Q3 2023 Allied Gaming & Entertainment Inc Earnings Call

[music].

Good afternoon, and welcome to the ally to gaming and Entertainment, Inc. Third quarter 2023 earnings Conference call.

All participants will be in listen only mode.

Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Please note this event is being recorded.

I would now like to turn the conference over to Tyler drew of Auto Investor Relations. Please go ahead.

Thank you operator.

Good afternoon, and welcome to the Allied Gaming Entertainment 2023 third quarter earnings Conference call.

With me on the call today are Allied gaming and entertainments, Chief Executive Officer, and watch it and Chief Financial Officer Roy Anderson.

I turn the call over to management. Please note that our prepared remarks may contain forward looking statements.

Such as May will expect intend plan believe.

Good.

Nate judgment targeting should anticipate goal and variations of these words and similar expressions.

Identify forward looking statements.

Actual results could differ materially from those implied by such forward looking statements due to a variety of factors discussed in the Companys public filings, including the risk factors discussed in documents filed with Securities and Exchange Commission.

Although the company believes the expectations such forward looking statements are based upon reasonable assumptions it can give no assurance.

That will be attained.

The company undertakes no obligation to update any forward looking statement, whether as a result of new information future events or otherwise.

In addition, certain of the financial information presented in this call represents non-GAAP financial measures.

Any early which is good.

Her name is available on the company's website.

Definitions of such non-GAAP financial measures reconciliations to the appropriate GAAP measures.

Explanation of why the company believes such non-GAAP financial measures are useful to investors.

With that it is now my pleasure to turn the call over to ally entertainments CEO in March at the mall.

Thank you Taylor and thank you all for joining us this afternoon.

Sure exciting development from the past quarter.

We are committed to executing our strategic plan to focus on our growth is around the E sports gaming and entertainment.

Beginning with our financial performance in Q3, we've achieved a significant milestone by recording positive net income.

This accomplishment reflects our relentless effort to enhance operational efficiency and reduce expenses in anticipation of robust revenue growth in 2024.

Our unwavering commitment to improving profitability remains steadfast.

Despite the challenges we faced in Q3, particularly in the form of a 28% decrease in revenue largely due to a decrease of life events, reflecting the impact of economic uncertainty.

Our dedication through streamlining our general and administrative expenses.

That's it in a remarkable reduction of over 50% in Q3.

This accomplishment not only improved our net income, but also bolstered our adjusted EBITDA results.

Setting us on a path to manage and grow our business and this lower expense level.

During the quarter, our subsidiary Allied esports International AE I provided its audiences with more world class experiences and both it's a hotbed for arena and Almond mobile arena.

We produced a total of 17 nine event days during Q3.

Comprising 44 proprietary even days and 35 third party event days.

Notable events at high priced arena incurred it boxing weekend reception, a dynamic and fun gaming event honoring boxing legend, such as Mike Tyson and I Wonder Holly field.

A red Bull and riot games event showcasing brand new gameplay from Brian its upcoming tidal project out for the first time during the most attended evolution Championship series 2023, 20 months in the history.

I told one of five day hackathon event and an industry event by Cox communications to discuss their leading connectivity kept it pretty quick.

In September we also hosted the UNLV hockey and you're giving day, a fund raising events in partnership with you and that will be utilizing our online mobile arena.

Jim a stronger connection with our local community.

Oh My mobile Arena was also active during the quarter, but events, including the NHL drafts and three U N L E College football games at Allegiant Stadium in Paradise, Nevada.

In recognition of our contributions were deeply honored that the Clark County Commission officially declared October 14th.

Allied esports day in Clark County, we're excited about the awareness this spring.

Look forward to providing even more memorable experiences to our audiences.

Turning to our partnership with Hyperx recently, we rolled out a new set of H B O N P. C. The monitors to retrofit and update the gaming zones, but in high priced arena.

The arena, which is considered the world's most recognized venue production facility for esports.

Totally outfitted with state of the art equipment.

In conjunction with in person live events. We're currently in production on our original concrete curious wanna be even too which will be available on the yes up.

After generating strong viewership numbers during season one we.

We expect to release, even chew in the spring.

We're focused on incorporating more of the most well known New York Yankee players.

Together with top ranking pro gamers into their show to increase its reach.

Furthermore, we are actively engaging with potential partners to create new and engaging content for all viewers.

Aren't you Wanna be and elevate the shelf stay tuned for more details on these partnerships in bulk.

Let's turn to our ally mobile Entertainment subsidiary R. E N E.

Which is dedicated to exploring opportunities in the massive and growing mobile games market.

Subsequent to the end of quarter on October 31st 2023, we closed on the previously announced strategic investment in Beijing, and Guangzhou technology called <unk>.

Prominent mobile game developer and operator.

We are delighted to finalize this strategic investment establishing a J E. As the majority shareholder in Jihad, while also assuming a controlling interest in the board.

This move reinforces our presence in the highly lucrative mobile games market and strengthens our position to grow but in the global gaming industry.

<unk> has demonstrated impressive results in just 18 months in operation and we expect this investment will be immediately accretive to our top and bottom lines, while bringing valuable digital IP into the allied ecosystem.

Awesome, continuing to make progress, but in our ally experiential entertainment subsidiary or a E, which focuses on organizing general entertainment life events extra and show Entertainment, Daniel Operation management and consultation.

We're actively exploring opportunities to co organized partner events in Macau.

Recently in Macau has made a substantive effort to diversify its economy and generate more non gambling revenue in the area.

As such casino operators have pledged billions of dollars in investment over the next decade.

We plan to use our events and content expertise to assist with some of the casino operator in providing more non gaming entertainment option to their customers and expanding the revenue stream in a similar manner to Las Vegas.

As discussions are finalized we will update the market with additional details.

We also continue to believe our stock is undervalued and have now repurchased approximately $2 7 million dollar off a J E stock between the announcement of the plan in November 2022 at the end of Q3.

And with that I'd like to turn the call now to our CFO Roy Anderson should provide updates on our Q3 financials.

Thank you Yang y anymore.

For me most respected third quarter revenues of $1 $1 million were down 28% from the prior year period.

As Jim alluded to the year over year revenue decrease was primarily due to a decline in third party in person events at our hydro Rich arena in Las Vegas.

Total costs and expenses for the third quarter of 2023 were $1.8 million, a decrease of 46% compared to the third quarter of 2022.

The decrease was driven by a strategic reduction in our G&A expenses, 63% and a 48% decrease in all in person expenses related to the decline in third party events held during the quarter along with certain operating efficiencies. We have implemented you know in person events.

The 63% reduction of G&A includes cash compensation stock based compensation.

And the recognition of employee retention credit refunds under the 2020 cares and subsequent patch.

These decreases were partially offset by an increase in depreciation and amortization expenses acquisition related professional fees and consulting fees incurred in connection with other strategic investment opportunities.

Net income for the third quarter of 2023 significantly changed $1 million compared to a net loss of one 6 billion in the prior year period.

Our results for Q3 2023, including approximately $716000 of interest income earned on short term investments.

But we're just at the beta loss was zero point $2 million in the third quarter of 2023, a considerable improvement from a loss of $1 8 million in Q3 2022.

Our adjusted EBITDA includes adjustments for depreciation amortization business acquisition transaction cost stock based compensation and interest income.

Now moving onto our balance sheet as of September 32023, our cash and short term investments position totaled $77 $4 million, including $5 million of restricted cash compared to $86 8 million at December 31, 2022, which also links.

$5 million of restricted cash.

As of September 32023 of the company's working capital position was very strong at $73 9 million, including the current portion of an operating lease liability of $1 4 million that was recorded in connection with the implementation of the new leasing standard and you can see 842 on December 30.

First 2022.

During the quarter and then our stock repurchase program we acquired.

182021 shares of our common stock in open market transactions at an average selling price of 98 cents for a total repurchase cost of $171355 excluding broker fees.

This brings us to $2 $7 million in aggregate repurchases of our common stock since the commencement of a client moving forward the amount of timing and amount of any purchases will continue to be based on the evaluation.

Market conditions stock price and other factors.

I'll now turn the call back over to Ian Walsh for closing remarks.

Thank you Ray in summary, we remain excited about the growth prospects ahead of ally gaming and entertainment.

We have done significant work in the background, which we believe has built a strong foundation.

Along with our recently closed investment in J Huh.

Shouldn't become more evident in our financial results.

We look forward to providing you with additional updates on our progress when we release, our fourth quarter and full year 2020 see results in March.

Thank you.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.