Guild Esports PLC, (LON:GILD, OTCQB: GULDF) a UK-based owner and developer of esports teams, has announced its audited full-year results from 1 October 2020 to 30 September 2021. All figures are in £millions (£m).
Highlights
· Raised £20m before expenses via a flotation on the London Stock Exchange on 2 October 2020 to scale the business from start-up phase to full commercial operations
· Established a strong global fan base with a network audience of more than 14.6 million and an owned audience exceeding 1 million (2020: 25,000)
· Signed sponsorship deals with world-class consumer brands Subway, Samsung and HyperX with a total combined contracted revenue of £3.9m over the lifetime of the deals
· Created five professional esports teams including an all-female roster for Valorant, comprising a total player count of 19
· Won two major trophies in Fortnite and one in Rocket League tournaments
· In May 2021 launched the Guild Academy, the world’s most advanced online portal to nurture budding pro-stars and create a sustainable pool of talent for the Company
· Annual revenues increased to £1.9m (2020: £nil) reflecting significant contribution from sponsorship income in the second half despite termination of a large contract by Guild
· Pre-tax loss of £8.8m (2020: £2.7m), reflecting major investment across the business to drive long-term growth
· Adjusted cash* amounted to £11.2m as at financial year end
Post-Period Highlights
· Signed a £4.5m three-year sponsorship deal with BitStamp in January 2022, the largest contract to date, and 25% more than the contract terminated by Guild in October 2021 which BitStamp replaces
· Launched Apex Legends Team, the Company’s sixth pro-team, to compete in the free-to-play shooter that has a 100 million worldwide audience, bringing the roster count to 22 players
· Won fourth major trophy at a prestigious Fortnite tournament in November
· Shares listed on the USA’s OTC market to broaden investor base in North America
· Signed 10-year lease for Guild Academy and headquarters in London’s Shoreditch, which is expected to become a significant commercial asset
Outlook
· Robust pipeline of potential sponsors with several deals at advanced stages of negotiations
· Confidence in delivering strong growth in sponsorship revenues with total contracted revenues of £8.4m to date and a current annualised run rate at £3.1m for the year ending 30 September 2022
· Expanding roster of top players means Guild is well-positioned to achieve high rankings in tournaments and increase its fan-following further
· Network audience continues to grow rapidly and on track to broadly double again this year
*Calculated as cash at bank, less trade creditors, accruals and other taxation, add trade debtors, accrued revenue and VAT recoverable
Commenting on the results, Guild’s Chief Executive Officer, Kal Hourd, said: “We’ve made good progress amid challenging trading conditions in our first full year of operations as a publicly listed company.
Our network audience and fan base has grown exponentially, making us the fastest growing esports team organisation in Europe. The major investment made across the business to scale up our activities has enabled us to establish a strong foundation for long-term revenue growth and resulted in three global sponsorship deals.
We have entered the new year with strong momentum and recently clinched our fourth and largest sponsorship deal to date. With Guild performing well operationally, I am confident that the hard work and investment made thus far will translate into significant improvements in revenue and value creation and I look forward to the future with great confidence.”
Chairman’s statement
I am pleased to report Guild’s maiden full year results since its flotation on the London Stock Exchange on 2 October 2020. The period under review saw Guild rapidly scale from start-up phase to full commercial operations as part of its growth strategy to become one of the world’s leading esports team organisations in the next few years.
Despite the challenges of building a new business amid a global pandemic, good progress was made across the business to fulfil that vision.
The Company generated revenues of £1.9m (2020: £nil) as it benefitted from first-time contributions from sponsorship deals signed earlier in the year. The loss before tax increased to £8.8m (2020: £2.7m) which reflects a major investment in operational infrastructure, esports teams, the Guild Academy, content creation and the development of Guild merchandising. This investment is fundamental to Guild’s business model and long-term strategy. It enabled the Company to deliver exponential growth in its fan base and total audience network in 2021, making it the fastest growing esports teams organisation in Europe.
Our growing audience of young and hard-to-reach consumers is a powerful magnet for global brands and sponsors as evidenced by the quality of the sponsorship deals signed with Subway, Samsung and Hyper X during the year, followed by BitStamp, a leading cryptocurrency exchange, in January 2022. I am proud that we have gained the trust of such marque brands as our sponsorship partners in a relatively short time.
Guild is still at an early stage in its growth and also well placed to benefit from long term industry fundamentals driving the esports sector worldwide. In terms of market size, the electronic games sector is larger than the Hollywood movie and music industries combined, as well as one of the fastest growing leisure and entertainment activities pursued by mainstream consumers. The recent $69bn cash takeover bid by Microsoft for Activision reflects how leading consumer facing technology giants see the industry’s long-term prospects.
Guild’s own investment in the business in 2021 provides a solid platform for long term growth and build media value necessary to drive sponsorship revenue in the year ahead and beyond. Our new business pipeline remains robust and we are at an advanced stage of negotiations with multiple partners which provides great confidence for Guild’s prospects.
As a young teams organisation, Guild’s fast growing audience of keen and loyal fans is the life blood of the Company. Our expanding roster of pro-players achieved notable success in several major tournaments and their continued success is of great pride for all Guild fans and supporters alike.
We are confident that we have laid the foundation to provide tremendous value to our brand partners and as well as create long-term shareholder value.
Our staff numbers have increased from just a handful to more than 35 full-time staff at present and I commend all our employees, players and partners for their hard work and dedication which has positioned the Company for growth in the years ahead.
Mr D Lew
Non-Executive Chairman
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Operational review
Good progress was made in our first full year, with growth in operations, esports, the launch of the Guild academy, and a growing fanbase which generates the media value needed to attract brand sponsors and generate revenue for the Company.
The esports sector grew by 14.5 per cent in 2021 and is now a $1bn industry. The growth is expected to continue according to Newzoo and is predicted to reach $1.6bn by 2024. Total viewing audience is estimated to increase from more than 400 million to approximately 650 million in the same period.
Sponsorship
Guild secured three sponsorships totalling contracted revenues of £3.9m since its stock market debut with leading high-profile brands in their respective industry sectors.
Hyper X, a leading gaming peripherals brand recently acquired by HP Inc from Kingston Technologies, which has a long association with the esports sector, became Guild’s exclusive peripherals partner in Jan 2021. As part of the two-year agreement, HyperX products will be used by our pro-players, content-creators and academy students as well as to fit out our London headquarters.
Subway, the world’s largest submarine sandwich franchise signed as a main sponsor March 2021, becoming Guild’s Official Quick-Service Restaurant Partner as well as an Official Academy Partner of Guild Esports in more than 50 EMEA markets. The agreement provides Subway marketing exposure on Guild’s team jersey, bespoke branded content, its London headquarters, and player and content creator channels, along with exclusive esports activations.
In June 2021, Guild signed with Samsung, world-leader in transformative technologies, as its Official Display Partner. The agreement provides best-in-class products for our players, content creators, academy students and the London Headquarters and will provide exposure for Samsung across Guild’s digital and social eco-system.
Together these sponsorship deals have laid a strong foundation for growth in sponsorship revenues from this year following their first-time contribution to revenues in the second half of 2021.
The Company’s pipeline of new business from other potential sponsors and advertisers has also strengthened significantly. Discussions are currently at an advanced stage with several such prospects. These potential sponsors are engaged in multiple industries and have shown great interest in partnering with Guild as we emerge as a leading esports brand and expand our audience in a rapidly growing esports sector.
In October 2021, Guild announced the termination of a sponsorship deal with a European Fintech company totalling £3.6m over three years. Despite working with the brand for over a year through their financial difficulties induced by Covid-19, Guild took the decision to cancel the deal due to lack of certainty of their launch date, and delay in contractual payments. Guild’s robust pipeline and growing interest from a range of other fintech prospects gave comfort that a replacement would be secured soon.
Although termination of the contract held back our revenue growth in 2021 we bounced back with a substantially larger £4.5m sponsorship deal with BitStamp in January 2022, which will start making a significant contribution to revenues in the current year. BitStamp is one of the world’s longest established cryptocurrency exchanges, and has also opened up potentially further opportunities in the fintech sector. Taking this win into account, the total contracted revenues at the date of this report is £8.4m.
Rapidly growing audience
Guild is building its endemic audience through the creation of original content, signing of top-tier players and working with influencers and content creators, with David Beckham’s social posts bringing in fans from different segments. Guild’s fanbase and social reach has grown significantly, with Guild’s owned audience making the Company the fastest growing esports organisation in Europe in 2021.
Subscribed fans in 2021 exceeded 1.1 million, video views surpassed 38.5 million, and social impressions of almost 500 million. With the Company’s roster of players and content-creators, Guild has a network audience with direct access to over 14.6 million fans (not including David Beckham’s own followers) via social media posts, an essential and attractive asset for potential sponsors.
