SharpLink Gaming .(SBET) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2023, revenue increased by 79% to $3.39 million from$1.9 million in Q1 2022, primarily due to contributions from the SportsHub Gaming network acquisition [11] - Gross profit rose by 114% to $1.34 million, with gross profit margin improving to 40$2.82 million, or $1 per share, compared to a net loss of$7.04 million, or $2.99 per share, in the previous year [16] Business Line Data and Key Metrics Changes - The newly merged SportsHub/Fantasy Sports group contributed$1.4 million in Q1 2023, compared to $0 in the prior year [11] - Revenue from Sports Gaming Client Services increased by 17$1.05 million from $911,000 [11] - Affiliate Marketing international business group revenues rose by 9$1.01 million, while U.S. segment revenues surged by 355% to $280,000 [15] Market Data and Key Metrics Changes - The overall sports betting industry has seen stock price depreciation of approximately 61%, with a mean loss of over 82% [27] - SharpLink is currently trading at a sales multiple under 1x, significantly below the industry mean of over 1.5x [31] Company Strategy and Development Direction - The company emphasizes the importance of utilizing technology, such as C4 conversion technology, to enhance player engagement and conversion rates [22] - There is a focus on leveraging free-to-play games to convert sports fans into bettors, which is seen as a fundamental component of SharpLink's business model [29] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by macroeconomic conditions affecting market performance but remains committed to delivering tangible results [40] - The company believes it is well-positioned for potential dynamic growth in the coming quarters [33] Other Important Information - The company successfully cured its NASDAQ deficiency and will continue trading without suspension [37] - An upcoming Annual General Meeting is scheduled for May 25, where shareholders will vote on several important proposals [24] Q&A Session Summary Question: Why was the reverse stock split implemented immediately? - Management was informed by NASDAQ that the company did not qualify for an extension, necessitating the reverse stock split to regain compliance [20] Question: What are the common themes from the SBC Summit? - The summit highlighted the industry's shift towards technology-enabled solutions for player acquisition and conversion, with a focus on free-to-play games [28] Question: Why has the stock value declined significantly? - The decline is attributed to broader market conditions affecting the sports betting industry, but management believes the market will correct as performance improves [38]