Enthusiast Gaming Holdings Inc. (TSXV: EGLX) (FSE: 2AV)
(“
Enthusiast Gaming” or the
“
Company”), the largest gaming network in North
America and the United Kingdom, is pleased to announce that it has
filed its unaudited Q3 2019 Financial Statements and Management’s
Discussion and Analysis (“
MD&A”) for the three
and nine month periods ending September 30, 2019. These filings are
available for download on the Company’s profile at www.sedar.com.
All figures are expressed in Canadian dollars unless otherwise
stated.
On August 29, 2019, Enthusiast, Aquilini GameCo,
and Luminosity Gaming completed a Plan of Arrangement, which
resulted in the creation of a leading publicly traded video game
media and esports company in North America. Exiting Q3, the
combined platform consists of over 100 gaming related websites, 900
YouTube channels, seven professional esports teams, over 50
celebrity gaming influencers and content creators and almost 30
live events worldwide, including major activations in Toronto,
London, Helsinki, Hong Kong and Seattle. Enthusiast Gaming’s
network reaches over 200 million gamers globally on a monthly basis
across its Media, Esports and Events divisions.
The Financial Statements and MD&A for the
three and nine months ended September 30, 2019 include the
financial results of Aquilini GameCo for the three and nine months
ended September 30, 2019, and the financial results of Luminosity
Gaming and J55 Capital Corp. from August 27, 2019 to September 30,
2019, and the financial results of the former Enthusiast Gaming
group including its subsidiaries from August 29, 2019, to September
30, 2019. The comparative balances as at December 31, 2018 and the
comparative financial results for the three and nine month periods
ended September 30, 2018 are those of Aquilini GameCo prior to the
Luminosity Gaming Acquisition, the J55 Capital Corp. Amalgamation,
and the Enthusiast Plan of Arrangement.
Accordingly, the recognized revenue for Q3 2019
on the Financial Statements of $3.0 million was generated on a
consolidated basis by Enthusiast between August 29 and September
30, 2019, and by Luminosity Gaming between August 27 and September
30, 2019. Between July 1 and their respective transaction dates,
Enthusiast and Luminosity collectively generated an additional $3.3
million of revenue, for an aggregate pro forma consolidated revenue
for the three month period ending September 30, 2019 of $6.3
million.
Adrian Montgomery, CEO of Enthusiast
Gaming commented, “I am pleased with our Q3 results with
consolidated, pro forma revenue of $6.3 million in the quarter. We
closed a transformational merger in the quarter between Enthusiast,
Aquilini GameCo and Luminosity and we are focused on executing our
growth strategy through investing in revenue optimization tools and
monetization strategies to drive higher revenue per viewer and
higher margins.” He continued, “It’s important for us to remain
diligently focused on our growth strategy and continue improving on
our execution. I am looking forward to a strong finish to the
year.”
Third Quarter Financial and Operating
Highlights
- Pro forma consolidated revenue for the three-month period ended
September 30, 2019 was $6.3 million. Media revenue accounted for
76% of the total, with Esports accounting for the balance.
- Pro forma Media revenue per viewer was $0.10, while pro forma
consolidated gross margin for the three-month period ended
September 30, 2019 was 49%, with Media gross margin of
33%.
- Cash on hand as at September 30, 2019 was $7.2 million, which
does not account for an additional $17 million advanced to the
Company subsequent to September 30, 2019, relating to the Secured
Loan announced on August 8, 2019.
- Exiting Q3, the Company continues its pursuit of increasing
revenue per viewer and gross margin by making further investments
in optimizing its media platform, enhancing its viewer experience
and providing better value for advertisers. These efforts are
expected to contribute to an increase in revenue, revenue per
viewer and margin in Q4 2019 and in FY 2020.
- The Company also funded the remainder of the Deferred Payment
of USD $14 million relating to "The Sims Resource" acquisition,
seven months ahead of schedule. Full ownership and integration
allows Enthusiast Gaming to implement an optimized advertising and
content strategy to increase revenue and margin as well as provides
the ability to leverage paid subscription models across the
Enthusiast Gaming platform.
- The Vancouver Titans, a professional Overwatch esports team the
Company has a significant ownership interest in, placed 2nd in the
2019 Overwatch League Grand Finals. With a prize pool of US$1.7
million, the finals were attended by 12,000 fans in the Wells Fargo
Centre in Philadelphia and broadcast globally on ESPN and Twitch,
in the United States on ABC and in Canada on TSN.
- The Company continues to evaluate accretive acquisition
opportunities to grow the number of gaming communities it
serves.
Events to Subsequent to the
Quarter
- On October 4, the Company completed the acquisition of Steel
Media Limited. (“Steel Media”), a leading mobile
gaming and live events company, based in the UK. The acquisition of
Steel Media unlocked a new audience segment for Enthusiast Gaming,
the highly coveted and rapidly growing mobile gaming segment. The
acquisition aligns well with Enthusiast Gaming’s strategy of
growing its total audience reach across the entire gaming market
through accretive acquisitions within two of its key verticals,
Media and Events.
- On October 18-20, the Company hosted is the latest EGLX event
in Toronto. With over 30,000 attendees, the expo saw the addition
of several new programming tracks, including an Industry track, the
introduction of the EGLX Rising Stars competition and the hosting
of Ubisoft’s 2019 Rainbow 6 Canadian Nationals. Rising Stars
achieved over 7 million live views on Twitch over the event.
- The Company has been working with third party audience
verification tools to support its advertising sales efforts and is
pleased to announce that it is now verified by Comscore as the
largest combined web and video entity in gaming information
category in North America and the United Kingdom, surpassing all
other major gaming companies in the regions.
- The Call of Duty League franchise, the Seattle Surge, unveiled
its branding and announced dates for its 2020 homestand. The
Company has a significant ownership interest in the Seattle
Surge.
Certain information provided in this news
release is extracted from the unaudited condensed consolidated
interim Financial Statements and MD&A of the Company for the
three and nine months ended September 30, 2019, and should be read
in conjunction with them. It is only in the context of the fulsome
information and disclosures contained in the unaudited condensed
consolidated interim Financial Statements and MD&A that an
investor can properly analyze this information.
Investor Relations
Update
Enthusiast Gaming would also like to provide an
update on its overall combined Investor Relations and Marketing
Strategy. The Company has entered into agreements with each of
Strike Communications Inc. (“Strike”), New Era
Publishing Inc. (“New Era”) and Native Ads Inc.
(“Native Ads”). Strike provides marketing and
investor relations services, including the development of a
comprehensive capital markets and investor relations strategy for
an indefinite term with the agreement effective July 23, 2018; New
Era provides capital markets advisory, media and editorials and a
comprehensive Institutional Analysis report for 6 month term which
started on September 1, 2019; and Native Ads provides a three month
programmatic digital media advertising campaign which started on
September 9, 2019. The Company will pay consideration of $8,000 per
month to Strike, US$400,000 (with US$200,000 due on signing and
US$200,000 due on November 11, 2019) to New Era, and CAD$150,000 to
Native Ads (paid in full on September 17, 2019), in each case,
payable from the general working capital of the Company. Enthusiast
may, at its sole discretion and subject to the approval of the
TSXV, grant stock options to Strike under its stock option plan.
Each of the agreements are subject to the approval of the TSXV.
Strike is an independent marketing and
communications firm based out of Vancouver, B.C., New Era is an
independent research firm that is based out of Vancouver B.C., and
Native Ads is a full-service ad agency that operates an ad exchange
for content publishers with an office in Vancouver, B.C. The
principal of Strike currently holds 9,150 common shares in the
capital of the Company (“Shares”) and 15,825
options to purchase Shares. Neither New Era or Native Ads, nor any
of their respective directors and officers own any securities of
the Company or any right to acquire securities of the Company, and
each of them are privately owned and are arm’s length parties to
the Company.
About Enthusiast
Gaming
Enthusiast Gaming (TSX.V: EGLX)(FSE: 2AV) is
building the world’s largest network of communities for gamers and
esports fans. Already the largest gaming network in North America
and the United Kingdom, the Company’s business is comprised of
three main pillars: Media, Events and Esports. Enthusiast Gaming’s
digital media platform includes 100+ gaming related websites and
900 YouTube channels which collectively reach 150 million visitors
monthly. The media network generates over 30 billion ad requests
and over 1 billion page views per month. Enthusiast’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-based Call of Duty team. Collectively, the integrated
ecosystem reaches over 200 million gaming enthusiasts on a monthly
basis. Enthusiast Gaming’s event business, owns and operates
Canada’s largest gaming expo, Enthusiast Gaming Live Expo, EGLX,
(eglx.com) and the largest mobile gaming event in Europe, Pocket
Gamer Connects. For more information on the Company, visit
www.enthusiastgaming.com. For more information on Luminosity
Gaming, please visit luminosity.gg.
CONTACT INFORMATION:
Alex MacdonaldChief Financial Officer (416)
623-9620
Investor Relations: Julia
BeckerHead of Investor Relations &
Marketingjbecker@enthusiastgaming.com(604) 785.0850
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 Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Enthusiast Gaming (TSXV:EGLX)
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Enthusiast Gaming (TSXV:EGLX)
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