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Shares in Esports Entertainment Group (EEG) have surged after CEO Alex Igelman revealed the group cut around 37% of jobs and implemented several cost-cutting measures to enhance operational efficiency.

In a letter to shareholders, Igelman said that by streamlining the business, EEG can move into a dominant position within the high-growth esports industry and “drive long-term profitability”.

Esports Entertainment’s financial health has been under strain since the company announced a net loss of $63.6m for the first three months of 2022

Igelman has since carried out a company review and developed a corporate vision after he joined the business in January.

EEG CEO Alex Igelman: “I strongly believe that our achievements over a short three-month span are truly noteworthy. However, this is merely the starting point of our journey.”

As part of a restructuring exercise, Igelman revealed the company has reduced its headcount from 158 full-time employees at the end of 2022 to 99 full-time employees, inclusive of planned reductions.

Annualised salaries are expected to decline by approximately 36% based on the actions taken thus far.

Although the company incurred upfront costs related to the restructuring, these initiatives are expected to lower operating expenses by more than $4m on an annualised basis over time.

Debt reduction

Moreover, through various measures, including the sale of its Bethard business, the company has reduced debt and other liabilities by approximately $27.1m since the end of last year.

In March, the group also initiated the liquidation of Argyll Entertainment, an online gambling business in the UK with recurring losses.

“I strongly believe that our achievements over a short three-month span are truly noteworthy. However, this is merely the starting point of our journey,” he wrote.

He added that the company plans to have a renewed focus on esports wagering through new betting content and offerings via its MGA licence.

In the US market, the group wants to direct its attention toward aggregating and supplying B2B esports solutions and content for the esports and esports gambling industries.

“Esports Entertainment has extremely valuable and differentiated assets, which we believe will be key to the future of this industry,” he concluded.

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