Allied Gaming & Entertainment, Inc. (NASDAQ: AGAE) (the
“Company” or “AGAE”), a global experiential entertainment company,
today announced financial results for the first quarter ended March
31, 2023.
“It has been a strong start to the year so far at Allied and we
are continuing to gain momentum in the second quarter as we advance
on our strategic objectives,” said Yinghua Chen, the Company’s
Chief Executive Officer. “We are also excited to have recently
announced our continued relationship with HyperX/HP on the Arena
branding side and renewal of sponsorship from Progressive Insurance
on our original content programs. These growing relationships are
further evidence that Allied is recognized as an established name
in the gaming entertainment community and that we offer an inroad
to this crucial and fast-growing multi-billion-dollar gaming
marketplace.”
First Quarter 2023 Financial Results
Revenues: Total revenues of $1.2 million were relatively flat
from the fourth quarter of 2022, and down from $2.4 million in the
first quarter of 2022. The year-over-year decline was primarily
attributable to the timing of the Company’s original content
series, ELEVATED, which recognized revenues for Season 1 in the
first quarter of 2022 and is expected to recognize revenues for
Season 2 in the second quarter of 2023.
Costs and expenses: Total costs and expenses were $3.8 million,
a decrease of 38% compared to the first quarter of 2022. The
decrease was in large part due to a 26% reduction in general &
administrative expenses, principally cash, severance and
stock-based compensation, as well as the aforementioned timing and
related expense recognition of ELEVATED.
Net loss for the first quarter of 2023 was $1.9 million compared
to a net loss of $3.8 million in the prior year period. Net loss in
the first quarter of 2023 includes approximately $734,000 of
interest income earned on short-term investments.
Furthermore, adjusted EBITDA loss was $2.0 million for the first
quarter of 2023, a 20% reduction from a loss of $2.5 million in the
first quarter of 2022. A reconciliation of the GAAP-basis net loss
to adjusted EBITDA is provided in the table at the end of this
press release.
Balance Sheet
As of March 31, 2023, the Company had a cash and short-term
investments position of $84.4 million, including $5.0 million of
restricted cash. This compared to $86.8 million in cash and
short-term investments at December 31, 2022, which also included
$5.0 million of restricted cash. At March 31, 2023, the Company had
a working capital position of $75.6 million compared to $79.1
million at December 31, 2022. AGAE’s working capital positions on
March 31, 2023 and December 31, 2022 were reduced by operating
lease liabilities of $1.3 million and $1.2 million, respectively,
recorded in connection with the Company’s implementation of the new
leasing standard (ASC 842) on December 31, 2022. As of March 31,
2023, the Company had approximately 39.1 million shares of
outstanding common stock.
During the first quarter, the Company bought back a total of 1.1
million shares of its common stock at an average selling price of
$1.26 for a total cost of $1.43 million, excluding broker fees.
Moving forward, the manner, timing and amount of any purchases will
continue to be based on an evaluation of market conditions, stock
price and other factors.
Operational Update
Allied Esports produced 82 events in the first quarter of 2023,
with 42 proprietary events and 40 third-party events. Third-party
events were up 5.3% compared to the first quarter of 2022 and were
highlighted by the View Sonic CES Event, the HyperX CES Event,
Nighthawk Pictures Production, ReliaQuest, and Astral Clash.
The Allied Esports mobile arena was also active with six events
during the quarter, including the 2023 Cotton Bowl Classic in
Arlington, Texas; the Feld Motorsports eSX Finals in Los Angeles,
California; the AIM Sports Volleyball SoCal Cup in Seal Beach,
California; The Clash at the Coliseum NASCAR Race in Los Angeles,
California; Superbowl LVII in Phoenix, Arizona; and NHL Stadium
Series in Raleigh, North Carolina.
Subsequent to the end of the quarter, AGAE announced that AE
Studios, its content development, storytelling and production
services arm, will produce the second season of ELEVATED, Presented
by Progressive Insurance, for a total of ten episodes. Season 2
premiered on May 3, 2023 on various creator channels from One True
King (OTK), one of the most watched content organizations on
Twitch.
Also subsequent to the end of the quarter, the Company announced
the extension of its exclusive naming rights agreement with
HyperX/HP, which ensures that AGAE’s flagship arena will remain
known as HyperX Arena Las Vegas. HyperX/HP will continue to receive
prominent branding and signage inside and outside of the venue, as
well as partner with AGAE on a variety of co-branded experiences
and events at the arena. In addition, as part of the expansion of
the agreement, HP Omen will now sponsor the Allied Mobile Esports
Truck as well.
First Quarter 2023 Conference Call
The Company will host a conference call today at 2:00 p.m.
Pacific Time / 5:00 p.m. Eastern Time to discuss its first quarter
2023 financial results. Participants may join the conference call
by dialing 1-844-826-3035 (United States) or 1-412-317-5195
(international).
A live webcast of the conference call will also be available on
Allied Gaming & Entertainment’s Investor Relations site at
ir.alliedgaming.gg. Additionally, financial information presented
on the call will be available on Allied Gaming &
Entertainment’s Investor Relations site. For those unable to
participate in the conference call, a telephonic replay of the call
will also be available shortly after the completion of the call,
until 11:59 p.m. Eastern Time on Thursday, May 25, 2023, by dialing
1-844-512-2921 (United States) or 1-412-317-6671 (International)
and using the replay passcode: 10178258.
About Allied Gaming & Entertainment
Allied Gaming & Entertainment Inc. (Nasdaq: AGAE) is a
global experiential entertainment company focused on providing a
growing world of gamers with unique experiences through renowned
assets, products and services. For more information, visit
alliedgaming.gg.
Non-GAAP Financial Measures
As a supplement to our financial measures presented in
accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”), the Company presents certain non-GAAP measures of
financial performance. These non-GAAP financial measures are not
intended to be considered in isolation from, as a substitute for,
or as more important than, the financial information prepared and
presented in accordance with GAAP. In addition, these non-GAAP
measures have limitations in that they do not reflect all of the
items associated with the company’s results of operations as
determined in accordance with GAAP. Non-GAAP financial measures are
not an alternative to the Company’s GAAP financial results and may
not be calculated in the same manner as similar measures presented
by other companies.
The Company provides net income (loss) and earnings (loss) per
share in accordance with GAAP. In addition, the Company provides
EBITDA (defined as GAAP net income (loss) from continuing
operations before interest (income) expense, income taxes,
depreciation, and amortization). The Company defines “Adjusted
EBITDA” as EBITDA excluding certain non-cash charges, such as
stock-based compensation, inducement expense, extinguishment losses
and impairment losses.
In the future, the Company may also consider whether other items
should also be excluded in calculating the non-GAAP financial
measures used by the Company. Management believes that the
presentation of these non-GAAP financial measures provides
investors with additional useful information to measure the
Company’s financial and operating performance. In particular, these
measures facilitate comparison of our operating performance between
periods and help investors to better understand the operating
results of the Company by excluding certain items that may not be
indicative of the Company’s core business, operating results, or
future outlook. Additionally, we consider quantitative and
qualitative factors in assessing whether to adjust for the impact
of items that may be significant or that could affect an
understanding of our ongoing financial and business performance or
trends. Internally, management uses these non-GAAP financial
measures, along with others, in assessing the Company’s operating
results, measuring compliance with any applicable requirements of
the Company’s debt financing agreements in place at such time, as
well as in planning and forecasting.
The Company’s non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles, and our
non-GAAP definitions of the “EBITDA” and “Adjusted EBITDA” do not
have a standardized meaning. Therefore, other companies may use the
same or similarly named measures, but include or exclude different
items, which may not provide investors a comparable view of the
Company’s performance in relation to other companies.
Management compensates for the limitations resulting from the
exclusion of these items by considering the impact of the items
separately and by considering the Company’s GAAP, as well as
non-GAAP, financial results and outlook, and by presenting the most
comparable GAAP measures directly ahead of non-GAAP measures, and
by providing a reconciliation that indicates and describes the
adjustments made.
Forward Looking Statements
This communication contains certain forward-looking statements
under federal securities laws. Forward-looking statements may
include our statements regarding our goals, beliefs, strategies,
objectives, plans, including product and service developments,
future financial conditions, results or projections or current
expectations. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” “intend” or “continue,” the negative of such terms, or
other comparable terminology. These statements are subject to known
and unknown risks, uncertainties, assumptions and other factors
that may cause actual results to be materially different from those
contemplated by the forward-looking statements. These
forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside our control, that could cause
actual results or outcomes to differ materially from those
discussed in these forward-looking statements. The inclusion of
such information should not be regarded as a representation by the
Company, or any person, that the objectives of the Company will be
achieved. Important factors, among others, that may affect actual
results or outcomes include: risks associated with the future
direction or governance of the Company; our ability to execute on
our business plan; the substantial uncertainties inherent in the
acceptance of existing and future products and services; the
ability to retain key personnel; potential litigation; general
economic and market conditions impacting demand for our services; a
change in our plans to retain or invest the net cash proceeds from
the WPT sale transaction; our inability to enter into one or more
future acquisition or strategic transactions using the net proceeds
from the WPT sale transaction; and our ability, or a decision not
to pursue strategic options for the esports business. You should
consider the areas of risk described in connection with any
forward-looking statements that may be made herein. The business
and operations of AGAE are subject to substantial risks, which
increase the uncertainty inherent in the forward-looking statements
contained in this communication. Except as required by law, we
undertake no obligation to release publicly the result of any
revision to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events. Further information on
potential factors that could affect our business and results is
described under “Item 1A. Risk Factors” in our Annual Report on
Form 10-K for the year ended December 31, 2022, as filed with the
SEC on March 24, 2023, as well as subsequent reports we file with
the SEC. Readers are also urged to carefully review and consider
the various disclosures we made in such Annual Report on Form 10-K
and in subsequent reports with the SEC.
Allied Gaming &
Entertainment, Inc. and Subsidiaries
Condensed Consolidated Balance
Sheets
March 31, December 31,
2023
2022
(unaudited) Assets Current Assets Cash and cash
equivalents
$
3,587,191
$
11,167,442
Short-term investments
74,500,000
70,000,000
Interest receivable
1,302,212
677,397
Accounts receivable
306,423
72,739
Prepaid expenses and other current assets
724,111
459,274
Total Current Assets
80,419,937
82,376,852
Restricted cash
5,000,000
5,000,000
Property and equipment, net
3,459,550
4,005,622
Digital assets
49,392
49,761
Intangible assets, net
586,837
22,836
Deposits
379,105
379,105
Operating lease right-of-use asset
5,618,413
5,845,549
Other assets
99,900
49,950
Total Assets
$
95,613,134
$
97,729,675
Liabilities and Stockholders' Equity Current Liabilities
Accounts payable
$
538,227
$
317,561
Accrued expenses and other current liabilities
1,896,874
1,645,379
Deferred revenue
1,146,200
108,428
Operating lease liability, current portion
1,279,117
1,227,164
Total Current Liabilities
4,860,418
3,298,532
Operating lease liability, non-current portion
6,194,507
6,527,075
Total Liabilities
11,054,925
9,825,607
Commitments and Contingencies (Note 12) Stockholders' Equity
Preferred stock, $0.0001 par value, 1,000,000 shares authorized,
none issued and outstanding
-
-
Common stock, $0.0001 par value; 100,000,000 shares authorized,
39,085,470 shares issued at March 31, 2023 and December 31, 2022,
and 37,398,120 and 38,503,724 shares outstanding at March 31, 2023
and December 31, 2022, respectively
3,909
3,909
Additional paid in capital
198,531,740
198,526,614
Accumulated deficit
(112,129,355
)
(110,235,568
)
Accumulated other comprehensive income
221,555
219,675
Treasury stock, at cost, 1,687,350 and 581,746 shares at March 31,
2023 and December 31, 2022, respectively
(2,069,640
)
(610,562
)
Total Stockholders' Equity
84,558,209
87,904,068
Total Liabilities and Stockholders' Equity
$
95,613,134
$
97,729,675
Allied Gaming &
Entertainment, Inc. and Subsidiaries
Condensed Consolidated
Statements of Operations and Comprehensive Loss
(unaudited)
For the Three Months Ended March 31,
2023
2022
Revenues: In-person
$
1,193,330
$
2,203,066
Multiplatform content
101
208,988
Total Revenues
1,193,431
2,412,054
Costs and Expenses: In-person (exclusive of depreciation and
amortization)
672,222
1,810,353
Multiplatform content (exclusive of depreciation and amortization)
395
21,133
Selling and marketing expenses
54,598
69,038
General and administrative expenses
2,543,347
3,451,870
Depreciation and amortization
578,560
808,612
Total Costs and Expenses
3,849,122
6,161,006
Loss From Operations
(2,655,691
)
(3,748,952
)
Other Income (Expense): Other income (expense), net
27,455
(6,707
)
Interest income, net
734,449
4,462
Total Other Income (Expense)
761,904
(2,245
)
Net loss
(1,893,787
)
(3,751,197
)
Other comprehensive income: Foreign currency translation
adjustments
1,880
12,964
Total Comprehensive Loss
$
(1,891,907
)
$
(3,738,233
)
Basic and Diluted Net Loss per Common Share
$
(0.05
)
$
(0.10
)
Weighted Average Number of Common Shares Outstanding:
Basic and Diluted
38,389,202
39,064,463
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are non-GAAP financial measures and
should not be considered as a substitute for net income (loss),
operating income (loss) or any other performance measure derived in
accordance with United States generally accepted accounting
principles (“GAAP”) or as an alternative to net cash provided by
operating activities as a measure of AGAE’s profitability or
liquidity. AGAE’s management believes EBITDA and Adjusted EBITDA
are useful because they allow external users of its financial
statements, such as industry analysts, investors, lenders and
rating agencies, to more effectively evaluate its operating
performance, compare the results of its operations from period to
period and against AGAE’s peers without regard to AGAE’s financing
methods, hedging positions or capital structure and because it
highlights trends in AGAE’s business that may not otherwise be
apparent when relying solely on GAAP measures. AGAE presents EBITDA
and Adjusted EBITDA because it believes EBITDA and Adjusted EBITDA
are important supplemental measures of its performance that are
frequently used by others in evaluating companies in its industry.
Because EBITDA and Adjusted EBITDA exclude some, but not all, items
that affect net income (loss) and may vary among companies, the
EBITDA and Adjusted EBITDA AGAE presents may not be comparable to
similarly titled measures of other companies. AGAE defines “EBITDA”
as earnings before interest, income taxes, depreciation and
amortization of intangibles. AGAE defines “Adjusted EBITDA” as
EBITDA excluding stock-based compensation, gain on forgiveness of
PPP loans, transaction costs and other charges related to the sale
of WPT, impairment losses, conversion inducement expenses and
extinguishment losses.
The following table presents a reconciliation of EBITDA and
Adjusted EBITDA to net loss from continuing operations, AGAE’s most
directly comparable financial measure calculated and presented in
accordance with GAAP.
Three Months EndedMarch 31,
2023
2022
Continuing operations Net loss from continuing operations
$
(1,893,787
)
$
(3,751,197
)
Interest income, net
(734,449
)
(4,462
)
Depreciation and amortization
578,560
808,612
EBITDA
(2,049,676
)
(2,947,047
)
Stock compensation
5,126
401,296
Adjusted EBITDA
$
(2,044,550
)
$
(2,545,751
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510006069/en/
Investor Contact: Tyler Drew Addo Investor Relations
ir@alliedgaming.gg
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