Enthusiast Gaming Holdings Inc. (“Enthusiast
Gaming” or the “Company”) (NASDAQ:EGLX; TSX:EGLX), an integrated
gaming entertainment company, today announced financial results for
the year ended December 31, 2021.
2021 Financial Highlights
- Revenue for 2021 was $167.4
million, representing a 130% increase from revenue for 2020 of
$72.8 million
- Gross profit for 2021 was $37.8
million, representing a 102% increase from gross profit for 2020 of
$18.7 million
- Direct sales in 2021 of $22.2
million, representing a 344% increase from direct sales in 2020 of
$5.0 million. Direct sales are included in revenue
- Paid subscribers
as at December 31, 2021, of 220,000, representing an 80% increase
from paid subscribers as at December 31, 2020, of 122,000
Q4 2021 Financial
Highlights
- Revenue for the three months ended
December 31, 2021 (“Q4 2021”), of $56.9 million, representing a 34%
increase from revenue for the three months ended December 31, 2020
(“Q4 2020”), of $42.5 million
- Gross profit in Q4 2021 of $13.7
million, representing a 69% increase from gross profit in Q4 2020
of $8.1 million
- Gross margin in Q4 2021 of 24.1%,
representing a 500 basis point increase from gross margin in Q4
2020 of 19.1%
- Direct sales in
Q4 2021 of $8.8 million, representing a 167% increase from direct
sales in Q4 2020 of $3.3 million. Direct sales are included in
revenue
“Our momentum continues and we are pleased to
confirm our record breaking results from Q4 2021,”
commented Adrian Montgomery, CEO of Enthusiast
Gaming. “We are seeing strong repeat business in direct
sales, continued conversions of viewers into paying subscribers,
and strength in our product offerings, particularly in Addicting
Games and U.GG. We expect this momentum to carry into 2022 and
beyond.”
"Our higher yield and higher margin revenue
streams are expanding, with noticeable impacts to the income
statement," commented Alex Macdonald, CFO of Enthusiast
Gaming. "Direct sales and subscription combined accounted
for over 20% of revenue in Q4, helping push quarterly revenue to an
all time high and gross margin to over 24%. We maintain a growth
oriented position and outlook."
Q4 Operational Highlights
- Expansion of in-game purchasing
opportunities and subscription offerings for multiple Addicting
Games titles including Little Big Snake, TypeRacer, EV.IO, and
mope.IO
- Two new event series launched:
Pocket Gamer Connects Digital NEXT, and Beyond Games
- Record U.S. unique visitor traffic
of 51.8 million recorded in December 2021 as measured by
Comscore
- Acquisition of League of Legends
community U.GG, and expansion of the U.GG desktop app
- Luminosity Gaming ranked number one
esports team on Twitch according to a study conducted with
Nielsen
- Renewals or additional business
with key partners including Proctor & Gamble, HBO Max, TikTok,
Disney, ExitLag, G FUEL and Square Enix
- New season of
Rising Stars announced, co-created with e.l.f. Cosmetics (NYSE:
ELF)
Organizational Updates
The Company also announced that due to her
recent appointment as Chief Investment Officer of the California
Public Employees' Retirement System (CalPERS), Nicole Musicco was
required to resign from the Board of Directors of the Company,
effective March 25, 2022.
“I am thankful for my time on the Board of
Enthusiast Gaming and am impressed with the trajectory of the
Company,” said Nicole Musicco. “Adrian and the management team are
highly capable and there is a strong vision in place. I look
forward to watching the Company continue to grow.”
The Company wishes to thank Nicole for her
service, and congratulates her on the appointment at CalPERS.
The Company also announced that Menashe
Kestenbaum has transitioned out of the role of President to focus
exclusively on strategy and governance as a member of the Board of
Directors. As a continuing member of the Board, his experience will
continue to help the Company towards achieving its growth
objectives.
Other recent appointments at the Company
include:
- Scotty Tidwell as Senior Vice
President of Talent
- Alex Gonzalez as
Head of Luminosity Gaming
Certain information provided in this news
release is extracted from financial statements and management’s
discussion & analysis (“MD&A”) of the Company for the year
ended December 31, 2021, 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.
Earnings Announcement and Supplemental
Information
Management will host a conference call and
webcast on March 28, 2022, at 5:00 p.m. Eastern Time to review and
discuss the fourth quarter and year-end 2021 results.
Please call the following numbers to
participate:
North America (toll-free): 1-855-327-6837
International: 1-631-891-4304
Conference ID: 10018468
A live webcast can be heard at
https://www.enthusiastgaming.com/shareholder-information/.
If you are unable to join live, an archived
recording of the webcast will be available on the Investor
Relations page of the Enthusiast Gaming website.
About Enthusiast Gaming
Enthusiast Gaming is an integrated gaming
entertainment company, building the largest media and content
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 Officerinvestor@enthusiastgaming.com
Media Relations:Derek Holota, Provident
CommunicationsDerek@providentcomms.com343-422-5606
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.
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 www.sedar.com. 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.
Enthusiast Gaming Holdings Inc. |
|
|
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|
|
Consolidated Statements of Financial Position |
|
|
|
|
As of December 31, 2021 and 2020 |
|
|
|
|
|
(Expressed in Canadian Dollars) |
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
December 31, 2020 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash |
|
$ |
22,654,262 |
|
$ |
4,323,823 |
|
|
Trade and
other receivables |
|
|
33,801,990 |
|
|
22,424,596 |
|
|
Investments |
|
|
131,342 |
|
|
124,998 |
|
|
Loans
receivable |
|
|
176,931 |
|
|
194,389 |
|
|
Income tax
receivable |
|
|
356,366 |
|
|
290,077 |
|
|
Prepaid expenses |
|
|
2,145,184 |
|
|
576,802 |
|
Total current assets |
|
|
59,266,075 |
|
|
27,934,685 |
|
Non-current |
|
|
|
|
|
|
Property and
equipment |
|
|
247,988 |
|
|
354,850 |
|
|
Right-of-use
assets |
|
|
2,885,662 |
|
|
2,848,400 |
|
|
Long-term
investment |
|
|
- |
|
|
2,606,100 |
|
|
Investment
in associates and joint ventures |
|
|
885,269 |
|
|
1,026,910 |
|
|
Long-term
portion of prepaid expenses |
|
|
261,922 |
|
|
263,196 |
|
|
Intangible
assets |
|
|
129,138,595 |
|
|
81,106,007 |
|
|
Goodwill |
|
|
195,097,659 |
|
|
106,181,086 |
|
Total assets |
|
$ |
387,783,170 |
|
$ |
222,321,234 |
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
Current |
|
|
|
|
|
|
Accounts
payable and accrued liabilities |
|
$ |
34,391,221 |
|
$ |
23,602,547 |
|
|
Contract
liabilities |
|
|
3,890,569 |
|
|
1,625,594 |
|
|
Income tax
payable |
|
|
114,094 |
|
|
- |
|
|
Current
portion of long-term debt |
|
|
2,000,000 |
|
|
1,250,000 |
|
|
Current portion of deferred payment liability |
|
27,244,146 |
|
|
636,600 |
|
|
Current
portion of convertible debentures |
|
|
- |
|
|
7,546,453 |
|
|
Current
portion of lease contract liabilities |
|
|
796,835 |
|
|
578,330 |
|
|
Current
portion of other long-term debt |
|
|
11,121 |
|
|
- |
|
Total current liabilities |
|
|
68,447,986 |
|
|
35,239,524 |
|
Non-current |
|
|
|
|
|
|
Long-term
debt |
|
|
7,681,867 |
|
|
21,651,956 |
|
|
Long-term portion of deferred payment liability |
|
20,794,275 |
|
|
529,124 |
|
|
Long-term
lease contract liabilities |
|
|
2,213,512 |
|
|
2,308,336 |
|
|
Vendor-take-back loan |
|
|
- |
|
|
5,559,250 |
|
|
Other
long-term debt |
|
|
136,324 |
|
|
- |
|
|
Deferred tax
liability |
|
|
25,740,885 |
|
|
15,161,987 |
|
Total liabilities |
|
$ |
125,014,849 |
|
$ |
80,450,177 |
|
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
|
|
Share
capital |
|
|
387,087,948 |
|
|
232,616,997 |
|
|
Contributed
surplus |
|
|
25,485,361 |
|
|
7,494,164 |
|
|
Accumulated other comprehensive income (loss) |
|
527,166 |
|
|
45,428 |
|
|
Deficit |
|
|
(150,332,154 |
) |
|
(98,285,532 |
) |
Total shareholders' equity |
|
|
262,768,321 |
|
|
141,871,057 |
|
Total liabilities and shareholders' equity |
|
$ |
387,783,170 |
|
$ |
222,321,234 |
|
|
|
|
|
|
|
|
Enthusiast Gaming Holdings Inc. |
|
|
|
|
|
Consolidated Statements of Loss and Comprehensive
Loss |
|
|
|
|
For the years ended December 31, 2021 and
2020 |
|
|
|
|
|
(Expressed in Canadian Dollars) |
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
December 31, 2020 |
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
Revenue |
|
$ |
167,364,286 |
|
$ |
72,758,717 |
|
|
Gain on player buyout |
|
|
- |
|
|
204,764 |
|
Total revenue |
|
|
167,364,286 |
|
|
72,963,481 |
|
Cost of sales |
|
|
129,589,540 |
|
|
54,294,967 |
|
Gross margin |
|
|
37,774,746 |
|
|
18,668,514 |
|
Operating expenses |
|
|
|
|
|
|
Professional
fees |
|
|
3,073,330 |
|
|
2,273,088 |
|
|
Consulting
fees |
|
|
4,591,688 |
|
|
5,805,134 |
|
|
Advertising
and promotion |
|
|
3,047,149 |
|
|
1,409,084 |
|
|
Office and
general |
|
|
6,972,055 |
|
|
2,878,813 |
|
|
Salaries and
wages |
|
|
25,140,326 |
|
|
9,131,447 |
|
|
Technology
support, web development and content |
|
|
10,640,184 |
|
|
4,734,548 |
|
|
Esports
player, team and game expenses |
|
|
5,497,165 |
|
|
3,446,652 |
|
|
Foreign
exchange gain |
|
|
(2,079,774 |
) |
|
(13,832 |
) |
|
Share-based
compensation |
|
|
18,918,489 |
|
|
818,383 |
|
|
Amortization
and depreciation |
|
|
9,518,471 |
|
|
5,036,787 |
|
Total operating expenses |
|
|
85,319,083 |
|
|
35,520,104 |
|
|
|
|
|
|
|
|
Other expenses (income) |
|
|
|
|
|
|
Transaction
costs |
|
|
1,490,463 |
|
|
1,882,081 |
|
|
Share of loss from investment in associates and joint ventures |
|
266,641 |
|
|
2,057,135 |
|
|
Interest and
accretion |
|
|
2,844,956 |
|
|
5,236,482 |
|
|
Change in
fair value of investment |
|
|
444,764 |
|
|
(183,951 |
) |
|
Loss on
modification of long-term debt |
|
|
- |
|
|
1,140,320 |
|
|
Gain on
repayment of long-term debt |
|
|
(39,502 |
) |
|
- |
|
|
Gain on
settlement of long-term debt |
|
|
(11,991 |
) |
|
- |
|
|
Loss on
settlement of vendor-take-back loan |
|
|
316,241 |
|
|
- |
|
|
Loss on
revaluation of deferred payment liability |
|
|
181,707 |
|
|
- |
|
|
Loss on
conversion of convertible debentures |
|
|
- |
|
|
49,002 |
|
|
Interest income |
|
|
(51,529 |
) |
|
(102,158 |
) |
Net loss before income taxes |
|
|
(52,986,087 |
) |
|
(26,930,501 |
) |
|
|
|
|
|
|
|
Income taxes |
|
|
|
|
|
|
Current tax
expense |
|
|
194,222 |
|
|
5,617 |
|
|
Deferred tax recovery |
|
|
(1,133,687 |
) |
|
(83,786 |
) |
Net loss for the year |
|
|
(52,046,622 |
) |
|
(26,852,332 |
) |
|
|
|
|
|
|
|
Other comprehensive income (loss) |
|
|
|
|
|
Items that may be reclassified to profit or loss |
|
|
|
|
|
|
Foreign
currency translation adjustment |
|
|
481,738 |
|
|
(44,650 |
) |
Net loss and comprehensive loss for the year |
|
$ |
(51,564,884 |
) |
$ |
(26,896,982 |
) |
Net loss and comprehensive loss per share, |
|
|
|
|
|
|
basic and diluted |
|
$ |
(0.43 |
) |
$ |
(0.32 |
) |
Weighted average number of common shares |
|
|
|
|
|
|
outstanding, basic and diluted |
|
|
121,002,659 |
|
|
83,401,398 |
|
|
|
|
|
|
|
|
Enthusiast Gaming Holdings Inc. |
|
|
|
|
|
Consolidated Statements of Cash Flows |
|
|
|
|
|
For
the years ended December 31, 2021 and 2020 |
|
|
|
|
|
(Expressed
in Canadian Dollars) |
|
|
|
|
|
|
|
|
December 31, 2021 |
|
December 31, 2020 |
|
|
|
|
|
|
Cash
flows from operating activities |
|
|
|
|
|
Net loss for the year |
|
$ |
(52,046,622 |
) |
$ |
(26,852,332 |
) |
Items not
affecting cash: |
|
|
|
|
|
Amortization and depreciation |
|
|
9,518,471 |
|
|
5,036,787 |
|
Share-based compensation |
|
|
18,918,489 |
|
|
818,383 |
|
Interest and accretion |
|
|
1,294,774 |
|
|
1,868,063 |
|
Deferred tax recovery |
|
|
(1,133,687 |
) |
|
(83,786 |
) |
Gain on player buyout |
|
|
- |
|
|
(204,764 |
) |
Foreign exchange (gain) loss |
|
|
(172,776 |
) |
|
16,409 |
|
Gain on repayment of long-term debt |
|
|
(39,502 |
) |
|
- |
|
Gain on settlement of long-term debt |
|
|
(11,991 |
) |
|
- |
|
Loss on settlement of vendor-take-back loan |
|
|
316,241 |
|
|
- |
|
Loss on revaluation of deferred payment liability |
|
|
181,707 |
|
|
- |
|
Loss on conversion of convertible debentures |
|
|
- |
|
|
49,002 |
|
Capitalized interest and success fee |
|
|
- |
|
|
1,494,910 |
|
Shares for services |
|
|
173,567 |
|
|
441,613 |
|
Loss on modification of long-term debt |
|
|
- |
|
|
1,140,320 |
|
Provisions |
|
|
- |
|
|
47,716 |
|
Change in fair value of investment |
|
|
444,764 |
|
|
(183,951 |
) |
Share of loss from investment in associates and joint ventures |
|
266,641 |
|
|
2,057,135 |
|
Changes in
working capital: |
|
|
|
|
|
Changes in trade and other receivables |
|
|
(8,322,247 |
) |
|
(7,114,118 |
) |
Changes in prepaid expenses |
|
|
(1,599,739 |
) |
|
(1,777 |
) |
Changes in loans receivable |
|
|
37,500 |
|
|
- |
|
Changes in accounts payable and accrued liabilities |
|
|
7,687,368 |
|
|
6,896,882 |
|
Changes in contract liabilities |
|
|
1,284,406 |
|
|
(22,000 |
) |
Changes in income tax receivable and payable |
|
|
(174,052 |
) |
|
(292,492 |
) |
Income tax paid |
|
|
(301,975 |
) |
|
- |
|
Net cash used in operating activities |
|
|
(23,678,663 |
) |
|
(14,888,000 |
) |
|
|
|
|
|
|
Cash
flows from investing activities |
|
|
|
|
|
Cash paid
for mergers and acquisitions |
|
|
(36,222,278 |
) |
|
(10,500,000 |
) |
Cash
acquired from mergers and acquisitions |
|
|
2,406,356 |
|
|
281,125 |
|
Proceeds
from disposal of investment |
|
|
- |
|
|
680,000 |
|
Deferred
payment liability |
|
|
- |
|
|
(659,832 |
) |
Proceeds
from disposal of intangible assets |
|
|
- |
|
|
204,764 |
|
Investment
in associates and joint ventures |
|
|
(125,000 |
) |
|
(2,169,750 |
) |
Acquisition
of property and equipment |
|
|
(3,398 |
) |
|
(7,259 |
) |
Net cash used in investing activities |
|
|
(33,944,320 |
) |
|
(12,170,952 |
) |
|
|
|
|
|
|
Cash
flows from financing activities |
|
|
|
|
|
Proceeds
from the issuance of shares for offerings, net of |
|
|
|
|
|
transaction costs |
|
|
95,146,338 |
|
|
15,609,256 |
|
Proceeds
from long-term debt, net of transaction costs |
|
|
10,823,240 |
|
|
26,000 |
|
Repayment of
long-term debt |
|
|
(23,773,470 |
) |
|
- |
|
Proceeds
from exercise of warrants |
|
|
- |
|
|
2,728,015 |
|
Proceeds
from exercise of options |
|
|
784,431 |
|
|
228,536 |
|
Repayment of
vendor-take-back loan |
|
|
(6,158,329 |
) |
|
- |
|
Repayment of
other long-term debt |
|
|
(5,561 |
) |
|
- |
|
Lease
payments |
|
|
(802,013 |
) |
|
(404,958 |
) |
Net cash provided by financing activities |
|
|
76,014,636 |
|
|
18,186,849 |
|
|
|
|
|
|
|
Foreign
exchange effect on cash |
|
|
(61,214 |
) |
|
(15,796 |
) |
Net change
in cash |
|
|
18,330,439 |
|
|
(8,887,899 |
) |
Cash, beginning of year |
|
|
4,323,823 |
|
|
13,211,722 |
|
Cash, end of year |
|
$ |
22,654,262 |
|
$ |
4,323,823 |
|
|
|
|
|
|
|
Enthusiast Gaming (NASDAQ:EGLX)
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