Q1 2024 Enthusiast Gaming Holdings Inc Earnings Call

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Operator: Good day, and welcome to the Enthusiast Gaming Holdings Inc. first quarter 2024 financial results conference call. All participants will be in listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to JB Elliott, Chief Strategy Officer and General Counsel. Please go ahead, sir.

Good day and welcome to the enthusiast Gaming Holdings, Inc. First quarter 'twenty 'twenty four financial results Conference call. All participants will be in listen only night should you need any assistance. Please signal a conference specialist by pressing the stocky followed by theory.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad withdraw.

Withdraw your question. Please press Star then two please note. This event is being recorded.

Speaker Change: Now I'd like to turn the conference over to J P. Elliott Chief strategy Officer, and General Counsel. Please go ahead Sir.

JB Elliott: Thank you, Operator. Good afternoon, everyone, and welcome to the Enthusiast Gaming first quarter 2024 results conference call. I'm JB Elliott, Chief Strategy Officer and General Counsel. With me today are Interim Chief Executive Officer Adrian Montgomery and our Chief Financial Officer Felicia DellaFortuna.

Thank you operator, good afternoon, everyone and welcome to the enthusiast gaming first quarter 2024 results conference call on JV Elliott Chief strategy Officer, and General Counsel with me today, <unk> interim Chief Executive Officer, Adrian Montgomery, and our Chief Financial Officer, Felicia for Qunar will begin with some prepared.

JB Elliott: We'll begin with some prepared remarks and then open the floor to questions. Before we begin, I'd like to remind everyone that today's presentation contains forward-looking information that involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectations. These statements should not be read as assurances of future performance or results. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements.

Speaker Change: Our remarks, and then open the floor to questions before we begin I'd like to remind everyone that today's presentation contains forward looking information that involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectations. These statements should not be read as assurances of future performance.

JB Elliott: A more complete discussion of the risks and uncertainties facing the company appears in the company's management discussion and analysis for the three-month period ending March 31st, 2024, which is available under the company's profile on CDR Plus as well as on the company's website at EnthusiastGaming.com. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of The company disclaims any intention or obligation, except to the extent required by law, to update and revise any forward-looking statement as a result of new information, future events, or for any other reason. Adrian, the call is yours.

Speaker Change: Our results such statements involve known and unknown risks uncertainties and other factors that may cause actual results performance or achievements to be materially different from those implied by such statements a more complete discussion of the risks and uncertainties facing the company appears in the company's management discussion and analysis for the three months period ending March 31.

Speaker Change: 2024, which are available under the company's profile on SEDAR, plus as well as on the company's website at <unk> Dot com.

Adrian Taylor Montgomery: You are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this presentation. The company disclaims any intention or obligation except to the extent required by law to update and revise any forward looking statement as a result of new information future events or for any other reason now I'd like to turn the call over to a J Montgomery.

Adrian: Adrian the call is yours.

Adrian: Thank you JB.

Adrian Taylor Montgomery: It's been an eventful four months since I returned to the CEO role. During this time, I've been energized by the ongoing enthusiasm within our communities. The robust demand for our product and innovation; the traction gained through our direct sales initiatives with top-tier brands and the dynamic collaborations with our enviable strategic partners, including the National Football League. In these areas, we've been diligently advancing our efforts while also sharpening our focus on driving profitable revenue, expanding gross margins, and optimizing our cost structure. I'm proud to share that our team's hard work has already translated into consistent victories across all of these fronts, which I will be outlining for you today.

Adrian: It's been an eventful four months since I returned to the CEO role.

Adrian: During this time I've been energized by the ongoing enthusiasm within our communities the robust demand for our product innovations.

Adrian: The traction gained through our direct sales initiatives with top tier brands and the dynamic collaborations with our enviable strategic partners, including the National Football League.

Adrian: In these areas we've been diligently advancing our efforts while also sharpening our focus on driving profitable revenue expanding gross margins and optimizing our cost structure.

Adrian: I'm proud to share that our team's hard work has already translated into consistent victories across all of these fronts, which I will be outlining for you today.

Adrian Taylor Montgomery: But before diving into details, I'm thrilled to kick off with a significant announcement: gaming's position as the premier platform for engaging gamers. I am pleased to announce that we have just signed our latest strategic partnership, a collaboration with the National Hockey League to launch an entertainment series bringing together celebrity athletes and sports fans with gaming influencers and gaming enthusiasts. It is a multi-year partnership that will launch in 2024-2025. We look forward to announcing the details of the series and the launch date jointly with the NHL in the near future.

Adrian: But before diving into details I'm thrilled to kick off with a significant announcement, one that underscores enthusiast gaming position as the premier platform for engaging gamers.

Adrian: I am pleased to announce that we have just signed our largest strategic partnership a collaboration with the National Hockey League to launch an entertainment series, bringing together celebrity athletes and sports fans with gaming Influencers and gaming enthusiasts. It is a multi year partnership which will launch with the <unk>.

Adrian: 24, 2025 season, we look forward to announcing the details of the series and the launch date jointly with the NHL in the near future.

Adrian Taylor Montgomery: This announcement follows a number of catalysts achieved over the last four months which are rapidly advancing and stabilizing the business, having already led to our best reported quarterly adjusted EBITDA in company history, and that was in Q1, which is our slowest quarter of the year. On the business front, we previously stated that we wanted to focus on profitable revenue streams, particularly around owned and operated properties, and drive significant gross margin expansion, all while being as disciplined and efficient as possible on our costs. We are accomplishing.

Adrian: This announcement follows a number of catalysts achieved over the last four months, which are rapidly advancing in stabilizing the business, having already led to our best reported quarterly adjusted EBITDA in company history and that was in Q1, which is our slowest quarter of the year.

Adrian: On the business front, we previously stated that we wanted to focus unprofitable revenue streams, particularly around the owned and operated properties and drive significant gross margin expansion, all while being as disciplined and efficient as possible on our costs.

Adrian: We are accomplishing this in March we announced a $10 million cost reduction program, which has already shown benefits in our Q1 numbers with such benefits to increase as they normalize in Q2 and thereafter.

Adrian Taylor Montgomery: In March, we announced a $10 million cost reduction program, which has already shown benefits in our Q1 numbers, with such benefits to increase as they normalize in Q2 and thereafter. Also in March, we announced an ad tech partnership with Playwire in order to partner with a global leader to monetize our properties, enabling us to increase our yield and drive growth to our bottom line. This partnership is already live, and we are quickly seeing a significant increase in yield while also realizing substantial cost savings.

Adrian: Also in March we announced an AD tech partnership with play wire in order to partner with a global leader to monetize our properties, enabling us to increase our yield and drive growth to our bottom line.

Adrian: This partnership is already live and we're quickly seeing a significant increase in yield while also realizing substantial cost savings.

Adrian Taylor Montgomery: In April, we announced the sale of a small subset of certain non-core, non-profitable casual gaming assets for a purchase price of over $4 million, further trimming our adjusted EBITDA loss and adding liquidity to our balance. And, of course, today we announced our next strategic partnership, a collaboration with the National Hockey League. This will further strengthen our direct sales offering and open up new channels to bring additional Fortune 500 brands to Enthusiast Gaming.

Adrian: In April we announced the sale of a small subset of a certain noncore nonprofit book casual gaming assets for a purchase price of over 4 million further trimming, our adjusted EBITDA loss and adding liquidity to our balance sheet.

Adrian: And of course today, we announced our next strategic partnership a collaboration with the National Hockey League. This will further strengthen our direct sales offering and open up new channels to bring additional fortune 500 brands to enthusiast gaming.

Adrian Taylor Montgomery: These moves have brought a new spark to the business, and the results are already showing, including in our strong Q1 adjusted EBITDA results. However, we've also been busy on the product front, which is our lifeblood, over the last four months. In U.GG, advancements continued, most recently demonstrated by the platform's expansion into another game title, being the popular Riot Games title, Teamfight Tactics. This brings the total number of game titles in UGG to four, also including League of Legends, World of Warcraft, and Valorant.

Adrian: These moves have brought a new spark to the business and the results are already showing including in our strong Q1. Adjusted EBITDA results. However, we've also been busy on the product front, which is our lifeblood over the last four months.

Adrian: In Utah G. G. Advancements continue most recently demonstrated by the platforms expansion into another game title being the popular riot games Tito titled team fight tactics. This brings the total number of game titles in U G. G to four also including league of Legends World of Warcraft and Valeant.

Adrian Taylor Montgomery: These advancements have helped continue the growth of U.GG as one of our flagship products, with the desktop application having now surpassed 2.5 million downloads. These enhancements to U.GG will continue with more planned expansions to additional game titles, including Helldivers 2 and 2X KO, both coming soon.

Adrian: These advancements of help continue the growth of U G. G is one of our flagship products with the desktop application, having now surpassed $2 5 million downloads.

Adrian: These enhancements to you that G. G will continue with more planned expansion to additional game titles, including Hell divers to and two X K O both coming soon.

Adrian Taylor Montgomery: The Sims Resource continues to dominate as the largest and most engaged Sims fan community. Time spent per user on TSR continues to be nearly triple that of the largest competitor, and our thesis remains that when we bring users to TSR, they will stay for the long run. To that end, TSR has now deployed its very own first-party data analytics platform.

Adrian: The Sims resort continues to dominate as the largest and most engaged him span.

Adrian: Time spent per user on T. S are continues to be nearly triple that of the largest competitor and our thesis remains that when we bring users to T S or they will stay for the long run to that end <unk> has now deployed its very own first party data analytics platform. This will enable us to be more.

Adrian Taylor Montgomery: This will enable us to be more targeted and expansive with our acquisition approach. The high engagement already enjoyed by the site is translating into a healthier and more profitable paid subscriber base. As of today, the majority of our subscription activations are into the premium plans, which we define as 3, 6, or 12-month packages. This is a new achievement for TSR.

Adrian: Targeted an expansive with our acquisition approach the high engagement already enjoyed by the site is translating into a healthier and more profitable paid subscriber base.

Adrian: As of today, the majority of our subscription Activations are into premium plan, which we define as three six or 12 month packages. This is a new achievement for tsi pre.

Adrian Taylor Montgomery: Premium subscribers have a much higher LTV and generate much more upfront value, which will enable us to put more resources towards customer acquisition, thereby allowing TSR to grow its status as the number one fan community for all things sims for years to come. Icy Veins has been expanded to cover the game title Last Epoch, offering guide news and trusted character builds for fans of the game. Icy Veins has a promising year ahead, with this expansion now live.

Adrian: Premium subscribers have a much higher LTV and generate much more upfront value, which will enable us to put more resources towards customer acquisition, thereby allowing T. S are to grow its status as the number one fan community for all things Sims.

Adrian: For years to come.

Adrian: IC veins has been expanded to cover the game title loss E. Pas offering guide news and trusted character builds for fans of the game IC veins as a promising year ahead with this expansion now live but.

Adrian Taylor Montgomery: But more notably, with the much-anticipated World of Warcraft expansion, The War Within, scheduled for release in the fall of 2024, and the much-anticipated Diablo 4 expansion, Vessel of Hatred, scheduled for release in late 2024. This will be a double-header for Icy Veins, as these expansions into major game titles supported by Icy Veins typically bring vast increases of traffic to the site Luminosity Gaming has been hard at it in the first few months of this year, packing venues across North America and running its own events for tens of thousands of live viewers online, along with tens of millions of views on its recently launched Smash channel.

Adrian: More notably with the much anticipated world of Warcraft expansion the war within scheduled for release in the fall of 'twenty 'twenty four and the much anticipated Diablo four expansion the vessel of hatred scheduled for release in late 2024. This will be a double header for IC beans as these.

Adrian: <unk> into major game titles supported by IC means typically bring vast increases of traffic to the site and this year, we're getting two of them.

Adrian: Luminosity gaming has been hard at it in the first few months of this year packing venues across North America, and running its own events for tens of thousands of live viewers online.

Adrian: Along with tens of millions of views on its recently launched Smash channel.

Adrian Taylor Montgomery: Luminosity Gaming recently started working directly with Amazon to create Boost Blitz, a fun twist on the traditional Rocket League tournament. We are honored and humbled that one of the largest companies in the world, Amazon, continues to choose us as a trusted partner to reach gaming and eSports audiences, and we expect that relationship only to grow in the coming months and years. Luminosity Gaming also held the Kroger Smash Invitational in April, and this weekend, they are hosting the Get On My Level Smash and Fighting Game Live event in Toronto.

Adrian: Luminosity gaming recently started working directly with Amazon to create boost splits are fun twist on the traditional rocket League tournament.

Adrian: We are honored and humbled that one of the largest companies in the world Amazon continues to choose us as a trusted partner to reach gaming and esports audiences and we expect that relationship only to grow in the coming months and years luminosity gaming also had to held the Kroger smash invitation.

Adrian: In April and this weekend is hosting to get on my level Smash and fighting game live event in Toronto.

Adrian Taylor Montgomery: The Kroger Smash Invitational had an average watch time of 84 minutes and peaked at over 16,800 concurrent live viewers, and the Get On My Level live event is expected to be attended by over 2,000 attendees this week.

Adrian: The progress mash invitation how would an average watch time 84 minutes and peaked at over 16800 concurrent live viewers and the gain on my level live event is expected to be attended by over 2000 attendees. This weekend.

Adrian Taylor Montgomery: Pocket Gamer is celebrating its 10th anniversary year and is lined up to have a busy year full of record events, both existing and new. The year started strong for Pocket Gamer with our flagship event, Pocket Gamer Connects London, being held in January. PGC London was the largest Pocket Gamer event ever, with over 150 sponsoring partners and over 2,600 delegates representing 1,300 companies. Furthermore, in March, we held the first-ever Pocket Gamer Connect San Francisco with over 1,000 delegates in attendance.

Pocket Gamer is celebrating its 10th anniversary year and is lined up to have a busy year full of record events, both existing and new.

Adrian: The year started strong for pocket Gamer with our flagship event pocket Gamer connects London being held in January.

Adrian: P. G C. London was the largest pocket gamer event ever with over 150 sponsoring partners and over 2600 delegates representing 1300 companies further in March we held our first ever pocket Gamer connect San Francisco with over 1000 delegates in attendance.

Adrian Taylor Montgomery: And just recently, two weeks ago, we held the second annual Dubai Game Expo Summit, which also set a record, including approximately 1,400 delegates in attendance. The 10th anniversary year is just getting started for Pocket Gamer, with large events still to come, including the Mobile Game Awards in Germany in August, PGC Helsinki, and the Top 50 Game Developer Series in October, and PGC Jordan in November.

Adrian: And just recently two weeks ago, we held the second annual Dubai game Expo Summit, which also set records, including approximately 1400 delegates in attendance.

Adrian: The 10th anniversary year is just getting started for pocket gamer with large events still to come including the mobile game Awards in Germany in August P. G C. Helsinki in the top 50 game developer series in October and P. G C. Jordan in November we see continued demand for our B to B mobile gaming.

Adrian Taylor Montgomery: We see continued demand for our B2B mobile gaming events and are evaluating other opportunities across Europe, the Middle East, and Asia for additional events both this year and next. Fantasy Football Scout remains one of the top choices for fantasy sports and Premier League fans and has had a strong start to the year, including a current 20% increase in partnership and sponsorship revenue year over year. Through FFS, we are working directly with the Premier League, UEFA, Sky Sports, and DraftKings, among other notable partners.

Adrian: Events and are evaluating other opportunities across Europe, the middle East and Asia for additional events, both this year and next.

Adrian: Fantasy football Scout remains one of the top choices for fantasy Sports and Premier League fans and has had a strong start to the year, including a current 20% increase in partnership and sponsorship revenue year over year.

Adrian: Through <unk>, we were working directly with the Premier League UEFA Sky Sports and draft Kings among other notable partners.

Adrian Taylor Montgomery: I'm pleased to announce that FFS is currently working with UEFA on a Euro 2024 fantasy game to be hosted in June and July, alongside the launch of a dedicated podcast. FFS has launched new tools and features for members this year, and as of recently, its content even appears in English standard, the UK's third-largest publication.

Adrian: I'm pleased to announce that <unk> is currently working with UEFA on a euro 2020 for fantasy game to be hosted in June and July alongside the launching of a dedicated podcast.

Adrian: F. A fast has launched new tools and features for members this year and as of recently its content even appears.

Adrian: Onboard.

Adrian: The uk's herb largest publication.

Adrian Taylor Montgomery: And of course, in Q1 this year, we finished Season 2 of NFL Tuesday Night Gaming. Season 2 saw a tremendous increase in engagement over Season 1, with 5 million weekly average impressions and over 111 million impressions for the entire season, resulting in a 53 percent increase in engagement year over year. Notable sponsors of Season 2 of NFL TNG included Lego, Campbell's, and Carnival. NFL TNG is a tremendous asset for our direct sales team, and the recent leaps in engagement make us excited for its future.

Adrian: And of course in Q1 of this year. We finished season two of NFL Tuesday night gaming.

Adrian: Season, two saw a tremendous increase in engagement over season, one with 5 million weekly average impressions and over 111 million impressions for the entire season, resulting in a 53% increase in engagement year over year.

Adrian: Notable sponsors of season, two of Nf L. T N G included Lego Campbell's and Carnival.

Adrian: N F. L. T N G is a tremendous asset for a direct sales team and the recent leaps and engagement make us excited for its future.

Adrian Taylor Montgomery: Based on these results, I am pleased to announce that, along with our partner, the NFL, we will be bringing NFL TNG back for Season 3, starting this fall with a renewed creative concept focusing on our most successful segments and evolving consumer demand trends, details of which will be jointly announced with the NFL closer to the launch of Season 3.

Adrian: Based on these results I am pleased to announce that along with our partner the NFL, we will be bringing NFL TNG back for season three starting this fall with a renewed creative concept focusing on our most successful segments and evolving cost consumer demand trends details of which will jointly.

Adrian: We follow with the NFL closer to the launch of season three.

Adrian Taylor Montgomery: Underlying these and all of our other owned and operated assets lies a coveted community of gaming audiences, and I identify these as our most valuable assets, and the underlying strategy remains the same: leverage our large and highly engaged audience to derive a higher percentage of direct sales and subscription revenue with less reliance on network revenue. This will, and is, leading to significantly expanded gross margins, which, when paired with disciplined spending, will allow us to generate stable and increasing returns, and we are quickly realizing these benefits. The adjusted EBITDA loss reported in Q1 was a record low $1.8 million, a 42% improvement year over year. There are two reasons why this is extremely notable.

Adrian: Underlying these and all of our other owned and operated assets lives a coveted community of gaming audiences and identify these as our most valuable assets and the underlying strategy remains the same leverage our large and highly engaged audience to drive a higher percentage of <unk>.

Adrian: Your extra sales and subscription revenue with less reliance on network revenue.

Adrian: This will and is leading to significantly expanded gross margins, which when paired with disciplined spending will allow us to generate stable and increasing returns.

Adrian: And we are quickly realizing these benefits.

Adrian: Adjusted EBITDA loss reported in Q1 was a record low $1.8 million or 42% improvement year over year over year.

Adrian: There are two reasons why this is extremely notable one the $10 million cost reduction program was finalized in March and the resulting savings are not yet fully normalized and flown.

Adrian Taylor Montgomery: One, the $10 million cost reduction program was finalized in March, and the resulting savings are not yet fully normalized and flown through the Q1 numbers. And two, Q1 is the seasonally lowest quarter of the year, and the results are expected to continue to improve substantially and sequentially as we move throughout the rest of the calendar. There has been a lot of work done in a very short period of time to set the company up for success this year.

Adrian: Going through the Q1 numbers and to Q1 is the seasonally lowest quarter of the year and the results are expected to continue to improve substantially and sequentially as we move throughout the rest of the calendar.

Adrian: There has been a lot of work done in a very short period of time to set the company up for success this year, bringing new focus stability and excitement to the business. Some of this work involved making decisions around shedding large segments of low margin network revenue.

Adrian Taylor Montgomery: Bringing new focus, stability, and excitement to the business. Some of this work involved making decisions around shedding large segments of low-margin network revenue, resulting in a significant decrease in top-line revenue, which was $23.3 million in Q1, as compared to $42.9 million last year. However, this enabled us to shed significant costs with little impact on gross profit, which was $14.1 million as compared to $16.8 million last year, resulting in our record low Q1 adjusted EBITDA loss of $1.8 million, compared to $3.1 million last year. Those of you who know me will know that decreased is not a word I like to use.

Adrian: Resulting in a significant decrease in top line revenue, which was $23 3 million in Q1 as compared to $42 9 million last year. However.

Adrian: However, this enabled us to shed significant costs with little impact to gross profit, which was $14 1 million as compared to $16 8 million last year, resulting in a record low Q1 adjusted EBITDA.

Adrian: Loss of $1 8 million compared to $3 1 million last year.

Adrian: Those of you who know me will know that decreased with not a word I like to use growth is in this company's DNA and we are quickly getting back to growth. These last few months, we've had to make changes to rapidly position ourselves to support and sustain profitable growth in this new environment.

Adrian Taylor Montgomery: Growth is in this company's DNA, and we are quickly getting back to growth. In these last few months, we've had to make changes to rapidly position ourselves to support and sustain profitable growth in this new environment. These changes have created a streamlined business model designed for sustainable and scalable profitability and focused on who we are and what we own and control. We are a media and entertainment company for gamers. We own and control our highly engaged communities, which are best in class in their respective verticals.

Adrian: These changes have created a streamlined business model designed for sustainable and scalable profitability and focused on what we are and what we own and control.

Adrian: We are a media and entertainment company for gamers, we own and control our highly engaged communities, which are best in class in their respective verticals. We are focused on increasing the size and engagement of our vast audience and we are now streamlined inefficient with growth gross.

Adrian Taylor Montgomery: We are focused on increasing the size and engagement of our vast audience, and we are now streamlined and efficient with growth gross margins of over 60%. This means that we can reach breakeven and profitability at a much lower gross profit threshold, significantly enhancing our ability to scale profits rapidly and sustainably. Therefore, we are investing in high-margin, revenue-producing areas of the business to drive profit. We are investing in direct sellers to continue to unlock the value of our vast digital inventory and to capitalize on our unique offerings, including our partnerships with both the NFL and the NHL.

Adrian: <unk> of over 60%.

Adrian: This means that we can reach reach breakeven and profitability at a much lower gross gross profit threshold significantly enhancing our ability to scale profits rapidly and sustainably.

Adrian: Therefore.

Adrian: We are investing in high margin revenue producing areas of the business to drive profit.

Adrian: We are investing in direct sellers to continue to unlock the value of our vast digital inventory and to capitalize on our unique offerings, including our partnerships with both the NFL and the N H L.

Adrian Taylor Montgomery: We are investing in our product offerings, including more game titles on U.GG and IC Games and more events in Pocket Gamer and Luminon. And we are investing in existing and new subscription offerings, such as the Sims Resource and Fantasy Football Scout, which boast the highest quality offerings as measured by engagement but still have plenty of market share to conquer. We find ourselves here today following a wave of positive catalysts in the first few months of the year, with record-adjusted EBITDA loss results posted in Q1, and seasonal tailwinds at our backs.

Adrian: We are investing in our product offerings, including more game titles on U G G and IC beams and more events and pocket gamers luminosity.

Adrian: And we are investing in existing and new subscription offerings, such as the Sims resource and fantasy football scope, which boasts the highest quality offerings as measured by engagement.

Adrian: But still have plenty of market share to conquer.

Adrian: We find ourselves here today following a wave of positive catalysts in the first few months of the year with record adjusted EBITDA loss results posted in Q1 and seasonal tail winds at our back.

Adrian Taylor Montgomery: Because of this, I remain of the strong opinion that our outlook has never been stronger, and I have full confidence that 2024 will be a prosperous year for Enthusiast Gaming. We've set the stage to make that happen, and we'll keep working hard to maintain this momentum. Thank you, and I will now turn the call over to Felicia to provide further commentary and details on the financial results. Thank you.

Adrian: Because of this I remain of the strong opinion that our outlook has never been stronger and I have full confidence that 'twenty 'twenty four will be a prosperous year for easiest gaming.

Adrian: We've set the stage to make that happen and we will keep working hard to maintain this momentum.

Felicia: Thank you and I will now turn the call over to Felicia to provide further commentary and details on the financial results Felicia.

Felicia DellaFortuna: Thank you, Adrian. At the start of the year, we identified that we needed to accelerate changes being made to Enthusiast Gaming's business model, and in Q1, we implemented OMNAP. By strategically deprioritizing lower-margin video platform revenue, we mitigated the expected year-on-year decline in revenue. This, alongside a focus on improving gross margins and reducing costs, resulted in an adjusted EBITDA loss of $1.8 million for Q1 2024, a $1.3 million improvement over the year-ago period, and a company record. In our first full quarter, we completed the following. We enacted cost savings measures at the beginning of March that generated 10 million in annual run rate savings with one month's benefit being shown in Q1, 2024.

Felicia: Thank you Adrian at the start of the year, we had identified that we needed to accelerate changes being made Cynthia gaming business model and in Q1, we executed on that.

Felicia: By strategically do you prioritize the lower margin video platform revenue, we mitigated the expected year on year decline in revenue. This alongside our focused on improving gross margin and reducing costs resulted in an adjusted EBITDA loss of $1 8 million for Q1, 'twenty 'twenty four.

Felicia: One 3 million dollar improvement on the year ago period, and a company record.

Felicia: And our first full quarter, we completed the following we enacted cost savings measure. He said at the beginning of March that generated 10 million in annual run rate savings with one months benefit being shown in Q1 2024, we successfully.

Felicia DellaFortuna: We successfully increased our page view traffic in Q1, 2024 compared to Q4, 2023 by over 20% as a result of our continued focus on highly engaged communities on our owned and operated property. Additionally, we increased gross margin to over 60%, yielding a better revenue mix and cost structure focused on sustainable adjusted EBITDA profitability. In our last earnings call, we also announced that we are focused on a couple of major areas that reduce costs while focusing on growth.

Felicia: We increased our page view traffic in Q1 2024 compared to Q4 2023 by over 20% as a result of our continued focus on highly engaged communities on our owned and operated properties and we increased gross margin to over 60%, yielding a better revenue mix and cost structure.

Felicia: Focused on sustainable adjusted EBITDA profitability.

Felicia: In our last earnings call. We also announced that we are focused on a couple of major areas that reduced costs, while focusing on growth.

Felicia DellaFortuna: We announced outsourcing our ad tech to PlayWire to leverage their expertise in gaming and complete technology platforms to power our network of gaming websites, channels, and apps. We are now live on PlayWire's ad tech stack with our flagship owned and operated sites and apps, such as U.GG, iSee, The Sims Resource, and Pocket Gamer.

Felicia: We announced our first thing our AD tech to play wire to leverage their expertise in gaming and complete technology platform to power our network of gaming websites channels and apps. We are now live and play wires AD Tech stack with our flagship owned and operated sites and apps such as E. G. G. I see the same three sorry.

Felicia: Parking Tamar.

Felicia DellaFortuna: Secondly, we have sourced our production capabilities and have converted our Los Angeles office into a production studio in order to be able to better serve our strategic partners. Additionally, while we have reduced our workforce by 25% relative to December 2023, we have expanded our direct sales team, enhanced technologies to increase our highly engaged communities, and signed our second sports league, the NHL. We are driving towards a significant improvement in adjusted EBITDA, a KPI included in our filings, by delivering our lowest reported adjusted EBITDA loss ever in Q1 2024 of $1.8 million.

Felicia: We in sourced our production capabilities and have converted our Los Angeles office into a protection studio in order to be able to better serve our strategic partners.

Further while we reduced our workforce by 25% relative to December 2023 we have expanded our direct sales team enhanced technologies to increase our highly engaged communities and signed our second point Blake C N H L.

Felicia: We are driving towards significant improvement in adjusted EBITDA a T. P. I included in our filings by delivering our lowest reported adjusted EBITDA loss in Q1, 'twenty 'twenty four up 1.8 million. The changes we've made have set us up with an achievable path to adjusted EBITDA profitability in the near term.

Felicia DellaFortuna: The changes we've made have set us up with an achievable path to adjusted EBITDA profitability in the near term. We also have made notable improvements in strengthening our balance sheet. We completed the asset sale of certain non-core, non-profitable casual gaming assets for approximately $4 million. We continue to work closely with our lender to establish a mutually agreed foundation going forward, and we have finalized an agreement with our lender to provide additional deferrals of principal repayments under our term loan.

Felicia: We also have made notable improvements in strengthening our balance sheet, we completed the asset sale of certain noncore nonprofit about casual gaming assets of approximately 4 million. We continue to work closely with our lender to establish a mutually agreed foundation going forward and have finalized an agreement with our lender to provide additional deferrals that prints.

Felicia: Repayments under our term loan.

Felicia DellaFortuna: We have made considerable progress in reducing net payment terms across our material receivables, and we continue to actively seek out additional sources of balance sheet strength throughout our organization. All of these sources of funds and changes to our working capital needs, combined with the much lower adjusted EBITDA loss, have given us the runway we needed to advance and stabilize the business. With the remaining adjusted EBITDA losses quickly trimming, as we sit here halfway through Q2, we are on a strong path in the right direction. And we continue to feel confident in this direction because our audiences, our community, are as engaged as ever.

Felicia: We've made considerable progress in reducing that payment terms across our material receivable and we continue to actively seek out additional sources of balance sheet strength throughout our organization.

Felicia: All of these sources of funds and changes to our working capital needs combined with a much lower adjusted EBITDA law have given us the runway we needed to advance and stabilize the business with the remaining adjusted EBITDA losses quickly trimming as we sit here halfway through Q2, we are on a strong path and the right deal.

Felicia: Our action and we continue to feel confident in this direction because their audiences our community are engaged as ever.

Felicia DellaFortuna: Excluding the video platform, minutes per user increased by 60% in Q1 year-over-year as we continued to focus on our highly engaged community. We increased overall webpage views in Q1 2024 compared to Q4 2023 by 20% due to the successful expansion of certain owned and operated properties in the web platform. In respect of our more detailed financial results, I would first note that our results are presented in Canadian dollars. The significant majority of our revenues and expenses are measured in U.S. dollars and are translated into Canadian dollars for presentation in our financial statement. The exchange rate between the U.S. dollar and our presentation currency, the Canadian dollar, should be monitored and considered when analyzing or forecasting results.

Felicia: Excluding video platform minutes per user increased by 60% in Q1 year over year as we continued focus on our highly engaged community. We increased overall webpage vs. Q1, 2024, compared to Q4 2023 by 20% to the successful expansion of certain owned and operated properties and the web platform.

Felicia:

Felicia: In respect of our more detailed financial result.

Felicia: First note that our results are presented in Canadian dollars. The significant majority of our revenue and expenses are measured in U S dollars and are translated into Canadian dollars for presentation in our financial statements. The exchange rate between the U S dollar and our presentation currency, if the Canadian dollar should be monitored and considering when analyzing the fort.

Felicia: Casting when analyzing or forecasting results.

Felicia DellaFortuna: Additionally, it's important to note that the historical financial results don't fully reflect the cost reduction and changes in emphasis we have discussed, so historical financials will likely not bear a strong resemblance to future results. Turning to the financial results for the first quarter, we entered the quarter with $1.7 million in cash as of March 31, 2024, and as of that date, we had a networking capital deficiency of $36 million, which is unchanged from the deficiency noted as December 31, 2023.

Felicia: Additionally, it's important to note that the historical financial results don't fully reflect the cost reductions and changes in emphasis we have discussed so historical financials will likely not bearish strong rates I'm going to teach a result.

Felicia: Turning to the financial results for the first quarter.

We ended the quarter with $1 7 million in cash as of March 31, 2024, and that's that Pete we had a net working capital deficiency of $36 million, which is unchanged to the deficiency noted at December 31, 2023. The majority of the deficiency comes down $22 million in current debt relating to credit.

Felicia DellaFortuna: The majority of this deficiency comes from $22 million in current debt relating to our credit facilities and $4 million in contract liabilities or deferred revenue to be recognized in future periods, with the remainder being ordinary course working capital. Addressing our balance sheet continues to be a primary focus for our management.

Felicia: Facilities and $4 million in contract liabilities or deferred revenue to be recognized in future periods with the remainder being ordinary course working capital items.

Felicia: Dressing our balance sheet continues to be a primary focus for our management team now.

Felicia DellaFortuna: Now to our P&L, in Q1, revenue was $23.3 million, a 46% decrease compared to $42.9 million in Q1, 2023. Median content revenue decreased from $35.5 million to $15.9 million, a 55% reduction. The primary factor was a strategic shift to deprioritize lower-margin revenue on our video platform, resulting in a $14.5 million decrease in revenue. Direct sales revenue decreased by approximately $3 million period-over-period from $10 million to $6.6 million as a result of the timing of ad spend associated with certain sales verticals, such as consumer products and technology, and telecommunications, relative to the year-ago period.

Felicia: Now to our P&L.

In Q1.

Felicia: Revenue was $23 3 million or 46% decrease compared to $42 9 million in Q1, 2023 media and content revenue decreased from $35 5 million to $15 9 million or 55% reduction the primary factor with the strategic shift to prioritize flower Mart.

Felicia: And revenue on our video platform, resulting in a $14 5 million dollar decrease in revenue direct sales revenue decreased by approximately 3 million period over period from 10 million to $6 6 million as a result of the timing of AD spend associated with certain sales verticals, such as consumer products and technology and telecommunications.

Felicia: Since relative to the year ago period.

Felicia DellaFortuna: Net revenue retention for direct sales deals over $50,000 remained consistent at 60%. Net revenue retention is calculated by dividing the direct sales revenue for the trailing 12-month period from advertisers who were active in the previous 12-month period by the total direct sales revenue for the trailing 12-month period. Said another way, we have a healthy base of large recurring customers who continue to generate a significant portion of our direct sales revenue. This gives us a foundation of repeat business from which to grow.

Felicia: Net revenue retention for direct sales skills over 50000 remained consistent at 60% net.

Felicia: Net revenue retention is calculated by dividing the direct sales revenue for the trailing 12 months period from advertisers who were active in the previous 12 month period by the total direct sales revenue for the trailing 12 month period set another way, there's a healthy base of large recurring customers to continue to generate a significant portion of our direct sale.

Felicia: Revenue. This gives us a foundation of repeat business from which to grow while revenue retention remained consistent average spend per advertiser decreased year over year for consumer products and technology and telecommunications youll see that decreasing year over year revenue.

Felicia DellaFortuna: While revenue retention remained consistent, average spend per advertiser decreased year-over-year for consumer products and technology and telecommunications, yielding a decrease in year-over-year revenue. As part of its focus on growth, the company has made an investment in increasing its seller count in Q2 2024 relative to Q1 2024. Esports and entertainment revenue remained relatively consistent year-over-year, and finally, subscription revenue also remained consistent year-

Felicia: Part of its focus on growth. The company has made an investment in increasing its cellar count in Q2, 'twenty 'twenty four relative to Q1 'twenty 'twenty four.

Felicia: E Sports and entertainment revenue remained relatively consistent year over year and finally subscription revenue also remained consistent year over year.

Felicia DellaFortuna: Gross profit was $14.1 million in Q1, down 16% compared to the $16.8 million of gross profit reported in Q1 2023. Gross margin increased from 39.1% to 60.3%. This gross margin increase reflects the greater contribution of owned and operated properties, direct sales, and subscription revenue to our overall revenue profile, as well as the deprioritization of certain represented video channels.

Felicia: Gross profit was $14 1 million in Q1 down 16% compared to the $16 8 million of gross profit reported in Q1 2023.

Felicia: Margin increased from 39, 1% to 63%.

Felicia: This gross margin increase reflects the greater contribution of owned and operated properties direct sales and subscription revenue to our overall revenue profile as well as the de prioritization of certain represented video channel.

Felicia DellaFortuna: Total operating expenses in Q1 2024 were $15.5 million, down almost 40% from the year-ago quarter. Operating expenses in Q1 include non-cash items with a depreciation and amortization of $700,000 and a share-based compensation credit of $2 million, mainly due to the forfeiture of stock options from the previous CEO. Adjusted EBITDA loss was $1.8 million in Q1 2024 compared to an adjusted EBITDA loss of $3.1 million in Q1 of last year. This quarter's adjusted EBITDA excludes approximately $600,000 in severance and $400,000 in public company costs relating to incremental listing fees and Z&O insurance costs, which are non-recurring following our delisting from NASDAQ and our SEC deregistration.

Felicia: Total operating expenses in Q1, 2024 were $15 5 million down almost 40% from the year ago quarter.

Felicia: Operating expenses in Q1 include noncash items, such as depreciation and amortization of 700000 and share based compensation credit of 2 million, mainly due to the forfeiture of stock options from the previous CEO.

Felicia: Adjusted EBITDA loss was $1 8 million in Q1 2024 compared to an adjusted EBITDA loss of $3 1 million in Q1 of last year.

Felicia: This quarter's adjusted EBITDA excludes approximately 600000 in severance and 400000 in public company costs relating to incremental listing fees and D&O insurance costs, which are nonrecurring following our delisting from NASDAQ and our S. A C D registration.

Felicia DellaFortuna: Adjusted EBITDA loss in Q1 2024 includes approximately one month of the $10 million of cost savings initiatives enacted. Net loss and comprehensive loss was $1.3 million in Q1 2024, as compared to $8.7 million in Q1 of last year. Our net loss has significantly improved year-over-year, largely due to the cost-saving initiatives implemented. We continue to be focused on our highly engaged communities, improving our financials so that we can be sustainably profitable, and ensuring that we continue to conserve cash and strengthen our balance. Thank you. Operator, I will kindly turn it back to you.

Adjusted EBITDA loss in Q1, 'twenty 'twenty four includes approximately one month of the 10 million of cost savings initiatives enacted.

Felicia: Net loss and comprehensive loss was $1 3 million in Q1, 2024 as compared to $8 7 million in Q1 of last year. Our net loss has significantly improved year over year largely in part due to the cost saving initiatives implemented.

Speaker Change: We continue to be focused on our highly engaged communities improving our financials. So that we can be sustainably profitable and ensuring we continue to conserve cash and strengthen our balance sheet. Thank you operator, I kindly turn it back to you.

Speaker Change: [laughter].

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then two. Your first question comes from Kevin Krishnaratne from Scotiabank. Please go ahead.

Speaker Change: Thank you.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Speaker Change: Using a speaker phone please pick up the handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: Your first question comes from Kevin Cristian <unk> from Scotiabank. Please go ahead.

Kevin Krishnaratne: Hey there, good evening.

Kevin Krishnaratne: Hey, there good evening, just a question on the direct sales $6 6 million you called out a couple of items. There I think there's two different ones you called out and as a C. P. G are the second half macro impacting our techs. So I'm wondering on the C. P. G is that just timing on their part with their campaigns that they.

Kevin Krishnaratne: Just a question on the direct sales, $6.6 million. You called it a couple of items there. I think there are two different ones you called out. One is CPG, and the second is macro-impacting tech. So I'm wondering about the CPGs, is that just timing on their part? Were there campaigns that they typically run in Q1 that are coming into Q2? So I'm just wondering, is there sort of a, do you think you'll expect to catch up on those campaigns? Any thoughts there?

Kevin Krishnaratne: That they typically run in Q1 that you know we're coming into Q2. So I'm. Just wondering is there sort of a do you think you'll expect to catch up on the on those those campaigns any thoughts there and then on the on the TAC you just called it out can you remind us how big that vertical is for you you know what are some of your other larger verticals.

Kevin Krishnaratne: And then on the tech side, you just called it out. Can you remind us how big that vertical is for you? What are some of your other larger verticals?

Felicia DellaFortuna: So CPG is, in fact, just timing as it relates to Q1 2024 relative to Q1 2023. And so we do anticipate from our outlooks at Q2 and towards the end of the year for that to simply be timing on the results.

Speaker Change: So P. P. G is in fact, just timing as it relates to the Q1 'twenty 'twenty four relative to Q1 2023, and so we do anticipate from our outlook at <unk>.

Speaker Change: Q2, and towards the end of the year for that to simply be timing on the result.

Felicia DellaFortuna: Tech Telco is one of our major verticals, but not the only major vertical. So we do also have pretty large verticals in entertainment, as we've mentioned, with Amazon and other sponsorships across the Enthusiast Gaming portfolio. Travel is also a large vertical for us, and of course, gaming is another material, of course.

Speaker Change: Telco is a one of our major verticals, but not the only major vertical. So we do also have pretty large vertical and entertainment as we've mentioned with Amazon and other sponsorships across the enthusiast gaming portfolio travel is also a large vertical for us.

Speaker Change: And of course gaming.

Speaker Change: It's another material vertical as well.

Kevin Krishnaratne: And so what you're saying is macro softness is only having an impact on the tech telcos and not those other larger ones to such a big effect? That's correct. Second question, it looks like your strategy of moving more to owned content is working well. If I look at your total media, and then, you know, left the direct sales to about nine and a half million dollars there, can you talk about the mix of that right now between owned and third-party content, and then you have how you see that evolving?

Speaker Change: And so what you're saying is it's not macro softness is only having an impact on on the tech telco and not those other larger ones just bigger.

Speaker Change: Yeah.

Speaker Change: That's correct.

Speaker Change: Got it.

Speaker Change: Second question it looks like your strategy, you know moving more to own content is working well.

Speaker Change: If I look at the you know your total media and then you know less the are the direct sales to about $95 million. There can you talk about the mix of that right now between our owned and third party content and then how you see that evolving into into Q2.

Felicia DellaFortuna: So in Q4 2023, the vast majority of our revenue was from the video platform in the media and content revenue line. And in Q1 2024, it's an equal part across our direct sales, owned and operated properties, and video platform. And as we continue to deprioritize video, as we have in Q1, we would expect direct sales and our owned and operated properties to be the majority of media and content.

Speaker Change: So in Q4 2023, the vast majority of our revenue was on the video platform in the media and content revenue line and in Q1 2024, it's it's it's equal parts across our.

Speaker Change: Our direct sales of owned and operated properties and video platform and as we continue to prioritize video as we have in Q1, we would expect direct sales and and our owned and operated properties to be the majority of the media and content line.

Kevin Krishnaratne: Got it. Okay, just one last one for me on OPEX. So if we think about, you know, thinking about OPEX for Q2, can we look at the OPEX that you did in Q1? I think you'll get about a $1.5 million benefit from the extra two months of savings there on the $10 million annual saving. But then you've got maybe some increases in OPEX coming on headcount increases for direct sales. I'm just wondering if you can sort of talk about how to think about, you know, run rate OPEX for Q2. And then, related to that, are you thinking about being able to generate sequential EBITDA, you know, improvements quarter over quarter in 2024?

Speaker Change: Got it.

Speaker Change: One last one for me on an Opex. So if we think about you know.

Speaker Change: Thinking about Opex for Q2 can we.

Speaker Change: Look at the Opex that you Didnt in Q1, I think you'll get a about a one and a half million dollar benefit from the extra two months of savings there on the on the $10 million annual saving them, but then you've got maybe some increases in opex coming on on head count increases were direct sale I'm. Just wondering if you can sort of talk.

Speaker Change: How to think about you know run rate Opex for Q2, and then I guess related to that are you thinking about being able to generate sequential EBITDA, you know improvements quarter over quarter over over 'twenty 'twenty four.

Felicia DellaFortuna: So as it relates to operating expenses in Q1 2024, we had one month's worth of cost savings. So simply taking the $10 million, it's averaging at around $800,000 per month. So we will have the benefit in Q2 2024 of an incremental, you know, one and a half million of savings. We are working on direct sales. So the investment in direct sales associated with the incremental sellers is five. And that should... But that's not what I meant.

Speaker Change: So as it relates to the operating expense in Q1 2024, we had we had one month's worth of the cost savings is simply taking the 10 million its averaging at around 800000 per month, because we will have the benefit in Q2 'twenty 'twenty four is an incremental you know one and a half.

Speaker Change: A million a day.

We.

Speaker Change: Our working on direct sales to the investment indirect sales associated with the incremental salary.

Speaker Change: Is.

Speaker Change: Five and that should but that's happening in quarter. So.

Adrian Taylor Montgomery: But that's happening in the quarter. So the cost impact in Q2 is going to be muted as a result. So I would just point that out. OK.

Speaker Change: The cost impact.

Speaker Change: In Q2 is going to be muted as a result.

Speaker Change: So I would just point that out.

Kevin Krishnaratne: Okay, sorry, did you say five? I don't know if I caught that properly. Five, yeah. Got it. And so then. You think you'll be moving even higher on EBITDA? I don't know, I don't need to give guidance but just thoughts on your ability to continuously, you know, move up on EBITDA, you know, compress the EBITDA losses here.

Speaker Change: Okay, Sorry did you say you said five.

Speaker Change: It didn't I don't know if I get that property.

Speaker Change: Five yes.

Speaker Change: Got it and so then.

Speaker Change: You think you'll be moving even higher EBITDA and I don't really I know you don't give guidance, but just thoughts on your ability to continue to see a move up on the EBITDA a compressed to you, but the losses here.

Adrian Taylor Montgomery: Yes, so look, the new platform and the new cost structure that we implemented in Q1 are going to pay dividends on a go forward basis, and so when we think about, you know, a record narrow EBITDA loss of sub $2 million in Q1, and we think about seasonal lift in CPM, and new partnerships with Mega Brands like the National Hockey League and a more mature. Relationship is even still in its infancy with Playwire.

Speaker Change: Yes, so look the.

Speaker Change: The new platform and the new cost structure.

Speaker Change: That we affected in Q1 is going to pay dividends.

Speaker Change: On a go forward basis, and so when we think about you.

Speaker Change: You know a record a narrow EBITDA loss of sub 2 million in Q1, when we think about seasonal lift in C. P M.

Speaker Change: And new partnerships with <unk>.

Mega brands like the National Hockey League.

Speaker Change: And a more mature.

Speaker Change: Our relationship are even still in its infancy with play a wire.

Speaker Change:

Adrian Taylor Montgomery: You know, you can expect to see that accelerated path to profitability, and it's up to us to execute. But the stage has been set, and again, it's fun to scale a 60% margin business, and there's real operating leverage that you can generate from it. And now it's up to us to take the benefit of the medicine that we took in Q1 and use it to our benefit in Q2, Q3, and Q4.

Speaker Change: You know you can expect to see that accelerated path to profitability.

And it's up to us to execute but the stage has been set and again, it's fun to scale, a 60% margin business and there's real.

Speaker Change: The operating leverage that you can generate from it.

Speaker Change: And now it's up to us to take the benefit of the medicine.

Speaker Change: That we took in Q1 and use it to our benefit.

Speaker Change: In Q2, Q3 and Q4.

Kevin Krishnaratne: Got it. No, thanks a lot for taking my questions. I'll pass the line. Thanks.

Speaker Change: Got it no. Thanks, a lot for taking my questions I'll pass the line. Thanks.

Kevin Krishnaratne: Thank you Kevin.

Kevin Krishnaratne: Yeah.

Operator: Thank you. Your next question comes from Griffin Boss from B. Riley Securities. Please go ahead.

Thank you. Your next question comes from Christian Buss from B Riley Securities. Please go ahead.

Griffin Taylor Boss: Hi, thanks for taking my questions. I'm not sure if this is exactly what you were just talking about or not. I missed what you were talking about regarding the five numbers, but are you expecting a similar level of upfront investment required for the new NHL series relative to what we saw for Tuesday Night Gaming? Or is that going to come down now that you've built out that business over a couple seasons with the NFL?

Christian Buss: Hi, Thanks for taking my questions I'm not sure. If this is exactly what you were just talking about or not.

Christian Buss: I missed what you were talking about regarding the five number but are you expecting a similar level of upfront investment required for the new N. H L series relative to what we saw for Tuesday night gaming or is that going to come down now that you've built out that business over a couple of seasons with the NFL.

Adrian Taylor Montgomery: Yes. Yes to what you just said.

Christian Buss: Yes.

Yes to what you just said.

Speaker Change: The first of all we're thrilled with the NHL announcement for three reasons, one within our stakeholder community. It became the question of all questions. You know winter when are you going to get another sports League. So it's good to have that behind us.

Adrian Taylor Montgomery: You know, first of all, we're thrilled with the NHL announcement for three reasons. One, within our stakeholder community, it became the question of all questions, you know, when are we going to get another sports league? So it's good to have that behind us. We're thrilled because of the strength of the brand. But to your point, we also see a tremendous economic opportunity in leveraging the production capabilities that we have now that we've pulled the NFL in-house and being able to scale on top of that platform with the NHL. So we expect a much improved, right out of the gate economic model as a result of being able to scale beyond just one sport.

Speaker Change: We're thrilled because of the strength of the brand, but but to your point, we also see a tremendous economic opportunity in leveraging the.

Speaker Change: The production capabilities that we have now that we've pulled NFL in house and being able to scale on top of that platform with the N. H L. So we expect a a much improved right out of the gate.

Speaker Change: Economic model as a result of of being able to scale beyond just one sports League.

Griffin Taylor Boss: Okay, great. That's great to hear. And are you seeing an overlap, maybe between the sponsors you've been able to attract for the NFL's Tuesday Night Gaming and those you think you'll be able to attract with the NHL? I guess, said differently, are you seeing interest from those existing sponsors that you're already working with for this new series, or is it just too early to tell?

Speaker Change: Okay, Great. That's that's great to hear and are you seeing are in overlap maybe between the sponsor's you'd been able to attract for for the N F.

Speaker Change: Tells Tuesday night gaming and those do you think you'll be able to attract with our with the NHL. I guess said differently are you are you seeing interest from those existing sponsors that you're already working with for this new series or is it just too early to tell.

Adrian Taylor Montgomery: No, we're initially seeing a strong interest across the board. Certainly, there's a lot of focus on hockey right now because it's the playoffs. I think our sales leadership in Canada thinks that we've partnered with just about the most important brand in this country. But, you know, hockey has continued to surge in popularity in the U.S. All the games are on ESPN, and we're seeing a lot of interest from significant companies south of the border.

Speaker Change: No we're seeing a strong interest initially across the board certainly theres a lot of focus on hockey right now because it's the playoffs I think our sales leadership in Canada.

Speaker Change: Thinks that we partnered with just about the most important brand.

Speaker Change: In this country.

Speaker Change: But you know hockey.

Speaker Change: <unk> has continued to ramp in popularity in the U S. All the games are on ESPN and we're seeing a lot of interest from significant companies are south of the border. There. There is some overlap there is some new.

Adrian Taylor Montgomery: There is some overlap. There is some new. But we're really excited about it, and in no way, shape, or form do we feel that the NHL and the NFL will in any way cannibalize each other. It's actually quite the opposite.

Speaker Change: But we're really excited about it and in no way shape or form do we feel that the debt that the NHL and the NFL will in any way cannibalize each other it's actually quite the opposite.

Griffin Taylor Boss: Excellent. Okay, thanks for that, Adrian.

Speaker Change: Excellent okay. Thanks for that Adrian and then one more maybe for Felicia how much of the entire expected reduction in video programmatic revenues where were realized in the media and content line for for the quarter I guess I guess I'm just looking forward how much should we expect our is still need to come out in may.

Griffin Taylor Boss: And then one more maybe for Felicia. How much of the entire expected reduction in video programmatic revenues was realized in the media and content line for the quarter? I guess I'm just looking forward. How much should we expect our still need to come out in maybe QQ and beyond?

Speaker Change: Q2 and beyond.

Felicia DellaFortuna: So the total production in Q1 was approximately $15 million, and so I would anticipate around that, if not slightly higher, in looking out to Q2 and beyond.

Speaker Change: So the total reduction in Q1 was approximately 15 million.

Speaker Change: And so I would anticipate around that if not slightly higher and looking out to Q2 and beyond.

Griffin Taylor Boss: Okay, I got it. Thanks for taking my questions. I appreciate it.

Speaker Change: Okay got it thanks for taking my questions I appreciate it.

Chris: Thanks, Chris.

Chris: Yeah.

Operator: Thank you. Your next question comes from Gianluca Tucci from AWood Securities. Please go ahead.

Speaker Change: Thank you. Your next question comes from John They could they change from Haywood Securities. Please go ahead.

Gianluca Tucci: Hi guys, good evening. Firstly, just on the media and the content business, is there more low-margin cutting to be done there? Or is this a good level to model growth from going forward?

John They: Hi, guys good evening.

John They: Firstly, just on the media and the content business.

John They: Is there more low margin cutting to be done there or is sure a good level to model growth from going forward.

Felicia DellaFortuna: I would say that the majority of that work has been completed in Q1, but there's always areas of further optimization as it relates to gross margin. As we continue to grow our owned and operated sites relative to our representative sites, that should yield some margin improvement as well as we move through the year.

Speaker Change: I would say that the majority has been completed in Q1, but there's always areas that further optimization as it relates to gross margin as.

Speaker Change: As we continue to grow our owned and operated sites relative to I represented sites that should yield some margin improvement as well as we move through the year.

Gianluca Tucci: Okay, and on the subscription side of things, nice sequential growth there. Can you unpack the moving parts here and how you're able to better extract more of your users' wallets?

Speaker Change: Okay and on the subscription side of things nice sequential growth. There can you unpack the moving parts here and how you're able to better extract more of your users wallets.

Adrian Taylor Montgomery: Yeah, look, I think we're, you know, again, moving into longer-term subscription offerings has been a priority of the business. We've seen a lot of success with that. As recently as today, we have really started to capitalize on first-party data, which allows us to use event-driven tracking to categorize and cohort our users, replaces the use of cookies, and we can trace new users back to their acquisition source. This has engagement advertising applications.

Yeah look I think.

Speaker Change: We're again moving.

Speaker Change: Moving into longer term subscription offerings has been a priority of the business.

Speaker Change: <unk> seen a lot of success with that.

Speaker Change: Recently as today.

Speaker Change: We have really started to capitalize on first party data.

Speaker Change: Which allows us.

Speaker Change: To use event driven tracking be categorized in cohort or users.

Speaker Change: <unk> replaces the use of cookies and you know we can trace new users back to their acquisition source.

Adrian Taylor Montgomery: So, you know, that's a more detailed answer to that. As we move people into longer-term packages, their checkout value is higher, which means we can afford, from an accretive perspective, to spend more on customer acquisition.

Speaker Change: This has engagement advertising applications. So.

Speaker Change: That's a more detailed answer.

Speaker Change: That you know as we move people into longer term packages their checkout value was higher which means we can afford a you know from an accretive perspective to spend more on customer acquisition. Then you layer on the first party data that we worked hard to obtain and deploy and now you've got an efficient.

Adrian Taylor Montgomery: Then you layer on the first-party data that we worked hard to obtain and deploy, and now you've got an efficient strategy to increase subscribers in a very effective way. The Sims has recently launched an expansion pack. You know, there's news that the great Margot Robbie is going to be producing and perhaps starring in a Sims movie.

Speaker Change: Strategy.

Speaker Change: To increase subscribers in in a very effective way. The Sim says recently launched an expansion pack.

Speaker Change:

Speaker Change: No there's news that.

Speaker Change: There's news that the.

Speaker Change: The great Margot Robbie as.

Speaker Change: Is going to be producing and perhaps starring at Sam's movie, we all saw the attention that generated.

Adrian Taylor Montgomery: We all saw the attention that generated from Barbie. And so, there's a lot of attention around this property. We're far and away the market leader. And so now that we're using data and effective tactics and moving people into longer-term packages, you know, we're increasing our ability to deploy cost consumer acquisition methods. And so the sum total, all of that is good for us.

Speaker Change: Barbie.

Speaker Change: And so.

Speaker Change: There's a lot of attention around this property.

Speaker Change: We're far and away the market leader and so now that we're using data and effective tactics and moving people into longer term packages, you know were increasing our ability to deploy cost.

Speaker Change: Consumer acquisition.

Speaker Change: Methods and so the sum total of all of that.

Speaker Change: <unk> is a.

Speaker Change: Good for us.

Felicia DellaFortuna: I would also add that focusing on three, six, Premium Subscriber has also been one of the initiatives to improve upon our networking capital. With subscribers paying up front for their subscription packages, that's also been a positive change for us as we work on strengthening our balance sheet. So it hits all of the points that Adrian mentioned but also improves our liquidity.

Felicia DellaFortuna: I would.

Speaker Change: I also add that focusing on three six.

Speaker Change: Premium subscribers has also been one of the initiatives to improve upon our networking capital.

Speaker Change: With the subscribers paying upfront for their subscription packages. That's also been a positive change for us as we where we work on strengthening our balance sheet. So.

Adrian: It hits all of the points that Adrian mentioned, but also improve upon our liquidity.

Gianluca Tucci: I appreciate that color. Thank you, guys. And I guess, just lastly, could you update us on your headcount as of today, guys?

Speaker Change: I appreciate that color. Thank you guys and I guess, just lastly could you update us on your head count as of today guys.

Felicia DellaFortuna: We're approximately around 130. Okay. Thank you.

Speaker Change: We're approximately around 130.

Gianluca Tucci: Okay, thank you guys, and again, congrats on the hockey partnership with the NHL.

Speaker Change: Okay. Thank you guys and again congrats on the hockey partnership with Universal.

Speaker Change: Thank you.

Speaker Change: Yeah.

Operator: Thank you. Your next question comes from Robert Young from CannaCode Genuity. Please go ahead.

Speaker Change: Thank you. Your next question comes from Robert Young from Canaccord Genuity. Please go ahead.

Robert Young: Hi, good evening. Congratulations on the NHL. If I think back, I think there were discussions with two major sports leagues. I'm not sure if that was before the NFL and the NHL or if there was a third one out there. So I was curious about the pipeline, given you've had such success with two major sports leagues already. I'm sure you have an exciting pipeline to share.

Robert Young: Hi, good evening.

Robert Young: Brad on the NHL.

Speaker Change: Think back I think there were discussions with two major sports leagues I'm not sure if that was before the NFL NBA NHL or if there was a third one out there.

Speaker Change: So I was curious about the pipeline.

You've had such success with two major sports leagues already I'm sure you have an exciting pipeline to share.

Speaker Change: Yeah.

Adrian Taylor Montgomery: Um, Felicia's mom is Italian, and my mom's Italian. And that question reminds me of when I got nine out of 10 on a math test. And my, you know, we can't even savor the NHL. No, I'm just teasing you, Rob. Um, we do have a pipeline. And, again, what I would stress here are a couple things. One, you know, because of the success of the NFL, I would include the renewal of the NFL into the third year as almost two announcements in this, along with the NHL.

Rob: Felicia's Mama's, Italian and my Mom's Italian and dock question reminds me of when I got nine out of 10 on a math test [laughter] My Oh, we can't even say, where the NHL Dow I'm just teasing you Rob.

Rob: We do have a pipeline.

Rob: And again, what I would stress here.

Rob: Is a couple of things one you know because of the success of the NFL I I would include the renewal of the NFL into their third year as almost two announcements in this along with the NHL again.

Rob: We're having a lot of success.

Adrian Taylor Montgomery: Again, we're having a lot of success working with the NFL to the point that we're being renewed for season three. We've got a relationship with the NHL, too. You know, we're doing a lot of work through FFS with the Premier League. And so, you know, that presents an opportunity for us, potentially. But again, these sports leagues are the initial contact in many cases has been inbound because they've seen the success that we've had with the NFL and they want to replicate, and they want to get more proactive about engaging a younger audience. So we do have a pipeline, but our immediate focus is launching the NHL and launching it successfully.

Rob: I'm working with the NFL to the point that were renewed for season three we've got a relationship with the N. H L. You know we're doing a lot of work a through F. A fast with the Premier League.

Rob: And so you know that presents an opportunity for us potentially but again these sports leagues are or the initial contacts in many cases has been inbounds because they've seen the success that we've had with the NFL and they want to replicate that they want to get more proactive about engaging a younger.

Rob: Audience. So we do have a pipeline, but our immediate focus is launching NHL and launching it successfully.

Okay.

Robert Young: And then my second question, I'm not sure I understood the timing comments related to CPG on direct sale. There was no, the quarter over the quarter decline was pretty stark. And so I was hoping to give them maybe a little more color on what that means.

And then my second question I'm not sure I understood the timing comment related to C. P. G on direct sale, there's no quarter over quarter decline was pretty stark.

Speaker Change: And so I was hoping you could give me maybe a little more color on what that means.

Felicia DellaFortuna: And then I also was curious, given that's a very high margin piece of the business, if that rebounds, what type of gross margin contribution is possible in the short run? I mean, despite the fact you're at 60%, which is great, but what potential upswing is possible in the margins, you know, if the direct sales go back to, you know, 13 million or above, or it wasn't Q4?

Speaker Change: And then I also was curious given that's a very high margin piece of the business if that rebounds.

Speaker Change: I mean, what type of gross margin contribution.

Speaker Change: As possible in the short run I mean, despite the fact, you're at 60%, which is great, but what what potential upswing as possible and the margins you know if the direct sales goes back to a $13 million or above where it was in Q4.

Felicia DellaFortuna: So, to elaborate on CPG specifically, as I'm looking at our book dollars for the rest of the year, as well as our pipeline activity, there are certain clients that were heavy spenders in Q1 2023 that have returned; they just haven't returned in Q1 2024, and so that's what I'm saying as it relates to timing. Obviously, being in the advertising space, they want to make sure that their advertising campaigns are associated with certain launches or certain initiatives, and so with CPG specifically, that is what the change in timing is about.

Speaker Change: Okay.

Speaker Change: So to elaborate on the CPG, specifically as I'm looking at our book salaries as part of the rest of the area as well as our pipeline activity theres certain clients that are where heavy spenders in Q1 2023 that have returned they just haven't returned in.

Speaker Change: Q1, 'twenty 'twenty four and so that's what I'm, saying as it relates to timing, obviously being in the advertising space. They want to make sure that their advertising campaigns are associated with certain lunches or certain initiatives and so with CPG, specifically that is what the the change in timing.

Felicia DellaFortuna: With Tectalco, it was more macro. But yes, CPG has just been related to timing. For example, there are some large events coming up, like the Olympics and things like that, where consumer products may want to put their advertising dollars, in lockstep with those, on the group.

Speaker Change: With tech telco it it it was more macro.

Felicia DellaFortuna: Sorry, but go ahead.

Speaker Change: But yes C. P. G is just has just been a related to China. For example, there are some large event coming up like the Olympics and things like that where you know consumer products may want to do you know put their their advertising dollars mm.

Speaker Change: In lock step with us.

Speaker Change: On the AR on the grid sorry go ahead.

Felicia DellaFortuna: Nope, keep going.

Speaker Change: Well keep going.

Felicia DellaFortuna: And then on the gross margin profile, yes, it's a significant gross margin contributor, but it isn't necessarily the number one gross margin contributor. Subscription is the highest gross margin revenue line that we have. As we focus on our owned and operated properties across our programmatic offering, that is also a very significant gross margin profile of our business. And direct sales, you know, are also there. So we have opportunities across direct sales to mitigate some of those changes.

Speaker Change: And then on the gross margin profile, yes, it's a it's a significant is this significant gross margin contributor but it isn't.

Speaker Change: This thoroughly the number one gross margin contributor subscription is the highest gross margin.

Speaker Change: Revenue line that we have as we focus on our owned and operated properties across our programmatic offering that is also a very significant gross margin profile to our business.

Speaker Change: And direct sales you know it's it's it's also there so.

Rob: We have opportunities to cross direct sale to mitigate some of those changes I think Rob specific to where you were going with that I would look more to the EBITDA line.

Felicia DellaFortuna: I think, Rob, specific to where you were going with that, I would look more to the EBITDA line when you think about direct sales. Ramping back up that impact is really going to fall to the bottom line, and that's where it gets a little bit exciting.

Rob: When you think about.

Rob: Direct sales ramping back up that that impact is.

Rob: Is is really going to fall to the bottom line.

Rob: And that's where it gets a little bit exciting.

Rob: Okay.

Felicia DellaFortuna: So I guess I kind of suggest that direct sale is kind of at the corporate margins, roughly. And then maybe the last question, the subscription opportunity going forward. I know that's an area. As you've touched on in the past, it feels as though it's maybe a little untapped. And maybe we can just talk about that given it is the highest-margin piece of the business and where that can go, and then I'll pass the line. Yeah, look, I think that with

Mike: So I guess, Mike kind of suggest that direct sales is kind of at the corporate margins roughly.

Mike: Yeah.

Okay, and then maybe last question the subscription opportunity going forward I know that's an area.

Touched on in the past it feels as though it's maybe a little untapped and maybe if you can just talk about that given it is the highest margin piece of the business.

Mike: Where that can go maybe and then I'll pass along.

Speaker Change: Yeah look I think that with our ability to start to deploy our first party data.

Adrian Taylor Montgomery: Our ability to start to deploy first-party data, our ability to, you know, as we've increased the lifetime value of our subscribers by moving them into longer and longer-term subscription offerings, we have an ability to deploy more intelligent user acquisition strategies, and cost-effective user acquisition strategies. And so we're pretty bullish on now being able to get more smart about going out and acquiring subscribers, and we feel like we have the platform to do it.

Speaker Change: Our ability to you know as we've increased the lifetime value of our subscribers.

Speaker Change:

Speaker Change: Through moving them into longer and longer term.

Speaker Change: Subscription offerings, we have an ability to deploy.

Speaker Change: More intelligent user acquisition strategies.

Speaker Change: Cost effective user acquisition strategies, and so we're pretty bullish on now being able to get more smart about going out and acquiring subscribers and we feel like we have the platform to do it and I would also talk about.

Adrian Taylor Montgomery: And I would also talk about, you know, Fantasy Football Scout and the work that they're doing with UEFA Euro 2024 this year. There's an opportunity to cross-pollinate those learnings and the success that we're having on the Sims.

Speaker Change: You know fantasy football scope and the work that they're doing with UEFA Euro 2020 fours. This year Theres, an opportunity to cross pollinate those learnings and the success that we're having on the films so you're quite right. It is a big focus of.

Adrian Taylor Montgomery: So you're quite right, it's a big focus of ours. It's a big focus of our business, given the margin profile. And given the fact that, you know, we are far and away the market leader on TSR, we're one of the market leaders in Fantasy Football for the Premier League, and so, you know, continuing to increase our market share is very, very crucial, given the level of engagement that's on TSR, given that it's triple what our nearest competitor is. So we're gonna continue to focus on that, and we see a lot of upside.

Speaker Change: Of us, it's a big focus of our business given the margin profile and given the fact that you know we are far and away the market leader on GSR with them one of the market leaders in fantasy for the Premier League and so you know continuing to increase our market share.

Speaker Change: Is very very distinct given the level of engagement. That's on T. S are given that it's triple what our nearest competitor is so.

Speaker Change: We're going to continue to focus on that and we see a lot of upside there.

Speaker Change: Yeah.

Operator: Thank you. Once again, to ask a question, please press star then 1. Your next question comes from Drew McReynolds from RBC Capital Markets. Please go ahead.

Drew McReynolds: Thank you once again to ask a question. Please press Star then one the next question comes from drew Mcreynolds from RBC capital markets. Please go ahead.

Drew McReynolds: Thanks very much. Good afternoon, Yeah, so obviously, Adrian, like a lot of good Unknown Attendees, Robert Young, Felicia DellaFortuna, Kevin Krishnaratne, Drew McReynolds, Gianluca Tucci, Alex Macdonald, Nicolas Brien, Matthew Chesler, JB Elliott, Enthusiast, Felicia, you talked about lender support and, you know, the waiver and, you know, amendment Can you just give us kind of, you know, a sense of the bridge here, you know, in terms of liquidity or covenants that you just have to get over to get to the other side here as, you know, that profitability flow through builds, you know, into 2024 and 2025. Thank you.

Drew McReynolds: Thanks, very much good afternoon.

Drew McReynolds: Yeah, So so obviously adrian.

Drew McReynolds: A lot of good.

Drew McReynolds: One of things happening through the business you know as you as you kind of revamp things here I think you know we're all obviously interested in the adjusted EBITDA trajectory.

Drew McReynolds: Just in the near term until that kind of builds.

Felicia: Felicia you talked about lender support and you know the waiver and you know and buy them in with the deferral of principal repayments can you just.

Felicia: Give us kind of a sense of the bridge here.

Felicia: And liquidity or covenants that you just have to get over.

Felicia: To get to the other side here as you know that profitability flow through builds.

Felicia: Into 2024 and 2025, thank you.

Felicia DellaFortuna: So we're definitely focused on the balance sheet on multiple fronts. So the first and foremost is the sale of the non-core assets, which isn't reflected in our March 31st cash balance, but that transaction closed on April 15th for that amount.

Speaker Change: So we're we're we're definitely focused on the balance sheet and in multiple friends. So that's the first and foremost is the sale of the noncore assets, which isn't reflected in our March 31st cash balance.

Speaker Change: But that transaction closed in April 15th.

Felicia DellaFortuna: So that was a big win for us, you know, shoring up the balance sheet. We also noted, right, that we've been working with, you know, material receivable providers improving upon those terms. So, you know, bringing cash up front and improving upon our overall DSO. The subscription initiatives that we noted are one positive path to liquidity. The second is our relationship with Playwire. And so, rather than working with individual SSPs that, you know, may tend to play slower, we are now concentrated but committed through one partner, which will give us preferable reception terms.

Speaker Change: And for that for that amount. So that was the bank a win in US and you know shoring up the balance sheet.

We also had noted freight that we've been working with you know material receivable providers and improving upon those terms.

Speaker Change: So you know, bringing bringing cash up front and improving upon our overall DSO.

Speaker Change: The subscription initiative that we noted is one positive path to liquidity. The second is our relationship with play wire and so rather than working with the individual S. S piece, but that you know may tend to play slower. We are now concentrated but committed through one partner, which will get us preference.

Speaker Change: Paul.

Felicia DellaFortuna: And so that's just bringing our receipts forward. Also, in significantly improving upon our operating expense structure, specifically as it relates to headcount, that has very much decreased the amount of cash outlay that we expect. And so we feel now, with showing two months worth of savings in Q2, that the cost structure is more attainable and has reduced the break-even point that we need on gross profits significantly to start to create positive cash flow into the business. Okay, I understand. Thank you for your

Paul: Receipt terms and so that's just bringing our receipts forward.

Paul: Also in significantly improving upon our operating expense structure.

Speaker Change: Quickly as it relates to head count that has very much decreased the amount of cash outlays that we expect.

Speaker Change: In Q2, and so we feel now with showing you know to monitor a month's worth of savings in Q2 that the cost structure is more attainable and it has reduced the breakeven point that we need on on gross profit significantly could start to create positive cash flow.

Speaker Change: Into the bad sense.

Felicia DellaFortuna: Okay, I understand. Thank you for that.

Speaker Change: Okay understood. Thank you for that.

Speaker Change: Thank you.

Drew McReynolds: You have a follow-up question from Kevin Krishnaratne from Scotiabank; please go ahead.

Speaker Change: Do you have a follow up question from Kevin Kushner at me from Scotiabank. Please go ahead.

Kevin Krishnaratne: Thanks for taking the additional question. It's just a follow-up to Drew's question. It's probably in the financials, but can you remind us how much revenue is associated with the non-core assets that you're selling?

Speaker Change: Okay, great. Thanks for taking the additional questions just to follow up the Dru is there can you it's probably in the financials, but can you remind us how much revenue.

Speaker Change: Is associated with the the noncore assets that you're selling pesos.

Felicia DellaFortuna: It was less than 2% of our total revenue.

Speaker Change: It was it was it was less than <unk>.

Dru: Less than 2% of our total revenue.

Dru: Okay. Thank you.

Dru: Yeah.

Operator: Thank you. There are no further questions at this time. I'll now turn the conference back over to Mr. Montgomery for closing remarks.

Dru: Thank you there.

There are no further questions at this time I'll now turn the conference back over to Mr. Montgomery for closing remarks.

Dru: Yeah.

Adrian Taylor Montgomery: Thank you.

Adrian Taylor Montgomery: Thank you, Operator, and thanks to those who've tuned into the call. I think you can tell from our remarks that we're pretty excited about the path that we're on, the focus is on sustainable and scalable profitability, and we're in the zone to start executing on that. End these calls. There's been a lot of work on multiple fronts. A lot of difficult decisions that have been made and undertaken.

Speaker Change: Operator, and thanks to to those who've.

Speaker Change: Who've tuned in to the call.

Speaker Change: I think you can tell from from our remarks that we're.

Speaker Change: We're pretty.

Speaker Change: I'm excited about the path that we're on.

Speaker Change: The focus.

Speaker Change: Is on sustainable and scalable profitability and we're in the zone to start executing on that.

Speaker Change: But as I.

Speaker Change: And these calls.

Speaker Change: There's been a lot of work on multiple fronts.

Speaker Change: A lot of difficult decisions.

Speaker Change: That have been made and undertaking and I just want to thank.

Adrian Taylor Montgomery: And I just want to thank the hard-working people at Enthusiast Gaming who come in every day and share their passion and their commitment and their optimism about the future of this business. It really is the energy that we all feed off of. So Enthusiast, thank you for everything that you do and continue to do. You're our greatest strength, and we're going to keep building on the momentum that we've established in this quarter, and we're excited to visit with you again in a few short months. So, thank you very much, and have a good evening.

Speaker Change: The hardworking people at enthusiast gaming who've come in everyday who share their passion and their commitment.

Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: And their optimism.

Speaker Change: About the future for this business and it really is the energy that we all feed off of so enthusiasts. Thank you for everything that you do and continue to do your greatest strength.

Speaker Change: And we're going to keep.

Speaker Change: Building on the momentum that we've established in this quarter and we're excited to visit with you again in a few short months. So thank you very much and have a good evening.

Speaker Change: Thank you. The conference has now concluded. Thank you. Thank you for attending today's presentation you may now disconnect.

Speaker Change: [music].

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