Gfinity Attempts Another Restructure as Multi-Million-Dollar Losses Prevail

Credit: Gfinity

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 Gfinity’s 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 £4.11M ($5.12M USD). However, the company still generated a net loss of £1.77M ($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.

Gfinity’s esports segment generated the lion’s share of the company’s total revenue at £2.49M ($3.1M) during the period. The segment’s 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, Gfinity’s 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 — the Gfinity Arena, which hosted events such as the F1 Esports broadcasts. Additionally, it was agreed that the company’s previous CEO John Clark would leave the company.

Gfinity expects the restructuring to shave off £0.7M ($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 Gfinity’s partnership extension for the 2022 F1 Esports Pro Series was made in June 2022.

Gfinity Digital Media generated £1.45M ($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 £168K ($210K) to Gfinity’s total revenues while costing the company £2.7M ($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 £1.69M ($2.11M). In February, Gfinity was able to secure £2M ($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 £0.1 ($0.12) to £0.2 ($0.24) window on the London Stock Exchange (LSE), a bundle of misery compared to its all-time high at £37.4 ($46.6) in September 2017.