Gfinity gets pandemic boost as world turns to esports

What it does

AIM-quoted Gfinity (LON:GFIN) is a world leader in the fast-growing market for esports.

The company provides full end-to-end esports solutions, including bespoke content, tournament and event solutions for commercial partners via its proprietary online platform and live broadcasting studio, plus it is building its owned Elite Series brand and hosting its proprietary Elite Series tournament format.

Revenues are derived from managed services fees for third-party events, and advertising and sponsorship.

Several big names have hired Gfinity to be its event partner and to look after the logistics of running a successful tournament, including none other than Microsoft.

The tech giant has partnered with Gfinity on numerous occasions, including for its Halo and Forza Racing championships.

Formula 1 has also used the company’s services to run its competition to find the best virtual racer in the world, as has the Premier League, which launched its ePremier League last year and in February 2020 appointed Gfinity to operate a US version of the tournament in partnership with the NBC Sports network.

The company also has a digital media group Gfinity Digital Media, which it launched in July to build on the excellent growth of its web channels and social platforms.

 

How it is doing

In its results for the year ended June 30, 2020, the group reported an adjusted operating loss of £5.5mln, narrowed from an £8.6mln in the prior year, while revenues were at £4.5mln compared to £7.9mln in 2019.

The firm also reported that it had cut its operating cost base by 50% following a major restructuring in March, while it ended the year with a cash balance of £1.6mln plus £2mln of unexercised warrants which it said left it “well capitalised to deliver against the market opportunities in the growing esports market”.

Gfinity highlighted significant growth in its newly launched digital media group, Gfinity Digital Media, which it said is now on target to generate revenues of over £2mln in the 2021 financial year, adding that it has made “excellent progress” in its three core focus areas.

Looking ahead, the firm said market dynamics are “rapidly, and permanently, changing in favour of the company’s offering” and that a strategic review is underway to explore all optional to capitalise on market opportunities.

The firm has also made progress with its partnerships, announcing in late October that it has been appointed by Red Bull as the production for Red Bull Worlds Simplified, a new digital show which breaks down the League of Legends World Championship Final into a format that is accessible to people around the world, including those with no prior knowledge of the game or competition.

Earlier that month, the company also launched a formal sales process to explore a number of options as part of a strategic review to “continue on its current pathway towards profitability” targeted for the first quarter of the 2021 calendar year.

 

What the boss says: John Clarke, chief executive

“We are delighted that our sharpened focus on three core areas is now driving improved financial performance and we have significantly strengthened our market positioning to create an exciting platform for future growth. We have competitive strength and momentum in three core areas, being: what we own, what we co-own and the communities we build for others. We continue to deliver on our promise of providing unique esports solutions for our clients, using our own tech IP and world-class production capability and working with some of the world’s biggest brands.”

“We announced a review of our corporate strategic options on 9 October 2020. This is progressing as planned. It is at a very early stage but we look forward to exploring these options and to updating shareholders in due course.”

 

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Blue Sky

Lockdown aside, analysts expect the industry to keep grabbing interest worlwide. At the moment it’s worth US$150bn, with an annual growth of 12% since 2015.

 

Read: Gfinity – Building on leadership in esport

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