Release Date: August 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- HyperX Arena remains in high demand, hosting 65 event days in the quarter, including 40 third-party events.
- Launch of the World Mahjong Tour, modeled after the successful World Poker Tour, expected to drive brand awareness and revenue.
- Z-Tech's new casual mobile game, Balloon Pop Mania, has been well-received and contributed to a 53% increase in Q2 in-game ad revenue over Q1.
- Total revenues for Q2 2024 were $2.6 million, up 11% from the first quarter.
- Strong cash and short-term investments position totaling $95.2 million as of June 30, 2024, up from $78.6 million at the end of 2023.
Negative Points
- Total revenues for Q2 2024 were down 19% compared to the same quarter in 2023.
- Net loss for Q2 2024 was $3.9 million, significantly higher than the $0.7 million loss in Q2 2023.
- Total costs and expenses for Q2 2024 increased to $7.9 million from $4.7 million in the prior year period.
- Approximately $3 million of the increase in expenses was due to litigation and hostile takeover attempts by Knighted Pastures.
- Adjusted EBITDA loss for Q2 2024 was $1.4 million, compared to a loss of $1.1 million in Q2 2023.
Q & A Highlights
Q: Can you provide more details on the World Mahjong Tour and its expected impact on the company?
A: (Yinghua Chen, CEO) The World Mahjong Tour (WMT) is modeled after the successful World Poker Tour. It will debut later this year with regional tournaments culminating in a final at HyperX Arena in spring 2025. WMT will leverage our subsidiaries' expertise, including proprietary mobile games and content production, to drive brand awareness and provide a unique experience. We believe WMT will be a game changer, tapping into the vast market potential of Mahjong.
Q: What were the main drivers behind the 19% year-over-year revenue decline?
A: (Roy Anderson, CFO) The decline was primarily due to a $2 million decrease in revenues from our branded content production arm. However, this was partially offset by a $1.7 million increase in casual mobile gaming revenues, thanks to the integration and performance of Z-Tech.
Q: Can you elaborate on the increase in costs and expenses for the second quarter?
A: (Roy Anderson, CFO) Total costs and expenses rose to $7.9 million from $4.7 million in the prior year. Approximately $3 million of this increase was due to costs related to the counterproductive actions of Knighted Pastures, including litigation and their hostile takeover attempt.
Q: How is Z-Tech performing and what are its future prospects?
A: (Yinghua Chen, CEO) Z-Tech is performing well, with Q2 in-game ad revenue rising 53% over Q1. They released a new casual mobile game, Balloon Pop Mania, which has been well-received. We are optimistic about Z-Tech's robust performance and sustained revenue growth in the second half of 2024.
Q: What is the current financial position of the company?
A: (Roy Anderson, CFO) As of June 30, 2024, our cash and short-term investments totaled $95.2 million, including $5 million of restricted cash. This is up from $78.6 million at the end of 2023. The increase is primarily due to proceeds from low and noninterest-bearing loans from Morgan Stanley Bank Asia Limited.
Q: What are the future revenue catalysts for Allied Gaming & Entertainment?
A: (Yinghua Chen, CEO) We have several revenue catalysts across our three subsidiaries. We are particularly optimistic about the World Mahjong Tour and its potential to gain strong momentum leading up to the inaugural finale in spring 2025. Additionally, our investments in mobile gaming and experiential entertainment are expected to drive future growth.
Q: How is the HyperX Arena contributing to the company's performance?
A: (Yinghua Chen, CEO) The HyperX Arena remains in high demand, hosting a wide variety of events, including world-class poker tournaments and industry awards. This quarter, we had 65 event days, 40 of which were third-party events. The arena's versatility continues to be a significant asset for us.
Q: What are the company's plans for expansion in Asia?
A: (Yinghua Chen, CEO) Allied Experiential Entertainment (AEE) is expanding its opportunities in Asia. We are in close negotiations to partner with a popular annual music festival in Macau. We look forward to sharing more details as negotiations are finalized.
Q: What measures are being taken to address the litigation and hostile takeover attempt by Knighted Pastures?
A: (Roy Anderson, CFO) We are actively addressing the litigation and hostile takeover attempt by Knighted Pastures. These actions have driven up our costs, but we are committed to protecting the company's interests and ensuring long-term stability and growth.
Q: What is the outlook for the third quarter and the rest of 2024?
A: (Yinghua Chen, CEO) We are optimistic about the positive momentum we are experiencing. Our management team and Board have the right skills and expertise to lead the company forward. We look forward to providing more updates when we release our third quarter 2024 results in November.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
