Allied Esports Entertainment, the owner of the World Poker Tour (WPT), announced a significant financial setback in the second quarter, reporting a substantial loss of $10.9 million. This financial downturn was directly attributed to the COVID-19 pandemic, which compelled the company to postpone numerous esports events.
During the initial six months of the year, their total earnings reached $10.6 million, a considerable decrease compared to the $13.8 million generated in the previous year.
The company’s expenses also experienced an upward trend, exacerbating their financial losses. The second quarter saw a loss of $12.9 million, nearly double the amount lost in the same period last year.
Their revenue in the second quarter experienced a substantial decline of almost 40% compared to the previous year. This downturn was directly linked to the cancellation of numerous live events due to the ongoing pandemic.
Although Allied reported a rise in service requests, its diverse content revenue dipped by 59.1% to $705,251. Support revenue also experienced a downturn due to the postponement of the WPT final table, a consequence of the pandemic.
These reductions were partially balanced by an annual increase in interactive services revenue, which expanded by 33.3% from $2.4 million to $3.2 million. Allied Esports attributed this growth to a substantial surge in ClubWPT subscription users and virtual chip purchases, along with the launch of a new premium tier of ClubWPT membership.
Regarding expenses for the period, total costs and expenditures decreased by 6.9% to $9.4 million, with spending across various areas declining due to COVID-19 restrictions.
Diverse platform costs decreased by 63.4% to $563,833, while offline expenses also declined by 40.6% to $507,112. Sales and marketing costs decreased by 71.7% to $292,485, while general and administrative costs also decreased to $3.7 million.
However, as expenses surpassed revenue, Allied Esports’ operational loss amounted to $4.8 million, compared to $2.7 million in the previous year. After accounting for other expenses of $6.1 million, the net loss reached $10.9 million, exceeding the $2.8 million recorded in 2018.
After factoring in foreign exchange expenses, Allied Esports’ consolidated loss for the second quarter was $10.9 million, compared to $2.8 million in the previous year.
The firms chief executive, David Ng, stated that they continued to confront a challenging environment in the second quarter due to the ongoing COVID-19 outbreak.
“For a significant portion of the second quarter, stay-at-home directives compelled us to temporarily shut down our physical locations, which negatively impacted our financial outcomes.
“We promptly shifted our focus to our online content and interactive offerings to mitigate the pandemic’s effect on our operations and continue serving our dedicated clientele.”
Ng also noted that Allied Esports successfully refinanced $14 million in debt and $3.7 million in interest that was due on August 23, 2020.
“By extending the debt’s maturity date by up to two years, we have enhanced our financial adaptability as we navigate the economic uncertainty surrounding the pandemic while striving to generate value and expansion for the future,” Ng remarked.
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