TORONTO, July 10, 2025 (GLOBE NEWSWIRE) -- Enthusiast Gaming Holdings Inc. (TSX: EGLX) (“Enthusiast Gaming” or the “Company”) today announces a debt financing and forbearance transaction (the “Transaction”) designed to support the Company’s recapitalization and long-term business objectives. Following the Company’s announcement of the strategic divestment of its direct sales business line, Enthusiast Gaming has sharpened its focus on its portfolio of high-performing digital gaming media assets that deliver ...

Leadership Changes - Alex Macdonald has been appointed as Chief Executive Officer, effective July 6, 2025, succeeding Adrian Montgomery [1][2] - J.B. Elliott has been appointed as President and Chief Operating Officer, previously serving as Chief Strategy Officer and General Counsel [3] - Nathan Teal has been appointed as Interim Chief Financial Officer, bringing over 20 years of experience in public accounting and financial reporting [4] Business Strategy and Divestment - The company has signed a letter of intent (LOI) with an entity controlled by Adrian Montgomery for the divestment of its direct sales business line and related creative assets [5] - The direct sales business includes Omnia Media Inc. and GameCo Esports Canada Inc., which hold the company's YouTube CSP licenses and esports operations, respectively [5] - Following the transaction, the company will retain its owned and operated content channels, ensuring continuity in operations [6] Financial Implications - The proposed transaction includes a purchase price of US$1,000,000, with the purchaser assuming certain liabilities related to the acquired entities [7][8] - The transaction is expected to result in approximately $10 million of annual cost savings, leading to material improvements in Adjusted EBITDA and significant working capital benefits [11] Future Business Focus - Post-transaction, the company will continue to operate its portfolio of owned and operated digital assets, including major gaming properties and events [12] - The company aims to deepen direct engagement with its audience and expand its owned intellectual property, focusing on monetizing more effectively [13][14]

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]