Earnings Call: Q2 2020

Aug 10, 2020

Greetings, and welcome to the Allied Esports Entertainment Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lasse Glassen, Managing Director with ADDO Investor Relations. Thank you. You may begin. Thank you, operator. Good afternoon, and welcome to Allied Esports Entertainment's 20 22nd quarter results conference call. Speaking on the call today is Allied Esports Entertainment's Chief Executive Officer, Frank Ng and Chief Financial Officer, Tony Hanning. The company's President and long time WPP CEO, Adam Pliska and Judd Hannigan, who is leading the Esports operations are also available for the question and answer session. 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 for any forward looking statement, whether as a result of new information, future events or otherwise. In addition, certain of the financial information presented on this call is non GAAP financial measures. The company's earnings release, which was issued this afternoon and is available on the company's website, presents reconciliations 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, Frank Yang. Frank? Thank you, Lasse, and thank you, everyone, for joining us this afternoon. Throughout the Q2, we continue to operate in an extremely challenging and uncertain operating environment arising from the ongoing COVID-nineteen pandemic. The shelter in place orders that began in mid March across most of the United States as well as nearly all of our markets around the globe extended for essentially the entire Q2. This resulted in the temporary shutdowns of the in person pillar of our business strategy, which negatively affected our Q2 financial performance. Given this reality, we quickly shifted our strategic focus to the multi platform content and interactive pillars to mitigate the impact of the pandemic of our business and to continue to serve our loyal communities while strengthening Ally Esports for the future. Overall, I'm pleased with our employees' steadfast dedication and commitment as well as the team's ability to rapidly pivot and manage through this pandemic. We believe the strategic shift was successful for both our esports and poker businesses. Looking first at esports, beginning March 14, we moved all of our U. S. Tournament operations and production services online as one of the few forms of competitive sports entertainment that continues to operate and produce competitive content during the pandemic, we believe the esports industry has filled the void left by the unprecedented suspension of traditional sports. This led to a tremendous surge in both active gameplay and viewership with Nielsen recently reporting that 82% of global consumers played video games and watched video game content during the height of the pandemic lockdowns. Most notably, since the onset of the pandemic, traditional media broadcasters and sports betting platforms have turned to esports during this time to fill the channels and platforms with competitive content, which has accelerated this awareness and acceptance of esports among mainstream audiences and the interest level for traditional brands to engage in esports. As an example of this, Ally Esports Saturday Night's Speedway Mario Kart Tournament at HyperX Esports Arena recently had a clip that was picked up by and shared by ESPN Esports on Twitter and garnered nearly 500,000 views on the platform in one day. The clip is currently the 4th most watched Mario Kart clip of all time on Twitch and Rising. Over the longer term, we believe that the pandemic will accelerate the growth trajectory of the esports industry and our business. With the cancellations of in person or poker tour events around the globe due to the pandemic, Weem also moved our WPT events online and continued to leverage our interactive pillar, including the subscription based online platform, ClubWPT. Recent business highlights from the online shift include a significant increase in new subscribers on our Club WPT platform, which I will discuss later in my remarks. Based on the success of our online production services and tournaments for esports and WPT, we expect to continue these activities going forward. With that as a backdrop, let's shift gears and review our 2nd quarter results. Total revenues for the quarter of $4,600,000 dollars declined from $7,300,000 in the prior year period. While we generated solid growth in revenues from interactive services, This was more than offset by reduced levels of revenue from in person experiences and multi platform content related to the pandemic that persists for the entire Q2. Due to the reduced level of business activity that resulted from the shuddering of it of the in person experiences pillar, we took significant actions to reduce our expenses and minimize the negative impact on our financial position. These actions include salary reductions across the board as well as other cost saving measures. In total, we successfully reduced our general and administrative and selling and marketing expenses by $1,300,000 this quarter versus the same period last year. Importantly, we also successfully refinanced the company's outstanding short term debt, which significantly improved the liquidity, position and financial flexibility going forward. Tony Hung, our CFO will discuss this in more detail in his remarks. While it is clear that the pandemic adversely impacted our Q2 financial results, We remain confident in our ability to capitalize on the valuable positions we created in esports, which has gained in popularity as a result of the shelter in place orders. Additionally, WPT continues to steadily build its business and has a very promising outlook. As we have explained previously, our goal is to maximize the potential of these complementary businesses through a model built around 3 strategic pillars, namely in person experiences, multi platform content and interactive services. With that, let's turn to the highlights of our 2nd quarter results, as well as an update on the previously announced strategic partnerships. Like everyone in the live entertainment and event industry, and as noted earlier, we temporarily suspended our in person first pullout activities during the Q2. As a result of the hard work and dedication of our team, we placed a heightened focus on interactive services and multi platform content to help carry us through these unprecedented times and simultaneously to strengthen the pipeline of new fans to funnel to our live events as circumstances begin to normalize. In particular, the shift to holding events online led to a significant boost to our interactive services pillar. Looking first at the interactive pillar. In total, Ally Esports produced 78 online events in the 2nd quarter with 60 proprietary online events and 18 third party productions across our North American and European business units. We believe our emphasis on this pillar helped grow our customer base at a time when the in person pillar of our model was not available. We have also launched a new form of monetization for our events through sports betting and recently announced the vie.gg CSGO Legend Series, which is a 2 week program designed to provide sports betting operators with a robust pipeline of authentic competitive daily content. The program will kick off in late August in partnership with Esports Entertainment Group and their sports betting platform, vie.gg. The Legend series is one of our longest running and most successful original tournament brand, and we are thrilled to work with Esports Entertainment Group and their vi.gg platform to add a wagering component to our content model that will simultaneously introduce consumers and elevate the brand even further. While the interactive services platform for the esports business continues to mature, the platform we have built to host online esports tournaments represents an important fundamental building block. Longer term, we envision further developing the platform as an always on subscription based online service where esports players and fans can watch, play and win with other members of the esports community and with top esports personalities and influencers. This online platform will be closely integrated with our offline experiences to create a comprehensive and authentic esports tournament experiences for fans. Turning to WPT, we also shifted events that were previously held in person to the online environment. In May, WPD hosted its 1st main tour event online on party poker. This event set the record for the largest WPT main event in 18 seasons with 2,130 entries. The WPT Online Series Festival also featured the largest WPT Deep Stacks event ever with 3,554 entries and the 2nd most attended WPT 500 event with 4,828 entries. The overall WPT Online Festival attracted more than 111,000 entries on party poker. In June, the first ever WPT online poker open on the party poker U. S. Network became the 1st WPT Real Money online gaming event to take place in the United States since the unlawful Interact Gambling Enforcement Act was adopted in 2006. The event set the record for the largest prize pool in party poker U. S. Network history. In addition to the online event, the successful World Poker Tour Interactive Services strategy includes Club WPT, its online membership platform that offers a subscription based poker club with no purchase necessary. During the Q2, Club WPT launched its 100,000 Club WPT Diamond Championship, which has proven to be a very popular amount of players. These qualifiers, which run from June through October, will result in a 100,000 prize pool event in November, which largest single day tournament prize pool in club history with the 1st play taking home $25,000 On June 1, we also launched the new premium level of Club WPT membership, Club WPT Diamond. Early adoption of the new subscription level exceeded our expectation. Thanks in part to these activities, Club WPT registration accelerated during the Q2 and increased an impressive 127% from the prior year period. This is on top of the 40% year over year increase in registrants we generated in the Q1. Importantly, 2nd quarter Club WBD subscription revenue increased 50% over the same period last year. The next pillar of our business model is multiplatform content, where we generate content for consumption on a 20 fourseven basis. This could be from content that is live streamed, post produced or packaged, where we retain optionality in monetizations of content via direct distribution and sponsorship, use of third party distributors or other various hybrid solutions. World Poker Tour has a long track record of success and has effectively executed this business model for many years. Overall, demand for alternative sports during the crisis continues to increase interest for our poker television product. 2nd quarter highlights include the distribution of WPT season 12 13 in 77% of the syndication marketplace for linear TV in the U. S. In addition, this should put WPD in the position of selling national ad buys in 2021, potentially increasing future ad sales revenues. This allow us the opportunity to assess markets that we would otherwise not have reached previously. In fact, linear household penetration in the 2nd quarter was up 105% year over year, while linear viewership also grew 43% over the prior year period. In addition, WPT partnered with Budweiser and World Central Kitchen to produce the King's Celebrity Poker Challenge on Club WPT, featuring guest celebrities, including Jose Andreas, Jason Alexander and Jon Hamm among others. This event aired on FS1 and OTT platforms to an audience of more than 1,000,000 nationwide viewers. And finally, with many live events canceled, Club WPT provided an opportunity for WPT to pivot online by leveraging the company's assets, including live Twitch streams on WPT talent, play on Club WPT in a regular series of online tournament, which has promoted the Club WPT product in front of thousands of weekly viewers. On the e sports side of the business, the move from the in person pillar I discussed earlier in my remarks continues to generate significant content that we are streaming. During the Q2, we launched multiple programming offerings, including proprietary and with partners, including the production of HyperX Game Spotlight, a deep dive epicsotic program focused on game developers telling the stories behind the inspiration and evolutions of their games and Esports Studio, which brings traditional sports athletes together to compete in the video game versions of their sport. In addition to live streaming on Twitch, Esports Studio also aired live on Germany's Sportsdeutschland. Tv OTT platform. We also launched the 12th edition of our proprietary Legend series program featuring Valorant by Riot Games, the biggest esports launch of the year. Importantly, the focus on content and online tournament participation dramatically increased social media interaction across Ally Esports Twitter, Instagram and Facebook accounts versus the same time period immediately before the closure of the HyperX Esports arena. Now, I would like to provide an update on our strategic relationship with Simon Property and Brookfield Property Partners. We are working with these important partners to deliver esports experiences through integrated gaming venues and production facilities at select Simon and Brookfield properties. Earlier in this year, Simon's Mall of Georgia located in the Atlanta metro area was selected as the location for an Allied esports venue. While the Simon project is currently halted due to the pandemic, Simon remains keen on the esports concept and we have extended the milestone under our partnership agreement until the COVID-nineteen crisis has ended. We also announced a similar strategic relationship with Brookfield. We plan to expand the On Mall venue concept to an existing Brookfield retail location in the Northwestern part of the United States with opening currently slated for mid-twenty 21. Although the pandemic has delayed our timeline with expansion to malls, we remain confident in the prospects of this business initiative and will continue to update you on our progress in future calls. Before turning it over to Tony, I would also like to provide an update on our flagship HyperX Esports Arena, Las Vegas at the Luxor Hotel and Casino. While we continue to make progress on the further development of our indirect pillar, we remain committed to the live in person segment of our business and with our recovery already begun, we believe there is an exciting opportunity for long term growth in the live in person esports business. The facility successfully reopened on June 25 with certain restrictions and a modified schedule for daily play and weekly tournament. We are motivated by the early demand we have seen for our weekly tournament and continue to expand both our live weekly in person and online tournament offerings. As the health and safety of guests and team members remain our top priority, HyperX Esports Arena has implemented extensive sanitization protocols throughout the venue. Furthermore, reduced operating hours and enforced physical distancing remain in effect, lowering customer capacity by approximately 35% of pre pandemic levels. Food and beverage service is also limited. That said, we are seeing encouraging demand for our in arena events thus far and have earned the trust of our customers to provide a safe place to play with our enhanced safety and sanitization protocol. Looking forward, we continue to focus on online events and production services as the recovery of live in person events carries on. With that, I would like to turn the call over to Tony Hung, our CFO, for a more detailed update and on our Q2 financial results. Hey, Tony. Thank you, Frank. Good afternoon, everyone, and thank you for joining us today. As Frank mentioned, the Q2 marked a challenging operating environment as most of our markets were shut down throughout the quarter due to the COVID-nineteen pandemic. While our in person pillar was significantly impacted by the shelter in place orders, we quickly shifted our strategic focus to the development of our multiplatform content and interactive pillars. As we continue to lean into these two pillars while diligently working on the recovery of live in person events and adhering to state and local restrictions, our priority remains to manage our expense base to strengthen our liquidity and capital structure during these uncertain times. Now turning to our 2nd quarter results. Total revenues for the Q2 of 2020 were $4,600,000 down 37.6% year over year, primarily due to lower in person and multiplatform content revenues, partially offset by higher revenues from the interactive pillar. Looking at these results in greater detail, in person revenues for the 2nd quarter totaled $700,000 compared to $3,200,000 in the prior year period, a decrease of 78% year over year as a result of the closure of most markets throughout the quarter due to the spread of the pandemic. Multiplatform content revenues totaled $700,000 compared to $1,700,000 in the prior year period, a decrease of 59%. While we have seen more demand for our content, we experienced a decrease in multiplatform content revenues primarily due to a true up on music royalties in previous quarters. In addition, we generated lower sponsorship revenue in the Q2 of 2020, resulting from the postponement of the WPT final tables due to the pandemic. Finally, interactive revenues totaled $3,200,000 compared to $2,400,000 in the prior year period, an increase of 34%, primarily attributed to strong growth in Club WPT registration and the successful launch of our premium Club WPT diamond service. Overall, total revenues in the Q2 of 2020 derived from Allied Esports decreased to $600,000 from $20,300,000 in the Q2 of 2019. Total revenues derived from WPT decreased to $4,000,000 from $5,100,000 in the prior year period. Although the mandatory shutdown and shelter in place orders across the globe significantly impacted our esports World Poker Tour's mature multi platform and interactive pillars allowed us to still realize revenue from the transition to online services and events and generate year over year growth in the interactive pillar despite the pandemic. Total costs and expenses for the Q2 were 9,400,000 dollars down from $10,100,000 in the prior year period. We significantly reduced our expenses in the in person pillar by 41% or 300,000 dollars multiplatformcontent pillar by 53 percent or $1,000,000 and selling and marketing expenses by 72% or 700,000 dollars compared to the prior year period as well as general and administrative expenses by 14% or 600,000 dollars The decreases reflect the swift and aggressive actions we took during the quarter to actively reduce all nonessential spending. The year over year decrease in total costs and expenses were partially offset by several factors. 1st, expenses in the interactive pillar increased 44 percent or $200,000 compared to the Q2 of 2019, and online operating expenses increased 124 percent or $200,000 as we continue to rationalize expenses to build out online events and production services as the recovery of live in person events continues. In addition, we incurred approximately 300,000 dollars of stock based compensation expenses and a $1,100,000 impairment charge against our investment in ESA versus $9,000,000 in the prior year period. Total net loss for the Q2 was $10,900,000 up from a net loss of $2,800,000 in the Q2 of 2019. The decline was primarily due to the operational results in addition to a conversion inducement expense of $5,200,000 from the refinancing agreement, which I will describe in more detail in a moment. Now moving to our balance sheet. At June 30, 2020, our cash position totaled $14,200,000 including $5,000,000 of restricted cash compared to $12,100,000 at December 31, 2019, which included $3,700,000 of restricted cash. The increase of cash is due in large part to $2,000,000 of additional capital raised from our Chairman, Lyle Berman, through the sale of Allied Sports common stock and from $1,600,000 of PPP loans as well as proceeds from the sale of certain WPT employee shares for tax withholding purposes. During the Q2, we executed a series of activities to refinance our convertible debt and better position our company going forward. As part of this, we entered into an agreement with Knighted Pastures LLC, who held a $5,000,000 convertible promissory note issued by the company. On April 29, Knighton agreed to convert $2,000,000 of the principal amount of their note into shares of the company's common stock at $1.60 per share. On May 22, 2020, they also agreed to convert the remaining $3,000,000 of their bridge note into the company's common stock at $1.40 per share. As part of this transaction, United Pastures has also agreed to an 18 month extension on a $1,400,000 of accrued interest originally due in August 2020. 2 additional existing convertible bridge note holders, collectively holding $2,000,000 of the company's debt, also agreed to an 18 month extension on the maturity of their respective holding. And finally, a group of new institutional investors agreed to refinance, net of fees and interest, the the remaining $7,000,000 in convertible bridge note principal and the associated accrued interest held by the company into senior secured notes maturing in 24 months. With the completion of these transactions, Allied Sports Entertainment has significantly improved its liquidity position and has now addressed the entire $14,000,000 of outstanding debt and $3,700,000 of accrued interest that was scheduled to mature on August 23, 2020. This refinancing will provide the company with additional financial flexibility over the next 18 to 24 months as we continue to look for opportunities to optimize our capital in a manner that allows us to better navigate economic uncertainties during the COVID-nineteen pandemic while creating value and growth for the future. Finally, as detailed in an 8 ks filed on July 24, we entered into an amendment to our existing term sheet and share purchase agreement with TVS Peca, which eliminated our future $2,000,000 commitment for various strategic initiatives and our obligation further invest in and develop an esports platform for the Mexican market, in turn, allowing us to conserve more cash. In return, we are releasing TBS Teka from the 24 month lockup that prohibits TBS Teka from selling or transferring their shares of our common stock. And if they do not generate at least $1,600,000 of gross proceeds from the sale of their stock, then on March 1, 2021, we will contribute additional capital to the party's strategic alliance in amount equal to such shortage. In summary, despite the unprecedented environment and significant impacts we felt from the pandemic, we continue to rightsize our business and pivot to offering more multiplatform content and interactive services using the successful WPT model to guide the expansion of the Allied esports business. We are thrilled with the reception of our online events and production services that we are generating. We remain optimistic in our growth opportunities as we continue to accelerate the development of the areas of our business that can realize benefits in the current operating environment while optimizing our operations and strengthening our balance sheet. We will now open the line for Q and A. Operator? Thank you. We will now be conducting a question and answer session. Our first questions come from the line of Brian Kinstlinger of Alliance Global Partners. Great. Thanks so much. I was taking so many notes. I didn't quite, Tony, pick up the discussion and the details around your TBS TECA deal. Can you just reiterate what there's the details behind that and the capital, what they need to sell? And and just I just wasn't able to write it down fast enough. Sure, Ryan. Be happy to do that and thanks for joining the call. As you may recall, our original agreement with PBS Teva, we had a commitment to invest $7,000,000 in to the strategic partnership that we had with them, dollars 5,000,000 of which has already been invested. So we had $2,000,000 remaining of ongoing commitment due over the next 2 years. As part of this recent amendment, we've now eliminated the $2,000,000 of additional commitment. So we've basically fulfilled our entire obligation. And then on the flip side, what we've also done is CBSEteca's shares, which they had purchased as part of the original strategic partnership, were subject to lockup. Those are now being released as well. And then essentially, there's a make whole on that. So to the extent that they sell those shares and don't receive $1,600,000 of gross proceeds from those sales, then we will do a make whole on the difference between what they actually receive and $1,600,000 And how many shares do they have? Can you just remind me? Is it one you said? Sure. It's about just around 760,000 shares. Great. And then just moving to the business, can you talk about the trends in your in person? You gave a lot of details around what's going on right now, 35% less capacity, much lower food and beverage. In light of the somewhat 75% to 80% decline in revenue in the Q1, Should that be something more like 50% to 60% decline with a late opening to the quarter, a little less capacity but much lower numbers. I mean, how should we think about that? And is there any way to predict at all what capacity starts to increase even further? Yes. No, it's difficult, obviously, as you know, Brian, with in person, not knowing exactly how the COVID pandemic is going to play out. But I definitely feel that we're kind of have reached the bottom and are starting to trend back up again. And so as you mentioned on in person, we had already been seeing a stable base of revenues coming from the sponsorship revenues that we were receiving tied to the Las Vegas arena as well as some of the online event revenues and so forth. I think as you mentioned, as we now have the Esports Arena open again for a full quarter, you'll start to see that trend up again. And then I think the bigger the other big factor will be once we start booking more and more of those 3rd party events that we had been doing pre COVID as well. And have you done any of those yet? Have you started at least for the future or not yet? Yes. Jud can probably provide a little bit more color there, but we have started to do what we said, we just did one the other day with our truck, and we're starting to do some at the arena as well. Yes, we have, Tony. Thank you. And then you highlighted the drop in multicontend revenue. You mentioned music true ups sounded like a little less sponsorship, I assume, is ad demand and maybe some timing for events. Could you maybe split the 3 buckets up, what the decline result how much of the decline was from each one? And then specifically talk about what a music true up is. Sure. Yes. It's a little confusing because at a business level, we are seeing a continued increased demand for our content, but music royalties is a little complicated because we typically will get those paid in about 6 months in arrears. So there's a little bit of a lag period there. And so the vast majority of the decrease in Pillar 2 or Multimedia Content revenues this quarter came from a result of those true ups from music royalties. The other piece that I mentioned earlier that also impacted but not as much was on the sponsorship side because we have sponsorship deals in place, but some of them we don't recognize those revenues until the final tables are done. And because of the COVID-nineteen pandemic, those final tables got postponed. So when those come back, then we'll be able to recognize those revenues, but that also had an impact when compared to last year. So what were the music royalties for the Q2 this year versus last year? Yes. So the music royalties, you're talking about nearly $300,000 versus last year, it was about $700,000 for the quarter. And then so there was that and then also some of the true ups. Right. And so the true up was how much? So the true up makes up the other difference. It was about $300,000 roughly. Yes. Yes. And then I think this is more a long term and a high level strategic question, but maybe talk about your thoughts of your strategy at malls at a high level. It sounds like your plans for breaking construction as soon as you'd hope to open mid-twenty 21. But given the reluctance for, I would think, consumers to head to the mall, how are you is there any change in your thought process to how you go about this business in the near and medium term? Yes. I think, in general, we're still closely monitoring the situations of how the pandemic is moving along. And we're in constant dialogue with all those partners. In fact, we talked to one of them. And they are thinking more like in the very near future, whenever things are easing up a little bit more, we may do some top up activities at some of their locations, whereas the others, we're still talking on the permanent locations. But in the meantime, we're trying to figure out the better business arrangement that will cater for this kind of situation. So we're, in the meantime, also discussing those arrangements with these partners. But like what Tony has been saying, we just have to keep watching at the situations. When things are getting better, we will accelerate on that. And we still have strong belief and this will be a very good business area for us to focus on in the long run. I assume 1 mid-twenty 21, it sounds like, in the Northwest, and you'd hope maybe to have a second by the end of the year. So a good scenario for 2021 is having 2 locations. Would that be an accurate statement in your view? That would be a good scenario. But again, we really have to see how the economy is being opened up, what's the pacing on that. Yes. Last question I have, I might have missed it, there were so many details. On WPT Online, did you talk about how many subscribers you have at the end of the quarter? And how does that compare versus March in the year ago period? And then last question is, how many Diamond subscribers? Yes. Brian, this is Tony again. So we haven't publicly disclosed the actual subscriber numbers, but I'll give you kind of a ballpark there in the 5 figure range. And then Adam, I don't know if you want to share a little bit of color in terms of how well the online piece of the WPT business has been doing. Sure. So in terms of we started to actually see a tick up at the beginning of January because that's when we started our new initiatives. As the COVID crisis has increased and more people were at home, that just magnified. And in addition to that, we had transferred our talent online. So they became streamers, which are good best practices that will continue long after this is done. So what we really saw before Diamond was a substantial uptick in the overall Club WPT. When we started in May, what I can say is that we had we were hoping to convert a certain amount, but our expectations were quickly realized within a week or so and what we thought that 1st month would be. I think that we are now confident that Diamond will become a significant and definitely the fastest growing part of Club WPT for the remainder of the year. Our next question is coming from the line of Derek Soderber with Collier Securities. Please proceed with your question. Hi, thanks for taking my questions. My first question relates to the online events compared to in person. So now that you guys have sort of had a full quarter of online events, I was wondering if you guys strip out the food, beverage, merchandise revenue from your typical in person event, how has revenue per event from your online events performed relative to your traditional in person events? And then maybe relative to what you guys expected to get from an online event back in May? Sure. Let me go ahead and start and then Jud can fill in a little bit as well. But the size of the 3rd party event, they can vary anywhere from kind of 5 figures to the mid-six figures depending on the size of those events. But I think overall, we've been pretty pleased with how those have been playing out. And Jed, I don't know if you want to add a little bit more color in terms of some of the specific events. What I'd add to is, Derek, is the frequency at which we can do events online. So if you're comparing one event to an event in arena, there are different economics there versus what a player might pay for entering one particular event online versus coming in for an in arena experience. However, the frequency of which we can do things online is much greater in detail. So I think that's kind of the main difference in just our operating practice there in online versus in arena. Okay. I can also add to that is this is the B2C part of it. Yes, B2C part, of course, food and beverage will have some impact and all the retail part has some impact. But as we're doing more and more of these online events, we're also drawing in new customers, new engagement on the B2B side. Like, for example, we have announced that EEG, the sports betting series that we're doing for them is a pure online event, which we never had those opportunities before. And we're running at the moment the Valorant series for the official series for Riot, it's pure online event again. And this is something that we never had before. So as we do more of these online events, we're also attracting a lot of those new B2B opportunities, which can be lucrative as well. Okay. Derek, this is Adam. I know your question was more focused on the esports side of the business, but the WPT has also put its events online during this time. And this will be a substantial impact and it will be a substantial impact going forward. It basically switches the margin when you're not flying a whole group of people to Marrakesh or Uruguay or wherever it is and the scale is even greater. So as indicated by Frank, we had a main tour event, which was our largest main tour event of all time. We have an event going on right now the Party Poker. That event in May was so successful. The Party Poker has jumped behind it and put $100,000,000 of guarantees into the events that are going on right now. So we feel like that is a substantial opportunity to really flip the cost where we've always looked at the 1st pillar for the WPT at least as that's where you build your brand, that's where you probably will see in the long term the lowest margin. But in this case, things change and you're able to run events 20 fourseven and so we think that's going to be a great growth area going forward. And then just kind of to piggyback on that some of these points, with some of your team working in different locations and maybe your servers being in different locations, are you guys limited at all to the number of events you guys can hold online concurrently? I think actually, 1st of all, the servers that we're using, they are the game servers provided by their publisher. So wherever they have those servers, we can run events. We have a working team directly owned by us in Germany and one in United States. And we have a partner's team in Mexico and other locations as well. So with this big network, we can pretty much run around the clock online tournaments, more than 24 hours if we need to. So, I think there we don't see any limitations once we get online. In fact, it really frees me up and our production capacity will increase dramatically because we're actually engaging in online now. Okay, great. And then just one final one. Back to the real money gaming, I know you'd mentioned it a little bit before, but I was wondering if you can maybe remind us how large of an opportunity that is for you guys? And then maybe when we might just start to see those opportunities really start to materialize on the top line? Okay. That's a major first step for us. We have never done any content or tournament in this area before. This is the first trial. But I think that has a lot to do with our belief. We believe tournaments, esports, they meant to accomplish some business objectives and we have been designing a lot of our events to create entertainment. But in the meantime, we must satisfy our partners' business objectives. And this time, it's our partner, EEG, which they want to launch their new online betting solutions, first time, vie.gg. And so we take one of our most popular series, Legend of the Legend series, which we have been doing for a long time in Europe, and we adjust the format a little bit so that it will enable a more engaging experience for Esports betting purposes for our partner. So again, this is the first time and it's a licensed arrangement. We licensed our tournaments to them and we redesigned some of the features of the stream and also the format of the tournament so that it will help their help them to achieve their goals better. And hopefully, on a rev share deal, we should be able to get something much more meaningful in the long run. Great. Thanks. There are no further questions at this time. I'd like to turn the call back over to management for any closing remarks. Okay. Thank you. Thank you for your support, everyone, and joining us on today's call. We look forward to speaking with everybody again when we report our 20 2Q3 results in early November. Thank you again for your time this morning, and please stay safe and healthy. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great evening.