EBET, Inc. (EBET)·Q3 2022 Earnings Summary

Executive Summary

• Q3 FY2022 (three months ended June 30, 2022) revenue was $18.17M with gross profit of $7.25M and gross margin of 40%; net loss was $8.98M and diluted EPS was $(0.70) .
• Management announced a profitability plan and achieved approximately breakeven Adjusted EBITDA in the first two months of Q4 (July–August), compared to Q3 Adjusted EBITDA of $(4.02)M; net loss improved from $9.0M in Q3 to $3.8M for the two months ended August 31 .
• The company withdrew its prior FY2022 revenue guidance, stating it does not expect to reach $70M; no updated revenue guidance was provided, while targeting a positive EBITDA run-rate beginning August 2022 .
• Strategic shift toward iGaming with optimization of marketing and cost reductions; management highlighted expansion initiatives (Brazil, anticipated Netherlands and Ontario licenses in FY Q1 2023) and a major upgrade to Karamba to support customer acquisition/retention .

What Went Well and What Went Wrong

What Went Well

• Rapid operational turnaround under the profitability plan: “We are on a current run rate to achieve positive EBITDA this month… major inflection point” (CEO) ; Adjusted EBITDA ~breakeven for July–August and net loss reduced to $3.8M vs $9.0M in Q3 .
• Maintained substantial gross margin profile in Q3 (40%), reflecting solid unit economics despite restructuring actions .
• Clear strategic focus: re-aligning resources to iGaming, optimizing marketing efficiency, eliminating non‑material contracts, and reducing operating costs; launching Karamba site upgrade and new affiliate platform (eaffiliates.com) to increase traffic conversion .

What Went Wrong

• Guidance reset: EBET does not expect to reach the prior FY2022 revenue guidance of $70M and provided no updated revenue guidance, signaling near-term revenue pressure from cutting unprofitable revenues .
• Elevated operating losses and interest burden: Q3 operating loss $(6.99)M and interest expense $(1.99)M; cumulative nine-month net loss $29.70M, reflecting acquisition integration costs and debt financing (15% senior notes) .
• Liquidity/covenant pressures: working capital deficit of ~$4.8M at quarter end; the company obtained a waiver for senior note covenants contingent on equity raise and amended $5M of the loan to be convertible, underscoring financing risk .

Financial Results

Segment breakdown (company discloses all revenue as gaming; no disaggregation required):

KPIs and balance metrics:

Adjusted EBITDA progression under profitability plan:

Guidance Changes

Earnings Call Themes & Trends

Note: Motley Fool transcript (Aug 17, 2022) documents the Q3 call event timing; public summaries indicate limited analyst Q&A .

Management Commentary

• “We are on a current run rate to achieve positive EBITDA this month and feel that we have reached a major inflection point for EBET’s business.” – Aaron Speach, CEO (Aug 15, 2022) .
• “Significant progress… two-month period of improved Net Loss and Adjusted EBITDA… despite the challenging global business environment.” – Aaron Speach, CEO (Sep 21, 2022) .
• “We are very pleased with our business results for the second quarter… focus on creating the best experience for the Gen Z and Millennial wagering market.” – Aaron Speach, CEO (May 10, 2022) .
• “The boost in revenue from our newly acquired brands is a great indication of future growth.” – Aaron Speach, CEO (Feb 9, 2022) .

Q&A Highlights

• Guidance clarity: Management stated it does not expect to reach $70M FY2022 revenue and is not providing updated revenue guidance, focusing instead on achieving a positive EBITDA run-rate .
• Profitability path: Emphasis on re-aligning to iGaming, optimizing marketing, and reducing costs; near-term revenue growth expected to decline as unprofitable revenue is cut .
• Call format/tone: External coverage indicates limited or no analyst Q&A in the Q3 call, with the narrative focused on restructuring and profitability .

Estimates Context

• S&P Global consensus estimates for Q3 2022 (revenue and EPS) were unavailable due to a missing CIQ mapping for EBET in the SPGI database. As a result, comparisons to Street estimates could not be made. Values would be retrieved from S&P Global if available.

Key Takeaways for Investors

• The pivot to iGaming and disciplined marketing is intended to improve unit economics and reduce cash burn; near-term revenue may decelerate as unprofitable revenue is cut, but EBITDA run-rate is targeted to turn positive beginning August 2022 .
• Q3 results show resilient gross margin (40%) and improved operating loss versus Q2, but interest expense and operating costs remain headwinds; monitoring debt service and covenant compliance is critical .
• Liquidity remains tight with a working capital deficit (~$4.8M) and reliance on equity raises/covenant waivers; the conversion feature on $5M of senior notes adds potential dilution but provides flexibility .
• Guidance withdrawal (FY2022 revenue) is a negative near-term signal; the key catalyst is execution of the profitability plan and demonstrated sustained positive EBITDA .
• Regulatory/geographic expansion (Brazil; anticipated Netherlands/Ontario licenses) and product upgrades (Karamba, eaffiliates.com) are medium-term growth levers if the company stabilizes operations .
• Legal proceedings (FINRA arbitration) add uncertainty; while the company believes it has defenses, potential cash flow or operational impact should be considered in risk assessment .
• With Street estimates unavailable for Q3, focus on internal milestones (EBITDA run-rate, cash trajectory, marketing ROI, debt reduction via excess cash flow prepayments once applicable) for trading and investment decisions .

Citations:
All financial and operational data/quotes are sourced from EBET filings and press releases: Q3 2022 10-Q , Aug 15, 2022 8-K/press release , Sep 21, 2022 8-K/press release , Q2 2022 10-Q , Q2 press release (May 10, 2022) , Q1 press release (Feb 9, 2022) . Earnings call sourcing references: .