EGLX:CC - Enthusiast Gaming Reports Fourth Quarter and Full-Year 2023 Results

LOS ANGELES, April 01, 2024 (GLOBE NEWSWIRE) -- Enthusiast Gaming Holdings Inc. (“Enthusiast Gaming” or the “Company”) (TSX: EGLX) , a leading gaming media and entertainment company, today announced financial results for the three (“Q4 2023”) and 12 months ended December 31, 2023 (“FY 2023”).

“We are moving swiftly to simplify and streamline our business in order to improve financial performance,” commented Adrian Montgomery, Board Chair and interim CEO of Enthusiast Gaming. “The actions we have taken in Q1 2024 to focus on our core communities, content and experiences, position Enthusiast Gaming to quickly enhance our profitability and position us for growth as we move forward.”

Added Montgomery, “Enthusiast Gaming embarks on this important year of transformation with many strengths: a large and highly engaged audience of gamers and esports fans, world-class marketing brands that want to reach them, and an enviable set of strategic partners such as the NFL.”

Financial Highlights for Q4 2023

• Revenue decreased by 13% to $47.1 million, with the majority of the decline related to a decrease in lower margin revenue on the video platform
• Gross profit increased by 5% to $18.9 million, with margins expanding 670 basis points to 40.2%
• Adjusted EBITDA loss improved to $3.0 million compared to a loss of $5.2 million in Q4 2022
• Net loss of $39.5 million includes non-cash impairment charges of $38 million

Full Year 2023 Business Highlights

• Direct sales (included in revenue) for the year ended December 31, 2023 was $41.7 million as compared to approximately $37.4 million for the year ended December 31, 2022
• Paid subscribers were 268,000 at December 31, 2023, a 2% increase from 262,000 at December 31, 2022
• Unique Visitors of 52 million, a 4% increase year-over-year, extending position as the #1 Gaming Property in the U.S., based on the latest digital media ratings from Comscore (December 2023)
  

“2024 is an important year of transformation for Enthusiast Gaming, including a $10 million cost reduction program implemented in March, to help us achieve profitability and deliver value for our shareholders,” said Felicia DellaFortuna, CFO of Enthusiast Gaming. “Some of these actions will result in lower revenue as we deprioritize low margin activities such as programmatic advertising through the network, but will also drive improved overall profitability in the form of higher gross margins and the foundation for positive Adjusted EBITDA.”

Fourth Quarter 2023 Results Comparison

Revenue was $47.1 million in Q4 2023, a 13% decrease compared to $54.0 million in Q4 2022. Media and Content revenue decreased 13% to $42.6 million and Subscription revenue decreased 13% to $3.3 million, partially offset by a 9% increase in Esports and Entertainment revenue to $1.2 million. During the quarter, the Company experienced lower views on its web and video platforms in part due to the strategic decision to de-prioritize lower margin businesses. Direct Sales (included in revenue) increased by 3% to $13.2 million in Q4 2023 compared to $12.8 million in Q4 2022.

Gross profit increased 5% to $18.9 million in Q4 2023 compared to $18.1 million in Q4 2022, with gross margins expanding to 40.2% from 33.5% in Q4 2022.

Adjusted EBITDA loss was $3.0 million in Q4 2023 compared to an Adjusted EBITDA loss of $5.2 million in Q4 2022. Adjusted EBITDA in Q4 2023 excludes $2.6 million in severance and $0.4 million nonrecurring public costs such as annual Nasdaq listing fees.

Net loss was $39.5 million, or $(0.26) per share, in Q4 2023, compared to $11.8 million, or $(0.08) per share in Q4 2022. Net loss in Q4 2023 includes $38 million of non-cash impairment charges primarily related to goodwill and intangible assets.

Full-Year 2023 Results Comparison

Revenue was $178.2 million in 2023, a 12% decrease compared to $202.8 million in 2022. Media and Content revenue decreased 14% to $154.8 million, partially offset by a 10% increase in Esports and Entertainment revenue to $8.3 million and a 3% increase in Subscriptions revenue to $15.0 million. Direct Sales (included in revenue) increased by 11% to $41.7 million in 2023 compared to $37.4 million in 2022.

Gross profit increased 6% to $67.4 million in 2023 compared to $63.5 million in 2022, with gross margins expanding to 37.8% from 31.3% in 2022.

Adjusted EBITDA loss was $13.0 million in 2023 compared to an Adjusted EBITDA loss of $15.1 million in 2022. Adjusted EBITDA for the year excludes $4.0 million in severance and $2.3 million in annual Nasdaq listing fees and D&O insurance costs.

Net loss was $117.7 million in 2023, or $(0.77) per share, compared to $76.8 million in 2022, or $(0.54) per share. Net loss in 2023 includes $86.2 million of non-cash impairment charges primarily related to goodwill and intangible assets.

Organizational Updates

As previously announced by the Company, Mr. Thomas Hearne was appointed to the Board of the Company on March 20, 2024. Mr. Hearne has subsequently been appointed Chairman of the Audit Committee of the Board. Additionally, the Company also announced that Ms. Tara Fournier is no longer with the Company. Ms. Fournier has served as the Company’s Chief People Officer since May 2023.

Investor Conference Call

Management will host a conference call and webcast on Monday, April 1, 2024, at 5 p.m. ET to review and discuss its Q4 2023 results. Conference call details:

• Dial-in: 1-855-239-1101 or 1-412-317-5231 (Conference ID: 10187154)
• Live webcast: https://viavid.webcasts.com/starthere.jsp?ei=1660990&tp_key=d2cb2eac63

A replay will be available on Enthusiast Gaming’s website at enthusiastgaming.com/investors .

Supplemental Information

Enthusiast Gaming’s financial statements and management discussion and analysis (“MD&A”) are available at www.sedarplus.ca and enthusiastgaming.com/investors . All amounts are in Canadian dollars.

About Enthusiast Gaming

Enthusiast Gaming is a leading gaming media and entertainment company, building the largest platform for video game enthusiasts and esports fans to connect and compete worldwide. Combining the elements of its five core pillars: creators, content, communities, games, and experiences, Enthusiast Gaming provides a unique opportunity for marketers to create integrated brand solutions to connect with coveted Gen Z and Millennial audiences. Through its proprietary mix of digital media, content and gaming assets, Enthusiast Gaming continues to grow its network of communities, reflecting the scale and diversity of gaming enthusiasts today.

Contacts

Enthusiast Gaming: Felicia DellaFortuna, Chief Financial Officer
Investors: FNK IR, Matt Chesler, CFA, investor@enthusiastgaming.com
Media: press@enthusiastgaming.com

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

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 Gaming anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. 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 statements in this news release include, but are not limited to, statements regarding trends in certain financial and operating metrics of the Company, and expectations relating to the financial performance and the financial results of future periods.

Forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, including, but not limited to, expectations and assumptions concerning: interest and foreign exchange rates; capital efficiencies, cost saving and synergies; growth and growth rates; the success in the esports and gaming media industry; the Company’s growth plan, and judgment applied in the application of the Company’s accounting policies and in the preparation of financial statements in accordance with applicable financial reporting standards. While Enthusiast Gaming considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; and future legislative, tax and regulatory developments. Readers are cautioned that the foregoing list is not exhaustive. For more information on the risks, uncertainties and assumptions that could cause anticipated opportunities and actual results to differ materially, please refer to the public filings of Enthusiast Gaming which are available on SEDAR at www.sedar.com. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. Enthusiast Gaming disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Non-GAAP Measures

This press release references certain non-GAAP measures, including Adjusted EBITDA, as described below. These non-GAAP measures are not recognized measures under GAAP and do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those GAAP measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under GAAP.

The Company uses non-GAAP measures including:

“EBITDA”, which is defined as earnings before interest, taxes, depreciation and amortization. Enthusiast Gaming calculates EBITDA using gross margin less total operating expenses plus share-based compensation, amortization and depreciation and annual general meeting legal and advisory costs; and,

“Adjusted EBITDA”, which is defined as EBITDA plus severance and other non-recurring items. Non-recurring items include the annual Nasdaq listing fees and directors and officers (“D&O”) liability insurance relating to the Company’s former listing on Nasdaq.