Gfinity - Building on leadership in esport
Gfinity (LON:GFIN) is a world leader in the fast-growing market for esports. The company designs, develops and delivers full end-to-end esports solutions. This includes bespoke content, tournament and event solutions for commercial partners via the company’s proprietary online platform, live broadcasting studio events, and content distribution solutions. Distribution includes the Gfinity community platforms that provide the company with its own online media channels attracting millions of consumers each week and which are building a fast-growing revenue stream.
These capabilities allow Gfinity, through its strategic client management process, to connect clients across four main segments (games publishers, sports rights holders, media companies, and commercial brands) to a growing audience of around 900 million competitive gaming fans globally. Gfinity’s client base includes some of the world’s most recognisable brands.
The company recently reported full-year (FY) June 2019 results in line with the upgraded trading update issued in July. Revenue grew 82% year-on-year, and the company made further progress towards its objective of EBITDA (underlying earnings) break-even by FY 2021. The strong results reflect strategic initiatives undertaken by the new executive team since 2018 (details p4). Post period end, Gfinity raised additional capital of £5.25mln (gross), leaving the company well capitalised heading into 2020. The results release also included further details of the expanding revenue generation model.
Revenues are derived from four different types of contract – (1) Consultancy fees; (2) Service delivery fees; (3) Advertising directly to the Gfinity Community platforms; and (4) Shared content and commercial rights to the esports programming that Gfinity creates. Historically Gfinity essentially operated a binary revenue model, either providing a service for a fee or creating own-label programming while bearing 100% of the cost and risk. The company is increasingly seeing a shift towards the risk and reward sharing model of shared commercial rights, as well as the consultancy and community opportunities. In this report we examine the future potential revenue mix.
Quick facts: Gfinity PLC
Price: 1.675 GBX
Market Cap: £12.05 m
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