Enthusiast Gaming Reports Third Quarter 2021 Results
Record revenue of $43.3 million, including direct sales of $6.8 million
Record gross profit of $10.1 million
Paid subscribers grew to an all-time high of 207,000
TORONTO, Nov. 10, 2021 (GLOBE NEWSWIRE) — Enthusiast Gaming Holdings Inc. (NASDAQ:EGLX; TSX: EGLX), (“Enthusiast Gaming” or the “Company”), today announced financial results for the three and nine months ended September 30, 2021. All amounts are stated in Canadian dollars unless otherwise indicated.
Third Quarter 2021 Financial and Operating Highlights
- Revenue of $43.3 million, a 165% increase vs revenue of $16.3 million in Q3 2020
- Direct sales of $6.8 million, a 580% increase vs direct sales of $1.0 million in Q3 2020
- Gross profit of $10.1 million, a 146% increase vs gross profit of $4.1 million in Q3 2020
- Paid subscribers of 207,000 as at September 30, 2021, an 85% increase vs paid subscribers of 112,000 as at September 30, 2020
- Cash balance of $33.5 million as at September 30, 2021, as compared to $4.3 million as at December 31, 2020
- Completed acquisitions of GameKnot and Addicting Games
- Net cash used in operating activities of $3.8 million vs $3.7 million in Q3 2020
- Net and comprehensive loss of $12.3 million, or $0.10 per common share, vs $8.0 million and $0.10, for Q3 2020
“This has been an outstanding quarter for Enthusiast Gaming across our key categories,” commented Adrian Montgomery, CEO of Enthusiast Gaming. “Ongoing momentum in direct sales, the acquisition of Addicting Games, and the renewal and addition of key partners continues to power revenue and gross profit numbers that demonstrate the strength of our strategy. Our team’s ability to continue acquiring accretive properties, attract quality partners, and deliver the best fan experience through our flywheel of content, creators, and communities continues to deliver against and exceed expectations.”
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 and nine months ended September 30, 2021 and should be read in conjunction with them. It is only in the context of the 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 November 10, 2021, at 5:00 p.m. ET to review and discuss the third quarter 2021 results.
Conference call dial-in details:
North America (toll-free): +1 844-826-3035
International: +1 412-317-5195
Conference ID: 10161588
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:
Ashley Stanhope, Provident Communications
ashley@providentcomms.com
416-303-1498
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 Consolidated Interim Statements of Financial Position | ||||||||
| As at September 30, 2021 and December 31, 2020 | ||||||||
| (Unaudited – Expressed in Canadian Dollars) | ||||||||
| September 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current | ||||||||
| Cash | $ | 33,526,534 | $ | 4,323,823 | ||||
| Trade and other receivables | 27,351,305 | 22,424,596 | ||||||
| Investments | 133,466 | 124,998 | ||||||
| Loans receivable | 176,931 | 194,389 | ||||||
| Income tax receivable | 290,077 | 290,077 | ||||||
| Prepaid expenses | 3,098,610 | 576,802 | ||||||
| Total current assets | 64,576,923 | 27,934,685 | ||||||
| Non-current | ||||||||
| Property and equipment | 279,562 | 354,850 | ||||||
| Right-of-use asset | 2,731,941 | 2,848,400 | ||||||
| Long-term investment | – | 2,606,100 | ||||||
| Investment in associates and joint ventures | 921,235 | 1,026,910 | ||||||
| Long-term portion of prepaid expenses | 263,224 | 263,196 | ||||||
| Intangible assets | 101,540,147 | 81,106,007 | ||||||
| Goodwill | 156,181,672 | 106,181,086 | ||||||
| Total assets | $ | 326,494,704 | $ | 222,321,234 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current | ||||||||
| Accounts payable and accrued liabilities | $ | 27,136,558 | $ | 23,602,547 | ||||
| Contract liabilities | 3,455,887 | 1,625,594 | ||||||
| Income tax payable | 374,364 | – | ||||||
| Current portion of long-term debt | 9,766,060 | 1,250,000 | ||||||
| Current portion of deferred payment liability | 10,648,211 | 636,600 | ||||||
| Current portion of convertible debentures | – | 7,546,453 | ||||||
| Current portion of lease contract liabilities | 604,094 | 578,330 | ||||||
| Current portion of other long-term debt | 11,176 | – | ||||||
| Total current liabilities | 51,996,350 | 35,239,524 | ||||||
| Non-current | ||||||||
| Long-term debt | – | 21,651,956 | ||||||
| Long-term portion of deferred payment liability | 5,991,777 | 529,124 | ||||||
| Long-term lease contract liabilities | 2,266,045 | 2,308,336 | ||||||
| Vendor-take-back loan | – | 5,559,250 | ||||||
| Other long-term debt | 137,158 | – | ||||||
| Deferred tax liability | 20,880,115 | 15,161,987 | ||||||
| Total liabilities | $ | 81,271,445 | $ | 80,450,177 | ||||
| Shareholders’ Equity | ||||||||
| Share capital | 360,603,409 | 232,616,997 | ||||||
| Contributed surplus | 21,563,566 | 7,494,164 | ||||||
| Accumulated other comprehensive income | 49,007 | 45,428 | ||||||
| Deficit | (136,992,723 | ) | (98,285,532 | ) | ||||
| Total shareholders’ equity | 245,223,259 | 141,871,057 | ||||||
| Total liabilities and shareholders’ equity | $ | 326,494,704 | $ | 222,321,234 | ||||
| Enthusiast Gaming Holdings Inc. | ||||||||||||||
| Condensed Consolidated Interim Statements of Loss and Comprehensive Loss | ||||||||||||||
| For the three and nine months ended September 30, 2021 and 2020 | ||||||||||||||
| (Unaudited – Expressed in Canadian Dollars) | ||||||||||||||
| For the three months ended | For the nine months ended | |||||||||||||
| September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |||||||||||
| Revenue | ||||||||||||||
| Revenue | $ | 43,341,907 | $ | 16,328,946 | $ | 110,421,843 | $ | 30,287,614 | ||||||
| Gain on player buyout | – | – | – | 204,764 | ||||||||||
| Total revenue | 43,341,907 | 16,328,946 | 110,421,843 | 30,492,378 | ||||||||||
| Cost of sales | 33,216,294 | 12,268,906 | 86,345,922 | 19,917,990 | ||||||||||
| Gross margin | 10,125,613 | 4,060,040 | 24,075,921 | 10,574,388 | ||||||||||
| Operating expenses | ||||||||||||||
| Professional fees | 434,862 | 549,942 | 2,385,837 | 1,463,887 | ||||||||||
| Consulting fees | 725,408 | 1,336,461 | 3,111,761 | 3,725,135 | ||||||||||
| Advertising and promotion | 609,587 | 215,410 | 2,465,529 | 701,901 | ||||||||||
| Office and general | 1,963,965 | 625,296 | 4,836,416 | 2,077,937 | ||||||||||
| Salaries and wages | 6,574,338 | 2,304,003 | 16,768,850 | 5,191,402 | ||||||||||
| Technology support, web development and content | 3,146,453 | 1,163,126 | 7,239,996 | 3,397,877 | ||||||||||
| Esports player, team and game expenses | 1,615,655 | 760,844 | 4,609,978 | 2,244,640 | ||||||||||
| Foreign exchange gain | (1,060,724 | ) | (23,125 | ) | (2,136,979 | ) | (71,394 | ) | ||||||
| Share-based compensation | 4,971,949 | 203,963 | 14,690,294 | 873,211 | ||||||||||
| Amortization and depreciation | 2,372,839 | 1,042,072 | 5,668,276 | 3,390,604 | ||||||||||
| Total operating expenses | 21,354,332 | 8,177,992 | 59,639,958 | 22,995,200 | ||||||||||
| Other expenses (income) | ||||||||||||||
| Transaction costs | 301,343 | 1,621,775 | 510,472 | 1,621,775 | ||||||||||
| Share of loss from investment in associates | ||||||||||||||
| and joint ventures | 158,415 | 808,011 | 230,675 | 2,080,358 | ||||||||||
| Interest and accretion | 430,538 | 1,264,594 | 1,702,839 | 3,951,379 | ||||||||||
| Change in fair value of investment | 288,093 | (374,065 | ) | 444,764 | (211,050 | ) | ||||||||
| Loss on modification of long-term debt | – | 806,879 | – | 806,879 | ||||||||||
| Gain on repayment of long-term debt | – | – | (39,502 | ) | – | |||||||||
| Loss on settlement of vendor-take-back loan | – | – | 316,241 | – | ||||||||||
| Loss on revaluation of deferred payment liability | 33,162 | – | 122,346 | – | ||||||||||
| Interest income | (9,315 | ) | (14,775 | ) | (50,546 | ) | (91,305 | ) | ||||||
| Net loss before income taxes | (12,430,955 | ) | (8,230,371 | ) | (38,801,326 | ) | (20,578,848 | ) | ||||||
| Income taxes | ||||||||||||||
| Current tax expense | 127,101 | 9,139 | 161,138 | 20,520 | ||||||||||
| Deferred tax recovery | (130,212 | ) | (143,623 | ) | (255,273 | ) | (585,818 | ) | ||||||
| Net loss for the period | (12,427,844 | ) | (8,095,887 | ) | (38,707,191 | ) | (20,013,550 | ) | ||||||
| Other comprehensive income (loss) | ||||||||||||||
| Items that may be reclassified to profit or loss | ||||||||||||||
| Foreign currency translation adjustment | 124,873 | 62,420 | 3,579 | 66,039 | ||||||||||
| Net loss and comprehensive loss for the period | $ | (12,302,971 | ) | $ | (8,033,467 | ) | $ | (38,703,612 | ) | $ | (19,947,511 | ) | ||
| Net loss and comprehensive loss per share, | ||||||||||||||
| basic and diluted | $ | (0.10 | ) | $ | (0.10 | ) | $ | (0.33 | ) | $ | (0.26 | ) | ||
| Weighted average number of common shares | ||||||||||||||
| outstanding, basic and diluted | 126,395,192 | 83,147,816 | 118,514,822 | 76,651,219 | ||||||||||
| Enthusiast Gaming Holdings Inc. | |||||||
| Condensed Consolidated Interim Statements of Cash Flows | |||||||
| For the nine months ended September 30, 2021 and 2020 | |||||||
| (Unaudited – Expressed in Canadian Dollars) | |||||||
| For the nine months ended | |||||||
| September 30, 2021 | September 30, 2020 | ||||||
| Cash flows from operating activities | |||||||
| Net loss for the period | $ | (38,707,191 | ) | $ | (20,013,550 | ) | |
| Items not affecting cash: | |||||||
| Amortization and depreciation | 5,668,276 | 3,390,604 | |||||
| Share-based compensation | 14,690,294 | 873,211 | |||||
| Interest and accretion | 606,060 | 1,378,077 | |||||
| Deferred tax recovery | (255,273 | ) | (585,818 | ) | |||
| Gain on player buyout | – | (204,764 | ) | ||||
| Foreign exchange gain | (101,302 | ) | (7,050 | ) | |||
| Gain on repayment of long-term debt | (39,502 | ) | – | ||||
| Loss on settlement of vendor-take-back loan | 316,241 | – | |||||
| Loss on revaluation of deferred payment liability | 122,346 | – | |||||
| Capitalized interest and success fee | – | 1,494,910 | |||||
| Shares for services | 110,565 | 138,172 | |||||
| Loss on modification of long-term debt | – | 806,879 | |||||
| Provisions | – | 90,366 | |||||
| Change in fair value of investment | 444,764 | (211,050 | ) | ||||
| Share of loss from investment in associates and joint ventures | 230,675 | 2,080,358 | |||||
| Changes in working capital: | |||||||
| Changes in trade and other receivables | (3,896,016 | ) | (1,916,067 | ) | |||
| Changes in prepaid expenses | (2,584,504 | ) | 63,250 | ||||
| Changes in loans receivable | 37,500 | – | |||||
| Changes in accounts payable and accrued liabilities | 2,383,538 | 2,288,492 | |||||
| Changes in contract liabilities | 881,756 | (387,411 | ) | ||||
| Changes in income tax receivable | (149,468 | ) | (285,480 | ) | |||
| Net cash used in operating activities | (20,241,241 | ) | (11,006,871 | ) | |||
| Cash flows from investing activities | |||||||
| Cash paid for mergers and acquisitions | (27,071,176 | ) | (10,500,000 | ) | |||
| Cash acquired from mergers and acquisitions | 489,107 | 281,125 | |||||
| Proceeds from disposal of investment | – | 680,000 | |||||
| Proceeds from disposal of intangible assets | – | 204,764 | |||||
| Investment in associates and a joint venture | (125,000 | ) | (2,169,750 | ) | |||
| Acquisition of property and equipment | (3,398 | ) | (4,871 | ) | |||
| Net cash used in investing activities | (26,710,467 | ) | (11,508,732 | ) | |||
| Cash flows from financing activities | |||||||
| Proceeds from the issuance of shares for offerings, net of | |||||||
| transaction costs | 95,150,810 | 15,609,257 | |||||
| Proceeds from long-term debt | 944,787 | – | |||||
| Repayment of long-term debt | (14,023,470 | ) | – | ||||
| Proceeds from exercise of warrants | – | 2,354,246 | |||||
| Proceeds from exercise of options | 784,431 | 49,366 | |||||
| Repayment of vendor-take-back loan | (6,158,329 | ) | – | ||||
| Lease payments | (531,085 | ) | (221,764 | ) | |||
| Net cash provided by financing activities | 76,167,144 | 17,791,105 | |||||
| Foreign exchange effect on cash | (12,725 | ) | 39,176 | ||||
| Net change in cash | 29,202,711 | (4,685,322 | ) | ||||
| Cash, beginning of period | 4,323,823 | 13,211,722 | |||||
| Cash, end of period | $ | 33,526,534 | $ | 8,526,400 | |||
