TIDMGFIN
RNS Number : 4790P
Gfinity PLC
09 February 2023
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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
09 February 2023
Gfinity PLC
("Gfinity", the "Company" or the "Group")
Business update and financing
The Board of Gfinity plc (AIM:GFIN), the leading esports
solutions provider, today provides a business update and details on
discussions in relation to equity financing .
Business update
On 23 December 2022, the Company announced its final year
results for the year ended 30 June 2022. These results reported a
reduction in Adjusted Operating Loss of 28% to GBP2.0m, and a
closing year-end cash position of GBP2.1m. This represented a third
straight improvement in the Adjusted Operating Loss, driven by
growth in revenue attached to Gfinity's owned tech IP, audience and
esports properties.
The Com pany intends to publish its unaudited financial results
for the six months ended 30 December 2022 during March 2023. Based
on management accounts the Company expects to report the
following:
Financial Highlights:
1. Revenue of GBP4.1m; an increase of 26% on H1 FY22 and a 106%
improvement on the previous 6 months.
2. Adjusted operating loss of GBP0.8m, an increase of 102% on H1
FY22; however, this is an improvement of 47% on the previous 6
months.
Operational Highlights:
Athlos:
Over the past 12 months Gfinity has made a significant
investment to productise its competitive esports technology
platform under the Athlos brand, allowing this technology to be
deployed at scale, directly into publishers' games. This technology
allows publishers to easily deploy competitive functionality into
their games. Gamers who participate in competitive play are proven
to spend significantly more time and money in-game than casual
gamers, enabling publishers to drive significant increases in
revenue per user.
Athlos, has delivered a highly successful beta programme with
one of the world's largest mobile game publishers and was
successfully integrated into 2 further betas in FY23. It has now
been integrated into 8 games. In January 2023, Athlos exited its
beta phase with the announcement of a deal with another global top
ten mobile game developer.
The board believes that Gfinity has first mover advantage in a
market worth over GBP800m. The Athlos platform delivers an
extremely attractive value proposition to video game developers and
publishers. The platform has proven, during its beta programme, to
deliver deep player engagement, the key to driving increases in a
game's live service revenue. As the only SAAS tournament platform
that is integrated directly into a video game, the player
experience is seamless. All other competitors require players to
engage outside the game creating a very poor player experience.
Athlos can be deployed technically within days and operationally
within weeks setting itself apart from competitors. As a result,
there is little reason for a developer to develop their own
competitive technology as it would require scarce development
resources to be deployed, at a significant cost, over many years.
With the industry transition over the last few years to free to
play, live service business models built on in-game monetization,
the Athlos platform is a critical service to dramatically improve
player engagement and publisher revenue.
To accelerate growth and to solidify Athlos' first-mover
advantage, Gfinity is seeking outside investment. The Company is in
discussions with several parties, with a view of taking a direct
investment in the Athlos platform and thereby reducing the cash
cost to Gfinity. The Directors currently expect the pre-money
valuation that will be ascribed to Athlos upon external investment
to be at a significant premium to Gfinity's investment cost.
Gfinity expects to retain a significant stake in the platform, but
the venture would benefit from the additional capital to complete
further product enhancements and scale the marketing, sales and
customer support functions to the substantial business
opportunity.
Gfinity Digital Media ("GDM")
The Gfinity Digital Media business continues to represent a
valuable asset for the Company, with an average of 13.1m monthly
active users (MAUs) visiting Gfinity's owned and operated platforms
in H1.
A Google algorithm update impacted our SEO traffic in September
of 2022, along with many of the largest publishing companies;
however, the team has made significant progress to recover and
improve GDM's rankings across sites, with latest audience levels
across our network (in January) returning to 13m monthly unique
visitors.
External economic factors have impacted advertising rates across
the whole sector over the past 6 months, but GDM still delivered
revenue of GBP1.5m in H1 of FY23, a decrease of 11% on H1 of FY22,
but an increase of 20% on the previous 6 months
.
Esports Solutions
Esports Solutions delivered revenue of GBP2.5m in H1 of FY23,
representing an increase of 71% on H1 of FY22; and an increase of
323% on the previous 6 months. Gfinity has enjoyed success in
supporting clients from the traditional sports sector in the
development of their esports and gaming strategies and business
plans, then supporting the roll-out of these plans - leveraging
Gfinity's capability to build digital communities and deploy
market-leading esports technology.
The Directors are conscious, however, of the inconsistent nature
of service delivery work, and also the high cost to the Company of
delivering a true end-to-end esports solution; and the resources
required to support clients in their activations around the globe.
To that end, Gfinity has partnered with a US esports business to
jointly deliver solutions on a profit-share basis and no fixed
cost. This deal gives Gfinity access to a state-of-the-art US based
esports arena as the new home for any production and live events.
As a result, effective immediately, Gfinity has decided to close
the Gfinity Arena in Fulham, further reducing the Company's fixed
cost base.
Corporate restructure and proposed board changes:
In April 2020 a new 'what we own' strategy for Gfinity was
outlined. As part of this we set out to:
1. Manage the economics of the business: right-size the
business; reduce our losses; and create a pathway to profitability
by end 2023
2. Rebalance the Company's revenue sources, with less dependence
on esports services/operations, and delivering improved financial
predictability.
This has been achieved by creating three stand-alone revenue
generating pillars within the business:
a. Our owned community of hard-to-reach gamers, through GDM
b. Our owned, licensable Technology IP (re-branded Athlos in August 2022)
c. Our legacy Esports solutions (previously esports operations)
which has pivoted, to focus on fewer, more financially rewarding
motorsport and football assignments, and consulting services.
This strategy has delivered significant progress: 3 consecutive
years of significantly reduced Adjusted Operating Loss.
In line with this strategy, experienced experts in their
respective sectors have been brought in to lead each of the
business units.
Athlos Game Technologies is led by Thomas Preising, a former GM
& Country/Regional Director of India and the Middle East. Tom
works with Gfinity's Head of Product, Mike Stevens alongside
industry veteran Todd Sitrin (Strategic Advisor), the former Head
of Competitive Gaming for EA Len Rinaldi, former GM of Apple for
Western Europe provides strategic input to this group from a board
perspective.
In September 2022, Gfinity announced the appointment of an
experienced leader in the digital media sector - Rebekah
Billingsley - as MD of the GDM business, Rebekah overseas a strong
leadership group and is supported by non-executive director Hugo
Drayton, who also sits on the board of Future plc.
Gfinity's Esports Solutions team is overseen by Chief Operating
Officer Jonathan Hall, supported by Head of Esports Michael
Valentine.
The heads of each of these business units report directly to the
board. In light of this change, the following changes will be made
to the board of directors with immediate effect:
1. Neville Upton, current non-Executive Chairman, will take on the role of Executive Chairman.
2. John Clarke, current Chief Executive Officer, will step down
from his role and will leave the Company.
3. Jonathan Hall, Chief Financial and Operating Officer, will
take Executive responsibility for the Esports Solutions
business.
Financing discussions
As detailed in the Group's final results' announcement on 23
December 2022, the Board has agreed the Group will require
additional external funding, in order to continue to deliver its
strategy. Today, the Group has cash of GBP0.4m. Given the continued
investment in Athlos, the directors believe the Company will
require additional working capital in March 2023.
Therefore, the Directors announce their intentions to raise a
minimum sum of GBP1.5m, via an equity placing and subscription.
Based on the current business plan, this sum will allow the
business the headroom to complete the proposed corporate
restructuring, secure the planned external investment into Athlos
over the next few months and take the business through to
break-even point. The Directors have received an opinion letter
confirming that it is expected that any eligible investments would
qualify for EIS/ VCT relief.
The Directors have engaged with existing and potential new
investors over the past week. Shareholders should be aware that
funding discussions remain ongoing and while there is no certainty
on the outcome of these discussions or the terms, the Directors
expect to close the terms of the equity funding round in February
2023. A further update will be made as appropriate.
Investors who are interested in participating in the equity
funding round should contact IR@gfinity.net.
Enquiries :
Gfinity plc www.gfinityplc.com
Neville Upton, Executive Chairman ir@gfinity.net
Canaccord Genuity Limited (Nominated Adviser Tel: +44 (0)207 523
and Broker) 8150
Bobbie Hilliam / Patrick Dolaghan
About Gfinity
Gfinity is a leading media and technology company in the
fast-growing esports and gaming sector. Founded in late 2012,
Gfinity established itself as esports and community engagement
experts. More recently, the company's business model has evolved to
reflect the rapidly developing gaming market, sharpening its
strategic focus, based on 3 distinct areas:
Gfinity Digital Media is made up of 11 sites that reach up to 15
million monthly unique active users and delivers 75 million
impressions per month across its social network of over 7,000,000
followers.
The Gfinity Engagement Platform (Athlos) is a fully
configurable, white-label, bespoke solution, designed to maximise
community engagement through competitive play, and is already
trusted by some of the world's biggest gaming and esports
organisations.
Our JVs and Partnerships - Esports Solutions - allow the Company
to benefit from co-owned ideas, working with partners who value and
benefit from Gfinity's expertise, to create products such as the
Global Racing Series with Abu Dhabi Motorsport Management, and
esports activities for Manchester United FC, and Formula 1.
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END
TSTTLMBTMTIMBRJ
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February 09, 2023 07:15 ET (12:15 GMT)
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