TORONTO, May 15, 2024 (GLOBE NEWSWIRE) -- Enthusiast Gaming Holdings Inc. ("Enthusiast Gaming" or the "Company") (TSX:EGLX), a leading gaming media and entertainment company, today announced financial results for the three months ended March 31, 2024 ("Q1 2024"). "The cornerstone of Enthusiast Gaming has always been, and remains, the strength of its owned and operated assets. Assets like TheSimsResource, U.GG, Icy-Veins, PocketGamer, Luminosity Gaming, NFL Tuesday Night Gaming, and our many other assets and properties that boast large, coveted, and highly engaged gaming audiences," commented Adrian Montgomery, Board Chair and interim CEO of Enthusiast Gaming. "During and subsequent to the first quarter, the team has been hard at work, delivering much needed focus, stability, and excitement to the business, including streamlining the Company's cost structure, executing significant product advancements across our asset portfolio, expanding our key strategic partnerships, including the signing of a new sports league, and the divestment of certain non-core, non-profitable legacy assets, bolstering the Company's balance sheet." "On the back of all of these changes," Montgomery continued, "we have reported our best quarterly Adjusted EBITDA in company history, in our seasonally slowest quarter of the year, and having only initiated our cost savings program in March of this year. These results indicate a clear path to scalable and sustainable profitability in 2024, positioning us for a return to growth." Financial Highlights for Q1 2024 Revenue of $23.3 million, compared to $42.9 million in Q1 2023, with the majority of the decline being related to lower margin revenue attributable to the video platform. Gross profit of $14.1 million, compared to $16.8 million in Q1 2023, with gross margin expanding to 60.3% from 39.1%. Operating expenses of $15.5 million, a $9.7 million year-over-year decrease from $25.2 million in Q1 2023. Adjusted EBITDA loss of $1.8 million, a $1.3 million improvement compared to $3.1 million in Q1 2023, resulting from the successful implementation of certain cost savings measures and the deprioritization of certain business activities, mitigating the related decline in revenue. Net loss and comprehensive loss of $1.3 million in Q1 2024 compared to a net loss and comprehensive loss of $8.7 million in Q1 2023. Business Highlights for Q1 2024 The Company announced a $10 million cost reduction program to be primarily driven by efficiencies in ad tech, the insourcing of production and content resources, headcount reductions and other areas, which was principally executed in Q1 2024. Direct sales (included in revenue) for Q1 2024, was $6.6 million as compared to approximately $10.0 million for Q1 2023, as a result of the timing of advertising spends associated with certain consumer product goods clients period-over-period as well as macroeconomic impacts on the technology/telecommunication industry. The Company amplified its focus on its highly engaged communities, resulting in a 23% increase in aggregate pageviews in Q1 2024 as compared to Q4 2023 and, excluding the impact of the video platform, a 60% year-over-year increase in time spent per unique visitor. The Company made a number of expansions to its product and entertainment offerings, including U.GG's expansion into Riot Game's title Teamfight Tactics, Icy-Veins expansion into Last Epoch, PocketGamer Connects hosting its largest ever event in London in January and an inaugural event in San Francisco in March, and Luminosity expanding its presence to New York hosting Luminosity Makes Big Moves with over 57,000 peak concurrent viewers The Company entered into a multi-year partnership with Playwire, a leading advertising technology provider, to outsource its ad tech stack and amplify its monetization opportunities across its communities. The previously announced sale of certain non-core, non-profitable casual gaming assets for a purchase price of approximately US$3.0 million closed on April 15, 2024, helping strengthen the balance sheet. The Company expanded its sports league partnerships, including entering into a strategic partnership with an additional major US sports league, further details of which will be announced closer to the launch of the program. The Company concluded Season 2 of NFL TNG, with Season 2 achieving a 52% increase in total impressions as compared to Season 1. Total impressions for Season 2 were 111 million, averaging over 5 million per week. "We are working swiftly to provide sustainable and scalable profitability for the Company, and delivering the lowest quarter of Adjusted EBITDA losses in Q1 2024 shows our commitment to do just that. We continue to be committed to growth and focusing on higher gross margin revenue lines like direct sales, subscription and programmatic across our owned and operated sites." said Felicia DellaFortuna, CFO of Enthusiast Gaming. First Quarter 2024 Results Comparison Revenue was $23.3 million in Q1 2024, a 46% decrease compared to $42.9 million in Q1 2023. Media and Content revenue was $15.9 million in Q1 2024, a 55% decrease from $35.5 million in Q1 2023. Esports and Entertainment revenue and Subscription revenue remained consistent in Q1 2024 compared to Q1 2023 at $3.4 million and $4.0 million, respectively. During Q1 2024, the Company experienced lower views on its video platforms due to the strategic decision to de-prioritize the lower margin video platform revenue which yielded the vast majority of the decline in Media and Content revenue in Q1 2024 compared to Q1 2023. Direct Sales (the majority of which is included in media and content revenue) decreased by $3.4 million to $6.6 million in Q1 2024 as compared to $10.0 million in Q1 2023. This is a result of the timing of advertising spends associated with certain consumer product goods clients year-over-year as well as macroeconomic impacts on the technology/telecommunication industry. Gross profit was $14.1 million in Q1 2024, a 16% decrease compared to the $16.8 million in Q1 2023. Gross margin increased to 60.3% in Q1 2024 from 39.1% in Q1 2023. Adjusted EBITDA loss was $1.8 million in Q1 2024 compared to an Adjusted EBITDA loss of $3.1 million in Q1 2023. Net loss and comprehensive loss was $1.3 million, or $(0.01) per share, in Q1 2024, compared to $8.7 million, or $(0.06) per share, in Q1 2023. Organizational Updates The Company is pleased to announce that Mr. John Zorbas has been appointed to the Board of Directors of the Company, effective May 15, 2024. Mr. Zorbas is currently the CEO, President and director of Captor Capital Corp. and serves on the board of directors of numerous Canadian and UK-based public companies. Mr. Zorbas brings extensive capital markets and public company experience that will make him a valuable addition to the Board. Investor Conference Call Management will host a conference call and webcast on Wednesday, May 15, 2024, at 5 p.m. ET to review and discuss its Q1 2024 results. Conference call details: Dial-in: 1-855-239-1101 (Conference ID: 10189020) Live webcast: https://viavid.webcasts.com/starthere.jsp?ei=1670082&tp_key=fa58616338 A replay will be available on Enthusiast Gaming's website at enthusiastgaming.com/investors. Supplemental Information Enthusiast Gaming's financial statements and management discussion and analysis ("MD&A") are available at www.sedarplus.ca and enthusiastgaming.com/investors. All amounts are in Canadian dollars. About Enthusiast Gaming Enthusiast Gaming is a leading gaming media and entertainment company, building the largest platform for video game enthusiasts and esports fans to connect and compete worldwide. Combining the elements of its five core pillars: creators, content, communities, games, and experiences, Enthusiast Gaming provides a unique opportunity for marketers to create integrated brand solutions to connect with coveted Gen Z and Millennial audiences. Through its proprietary mix of digital media, content and gaming assets, Enthusiast Gaming continues to grow its network of communities, reflecting the scale and diversity of gaming enthusiasts today. Contacts Enthusiast Gaming: Felicia DellaFortuna, Chief Financial OfficerInvestors: 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.sedarplus.ca. 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. Non-IFRS Measures This press release references certain non-IFRS measures, including Adjusted EBITDA, as described below. These non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. The Company uses non-IFRS measures including: "EBITDA", which is defined as earnings before interest, taxes, depreciation and amortization. Enthusiast Gaming calculates EBITDA using gross margin less total operating expenses plus share-based compensation, amortization and depreciation and annual general meeting legal and advisory costs; and, "Adjusted EBITDA", which is defined as EBITDA plus severance and other non-recurring public costs. Non-recurring costs include items such as annual Nasdaq listing fees and directors and officers ("D&O") liability insurance specific to the Company's former listing on Nasdaq. 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.   Enthusiast Gaming Holdings Inc. Condensed Consolidated Interim Statements of Loss and Comprehensive Loss For the three months ended March 31, 2024 and 2023 (Unaudited - Expressed in Canadian Dollars)   For the three months ended   March 31, 2024 March 31, 2023               Revenue $ 23,328,239   $ 42,879,966   Cost of sales   9,252,080     26,114,408   Gross margin   14,076,159     16,765,558   Operating expenses             Professional fees   552,558     453,336   Consulting fees   1,452,236     1,308,484   Advertising and promotion   479,804     1,456,111   Office and general   994,398     2,291,783   Salaries and wages   8,346,301     9,207,024   Technology support, web development and content   4,268,659     5,296,024   Esports player, team and game expenses   609,112     635,447   Foreign exchange loss   105,935     114,557   Share-based compensation   (1,998,257 )   1,130,331   Amortization and depreciation   715,494     3,338,023   Total operating expenses   15,526,240     25,231,120                 Other expenses (income)             Share of net (income) loss from investment in associates and joint ventures   (25,382 )   172,447   Interest and accretion   623,214     610,340   Gain on revaluation of deferred payment liability   (16,900 )   (172,024 ) Interest income   (5,053 )   (61,207 ) Net loss before income taxes   (2,025,960