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Enthusiast Gaming Announces Q3 2020 Revenue Of $16.3M, Net Loss Per Share Of $(0.09)

TORONTO, Nov. 16, 2020 (GLOBE NEWSWIRE) -- Enthusiast Gaming Holdings Inc. ("Enthusiast Gaming" or the "Company") (TSX: EGLX)(OTCQB:ENGMF)(FSE: 2AV), today announced results for

· 11/16/2020 16:12

TORONTO, Nov. 16, 2020 (GLOBE NEWSWIRE) -- Enthusiast Gaming Holdings Inc. ("Enthusiast Gaming" or the "Company") (TSX: EGLX)(OTCQB:ENGMF)(FSE: 2AV), today announced results for the third quarter ended September 30, 2020.
 

"The third quarter was another record quarter for us. The acquisition of Omnia in August was transformational, and Omnia's assets and viewers are proving to be a natural fit for our ecosystem," commented Adrian Montgomery, Chief Executive Officer of Enthusiast Gaming. "We are on a mission to prove the earnings power of our platform of 300 million gamers monthly. We are growing rapidly and look forward to continued strong performances in the fourth quarter and in 2021."

Third Quarter 2020 Highlights:

  • Reported revenue was $16.3 million, an increase of 133% compared to $7.0 million in the second quarter;
  • Pro forma revenue was $31.7 million for Q3 2020, an increase of 17% compared to $27.2 million in the second quarter;
  • Reported gross margin was $4.1 million, an increase of 28% compared to $3.2 million in the second quarter;
  • Pro forma gross margin was $5.3 million, an increase of 18% compared to $4.5 million in the second quarter;
  • Reported operating expenses were $8.2 million, an increase of 9% compared to $7.5 million in Q2;
  • Pro forma operating expenses were $9.3 million, an increase of 4% compared to $8.9 million in the second quarter;
  • Net loss and comprehensive loss for Q3 was $8.0 million, compared to $6.5 million in the second quarter, resulting in a net and comprehensive loss per share, basic and diluted, of $0.10 and $0.09, respectively;
  • Pro forma total views across written and video content were 10.6 billion for Q3, and 32.2 billion year-to-date;
  • Direct sales were approximately $1.0 million, an increase of 67% compared to the second quarter;
  • Closed the acquisition of Omnia Media on August 30, 2020;
  • Closed a $17.25 million bought deal public offering on August 31, 2020;
  • Introduced two new paid subscription offerings, Siliconera+ and The Escapist+; and,
  • Added three senior media executives to the leadership team.

The Company completed the acquisition of Omnia Media Inc. ("Omnia") on August 30, 2020 (see press release dated August 31, 2020). The unaudited condensed consolidated interim financial statements of the Company for the three and nine months ended September 30, 2020 (the "Financial Statements") include the financial results of Omnia from August 30 through September 30, 2020. References to "pro forma" figures herein will assume the acquisition of Omnia took place on the first day of the respective period. The Company is providing pro forma quarterly information for 2020 as a number of mergers and acquisitions closed in the second half of 2019 reduce the comparability of year-over-year figures. The Financial Statements contain comparative figures for the three and nine months ended September 30, 2019. Results are presented in Canadian dollars.

Pro Forma Metrics

Select Pro Forma Financial Metrics: Quarterly and 9 Months 2020
Pro Forma for Omnia Acquisition
(in $M except for EPS) Q120 Q220 Q320 9 months FY20
Total Revenue $26.2   $27.2   $31.7   $85.1  
Media and Content $ 22.5   $24.4   $ 29.0   $75.9  
Subscription $1.2   $ 1.7   $1.6   $ 4.5  
Esports and Entertainment $ 2.5   $ 1.1   $ 1.1   $ 4.7  
Gross Margin $4.7   $4.5   $5.3   $14.6  
Gross Margin % 18.0 % 16.7 % 16.8 % 17.2 %
Operating Income (loss) ($4.6 ) ($4.3 ) ($4.0 ) ($12.9 )
Operating Margin -17.4 % -15.9 % -12.6 % -15.2 %
Net Income (loss) ($6.1 ) ($6.4 ) ($8.0 ) ($20.5 )
Earnings (loss) Per Share (basic & diluted) ($0.08 ) ($0.09 ) ($0.10 ) ($0.27 )


 

Select Pro Forma Operating Metrics: Quarterly and 9 Months 2020
Pro Forma for Omnia Acquisition
  Q120 Q220 Q320 9 months FY20
Total Views (millions) 9,201 12,485 10,554 32,240
Web pageviews 2,296 3,119 2,427 7,842
Video views 6,905 9,366 8,127 24,398
Paid Subscribers (thousands - as at end of period)  92 111 112  112

Certain information provided in this news release is extracted from Financial Statements and Management's Discussion & Analysis ("MD&A") of the Company for the three and nine months ended September 30, 2020, 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 www.sedar.com.

Earnings Announcement and Supplemental Information

Management will host a conference call and webcast on November 16, 2020, at 5:00 p.m. Eastern Time to review and discuss third quarter results.

Please call the following numbers (at least 10 minutes before the scheduled time) to participate:

North America (toll-free): 1-877-407-9039

International: +1 201-689-8470

Conference ID: 13713075

A live webcast can be heard at https://www.enthusiastgaming.com/shareholder-information/.

If you are unable to join live, a replay of the call will be accessible until November 30, 2020, as follows: North America: 1-844-512-2921; International: +1 412-317-6671. The conference ID is 13713075. A recorded version of the webcast will also be available via the Enthusiast Gaming investor relations website.

About Enthusiast Gaming

Enthusiast Gaming (TSX:EGLX) (OTCQB:ENGMF)(FSE: 2AV) is building the world's largest social network of communities for gamers and esports fans that reaches over 300 million gaming enthusiasts on a monthly basis. Already the largest gaming platform in North America and the United Kingdom, the Company's business is comprised of four main pillars: Esports, Content, Talent and Entertainment. Enthusiast Gaming's esports division, Luminosity Gaming, is a leading global esports franchise that consists of 7 professional esports teams under ownership and management, including the Vancouver Titans Overwatch team and the Seattle Surge Call of Duty team. Enthusiast's gaming content division includes 2 of the top 20 gaming media and entertainment video brands with BCC Gaming and Arcade Cloud, reaching more than 50MM unique viewers a month across 9 YouTube pages, 8 Snapchat shows and related Facebook, Instagram and TikTok accounts. Its 100 gaming-related websites include The Sims Resource, Destructoid, and The Escapist. Enthusiast's talent division works with approximately 500 YouTube creators such as Pokimane, Flamingo, Anomaly, and The Sidemen. Enthusiast's entertainment business includes Canada's largest gaming expo, EGLX (eglx.com), and the largest mobile gaming event in Europe, Pocket Gamer Connects (pgconnects.com). For more information on the Company visit enthusiastgaming.com. For more information on Luminosity Gaming visit luminosity.gg.

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.        
Condensed Interim Consolidated Statements of Financial Position    
As at September 30, 2020 and December 31, 2019        
             
        September 30, 2020     December 31, 2019  
            (Audited)  
  ASSETS        
  Current        
    Cash $ 8,526,400   $ 13,211,722  
    Investments   125,002     804,865  
    Trade and other receivables   17,230,810     6,701,087  
    Loans receivable   205,235     205,936  
    Income tax receivable   283,065     -  
    Prepaid expenses   821,029     612,386  
  Total current assets   27,191,541     21,535,996  
  Non-current        
    Property and equipment   406,949     298,312  
    Right-of-use asset - lease contract   3,178,922     733,413  
    Long-term investment   2,755,340     2,480,405  
    Investment in associates   1,003,687     914,295  
    Long-term portion of prepaid expenses   -     104,630  
    Intangible assets   82,625,437     60,017,320  
    Goodwill   110,149,496     83,259,416  
  Total Assets $ 227,311,372   $ 169,343,787  
             
  LIABILITIES AND SHAREHOLDERS' EQUITY        
  Current        
    Accounts payable and accrued liabilities $ 19,182,061   $ 7,423,396  
    Deferred revenue   1,260,183     1,647,594  
    Income tax payable   -     2,415  
    Deferred payment liability   1,332,854     1,208,413  
    Current portion of lease contract liability   512,789     193,366  
  Total current liabilities   22,287,887     10,475,184  
  Non-current        
    Long-term debt   22,310,203     19,691,220  
    Long-term lease contract liability   2,703,040     548,846  
    Convertible debentures   7,656,712     7,015,820  
    Vendor-take-back loan   5,401,037     -  
    Deferred payment liability   536,372     473,413  
    Deferred tax liability   18,708,353     12,482,605  
  Total liabilities $ 79,603,604   $ 50,687,088  
             
  Shareholders' Equity        
    Share capital   226,212,402     176,511,857  
    Shares to be returned to treasury   -     (3,858,756 )
    Warrants reserve   8,037,946     15,404,728  
    Contributed surplus   9,872,621     9,439,324  
    Accumulated other comprehensive income   156,117     90,078  
    Deficit   (96,571,318 )   (78,930,532 )
  Total shareholders' equity   147,707,768     118,656,699  
  Total liabilities and shareholders' equity $ 227,311,372   $ 169,343,787  
             




 

Enthusiast Gaming Holdings Inc.                  
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss          
For the three and nine months ended September 30, 2020 and 2019          
        For the three months ended   For the nine months ended  
        September 30, 2020      September 30, 2019     September 30, 2020      September 30, 2019    
                       
  Revenue                  
    Revenue $ 16,328,946   $ 3,007,307   $ 30,287,614   $ 3,007,307    
    Gain on player buyout   -     -     204,764     -    
  Total revenue   16,328,946     3,007,307     30,492,378     3,007,307    
  Cost of sales   12,268,906     1,048,215     19,917,990     1,048,215    
  Gross margin   4,060,040     1,959,092     10,574,388     1,959,092    
  Operating expenses                  
    Professional fees   549,942     724,644     1,463,887     1,371,092    
    Consulting fees   1,336,461     2,118,877     3,725,135     2,617,586    
    Advertising and promotion   215,410     630,555     701,901     1,118,975    
    Office and general   625,296     283,431     2,077,937     401,929    
    Salaries and wages   2,304,003     591,490     5,191,402     658,516    
    Technology support, web development and content   1,163,126     115,622     3,397,877     115,622    
    eSports player, team and game expenses   760,844     808,063     2,244,640     808,063    
    Foreign exchange (gain) loss   (23,125 )   120,347     (71,394 )   135,975    
    Share-based compensation   203,963     2,156,199     873,211     2,549,819    
    Amortization and depreciation   1,042,072     259,771     3,390,604     259,771    
  Total operating expenses   8,177,992     7,808,999     22,995,200     10,037,348    
                       
  Other expenses (income)                  
    Listing expense   -     6,891,713     -     6,891,713    
    Transaction cost   1,621,775     2,873,606     1,621,775     2,873,606    
    Share of loss from investment in associates   808,011     -     2,080,358     -    
    Interest and accretion   1,264,594     1,134,007     3,951,379     1,134,007    
    Change in fair value of investment   (374,065 )   -     (211,050 )   -    
    Loss on modification of long-term debt   806,879     -     806,879     -    
    Interest income   (14,775 )   (590,292 )   (91,305 )   (658,515 )  
  Net loss before income taxes   (8,230,371 )   (16,158,941 )   (20,578,848 )   (18,319,067 )  
                       
  Income taxes                  
    Current income tax expense   9,139     -     20,520     -    
    Deferred income tax recovery   (143,623 )   -     (585,818 )   -    
  Net loss for the period   (8,095,887 )   (16,158,941 )   (20,013,550 )   (18,319,067 )  
                       
  Other comprehensive income                  
  Items that may be reclassified to profit or loss                  
    Foreign currency translation adjustment   62,420     19,397     66,039     19,397    
  Net loss and comprehensive loss for the period $ (8,033,467 ) $ (16,139,544 ) $ (19,947,511 ) $ (18,299,670 )  
  Net loss and comprehensive loss per share,                  
    basic and diluted $ (0.10 ) $ (0.42 ) $ (0.26 ) $ (0.69 )  
  Weighted average number of common shares                  
    outstanding, basic and diluted   83,147,816     38,601,234     76,651,219     26,376,710    
                       




 

Enthusiast Gaming Holdings Inc.        
Condensed Interim Consolidated Statements of Cash Flows        
For the three and nine months ended September 30, 2020 and 2019
           
      For the nine months ended
      September 30, 2020     September 30, 2019  
           
  Cash flows from operating activities        
  Net loss for the period $ (20,013,550 ) $ (18,319,067 )
  Items not affecting cash:        
  Amortization and depreciation   3,390,604     259,771  
  Share-based compensation   873,211     2,549,819  
  Interest and accretion   1,378,077     1,015,791  
  Deferred income tax recovery   (585,818 )   -  
  Gain on player buyout   (204,764 )   -  
  Foreign exchange (gain) loss   (7,050 )   124,412  
  Listing expense   -     6,891,713  
  Capitalized interest and success fee   1,494,910     43,803  
  Shares issued for services   138,172     355,892  
  Loss on modification of long-term debt   806,879     -  
  Provisions   90,366     -  
  Change in fair value of investment   (211,050 )   -  
  Share of loss from investment in associates   2,080,358     -  
  Changes in working capital        
  Changes in trade and other receivables   (1,916,067 )   (1,376,401 )
  Changes in prepaid expenses   63,250     14,868  
  Changes in accounts payable and accrued liabilities   2,288,492     1,267,787  
  Changes in deferred revenue   (387,411 )   -  
  Changes in income tax receivable   (285,480 )   -  
  Net cash used in operating activities   (11,006,871 )   (7,171,612 )
           
  Cash flows from investing activities        
  Cash paid for acquisitions   (10,500,000 )   (1,500,000 )
  Business acquisitions, net of cash acquired   281,125     (10,727,844 )
  Proceeds from disposal of investment   680,000     -  
  Deferred payment liability   -     (11,965,500 )
  Proceeds from disposal of intangible assets   204,764     -  
  Investment in associate   (2,169,750 )   (1,330,690 )
  Acquisition of property and equipment   (4,871 )   (48,438 )
  Net cash used in investing activities   (11,508,732 )   (25,572,472 )
           
  Cash flows from financing activities        
  Proceeds from the issuance of shares for the Offering, net of   15,609,257     -  
     transaction cost        
  Proceeds from the issuance of shares for subcription receipt   -     23,937,295  
     proceeds, net of transaction cost        
  Proceeds from convertible debenture, net of transaction costs   -     9,345,004  
  Proceeds from long-term debt, net of tansaction costs   -     2,170,000  
  Proceeds from exercise of warrants   2,354,246     345,531  
  Proceeds from exercise of options   49,366     19,237  
  Lease payments   (221,764 )   (22,186 )
  Net cash provided by financing activities   17,791,105     35,794,881  
           
  Foreign exchange effect on cash   39,176     (6,491 )
  Net change in cash   (4,685,322 )   3,044,306  
  Cash, beginning of period   13,211,722     4,155,054  
  Cash, end of period $ 8,526,400   $ 7,199,360  
           

 


 

For further information: Enthusiast Gaming Contact: Alex Macdonald, CFO, 416.623.9360

Investor Relations Contact: 
Eric Bernofsky, Chief Corporate Officer, 416.623.9360
investor@enthusiastgaming.com

Media Relations – ID Public Relations
EnthusiastGaming@id-pr.com

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