Enthusiast Gaming Reports First Quarter 2021 Financial Results

Wednesday, 12. May 2021 22:15

Revenue growth of 321% vs the same period last year
Gross Profit up 80% vs same period last year
Direct sales of $2.2 million vs $60 thousand in the same period last year
Subscription revenue growth of 50% vs same period last year

TORONTO, May 12, 2021 (GLOBE NEWSWIRE) -- Enthusiast Gaming Holdings Inc. (NASDAQ:EGLX) (TSX:EGLX), (“Enthusiast Gaming” or the “Company”), today announced financial results for the first quarter ended March 31, 2021. All amounts are stated in Canadian dollars unless otherwise indicated.

“Our first quarter results were fueled by our focused acquisition strategy as well as organic growth gains coming from direct sales and premium subscriptions,” commented Adrian Montgomery, CEO of Enthusiast Gaming. We have leveraged this momentum in our growth strategy, announcing earlier today our accelerated plans to launch a gaming social network and premium subscription offering with the acquisition of Tabwire, enabling us to evolve further into a technology-driven media, esports and entertainment company.”

First Quarter 2021 Highlights:

  • Revenue was $30.0 million, a 321% increase vs Q1 2020 revenue of $7.1 million.
  • Gross profit was $5.9 million, an increase of 80% vs Q1 2020 gross profit of $3.3 million.
  • Net loss and comprehensive loss was $13.6 million, resulting in a net loss and comprehensive loss per share, basic and diluted, of $0.12.
  • Direct advertising sales of $2.2 million, compared to $60 thousand in the same period last year.
  • Paid subscribers grew 49% over the past 12 months to 137,000 paid subscribers as of March 31, 2021.
  • 9.9 billion total views across written and video content.
  • Strengthened balance sheet by approximately $50 million with the combination of a bought deal financing for gross proceeds of $42.5 million and the reduction of indebtedness through the conversion of outstanding debentures of approximately $9 million.
  • Announced key partnership deals with Samsung and TikTok.
  • Was ranked as a Top 100 Internet Properties in the United States by Comscore, one of only two gaming properties to make the list alongside Amazon’s TWITCH.TV, and ranked #1 Gaming Information property for unique visitor traffic from mobile devices.
  • Announced and closed subsequent to Q1, the acquisition of Vedatis SAS, owners of Icy Veins, one of the largest Activision Blizzard fan communities.

We continue to see the benefits of our investments in key areas that drive long-term revenue and margin growth. For any media company, Q1 is seasonally the lowest quarter, but our results are off to a strong start and point to a promising year ahead. As a result, we will continue to execute our strategy of combining accretive acquisitions with organic growth through our proprietary flywheel.”

Significant events subsequent to First Quarter 2021:

  • Signed an integrated and strategic partnership deal with ESPAT TV, a strong producer of gaming and entertainment content across multiple distribution channels, and including ESPAT TV’s Creative Collective, which consists of Ridley Scott Creative Group, Petrol, PRG, and Movers & Shakers, has produced work across the globe partnering with publishers, brands, live events, and advertising agencies alike.
  • Luminosity Gaming, the Company’s esports organization, was ranked by Streams Charts as the most popular esports community on Twitch in March 2021, with 40 million hours watched, outpacing the runner up by more than 15 million hours.
  • Filed a Registration Statement on Form 40-F with the United States Securities and Exchange Commission (“SEC”) becoming a reporting issuer in the United States.
  • Announced that the Company’s common shares were approved for listing on the Nasdaq Global Select Market (“Nasdaq”) under the trading ticker symbol “EGLX” and commenced trading on April 21, 2021.
  • Appointed NFL superstar, Silicon Valley advisor and community leader, Richard Sherman to its Board of Directors.
  • Announced a partnership deal with ExitLag, a Latin American software developer with proprietary technology to improve routing connections for gamers.  
  • Filed a short form base shelf prospectus in Canada and the US up to an aggregate total of $250 million.
  • Announced plans to create a subscription-based gaming social network, Project GG, facilitated by entering into a definitive agreement to acquire Tabwire LLC, a technology and data platform that gives gamers the ability to login directly to view their game data in real time with 13 billion gamer profiles, for US$11 million in cash and stock.

Certain information provided in this news release is extracted from the unaudited condensed consolidated interim financial statements (the “Financial Statements”) and Management’s Discussion & Analysis (“MD&A”) of the Company for the three months ended March 31, 2021 and should be read in conjunction with them. It is only in the context of the fulsome information and disclosures contained in the Financial Statements and MD&A that an investor can properly analyze this information. The Financial Statements and MD&A can be found under the Company’s profile on SEDAR and EDGAR.

Earnings Announcement and Supplemental Information

Management will host a conference call and webcast on May 12, 2021, at 5:00 p.m. EDT to review and discuss the first quarter 2021 results.

Conference call dial-in details:
North America (toll-free): +1 877-407-9039
International: +1 201-689-8470
Conference ID: 13718919

A live webcast can be accessed at https://www.enthusiastgaming.com/investors/.

If you are unable to join live, an archived recording of the webcast will be available on the investor relations section of the Enthusiast Gaming website.

About Enthusiast Gaming

Enthusiast Gaming is building the largest media platform for video game and esports fans to connect and engage worldwide. Combining the elements of its four core pillars; Media, Talent, Esports and Experiences, Enthusiast Gaming provides a unique opportunity and integrated approach to reach and connect with its coveted GenZ and Millennial audience. Through its proprietary mix of digital media and entertainment assets, Enthusiast Gaming has built a vast network of like-minded communities to deliver the ultimate fan experience.


Enthusiast Gaming Investor Relations:
Eric Bernofsky, Chief Corporate Officer

Media Relations:
Carmela Antolino, Provident Communications

Forward Looking Statements

This news release contains certain statements that may constitute forward-looking information under applicable securities laws. All statements, other than those of historical fact, which address activities, events, outcomes, results, developments, performance or achievements that Enthusiast anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. Such information may involve, but is not limited to, comments with respect to strategies, expectations, planned operations and future actions of the Company. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or statements formed in the future tense or indicating that certain actions, events or results "may", "could", "would", "might" or "will" (or other variations of the forgoing) be taken, occur, be achieved, or come to pass. Forward-looking information is based on currently available competitive, financial and economic data and operating plans, strategies or beliefs as of the date of this news release, but involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of Enthusiast to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors may be based on information currently available to Enthusiast, including information obtained from third-party industry analysts and other third-party sources, and are based on management's current expectations or beliefs regarding future growth, results of operations, future capital (including the amount, nature and sources of funding thereof) and expenditures. Any and all forward-looking information contained in this press release is expressly qualified by this cautionary statement. Trading in the securities of the Company should be considered highly speculative.

Neither the TSX Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this release.

Enthusiast Gaming Holdings Inc.     
Consolidated Statements of Financial Position     
As at March 31, 2021 and December 31, 2020     
(Unaudited - Expressed in Canadian Dollars)     
    March 31, 2021  December 31, 2020 
 Cash $24,400,296 $4,323,823 
 Investments  124,997  124,998 
 Trade and other receivables  18,123,771  22,424,596 
 Loans receivable  179,391  194,389 
 Income tax receivable  290,077  290,077 
 Prepaid expenses  539,770  576,802 
Total current assets  43,658,302  27,934,685 
 Property and equipment  325,885  354,850 
 Right-of-use asset - lease contracts  2,648,341  2,848,400 
 Long-term investment  2,577,922  2,606,100 
 Investment in associates  948,492  1,026,910 
 Long-term portion of prepaid expenses  259,794  263,196 
 Intangible assets  79,672,394  81,106,007 
 Goodwill  106,181,086  106,181,086 
Total Assets $236,272,216 $222,321,234 
 Accounts payable and accrued liabilities $17,610,564 $23,602,547 
 Contract liabilities  1,865,475  1,625,594 
 Current portion of long-term debt  2,000,000  1,250,000 
 Current portion of deferred payment liability   -   636,600 
 Current portion of convertible debentures   -   7,546,453 
 Current portion of lease contract liabilities  540,020  578,330 
Total current liabilities  22,016,059  35,239,524 
 Long-term debt  8,026,237  21,651,956 
 Long-term lease contract liabilities  2,113,162  2,308,336 
 Vendor-take-back loan  5,711,756  5,559,250 
 Long-term portion of deferred payment liability 539,730  529,124 
 Deferred tax liability  15,082,200  15,161,987 
Total liabilities $53,489,144 $80,450,177 
Shareholders' Equity     
 Share capital  281,716,168  232,616,997 
 Contributed surplus  12,872,136  7,494,164 
 Accumulated other comprehensive income (loss) (2,274) 45,428 
 Deficit  (111,802,958) (98,285,532)
Total shareholders' equity   182,783,072  141,871,057 
Total liabilities and shareholders' equity $236,272,216 $222,321,234 

Enthusiast Gaming Holdings Inc.     
Consolidated Statements of Loss and Comprehensive Loss    
For the three months ended March 31, 2021 and 2020    
(Unaudited - Expressed in Canadian Dollars)   
    Three months ended
March 31, 2021
  Three months ended
March 31, 2020
 Revenue $ 30,022,335  $6,929,572 
 Gain on player buyout   -   204,764 
Total revenue   30,022,335   7,134,336 
Cost of sales   24,091,327   3,841,107 
Gross margin   5,931,008   3,293,229 
Operating expenses     
 Professional fees   737,496   286,242 
 Consulting fees   1,310,627   1,207,650 
 Advertising and promotion   1,042,354   273,886 
 Office and general   706,945   986,468 
 Salaries and wages   4,628,275   1,240,484 
 Technology support, web development and content   1,394,883   934,894 
 Esports player, team and game expenses   1,528,605   865,109 
 Foreign exchange gain   (10,133) (156,517)
 Share-based compensation   5,760,036   390,373 
 Amortization and depreciation   1,635,854   1,297,140 
Total operating expenses   18,734,942   7,325,729 
Other expenses (income)     
 Share of loss from investment in associates   78,418   95,829 
 Interest and accretion   791,314   1,325,261 
 Change in fair value of investment   (3,984) 174,616 
 Gain on repayment of long-term debt   (39,502)  -  
 Interest income   (18,320) (61,523)
Net loss before income taxes  (13,611,860) (5,566,683)
Income taxes     
 Current tax recovery   (14,655)  -  
 Deferred tax recovery   (79,779)  -  
Net loss for the period  (13,517,426) (5,566,683)
Other comprehensive income (loss)     
Items that may be reclassified to profit or loss     
 Foreign currency translation adjustment   (47,702) 202,371 
Net loss and comprehensive loss for the period $ (13,565,128)$(5,364,312)
Net loss and comprehensive loss per share,      
 basic and diluted  $(0.12)$(0.07)
Weighted average number of common shares      
 outstanding, basic and diluted  111,462,147  72,524,137 

Enthusiast Gaming Holdings Inc.     
Consolidated Statements of Cash Flows     
For the three months ended March 31, 2021 and 2020
(Unaudited - Expressed in Canadian Dollars)     
   Three months ended
March 31, 2021
  Three months ended
March 31, 2020
Cash flows from operating activities     
Net loss for the period  $ (13,517,426)$(5,566,683)
Items not affecting cash:     
Amortization and depreciation   1,635,854   1,297,140 
Share-based compensation   5,760,036   390,373 
Interest and accretion   274,083   438,989 
Deferred tax recovery   (79,779) - 
Gain on player buyout   -   (204,764)
Foreign exchange gain   (696) (69,000)
Gain on repayment of long-term debt   (39,502) - 
Capitalized interest and success fee   -   683,595 
Shares for services   93,553   46,058 
Change in fair value of investment   (3,984) 174,616 
Share of loss from investment in associates   78,418   95,829 
Changes in working capital     
Changes in trade and other receivables   4,300,825   (717,375)
Changes in prepaid expenses   (5,623) (2,012)
Changes in loans receivable   12,500   - 
Changes in accounts payable and accrued liabilities   (6,035,820) (1,021,719)
Changes in contract liabilities   239,881   (480,454)
Changes in income tax receivable   -   4,762 
Net cash used in operating activities   (7,287,680) (4,930,645)
Cash flows from investing activities     
Proceeds from disposal of investment   -   680,000 
Proceeds from disposal of intangible assets   -   204,764 
Acquisition of property and equipment   (3,398) (4,871)
Net cash (used in) provided by investing activities   (3,398) 879,893 
Cash flows from financing activities     
Proceeds from the issuance of shares for the Offering, net of  39,862,514   - 
transaction costs     
Proceeds from long-term debt   944,787   - 
Repayment of long-term debt   (13,773,470) - 
Proceeds from exercise of warrants   -   2,160,342 
Proceeds from exercise of options   594,836   49,367 
Lease payments   (236,614) (60,252)
Net cash provided by financing activities   27,392,053   2,149,457 
Foreign exchange effect on cash   (24,502) 177,776 
Net change in cash   20,076,473   (1,723,519)
Cash, beginning of period   4,323,823   13,211,722 
Cash, end of period $ 24,400,296  $11,488,203 

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