Enthusiast Gaming Reports Third Quarter 2021 Results
11/10/2021 - 04:15 PM
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:
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:investor@enthusiastgaming.com
Media Relations:ashley@providentcomms.com
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, September 30, September 30, September 30, 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
