Allied Esports Entertainment, Inc.

Greetings. Welcome to the Allied Esports Entertainment third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Lassa Glassen, Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon and welcome to the Allied Esports Entertainment 2021 Third Quarter Results Conference Call. Speaking on the call today is Allied Esports Entertainment's Chief Executive Officer, Li-Beng Claire Wu, Chief Financial Officer, Roy Anderson, and Co-Chairman of the Board and President, Lyle Berman. Before I turn the call over to management, please remember that our prepared remarks and responses to questions may contain forward-looking statements. Words such as may, will, expect, intend, plan, believe, seek, could, estimate, judgment, targeting, should, anticipate, goal, and variations of these words and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from those implied by such forward-looking statements. due to a variety of factors discussed in the company's public filings, including the risk factors discussed in documents filed with the Securities and Exchange Commission. Although the company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. The company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. In addition, certain of the financial information presented in this call represents non-GAAP financial measures. The company's earnings release, which was issued this afternoon and is available on the company's website, presents definitions of such non-GAAP financial measures, reconciliation to the appropriate GAAP measure, and an explanation of why the company believes such non-GAAP financial measures are useful to investors. With that, it's now my pleasure to turn the call over to Allied Esports Entertainment's CEO, Claire Wu. Claire.

Thank you, Liza, and thank you, everyone, for joining us this afternoon. My remarks today will begin with a discussion of recent changes in our leadership team at AESE, as well as an overview of the important operating highlights from this past quarter. Roy Anderson, our Chief Financial Officer will follow with additional details on our third quarter financial performance. And Lyle Berman, co-chairman of the board and the president, will conclude with an update on the previously announced strategic process for our esports business, along with the company's progress on our ongoing activities to invest our cash from the sale of the World Poker Tour, or WPET. After our prepared remarks, we will open the floor to questions. Turning first to recent changes in our leadership team. As announced earlier this month, Lyle Berman, currently the co-chairman of the board, has assumed additional duties as president of the company and will head up our investor relations efforts. Furthermore, Yinghua Chen, a current director has been named the Chief Investment Officer. Together, Lila and Yinhua will focus on completing the sale of our esports business and identifying opportunities to invest our cash to maximize shareholder value. And finally, I am very pleased to introduce Roy Anderson as our new Chief Financial Officer. Roy joined the company last month and has truly hit the ground running. As CFO, he will have responsibility for overseeing all aspects of our accounting, financial reporting and planning, treasury, and tax activities. Before joining AESE, Roy was a partner with MedZap USA, an independent member firm of MedZap Group, where he advised and worked closely with the top executives and investors of companies in the technology, media, and the telecommunications markets, ranging from startups to large multinational companies. Roy brings strong leadership qualities, financial insight, and the strategic M&A experience to our executive team. This combined with his broad-based industry expertise makes him ideally suited to lead our finance and accounting activities as we move forward. With that, let's move on to an overview of our results for the third quarter of 2021. This quarter was a very productive period for AESE. highlighted by a strong quarter of growth from our esports business. During this quarter, total revenue more than doubled from the last quarter and increased over 182% compared to the third quarter last year. This growth was driven by a sharp recovery of the in-person pillar of our esports business, with the U.S. economy almost fully reopened. coupled with a steady climb in Las Vegas food traffic and the return of live entertainment events. That said, game publishers, who were our last customers prior to the pandemic, have not yet resumed in-person events and could provide an additional boost to our in-person parallel when they resume normal activities. In addition, our multi-platform content parallel generated solid revenue contributions as we continue to make strides towards monetizing our growth content library with key streaming partners, as well as building out our production services capabilities through AE Studios. Importantly, during the quarter, we significantly improved our liquidity position with the sale of WPT to Element partners in an all-cash transaction for $105 million. Since the completion of the WPT transaction this summer, we have made a good headway in evaluating opportunities to invest our cash. We also made good progress exploring strategic alternatives for our esports business and recently signed a long-binding net of intent to sell our esports assets. Lyle will discuss this in more detail in his remarks. With that, let's now turn to our third quarter operational highlights for our esports business. The recovery from the pandemic continued in the third quarter with increased demand for tournament and production services. This led to LA Esports production of 110 events in this quarter, an increase of 31% versus the last quarter. This included 39 pro-territory events and 71 third-party online and in-person productions. In total, over 8,000 players competed in allied esports productive events during the third quarter. With the easing of pandemic-related restrictions, The company's pre-territory events such as lockdown and Saturday Night Speedway saw a 24% increase in player entries compared with last quarter. Also, Hyundai Mazda, a well-known auto dealership in the metro Las Vegas area, has become the new presenting sponsor of Saturday Night Speedway featuring Mario Kart at the HyperX Esports Arena, Las Vegas. Third-party events company-wide were up by 51%, quarter over quarter. This was driven by an 89% increase in third-party events and productions booked at the HyperX Esports Arena, made by a fixed production of the Rainbow Six North American Net Red Cross Rescue L'Oreal featuring four guys and the World Port Control final tables. Additional contribution came from the company's organization and the production of Travel Titans in North America, Europe, and Latin America for attention-backed streaming platform Travel. AE Studios, the company's new original content, story painting, and the production service arm also produced a number of events, including the celebrity showdown for Twitch. Although the company's more expansion plans with Simon Properties and the Brookfield Property Partners continue to remain on hold, the Allied Esports track in North America continued to bring gaming activations to fans around the country. During the quarter, the Allied Esports track began a seven-stop tour at Alaska Cup Series event and offered gaming activations. The track was also utilized by Monster Energy in its activations at a three-day hard work festival, Roknagoma. As sequence to quarter end in October, the AI Esports track in Europe returned to action with partner travel and the Ponds Lake Game Arena, which is the largest computer console and multimedia entertainment fair in Central and Eastern Europe. Throughout the pandemic, we also made significant strides to advance Ally Esports' multi-platform content payroll. To this end, the first major milestone was the launch of a 24-hour content strategy on Twitch, which saw 3.2 million live views in the third quarter of 2021 and increased the followers by 24%. So far, the company has delivered 14.7 million live views on its Twitch channel since launching the 24-hour strategy in November 2020. I am pleased to report that the company's content library currently holds over 1,000 hours of esports programming with distribution on 10 streaming platforms around the world. Earlier this year, we successfully launched AE Studios. Through AE Studios, we leverage our years of digital content creation and world-class production facilities to design and produce digital-first content for clients and partners spanning a variety of industries, such as gaming, entertainment, pop culture, music, and sports. During the third quarter, AE Studios' production of Celebrity Showdown, a footage on its Twitch Sports channel, aired 16 episodes, and the showdown was extended from 24 to 30 episodes for 2021. Subsequent to quarter end, Allied Esports was recognized at the Tempest Esports Business Awards in October as a finalist in the innovative use of technology category. This award acknowledged the company for its production of the world's first esports tournament between live animated commentators in a partnership with motion capture technology leader, Accent. This is a great honor and reflects the spirit of innovation that has made Ally Esports a leader in the competitive gaming industry. Also subsequent to the end of this quarter, AE Studios produced the live stream of the first ever Ulo Championship Series Invitational Tournament from the HyperX Esports Arena on November 11th. The event was hosted by professional gamer and streamer Tyler Ninja Blevins, and viewers from around the world were able to watch live on Uno's TikTok channel as finalists competed for a winner-take-all $50,000 prize. That concludes my prepared remarks, and at this time, I would like to turn the call over to Roy Anderson, our CFO, for an update on our third quarter financial results. Roy?