Jon Najarian, co-founder of Market Rebellion and TradeMonster, has joined EBET (formerly Esports Technologies) as an adviser to the business.
A former linebacker for the Chicago Bears, Najarian now holds decades of experience in the securities and futures markets, after becoming a trader on the Chicago Board Options Exchange following his NFL career.
Having also held a 25-year career as a floor trader on the New York Stock Exchange and derivatives marketplace CME, he co-founded MarketRebellion.com, a service which provides education, analysis and tools for trading options and securities.
Najarian is also a contributor on CNBC’s investment-focused Halftime Report.
Further back in his career, Najarian also co-founded online brokerage firm TradeMonster in 2005, before the business was subsequently sold to E*TRADE Financial Corp for $750m in 2016. Najarian remains an active investor and market analyst.
“EBET is an exciting company with a solid strategy, field-tested products in the wagering space and a management team that can drive the business into a new era,” Najarian commented.
EBET CEO Aaron Speach: “We are delighted to welcome Jon Najarian as an adviser. His vast experience will undoubtedly provide EBET with strategic insight that will help shape the direction and further success of the company.”
“Their geographic reach, expansion plans and customer base, I believe, will help them carve out a leadership position within the industry. I am thrilled to be joining and contributing my experience to accelerate the growth of EBET, helping it realise its enormous potential.”
Aaron Speach, CEO of EBET, added, “We are delighted to welcome Jon Najarian as an adviser. His vast experience will undoubtedly provide EBET with strategic insight that will help shape the direction and further success of the company.”
Last week, EBET revealed a new restructure and profitability plan aimed at reaching a positive EBITDA run rate beginning this month.
A series of cost-cutting exercises designed to serve that goal have now started to be implemented.
Measures include reducing the firm’s number of staff and contractors by 54%, drastic cuts to UK marketing activity and crucially, eschewing esports – once a flagship vertical for the firm – to concentrate on its higher margin online casino operations.
Despite the strategic pivot, Speach said EBET still believes in esports and will look to grow its Gogawi brand globally, but only once the esports market has matured and its audience moves into different wage bracket with higher spend on betting.
EBET, the Nasdaq-listed gambling operator formerly known as Esports Technologies, has unveiled a ruthless new restructure as management puts a laser-like focus on profitability.
The firm is intending to reach a positive EBITDA run rate beginning this month (August 2022) and has initiated a series of cost-cutting exercises to achieve that goal.
These include trimming the number of staff and contractors by 54%, drastic cuts to UK marketing activity and eschewing esports – once a flagship vertical for the firm – to concentrate on high margin online casino.
On yesterday’s (15 August) earnings call, CEO Aaron Speach said the restructuring primarily involved transitioning away from unprofitable areas of the company while optimising marketing spent across core markets.
“Through these two changes, we’re proud to say that we are on a run rate in the month of August to be EBITDA positive and we have reduced the two major sources of cash burn on the company,” Speach told investors.
“The first change we made was to scale back marketing in the UK, as the cost per customer in the UK was increasingly challenging. We made the decision to cut down the spend by almost a million dollars a month in order to only spend in sectors and with affiliates that provided a responsible ROI.
“The other major change we made to the company was restructuring how we moved forward with eSports. We made the decision to cut the projects on the roadmap that were not producing revenue.”
EBET chief executive Aaron Speach: “The first change we made was to scale back marketing in the UK, as the cost per customer in the UK was increasingly challenging.”
Despite the strategic pivot, Speach said EBET still believes in esports and will look to grow its Gogawi brand globally, but only once the esports market has matured and its audience moves into different wage bracket with higher spend on wagering.
“This restructuring has been monumental for us and has almost immediately, in just two short months, taken us from a cash burn of approximately $1.3m per month to a positive run rate of EBITDA,” he added.
EBET revenue for the quarter ended 30 June came in at $18.2m with a gross profit of approximately $7.2m.
Revenue growth is expected to decline in the short term as the company focuses on its profitability initiative. As a result, EBET no longer expects to achieve its previous full-year 2022 revenue guidance of $70m. No new guidance was issued, however.
CFO Jim Purcell disclosed that revenue had increased dramatically year-on-year but fell by 4% on a sequential basis due to the reduced strength of the US dollar, market adjustments in Germany and increased competition in the UK.
EBET ended the quarter with a cash position of $6.9m and completed an equity raise of $3.5m during the reporting period. Adjusted EBIT came in at a loss of $4m, which Purcell said would significantly improve into Q4 2022 and fiscal year 2023.
The operator’s new focus on iGaming means that Karamba – the online casino brand it acquired from Aspire Global – will be a key area of investment moving forwards.
The brand went live in Brazil during the quarter and also expects to launch in both the Netherlands and Ontario during the first quarter of 2023.
This will be accompanied by a major site upgrade for Karamba globally.
EBET chief marketing officer Mark Thorne: “Spend smarter, not harder is our key guiding principle.”
“This will reinvigorate the brand, not only in our current core markets, but also in our expansion and licensing ambitions for the brands,” said CMO Mark Thorne.
“The new Karamba will reflect the modern nature of a successful online casino and sportsbook with a cleaner and more sophisticated approach, yet without losing the fun and entertainment core components of the brand that our customers love.”
Thorne revealed that since June 2022, the company has reduced marketing spend by more than $1m per month. “Spend smarter, not harder is our key guiding principle,” he added.
The company did not field questions from analysts at the end of the earnings call.
The stock closed at $2.39 per share despite a one-month rise of 9%. EBET stock is down more than 88% on a year-to-date basis following its 2021 IPO.
Nasdaq-listed Esports Technologies has reaffirmed its earnings guidance of $70m for 2022 after reporting Q1 2022 revenue of $7.1m.
The company’s fiscal year runs from September, meaning the three months ended 31 December 2021 marked its first fiscal quarter of 2022.
Full-year 2022 will therefore include 10 months of reporting since its December acquisition of Aspire Global’s B2C sportsbook and casino brands.
It declared gross profit of $2.5m during the quarter, and said “substantially all” revenue was generated during December after finalising the €135m acquisition of Aspire brands including Karamba, Hopa and Griffon Casino.
The acquisition allowed Esports Technologies to gain 1.3m depositing customers in regulated markets including the UK, Germany, Denmark and Ireland, while it is also exploring entering markets in Asia, Latam and Europe.
It will now look to cross-sell those customers into esports betting. Having consolidated all of its brands onto a single platform, the company plans to continue investing in new esports products and IP, it said.
This will include the continued development of its esports-specific odds-modelling technology and its patent-pending browser extension, which is designed to allow live wagering within any streaming environment.
In an interview with WallStreetBets founder Jaime Rogozinski last month, CEO Aaron Speach said the company would create value by building an esports-first betting operation and tapping into a new generation of customers, rather than integrating esports onto an existing product offering as an afterthought.
“There are a lot of companies just trying to add esports to their traditional sportsbooks and that is proven not to work, because traditional sports fans don’t bet on esports,” Speach told Rogozinski.
“It is hard to get younger customers onto those platforms because the websites look like they were built in the early 2000s,” he added.
He also suggested esports betting had not reached its full potential because esports fans do not trust the odds on offer due to a lack of capable trading expertise at existing providers of esports betting.
Commenting on the quarterly financial performance, Speach said: “This quarter, we have made a big step towards our vision to be the leader in esports wagering. The boost in revenue from our newly acquired brands is a great indication of future growth.
“With this business, and our other avenues for growth, we are strongly positioned to capitalise on the heightened popularity and interest in esports,” he added.