Allied Esports Entertainment, the parent company of the World Poker Tour (WPT), reported a substantial financial setback of $10.9 million in the second quarter. This significant loss was attributed to the global health crisis, which compelled the cancellation of numerous esports competitions.
The company’s earnings for the initial six months of the year reached $10.6 million, a considerable decrease compared to the $13.8 million generated during the previous year. Expenses also experienced a notable increase of 16.3%, resulting in a second-quarter deficit of $12.9 million.
Revenue for the second quarter declined by 37% year-over-year, with live events bearing the brunt of the pandemic’s impact. Live event revenue amounted to a mere $699,327, a substantial drop from the $3.2 million generated in the previous year.
While Allied reported a rise in service requests, its diverse content income experienced a drop of 59.1%, settling at $705,251. The revenue from sponsorships also took a hit, attributed to the postponement of the WPT final table due to the global health crisis.
These revenue dips were partially balanced out by a 33.3% year-on-year increase in revenue from interactive services, climbing from $2.4 million to $3.2 million. Allied Esports attributed this to a significant rise in ClubWPT subscriptions and virtual chip purchases, as well as the introduction of new ClubWPT membership levels.
On the spending side for the quarter, total costs and expenses saw a decrease of 6.9% to $9.4 million, due to reduced expenditures in many areas as a result of the Covid-19 shutdown.
Diversified content costs fell by 63.4% to $563,833, and live event costs also decreased by 40.6% to $507,112. Sales and marketing costs declined by 71.7% to $292,485, while general and administrative costs also decreased to $3.7 million.
However, due to expenses exceeding earnings, Allied Esports incurred an operating loss of $4.8 million, compared to $2.7 million the previous year. After other expenses of $6.1 million, the net loss reached $10.9 million, higher than the $2.8 million in 2018.
After taking into account foreign currency expenses, Allied Esports recorded a consolidated net loss of $10.9 million at the end of the second quarter, compared to $2.8 million the previous year.
The COVID-19 pandemic has presented us with a significant challenge,” stated David Ng, the company’s chief executive officer.
“During a substantial portion of the second quarter, we were compelled to close our brick-and-mortar locations due to lockdown mandates. This had a detrimental impact on our financial performance for the quarter.
“In response, we swiftly adjusted our strategy and concentrated on our online content and interactive services to mitigate the losses and continue serving our dedicated clientele.”
Ng also disclosed that Allied Esports successfully refinanced $14 million in debt and $3.7 million in interest payments in August 2020.
“By extending the repayment deadline for the debt by as much as two years, we have created substantial financial flexibility as we navigate this unpredictable economic landscape. We remain committed to generating value and expanding the company for the future,” Ng remarked.