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Enthusiast Gaming Announces $31.7 Million of Pro Forma Revenue in Q3 2020

Enthusiast Gaming Inc.
·14 min read

Completed transformational acquisition of Omnia Media on August 30, 2020

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

CONTACT: 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