Q4 2023 Allied Gaming & Entertainment Inc Earnings Call

Participants

Tyler Drew; IR; Allied Gaming & Entertainment, Inc.

Yinghua Chen; CEO and President; Allied Gaming & Entertainment, Inc.

Roy Anderson; CFO; Allied Gaming & Entertainment, Inc.

Presentation

Operator

Greetings and welcome to the Allied Gaming and Entertainment, Inc. fourth quarter and full year 2023. At this time, all participants are in a listen only mode. (Operator Instructions) And as a reminder, this conference is being. It is now my pleasure to introduce to you, Tyler drew with Investor Relations. Thank you, Tyler, you may begin.

Tyler Drew

Thank you, operator. Good afternoon, and welcome to the Allied gaming and entertainment 2023 Fourth Quarter and Full Year Earnings Conference Call being on the call today are allied gaming and Entertainment's Chief Executive Officer, Yinghua Chen; and Chief Financial Officer, Roy Anderson. Before I turn the call over to management, please note that our prepared remarks may contain forward-looking statements or Words such as may, will, expect, intend, plan, believe, seek, could, estimate, judgment, targeting, should, anticipate, goal and variations of these words and similar expressions are intended to identify forward-looking statements, and actual results could differ materially from those impacted by such forward-looking statements due to a variety of factors discussed in the Company's public
filings, including the risk factors discussed in documents filed with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions they can give no assurance that its expectations will be attained or The Company undertakes no obligation to update any forward-looking statements, 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. The Company's earnings release, which was issued this afternoon is available on the company's website presents definitions of such non-GAAP financial measures, reconciliations to the appropriate GAAP measures and an explanation of why the Company believes such non-GAAP financial measures are useful to investors. And with that, it is now my pleasure to turn the call over to Yinghua, Gaming and entertainment CEO. in Washington in one from Integra, and thank you all for joining us this afternoon.

Yinghua Chen

We've made substantial progress during 2023 and have entered 2024 in a position of strength. Allied e-sports, international airline, mobile entertainment and Allied experiential entertainment are all poised for growth as we execute on our strategic objectives this year. Let's begin with a review of our financial performance for the year and 2023. Total revenues of $7.7 million were up 21% from 2022, while our net loss attributable to common stockholders decreased by 68%. The improvement in net loss was from our continued commitment to reducing our expenses. General and administrative expenses improved by 30%, and we're well positioned for 2024.
Turning to Allied e-sports international or AI., our hyper X arena was in high demand during the fourth quarter and hosted a variety of events with 64 events pricing, 30 proprietary events and 34 third-party events. Notable events at Highbrook, Serena included home and showcase party, which featured over 10 different tournaments as we undo the exciting new lines of Oman and hyper extra equipment that visitors have the opportunity to experience while visiting HyperX arena world e-sports Day celebration in conjunction with Twitch gone off to party B, a sports F1 2023 Las Vegas show run, assuming Virtu raised that featured stars from both sports and entertainment to celebrate the inaugural Las Vegas Grand Prix and act as the official kickoff to the race.
All MLB team awards show during which Major League Baseball announced its all MLB first and second teams and was joined by current MLB players as well as past Legend of the game event included as the laboratory player entrants and pressure of reception and was broadcast live on MLB Network. We were also honored to have hybrid Serena featured in Mark Wahlberg hit new movie. The family plan, which was released in December, the well received movie has highlighted the Arena itself and all the high-tech gaming equipment in it, which opened more potential for similar production fully utilizing the Arena assets, movie viewers are able to get a sense of the fun live action that takes place for both participants and viewers during competitions at the arena.
Finally, post quarter end fabric, Serena held an event hosted by HP. gaming brands, BOWMAN and hybrids. During the year event included product demos, industry panels and a sterling performance by dj Steve Aoki. An exciting partnership was also announced as Ohman and hybrids will become Riot Games, official technology partners. And we'll provide deep expertise on global e-sports events across League of Legends and Valor and Champions Tour and team five tactic in 2024. We always appreciate when companies choose HyperX arena as it is a testament to our world-class facility and team which can be utilized for many reasons by the work fun or both.
Turning to our proprietary content following a successful 1st year of I want to be which explores the journeys of professional gamers and professional athletes we'll have appeared on YES Network fees in two Part one was just recently released on the yes, we remain engaged with other potential partners to utilize our asset and expertise to create additional new and engaging content series for our viewers, and we'll update you as details are finalized. We have now integrated Beijing, then Georgia for technology or Zetec into Allied mobile entertainment for our AME. following the closing of our strategic investment on October 31st, 2023, Zetec of prominent mobile games developer and operator with advanced in-game advertising strategies has progressed our vision for AME.
We expect the investment to improve our overall financial performance significantly and contribute to improving our distribution capabilities this year for our own catalog of mobile games during 2023, Ditech demonstrated strong financial results with revenue of $17 million and positive net income this year is off to a strong start as we expect our financials will see a benefit at both the top and bottom lines in 2020 for now that the tax financials are consolidated into ours, Allied experiential entertainment or AE. has made remarkable progress to close out the year, which has become more evident following recent announcements begin in November, we formed Skyline Music Entertainment Limited, a joint venture based in Macau that will aim to capitalize on the burgeoning and large untapped entertainment industry in Asia. That line has already finalized its first upcoming event.
The opening of the first ever China tour of the highly acclaimed among people journal award winning bank walk off the earth on April fourth, 2020 for locals are showing great enthusiasm for the event during which that line will oversee talent management, show promotion, sponsorship, marketing, ticket sales and on-site event management guideline. Also currently has a pipeline of additional events that we expect to finalize in the near future. In December, Elite front Entertainment's a company with expertise in orchestrating live events across Asia, notably within China's Greater Bay, announced a significant investment into a JV, validating their belief in our vision and the clear opportunity in the Asian market. Partnering with Relief Fund provides us with additional local expertise, which is essential in successfully planning and operating events in the region.
In addition, their partnerships with companies such as Tencent and Dorian, which is ByteDance, will be an advantage as we look to further expand our reach. Most recently earlier this month, we announced a new partnership with World Poker Tour and Wynn Macau to bring World Poker Tour to Macau for the first time in its two decade long history wall box to a Macao which runs from June 18th to 24, will attract PokerStars from all over the world featuring both championship and high roller events split by ins of Hong Kong dollar 40,000 Hong Kong dollar 200,000, respectively. We've continued to maintain a strong relationship with the team at World Poker Tour since we sold the company in 2001 and along with Wynn Macau. We're thrilled to be working with them on this inaugural event as well as future ones, along with WPTN.
When the fund was integral in securing local approvals and assisting in logistics for WPT Macau, underscoring the significance of our partnership posting an operating live events, especially internationally post formidable challenges, yet leveraging our established relationships and expertise. We streamlined the process of our partners, greatly enhancing the prospect of successful and Memorial events across continents. Before turning it over to do I I like to provide an update on our stock repurchase plan, we continue to believe our stock is undervalued and have now repurchased approximately $2.3 million shares of a JV between the announcement of the plan in November 2022 and the end of 2023. I will now turn the call over to our CFO, Roy Anderson, to provide updates on our Q4 financials.

Roy Anderson

Thank you, Ingo, and good afternoon, everyone, and thank you for joining us today. Our total revenues for 2023 were $7.7 million, up $1.3 million or 21% from 2022. The increase was primarily driven by an increase in sponsorship revenue relating to the renewal of our naming rights agreement at our flagship e-sports facility HyperEdge, Serena Las Vegas Season two was elevated and two months of revenue from our recent acquisition of Zetex. On a quarterly basis, revenues for the fourth quarter were $2.1 million, up $0.9 million or 70% from the prior year period. The increase from the fourth quarter of 2022 was driven by an increase in hyper direct Serena sponsorship revenues and two months of ZigTech operations.
Turning to expenses. In 2023, total costs and expenses were $14.3 million, a decrease of 21% compared to 2022. The decrease in costs and expenses is primarily due to a $3.2 million or 30% reduction in general and administrative expenses for the fourth quarter, total costs and expenses of $4 million saw a slight increase of 2% compared to the fourth quarter of 2022. Our net loss was $3.6 million in 2023, down significantly from $10.8 million in 2022. The decrease was driven by revenue growth within our multi-platform content and casual mobile gaming streams, interest income on our short-term investments and our continued focus on managing our expenses.
For the fourth quarter, our net loss was $1.1 million compared to $1.7 million in the prior year period. Our 2023 adjusted EBITDA loss of $4.6 million was down from a loss of $8.6 million in 2022. Our fourth quarter adjusted EBITDA loss of $1.2 million also improved down from a loss of $1.7 million in the fourth quarter of 2022. Our adjusted EBITDA includes adjustments for depreciation, amortization, business acquisition, transaction costs, stock-based compensation and interest income. Now onto our balance sheet. At December 31st, 2023, our cash and short-term investments position totaled $78.6 million, including $5 million of restricted cash compared to $86.8 million at December 31st, 2022, the Company's working capital surplus, defined as current assets minus current liabilities, was $66.4 million at December 31st, 2023, compared to $79.1 million at December 31st, 2022.
Also during the quarter and under the stock repurchase program mentioned by Ying Huang, we acquired 36,977 shares of our common stock in open market transactions at an average selling price of $0.83 for a total repurchase cost of $30,846, excluding broker fees. We continue to believe that our current share price does not reflect the company's intrinsic value, and we'll evaluate further repurchases based on market conditions, stock price and other factors. I now turn the call back over to you and Well, thank you, Ryan.

Yinghua Chen

2023 was a very busy year at Allied gaming and entertainment and one that we believe sets us up extremely well to capitalize in 2024 and beyond. Across the Allyes ecosystem, we have made great progress advancing on our initiatives and have continued to demonstrate to our current and potential customers and partners the value and entertainment that we consistently provide with Ditech now integrated into our business, a finalizing events and expanding its presence in Asia and the continued demand we have for our AI properties and content. I would like to reiterate that we're extremely excited for the year ahead and very confident in our path forward. Thank you for your time today. We look forward to speaking with you again when we release our first quarter 2024 results in May.

Operator

Ladies and gentlemen, that does conclude today's teleconference. You may disconnect your lines at this time.