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Enthusiast Gaming Reports Third Quarter 2023 Financial Results

LOS ANGELES, Nov. 13, 2023 (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 and nine months ended September 30, 2023 (“Q3 2023”).

Q3 2023 Financial Highlights

  • Revenue of $45.6 million, a decrease of 10% compared to Q3 2022
  • Gross profit of $16.7 million, an increase of 1% compared to Q3 2022, with gross profit margins expanding 400 basis points year-over-year to 36.7%
  • Operating expenses of $25.0 million, a decrease of 6% compared to Q3 2022
  • Ended the quarter with $2.8 million of cash, along with $4.5 million availability on the operating facility, for total available cash of $7.3 million

“We are making solid progress against our strategy to build the most scaled gaming communities in North America -- and a platform for significant growth,” commented Nick Brien, Chief Executive Officer. “Our efforts include sweeping changes across nearly every facet of the organization that are positioning the company for growth, profitability and value creation. As a measure of our progress, in the quarter we booked our largest branded solutions sale to date. We continue to expect to be profitable in the fourth quarter, entering next year as a self-sustaining business as we shift from a year of transformation velocity in 2023 to a year of growth velocity in 2024.”

“The core elements for long-term success are in place,” continued Mr. Brien. “We have a revamped management team, engaged communities, clear monetization strategies and technology enablement to significantly fuel profitable growth. Our operational focus demands that these components are efficiently and effectively integrated to create a culture of accountability and agility. We are increasingly excited about the growth opportunities ahead of us and believe 2024 will be the year where the efforts of the last six months translate into value creation for shareholders."

Q3 2023 Operational Highlights

  • Season 2 of the popular video gaming series, NFL Tuesday Night Gaming (NFL TNG) premiered on September 12 on NFL TNG’s Twitch, YouTube and X channels, with behind-the-scenes footage published on TikTok and Instagram. Audiences and engagement continues to build week-in and week-out compared to Season 1, including a 72% increase in impressions through Week 7 ending November 7. To date, NFL TNG has increased the number of advertisers from 11 in Season 1 to 14 in Season 2, including new sponsors such as State Farm.
  • As an example of creating unique and immersive experiences for brands that are scalable across digital entertainment and gaming platforms, Enthusiast Gaming collaborated with Netflix and Metavision to launch its first-ever Fortnite Creative in-game experience for One Piece.
  • Secured renewals and new additional business with key notable advertisers including Coca-Cola, UPS, Toyota, Shell, The Truth Initiative, FX Networks, AT&T, OLG, Paramount Pictures and ESPN. Renewals and additional business with existing customers accounted for 69% of Brand Solutions revenue in Q3 2023.
  • Pocket Gamer Connects (PGC), the Company’s B2B gaming events platform, ran two profitable conferences during the quarter (PGC Toronto and PGC Helsinki) and two other tentpole events (Metverse Mixer and Top 50 Game Makers Dinner at Gamescom). PGC Toronto increased the number of live delegates by 28% year-on-year, and PGC Helsinki drew a strong attendance of around 1,200 participants representing 510 companies and 41 countries.
  • Luminosity Gaming, the Company’s esports division, launched a new Super Smash channel in August, and reached over 2 million views and 10,000 subscribers in its first 60 days.
  • Luminosity Gaming announced its return to Rocket League in November after a one-year hiatus, and secured two top North American team members, Retals and MaJicBear, positioning Luminosity to be immediately competitive in the North American scene.
  • Luminosity Gaming’s Call of Duty Mobile team was crowned North American champions at the Stage 4 competition and now advances to compete for the world title in December.
  • Icy Veins, the Company’s strategy and guide platform for popular Activision-Blizzard game titles, is generating strong momentum and audience attention, including a record 5.9 million unique visitors in July, as well as 26 million sessions and 1.7 million hours spent on-site from users.
  • Addicting Games’ refresh of the content strategy for its web properties is resulting in increased user engagement and user retention, as evidenced by the 57% increase in pageviews in Q3 2023 (vs. Q2 2023) at Shockwave upon adding a new collection of daily games and challenges.
  • Paid subscribers were 265,000 at September 30, 2023, a 3% decrease from 272,000 at June 30, 2023 and 2% increase from 260,000 at September 30, 2022, as the Company is implementing initiatives to drive enhanced subscriber KPIs which is having a short term impact on subscriber trends on both a quarter-on-quarter and year-over-year basis.
  • The Company extended its position as the #1 Gaming Property for unique visitor traffic in the United States, reaching a new record of 56 million Unique Visitors, based on the latest digital media ratings from Comscore. The results represent 28% year-over-year growth in Unique Visitor traffic to Enthusiast Gaming’s digital media Property of gaming communities, content, and creators (Comscore Media Metrix® Multi-Platform, Total Audience, September 2023, U.S.).
  • As previously announced, on November 9, the Company’s shares were voluntarily delisted from Nasdaq after its Board of Directors evaluated the benefits and costs of continuing its listing on Nasdaq. The Company’s common shares continue to be listed and traded on TSX.

Third Quarter 2023 Results Comparison

Revenue was $45.6 million in Q3 2023, a 10% decrease compared to $50.6 million in Q3 2022. Media and Content revenue decreased 10% to $39.8 million, Esports and Entertainment revenue decreased 12% to $2.0 million, and Subscription revenue decreased 2% to $3.7 million. During the quarter, the Company experienced lower programmatic CPMs on its web and video platforms, similar to the trend of the broader programmatic market. The decreased CPMs were offset by an increase in total views (web and video) of 4% in Q3 2023 compared to the same period last year. Brand Solutions (included in revenue) decreased by 3% to $9.8 million in Q3 2023 compared to $10.1 million in Q3 2022.

Gross profit increased 1% to $16.7 million in Q3 2023 compared to $16.6 million in Q3 2022, with gross margin expanding 400 bps year-over-year to 36.7% from 32.7% in Q3 2022.

Net loss was $59.1 million in Q3 2023, compared to $37.1 million in Q3 2022. Net loss per basic and diluted share was $0.38 in Q3 2023 compared to $0.25 in Q3 2022. Results in Q3 2023 and Q3 2022 included a non-cash impairment expense of $51.7 million and $31.3 million respectively.

The Company’s cash balance was $2.8 million as of September 30, 2023, compared to $7.4 million as of December 31, 2022 and $2.7 million as of June 30, 2023. The $4.6 million decrease is primarily the result of a $0.3 million outflow in cash from operations and $3.3 million of repayments on the Company’s Term Credit. The Company had $4.5 million available on its operating credit facility as of September 30, 2023, for total available cash of $7.3 million. On October 12, 2023, the Company extended and expanded its term and operating credit facilities to provide up to approximately $7 million of additional liquidity.

Conference Call

Management will host a conference call and webcast on November 13, 2023, at 5 p.m. ET to review and discuss its Q3 2023 results. Conference call details:

  • Toll Free: 1-855-239-1101 (Conference ID: 10183500)
  • Live webcast:

A replay of the webcast will be available on the Investor page of the Enthusiast Gaming website at

Supplemental Information

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, 2023, 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 have been published on the Company’s profile on SEDAR+ and EDGAR. All amounts are in Canadian dollars.

About Enthusiast Gaming

Enthusiast Gaming is the leading gaming media and entertainment company in North America, 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.

Investor Contacts

Enthusiast Gaming: Nick Brien, Chief Executive Officer
Investors: FNK IR – Rob Fink / Matt Chesler, CFA,

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 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.

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.

Enthusiast Gaming Holdings Inc.     
Condensed Consolidated Interim Statements of Financial Position  
As of September 30, 2023 and December 31, 2022    
(Unaudited - Expressed in Canadian Dollars)     
    September 30, 2023  December 31, 2022 
 Cash $2,807,513 $7,415,516 
 Trade and other receivables  30,730,691  37,868,107 
 Investments  50,000  125,000 
 Loans receivable  -  50,935 
 Income tax receivable  -  367,092 
 Prepaid expenses  2,086,346  2,017,004 
 Total current assets  35,674,550  47,843,654 
 Property and equipment  142,511  180,621 
 Right-of-use assets  1,405,967  2,099,996 
 Investment in associates and joint ventures  2,522,200  2,450,031 
 Long-term portion of prepaid expenses  186,156  279,814 
 Intangible assets  102,041,486  116,967,438 
 Goodwill  126,709,548  171,615,991 
 Total assets $268,682,418 $341,437,545 
 Accounts payable and accrued liabilities $40,566,839 $32,823,320 
 Contract liabilities  4,819,056  5,380,378 
 Income tax payable  405,465  129,485 
 Current portion of long-term debt  4,352,940  17,431,625 
 Current portion of deferred payment liability 79,183  2,391,863 
 Current portion of lease liabilities  756,450  872,429 
 Current portion of other long-term debt  9,883  10,891 
 Total current liabilities  50,989,816  59,039,991 
 Long-term debt  10,337,962  - 
 Long-term portion of deferred payment liability 2,035,033  1,451,939 
 Long-term lease liabilities  933,678  1,478,438 
 Other long-term debt  143,934  144,844 
 Deferred tax liability  21,952,993  24,671,326 
 Total liabilities $86,393,416 $86,786,538 
 Shareholders' Equity     
 Share capital  444,474,076  442,781,376 
 Contributed surplus  34,685,622  30,402,742 
 Accumulated other comprehensive income  8,309,911  8,629,848 
 Deficit  (305,180,607) (227,162,959)
 Total shareholders' equity   182,289,002  254,651,007 
 Total liabilities and shareholders' equity $268,682,418 $341,437,545 

Enthusiast Gaming Holdings Inc.        
Condensed Consolidated Interim Statements of Loss and Comprehensive Loss       
For the three and nine months ended September 30, 2023 and 2022        
(Unaudited - Expressed in Canadian Dollars)        
  For the three months ended For the nine months ended
  September 30, 2023  September 30, 2022  September 30, 2023  September 30, 2022 
Revenue$45,558,271 $50,578,758 $131,037,006 $148,865,324 
Cost of sales 28,821,750  34,018,169  82,552,235  103,470,191 
Gross margin 16,736,521  16,560,589  48,484,771  45,395,133 
Operating expenses        
Professional fees 674,299  766,057  1,817,698  2,358,559 
Consulting fees 1,679,734  1,338,329  4,583,686  4,593,506 
Advertising and promotion 554,247  662,279  2,948,971  1,417,344 
Office and general 2,068,666  2,288,057  6,290,787  7,232,551 
Annual general meeting legal and advisory costs -  1,149,396  -  3,386,596 
Salaries and wages 8,814,047  9,325,237  27,953,381  27,135,015 
Technology support, web development and content 6,662,381  6,050,270  16,115,371  13,309,341 
Esports player, team and game expenses 680,637  623,913  1,961,799  3,618,761 
Foreign exchange (gain) loss (43,052) (480,528) 94,356  (1,105,730)
Share-based compensation 1,364,059  821,811  4,282,880  5,336,617 
Amortization and depreciation 2,562,229  4,055,415  8,786,327  13,257,813 
Total operating expenses 25,017,247  26,600,236  74,835,256  80,540,373 
Other expenses (income)        
Goodwill impairment 44,822,575  31,281,286  44,822,575  31,281,286 
Intangible asset impairment 6,838,060  -  6,838,060  - 
Transaction costs -  -  -  114,853 
Share of net (income) loss from investment in associates and joint ventures (138,339) 226,940  (72,169) (1,001,002)
Interest and accretion 617,653  414,203  1,833,378  2,963,981 
Loss on settlement of deferred payment liability -  -  -  3,302,824 
Gain on sale of intangible assets -  (4,836,075) -  (4,836,075)
Loss on derecognition of long-term debt -  482,282  -  482,282 
Loss (gain) on revaluation of deferred payment liability 413,044  332,208  615,121  (539,555)
Gain on player buyouts -  (24,660) -  (505,197)
Interest income (575) (5,257) (63,296) (7,978)
Net loss before income taxes (60,833,144) (37,910,574) (80,324,154) (66,400,659)
Income taxes        
Current tax expense 171,346  202,185  397,117  509,431 
Deferred tax recovery (1,940,134) (1,018,542) (2,703,623) (1,902,714)
Net loss for the period (59,064,356) (37,094,217) (78,017,648) (65,007,376)
Other comprehensive (loss) income        
Items that may be reclassified to profit or loss        
Foreign currency translation adjustment 1,815,312  6,904,338  (319,937) 8,764,205 
Net loss and comprehensive loss for the period$(57,249,044)$(30,189,879)$(78,337,585)$(56,243,171)
Net loss per share, basic and diluted$(0.38)$(0.25)$(0.51)$(0.46)
Weighted average number of common shares outstanding, basic and diluted 154,393,280  150,257,804  152,786,876  140,930,554 

Enthusiast Gaming Holdings Inc.    
Condensed Consolidated Interim Statements of Cash Flows    
For the nine months ended September 30, 2023 and 2022    
(Unaudited - Expressed in Canadian Dollars) For the nine months ended
   September 30, 2023  September 30, 2022 
 Cash flows from operating activities    
 Net loss for the period$(78,017,648)$(65,007,376)
 Items not affecting cash:    
 Goodwill impairment 44,822,575  31,281,286 
 Intangible asset impairment 6,838,060  - 
 Amortization and depreciation 8,786,327  13,257,813 
 Share-based compensation 4,282,880  5,336,617 
 Interest and accretion 179,452  2,266,161 
 Deferred tax recovery (2,703,623) (1,902,714)
 Share of net income from investment in associates and joint ventures (72,169) (1,001,002)
 Loss (gain) on revaluation of deferred payment liability 615,121  (539,555)
 Loss on settlement of deferred payment liability -  3,302,824 
 Gain on sale of intangible assets -  (4,876,659)
 Foreign exchange gain (115,291) (1,416,264)
 Gain on player buyouts -  (505,197)
 Gain on settlement of accounts payable -  (587,769)
 Gain on derecognition of long-term debt   482,282 
 Shares for services -  84,388 
 Provisions 139,856  - 
 Changes in working capital:    
 Changes in trade and other receivables 7,048,454  (2,476,193)
 Changes in prepaid expenses 23,820  (645,919)
 Changes in loans receivable -  125,995 
 Changes in accounts payable and accrued liabilities 7,743,519  2,479,331 
 Changes in contract liabilities (561,322) 559,566 
 Changes in income tax receivable and payable 755,959  371,458 
 Income tax paid (112,887) (93,433)
 Net cash used in operating activities (346,917) (19,504,360)
 Cash flows from investing activities    
 Cash paid for mergers and acquisitions -  (2,937,520)
 Cash acquired from mergers and acquisitions -  1,748,602 
 Proceeds from sale of intangible assets -  5,460,959 
 Proceeds from player buyouts, net of transaction costs -  505,197 
 Proceeds from redemption of investments 75,000  - 
 Repayment of deferred payment liability (844,350) (472,833)
 Acquisition of intangible assets (27,488) - 
 Acquisition of property and equipment (20,430) (5,245)
 Net cash (used in) provided by investing activities (817,268) 4,299,160 
 Cash flows from financing activities    
 Proceeds from long-term debt, net of transaction costs 539,329  9,759,047 
 Repayment of long-term debt (3,264,705) (1,500,003)
 Proceeds from exercise of options -  69,821 
 Repayment of other long-term debt (9,883) (13,026)
 Lease payments (722,139) (705,075)
 Net cash (used in) provided by financing activities (3,457,398) 7,610,764 
 Foreign exchange effect on cash 13,580  756,034 
 Net change in cash (4,608,003) (6,838,402)
 Cash, beginning of period 7,415,516  22,654,262 
 Cash, end of period$2,807,513 $15,815,860 

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