Exceeds fiscal Q1 expectations. The company's fiscal year started off strongly, with first quarter revenues exceeding our expectations ($14.3 million versus our $12.3 million estimate). First quarter revenues grew 92% year-over-year from $7.5 million in the first quarter of fiscal 2021. Adjusted EBITDA loss of $4.9 million was largely in line with our $4.7 million loss estimate. Advertising, Game and SaaS were strong. The company's software-as-a-service (SaaS) revenue grew 45% from the previous year quarter to $2.1 million. Advertising revenue grew 84% compared with the previous year quarter of $5.5 million, topping our forecast of $6 million by 65%. Game development revenue also topped our forecast, growing 320% year-over-year with $2.1 million compared to our estimate of $1.6 million. The gains in these divisions more than offset the disappointing revenue in its esports business.Revising fiscal 2022 estimates. The company's esports businesses likely will take longer to recovery than we initially thought. We are revising lower our full year 2022 revenue estimate from $62.1 million to $57.1 million. We are lowering our 2022 adj. EBITDA estimate from a loss of $15.3 million to a loss of $20.2 million, due to the company's ongoing revenue growth investments and likely losses in its esports business. The company may exceed our expectations, as illustrated by the fiscal first quarter results.Financial flexibility. As of November 30, 2021, the company had $9.7 million in cash and $5.6 million in long-term debt. The company indicated that it has garnered interest from a wide range of potential buyers for its Eden Games business. We believe a potential sale of Eden Games could generate between $30 million and $40 million, with proceeds to be used to fund its growth initiatives. Maintaining outperform rating. Near current levels, the GAME shares trade at 0.8 times EV to our fiscal 2022 revenue forecast, a significant discount to its peers. The company’s industry peers trade at an average 2.6 times EV/2022 Revenue. Our $14 price target reflects a target EV/2022 revenue multiple of 3.7 times, well below recent transaction multiples. Read More >>