Gfinity outlines plan to cut costs, CEO and chairman step down

UK-based esports business Gfinity has announced it is implementing a ‘cost reduction programme’ in its latest trading update.

This will include board and management changes, adopting a ‘variable cost’ operating model and focusing on three core areas: its own community, building community for others and motorsports (Gfinity produces the F1 Esports Series).

As part of these changes, executive chairman Garry Cook (who joined Gfinity two years ago) and CEO Graham Wallace have stepped down, though Gfinity says they will ‘maintain a relationship’ with Gfinity and work on investment and commercial opportunities.

They will be replaced by Neville Upton, president and co-founder of Gfinity, and John Clarke, global commercial and brand officer, respectively.

Gfinity said it will also exit areas that are having a negative impact on cash, including low-margin tournament operations.

The reason for the changes are due to several reasons. Gfinity says it ‘has not seen commercial opportunities materialise as expected’ and ‘discussions around strategic partnerships have also not progressed as quickly as anticipated’.

The company also cited challenging market conditions which have been exacerbated by the impact of the COVID-19 virus, which is forcing the postponement of many esports events.

Two major events that Gfinity delivers for its clients, due to take place before July 2020, have been postponed.

“The Company is closely monitoring developments regarding COVID-19 and its ongoing impact on the business and will continue to update the market as appropriate,” Gfinity said in a statement.

“Consequently, the board now expects that for the year to June 30th 2020 revenue will be lower and adjusted loss before tax will be higher than current market expectations. In light of all this, the company is pursuing other options for financing in the short term and continues its discussions with several potential strategic investors.”

Gfinity expects to report revenue of £3.5m, a gross profit of £2.1m and an adjusted operating loss of £2.4m for its most recent half-year.

Last year, Gfinity Australia closed and Gfinity outlined plans to relaunch its currently defunct Elite Series tournament, though there’s been no word of that since.

Gfinity’s share price is currently at a low of 3p. During the past five years, it previously peaked at over 30p.

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