Esports Entertainment Group Inc (GMBL) 2021 Q4 法說會逐字稿

Good day, and welcome to the Esports Entertainment Group fiscal 2021 Q4 earnings conference call. Today's conference is being recorded.

Before we begin, I'm just going to read some brief Safe Harbor language. Statements we make during this call that are not statements of historical fact constitute forward-looking statements that are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from historical results or from our forecast. We assume no responsibility for updating forward-looking statements.

For more information, please refer to the risk and uncertainties and other factors that could cause our actual results to differ materially from our historical results and for our forecast. We assume no responsibility for updating forward-looking statements.

For more information, please refer to the risk and uncertainties and other factors discussed in our SEC filings.

Now at this time, I'd like to turn the conference over to Mr. Grant Johnson, CEO. Please go ahead, sir.

Thank you. Welcome, everyone. Thank you for joining us for our fiscal fourth quarter earnings call. I am very proud of how our team continues to exceed -- execute our results for both the quarter, as well as the full -- and the full year reflect that. In the past year, we've grown from less than 50 employees to over 250. Our revenue base has scaled alongside with that. Our fiscal Q4 revenue increasing 63% quarter over quarter to $8.8 million. We are expecting to show even stronger rate of growth this fiscal quarter of 2022, as we digest our recent acquisitions.

In addition to that strong revenue growth, we continue to make significant strides in our goal to build the world's best esports entertainment online gambling company. As those of you who follow the Company know, we break the business into two divisions: EEG iGaming and EEG Games. I will walk through some of the operational highlights for each division and then pass the line to Dan to go into further details on the numbers.

Starting with our iGaming, our strategy is to build the best-in-class esports betting platform focusing on sports book functionality. On July 14, we completed the acquisition of Bethard, a rapidly growing B2C traditional sports betting operator. In addition to generating over $30 million in revenue, Bethard brings with it both the Swedish and the Spanish license. Well, it's still early days. We have made significant progress in integrating Lucky Dino and Bethard into our existing SportNation by infrastructure. We expect to recognize meaningful revenue synergies as we expand our cross-sell efforts across our brands.

In addition to the acquisitions, we have made significant strides growing our brands organically. In August, we launched the new pay-and-play casino brand in Finland called Fiksukasino. Pay-and-play is a rapidly growing concept in the online gambling industry that allows the player to bypass the onerous registration processes, enabling safe and reliable play without delay. This is a feature that many of our players and affiliates have been asking for and our team was able to deliver. Since the launch, the brand has significantly exceeded our internal expectations.

Turning focus to VIE, our flagship esports betting brand, we continue to make exciting progress here. Much of our current marketing to date has been spent in Latin America, which is the third largest esports market globally, growing more than 17% annually. So far, we have signed up marketing agreements with Infamous Gaming, Peru's second largest esports organization; Movistar Liga Pro gaming league; SG Esports, a Brazilian esports organization.

We are particularly excited with the SG sponsorship as their Dota 2 team will don the VIE logo as a primary jersey sponsor during the international in October, one of the most viewed esports tournaments of the year. This is in addition, of course, to the Harris Blitzer's men's CS: GO team under the Dignitas brand.

Moving to our North American efforts, which we expect to be a big growth area for VIE and for the Company, I'd like to give you an update, which is a question that comes up frequently to our New Jersey license application. We are now in the final stages of what has been a long process. The pandemic was definitely a factor and the length of time it took us to get to this point, as the process of document gathering was at times challenging.

Our software has been submitted to the DG lab, which is currently in the tactical audit process. Based on our successful mock audits of the testing lab, we do not anticipate any issues here. Once the testing has been completed, we are able to apply for our transactional waiver and begin making a market for esports wagering in the state of New Jersey.

In anticipation of our imminent lunch, we opened our New Jersey office in Hoboken in September and have begun scaling up staff in the state. With our New Jersey launch now on the horizon, we have our sights set on additional US jurisdictions. Earlier this summer, two of our executives, our CFO, Dan Marks; and VP of strategy and IR, Jeff Cohen, were invited to testify on behalf of the industry in the Ohio State Senate select committee on gaming. In September, the state government of Ohio announced they were very committed to adding esports to gambling framework as a priority, and this is in large part due to the presentations by these two gentlemen.

Legislation is expected to be written and voted upon this fall, and we are confident that esports may include in the state's sport betting bill. We intend to apply and expect to receive a license in the state in 2022. In addition to Ohio, we are in discussions with several other US states as well as the province of Ontario in Canada.

Turning now to the other divisions, EEG Games. In June, we completed the acquisition of GG Circuit and Helix. This has been a transformative transaction for us, bringing us to -- bringing with us an excellent team and creating a vertically integrated solution for esports Entertainment. Because of the assets we bring to bear, we continue to attract interest from high-profile organizations looking to enter the esports space. Since May, we have signed exclusive agreements with Cleveland Cavaliers, the LA Football Club, the LA Chargers, the New York Rangers, Indianapolis Colts, and the current Super Bowl champions, the Tampa Bay Buccaneers.

Additionally, we entered into a similar relationship with the Indian Gaming Esports Association, IGEA, which is the first-ever tribal esports organization to advance esports adoption amongst tribal nations and casinos. These groups are partnering with us specifically because they have done extensive due diligence and recognize that our combined assets are best in class for these non-endemics looking to enter into the esports and gaming ecosystem. In addition to the 13 teams we have already signed, we are in discussions with another 20 organizations that we expect to sign over the coming months.

I'd like to take a minute and dig in as to how we monetize in all these exciting partnership -- marketing partnerships. When we initially started signing these agreements, our plan was to monetize the relationships by charging players to play in the tournaments that we are running on behalf of the teams. Other revenues will be generated from sponsorship fees for brands wishing to target the highly coveted 18 to 35 gamer demographic.

However, in recent months, we have built a new customer-facing platform that ties together all of our capabilities in the EEG Games division and had several new revenue streams, including more targeted advertising, allowing smaller local brands access, e-commerce, subscriptions, pay-to-play, and of course crypto.

Occasionally -- additionally, sorry, we can also monetize through broadcasting our tournaments on Twitch and ESTV, which we have signed a partnership with in late August. This newly integrated platform will also be the primary delivery method for LANduel, our player-versus-player skill-based betting platform that we will be able to provide further details on this new platform in the coming weeks as to the specific dates for the inaugural launch taking place later this fall in Atlantic City. Alongside this, we will begin running the large pro team tournaments.

As we have communicated to our investors in the past, we plan to augment these digital relationships with physical installations of our Helix gaming centers in the future. So far, we have announced two new centers in North America. The first one will be at the Hall of Fame Villages in Canton, Ohio; and the second in Los Angeles at UCLA in their Student Union Building. We expect UCLA to open prior to the end of this year with Hall of Fame coming online in the first quarter of 2022. Our plan is to open approximately one center a quarter for the next two years. And we are in discussions with several of the organizations, the pro teams referenced above or that I referenced earlier about which potential locations these will be.

Lastly, I'd like to touch on GG Circuit, which is the infrastructure software that underpins our EEG Games division. As a reminder to our investors, GG Circuit is a B2B operating system for land center management. The company currently has over 650 centers and over 15,000 screens in those centers on their network, which is up from 517 centers and 11,500 screens at the beginning of this calendar year.

The development team has continued to improve the product offering for our customers. In May, we announced the rollout of a crypto mining solution that is a free add-on for the ggLeap subscribers. The crypto miner enables center owners to utilize computer power to mine for crypto, mainly Ethereum to date. They opt into the initiative with the click of a button. Since launch, this initiative has substantially outperformed our expectations with over 300 centers across 58 countries, [obtaining] mine over a million Ethereum since launch.

In addition to our crypto money operations, we also allow partners to deposit or withdraw crypto from our wagering platform on VIE.bet. We will be adding additional iGaming operations once the use of crypto is approved by the various gaming commissions.

I'd like to give an update on various financing. I'd like to address some of the misinformation that's been promoted in stock chat groups regarding our financing of the various tools at our disposal. As we disclosed back in the third quarter, we put a shelf in place for $100 million, and I actually in fact, in February, used $30 million of this vehicle to finance the purchase of Lucky Dino, which has $30 million in revenues and approximately $5 million in positive cash flow.

This September, we linked an ATM into the shelf. This did not replace or add to the shelf. It simply gave us an ability to draw down in small amounts of the substantial cost saving. To date, we have not used this vehicle. This has been misrepresented by certain groups with an agenda to negatively affect the share price. We believe as do all five of the analysts who cover us, the share price is well below where it should be based on comparable companies in the market.

As the largest single shareholder, my interests are in direct alignment with all the shareholders. To that end, we have been exploring many alternatives. One such alternative was our partnership with Game Fund. It's a $300 million fund that's dedicated to financing esports and gaming gambling operations. Being a partner here, we receive benefits, having clearly a relationship with large family source of capital is important, as well as receiving strategic information for partnerships with potential M&A activity. We continue to explore and negotiate other forms of capital, such as Metaverse Partners, which we will be able to discuss in more detail shortly.

I will now hand over the discussion to our CFO, Dan Marks, who is going to go through the numbers for you. Thank you. Dan?

Thank you, Grant. And good afternoon, everyone, and thanks again for joining us today. This time last year, our Q4 fiscal 2020 earnings call marked a significant milestone for the Company, as it was the first post on NASDAQ listing. Fast forward 12 months and we have completed six materials acquisitions and two rounds of capital raising in what has been a monumental year for the Company. But it leaves us very well-positioned in our ambition to be the global leader in esports entertainment, betting and digital gaming.

Before I jump into the financials, let me take a brief moment to summarize the key highlights that will frame our 2021 full year results. First, we moved at an unrelenting pace to execute against our core growth strategy to acquire and consolidate three B2C digital gaming businesses: Argyll Entertainment, Lucky Dino and Bethard to operate in eight countries in Europe and beyond.

Furthermore, we have acquired and consolidated both retail and online B2C esports competition businesses through our Esports Gaming League and Helix acquisitions. And via the purchase of GG Circuit, we have acquired and expanded the nation's largest esports competition B2B software business.

In support of our growth strategy, the NASDAQ listing and follow-on offerings allowed us to deploy capital to expand resources, strengthen the corporate enterprise, and to continue to develop our state-of-the-art betting platform, VIE.gg, melding esports with digital gaming.

Finally, we have established affiliate partnerships with 13 pro sports teams in the US, deliver their databases into online and land-based esports competitions. And furthermore, we'll use our acquisition of Genji Analytics, an esports data analytics company, to hone data from EEG's multiple B2B and B2C operations for monetization purposes, and to improve risk management in setting esports betting lines.

To reiterate Grant's messaging, 2021 was a truly foundational year for EEG. And while the investments required to position us for continued expansion, increased our net losses, a significant proportion of those expenses are now behind us. On our path to achieving scale and diversification, there are aspects to our revenues and EBITDA that will make comparatives challenging due to the sheer number of acquisitions and material growth across the year. The Company was effectively pre-revenue during fiscal 2020 and as such, comparative, relative growth rates against last year are difficult. That being said, I will move on to a review of our Q4 quarterly performance, our full-year 2021 performance, and provide some guidance to Q1 fiscal 2022.

Overall, from a financial statement standpoint, fourth quarter 2021 highlights include $8.8 million of net revenue in the quarter, a $3.4 million or 63% increase on net revenues versus the prior quarter. This increase was driven by incorporating a full quarter of revenues from the Lucky Dino acquisition, which completed on March 1, together with one month of revenues from the acquisitions of GG Circuit and Helix, which completes on June 1.

The quarter-on-quarter growth in net revenues, however, was actually slightly dampened by a reduction in gross gaming margin across our iGaming business. Wealth handle on our Argyll sportsbook and casino brands increased in Q4 by 20% to $68 million. Gross gaming margins reduced to [4.4%] from 6.7% in the prior quarter as a result of some material wins within some of our high-net value players.

Within our Lucky Dino casino brand, average monthly handle during the quarter rose one percentage point to $45 million. But gross margins across the quarter reduced to 6.5% down from 6.8% in March. However, average deposits per customer in our casino brands increased by 5% in the quarter to $312 per active player and leaves us well-positioned looking forward.

Despite the headwinds caused by lower gross gaming margins within the iGaming division in the quarter, gross margins across the entire business incorporating total net revenues [less] total cost of revenues increased to 59% from 57% in the previous quarter.

From an operating expense standpoint, we saw quarter-on-quarter increases in sales and marketing of $2.4 million and G&A expenses of $6.2 million. These increases are primarily driven by having the full quarter's worth of Lucky Dino and one month worth of GG Circuit, Helix expenses in Q4 versus just one month Lucky Dino expenses in Q3. But the increase in G&A costs was also driven by some one-off transaction costs totaling $2.1 million, namely those related to the closing of GG Circuit and Helix and costs associated with the Bethard acquisition that closed in early July. Together, with an increase of $1 million in depreciation and amortization over the prior quarter.

On the other expenses line, we have benefited from the improvement in the fair value of our warrant liabilities to the tune of $3.2 million and an income tax benefit through the release of differed tax liabilities of $3.8 billion. On a GAAP basis therefore, net loss for the quarter was $4.8 million compared to a net loss of $12.4 million in the previous quarter. On a non-GAAP basis, adjusted for non-cash charges, tax benefits and one-off transactional costs, adjusted EBITDA was negative $5.5 million for the quarter.

Next, let me briefly review our full-year 2021 results. From being pre-revenue in 2020, we generated $16.8 million of revenues in full year fiscal 2021. This was predominantly driven by 11 months of revenues from Argyll and four months of revenues from Lucky Dino. In terms of total operating expenses, the cost associated with six acquisitions and two funding rounds during the year meant we incurred an elevated level of professional advisory services and other related costs as we executed against our public listing and M&A strategies.

We also invested and we'll continue to invest in operational excellence through the continued expansion of our internal resources, as well as the building out of our betting and tournament platforms. Sequentially imposed an additional $3 million of stock compensation charges and $3.1 million in depreciation and amortization charges, total operating losses for the year were $25.7 million.

Total net loss for the year on the GAAP basis having accounted for changes in the fair value of both warrant liabilities and contingent consideration, offset by the previously mentioned release of deferred tax liabilities, was $26.4 million or minus $1.68 per weighted average diluted share. This compared to a net loss of $10.4 million in 2020 or minus $1.50 per weighted average diluted share. The weighted average diluted share count for the full year 2021 was $15.7 million compared to $6.9 million in 2020. On a non-GAAP basis, our adjusted EBITDA for fiscal 2021 was minus $14 million compared to minus $2.3 million in 2020.

From a balance sheet perspective, as of June 30, we have $19.9 million in cash, driven by the private placement of $35 million of convertible notes in May, which were partly used to fund the GG Circuit and Helix acquisitions. We had approximately $17.5 million in working capital and total shareholders' equity is $74.8 million, up $63.4 million from our position at the end of fiscal 2020.

Our current net cash burn is approximately $1 million per month, post the acquisitions of GG circuit and Helix, together with the monthly interest payments owed under $35 million notes. It remains a critical time to innovate and advance our platforms. And we will continue to invest in our proprietary software development, both with developing our betting platform and our tournament platforms as we look to monetize the opportunities that present themselves with the pro sport team partnerships we have announced.

In summary therefore, in Q4 and throughout fiscal 2021, we have continued to show material quarter-on-quarter growth as both our organic and acquisitive growth strategies have been executed. We will look to build on these foundations and start to realize the cross-sell benefits and efficiencies of bringing together the various acquisitions we have undertaken will present.

Looking forward to fiscal 2022 guidance, we are very excited about the growth and momentum of our iGaming business. The acquisition of Bethard in July brings new material revenue and EBITDA streams together with two new gaming licenses, and increased cross sell opportunities between our brands.

Consolidating our digital gaming businesses will allow us to exploit both revenue and expense synergy. Launching our betting platform in New Jersey in the coming weeks together with exploring license options in other states offers further growth opportunities for the iGaming division. On our EEG Games side, the brand partnerships we have announced, together with the enhancements of our tournament platforms, will allow us access to new customers, both online and in live, in-person events at our Helix centers, which will drive monetization opportunities.

The growth in our GG Circuit B2B software business will continue, augmented by ever-growing crypto currency mining opportunities, which have [gotten] at $1 million in revenues since we started mining late in Q4.

The launch of LANduel later this year our player-versus-player skill-based betting application, is also a usually exciting addition to our product suite. We are therefore still guiding to an annual revenue of over $100 million in fiscal 2022, with a range of $16 million to $16.5 million in revenues for the first quarter, split approximately 90/10 between our iGaming and EEG Games businesses.

We are not providing guidance for 2022 adjusted EBITDA at this time, but we are squarely focused on reaching positive adjusted EBITDA. We are still forecasting we will achieve before the end of calendar 2022. We will continue to advance our critical growth-focused investments namely the development and enhancements of our proprietary betting and tournament platforms. But we'll realize revenue and expense benefits and savings from our in large group as the year progresses. And we look forward to updating the market throughout the year as we execute our plans.

On one final and more technical note, we have experienced a tremendous amount of growth across the past year, both in terms of expansion, acquisition and capital. This required a heavy lift over the last few months, which is why are our call was delayed a couple of weeks to today. Moving forward, we will return to a more normal schedule starting with the mid-November update on Q1.

With that, please, can we now open the lines for Q&A? Operator?

Thank you. (Operator Instructions). Michael Kupinski, Noble Capital Markets.

Thank you and thanks for taking the question. Good afternoon. Can you provide an update on the expectations of revenue contributions that you expect from New Jersey? I know that you said that you think it's going to be up and riding in the next couple of weeks. And I know in the past, you've kind of given us some thoughts in terms of the ramp in New Jersey. I was wondering if you can update us on what your thoughts are there.

Thanks for asking the question. I think we have been very prudent in our estimates with regards to the revenue contribution that New Jersey will give to us. It's a very small part of the $100 million guidance as things stand. But I think we are excited to launch there and see as the only esports-led gaming operation. We do see big opportunities. We are just being prudent with regards to our forecast. So as things stand, it is a very small part of that $100 million. Obviously as time progresses and we get our marketing plans in place, we hope to see either exceeding that forecast but certainly growing as the months and years progress.

And in terms of the revenues in the fiscal fourth quarter, obviously they were in line with my expectations. Were there any surprises in terms of where the revenues came from, particularly kind of looking at Argyll versus Lucky Dino versus Helix and so forth?

No surprises. To be honest, they were broadly in line with what we were hoping for. I think margins were down on the gross gaming side us we had some big winners, but our overall handle was up, which is a good combination to have looking forward as margins stabilize. But we should start seeing the benefit of that -- those that are not stable as margins normalize. Obviously having higher handle means we should see the benefit of that going forward. So note the forecasts were pretty much in line with our expectations.

And in terms of value, just the expenses, G&A expenses were higher. Obviously, you had some transactional expenses in there. So can you just kind of give us some thought though in terms of how G&A expenses are going to look as we go forward into this quarter? And just kind of maybe give us a run rate for those expenses if you can.

Well, I know for a fact we had a $3 million to $4 million of one-off costs within our Q4 expense figures, our G&A expenses. So those will not be being repeated in our run rate going forward. I can provide additional detail separately with regards to what that total looks like, but it will certainly be lower without those one-off additional costs that we saw in Q4.

Yes, and it wasn't surprising to see sales and marketing a little higher. Obviously, you have a number of products and services that you are out there marketing. I was wondering if you can give us some thoughts in terms of the elevation in sales and marketing and the new product launches. And is the Q4 a good run rate for upcoming quarters or do you think that we start to see maybe as a percent of revenues that that number comes down? How should we look at that number?

Well, with the acquisition of Bethard at the start of July, obviously our overall sales and marketing centers will go up. Obviously, we've got a new brand within our overall group. So from that perspective, sales and marketing will increase quarter on quarter. But certainly as the year progresses, sales and marketing as a percentage of revenues will start to decline as we get the benefits of the cross-sell opportunities that our strategy is intended to realize. So we should be able to sell customers between brands, thus reducing net CPAs per customer.

And you've mentioned that your burn rate is about $1 million a month, right? And so can you just talk a little bit about your balance sheet at this point to support that growth -- the growth that you anticipate, the capital expenditures, if you can kind of give us some sense of what you're expecting to spend as you go into fiscal 2022? Just kind of give us some thoughts in terms of the capital and the capital allocation at this point.

Yes, so we have -- in the past, we've got various routes to raising capital that Grant has alluded to earlier in the presentation. And our balance sheet as of today is around $2.5 million and we are burning about $1 million a month, but we do have routes to additional capital that Grant has alluded to. We have shown that in the past. You can read that, and we are comfortable that we can do that going forward.

Got you. That's all I have. Thanks, guys.

Thank you.

Scott Buck, H.C. Wainwright.

Hi, good afternoon, guys. It looks like gross margins picked up couple of hundred basis points this quarter versus last. How should we be thinking about the longer-term gross margin opportunity? Are we close to a ceiling there based on future revenue mix, or is there still some extra room to expand?

So the expectation is that with being in large group, certainly on the iGaming side, we should start being able to realize cost efficiencies. And by that, I mean dealing with payment providers, casino games providers. We should be able to negotiate better deals because of the -- in large volumes that we are currently -- that in large group will have. So we are at 59% in Q4, up from 57% in Q3. I still think there is a couple of basis points at least improvement in that gross margin, as opposed to (technical difficulty). And obviously we will keep reporting on this as time goes on.

Great, Dan. Appreciate that color. And second, 2021 was obviously a busy year in terms of M&A. How should we think about 2022? Are you guys going to take a breather here and digest, or will you continue to be active in the marketplace?

Yes, I'll jump in there, Dan. At this point in time, we are taking a breather, to use your phrase, getting the various assets we have integrated with each other and gain those frequencies through that integration. That doesn't mean that we are completely out of the market. We keep our eyes open. We get opportunities to come our way frequently. And if there is a unique opportunity that will substantially enhance the shareholder value or give us another strategic advantage, we would consider it. But for now, we are again taking a pause to consolidate what we currently have.

No, that makes sense. Appreciate it, Grant, and appreciate the time today, guys. Thanks a lot.

Thank you.

Mike Hickey, Benchmark Company.

Hey, Grant, Dan, Jeff, hope you guys are good. Congrats on your quarter. I guess just to take a step back, could you just remind us what you're thinking about in terms of TAM on esports in the US? It looks like you are starting to accelerate some licensing opportunities. It seems like your team has had some success there with market access. Can you just double-click on that and maybe how that changes or enhances your perspective, that opportunity in sports betting over the next few years or so? Thanks, guys.

Sure. Actually, I'm going to call on Jeff to come in because he is focused on the research specifically to that. Jeff, do you want to pick up on the addressable market for the gaming and iGaming combined? Well, it doesn't look like Jeff is on the phone.

On the iGaming side, we have got our addressable market which is the more mature market of course. It's -- you are in the $150 billion, $160 billion and growing. Esports and gaming is obviously still evolving, is evolving quickly, depending which numbers you are looking at. It will range anywhere from 16 to the mid-20s. What we are finding with these affiliations with the pro teams, it's really getting this -- these are super affiliates effectively. So that market is more on the gamer as opposed to the esports [fan], which esports is a specific subcategory.

So the addressable market there. It's a little early for us to comment on those because we need to get a quarter or so under our belt, but the total addressable market between esports and iGaming because we have a footprint in both, where it makes us a bit unique in getting the access to both of those. So our addressable market is closer to $170 billion versus if we were just focused on the much smaller and emerging esports market when it does. So we will update when we get a quarter of the gaming with the pro teams. We will update you, I would think, end of first quarter next calendar year or our Q3.

Nice. Thanks, Grant. Just curious on FanDuel, where you guys are with that and how you think about the in-home opportunity. Thank you.

Yes. The software right now is complete. It's in. We are just waiting for the final approval so that we can proceed. We expect getting the final approval to hold our inaugural event in Atlantic City this fall.

Awesome. Thanks, guys. Thanks a lot.

Thank you.

Lisa Springer, Singular Research.

Good afternoon. I wanted to -- I wonder if you could give us more color around your partnership with the Indian Gaming Association in bringing esports technology to Indian casinos and how that's going to roll out?

Sure. IGEA, which is Ernie Stevens third -- as you're probably aware, Ernie Stevens Jr. is Chairman of NIGA. Ernie is his son. The initiative is to bring esports gaming opportunities to the native communities. This will be the focus of bringing that in will be generally through the Indian casino facilities. We are inviting -- we are presenting shortly in the East Coast Gaming Conference. There will be a number of the NIGA numbers invited as our guests to see the rollout of the LANduel product, but really, it's to give the opportunity to the various gamers in the native community for debating amongst themselves and the pathway through is going to be working with the casinos. So I would say that our strategy there was to partner with the largest possible group we could in the sector. As you know, NIGA represents about 50% of the US gambling market. And so we feel we have the best partner in the biggest sector of the market. That's the strategy.

Okay, thank you.

Michael Kupinski, Noble Capital Markets.

Thank you. Thanks for taking another question. A quick question, you mentioned the cross-selling opportunities in gaming and possible cost synergies. I was just wondering if you could just add a little color on that, if you can put maybe some -- what do you think might be dollar figures around both what might be revenue synergies as well as the cost synergies.

Dan?

Yes. I can certainly provide the high-level explanation on this. So we have brands, casino brands, sports brands. We pay CPA to get a customer onto our casino on one of our brands. We can then cross sell them into a sports brand and obviously save ourselves the $300, $400 of acquisition. It would cost otherwise if were paying to acquire a brand-new customer onto that brand. So with Bethard coming on board, we now have access to several new countries, several new licenses and we are able to move and sell customers between sportsbook, esports, casino and save ourselves the CPA.

I cannot give you at this stage specifics around the expected upside from those synergies. I can certainly work on something separately in the coming weeks and provide that to you. But we certainly see it as a material upside and opportunity for us as the year progresses and once, we fully integrated all of these top raters within the overall group.

Yes, it seems like there would be a fair amount of upside there. So that's the reason why I asked the question. That's all I have. Thank you.

Thank you.

That concludes today's question-and-answer session. I will now turn the conference back to our presenters for any additional or closing comments.

Thank you and thank you for the questions. And everybody, thank you for spending the time with us. As we continue to execute our plan, as you can clearly see by the numbers, it's been a time of exciting radical growth. To quote one of the comments, we are at this point in time focused on getting efficiencies out of the acquisitions we have made.

I appreciate the support from our shareholders. We will continue to do our best to provide the most value to our shareholders. And as I said myself, I am a shareholder. So my objectives are in direct lockstep with all of you on the phone today. So again, thank you for your support and thank you for coming to listen to our earnings call.

And so that does conclude today's call. Thank you for your participation. You may now disconnect.