Benzinga | Nov 16, 2020 04:17PM EST

Enthusiast Gaming Announces Q3 2020 Revenue Of $16.3M, Net Loss Per Share Of $(0.09)

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 2020Pro Forma for Omnia Acquisition(in $M except for EPS) Q120 Q220 Q320 9 months FY20Total 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 & ($0.08 ) ($0.09 ) ($0.10 ) ($0.27 )diluted)



Select Pro Forma Operating Metrics: Quarterly and 9 Months 2020Pro Forma for Omnia Acquisition Q120 Q220 Q320 9 months FY20Total Views (millions) 9,201 12,485 10,554 32,240Web pageviews 2,296 3,119 2,427 7,842Video views 6,905 9,366 8,127 24,398Paid Subscribers (thousands - as at end of 92 111 112 112period)

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 informationmay 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 PositionAs at September 30, 2020 and December 31, 2019 September 30, December 31, 2020 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 - 104,630 expenses 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 $ 19,182,061 $ 7,423,396 liabilities 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 512,789 193,366 liability 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 156,117 90,078 income Deficit (96,571,318 ) (78,930,532 ) Total shareholders' equity 147,707,768 118,656,699 Total liabilities and shareholders' $ 227,311,372 $ 169,343,787 equity





EnthusiastGaming Holdings Inc.Condensed Interim Consolidated Statements of Loss and Comprehensive LossFor the three and nine months ended September 30, 2020 and 2019 For the three months ended For the nine months ended September September September September 30, 2020 30, 2019 30, 2020 30, 2019 Revenue Revenue $ 16,328,946 $ 3,007,307 $ 30,287,614 $ 3,007,307 Gain on player - - 204,764 - buyout 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 549,942 724,644 1,463,887 1,371,092 fees Consulting 1,336,461 2,118,877 3,725,135 2,617,586 fees Advertising and 215,410 630,555 701,901 1,118,975 promotion Office and 625,296 283,431 2,077,937 401,929 general Salaries and 2,304,003 591,490 5,191,402 658,516 wages Technology support, web 1,163,126 115,622 3,397,877 115,622 development and content eSports player, team 760,844 808,063 2,244,640 808,063 and game expenses Foreign exchange (23,125 ) 120,347 (71,394 ) 135,975 (gain) loss Share-based 203,963 2,156,199 873,211 2,549,819 compensation Amortization and 1,042,072 259,771 3,390,604 259,771 depreciation Total operating 8,177,992 7,808,999 22,995,200 10,037,348 expenses Other expenses (income) Listing - 6,891,713 - 6,891,713 expense Transaction 1,621,775 2,873,606 1,621,775 2,873,606 cost Share of loss from investment 808,011 - 2,080,358 - in associates Interest and 1,264,594 1,134,007 3,951,379 1,134,007 accretion Change in fair value (374,065 ) - (211,050 ) - of investment Loss on modification 806,879 - 806,879 - of long-term debt Interest (14,775 ) (590,292 ) (91,305 ) (658,515 ) income Net loss before income (8,230,371 ) (16,158,941 ) (20,578,848 ) (18,319,067 ) taxes Income taxes Current income tax 9,139 - 20,520 - expense Deferred income tax (143,623 ) - (585,818 ) - recovery Net loss for (8,095,887 ) (16,158,941 ) (20,013,550 ) (18,319,067 ) the period Other comprehensive income Items that may be reclassified to profit or loss Foreign currency 62,420 19,397 66,039 19,397 translation adjustment Net loss and comprehensive $ (8,033,467 ) $ (16,139,544 ) $ (19,947,511 ) $ (18,299,670 ) loss for the period Net loss and comprehensive loss per share, basic and $ (0.10 ) $ (0.42 ) $ (0.26 ) $ (0.69 ) diluted Weighted average number of common shares outstanding, basic and 83,147,816 38,601,234 76,651,219 26,376,710 diluted





Enthusiast Gaming Holdings Inc. Condensed Interim Consolidated Statements of Cash FlowsFor the three and nine months ended September 30, 2020 and 2019 For the nine months ended September September 30, 2020 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 2,288,492 1,267,787 liabilities 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 15,609,257 - the Offering, net of transaction cost Proceeds from the issuance of shares for - 23,937,295 subcription receipt proceeds, net of transaction cost Proceeds from convertible debenture, net of - 9,345,004 transaction costs Proceeds from long-term debt, net of - 2,170,000 tansaction costs 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





For further information: Enthusiast Gaming Contact: Alex Macdonald, CFO, 416.623.9360

Investor Relations Contact: Eric Bernofsky, Chief Corporate Officer, 416.623.9360investor@enthusiastgaming.com

Media Relations -- ID Public RelationsEnthusiastGaming@id-pr.com