Core Insights - Enthusiast Gaming has announced a strategic partnership with Mediacube, enhancing its media inventory and access to a larger network of YouTube creators [1][2] - The partnership aims to provide brands with expanded access to Gen Z and Millennial audiences through premium advertising opportunities [2][4] - Mediacube selected Enthusiast Gaming for its proven ability to help brands authentically engage in the gaming space, creating new monetization paths for creators [3] Company Overview - Enthusiast Gaming is a leading gaming media and entertainment company in North America, focusing on connecting video game enthusiasts and esports fans [5][6] - The company operates on five core pillars: creators, content, communities, games, and experiences, offering integrated brand solutions for marketers [5][6] - Enthusiast Gaming continues to grow its network, reflecting the diversity and scale of gaming enthusiasts today [5][6]

Core Insights - Enthusiast Gaming Holdings Inc. reported a significant decline in revenue for Q1 2025, totaling $12.2 million, down 48% from $23.3 million in Q1 2024, primarily due to the strategic deprioritization of low-margin video platform revenue [5][7] - The company has focused on rebuilding its structure to enhance efficiency, resulting in gross margins stabilizing above 70% and a reduction in cash-based operating expenses [2][5] - Despite the revenue decline, the company is seeing growth in its programmatic business, paid subscriptions, and event revenue, positioning itself for future scalability [2][5] Financial Highlights - Revenue for Q1 2025 was $12.2 million, a 48% decrease from $23.3 million in Q1 2024 [5][7] - Gross profit was $9.0 million, down 36% from $14.1 million in Q1 2024, with gross margin increasing to 74.3% from 60.3% [5][8] - Operating expenses decreased to $14.1 million from $15.5 million in Q1 2024, reflecting strategic initiatives for efficiency [5][8] - Adjusted EBITDA loss was $2.6 million, compared to a loss of $1.8 million in Q1 2024 [8][24] - Net loss for Q1 2025 was $6.1 million, or $(0.04) per share, compared to a net loss of $1.3 million, or $(0.01) per share, in Q1 2024 [8][19] Business Highlights - Icy Veins showed strong performance, with yield improving by over 100% year-over-year, driven by strategic ad tech optimizations and new title coverage [5][6] - The Sims Resource grew its paid subscriber base, focusing on premium annual subscriptions for better retention [5][6] - U.GG experienced significant engagement growth, particularly in League of Legends, while expanding into new titles [5][6] - PocketGamer.com doubled its audience in Q1 2025, achieving over 30 million page views [9] - The direct sales team reported growth, closing $2.4 million in sales in Q1 2025, up from $2.1 million in Q4 2024 [9] - Enthusiast Gaming hosted two major PocketGamer Connects events, with significant year-over-year growth in attendance and sponsorship [9] Strategic Initiatives - The company has strategically deprioritized low-margin video platform revenue, which accounted for a significant portion of the revenue decline [5][7] - Focus has shifted towards high-margin products and properties, enhancing the ability to convert audience engagement into financial performance [2][5] - The company plans to continue its disciplined approach while preparing for stronger seasonal trends expected in the second half of the year [2][5]

Core Insights - Enthusiast Gaming integrates U.GG and Luminosity into the Rainbow Six Siege ecosystem, enhancing its relationship with Ubisoft ahead of the Siege X release [1][2] - The upcoming Siege X platform update aims to redefine the game's ecosystem and attract a larger player base by introducing free-to-play access to popular game modes [2] - U.GG's platform now provides essential tools for Rainbow Six Siege players, including global leaderboards and detailed player profiles, aligning with the game's revitalization [2][4] - Luminosity Gaming continues to compete in the Rainbow Six North American Pro League, representing a strategic investment in the game's competitive landscape [3][4] - Enthusiast Gaming's strategy focuses on partnering with publishers to build stronger gaming communities through data, content, and competitive infrastructure [4] Company Overview - Enthusiast Gaming is a leading gaming media and entertainment company in North America, connecting video game enthusiasts and esports fans globally [5] - The company operates on five core pillars: creators, content, communities, games, and experiences, providing unique marketing opportunities to engage Gen Z and Millennial audiences [5]

Financial Data and Key Metrics Changes - In Q4 2024, adjusted EBITDA improved significantly to $1.9 million from a loss of $3 million in Q4 2023, marking a $4.9 million swing into profitability [11][45] - Revenue for Q4 2024 was reported at $17.8 million, down from $47.1 million in Q4 2023, but gross margin improved to 76% from 40% in the same period [11][43] - For the full year 2024, total revenue was $73 million, down from $178 million in 2023, primarily due to the deprioritization of low-margin network revenues [12][39] Business Line Data and Key Metrics Changes - Media and content revenue in Q4 2024 was $12.8 million, down from $42.6 million in Q4 2023, mainly due to the deprioritization of the low-margin Omnia video network [40] - Esports and entertainment revenue increased to $2 million in Q4 2024 from $1.2 million in Q4 2023, driven by increased event revenue [40] - Subscription revenue decreased to $2.9 million in Q4 2024 from $3.3 million in Q4 2023, primarily due to the sale of certain legacy casual gaming assets [41] Market Data and Key Metrics Changes - The company ended 2024 with $4.8 million in cash and positive working capital of approximately $3.3 million, indicating improved financial health [46] - The partnership with Playwire has led to higher yields and improved monetization across owned and operated properties, contributing to the overall financial performance [37][50] Company Strategy and Development Direction - The company has refocused its business to emphasize owned and operated assets, eliminating lower-margin segments to improve profitability [9][10] - The strategic goal for 2025 is to expand the audience by engaging more gamers through product development and content strategies [15][56] - The company plans to invest in custom content and flexible models that align better with customer needs, moving away from rigid sponsorship commitments [26][76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining high gross margins similar to those achieved in 2024, with a focus on cost discipline and efficient monetization [14][48] - The broader economic environment is being monitored, with expectations of strong digital advertising growth in 2025, despite some caution regarding potential tariff impacts [52][53] - The company is optimistic about the future, emphasizing a commitment to profitable revenue growth while protecting margins [54][55] Other Important Information - The company has made significant reductions in operating expenses, with cash-based quarterly operating expenses down by over $10 million year-over-year in Q4 2024 [12][44] - The NFL Tuesday Night Gaming program has been discontinued due to unfavorable economics, allowing for a more flexible and profitable approach to custom content [25][76] Q&A Session Summary Question: Can you provide insights on top-line expectations and EBITDA performance for Q1? - Management noted that while Q1 typically sees normal seasonality, there is optimism for firmer CPMs and potential for positive EBITDA despite the end of the NFL TNG contract [59][60][68] Question: What is the outlook for gross margins in 2025? - Management indicated that gross margins are expected to stabilize in the low 70% range, with potential dips in Q1 followed by improvements throughout the year [69][70] Question: Are there future opportunities with the NFL? - Management stated that while the NFL relationship has concluded for now, there could be future opportunities, but the focus will be on more scalable and flexible content models [73][76] Question: Can you provide details on the contribution from political advertising? - Management confirmed that political advertising contributed approximately $1 million in Q4, with ongoing opportunities in the current political cycle [90][91] Question: What metrics can you share regarding the Playwire partnership? - Management highlighted improvements in CPMs, fill rates, and overall yield due to the partnership with Playwire, which has also led to cost savings [92][96]

Revenue and Growth - Annual revenue reached $202.8 million, representing a 21% increase year-over-year from $167.4 million in 2021[6] - Revenue for the year ended December 31, 2022, increased to $202.84 million, up 21.2% from $167.36 million in 2021[22] - Direct sales amounted to $37.4 million, up 69% from $22.2 million in 2021[6] - Subscription revenue reached $14.5 million, a 54% increase from $9.4 million in 2021, with paid subscribers growing to 262,000, up 19% from 220,000 in 2021[6] Profitability - Gross profit was $63.5 million, a 68% increase from $37.8 million in 2021, with a gross margin of 31.3%, up 870 basis points year-over-year[6][3] - Gross profit for Q4 2022 was $18.1 million, a 32% increase from $13.7 million in Q4 2021, with a gross margin of 33.5%, up 940 basis points year-over-year[17] - Gross margin improved to $63.46 million, representing a gross margin percentage of 31.3%, compared to 22.6% in the previous year[22] Expenses and Losses - Operating expenses rose to $110.80 million, an increase of 29.9% from $85.32 million in 2021[22] - Net loss for the year was $76.83 million, compared to a net loss of $52.05 million in 2021, reflecting a 47.5% increase in losses[22] - The company reported a net cash used in operating activities of $26.64 million, compared to $23.68 million in the previous year[23] Assets and Liabilities - Total current assets decreased to $47.84 million from $59.27 million, a decline of 19.3% year-over-year[21] - Total liabilities reduced significantly to $86.79 million, down 30.7% from $125.01 million in 2021[21] - Shareholders' equity decreased to $254.65 million from $262.77 million, a decline of 3.1% year-over-year[21] - Cash and cash equivalents at year-end decreased to $7.42 million from $22.65 million, a decline of 67.2%[23] Strategic Initiatives - The company launched an in-house talent agency, Storied, to enhance content initiatives and access top talent[17] - The NFL Tuesday Night Gaming collaboration generated approximately 48 million impressions in 2022, with 19 episodes produced[6] - The company achieved record attendance at live events under the Pocket Gamer Connects series in 2022, expanding into new locations[7] Financing - The company secured a $10 million expansion of its credit facility, increasing the total to $20 million, with maturity extended to December 31, 2024[6] Challenges - Goodwill impairment recorded was $31.28 million, indicating significant challenges in asset valuation[22] - Revenue for Q4 2022 was $54.0 million, a decrease of 5% compared to Q4 2021, primarily due to lower CPMs in the digital advertising industry[17]