Seeking Alpha • Jul 14
EBET Ramps Revenue Growth From Recent Acquisitions
EBET went public in April 2021 as Esports Technologies, raising around $14.4 million in gross proceeds in an IPO.
The firm enables online gambling services through a variety of brands.
EBET has grown revenue as a result of acquisitions but its operating losses are substantial and worsening.
Until the company can show revenue growth combined with a reduction of operating losses, I'm on Hold for the stock.
A Quick Take On EBET
EBET (EBET) went public as Esports Technologies in April 2021, raising approximately $14.4 in gross proceeds from an IPO that was priced at $6.00 per share.
The firm provides online gambling products via its recently acquired brands.
EBET’s high and increasing operating losses provide no path to operating breakeven and I see no upside catalyst given the firm’s current financial results unless it makes meaningful progress toward operating breakeven.
As a result, I’m on Hold for EBET in the near term.
EBET Overview
Las Vegas, Nevada-based EBET was founded to develop an online esports/sportsbook gambling service focused on the regions of the Asia Pacific and Latin America.
Management is headed by president, Chairman and CEO Aaron Speach, who has been with the firm since 2020 and was previously a founding member at ESEG Limited, which was acquired by the firm.
The company’s primary offerings include real money betting on:
Esports titles
Professional sporting events
iGaming casino games
The company operates via gaming license from the Curacao Gaming Authority with almost all of its wager history sourced from the Philippines.
Management seeks to expand its target sources to Japan, Thailand, Mexico, and South America.
The firm operates its platform at gogawi.com, where 70% of its customers bet on esports competitions and 30% bet on traditional sporting events.
Management has sought to create a 'business-to-business' experience that seeks to match larger volume betting interest 'across businesses operating in the esports wagering space,' since it believes the industry has produced solutions that have been more focused on the 'recreational bettor.'
EBET’s Market & Competition
According to a 2020 market research report by QYResearch, the global market for esports and esports gambling was an estimated $142 billion in 2020 and is expected to exceed $203 billion by 2026.
This represents a forecast CAGR of 6.2% from 2021 to 2026.
The main drivers for this expected growth are an increase in demand from mobile users to bet on esports activities as well as a wider range of esports events and opportunities to wager on.
Also, in 2019, Europe accounted for the largest market share in the industry at 47.7%. China [Macau] represented the second largest market at 21.2% market share.
Major competitive or other industry participants include:
DraftKings (DKNG)
Bet365
Pinnacle
Flutter Entertainment (FanDuel) (PDYPY) (PDYPF)
William Hill (WIMHY) (WIMHF)
Roar Digital
Luckbox
EBET’s Recent Financial Performance
Total revenue by quarter has grown markedly in recent quarters due to the acquisition of a number of brands:
5 Quarter Total Revenue (Seeking Alpha)
Gross profit by quarter has also grown in a similar trajectory as that of total revenue:
5 Quarter Gross Profit (Seeking Alpha)
Operating income by quarter has worsened sharply into negative territory over the past 5 quarters:
5 Quarter Operating Income (Seeking Alpha)
Earnings per share (Diluted) have followed a similar path as Operating Income:
5 Quarter Earnings Per Share (Seeking Alpha)
In the past 12 months, EBET’s stock price has dropped 88.4 percent vs. the U.S. S&P 500 index’ decline of around 12.7 percent, as the chart below indicates:
52 Week Stock Price (Seeking Alpha)
Valuation Metrics For EBET
Below is a table of relevant capitalization and valuation figures for the company:
Measure
Amount
Enterprise Value
$63,700,000
Market Capitalization
$35,980,000
Enterprise Value / Sales [TTM]
2.43
Price / Sales [TTM]
1.18
Revenue Growth Rate [TTM]
16059.00%
Operating Cash Flow [TTM]
-$14,050,000
Earnings Per Share (Fully Diluted)
-$2.44