MEEG’s Q1 Earnings Adversely Affected By Omicron Variant

• Main Events Entertainment Group reported a net loss of $40.64Mn for its first three months ending January 31, 2022, as higher costs outpaced revenue growth. The emergence of the Omicron variant, which resulted in the re-imposition of restrictive measures brought an immediate and sharp decline in demand for its services and this curtailed topline growth. 
• The company realised a 14.7% year over year increase in revenues during the quarter. However, stronger growth was expected before the emergence of the Omicron variant. Management highlighted that it began the year with strong client interest for its core services. However, with the emergence of the Omicron variant by mid-December, it faced multiple requests to scale back or defer holiday season projects. 
• In some instances, planning and preparatory work had already begun, and certain costs had already been incurred. As such, these costs turned into sunk costs, which contributed to elevated direct and indirect costs of $57.61Mn (88.5%) and $20.63Mn (32.0%), respectively.
• The company's prospects for the remainder of its financial year have improved significantly primarily due to the full withdrawal of the COVID-19 restrictions on the entertainment industry. MEEG is expected to see increased demand for its services supported by pent-up demand from the general public for entertainment services, which should positively impact its financial performance. 
• MEEG’s stock price has increased by 107.7% since the start of the calendar year and closed Monday’s trading session at $9.35.

(Source: Company Financials)