Q3 2023 SharpLink Gaming Ltd Earnings Call

Good morning, ladies and gentlemen, and welcome to sharp link Gaming's third quarter 2023 results webcast. Please note that this event is being recorded and will be available for replay shortly after the conclusion of our live broadcast joining us today from sharp link is the company's co founder and Chief Executive Officer.

Rob 15, and Robert <unk>, Chief Financial Officer, before I turn the floor over to them I remind you that during today's call statements that are not historical facts, including any projections statements regarding future events or future financial performance or statements of intent or belief.

Forward looking statements and are covered by the safe Harbor disclaimers contained in the Companys public filings with the S E C.

Actual outcomes and results may differ materially from what is expressed in or implied by these forward looking statements with that said I would now like to introduce Rob Fithian CEO of Sharp link. Please go ahead Rob.

Thank you Kat and good morning, everybody.

<unk> posted another strong quarter March by Triple digit percentage revenue growth for both the three and nine months reported period.

The revenue expansion that we achieved over the past three consecutive quarters is due in large measure to the successful execution of our M&A activities, which began in December 2021, with the acquisition of <unk> followed.

Followed by our merger with sports hub Games network, just one year later in December 2022.

Beyond the top line our gross profit margin has been a clear positive story showcasing the logic and strategy at gone into strengthening our infrastructure and diversifying our technology solutions and service offerings.

Our purpose of acquiring <unk> was to take advantage of its teams. Many years of success specialized expertise and experience and building a highly engaged affiliate marketing network for online poker stakeholders across the European continent.

With <unk> skill set and now onboard a sharply it's been our intention to apply and amplify these assets to build from the ground up and affiliate marketing services business designed to suit the unique needs of the U S market.

Today Sharp links affiliate marketing services U S business and international business remain hard at work to build an affiliate marketing platform that is not only a strong revenue channel, but one that deliver sharply abroad sticky audience of sports fans and provides our sports book partners with high quality traffic.

Of new sports Betters.

In connection with the phased rollout of our affiliate marketing growth strategy.

Sharp link HQ was launched last month, providing a venue for us to unite and showcase sharp lengths advanced technologies, setting tools and performance marketing capabilities.

Moreover, we expect to leverage this new flagship website benefit from cross promotional opportunities between all of the starplex business units, including promos and driving traffic to our proprietary fantasy sports and free to play properties with full bedding integration built it.

Sharp links merger with sports hub was also approached and executed with the intent to own fantasy sports assets that will provide us with a growing proprietary audience are sports fans, whose passion for fantasy sports games and contests.

Fuel their conversion to legal sports betters.

After all it was the rise of fantasy sports in this country that paved the way for legalized sports betting and advertising.

As Bob will share sports others play a significant role in the growth of sharply. Despite the fact the market is yet to recognize the value of this new business unit and its portfolio.

That's the sports assets represent.

For instance league say, our fantasy Sports League management platform collected nearly $32 million in total entry fees from over 56000 private fantasy football leagues for the 2023 and 24 season.

This represents a 22% increase over the prior year's season.

While the broader wall Street market is yet to recognize and reward sharply for the success. We are achieving on executing our long term growth plan will nonetheless continue to remain focused on nailing, our kpis and forge ahead with the intent of optimizing enduring value creation for our shareholders.

<unk>.

Before I provide an update on other corporate matters, Bob let's take a moment to review the actual third quarter results.

Thanks, Rob and good morning.

On Monday of this week, we filed our 10-Q with the SEC after the market closed and published a press release yesterday morning, providing some key highlights of the results for the three and nine months reporting period.

Okay.

As Rob noted revenues were strong climbing 153%.

101% for the three and nine month period ended September 32023, respectively.

More specifically total revenues increased to $3 3 million.

In Q3, 2023 compared to $1 $3 million.

For Q3 of last year.

Looking at the performance of each of our four business units sports hub contributed $1 $4 million to our total sales in Q3 of 2023.

Compared to zero last year due to the fact that our merger.

It was completed in December of 'twenty two.

Affiliate marketing services U S contributed $232000 for the three months ended September 32023.

From $115000 last year and affiliate marketing services International achieved revenues of $1 2 million in Q3.

Compared to $761000 in Q3 of 'twenty two.

Our sports gaming client services group, which produces free to play games for our marquee list of sports media operators leagues.

<unk> and sports books helps.

Held steady at $420000 revenues for the three months ended September 30 of this year, which compared to $417000 in Q3 of last year.

For the nine months ended September 32023, compared to the first nine months of 2022 total revenues rose to $9 9 million from $4 $9 million respectively.

Drilling down further sports hub represented $3.6 million of our total sales in 2023 for the nine month period.

Affiliate marketing services.

<unk> generated eight.

$817000 compared.

Two $285000.

Affiliate marketing services International revenues climbed to $3 3 million from $2 $5 million and the sports gaming client services.

Increased revenues to $2 $2 million compared to $2 $1 million on a year over year basis.

As Rob mentioned, we saw a sharp expansion in our gross profit margin in both the three and nine months reporting periods.

Gross profit increased 505% to $1 1 million for the three months ended September 32023 from gross profit of approximately 188 thousands for the comparable three months in 2022.

For the first nine months of 2023 gross profit nearly tripled rising 281%.

$235 million from $905000.

Likewise gross profit margin increased to 34.8% and 34, 7% for the three and nine months.

We ended September 32023.

This compared to 14, 5%.

And 18, 3% for the three and nine months ended September 32022.

Yeah.

Moving down the income statement for the three months ended September 32023, total operating expenses increased 71% to $3 6 million up from $2 1 million.

For the three months ended September 32022.

The increase was attributable solely to higher selling general and administrative expenses attributable primarily to our December 22.

Merger with sports hub as well as expansion initiatives associated with our affiliate marketing services business units.

For the nine months ended September 32023, and 22 operating expenses declined 18% to $11 million from $13.

$4 million largely due to goodwill.

And intangible asset impairment of $4 $7 million recorded in the nine months period ended September 32022.

The total net loss attributable to ordinary shareholders increased 39% to $2 $9 million for 99 cents loss per.

For sure.

Which compared to a net loss attributable to shareholders of $2 $1 million or <unk> 86 cents loss per share for the same three months in 2022.

For the nine months ended September 32023.

Total net loss available to ordinary shareholders was $9 $2 million or $3 35 loss per share, reflecting a 34% decline when compared to the total net loss attributable to shareholders of.

$13 9 million or $5 89.

Loss per share reported for the comparable nine month period in the previous year.

Now looking at our cash flows as of September 32023, the company had $49 $3 million in cash and $14 nine.

$9 million in restricted cash.

As compared to cash of.

$39 $3 million.

And restricted cash of $11 $1 million.

As of December 31, 2022.

Yeah.

For the nine months period.

At September 32023, cash provided by operations from continuing activities with $6 $3 million, which compared to cash used in operations for continuing activities of $6 $4 million for the nine months ended September 32000.

'twenty two.

Okay.

The increase in cash and restricted cash was primarily attributable to fantasy Sports League entry fees collected for the 2023 2024, NFL season, as well as entry fees for the 2023 MLB season.

These were offset by payouts for fantasy sports prizes. Following the end of the 2022 and 2023 NFL season that occurred in January along with our normal working capital spend.

Rob that concludes my review of the financial results.

I would like to encourage everyone listening to review our actual 10-Q.

Mailable on SEC Gov, and on sharp links Investor Relations page under SEC filings.

Our 10-Q provides much more detailed information regarding our financial performance that is important to investors to read and understand.

So with that I turn the floor back over to Rob Rob.

Thank you, Bob and just a couple of weeks Novell.

On November 29, 2023% to be precise sharply we will be hosting an extraordinary general meeting of our shareholders to vote on the re domestication of our company from Israel too.

Delaware if you.

Have not already voted I'd like to ask that you take a few moments to do that.

In the event you need assistance in getting your vote then please contact us through our Investor Relations E Mail at.

IR at sharply dot com.

That's IR.

Sharp link Dot com.

The re domestication of sharp link has been a long and expensive undertaking but one that we believe is essential to our long term growth strategy and overall cost reduction and corporate spend.

We are also working towards regaining full compliance with NASDAQ and look forward to providing a more meaningful update on this front in the coming weeks.

Overall as we progressed through the fourth quarter, we're pleased with our execution thus far this year.

Well, we are certainly mindful of the ongoing uncertainties of the market challenges affecting the U S sports betting industry in general.

We remain optimistic as we persist in our efforts to achieve our kpis.

And continue to create long term value for our shareholders.

With that I'd like to thank you all for joining our webcast today and thank you again for your continued support we sincerely appreciate you for sticking with us throughout this journey and we look forward to future calls with you the detail the many progressive milestones, we expect to achieve in the coming months.

For those of you who would like to listen to today's webcast again, a replay of this call will be available later today on our website found at sharply dot com.

With that I'd like to wish everyone. A good day operator back to you.

Thank you for attending today's conference. We appreciate your participation you may disconnect. Your lines at this time and have a wonderful day.

[music].