Enthusiast Gaming Reports First Quarter 2021 Financial Results

Rhea-AI Summary

Enthusiast Gaming announced impressive first quarter results for 2021, revealing a 321% revenue growth to $30 million compared to $7.1 million last year. Gross profit surged by 80% to $5.9 million. Direct sales soared to $2.2 million from $60,000 and subscription revenue increased by 50%. Despite a net loss of $13.6 million, the company reported a 49% growth in paid subscribers, reaching 137,000. Significant partnerships were formed with Samsung and TikTok, and the company strengthened its balance sheet by approximately $50 million through strategic financing.

Positive

• 321% revenue growth to $30 million
• 80% increase in gross profit to $5.9 million
• Direct sales increased to $2.2 million from $60,000
• 49% growth in paid subscribers to 137,000
• Strengthened balance sheet by approximately $50 million

Negative

• Net loss of $13.6 million

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.

Contacts

Enthusiast Gaming Investor Relations:
Eric Bernofsky, Chief Corporate Officer
investor@enthusiastgaming.com   

Media Relations:
Carmela Antolino, Provident Communications
carmela@providentcomms.com
647-287-2286

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
ASSETS
Current
	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
Non-current
	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
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
	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
Non-current
	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
	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

FAQ

What are Enthusiast Gaming's Q1 2021 revenue results?

Enthusiast Gaming reported a revenue of $30 million for Q1 2021, marking a 321% increase compared to $7.1 million in Q1 2020.

What was Enthusiast Gaming's gross profit for Q1 2021?

The gross profit for Q1 2021 was $5.9 million, an 80% increase from $3.3 million in the same period last year.

What is the net loss reported by Enthusiast Gaming for Q1 2021?

The company reported a net loss of $13.6 million for the first quarter of 2021.

How many paid subscribers does Enthusiast Gaming have as of March 31, 2021?

As of March 31, 2021, Enthusiast Gaming has 137,000 paid subscribers, reflecting a 49% growth over the past 12 months.

What partnerships did Enthusiast Gaming announce in 2021?

Enthusiast Gaming announced key partnerships with Samsung and TikTok in 2021.