In a trading update for the half year ended 30 June 2021, Gfinity said it delivered ‘a strong performance’ in December 2020, building on the month-on-month profitability reported in October and November and recording its first quarter of profitability in the group’s history.
The esports media group said it continued to build on the positive performance reported back on 18 December 2020 and as a result of a strong performance and on an adjusted EBITDA basis, the Company was profitable for the final quarter of the 2020 calendar year.
At the half year (31 December 2020), the Company's cash position was £1.7 million, slightly ahead of the cash position of £1.6m as at the end of the financial year (30 June 2020).
In particular, Gfinity said it continues to see positive traction across its digital media group, GDM, with ‘significant growth’ in monthly users across all sites, reaching close to 40 million users between October and December 2020.
GDM delivered revenues of £0.75m (compared to £0.44m between October and December 2019). It remains on track to deliver target revenues of around £2m for this financial year.
This week, GDM will launch a new site based on the popular game Magic the Gathering (MTG) - MTG Rocks. EpicStream possesses one of the fastest growing MTG communities on Facebook with 280,000 likes and over half a million engagements in the past 28 days.
The Company said it also continues to optimise its sites with the launch of the Manifold platform in January, which allows the GDM team to deliver content ‘anywhere at any time.’
Despite its strong performance, the Company noted that due to the project-based nature of the Company's revenue streams and some seasonality in the business in the short term it ‘does not imply the Company will always be profitable on a monthly basis going forward.’
Its Formal Sale Process (FSP) that was launched in October 2020, continues to progress as planned, it said. Gfinity told investors that it continues to engage in conversations as the Board evaluates the best options in order ‘to accelerate the growth of the business.’
"Since March 2020 the focus has been on transforming the financial performance of the business. The positive results in the last quarter of the 2020 calendar year demonstrates that the strategy we have implemented is starting to deliver. We recorded the first quarter of adjusted EBITDA profitability in our history, a significant milestone,” said CEO, John Clarke.
“In GDM, we now have a fast growing and highly profitable revenue stream. At the same time, we have identified significant opportunities to maximise licensed based revenues for our technical platforms, both tournament play and virtual production. The commercial pipeline is strong and there is a better understanding in the marketplace of the value that Gfinity brings.
The overall market environment, caused by COVID-19 and recurring lockdowns, is naturally having an impact across all sectors. Whilst we are confident as to the prospects for the Company, we will continue to ensure Gfinity can navigate any potential challenges created by the current situation,” Clarke commented.
“We are well positioned to reap the rewards of being a leading player in one of the most exciting industry sectors in the world,” Clarke told investors, adding that, “the fundamentals are strong and the foundations are now in place to enter a period of solid growth."
Investors will be pleased to hear Gfinity has recorded its first ever quarterly positive adj EBITDA, despite the ongoing uncertainty surrounding the FSP. Investors are now anticipating the publication of the group's first-half results for the six months to 31 December 2020 in March 2021, which will undoubtedly provide further postive details on the Company's operational and financial progress. Shares in Gfinity have increased by over 40% in value since the beginning of November 2020, gaining over 36% of that value in the past month alone. Shares in the esports media Company opened 4.00% lower this morning at 4.8p following the announcement.
The esports industry represents an exciting investment opportunity for Gfinity which is the only established UK listed company in the esports sector. In 2018, global esports revenue grew by 38% in value, with a projected esports market value of $1.5 billion by 2020.
In November 2020, Gfinity launched a formal sales process as part of a strategic review which it said will help it continue its current pathway towards profitability forecasted for Q1 2021.
Gfinity has seen three major progressions with regards to joint ventures and partnerships, including partnerships with BT Sport, ViacomCBS and Abu Dhabi Motorsport Management.
The group said it is on track to deliver target revenues for this financial year of around £2m, leading the Company towards its maiden profit. GFIN is currently technically in an offer period post the announcement of its strategic review on 9 October 2020.
‘While the Company continues on its current pathway towards sustainable profitability, at this point in time it is important to all its stakeholders to ensure that it has explored all strategic options to capitalise on the potential market opportunity,’ GFIN noted.