Allied Gaming & Entertainment Inc. (NASDAQ:AGAE) Q4 2023 Earnings Call Transcript

Allied Gaming & Entertainment Inc. (NASDAQ:AGAE) Q4 2023 Earnings Call Transcript March 27, 2024

Allied Gaming & Entertainment Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings and welcome to the Allied Gaming & Entertainment, Incorporated Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] And as a reminder, this conference is being recorded. It is now my pleasure to introduce to you Tyler Drew with Investor Relations. Thank you, Tyler. You may begin.

Tyler Drew: Thank you, operator. Good afternoon, and welcome to the Allied Gaming & Entertainment 2023 fourth quarter and full year earnings conference call. Speaking on the call today are Allied Gaming & Entertainment’s Chief Executive Officer Yinghua Chen; and Chief Financial Officer, Roy Anderson. Before I turn the call over to management, please note that our prepared remarks may contain forward-looking statements. Words such as may, will, expect, intend, plan, believe, seek, could, estimate, judgment, targeting, should, anticipate, goal and variations of these words and similar expressions are intended to be identified as forward-looking statements. Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors discussed in the company’s public filings, including the risk factors discussed in documents filed with the Securities and Exchange Commission.

Although the company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, certain of the financial information presented in this call represents non-GAAP financial measures. The company’s earnings release, which was issued this afternoon is available on the company’s website, presents definitions of such non-GAAP financial measures, reconciliations to the appropriate GAAP measures and an explanation of why the company believes such non-GAAP financial measures are useful to investors.

And with that, it is now my pleasure to turn the call over to Allied Gaming & Entertainment CEO, Yinghua Chen. Yinghua?

Yinghua Chen: Thank you, Tyler, and thank you all for joining us this afternoon. We’ve made substantial progress during 2023 and have entered 2024 in a position of strength. Allied Esports International, Allied Mobile Entertainment, and Allied Experiential Entertainment are all poised for growth as we execute on our strategic objectives this year. Let’s begin with a review of our financial performance for the year. In 2023, total revenues of $7.7 million were up 21% from 2022. While our net loss attributable to common stockholders decreased by 68%. The improvement in net loss was from our continued commitment reducing our expenses. General and administrative expenses improved by 30% and we’re well-positioned for 2024. Turning to Allied Esports International, or AEI, our HyperX Arena was in high demand during the fourth quarter, and hosted a variety of events with 64 events, comprising 30 proprietary events and 34 third-party events.

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Q&A Session

Notable events at HyperX Arena included Omen Showcase Party, which featured over 10 different tournaments as we unveil the exciting new lines of Omen and HyperX equipment that visitors have the opportunity to experience while visiting HyperX arena. World Esports Day celebration in conjunction with TwitchCon Afterparty; EA Sports F1 2023 Las Vegas Showrun; a thrilling virtual race that features stars from both sports and entertainment to celebrate the inaugural Las Vegas Grand Prix, an act as the official kickoff to the race. All MLB team award show during which Major League Baseball announced its All MLB first and second teams and was joined by current MLB players as well as past legends of the game. The event included a celebratory player entrance and pre-show reception and was broadcast live on MLB Network.

We were also honored to have HyperX Arena featured in Mark Wahlberg’s hit new movie, The Family Plan, which was released in December. The well received movie has highlighted the Arena itself and all the high tech gaming equipment in it, which opened more potential for similar production fully utilizing the Arena assets. Movie viewers are able to get a sense of the fun life action that taste please for both participants and viewers during competitions at the Arena. Finally, post quarter end HyperX Arena held an event hosted by HP gaming brand, Omen and HyperX during CES. The event included product demos, industry panels and a thrilling performance by DJ Steve Aoki. An exciting partnership was also announced as Omen and HyperX will become Riot Games official technology partners and will provide the expertise on Global Esports events across League of Legends, the Valorant Champions Tour and Teamfight Tactics in 2024.

We always appreciate when companies choose HyperX Arena, as it is a testament to our world class facility and team which can be utilized for many reasons by the work fun or both. Turning to our proprietary content following a successful first year of a WANNABE, which explores the journeys of professional gamers and professional athletes who have appeared on YES Network is in 2: Part One was just recently released on the Yes app. We remain engaged with other potential partners to utilize our assets and expertise to create additional new and engaging content series for our viewers and will update you as details are finalized. We have now integrated Beijing Lianzhong Zhihe Technology or Z-Tech into Allied Mobile Entertainment, or AME following the closing of our strategic investment on October 31, 2023.

Z-Tech, a prominent mobile games developer and operator with events [indiscernible] game advertising strategies has progressed our vision for AME. We expect the investment to improve our overall financial performance significantly and contribute to improving our distribution capabilities this year for our own catalogue of mobile games. During 2023, Z-Tech demonstrated strong financial results with revenue of $17 million and positive net income. This year is off to a strong start and we expect our financials will see a benefit at both the top and bottom lines in 2024, now that Z-Tech’s financials are consolidated into ours. Allied Experiential Entertainment, or AEE has made remarkable progress to close out the year, which has become more evident following recent announcements.

Begin in November, we formed Skyline Music Entertainment Limited, a joint venture based in Macau that will aim to capitalize on the burgeoning and large untapped entertainment industry in Asia. That line has already finalized its first upcoming event. The opening leg of the first ever China tour of the highly acclaimed and multiple journal award winning band Walk off the Earth on April 4, 2024. Locals are showing great enthusiasm for the event during which Skyline will oversee talent management, show promotion, sponsorship marketing, ticket sales and onsite event management. Skyline also currently has a pipeline of additional events that we expect to finalize in the near future. In December, Elite Fun Entertainment, a company with expertise in orchestrating live events across Asia, notably within China’s Greater Bay announced a significant investment into AGAE, validating their belief in our vision and the clear opportunity in the Asia market.

Partnering with Elite Fun provides us with additional local expertise, which is essential in successfully planning and operating events in the region. In addition, their partnerships with companies such as Tencent and Douyin, which is Bytedance will be an advantage as we look to further expand our reach. Most recently, earlier this month, we announced a new partnership with World Poker Tour and Wynn Macau to bring World Poker Tour to Macau for the first time in its two decade long history. World Poker Tour in Macau, which runs from June 18 to 24th will attract Poker Stars from all over the world, featuring both championship and high roller events, with buy ins of HK$40,000 and HK$200,000, respectively. We’ve continued to maintain a strong relationship with the team at World Poker Tour, since we sold the company in 2021.

And along with Wynn Macau, we’re thrilled to be working with them on this inaugural event as well as future ones. Along with WPT and Wynn, Elite Fun was integral in securing local approvals, and assisting in logistics for WPT Macau, underscoring the significance of our partnership. Hosting and operating live events, especially internationally pose formidable challenges, yet leveraging our established relationships and expertise, we streamline the process of our partners, greatly enhancing the prospect of successful and memorable events across continents. Before turning it over to Roy, I like to provide an update on our stock repurchase plan. We continue to believe our stock is undervalued and have now repurchased approximately 2.3 million shares of AGAE between the announcement of the plan in November 2022 and end of 2023.

I will now turn the call over to our CFO, Roy Anderson, to provide updates on our Q4 financials.