Gfinity (GFIN ) outlined to investors within its first half results for the period ended 31 December 2020 that it has seen a “significant improvement” in its financial performance.
Financial Highlights
The esports group reported revenue for the period of £3.0m, a sequential 212% rise from £1.0m for 2H20.
Gfinity’s recent restructuring reduced its adjusted administrative expenses to £2.5m, a 36% reduction from £3.9m in 2H20, and a 45% reduction from £4.5m in 1H20.
This lowered its operating losses to £0.9m, a 63% improvement on the same period in the prior year (1H20: £2.4m loss).
At an Adjusted EBITDA level, the reduction was even greater, with an 84% improvement on the equivalent period in the prior year (1H20: £2.7m loss).
Gfinity finished the period with £1.8m in cash, an increase of £0.2m from £1.6m for FY20.
Operating Highlights
Gfinity has significantly grown and expanded its digital media group, GDM. In November, GDM delivered a record month with 14 million monthly users across all sites - following a recorded 12 million in October 2020 - and revenues exceeded £275,000 for the first time.
Gfinity unveiled the acquisition of online news community Epicstream in December 2020. Within one month of acquisition, the site saw a 76% uplift in monthly active users, with 1.3 million unique visitors to the site in January 2021. The company said that GDM now remains on target to deliver revenue of around £2 million in the current financial year.
Gfinity continues to deliver esports solutions for several of the world’s biggest brands and sports rights holders, using it owned tech IP and world class production facilities.
In October 2020, it started the delivery of Season 4 of the F1 Esports Series virtually, utilising its proprietary virtual production service and most recently, it announced that it had been reappointed as the tournament operator for the third season of the ePremier League.
During the first half, we have continued to leverage significant demand for our expertise and capability in creating unique solutions for our partners, whilst also expanding and investing in our community of gamers through our GDM platform,” said CEO, John Clarke.
FY21 Outlook
Gfinity said it has continued to make ‘strong progress’ against its three strategic pillars post period-end. Last month, Gfinity launched a further site, MTG Rocks which achieved almost 150,000 monthly active users in its first month and which “continues to grow”, it said.
Earlier this month, Gfinity also announced a partnership with MapGenie to embed MapGenie's interactive video game maps into relevant articles across its network, allowing users to track their gameplay progress and access wider information and features.
Meanwhile, the company informed investors that Season 2 of the V10 R-League will commence in April 2021. It said this has now expanded to 10 participating teams, with the addition of McLaren Shadow and R8G Esports, the team of racing driver Romain Grosjean.
Gfinity was also appointed by the Football Association of Ireland to deliver the first ever eLOI, a new esports competition for League of Ireland clubs scheduled for 10 May 2021.
“The restructuring of Gfinity's business during April 2020 and new strategic focus positioned GFIN well to deliver a significantly improved financial performance in the 6 months to December 2020 and will continue to position Gfinity successfully for the future,” it said.
The group outlined that the growth of its Digital Media network and development of market leading technology solutions has provided a platform to deliver scalable growth into the second half and beyond, which it said, “it is now able to do from a firm financial footing.”
“Given the significant progress being shown across each of the Company's strategic pillars, the Board is confident about the outlook and Company's growth opportunities,” it added.
Meanwhile, the company also announced this morning that it has concluded the strategic review and formal sale process that had previously commenced back in October last year.
Clarke added, “We have been encouraged by the discussions held with a range of parties, one of which resulted in signing a significant multiyear commercial contract with the new sports fan engagement site IQONIQ and further deals are expected throughout 2021.”
Clarke highlighted to investors that “it is time to accelerate the growth of the business by being focused on the growth areas identified under each of our strategic pillars".
The 1H21 results highlighted the improved financial trading in the six month period following Gfinity’s announcement last month that it had recorded its first ever quarterly positive adj EBITDA.
Shares in Gfinity have ticked up by over 5% in value since the beginning of 2021.
Reasons to GFIN
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 pathway towards profitability forecasted for 1Q21.
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.
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