Earnings Labs

Sharplink, Inc. (SBET)

Q3 2023 Earnings Call· Wed, Nov 15, 2023

$7.30

+1.60%

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Transcript

Operator

Operator

Good morning, ladies and gentlemen, and welcome to SharpLink Gaming's Third Quarter 2023 Results Webcast. Please note that this event is being recorded and will be available for replay shortly after the conclusion of our live broadcast. Joining us today from SharpLink is the company's Co-Founder and Chief Executive Officer, Rob Phythian; and Robert DeLucia, Chief Financial Officer. Before I turn the floor over to them, I remind you that during today's call, statements that are not historical facts, including any projections, statements regarding future events or future financial performance or statements of intent or belief are forward-looking statements and are covered by the safe harbor disclaimers contained in the company's public filings with the SEC. Actual outcomes and results may differ materially from what is expressed in or implied by these forward-looking statements. With that said, I would now like to introduce Rob Phythian, CEO of SharpLink. Please go ahead, Rob.

Rob Phythian

Management

Thank you, Kat, and good morning, everybody. SharpLink posted another strong quarter, marked by triple-digit percentage revenue growth for both the three- and nine-month reporting periods. The revenue expansion that we achieved over the past three consecutive quarters is due in large measure to the successful execution of our M&A activities, which began in December 2021 with the acquisition of FourCubed, followed by our merger with SportsHub Games Network just one year later in December 2022. Beyond the top-line, our gross profit margin has been a clear positive story, showcasing the logic and strategy that's gone into strengthening our infrastructure and diversifying our technology solutions and service offerings. Our purpose of acquiring FourCubed was to take advantage of its team's many years of success, specialized expertise and experience in building a highly engaged affiliate marketing network for online poker stakeholders across the European continent. With FourCubed skill set and know-how on board at SharpLink, it's been our intention to apply and amplify these assets to build from the ground up in Affiliate Marketing Services business designed to suit the unique needs of the U.S. market. Today, SharpLink's Affiliate Marketing Services, U.S. business and International business remain hard at work to build an affiliate marketing platform that is not only a strong revenue channel but one that delivers SharpLink a broad, sticky audience of sports fans and provides our sportsbook partners with high-quality traffic of new sports bettors. In connection with the phased rollout of our affiliate marketing growth strategy, SharpLink HQ was launched last month, providing a venue for us to unite and showcase SharpLink's advanced technologies, betting tools, and performance marketing capabilities. Moreover, we expect to leverage this new flagship website to benefit from cross-promotional opportunities between all of SharpLink's business units including promos and driving traffic to our…

Robert DeLucia

Management

Thanks, Rob, and good morning. On Monday of this week, we filed our 10-Q with the SEC after the market closed and published a press release yesterday morning, providing some key highlights of the results for the three- and nine-month reporting periods. As Rob noted, revenues were strong, climbing 153% and 101% for the three- and nine-month period ended September 30, 2023, respectively. More specifically, total revenues increased to $3.3 million in Q3 2023 compared to $1.3 million for Q3 of last year. Looking at the performance of each of our four business units, SportsHub contributed $1.4 million to our total sales in Q3 of 2023, which compared to zero last year due to the fact that our merger was completed in December of '22. Affiliate Marketing Services U.S. contributed $232,000 for the three months ended September 30, 2023, up from $115,000 last year, and Affiliate Marketing Services International achieved revenues of $1.2 million in Q3 compared to $761,000 in Q3 of '22. Our Sports Gaming Client Services group, which produces free-to-play games for our marquee list of sports media operators, leagues, teams and sports books, held steady at $420,000 in revenues for the three months ended September 30th of this year, which compared to $417,000 in Q3 of last year. For the nine months ended September 30, 2023 compared to the first nine months of 2022, total revenues rose to $9.9 million from $4.9 million, respectively. Drilling down further, SportsHub represented $3.6 million of our total sales in 2023 for the nine-month period; Affiliate Marketing Services U.S. generated $817,000 compared to $285,000; Affiliate Marketing Services International revenues climbed to $3.3 million from $2.5 million; and the Sports Gaming Client Services increased revenues to $2.2 million compared to $2.1 million on a year-over-year basis. As Rob mentioned, we saw a…

Rob Phythian

Management

Thank you, Bob. In just a couple of weeks, November 29, 2023 to be precise, SharpLink will be hosting an Extraordinary General Meeting of our shareholders to vote on the redomestication of our company from Israel to Delaware. If you have not already voted, I'd like to ask that you take a few moments to do that. In the event you need assistance in getting your vote in, please contact us through our Investor Relations e-mail at ir@sharplink.com, that's ir@sharplink.com. The redomestication of SharpLink has been a long and expensive undertaking, but one that we believe is essential to our long-term growth strategy and overall cost reduction in corporate spend. We are also working towards regaining full compliance with Nasdaq and look forward to providing a more meaningful update on this front in the coming weeks. Overall, as we progress through the fourth quarter, we're pleased with our execution thus far this year. While we are certainly mindful of the ongoing uncertainties of the market challenges affecting the U.S. sports betting industry in general, we remain optimistic as we persist in our efforts to achieve our KPIs and continue to create long-term value for our shareholders. With that, I'd like to thank you all for joining our webcast today, and thank you again for your continued support. We sincerely appreciate you for sticking with us throughout this journey, and we look forward to future calls with you to detail the many progressive milestones we expect to achieve in the coming months. For those of you who'd like to listen to today's webcast again, a replay of this call will be available later today on our website found at sharplink.com. With that, I'd like to wish everyone a good day. Operator, back to you.

Operator

Operator

Thank you for attending today's conference. We appreciate your participation. You may disconnect your lines at this time, and have a wonderful day.

Q -

Management