Scout Gaming Group said the decision to implement a major restructuring of the business began to take effect in the second quarter, although the fantasy game provider still reports declining revenues and widening net losses.
Former Scout CEO Andreas Ternström said in March that providers would start reviewing their costs because they were “totally unsatisfied” with slowing growth and rising costs in the fourth quarter of 2021. did.
Ternström stepped down as CEO in June and was temporarily replaced by Niklas Jönsson, who continued to oversee the restructuring. Jönsson previously served as Chief Financial Officer.
Just weeks after Ternström left, Scout announced it was taking drastic measures to keep the business alive. The company cut half of its workforce, including Ukrainian employees, and planned to dilute its shares by 90% after he identified a 17 million Swedish krona black hole in its finances. . Shareholders are expected to vote on the dilution plan next month.
Jönsson updated the market on Scout’s position, saying the second quarter was an “intensive” period during which he and the board initiated and implemented a number of “survival decisions.” . Jönsson said some of these are already impacting the business, but the full effect will not be seen until the fourth quarter.
“We can conclude that the company’s expenses and labor are too high compared to the revenue generated over the long term,” says Jönsson. “Therefore, we changed our organizational structure and management to adapt to the new business.
“The restructuring program launched in the second quarter to address the above challenges is already paying off, and the full realization of that effect will be seen in the fourth quarter.
“At that point, we halved our workforce within the group to a total of 63 employees since the beginning of the year in order to streamline our organization and better support our customers through more efficient delivery processes.”
Looking at Scout’s second quarter results, revenue for the three months to 30 June was SEK4.3m (£344,725/€407,046/$410,482), down 47.5% from SEK8.0m in the same period last year.
Revenues from B2B business decreased by 38.5% year-on-year to SEK 1.6m, while B2C revenues decreased by 70.4% to SEK 2.1m. Scout noted that 17 of his B2B partners are now integrated and active.
Total operating expenses increased by 3.7% to SEK30.9m, cost of financial items was reduced from SEK1.1m to SEK694,000, while pre-tax loss reached SEK27.3m, higher than last year’s SEK17.0m Did.
As Scout did not pay taxes during the quarter, the net loss was also SEK 27.3 million, compared to SEK 17 million in the previous year. In addition, negative adjusted earnings (EBITDA) before interest, tax, depreciation and amortization (EBITDA) expanded from SEK 13.3m to SEK 23.3m.
As for the first half, revenues for the six months to 30 June amounted to SEK 16.3m, down 40.3% year-on-year. B2B revenue decreased by 10.0% to SEK 4.5m and B2C revenue decreased by 47.5% to SEK 6.4m.
Operating expenses increased by 6.5% at SEK64.4m, while expenses for financial items decreased by 82.8% at SEK1.2m. This left him with a pre-tax loss of SEK47.0m compared to his SEK26.3m in the first half of 2021.
Again, Scout paid no tax at all, so the net loss was also SEK47.0m, higher than last year’s SEK26.2m, and negative adjusted EBITDA widened from SEK28.2m to SEK41.6m.
After the period ends, Scout will launch fantasy products with Bet365 in 120 markets around the world, and the provider also signed a new deal with Norwegian state-owned operator Norsk Tipping.
Jönsson said these two deals, along with growing interest from other operators, allow the provider to look forward positively. However, he also cautioned that work on cost control and prize pool size will be a focus, at least until business shows positive results.
Mr Jönsson said: “But it will take a lot of work, continuous streamlining and very sharp focus from all of us in the organization to bring our plans to life.”
