A focus on revenue growth, new partnerships, and a positive outlook is a common communication pattern of publicly-traded esports companies. Yet, most of them are generating multi-million dollar losses year after year, undergo strategic reviews and restructures regularly, and become penny stocks as their share prices are in freefall. That exact pattern can be observed in British esports solution provider Gfinityโs latest financial report.
In its unaudited earnings report for the six-month period ended Dec. 31, 2022, Gfinity highlighted a 26% year-over-year increase in revenues to ยฃ4.11M ($5.12M USD). However, the company still generated a net loss of ยฃ1.77M ($2.21M) and continued its trend of posting a net loss for every reported six-month period since going public in December 2014. The revenue growth that Gfinity was able to accomplish was primarily driven by its esports segment.
Following a strategic review and consequent restructure in 2020, Gfinity focuses on three core areas of business: its esports segment, its network of digital media sites Gfinity Digital Media, and its publishing platform for game developers Athlos Gaming Technology.
Gfinityโs esports segment generated the lionโs share of the companyโs total revenue at ยฃ2.49M ($3.1M) during the period. The segmentโs 70% year-over-year increase in revenue was driven by its esports solutions for the football and motorsports sectors, which include partnerships with the Saudi Professional League, Formula 1, and Abu Dhabi Motorsports Management. Nevertheless, Gfinityโs esports segment is subject to an additional restructuring post-period that will see a pivot towards developing solutions for clients and away from live event production and delivery. As part of the restructuring, Gfinity relinquished its production and event facility โ the Gfinity Arena, which hosted events such as the F1 Esports broadcasts. Additionally, it was agreed that the companyโs previous CEO John Clark would leave the company.
Gfinity expects the restructuring to shave off ยฃ0.7M ($870K) from its cost base due to savings in staff costs and related overheads. Consequently, it’s questionable whether Gfinity will be able to retain its contract to deliver the F1 Esports Series for a sixth year. At this time, Formula One has not made an announcement detailing its partner for the 2023 F1 Esports Pro Series – the announcement of Gfinityโs partnership extension for the 2022 F1 Esports Pro Series was made in June 2022.
Gfinity Digital Media generated ยฃ1.45M ($1.81M) in revenues, an 11.3% decrease year-over-year as its network of media sites saw a 10% reduction in average monthly active users to 13.1M. Gfinity refers to Google algorithm changes as the reason for the decline.
Athlos Gaming Technology contributed ยฃ168K ($210K) to Gfinityโs total revenues while costing the company ยฃ2.7M ($3.36M) to operate due to high development expenses in the early stages of the platform’s life cycle.
As of Dec. 31, 2022, Gfinity had a cash position of ยฃ1.69M ($2.11M). In February, Gfinity was able to secure ยฃ2M ($2.49M) in additional funding from existing and new investors to provide its directors with headroom to complete its restructuring, acquire new commercial partners for the Gfinity Digital Media business, and provide runway to bring a separate external investor into the business to invest directly into the Athlos Gaming Technology platform.
Gfinity currently trades in the ยฃ0.1 ($0.12) to ยฃ0.2 ($0.24) window on the London Stock Exchange (LSE), a bundle of misery compared to its all-time high at ยฃ37.4 ($46.6) in September 2017.