GILD Guild Esports Plc

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014, as retained as part of the law of England and Wales. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Press Release

31 January 2024

Guild Esports PLC

("Guild Esports", "Guild", or "the Company")

Annual Results

Guild Esports PLC (LSE: GILD; OTCQB: GULDF), a global gaming-focused media business, is pleased to announce its audited results for the year ended 30 September 2023.

Operating and financial summary:

Post-period highlights:

Outlook:

Commenting on the results, Guild CEO Jasmine Skee said: "Guild continued its positive momentum into 2023, with our results showing rising revenues, falling costs and strong audience growth. With Guild Studios, Guild College and our Academy, we've diversified our revenue streams while continuing to attract global brands as sponsors. With our international expansion beginning and a strong sponsorship pipeline, we're looking to 2024 with confidence."

The annual report and accounts will be available for download from the Company's website (www.guildesports.com) later today.

For further information please contact:

About Guild Esports:

Guild Esports PLC is a global gaming-focused media business that fields professional players in gaming competitions under the Guild banner. Our Community focused initiatives aim to attract and nurture young gamers and develop the best esports talent, and our goal is to enable the significant interest in the eSports & Gaming market whilst building a distinctive lifestyle brand authentic to the gaming community worldwide. Guild is led by an experienced management team of entertainment sector and esports veterans and co-owned by David Beckham. The Company is headquartered in the UK and its shares are listed on the Main Market of the London Stock Exchange (ticker: GILD) and on the OTCQB Venture Market in the United States (ticker: GULDF). Please visit www.guildesports.com for more information.

Notes:

This document contains forward-looking statements which are subject to known and unknown risks and uncertainties because they relate to future events, many of which are beyond the Company's control. These forward-looking statements include, without limitation, statements in relation to the Company's financial outlook and future performance. No assurance can be given that future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Company.

You are cautioned not to rely on these forward-looking statements, which speak only as of the date of this announcement. The Company undertakes no obligation to update or revise any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances. Nothing in this document is or should be relied upon as a warranty, promise or representation, express or implied, as to the future performance of the Company or its businesses.

Chairman's Statement

I am delighted to report that Guild Esports welcomed Jasmine Skee as Chief Executive Officer in January 2023. The team made excellent progress in the year to 30 September 2023, with growing revenues, expanded esports offerings, audience growth and an increasingly international footprint. This was accomplished while dramatically cutting costs and refurbishing the state-of-the-art Sky Guild Gaming Centre, Guild's London headquarters, which was completed with investment from Sky Broadband, in addition to its existing sponsorship commitments.

Total revenues rose by 24% to £5.53m (2022: £4.53m) and losses almost halved to £4.5m (2022: £8.75m), reflecting new revenue streams and a re-evaluation of our cost-base to improve margins, allowing us to deliver the same high-quality services for our partners at a lower cost.

Our 2022 revenues were created primarily from two elements: sponsorship and prize money. Of the prize money, the majority was kept by our professional players, with Guild receiving a small proportion. Our sources of revenue for 2023, by contrast, were more diverse with the launch of Guild Studios focused on activation and events. Sponsorship revenues grew by more than 20% and remain a core offering, but we have reduced the costs of servicing contracts and leveraged our sponsorship and inventory rights more effectively, allowing us to improve gross profit margins. Prize money remained consistent year on year whilst reducing in share of revenues by nine percentage points. Importantly, we significantly reduced the fixed costs associated with our esports teams through increasingly focusing on performance related payments.

We kicked off our financial year by launching Guild College, providing a career pathway for young people in the esports industry. Guild Studios was launched in early 2023 providing bespoke, campaign-led solutions for brands and media owners looking to connect with esports, gaming, Gen-Z and Gen-Alpha audiences, providing a new revenue opportunity.

Alongside new revenue streams, Guild had a successful year for sponsorships, partnering with world-class brands across entertainment, sports and technology. Guild signed with four brands: Sky Broadband, Hummel, Fanatec and Secretlab. In the post-period, Guild has signed further commercial partnerships with Subway, naming them Official Quick-Service Restaurant Partner for the UK and esports trading platform eNDX.

With Guild part way through a multi-year partnership with Sky, and after having successfully signed a number of high-profile partnerships in 2023, Guild's existing sponsorship pipeline as at the year end, which is the portion of signed contracts yet to be recognised as revenues over the lifetime of the deals, amounted to £5m, of which £0.2m was price conditional on performance obligations.

Beyond Guild's commercial partnership agreements with several leading international sponsors, the company has also signed business partnerships with innovative technology brands to explore long-term, technology driven revenue opportunities. Our R&D partnership with Gerford AI has seen us complete our initial research and development phase and we are exploring development of a digital product surrounding performance in esports and gaming.

The loss before tax fell significantly to £4.5m from £8.75m in 2022, illustrating the success of our re-organisation programme that supported developing our existing and new revenue streams whilst greatly reducing the overheads and related cash requirements of our business. Administrative expenses fell by £3.51m in 2023 to £7.4m, down from £10.91m in 2022.

Our staff numbers have remained broadly unchanged from 2022, despite costs falling significantly, which now stand at 32 compared with 36 last year. We expect this number to grow steadily in 2024, with the potential for international expansion in the growth market of MENA.

In the post-period we were delighted to welcome Paul Kingsley as our new CFO and Company Secretary and Nathan Pillai as Special Advisor to the Board. Nathan has more than two decades' experience as an operator, builder and investor of blue-chip sport and entertainment properties including Manchester United, FC Barcelona Chelsea FC, Williams Racing, World Rally Championship and SailGP. He also has significant exposure to capital markets and high growth territories.

Net cash as at 30 September 2023 amounted to £0.46m compared with £2.73m at the same time in the previous year. As at 29 January 2024 net cash had increased to £0.8m.

Alongside a strong financial performance, our esports teams have continued to perform strongly at the highest levels of professional esports. It has been wonderful to watch them compete, and they have brought pride to the entire company. Next year should be even more exciting as a Guild fan, as Guild has entered Counter-Strike, Street Fighter and sim racing. Our growing competitive presence will increase our footprint in the overall esports ecosystem and create dynamic spectating opportunities for our worldwide online audiences.

Looking ahead, our effective cost-cutting programme and our growing revenues give great cause to be optimistic, with MENA a key target for international expansion. We are exploring not only having our teams compete in the region, but how we can utilise Guild's esports pedigree to generate value for shareholders and our wider stakeholders. Guild College is building direct engagement with our young community and the Guild Academy represents a significant opportunity to provide a clear path-to-pro for young people in the region. 

Our new business pipeline is robust and growing, and we are in discussion with a number of new partners and sponsors across a variety of sectors and geographies, with some agreements at advanced stages of discussions.

Guild is well-placed for the next phase of its development and is on track to continue its positive momentum. On behalf of the Board, I would like to thank all of our staff and partners for their excellent work, and our investors for their continued support, as we look to 2024 with confidence.

Mr D Lew

Non-Executive Chairman

Strategy and operational review

While the esports sector is forecast to grow to $1.87 billion by 2028 (source: Statista, 2023), many well-established businesses in the sector have faced pressures. Under its new CEO Jasmine Skee, who started on 1 January 2023, Guild enacted a new strategy to take advantage of the sector's growth more effectively.

Gaming is an immensely popular form of entertainment, and there are expected to be more than 3.8 billion gamers worldwide by 2030 (source: Midia Research, 2023). In 2023 Guild transitioned away from a pure-play esports brand towards a wider gaming focus, which has allowed the Company to better take advantage of the consistent popularity of video games. By continuing to focus on content creation, Guild can continue to grow its audience and appeal to new demographics and is well-placed to take advantage of sector growth.

Despite the strategic refocus towards a more diversified business, our esports strategy remains to establish Guild as one of Europe's top three esports teams organisations and brands, driven by strong esports performances, innovative content and global fans. Good progress was made towards these goals, as Guild's audience grew significantly, Guild's professional players competed across high-level tournaments and revenues continued to rise.

The Company continues to review its contracted revenue, pipeline, cash balances and committed expenditure. Based on the directors' assessment of the Company's cash needs and the availability of financing, the directors consider the Company to be a going concern and anticipate a fundraising may be required during the year ahead. A further update will be provided in due course.

New initiatives and business pillars

In November 2022, the Company launched Guild College in a four-year partnership with post-16 education provider SCL Education, to provide BTEC Level 2 and Level 3 qualifications in esports. Since Guild College was announced in November 2022, Guild College has filled 21 spaces on the course versus a target capacity of 125, due to a limit on the number of students Guild was allowed to take under the regulations from Pearson.

The Company is exploring international expansion, with a particular focus on the MENA region. The MENA region is a hotspot for gaming, forecasted to have more than 88 million gamers by 2028 (source: Statista, 2023). The Company is utilising its community focused initiatives, including Guild College and the Guild Academy, to establish a clear path-to-pro for young people in the region, as well as establish new ways to engage with the growing gaming audience.

This was followed by the launch of Guild Studios, the Company's creative and production division. Guild Studios allows the Company to monetise its in-house experience in esports to support brand owners on individual campaigns, allowing these brands to authentically engage with their target audiences. This has proven particularly effective in attracting brands not typically associated with esports, as these brands look to diversify their customer bases and appeal to younger audiences. Guild Studios not only widens the Company's offering to brands, but provides a lower barrier to entry, encouraging brands not typically associated with esports to collaborate with Guild to reach new audiences. 

Since its creation, Guild Studios has delivered campaigns and activations for high profile brands including Samsung UK, Coca-Cola, Sky Broadband, Subway and blood cancer charity Anthony Nolan. Guild Studios has organised activations and events including assisting in the launch of the new Samsung Galaxy S23, launching the first ever mixed-gender VALORANT tournament and launching an all-female Rocket League tournament.

In the post-period Guild Studios was named the Official Activation Partner of Sky Broadband for their 2024 Gaming Plan. Sky Broadband granted Guild Studios an exclusive mandate to deliver a suite of activation services in the first half of 2024.

Sponsorships and partnerships

The Company signed or renewed six partners in 2023, taking the total complement of its sponsors and partners to eight, including Sky Broadband, hummel, Subway, Secretlab, Fanatec, Pixels AI and Sky Glass.

On 25 April 2023, the Company won a new three-year sponsorship and merchandising contract with hummel, a well-known sports and lifestyle brand. Leading sportswear brand hummel has been appointed as Guild's first ever Technical Kit Partner, generating sponsorship revenues over a three-year term for Guild, in addition to a double-digit percentage of merchandising sales. The partnership will develop a new esports professional performance line, as well as consumer-focused lifestyle ranges and a dedicated kidswear line, with products potentially to be made available in online stores globally and physical stores in the UK. The Company's new hummel-created professional shirt went on sale worldwide in December 2023 with further product ranges to follow in 2024.

In April it was also announced that Guild and Bitstamp had mutually decided to end their sponsorship following two years of working together. Bitstamp opted not to take the third year of the partnership which was optional. This did not impact Guild's revenue expectations in the current financial year and all payments for the first two years have been received in full. Following the end of the Company's sponsorship with Bitstamp, Guild adapted its contracting process to have more innovative and collaborative relationships with our sponsors. This has reduced the costs of servicing contracts and allowed Guild to leverage its inventory and sponsorship rights more effectively moving forward, which contributed to the notable fall in our outgoing expenses.

In June, the Company signed a technical partnership with Fanatec, a leading provider of sim racing equipment and hardware designed for gaming and motorsport. Fanatec provided Guild with six state-of-the-art sim racing rigs, along with related hardware and regular technology upgrades. 

The rigs form the centrepiece of the new Guild Simulator Facility, which opened at the Sky Guild Gaming Centre in November 2023. As well as serving as a training facility for Guild's professional esports players, the cutting-edge simulators provide an additional revenue stream to the Company via experiential sim racing packages available for corporates, the wider public and the esports community. In the post-period, Guild launched a memberships scheme for the sim facility, where budding esports professionals receive two monthly sessions at the Sky Guild Gaming Centre as well as telemetric data showing users individualised areas for improvement.

Other new agreements were signed with Secretlab, naming it the Official Gaming Chair Partner of the Sky Guild Gaming Centre, and Sky Glass became Guild's Official Television Partner, providing an increase in revenue compared to the previous deal with Samsung TV.

Our relationships with our key partners have continued to deepen since the deals were announced, as we collaborate with them on creating unique content and experiences to reach our fans and followers, particularly Generation Z ("Gen Z").

The Company is exploring the use of artificial intelligence technologies to appeal to greater audiences, provide more detailed performance feedback to professional players and discover new professional players. Guild partnered with Artificial Intelligence developer Gerford AI in March 2023, and since then completed a comprehensive R&D project that will inform future products and services.

The Company's pipeline of new business from other potential sponsors is growing, benefiting from Guild's position as a leading esports brand with access to a hard-to-reach, young and growing audience.

Update on Strategic Investor

Further to the Company's announcement on 30 October, the strategic investor in Guild was 00Nation AS ("00Nation"). 00Nation went live in the Nordics in late 2021 and has combined media and wider youth culture with esports. Following its success in the wider space, 00Nation established a base in the UK in 2023, and will continue to focus on youth culture while partnering with Guild on professional esports.

00Nation has to date invested £500,000 in Guild comprising the two tranches announced on 30 October 2023, which have been delivered in full, making 00Nation a 13.5% shareholder in Guild. Guild and 00Nation remain in active negotiations concerning the deeper strategic partnership and its accompanying third tranche of investment, which is dependent on the conclusion of negotiations.

Esports teams

During the year Guild's teams have competed at the upper echelons of esports and have maintained a consistently high level of performance. Guild Fortnite professional player Anas won the 'MrBeast's Extreme Survival Challenge' tournament in December 2022 (with official confirmation received in January 2023), securing the entire prize pool of US$1m, and in the post-period Guild player Chico won $200,000 in a global Fortnite tournament. Guild received a percentage of these winnings in line with contractual agreements with its pro-players.

In 2023 Guild expanded its esports presence into new games, entering Counter-Strike, Street Fighter and sim racing for the first time. Guild's all-female Counter-Strike team, launched in March 2023, is a particular point of pride for the Company, which has a long-term strategic focus on improving opportunities for women in esports and gaming alongside its Official Premier Partner, Sky UK, which is equally committed to promoting viable professional opportunities for women in esports. Guild furthered its Counter-Strike presence with the signing of a men's team in August 2023.

Counter-Strike is among the world's most popular esports, with an audience that is continuing to grow. The Paris Major in March 2023, among Counter-Strike's most competitive tournaments, had an average viewership of 507,688 across its 116 hours of airtime, peaking at 1,528,724 concurrent viewers (source: Esports Charts, 2023).

Guild additionally entered Street Fighter, a long-running fighting game with a growing esports scene. In June 2023, the CR Cup Street Fighter tournament had more than 313,000 concurrent viewers, making it the most popular video game on streaming site Twitch at the time (source: Dexerto, 2023).

Following the Company's partnership with Fanatec, the Company successfully completed a £0.62m fundraise to facilitate investment into the Guild Racing team roster, allowing the Company to field drivers in professional sim racing. Guild entered Formula 4 Esports, a sim racing category fully sanctioned by Motorsport UK, the governing body for motorsport in the United Kingdom, in July 2023. Sim racing has attracted interest from major players in traditional motorsport including Aston Martin Aramco Cognizant, Red Bull Racing and Williams Racing.

Guild now competes across seven esports, which are:

Guild released its VALORANT teams on 30 November 2023 and currently does not have an active roster. VALORANT remains an important part of Guild's long-term esports strategy and the Company has commenced a search for the teams' replacement. As at 17 January 2024, the Company's professional player roster was 22 compared with 17 in January 2023.

Guild Academy

Guild's Academy, since its transition to an in-person only experience in early 2023, has moved from strength to strength, providing world-class esports facilities and coaching to Guild's existing and potential esports players.

Guild has adapted its esports strategy to focus on Academy players and building up owned talent, in contrast to the previous approach of purchasing players already competing at a high level. This has proven effective, as Guild has continued to perform at a high level but has reduced expenditure and opened the possibility of improving players at the Academy and then selling them on for profit. The Academy is beginning to achieve its primary purpose of developing future professional players and attracting new fans.

Guild has received interest in its Academy from overseas jurisdictions and is actively exploring how the Academy system can be rolled out internationally. Guild is initially focusing on MENA but may expand to further jurisdictions in 2024.

Strengthened leadership team

Jasmine Skee started as CEO on 1 January 2023, and throughout 2023 Ms Skee has taken steps to strengthen Guild's executive team. She recruited Luke Jones as Vice President of Commercial, Esports and Gaming, Nick Westwood as Senior Vice President of Creative and Strategy, and Matthew "Charlie" Charles as Director of Operations.

Stephen Duval joined as Special Advisor to the Board in July 2023, bringing 25 years of experience in the sports, media and entertainment sectors in Europe and the US, where he has deployed and advised on deals with an aggregate value in excess of $5 billion. In the post-period, Nathan Pillai joined as an additional Special Advisor to the Board, bringing more than two decades' experience as an operator, builder and investor of blue-chip sport and entertainment properties including Manchester United, FC Barcelona and Chelsea FC.

Guild's management team demonstrated their commitment to Guild's long-term strategy by participating in a fundraise in June 2023. Guild's directors subscribed for a total of £95,000 of new ordinary shares, with subscriptions made by CEO Jasmine Skee, Non-Executive Chairman Derek Lew, and Non-Executive Directors Brian Stockbridge and Jocelin Caldwell.

In addition to this, members of the Company's senior leadership team comprising Director of Operations Matthew "Charlie" Charles, Vice President of Commercial, Esports and Gaming Luke Jones and Senior Vice President of Creative and Strategy Nick Westwood made a combined contribution of £24,000. In the post-period, Guild's management made an additional contribution of £30,000, with contributions from Jasmine Skee, CEO; Nick Westwood, SVP of Creative and Strategy; Luke Jones, VP of Commercial, Esports and Gaming; Matthew Charles, Director of Operations; and Kristina Frost, Director of Client Services.

Audience

Guild's owned audience stands at 2.8m followers. This is an aggregate of Guild's Facebook, Instagram, TikTok, Twitch, Twitter and YouTube channels, as well as the Guild Eagles, Guild's Counter-Strike team, and Guild owned accounts. The owned accounts include 'Fortnite24_365' a Spanish-language TikTok channel with 1.4m followers, of which Guild produces the content and retains full editorial control.

Guild's significant audience growth on TikTok specifically is in-line with the Company's long-term strategy to appeal specifically to the Gen Z and Gen Alpha demographics. 80% of TikTok users are under the age of 44 and 60% are 16-24 (source: Wallaroo Media, 2024). Guild's new TikTok channel has expanded the Company's international audience and Guild is evaluating how best to generate further revenue from this new audience to maximise value for shareholders.

All content distributed on Guild's social media channels is created in-house by Guild Studios. Guild's number of followers across its owned and operated channels increased by 1.7m in H2 2023 and remains on an upward trajectory.

Alongside audience growth, audience engagement has increased significantly. Guild's owned channels received 145m impressions in the calendar year 2023, compared with 64m in 2022. The average daily users engaging with Guild's channels is 31,000 in 2023, compared with 4,500 in 2022.

Alongside the growth of Guild's owned channels, Guild Studios has allowed the Company to appeal to greater audiences through Studios' campaign-led approach. Guild's 'No Room for Abuse' campaign with Sky Broadband received 69m impressions and its 'Sweat Room' campaign received 1.4m impressions. 

The notable growth in impressions both generally and on a campaign-led basis indicates that Guild's audience is increasingly engaged with its content compared with 2022. As such, Guild's strategy to become a gaming-led media brand is bearing fruit.

Outlook

Guild made a good start to the new financial year and current trading remains in line with management expectations. Guild's new revenue streams started to bear fruit in 2023, which has made the Company more robust and more consistently cash generative. Guild's management is looking to expand Guild's international footprint in 2024, beginning with MENA, as well as expand into more sectors including betting, motorsport and Counter-Strike brands.

Our pipeline of potential new sponsorship deals also remains robust and several significant deals are under active negotiations.

Following a significant rationalisation programme, the Company's annual operating costs have been reduced further year-on-year by approximately £3.5m, thereby significantly reducing the ongoing cash requirements of the business. As a result, the Board looks to the future with confidence.

The financial statements were approved by the Board of Directors on 31 January 2024 and were signed on its behalf by:

Jasmine Skee

Director and Chief Executive Officer

The financial information set out in this announcement does not constitute statutory accounts. This financial information has been extracted from the audited full accounts of the Company for the year ended 30 September 2023. The Company does not declare a dividend for the period.

The full Annual Report of the Company will be available on the Company's website www.guildesports.com.  The Company's Annual General Meeting will be convened in due course.

The Directors of the Company accept responsibility for the contents of this announcement.