- Record Q4 revenue of $3.6 million, an increase of 50.8% YoY
- Exceeded 2018 target with $11.0 million in revenue
- Completed seven acquisitions in 2018, part of defined growth strategy
- Strategic one-time costs in 2018 accelerate “buy and build” game plan for 2019
TORONTO, ONTARIO, April 30, 2019– Enthusiast Gaming Holdings Inc. (“Enthusiast” or the “Company”) (TSXV: EGLX, OTCQB: EGHIF),is pleased to announce that it has filed its audited annual financial results for the 12 months ended December 31, 2018. Both the MD&A and the Financials Statements are available on SEDAR. All dollar figures are expressed in CAD unless otherwise specified.
Menashe Kestenbaum, CEO of Enthusiast commented, “I am very pleased with our 2018 financial and operating results as we hit a number of key financial and business milestones. 2018 was a transformative year for Enthusiast, as we completed our go-public transaction, raised over $20 million, outperformed on our financial goals with revenue growth of 3.3x, made a number of strategic acquisitions and attracted approximately 55,000 attendees to our live EGLX events. I am excited to execute our growth strategy in 2019, as we continue building the leading, vertically integrated video gaming media and esports company.”
Enthusiast had an instrumental 2018 which ultimately led to three significant events in the first half of 2019. First, the acquisition of The Sims Resource, the largest female video gaming website in the world. Second, the North American sales expansion with the opening of two US based sales offices to capitalize on the epicentre of the video game publisher and advertising markets. Third, the completion of significant investments in Waveform Entertainment, a leading esports broadcast and production company and Addicting Games, one of the largest multi-player, online game networks in the US.
2018 Business Highlights
During the fiscal year ending December 31, 2018, Enthusiast achieved the following business milestones:
- Completion of the Business Transaction (“RTO”) with Tova Ventures II Inc. and concurrent private placement. In connection with the Transaction, the Company changed its name to “Enthusiast Gaming Holdings Inc. and on October 4, 2018, the Company listed on the TSX Venture Exchange (“TSXV”) under the symbol “EGLX”
- The completion of seven strategic acquisitions, including:
- Pixelfame – a suite of video game content focused Facebook pages.
- Gamnesia Media– a leading online video game news, analyst, opinion, and overall entertainment venue for gamers
- Daily Esports – an online content platform covering the latest news and opinions about the esports industry.
- Gameumentary – a video games journalism outlet that produces documentaries
- IncGamers– including PC Invasion and Diablo branded websites.
- Escapist Magazine– a leading online magazine covering mostly video games as well as movies, comics, TV, and more
- Operation Sports– one of the largest online sports video gaming news and community forums.
Significant Momentum Growth in EGLX and Events Division
The Company successfully hosted two major Enthusiast Gaming Live Expos (“EGLX”), in 2018. The events combined attracted approximately 55,000 attendees and exhibitors in Toronto. Key sponsors included: Bell Canada, Nintendo, Warner Brothers, Alibaba, eBay, LG, HP, Microsoft, Cineplex, Sun Life Financial and OverActive Media, and EGLX hosted Canada’s largest esports tournament, WESG Finals – the World Electronic Sports Games “WESG”, Olympic-style esports competition. Attendees had the opportunity to meet and play with celebrities and gaming enthusiasts including Mitch Marner of the Toronto Maple Leafs, Greg Miller and Nick Scarpino of Kinda Funny, Naomi Kyle of Everybody Games, and the Heads-Up Daily team.
Combined, the two 2018 events reached over 1 million online viewers, watching live streams of its esports competitions on Twitch and across the Company’s digital properties. Plans are already underway on the EGLX 2019 season which is expected to include a number of preliminary events leading up to a larger EGLX in October in Toronto. Further, the Company is actively exploring US expansion opportunities for the live events in 2020.
Significant Events Subsequent to 2018
- January 23, 2019, Enthusiast entered into a representation agreement with Blue Ant Media and Omnia Media (Blue Ant subsidiary) to exclusively monetize Omnia Media’s platform of 900 gaming YouTube channels and 50 million monthly visitors.
- February 6, 2019, Enthusiast opened a San Francisco sales office and on April 1, 2019 welcomed its first Los Angeles based senior sales representative to drive advertising sales and brand partnerships with in the highly coveted California market, where a large number of advertising agencies and game publishers are located.
- On February 23, 2019, Enthusiast listed on the OTCQB under the symbol “EGHIF”.
- March 5 and 7, 2019, Enthusiast announced dates for EGLX 2019 on October 18-20, 2019 at the Metro Toronto Convention Centre. Second, Enthusiast launched its own esports tournament and entertainment series, called “EGLX Rising Stars”.
- April 9, 2019, Enthusiast announced agreement to purchase 20% interest in Waveform Entertainment for C$1,680,000, a leading esports broadcast and production company specializing in the organization of premium esports tournaments world-wide.
- April 11, 2019, Enthusiast invested US$1,500,000 in Addicting Games, one of the largest multi-player, online game networks in the United States.
- On April 12, 2019, Enthusiast closed the US$20,000,000 acquisition of The Sims Resource, the largest female video gaming website in the world, with over 2.5 billion monthly page views.
2018 Financial Highlights
- Record revenue of $10,970,855 during the twelve months ended December 31, 2018, a 223% increase compared to $3,394,524during the twelve months ended December 31, 2017.
- Gross profit during the twelve months ended December 31, 2018 increased 200% to $1,542,280 from $512,655 during the twelve months ended December 31, 2017.
- Comprehensive loss for the twelve months ended December 31, 2018 was ($19,159,497) compared to comprehensive loss of ($2,433,105) during the twelve months ended December 31, 2017. The company incurred one-time expenses of approximately $12,400,000 in the year, related to non-cash accounting costs, its RTO transaction, including legal, regulatory, professional and financing fees, in addition to one-time due diligence costs associated with its acquisition pipeline. In addition to the above, the Company incurred additional costs primarily due to the scaling up of operations, including building out a technology team, and the change in fair value of the warrant liability.
- Revenue during the three months ended December 31, 2018 of $3,583,005 compared to $2,375,754 during the three months ended December 31, 2017, representing an increase of 50.8%.
- Gross profit during the three months ended December 31, 2018 increased 88.4% to $1,581,850 from $839,688 during the three months ended December 31, 2017.
- Comprehensive loss for the three months ended December 31, 2018 was ($9,029,079) compared to comprehensive loss of ($1,652,791) during the three months ended December 31, 2017. The Company incurred one-time expenses in the quarter, related to its RTO transaction, including legal, regulatory, professional and financing fees, share-based compensation, in addition to one-time due diligence costs associated with its acquisition pipeline. In addition to above, the Company incurred additional costs primarily due to the scaling up of operations as well as costs associated with the RTO transaction and change in fair value of the warrant liability.
- The increase in cost of sales in Q4 2018 is as a result of increased revenue share associated with a highernumber of websites the Company monetized over the period. Gross margin as a percentage of sales, however increased to 44% from 35% in the period, mainly impacted by higher sell-through rates and revenue optimization initiatives.
The following financial data prepared in accordance with IFRS in Canadian dollars is presented for the three and twelve month periods ended December 31, 2018 and 2017.
Founded in 2014, Enthusiast is one of the fastest-growing community of video gamers. Through the Company’s unique acquisition strategy, it has a platform of over 80 owned and affiliated websites and currently reaches over 75 million monthly visitors with its unique and curated content. Enthusiast also owns and operates Canada’s largest gaming expo, Enthusiast Gaming Live Expo, EGLX, (www.eglx.ca). Approximately 55,000 people attended EGLX in 2018. For more information on the Company, visit www.enthusiastgaming.com.
Julia Becker, Head of Investor Relations & Marketing
Eric Bernofsky, COO & SVP Finance
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.
The securities of the Corporation have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.