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.          
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  
           
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