Q2 2024 Enthusiast Gaming Holdings Inc Earnings Call

August 14, 2024

Speaker Change: Good afternoon, ladies and gentlemen, and welcome to the NCCS Gaming Holdings, Inc. second quarter 2024 financial results conference call.

Operator: Gaming, Holdings Inc., 2nd Quarter 2024 Financial Results Conference Call. At this time, all lines are in a listen-only mode.

Operator: Gaming Holdings Inc., Second Quarter 2024 Financial Results, Conference Call. At this time, all lines are in a listen-only mode.

Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, August 14, 2024. I would now like to turn the conference over to Mr. JB Elliott, Chief Strategy Officer and General Counsel. Please go ahead.

Operator: Following the presentation, we will conduct a question-and-answer session.

Speaker Change: At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session.

Operator: If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, August 14, 2024.

Speaker Change: If at any time during this call you require immediate assistance, please press star zero for the operator.

Speaker Change: This call is being recorded on Wednesday, August 14th, 2024. I would now like to turn the conference over to Mr. JB Elliott, Chief Strategy Officer and General Counsel. Please go ahead, sir.

JB Elliott: I would now like to turn the conference over to Mr. JB 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 second quarter 2024 results conference call. I'm JB Elliott, Chief Strategy Officer and General Counsel. With me today is Interim CEO Adrian Montgomery and our Chief Financial Officer, Felicia DellaFortuna. 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.

JB Elliott: Thank you, operator. Good afternoon, everyone, and welcome to the Enthusiast Gaming, Second Quarter, 2024 Results, Conference Call. I'm JB Elliott, Chief Strategy Officer, and General Counsel.

JB Elliott: With me today is InterRoom CEO, Adrian Montgomery, and our Chief Financial Officer, Felicia Delafortuna. We'll begin with some prepared remarks and then open the Florida questions.

JB Elliott: 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.

JB Elliott: 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. 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 June 30, 2024, which are available under the company's profile on Cedar Plus, as well as on the company's website at enthusiastsgaming.com.

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.

JB Elliott: These statements should not be read as assurances of future performance or results.

JB Elliott: 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.

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 June 30, 2024, which are available under the company's profile on CDAR 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 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 Adrian Montgomery. Adrian, the call is yours.

JB Elliott: You are cautioned not to place a new reliance on these forward-looking statements, which speak only as of the date of this presentation. The company disclaims any intention or obligation, except 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.

JB Elliott: 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 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 Montgomery: Now I'd like to turn the call over to Adrian Montgomery. Adrian, the call is yours.

JB Elliott: Now, I'd like to turn the call over to Adrian Montgomery. Adrian, the call is yours.

Adrian Montgomery: Thank you, JB, and a warm welcome to everyone joining our second quarter earnings call. It has taken significant effort across the entire organization to deliver on the commitments we made for the first half of this year, and I'm proud to say that these efforts have paid off. Today, I'm pleased to present results that confirm that our company is not just stable and well-funded, but has also effectively reached a break-even and has some promising quarters ahead. While reaching this point has required significant work, it comes as no surprise to me that we've gotten here. I know firsthand the strength of our core assets and the vibrant communities that underlie this business.

Adrian Montgomery: Thank you, JB. And a warm welcome to everyone joining our second quarter earnings call. It has taken significant effort across the entire organization to deliver on the commitments we made for the first half of this year, and I'm proud to say that these efforts have paid off. Today I'm pleased to present results and confirm that our company is not just stable and well-funded, but has also effectively reached break even and has some promising quarters ahead.

Adrian Montgomery: Thank you, JB.

Adrian Montgomery: And a warm welcome to everyone joining our second quarter earnings call. It has taken significant effort across the entire organization to deliver on the commitments we made for the first half of this year and I'm proud to say that these efforts have paid off.

Speaker Change: Today, I'm pleased to present results that confirm that our company is not just stable and well-funded. Thank you. Thank you.

Speaker Change: but has also effectively reached a break even and has some promising quarters ahead.

Adrian Montgomery: While reaching this point has required significant work, It comes as no surprise to me that we've gotten here. I know firsthand the strength of our core assets and the vibrant communities that underlie this business. The enthusiasm within these communities remains strong and demand for our product innovations continues to grow. The resilience of the business demonstrated through challenging times is nothing short of commendable. And we have emerged from this period on our strongest footing ever.

Speaker Change: While reaching this point has required significant work,

Speaker Change: It comes as no surprise to me that we've gotten here.

Speaker Change: I know firsthand the strength of our core assets and the vibrant communities that underlie this business.

Adrian Montgomery: The enthusiasm within these communities remains strong, and demand for our product innovations continues to grow. The resilience of the business demonstrated through challenging times is nothing short of commendable, and we have emerged from this period on our strongest footing ever. And now, with renewed confidence, we are back to business with bright days ahead. Much of the success can be attributed to the significant advancements we saw in Q2. During this quarter, we experienced rapid optimization of our new ad tech setup, propelling many of our properties to new heights in June. Our cost efficiency initiatives are also bearing fruit, with a full quarter's results now reflecting their impact.

Speaker Change: The enthusiasm within these communities remains strong and demand for our product innovations continues to grow.

Speaker Change: The resilience of the business, demonstrated through challenging times, is nothing short of commendable. And we have emerged from this period on our strongest footing ever. And now, with renewed confidence, we are back to business, with bright days ahead.

Adrian Montgomery: And now, with renewed confidence, we are back to business with bright days ahead. Much of the success can be attributed to the significant advancements we saw in Q2. During this quarter, we experienced rapid optimization of our new ad tech setup, propelling many of our properties to new heights in June. Our cost-efficiency initiatives are also bearing fruit, with Froll Quarter's results now reflecting their impact. We expanded several product lines, forged a strategic partnership with the National Hockey League, and renewed our existing partnership with the NFL for a third seat. Additionally, we undertook a complete overhaul of our direct sales operation. Confident, it is back on track. We have once again started adding sellers.

Speaker Change: Much of this success can be attributed to the significant advancements we saw in Q2.

Speaker Change: During this quarter, we experienced rapid optimization of our new ad tech setup, propelling many of our properties to new heights in June.

Speaker Change: Our cost efficiency initiatives are also bearing fruit, with AfroQuarters results now reflecting their impact.

Adrian Montgomery: We expanded several product lines, forged a strategic partnership with the National Hockey League, and renewed our existing partnership with the NFL for a third season. Additionally, we undertook a complete overhaul of our direct sales efforts. Confident, it is back on track. We have once again started adding sellers, with seven direct sellers added since Q2. As a result, we've seen renewed interest and activity around our direct sales offerings, which we are confident will translate into increased bookings as the year progresses. I note that we have recently won significant new business from some of the most sought-after brands in all of advertising, including both Coca-Cola and McDonald's.

Speaker Change: We expanded several product lines, forged a strategic partnership with the National Hockey League, and renewed our existing partnership with the NFL for a third season.

Speaker Change: Additionally, we undertook a complete overhaul of our direct sales efforts.

Adrian Montgomery: With seven direct sellers added since Q2. As a result, we've seen renewed interest and activity around our direct sales offerings, which we are confident will translate into increased bookings as the year progresses. I note that we have recently won significant new business from some of the most sought after brands in all of advertising, including both Coca-Cola and McDonald. These collective efforts culminated in a record-breaking quarter. Our adjusted EBITDA loss narrowed to just $400,000, a remarkable $1.4 million improvement from Q1, and an impressive $3 million gain year over year.

Speaker Change: Confident it is back on track, we have once again started adding sellers with seven direct sellers added since Q2.

Speaker Change: As a result, we've seen renewed interest and activity around our direct sales offerings, which we are confident will translate into increased bookings as the year progresses.

Speaker Change: I note that we have recently won significant new business from some of the most sought-after brands in all of advertising

Adrian Montgomery: These collective efforts culminated in a record breaking quarter, are adjusted even a lot narrowed to just $400,000, a remarkable $1.4 million improvement from Q1, and an impressive $3 million gain year over year. Indeed, we have reached a milestone, being effectively breaking even in Q2. I could not be more proud of what we have achieved in Q2, particularly considering we had no seasonal advantages. The first half of the year is typically a slow period for businesses like ours. Plus, NFL TNG was in its off season, and unlike Q2, when we host PocketGamer Connects London, there were no major live events in Q2.

Speaker Change: including both Coca-Cola and McDonald's.

Speaker Change: These collective efforts culminated in a record-breaking quarter. Our adjusted EBITDA loss narrowed to just $400,000, a remarkable $1.4 million improvement from Q1.

Speaker Change: and an impressive $3 million gain year over year.

Adrian Montgomery: Indeed, we have reached a milestone, being effectively break even in Q2. I could not be more proud of what we have achieved in Q2, particularly considering we had no seasonal advantage. The first half of the year is typically a slow period, for Businesses Like Ours. Plus, NFL TNG was in its off-season, and unlike Q2, when we host Pocket Gamer Connects London, there were no major live events in Q2. Moreover, we completely transitioned our ad tech stack, underwent several leadership changes and operated with a significantly reduced headcount due to our strategic reposition. Indeed, Q2 was a base, a quarter with no advantage.

Speaker Change: Indeed, we have reached a milestone, being effectively breakeven in Q2.

Speaker Change: I could not be more proud of what we have achieved in Q2, particularly considering we had no seasonal advantages.

Speaker Change: The first half of the year is typically a slow period for businesses like ours.

Speaker Change: Plus, NFL TNG was in its off-season, and unlike Q2 when we host Pocket Gamer Connects London, there were no major live events in Q2.

Adrian Montgomery: Moreover, we completely transitioned our ad tech stack, underwent several leadership changes, and operated with a significantly reduced headcount due to our strategic repositioning. Indeed, Q2 was a baseline, a quarter with no advantages. Despite these challenges, we delivered our best ever adjusted EBITDA results in a period when such an outcome might not have been expected. This achievement is a testament to the strength and dedication across all areas of our business, particularly within products, which continue to grow and thrive. Our own and operated properties are taking on an increasingly prominent role in our P&L, reducing our reliance on network revenue and giving us greater flexibility to scale at higher margins.

Speaker Change: Moreover, we completely transitioned our ad tech stack, underwent several leadership changes, and operated with a significantly reduced headcount due to our strategic repositioning.

Speaker Change: Indeed, Q2 was a baseline, a quarter with no advantages.

Adrian Montgomery: Despite these challenges, we delivered our best ever-adjusted EVA results in a period when such an outcome might not have been expected. This achievement is a testament to the strength and dedication across all areas of our business, particularly within products which continue to grow and thrive. Our owned and operated properties are taking on an increasingly prominent role in our P&L, reducing our reliance on network revenue and giving us greater flexibility to scale at higher margins.

Speaker Change: Despite these challenges, we delivered our best-ever adjusted EBWA results in a period when such an outcome might not have been expected.

Speaker Change: This achievement is a testament to the strength and dedication across all areas of our business.

Speaker Change: particularly within products which continue to grow and thrive.

Speaker Change: Our owned and operated properties are taking on an increasingly prominent role in our P&L, reducing our reliance on network revenue and giving us greater flexibility to scale at higher margins.

Adrian Montgomery: These properties are key drivers behind our gross margin expansion, which reached an impressive 66% in Q2, up from 35% in the prior year. U.G.G, one of our flagship communities, continues to expand, empowering millions of players to enhance their gameplay across a growing number of game titles. In Q2 alone, U.G.G. launched support for two new titles, Team Fight Tactics in April and Hell Diverse 2 in... Jun. And the momentum does not stop there. Following Q2, U.G.G. also rolled out support for Swarm, the latest game mode in League of Legends. We have exciting product advancements on the horizon, including the launch of a Valorant standalone app in the second half of this year, and the launch of support for 2XKO slated for release next year.

Adrian Montgomery: These properties are key drivers behind our gross margin expansion, which reached an impressive 66% in Q2, up from 35% in the prior year. U.GG, one of our flagship communities, continues to expand, empowering millions of players to enhance their gameplay across a growing number of game titles. In Q2 alone, U.GG launched support for two new titles. Team Fight Tactics in April and Helldivers 2 in June. And the momentum does not stop there. Following Q2, U.GG also rolled out support for Swarm, the latest game mode in League of Legends.

Speaker Change: These properties are key drivers behind our gross margin expansion, which reached an impressive 66% in Q2, up from 35% in the prior year.

Speaker Change: UDOT GG, one of our flagship communities, continues to expand, empowering millions of players to enhance their gameplay across a growing number of game titles.

Speaker Change: In Q2 alone, U.GG launched support for two new titles, Team Fight Tactics in April and Helldivers 2 in June .

Speaker Change: And the momentum does not stop there. Following Q2, U.GG also rolled out support for Swarm, the latest game mode in League of Legends.

Adrian Montgomery: We have exciting product advancements on the horizon, including the launch of a Valorant standalone app in the second half of this year, and the launch of support for 2xKO slated for release next year. Moreover, there are several key catalysts in the second half that we expect will drive increased traffic to U.G.G., including the much-anticipated release of Arcane Season 2 in November and the League of Legends World Championships taking place in November and December. Icy Veins has continued its expansion, adding coverage for XenLess Zone 0 in July, with Honkai Star Rail soon to follow.

Speaker Change: We have exciting product advancements on the horizon, including the launch of a Valorant standalone app in the second half of this year, and the launch of support for 2xKO slated for release next year.

Adrian Montgomery: Moreover, there are several key catalysts in the second half that we expect will drive increased traffic to U.G.G., including the much anticipated release of Arcane Season 2 in November and the League of Legends World Championships taking place in November and December. Icy Baines has continued its expansion, adding coverage for Xenla Zone Zero in July, with Hong Kai Star Rail soon to follow. The migration to our new ad tech stack has given Icy Baines a significant boost, leading to an all-time high in RPM performance. The second half of the year brings even more excitement for Icy Baines, with major catalysts on the horizon, including the highly anticipated World of Warcraft expansion, The War Within, set for release on August 26, and the Diablo 4 expansion, Vessel of Hatred, slated for October 8.

Speaker Change: Moreover, there are several key catalysts in the second half that we expect will drive increased traffic to U.GG, including the much-anticipated release of Arcane Season 2 in November and the League of Legends World Championships taking place in November and December .

Speaker Change: Icy Veins has continued its expansion, adding coverage for XenLess Zone 0 in July , with Honkai Star Rail soon to follow.

Adrian Montgomery: The second half of the year brings even more excitement for Icy Veins, with major catalysts on the horizon, including the highly anticipated World of Warcraft expansion, The War Within, set for release on August 26th, and the Diablo IV expansion, Vessel of Hatred, slated for October 8th. These major game releases in flagship titles supported by ICBame are expected to drive substantial traffic to the site at a time when its ad monetization will be at its peak.

Speaker Change: The migration to our new ADTEC stack has given IC-Vanes a significant boost, leading to an all-time high in RPM performance.

Speaker Change: The second half of the year brings even more excitement for Icy Veins, with major catalysts on the horizon.

Speaker Change: Including the highly anticipated World of Warcraft expansion, The War Within.

Speaker Change: Set for release on August 26.

Speaker Change: and the Diablo 4 expansion, Vessel of Hatred, slated for October 8th.

Adrian Montgomery: These major game releases in flagship titles supported by Icy Baines are expected to drive substantial traffic to the site at a time when its ad monetization will be at its peak. TSR, The Sims Resource, had a standout quarter, marked by the launch of several innovative product advancements, including curated bundles for paid subscribers, and the introduction of free trials for our VIP service. These free trials have driven a significant increase in conversions from new customers to paid subscribers, and they have shifted our activation metrics, with premium annual packages now making up the majority of all signups.

Speaker Change: These major game releases in flagship titles supported by Icy Veins are expected to drive substantial traffic to the site at a time when its ad monetization will be at its peak.

Adrian Montgomery: TSR, The Sims Resource, had a standout quarter, marked by the launch of several innovative product advancements, including curated bundles for paid subscribers and the introduction of free trials for our VIP subscribers. These free trials have driven a significant increase in conversions from new customers to paid subscribers, and they have shifted our activation methods. Premium Annual Packages, now making up the majority of all signs. The success of the VIP bundles, coupled with the rollout of a fresh content strategy, is further cementing TSR's position as the go-to platform for sims fans worldwide.

Speaker Change: TSR, the SIMS resource, had a standout quarter, marked by the launch of several innovative product advancements, including curated bundles for paid subscribers and the introduction of free trials for our VIP service.

Speaker Change: These free trials have driven a significant increase in conversions from new customers to paid subscribers and they have shifted our activation metrics.

Speaker Change: with premium annual packages now making up the majority of all sign-ups.

Adrian Montgomery: The success of the VIP bundles, coupled with the rollout of a fresh content strategy, is further cementing TSR's position as the go-to platform for Sims fans worldwide. As a result, both June and July set new records for subscriber editions this year. NFL Tuesday Night Gaming Season Three is designed to bring fans even closer to the gaming creators and the NFL stars they love. This season will feature a 26th episode series with a lifestyle-focused format that invites fans to explore the lives and personalities behind the helmets and headsets. Along with compelling gameplay segments that deepen the connection between viewers and the players, season three will take NFL TNG on the road, visiting key hubs across the United States where gaming and football fans intersect.

Speaker Change: The success of the VIP bundles coupled with the rollout of a fresh content strategy

Speaker Change: is further cementing TSR's position as the go-to platform for Sims fans worldwide.

Adrian Montgomery: As a result, both June and July set new records for subscriber additions this year. NFL Tuesday Night Gaming Season 3 is designed to bring fans even closer to the gaming creators and the NFL stars they love. This season will feature a 26th episode series with a lifestyle focused format that invites fans to explore the lives and personalities behind the helmets and heads, along with compelling gameplay segments that deepen the connection between viewers and the players. Season 3 will take NFL TNG on the road, visiting key hubs across the United States where gaming and football fans intersect.

Speaker Change: As a result, both June and July set new records for subscriber additions this year.

Speaker Change: NFL Tuesday Night Gaming Season 3 is designed to bring fans even closer to the gaming creators and the NFL stars they love.

Speaker Change: This season will feature a 26-episode series with a lifestyle-focused format that invites fans to explore the lives and personalities behind the helmets and headsets.

Speaker Change: Along with compelling gameplay segments that deepen the connection between viewers and the players, Season 3 will take NFL TNG on the road, visiting key hubs across the United States where gaming and football fans intersect.

Adrian Montgomery: These format changes will deliver fresh content and new engagement opportunities. They will expand our sponsorship reach and reduce production costs. The new season kicks off in September, featuring partnerships including Toyota, Sargento, and Frigo. Our multi-year partnership with the NHL is progressing well as we prepare for its launch in the 2024-2025 season. The details of this collaboration will be announced jointly by the NHL and ourselves in the coming weeks, and we're excited to bring this product to market. We've identified several synergies between our NFL and NHL programs, including cost efficiencies, production synergies, and complementary sales markets.

Speaker Change: These format changes will deliver fresh content and new engagement opportunities.

Speaker Change: They will expand our sponsorship reach and reduce production costs.

Speaker Change: The new season kicks off in September, featuring partnerships including Toyota, Sargento, and Frigo.

Adrian Montgomery: Our multi-year partnership with the NHL is progressing well as we prepare for its launch in the 2024-2025. The details of this collaboration will be announced jointly by the NHL and ourselves in the coming weeks, and we're excited to bring this product to market. We've identified several synergies between our NFL and NHL programs, including cost efficiencies, production synergies, and complimentary sales marks.

Speaker Change: Our multi-year partnership with the NHL is progressing well as we prepare for its launch in the 2024-2025 season.

Speaker Change: The details of this collaboration will be announced jointly by the NHL and ourselves in the coming weeks.

Speaker Change: And we're excited to bring this product to market. We've identified several synergies between our NFL and NHL programs, including cost efficiencies, production synergies, and complementary sales markets.

Adrian Montgomery: This partnership will be a flagship component of our direct sales offerings, and it will open doors to a roster of major existing NHL sponsors. Pocket Gamer has had an exceptional first half of the year with B2B event and media bookings reaching all-time highs. Despite Q2 being a traditionally slow quarter for PGC, our Dubai Game Expo Summit in May, held in partnership with the Dubai government, was the largest event we've ever hosted in the region, attracting over 1,350 delegates from 650 companies across 60 countries. Looking ahead, the Mobile Games Awards at Gamescom in August, now in its seventh year, is set to be our biggest yet.

Adrian Montgomery: This partnership will be a flagship component of our direct sales offering, and it will open doors to a roster of major existing NHL sponsors. Pocket Gamer has had an exceptional first half of the year with B2B event and media bookings reaching all time high. Despite Q2 being a traditionally slow quarter for PGC, our Dubai Game Expo Summit in May held in partnership with the Dubai Government with the largest event we've ever hosted in the region, attracting over 1,350 delegates, from 650 companies across 60 countries. Looking ahead, the Mobile Games Awards at Gamescom in August, now in its seventh year, is set to be our biggest yet.

Speaker Change: This partnership will be a flagship component of our direct sales offerings.

Speaker Change: and it will open doors to a roster of major existing NHL sponsors.

Speaker Change: Pocket Gamer has had an exceptional first half of the year with B2B event and media bookings reaching all-time highs.

Speaker Change: Despite Q2 being a traditionally slow quarter for PGC, our Dubai Game Expo Summit in May, held in partnership with the Dubai government, was the largest event we've ever hosted in the region, attracting over 1,350 delegates.

Speaker Change: from 650 companies across 60 countries.

Speaker Change: Looking ahead, the Mobile Games Awards at Gamescom in August, now in its seventh year, is set to be our biggest yet.

Adrian Montgomery: Surpassing expectations with ticket sales still going strong. PGC Health Synchia in October and PGC Jordan in November are also on track to set new records and will contribute strongly to our Q4 performance. Additionally, we are actively planning more events for the end of the year and expanding our PGC conferences into 2025. Fantasy Football Scout has also been exceptionally active, recently announcing a partnership with the English Football League for our upcoming fantasy game, the Fantasy ESL. This new collaboration complements our existing relationships with the Premier League and UEFA, significantly expanding our target market. Collectively, these leagues have engaged over 16 million fantasy football players in the past year.

Adrian Montgomery: Surpassing Expectations with Ticketsdale still going strong. PGC Helsinki in October and PGC Jordan in November are also on track to set new records and will contribute strongly to our QCOR performance. Additionally, we are actively planning more events for the end of the year and expanding our PGC conferences into 2025. Fantasy Football Scout has also been exceptionally active, recently announcing a partnership with the English Football League for our upcoming fantasy game, the Fantasy EFL.

Speaker Change: Sir Passing Expectations with ticket sales still going strong.

Speaker Change: PGC Helsinki in October and PGC Jordan in November are also on track to set new records and will contribute strongly to our QCOR performance.

Speaker Change: Additionally, we are actively planning more events for the end of the year and expanding our PGC conferences into 2025.

Speaker Change: Fantasy Football Scout has also been exceptionally active.

Speaker Change: Recently announcing a partnership with the English Football League for our upcoming fantasy game, the Fantasy EFL. This new collaboration complements our existing relationships with the Premier League and UEFA, significantly expanding our target market.

Adrian Montgomery: This new collaboration complements our existing relationships with the Premier League and UEFA, significantly expanding our target market. Collectively, these leagues have engaged over 16 million fantasy football players in the past year. Additionally, our premium subscription revenue saw a notable increase from April to June, largely driven by the Euro 24 campaign, even during the traditionally slower period. FFS has also launched a new app on iOS and Android, and it is enhancing its premium members area with upgraded features, including stats bomb data for the Premier League and UEFA Champions League games.

Speaker Change: Collectively, these leagues have engaged over 16 million fantasy football players in the past year. Additionally, our premium subscription revenue saw a notable increase from April to June, largely driven by the Euro 24 campaign.

Adrian Montgomery: Additionally, our premium subscription revenue saw a notable increase from April to June, largely driven by the Euro-24 campaign, even during the traditionally slower period. FFS has also launched a new app on iOS and Android, and it is enhancing its premium members area with upgraded features, including Stats Bomb data for the Premier League and UEFA Champions League games. Looking ahead to the 24-25 season, we're excited to announce new marketing partnerships with Sleeper and Fan Team, which will further enhance FFS's offerings and reach. And of course, the busiest time of the year for FFS is just around the corner with the Premier League season kicking off on August 17th.

Speaker Change: Even during the traditionally slower period.

Speaker Change: FFS has also launched a new app on iOS and Android, and it is enhancing its Premium Members Area with upgraded features, including Stats Bomb data for the Premier League and UEFA Champions League games.

Adrian Montgomery: Looking ahead to the 24-25 season, we are excited to announce new marketing partnerships with Sleeper and Fanteam, which will further enhance FFS's offerings and, And of course, the busiest time of the year for FFS is just around the corner with the Premier League season kicking off on August 17th. These advancements across key products were instrumental in achieving the record-adjusted EBITDA numbers we reported for Q. The journey to this milestone was challenging.

Speaker Change: Looking ahead to the 24-25 season, we're excited to announce new marketing partnerships with sleeper and fan team, which will further enhance FFS's offerings and reach.

Speaker Change: And of course, the busiest time of the year for FFS is just around the corner, with the Premier League season kicking off on August 17th.

Adrian Montgomery: These advancements across key products were instrumental in achieving the record-adjusted EBITDA numbers we reported for Q2. The journey to this milestone was challenging. When I returned in January, we were facing significant obstacles, declining subscriber numbers, rising costs, and struggling programmatic and direct sales. efforts. The company was also grappling with limited cash flow, with only $1.9 million remaining at the end of Q1. Despite these difficulties, our management team remained confident and focused. We knew our communities were strong and engaged, and that Enthusiast Gaming is firmly rooted in an exciting industry with a unique value proposition. Gen Z and Gen Alpha spend substantial time with us, actively interacting with the content and experiences we provide, and this is a tremendous and rare asset.

Speaker Change: These advancements across key products were instrumental in achieving the record adjusted EBITDA numbers we reported for Q2.

Adrian Montgomery: When I returned in January, we were facing significant odds. Declining subscriber numbers, rising costs, and struggling programmatic and direct sales. The company was also grappling with limited cash flow, with only $1.9 million remaining at the end of Q1. Despite these difficulties, our management team remained confident and focused.

Speaker Change: The journey to this milestone was challenging.

Speaker Change: When I returned in January , we were facing significant obstacles.

Speaker Change: Declining subscriber numbers, rising costs, and struggling programmatic and direct sales efforts.

Speaker Change: The company was also grappling with limited cash flow, with only $1.9 million remaining at the end of Q1.

Speaker Change: Despite these difficulties, our management team remained confident and focused. We knew our communities were strong and engaged, and that Enthusiast Gaming is firmly rooted in an exciting industry with a unique value proposition.

Adrian Montgomery: We knew our communities were strong and engaged, and that Enthusiast Gaming is firmly rooted in an exciting industry with a unique value prop- Gen Z and Gen Alpha spend substantial time with us, actively interacting with the content and experiences we provide, and this is a tremendous and rare asset. So now we find ourselves here at August, not only having effectively reached break-even, providing a solid foundation for future growth, but also having strengthened our balance.

Speaker Change: Gen Z and Gen Alpha spend substantial time with us, actively interacting with the content and experiences we provide, and this is a tremendous and rare asset.

Adrian Montgomery: So now we find ourselves here in August, not only having effectively reached break even, providing a solid foundation for future growth, but also having strengthened our balance sheet. In April, we completed the sale of a subset of non-core, non-profitable, casual gaming assets for $4 million. This move, not only trimmed or adjusted even to loss, but also enhanced our liquidity. And of course, in July, we successfully secured $20 million in debt financing. This was a strategic investment from a supportive partner that has significantly strengthened our financial position and enhanced our liquidity. This crucial boost combined with our stabilized P&L ensure that we are well funded and ready for future growth, with our financial footing firmly established. Enthusiast Gaming is excellently positioned to capitalize on the numerous opportunities and catalysts ahead of which there are many.

Speaker Change: So now we find ourselves here in August , not only having effectively reached break even, providing a solid foundation for future growth, but also having strengthened our balance sheet.

Adrian Montgomery: In April, we completed the sale of a subset of non-core, non-profitable casual gaming assets for $4 million. This move not only trimmed our adjusted EBITDA loss but also enhanced our liquidity. And, of course, in July, we successfully secured $20 million in debt financing.

Speaker Change: In April, we completed the sale of a subset of non-core, non-profitable casual gaming assets for $4 million. This move not only trimmed our adjusted EBITDA loss, but also enhanced our liquidity.

Speaker Change: And of course, in July, we successfully secured $20 million in debt financing.

Adrian Montgomery: This was a strategic investment from a supportive partner that has significantly strengthened our financial position and enhanced our liquidity. This crucial boost, combined with our stabilized P&L, ensure that we are well-funded and ready for future growth. With our financial footing firmly established, Enthusiast Gaming is excellently positioned to capitalize on the numerous opportunities and catalysts ahead, of which there are many. It is these upcoming catalysts that renew my confidence in our, If we were able to establish a baseline of near break even in Q2.

Speaker Change: This was a strategic investment from a supportive partner that has significantly strengthened our financial position and enhanced our liquidity.

Speaker Change: This crucial boost combined with our stabilized P&L ensure that we are well funded and ready for future growth.

Speaker Change: With our financial footing firmly established, Enthusiast Gaming is excellently positioned to capitalize on the numerous opportunities and catalysts ahead, of which there are many.

Adrian Montgomery: It is these upcoming catalysts that renew my confidence in our future. If we were able to establish a baseline of near break even in Q2 despite the quarter's disadvantages, imagine the possibilities as we build on this foundation. What happens when the second half seasonality boosts our programmatic and direct sales? What happens when season three of NFL TNG and our NHL program both return to the air, bringing along their associated direct sales partners? What happens when our major pocket gamer events in Helsinki in Q3 and London in Q1 return? How significantly can these contribute to profits?

Speaker Change: It is these upcoming catalysts that renew my confidence in our future.

Speaker Change: If we were able to establish a baseline of near break-even in Q2, despite the quarter's disadvantages, imagine the possibilities as we build on this foundation.

Adrian Montgomery: Despite the quarter's disadvantages, imagine the possibilities as we build on this foundation. What happens when the second half seasonality boosts our programmatic and direct sales? What happens when season three of NFL, TNG and our NHL program both return to the air, bringing along their associated direct sales partners? What happens when our major Pocket Gamer events in Helsinki in Q3 and London in Q1 return?

Speaker Change: [inaudible]

Speaker Change: What happens when the second half seasonality boosts our programmatic and direct sales?

Speaker Change: What happens when Season 3 of NFL TNG and our NHL program both return to the air, bringing along their associated direct sales partners?

Speaker Change: What happens when our major Pocket Gamer events in Helsinki in Q3 and London in Q1 return? How significantly can these contribute to profits?

Adrian Montgomery: How significantly can these contribute to profit? With our enhanced liquidity now giving us greater operational flexibility, the potential is huge. Consider the impact of our management team's renewed focus, The ramp-up of our seven new direct sellers added in cute- The continued optimization of our new ad tech stack and the coming major game releases, which will further boost our key profit. I'll tell you what happened.

Adrian Montgomery: With our enhanced liquidity now giving us greater operational flexibility, the potential is huge. Consider the impact of our management team's renewed focus, the ramp-up of our seven new direct sellers added in Q2, the continued optimization of our new ad tech stack, and the coming major game releases which will further boost our key properties. I'll tell you what happens. Each of these elements will build on our solid Q2 baseline, setting us up for a series of increasingly strong quarters. With this baseline in place and this pipeline of catalysts, I once again feel like we are just getting started.

Speaker Change: With our enhanced liquidity now giving us greater operational flexibility, the potential is huge.

Speaker Change: Consider the impact of our management team's renewed focus, the ramp-up of our seven new direct sellers added in Q2.

Speaker Change: The continued optimization of our new ad tech stack and the coming major game releases, which will further boost our key properties.

Adrian Montgomery: Each of these elements will build on our solid Q2 baseline, setting us up for a series of increasingly strong quarters. With this baseline in place, and this pipeline of catalysts, I once again feel like we are just getting started. Thank you. And I will now turn the call over to Felicia to provide further commentary and details on the financial results. Felicia. Thank you, Adrian.

Speaker Change: I'll tell you what happens.

Speaker Change: Each of these elements will build on our solid Q2 baseline, setting us up for a series of increasingly strong quarters. With this baseline in place, and this pipeline of catalysts, I once again feel like we are just getting started.

Adrian Montgomery: 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.

Speaker Change: 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: As Adrian mentioned, we made a deliberate strategic shift to focus on our most engaged, owned communities and the revenue streams they generate. This approach delivered in Q2 2024, where we saw a dramatic improvement in our financial performance, are adjusted to even a lost narrowed to just $400,000, a $3 million improvement over last year and a $1.4 million improvement over Q1 2024, setting a new record for the company. We are confident in our path to a sustainable and profitable future, and these second quarter results underscore this momentum. We achieved an operating expense structure that was 13 million lower than the same period last year and 4 million lower than Q1 2024, reflecting the full impact of the operational efficiency measures implemented in March.

Felicia DellaFortuna: As Adrian mentioned, we made a deliberate strategic shift to focus on our most engaged, owned communities and the revenue streams they generate. This approach delivered in Q2 2024, where we saw a dramatic improvement in our financial performance; our adjusted even in lost narrowed to just $400,000, a $3 million improvement over last year and a $1.4 million improvement over Q1 2024, setting a new record for the company. We are confident in our path to a sustainable and profitable future, and the second quarter results underscore this momentum. We achieved an operating expense structure that was 13 million lower than the same period last year and 4 million lower than Q1 2024, reflecting the full impact of the operational efficiency measures implemented in March.

Felicia: Thank you, Adrienne. As Adrienne mentioned, we made a deliberate strategic shift to focus on our most engaged, owned communities and the revenue streams they generate.

Operator: Gaming, Holdings Inc., Second Quarter, 2024 Financial Results, Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session.

Felicia: This approach delivered in Q2 2024, where we saw a dramatic improvement in our financial performance.

Operator: If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, August 14, 2024.

Speaker Change: are adjusted to even a lost narrowed to just $400,000, a $3 million improvement over last year, and a $1.4 million improvement over Q1 2024, setting a new record for the company.

JB Elliott: I would now like to turn the conference over to Mr. JB Elliott, Chief Strategy Officer, and General Counsel. Please go ahead, sir. Thank you, operator.

Speaker Change: We are confident in our path to a sustainable and profitable future, and these second quarter results underscore this momentum.

Speaker Change: We achieved an operating expense structure that was $13 million lower than the same period last year, and $4 million lower than Q1 2024, reflecting the full impact of the operational efficiency measures implemented in March.

JB Elliott: Good afternoon, everyone, and welcome to the enthusiast gaming, Second Quarter, 2024 Results, Conference Call. I'm JB Elliott, Chief Strategy Officer, and General Counsel.

JB Elliott: With me today is InterRoom CEO, Adrian Montgomery, and our Chief Financial Officer, Felicia Delafortuna. We'll begin with some prepared remarks and then open the Florida 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.

Felicia DellaFortuna: Our gross margin surged to over 65 percent, up from 35 percent in Q2 2023, and we improved our margin by a further 586 basis points compared to Q1. By concentrating on owned and operated properties, we saw a 71 percent increase in our PN across web properties in Q2 2024 relative to Q2 2023, and we made significant strides in adgencity and viewability, yielding a month over month revenue increase of 35 percent in May, even with only partial integration of playwire, and a further 51 percent month over month increase in June as the majority of our sites came on to the new platform.

Felicia DellaFortuna: Our growth margin surged to over 65%, up from 35% in Q2 2023, and we improved our margin by a further 586 basis points compared to Q1. By concentrating on owned and operated properties, we saw a 71% increase in RPMs across web properties in Q2 2024 relative to Q2 2023. And we made significant strides in ad density and viewability, yielding a month-over-month revenue increase of 35% in May, even with only partial integration of Playwire, and a further 51% month-over-month increase in June, as the majority of our sites came onto the new platform. We are also seeing strong progress in our non-financial metrics, highlighting the overall health and sustainability of Enthusiast Gaming and the positive trajectory of our Highline Engage community.

Speaker Change: Our growth margin surged to over 65%, up from 35% in Q2 2023, and we improved our margin by a further 586 basis points compared to Q1.

JB Elliott: 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 month period ending June 30, 2024, which are available under the company's profile on Cedar Plus, as well as on the company's website at enthusiastsgaming.com.

Speaker Change: By concentrating on owned and operated properties, we saw a 71% increase in RPMs across web properties in Q2 2024 relative to Q2 2023.

Rema: And, we made significant strides in ad density and viewability, yielding a month-over-month revenue increase of 35% in May, even with only partial integration of Playwire, and a further 51% month-over-month increase in June , as the majority of our sites came onto the new platform.

Felicia DellaFortuna: We are also seeing strong progress in our non-financial metrics, highlighting the overall health and sustainability of enthusiastic gaming and the positive trajectory of our highly engaged communities. We maintained our PHB traffic from Q1 2024, which was approximately 20 percent higher than Q4 2023, even without the seasonal lists on sites such as U.G. while also successfully integrating Playwire across the vast majority of our sites. Excluding the video platform, we increased unique visitors year over year by over 30 percent while maintaining time spent on site, resulting in a 26 percent increase in total time spent in Q2 2024 compared to Q2 2023, despite vaping out certain represented sites as part of our focus on profitability.

Rema: We are also seeing strong progress in our non-financial metrics, highlighting the overall health and sustainability of Enthusiast Gaming and the positive trajectory of our highly engaged communities. We are also seeing strong progress in our non-financial metrics, highlighting the overall health and sustainability of Enthusiast Gaming and

JB Elliott: You are cautioned not to place a new reliance on these forward looking statements which speak only as of the date of this presentation. The company disclaims any intention or obligation except 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.

Felicia DellaFortuna: We maintained our page view traffic from Q1 2024, which was approximately 20% higher than Q4 2023, even without the seasonal lists on sites such as u.gg, while also successfully integrating Playwire across the vast majority of our sites. Excluding the video platform, we increased unique visitors year over year by over 30% while maintaining time spent on site, resulting in a 26% increase in total time spent in Q2 2024 compared to Q2 2023, despite phasing out certain representative sites as part of our focus on profitability.

Rema: We maintained our page view traffic from Q1 2024, which was approximately 20% higher than Q4 2023, even without the seasonal lifts on sites such as Udachi.g, while also successfully integrating Playwire across the vast majority of our sites.

Adrian Montgomery: Now I'd like to turn the call over to Adrian Montgomery. Adrian, the call is yours.

Rema: Excluding the video platform, we increased unique visitors year-over-year by over 30%

Rema: While maintaining time spent on-site, resulting in a 26% increase in total time spent in Q2 2024 compared to Q2 2023, despite phasing out certain represented sites as part of our focus on profitability.

Felicia DellaFortuna: We revitalized The Sims Resource, increasing subscriber counts in June after four months of stagnation. This growth continues through July and August. We also successfully insourced our production capabilities and launched our first special episode of NFL Tuesday Night Gaming on July 23rd, featuring our new on-the-road content strategy at the NFL Flag Championship. The episode garnered over 300,000 views, 60,000 watch hours, and an average viewer duration of over 10 minutes. The debut episode of Tuesday Night Gaming on September 3rd will showcase household names from the NFL, including Karen Williams, running back for the Los Angeles Rams, and fan favorite Madden superstar Matthew MMG-Megar.

Felicia DellaFortuna: We revitalized the FIMS resource, increasing subscriber counts in June after four months of stagnation. This growth continued through July and August. We also successfully in-sourced our production capabilities and launched our first special episode of NFL Tuesday Night Gaming on July 23rd, featuring our new on-the-road content strategy at the NFL Flag Championship. The episode garnered over 300,000 views, 60,000 watch hours, and an average viewer duration of over 10 minutes. The debut episode of Tuesday Night Gaming on September 3rd will showcase household names from the NFL, including Karen Williams, Running Back for the Los Angeles Rams, and fan favorite Madden superstar Matthew MMG Meagher.

Rema: We revitalize the Sims resource, increasing subscriber counts in June after four months of stagnation. This growth continues through July and August .

Adrian Montgomery: While reaching this point has required significant work, it comes as no surprise to me that we've gotten here. I know firsthand the strength of our core assets and the vibrant communities that underlie this business. The enthusiasm within these communities remains strong and demand for our product innovations continues to grow. The resilience of the business demonstrated through challenging times is nothing short of commendable, and we have emerged from this period on our strongest footing ever, and now with renewed confidence, we are back to business with Bright Days ahead.

Rema: We also successfully insourced our production capabilities and launched our first special episode of NFL Tuesday Night Gaming on July 23rd.

Rema: Featuring our new on-the-road content strategy at the NFL Flag Championship. The episode garnered over 300,000 views, 60,000 watch hours, and an average viewer duration of over 10 minutes.

Rema: The debut episode of Tuesday Night Gaming on September 3rd will showcase household names from the NFL including Karen Williams, running back for the Los Angeles Rams, and fan-favorite Madden superstar Matthew MMG Meagher.

Felicia DellaFortuna: We also bolstered our balance sheet, securing a 20 million, four-year non-revolving term loan from Beauty Capital in July. The proceeds from this loan will provide the company with essential growth capital.

Felicia DellaFortuna: We also bolstered our balance sheet, securing a 20 million four-year non-revolving term loan from Beauty Capital in July. The proceeds from this loan will provide the company with essential growth capital. In respect of our more detailed financials, 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 of the Canadian dollar should be monitored and considered when analyzing our forecasting results.

Speaker Change: We also bolstered our balance sheet, securing a 20 million four-year non-revolving term loan from Vity Capital in July . The proceeds from this loan will provide the company with essential growth capital.

Adrian Montgomery: Much of the success can be attributed to the significant advancements we saw in Q2. During this quarter, we experienced rapid optimization of our new ad tech setup, propelling many of our properties to new heights in June. Our cost efficiency initiatives are also bearing fruit, with a full quarters results now reflecting their impact. We expanded several product lines, forged a strategic partnership with the National Hockey League and renewed our existing partnership with the NFL for a third season.

Felicia DellaFortuna: In respect to our more detailed financials, I was first noticed that our results are presented in Canadian dollars. The significant majority of our revenues make sense with our measured in US dollars and are translated into Canadian dollars for presentation in our financial statements. The exchange rate between the US dollar and our presentation currency of the Canadian dollars should be monitored and considered when analyzing our forecasting results.

Speaker Change: In respect of our more detailed financials, 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 statements.

Speaker Change: The exchange rate between the U.S. dollar and our presentation currency of the Canadian dollar should be monitored and considered when analyzing or forecasting results.

Felicia DellaFortuna: Additionally, it's important to note that the historical financial results don't fully reflect the changes in revenue mix as well as cost reductions enacted, and so historical financials will likely not bear a strong resemblance to future results. Turning to the financial results for the second quarter, we ended the quarter with 2.2 million in cash as of June 30th, 2024, and the networking capital efficiency of 36 million, consistent with the figure reported at December 31st, 2023. The majority of this deficiency stems from 22 million in current debt related to our credit facilities and 3.5 million in contract liabilities or deferred revenue to be recognized in future periods, with the remainder being ordinary course working capital items. However, we have successfully strengthened our balance sheet post quarter with the 20 million dollar term loan, bringing the company to a strong positive working capital position net of the current debt.

Adrian Montgomery: Additionally, we undertook a complete overhaul of our direct sales efforts. Confident, it is back on track. We have once again started adding sellers with seven direct sellers added since Q2. As a result, we've seen renewed interest and activity around our direct sales offerings, which we are confident will translate into increased bookings as the year progresses. I note that we have recently won significant new business from some of the most sought after brands in all of advertising, including both Coca-Cola and McDonald's.

Speaker Change: Additionally, it's important to note that the historical financial results don't fully reflect the changes in revenue mix, as well as cost reductions enacted, and so historical financials will likely not bear a strong resemblance to future results.

Felicia DellaFortuna: Additionally, it's important to note that the historical financial results don't fully reflect the changes in revenue mix, as well as cost reductions enacted, and so historical financials will likely not bear a strong resemblance to future results. Turning to the financial results for the second quarter, We ended the quarter with $2.2 million in cash as of June 30, 2024 and a net working capital deficiency of $36 million, consistent with the figure reported on December 31, 2023.

Speaker Change: Turning to the financial results for the second quarter. We ended the quarter with 2.2 million in cash as of June 30, 2024, and the networking capital efficiency of 36 million, consistent with the figure reported at December 31, 2023.

Felicia DellaFortuna: The majority of this deficiency stems from $22 million in current debt related to our credit facilities and $3.5 million in contract liabilities or deferred revenue to be recognized in future periods, with the remainder being ordinary course working capital items. However, we have successfully strengthened our balance sheet post-quarter with the $20 million term limit, bringing the company to a strong positive working capital position net of the current debt.

Speaker Change: The majority of this deficiency stems from $22 million in current debt related to our credit facilities and $3.5 million in contract liabilities, or deferred revenue to be recognized in future periods.

Adrian Montgomery: These collective efforts culminated in a record breaking quarter are adjusted even a lot narrowed to just $400,000, a remarkable $1.4 million improvement from Q1, and an impressive $3 million gain year over year. Indeed, we have reached a milestone being effectively breaking even in Q2. I could not be more proud of what we have achieved in Q2, particularly considering we had no seasonal advantages. The first half of the year is typically a slow period for businesses like ours.

Speaker Change: with the remainder being ordinary course working capital items. However, we have successfully strengthened our balance sheet post-quarter with the $20 million term loan, bringing the company to a strong positive working capital position net of the current debt.

Felicia DellaFortuna: Now to our T&L. For the three months ended Q2 2024, revenue totaled 14.7 million, a 65 percent decrease compared to 42.6 million in Q2 2023. Media and content revenue decreased from 36.9 million to 10.6 million, a 71 percent reduction or 26.3 million. The primary driver behind this decline was our strategic decision to deprioritize lower margin revenue on our video platform, which accounted for approximately 20 million of the 26 million dollar decrease in media and content revenue. Additionally, direct sales contributed to the year prior to client decreasing from 8.7 million in Q2 2023 to 4.1 million in Q2 2024.

Felicia DellaFortuna: Now to our T&O, For the three months ended Q2 2024, revenue totaled $14.7 million, a 65% decrease compared to $42.6 million in Q2 2023. Media and content revenue decreased from $36.9 million to $10.6 million, a 71% reduction, or $26.3 million. The primary driver behind this decline was our strategic decision to deprioritize lower margin revenue on our video platform, which accounted for approximately $20 million of the $26 million decrease in media and content revenue.

Felicia DellaFortuna: Additionally, direct sales contributed to the year-over-year decline, decreasing from $8.7 million in Q2 2023 to $4.1 million in Q2 2024, a reduction of $4.6 million, or around 50%, largely due to having half the number of ramped sellers versus the year-ago period. However, despite these decreases, net revenue retention for direct sales deals, over 50,000, remained consistent at around 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.

Speaker Change: Now to our panel.

Speaker Change: For the three months ended Q2 2024, revenue totaled $14.7 million, a 65% decrease compared to $42.6 million in Q2 2023.

Speaker Change: Media and content revenues decreased from $36.9 million to $10.6 million, a 71% reduction, or $26.3 million.

Adrian Montgomery: Plus, NFL TNG was in its off season and unlike Q2, when we host PocketGamer Connects London, there were no major live events in Q2. Moreover, we completely transitioned our ad tech stack, underwent several leadership changes and operated with a significantly reduced headcount due to our strategic repositioning. Indeed, Q2 was a baseline, a quarter with no advantages. Despite these challenges, we delivered our best ever adjusted EBITDA results in a period when such an outcome might not have been expected.

Speaker Change: The primary driver behind this decline was our strategic decision to deprioritize lower margin revenue on our video platform, which accounted for approximately $20 million of the $26 million decrease in media and content revenue.

Speaker Change: Additionally, direct sales contributed to the year-over-year decline, decreasing from $8.7 million in Q2 2023 to $4.1 million in Q2 2024.

Felicia DellaFortuna: A reduction of 4.6 million, or around 50 percent, largely due to having half the number of grant sellers versus the year-ago period. However, despite these decreases, net revenue retention for direct sales deals over 50,000 remained consistent at around 60 percent. 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, there is a healthy base of large recurring customers to continue to generate a significant portion of our direct sales revenue.

Speaker Change: A reduction of $4.6 million, or around 50%, largely due to having half the number of ramped sellers versus the year-ago period.

Speaker Change: However, despite these decreases, net revenue retention for direct sales deals over $50,000 remained consistent at around 60%.

Adrian Montgomery: This achievement is a testament to the strength and dedication across all areas of our business, particularly within products which continue to grow and thrive. Our own and operated properties are taking on an increasingly prominent role in our P&L, reducing our reliance on network revenue and giving us greater flexibility to scale at higher margins. These properties are key drivers behind our gross margin expansion, which reached an impressive 66% in Q2 up from 35% in the prior year.

Speaker Change: 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.

Felicia DellaFortuna: Said another way, there is 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. While revenue retention remained consistent, the number of new logos decreased year over year due to a reduced number of ramp sellers than the year ago period. However, looking ahead to Q3 2024, we have successfully increased our seller count with more ramp sellers in Q3 2024 than Q1 of this year. We are also excited about the new and returning logos we're seeing in Q3 2024, including major brands such as McDonald's, Amazon, State Farm, Sargento, and White Claw.

Speaker Change: Said another way, there is 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 DellaFortuna: This gives us a foundation of repeat business from which to grow. While revenue retention remained consistent, the number of new logos decreased year over year due to a reduced number of grant sellers from the year-ago period. However, looking at head to Q3 2024, we have successfully increased our seller count with more grant sellers in Q3 2024 than Q1 of this year. We are also excited about the new and returning logos we're seeing in Q3 2024, including major brands such as Donald's, Amazon, State Farm, Serginso, and Whitecloth. The remainder of the decrease in median content revenue is attributable to a decrease in programmatic web revenue, primarily driven by fewer page views.

Speaker Change: While revenue retention remained consistent, the number of new logos decreased year-over-year due to a reduced number of RAMP sellers than the year-ago period.

Adrian Montgomery: U.G.G, one of our flagship communities, continues to expand, empowering millions of players to enhance their gameplay across a growing number of game titles. In Q2 alone, U.G.G, launched support for two new titles, Team Fight Tactics in April and Hell Diverse 2 in... Jun. And the momentum does not stop there. Following Q2, U.G.G, also rolled out support for Swarm, the latest game mode in League of Legends. We have exciting product advancements on the horizon, including the launch of a Valorant standalone app in the second half of this year, and the launch of support for 2XKO slated for release next year.

Speaker Change: However, looking ahead to Q3 2024, we have successfully increased our seller count with more ramped sellers in Q3 2024 than Q1 of this year.

Speaker Change: We are also excited about the new and returning logos we're seeing in Q3 2024, including major brands such as McDonald's, Amazon, State Farm, Sargento, and White Claw.

Felicia DellaFortuna: The remainder of the decrease in media and content revenue is attributable to a decrease in programmatic web revenue, primarily driven by fewer page views. This resulted from a more selective approach to represented sites aimed at improving overall profitability. This focus led to a 71% increase in RPM in Q2 2024 compared to Q2 2023, which substantially offset the loss in page views. Esports and entertainment revenues decreased by $700,000 year over year from $1.7 million in Q2 2023 to $1 million in Q2 2024, primarily due to a shift in event timing.

Speaker Change: The remainder of the decrease in median content revenue is attributable to a decrease in programmatic web revenue, primarily driven by fewer page views.

Felicia DellaFortuna: This resulted from a more selective approach to a represented site, instead improving overall profitability. This focus led to a 71% increase in RPM in Q2 2024 compared to Q2 2023, which substantially offset the loss in page views. E-sports and entertainment revenues decreased by 700,000 year-over-year from 1.7 million in Q2 2023 to 1 million in Q2 2024, primarily due to a shifted event timing. And finally, subscription revenue decreased by 900,000 or 23% from 4 million in Q2 2023 to 3.1 million in Q2 2024, primarily due to the sale of certain non-core, non-profitable assets under addicting games on April 15, 2024.

Speaker Change: This resulted from a more selective approach to a represented site, instead of improving overall profitability. This focus led to a 71% increase in RPM in Q2 2024 compared to Q2 2023, which substantially offset the loss in page views.

Speaker Change: Esports and entertainment revenues decreased by $700,000 year-over-year from $1.7 million in Q2 2023.

Speaker Change: to $1 million in Q2 2024, primarily due to a shift in event timing. And finally, subscription revenues decreased by $900,000 or 23% from $4 million in Q2 2023.

Felicia DellaFortuna: And finally, subscription revenues decreased by $900,000 or 23% from $4 million in Q2 2023 to $3.1 million in Q2 2024, primarily due to the sale of certain non-core, non-profitable assets under Addicting Games on April 15, 2024. Gross profit was $9.7 million in Q2 2024, down 35% compared to the $15 million of gross profit reported in Q2 2023. Gross margin increased from 35.2% to 66.2%. This significant margin improvement highlights the enhanced contribution and focus of our owned and operated properties, direct sales, and subscription revenue to our overall revenue profile.

Speaker Change: to $3.1 million in Q2 2024, primarily due to the sale of certain non-core, non-profitable assets under Addicting Games on April 15, 2024.

Adrian Montgomery: The second half of the year brings even more excitement for Icy Baines, with major catalysts on the horizon, including the highly anticipated World of Warcraft expansion, the war within set for release on August 26, and the Diablo 4 expansion, Vessel of Hatred, slated for October 8. These major game releases in flagship titles supported by Icy Baines are expected to drive substantial traffic to the site at a time when its ad monetization will be at its peak.

Felicia DellaFortuna: Gross profit was 9.7 million in Q2 2024, down 35% compared to the 15 million of gross profit reported in Q2 2023. Gross margin increased from 35.2% to 66.2%. This significant margin improvement highlights the enhanced contribution and focus of our owned and operated properties' direct sales and subscription revenue to our overall revenue profile. Additionally, the increase in gross margin reflects the impact of our strategic decision to see prioritize certain represented video channels. Total operating expenses in Q2 2024 were 11.6 million, down over 50% from the year-ago quarter. This figure includes non-cache items of depreciation and amortization of 700,000 and share-based compensation of 400,000.

Felicia DellaFortuna: Additionally, the increase in gross margin reflects the impact of our strategic decision to deprioritize certain represented video channels. Total operating expenses in Q2 2024 were $11.6 million, down over 50% from the year ago quarter. This figure includes non-cash items of depreciation and amortization of $700,000 and share-based compensation of $400,000. In Q2, we achieved an adjusted EBITDA loss of $400,000, a significant improvement from the $3.4 million loss reported in Q2 of last year. This quarter's adjusted EBITDA excludes approximately $100,000 in severance costs and $200,000 in public company costs relating to incremental listing fees and D&O insurance costs, which are nonrecurring following our

Speaker Change: Gross profit was $9.7 million in Q2 2024, down 35% compared to the $15 million of gross profit reported in Q2 2023.

Speaker Change: Gross margin increased from 35.2% to 66.2%

Speaker Change: This significant margin improvement highlights the enhanced contribution and focus of our own denoperative properties direct sales and subscription revenue to our overall revenue profile. Additionally, the increase in growth margin reflects the impact of our strategic decisions to deprioritize certain represented video channels.

Adrian Montgomery: TSR, The Sims Resource, had a standout quarter, marked by the launch of several innovative product advancements, including curated bundles for paid subscribers, and the introduction of free trials for our VIP service. These free trials have driven a significant increase in conversions from new customers to paid subscribers, and they have shifted our activation metrics, with premium annual packages now making up the majority of all signups. The success of the VIP bundles, coupled with the rollout of a fresh content strategy, is further cementing TSR's position as the go-to platform for Sims fans worldwide.

Speaker Change: Total operating expenses in Q2 2024 were $11.6 million, down over 50% from the year-ago quarter. This figure includes non-cash items of depreciation and amortization of $700,000 and share-based compensation of $400,000.

Felicia DellaFortuna: In Q2, we achieved an adjusted EBITDA loss of 400,000, a significant improvement from the 3.4 million dollar loss reported in Q2 of last year.

Speaker Change: In Q2, we achieved an adjusted EBITDA loss of $400,000, a significant improvement from the $3.4 million loss reported in Q2 of last year.

Felicia DellaFortuna: This quarter suggested EBITDA excludes approximately 100,000 in severance costs and 200,000 in public company costs relating to incremental listing fees and dino insurance costs, which are non-recurring following our.

Speaker Change: This quarter's adjusted EBITDA excludes approximately $100,000 in severance costs and $200,000 in public company costs relating to incremental listing fees and D&O insurance costs, which are non-recurring following our delisting from NASDAQ and the SEC deregistration.

Adrian Montgomery: As a result, both June and July set new records for subscriber editions this year.

Adrian Montgomery: NFL Tuesday night gaming season three is designed to bring fans even closer to the gaming creators and the NFL stars they love. This season will feature a 26th episode series with a lifestyle-focused format that invites fans to explore the lives and personalities behind the helmets and headsets. Along with compelling gameplay segments that deepen the connection between viewers and the players, season three will take NFL TNG on the road, visiting key hubs across the United States where gaming and football fans intersect.

Speaker Change: Net loss and comprehensive loss was $2.9 million in Q2 2024, a substantial reduction from the $12.4 million reported in Q2 of last year.

Speaker Change: In closing, we are proud to have delivered on our commitment and sister's quarter successfully establishing a stable financial foundation that positions us for sustained growth and profits.

Speaker Change: As we look ahead, we are excited by the catalysts that lie before us.

Speaker Change: Each won an opportunity to build on this foundation.

Speaker Change: Our business is now more efficient.

Speaker Change: more calculated, and more focused than ever before. This efficiency, combined with our strategic initiatives, brings me renewed confidence and optimism in our ability to deliver substantial value to our shareholders. We are just beginning to realize our full potential, and the future holds promise for us all.

Adrian Montgomery: Our multi-year partnership with the NHL is progressing well as we prepare for its launch in the 2024-2025 season. The details of this collaboration will be announced jointly by the NHL and ourselves in the coming weeks and we're excited to bring this product to market. We've identified several synergies between our NFL and NHL programs including cost efficiencies, production synergies and complementary sales markets. This partnership will be a flagship component of our direct sales offerings and it will open doors to a roster of major existing NHL sponsors.

Speaker Change: Thank you. Operator, I kindly turn it back to you.

René Brien: [inaudible]

Speaker Change: Thank you, ma'am. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone.

Speaker Change: You will hear a prompt that your hand has been raised.

Speaker Change: Should you wish to decline from the polling process, please press star followed by the number 2.

Speaker Change: If you are using a speakerphone, please lift the handset before pressing any key.

Speaker Change: Again, should you have a question, please press star followed by the number 1.

Speaker Change: One moment please for your first question.

Adrian Montgomery: Pocket Gamer has had an exceptional first half of the year with B2B event and media bookings reaching all time highs. Despite Q2 being a traditionally slow quarter for PGC, our Dubai Game Expo Summit in May held in partnership with the Dubai government with the largest event we've ever hosted in the region, attracting over 1,350 delegates from 650 companies across 60 countries. Looking ahead, the mobile games awards at Gamescom in August, now in its seventh year, is set to be our biggest yet.

Speaker Change: Our first question comes from the line of Gianluca Tucci from Haywood Security. Go ahead, please.

Gianluca Tucci: Hi, good afternoon guys, congrats on the quick turnaround efforts. If I could just ask firstly on a revenue perspective, with upcoming activations in the second half, Q3 and Q4, I'm wondering if we've hit the bottom from a revenue perspective or if there's more...

Speaker Change: Small margin business that needs to be cut.

Speaker Change: I would say that given the timing of certain events, Q2 should be our seasonally low.

Speaker Change: quarter out of the year, and that the deprioritization of the video platform is largely included in our Q2 2024 numbers.

Speaker Change: Okay, we are all together. These are all left in Q3 Q4 relative to Q2.

Adrian Montgomery: Fantasy football scout has also been exceptionally active, recently announcing a partnership with the English Football League for our upcoming fantasy game, the Fantasy ESL. This new collaboration complements our existing relationships with the Premier League and UEFA, significantly expanding our target market. Collectively, these leagues have engaged over 16 million fantasy football players in the past year.

Speaker Change: Okay, great. Yeah, so it sounds like Q2 is a pretty good base to model from. And in terms of seasonality, how should we think about, I guess, like, you know, like new seasonality for the company going forward on a pro forma basis after all the revenue mixes changed here?

Speaker Change: We anticipate new seasonality to follow the consumer and audience consumption patterns.

Adrian Montgomery: Additionally, our premium subscription revenue saw a notable increase from April to June, largely driven by the Euro-24 campaign, even during the traditionally slower period. FFS has also launched a new app on iOS and Android, and it is enhancing its premium members area with upgraded features, including stats bomb data for the Premier League and UEFA Champions League games. Looking ahead to the 24-25 season, we're excited to announce new marketing partnerships with Sleeper and Fan Team, which will further enhance FFS's offerings and reach. And of course, the busiest time of the year for FFS is just around the corner with the Premier League season kicking off on August 17th.

Speaker Change: So Q4 should be the seasonally highest quarter with holiday shopping and certain temple events that exist in Q4.

Speaker Change: Q3 will include the start of Season 3 NFL, which is not included in our Q2 revenue numbers.

Felicia: Okay, thanks Felicia. And then just lastly in terms of gross margins, great growth there. Given...

Speaker Change: The second half should be a bit busier from a content perspective. How should we be thinking about gross margins in the second half of the year compared to where Q2 ended at?

Speaker Change: We showed a gross margin list from Q2 2024 versus Q1 2024, and I think that step up

Adrian Montgomery: These advancements across key products were instrumental in achieving the record-adjusted EBITDA numbers we reported for Q2.

Speaker Change: Especially as we continue to make the shifts that we have and focusing on our owned and operated properties is a pretty.

Adrian Montgomery: The journey to this milestone was challenging. When I returned in January, we were facing significant obstacles, declining subscriber numbers, rising costs, and struggling programmatic and direct sales, efforts. The company was also grappling with limited cash flow with only $1.9 million remaining at the end of Q1. Despite these difficulties, our management team remained confident and focused. We knew our communities were strong and engaged, and that Enthusiast Gaming is firmly rooted in an exciting industry with a unique value proposition. Gen Z and Gen Alpha spend substantial time with us, actively interacting with the content and experiences we provide, and this is a tremendous and rare asset.

Speaker Change: Ann.

Speaker Change: Usable step up as we expect sequential improvement quarter over quarter.

Speaker Change: Thank you.

Speaker Change: Again, ladies and gentlemen, just a quick reminder, should you have a question, please press star followed by the number one on your touchstone phone.

Speaker Change: We have our next question coming from the line of Matthew Moss from B-Valley Securities. Go ahead, please.

Matthew Mod: Hi, good afternoon. Thanks for taking my questions.

Matthew Mod: I was just wondering, can you elaborate on the significant performance improvements seen across your network due to the outsourcing of your AdTech stack to PlayWire? Is this primarily better yield optimization and higher CPMs, or how would you characterize that?

Matthew Mod: [inaudible]

Speaker Change: So being able to partner with Playwire gave us the opportunity to enact certain things that we thought were going to be best both for overall yield as well as audience engagement.

Speaker Change: And we were able to do that faster in having a partner like Playwire across all of our individual sites.

Speaker Change: So the changes that we were able to make in the short time frame of Q2, where we were only live in Q2 about a month and a half, and so we started the transition mid-May 2024, we were able to increase viewability of certain ad units.

Adrian Montgomery: This was a strategic investment from a supportive partner that has significantly strengthened our financial position and enhanced our liquidity. This crucial boost combined with our stabilized P&L ensure that we are well funded and ready for future growth, with our financial footing firmly established, Enthusiast Gaming is excellently positioned to capitalize on the numerous opportunities and catalysts ahead of which there are many.

Speaker Change: We were able to increase density across our apps and websites. And with all of that and being able to consolidate

Speaker Change: across one ad tech stack platform. Our owned and operated sites got the benefit of yield in the great being part of the greater ecosystem of enthusiast gaming.

Adrian Montgomery: It is these upcoming catalysts that renew my confidence in our future. If we were able to establish a baseline of near break even in Q2 despite the quarters disadvantages, imagine the possibilities as we build on this foundation. What happens when the second half seasonality boosts our programmatic and direct sales? What happens when season three of NFL TNG and our NHL program both return to the air bringing along their associated direct sales partners?

Speaker Change: Great, okay, thank you. That was really helpful. And I'm not sure if you broke this out in your release, but I was wondering how much of video programmatic was included in your 2Q results and what level we can expect going forward?

Speaker Change: Video, programmatic, and our Q2 results was at around 3 million.

Speaker Change: [inaudible]

Speaker Change: And so we will, we do expect that to lower in Q3 2024 and Q3 2024 to be the the base point going forward.

Adrian Montgomery: What happens when our major pocket gamer events in Helsinki in Q3 and London in Q1 return? How significantly can these contribute to profits? With our enhanced liquidity now giving us greater operational flexibility, the potential is huge. Consider the impact of our management teams renewed focus, the ramp up of our seven new direct sellers added in Q2, the continued optimization of our new ad tech stack and the coming major game releases which will further boost our key properties. I'll tell you what happens. Each of these elements will build on our solid Q2 baseline setting us up for a series of increasingly strong quarters.

Adrian Montgomery: With this baseline in place and this pipeline of catalysts, I once again feel like we are just getting started.

Speaker Change: in terms of like a forecast or something like that?

Speaker Change: Yeah, yeah, just in terms of estimates, I mean, you know, you hit a great record quarter of adjusted EBITDA. I was just wondering, in terms of going forward in 2025, you know, what do you expect?

Speaker Change: Look, I think that- [inaudible]

Speaker Change: While we don't issue guidance, I think

Speaker Change: We have hit a milestone in Q2.

Speaker Change: And as I said last quarter, with the

Felicia DellaFortuna: 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. As Adrian mentioned, we made a deliberate strategic shift to focus on our most engaged, owned communities and the revenue streams they generate.

Speaker Change: Reconstruction of the financial profile of the company.

Speaker Change: It is, you know, the question of our ability to deliver scalable,

Speaker Change: Profitability is now a mathematical question that's not an aspirational.

Felicia DellaFortuna: This approach delivered in Q2 2024 where we saw a dramatic improvement in our financial performance are adjusted even in lost narrowed to just $400,000, a $3 million improvement over last year and a $1.4 million improvement over Q1 2024, setting a new record for the company. We are confident in our path to a sustainable and profitable future and the second quarter results underscore this momentum. We achieved an operating expense structure that was 13 million lower than the same period last year and 4 million lower than Q1 2024, reflecting the full impact of the operational efficiency measures implemented in March.

Speaker Change: question. And so what I mean by that is, and I think this was pointed out in the release,

Speaker Change: A year ago, we were a company [inaudible]

Speaker Change: Trying to build scale at a 35% gross margin and today we're a company trying to

Speaker Change: Executing Build Scale at a 66% gross margin. I much prefer that situation.

Speaker Change: than the former. And so what I would say is, given this milestone,

Speaker Change: The challenge and the mandate for management is to reinvigorate growth into the DNA of this company and that growth

Speaker Change: comes at

Speaker Change: You know, 66 cents.

Speaker Change: of every dollar to the bottom line. So that hard work's been done, and the next iteration in 25 in the balance of this year is to reinvigorate scalable growth at high margin to this business, which is why you're hearing optimism and confidence in our voices.

Felicia DellaFortuna: Our gross margin surged to over 65 percent up from 35 percent in Q2 2023 and we improved our margin by a further 586 basis points compared to Q1. By concentrating on owned and operated properties, we saw a 71 percent increase in our PN across web properties in Q2 2024 relative to Q2 2023 and we made significant strides in adgencity and viewability yielding a month over month revenue increase of 35 percent in May even with only partial integration of playwire and a further 51 percent month over month increase in June as the majority of our sites came on to the new platform.

Speaker Change: And I would also add that Q1 2025 will have a harder comp because a lot of the changes started in Q1 2024.

Speaker Change: and so, in terms of comparisons, I expect Q2 2025 to be a clean comparative point relative to Q2 of this year and one where we can start to really deliver financial results.

Felicia DellaFortuna: We are also seeing strong progress in our non-financial metrics highlighting the overall health and sustainability of enthusiastic gaming and the positive trajectory of our highly engaged communities. We maintained our PHB traffic from Q1 2024 which was approximately 20 percent higher than Q4 2023 even without the seasonal lists on sites such as U.G, while also successfully integrating playwire across the vast majority of our sites. Excluding the video platform, we increased unique visitors year over year by over 30 percent while maintaining time spent on site resulting in a 26 percent increase in total time spent in Q2 2024 compared to Q2 2023 despite vaping out certain represented sites as part of our focus on profitability. We revitalized the Sims resource, increasing subscriber counts in June after four months of stagnation. This growth continues through July and August.

Speaker Change: Alright, great. Yeah, thank you so much for taking the time to answer my questions and congrats on the big milestone.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Kevin Krishnaratne from Scotiabank. Go ahead, please.

Kevin Krishnaratne: Hey, good afternoon. Question on the top line on the direct sales deals. Can you remind me, in Q1 I think there were some deals or campaigns that you thought were going to land in Q1 that you figured would come in Q2 or later. Did any of those land or are those still to come in the coming quarters?

Speaker Change: Still to come in the coming quarters.

Speaker Change: Okay, good stuff. And then, just again on the top line.

Speaker Change: I'm wondering, you talked about some of the strength in a bunch of new logos coming on board. Anything to note there in terms of new verticals popping up that you may be getting stronger demand from relative to prior years? One I'm thinking of, I can't remember.

Felicia DellaFortuna: We also successfully insourced our production capabilities and launched our first special episode of NFL Tuesday Night Gaming on July 23rd featuring our new on-the-road content strategy at the NFL Flag Championship. The episode garnered over 300,000 views, 60,000 watchhours and an average viewer duration of over 10 minutes. The debut episode of Tuesday Night Gaming on September 3rd will showcase household names from the NFL including Karen Williams, running back for the Los Angeles Rams and fan favorite Madden superstar Matthew MMG-Megar.

Speaker Change: How much political spend you might see or might benefit from election cycles? Just any thoughts you can give there on different verticals.

Speaker Change: Yeah, so I think there's a number of key things that have happened and are happening right now. Certainly, in my remarks, Kevin, I highlighted McDonald's and Coca-Cola. For companies like ours, it takes years.

Speaker Change: to get an I.O. from a Coca-Cola or a McDonald's.

Speaker Change: And to get into their ecosystem, it is a very, very challenging process. And so, to be able to nab

Speaker Change: Companies like those as partners and clients.

Felicia DellaFortuna: In respect of our more detailed financials, I was first noticed that our results are presented in Canadian dollars. The significant majority of our revenues make sense with our measured in US dollars and are translated into Canadian dollars for presentation in our financial statements. The exchange rate between the US dollar and our presentation currency of the Canadian dollars should be monitored and considered when analyzing our forecasting results.

Speaker Change: for the very first time is extremely significant. These are the most sophisticated media buyers on planet Earth.

Speaker Change: And so we're very encouraged by that. We're encouraged, I think in previous calls.

Speaker Change: You know, going back 12 months, we would have talked about the impact of actor strikes and

Speaker Change: The slowdown in Hollywood, you know, in Q2 this year, we had the return of a number of entertainment brands to enthusiasts.

Speaker Change: Paramount, Disney, Warner Brothers, Universal Pictures.

Felicia DellaFortuna: Turning to the financial results for the second quarter, we ended the quarter with 2.2 million in cash as of June 30th 2024 and the networking capital efficiency of 36 million consistent with the figure reported at December 31st 2023. The majority of this deficiency stems from 22 million in current debt related to our credit facilities and 3.5 million in contract liabilities or deferred revenue to be recognized in future periods with the remainder being ordinary course working capital items. However, we have successfully strengthened our balance sheet post quarter with the 20 million dollar term loan bringing the company to a strong positive working capital position net of the current debt.

Speaker Change: We've done multiple activations with Amazon, which is one of the things I'm most excited about.

Speaker Change: and...

Speaker Change: You know, we've been part of the promotion for some of the most successful movies of the year, including Fall Guy, Kingdom of the Planet of the Apes, Inside Out 2, probably the biggest movie of the year.

Speaker Change: and Invisible Friends. So those, the return of entertainment, cracking Coca-Cola and McDonald's, and yeah, we are in an election cycle this year. There's been a lot written about the importance of the Gen Z vote to both.

Speaker Change: Republican and Democratic campaigns. We have already received sizable RFPs.

Felicia DellaFortuna: Now to our T&L. For the three months ended Q2 2024, revenue totaled 14.7 million a 65 percent decrease compared to 42.6 million in Q2 2023. Media and content revenue decreased from 36.9 million to 10.6 million a 71 percent reduction or 26.3 million. The primary driver behind this decline with our strategic decision to deprioritize lower margin revenue on our video platform which accounted for approximately 20 million of the 26 million dollar decrease in media and content revenue.

Speaker Change: in that arena, and so those are three pretty good bellwethers from a direct sales perspective.

Speaker Change: Good stuff, love to hear that. The final question I'll just ask you is on the OpEx base. Felicia, can you remind us, is this a good base to use in the Q3, or I'm curious about the commentary that you made on ramped sellers, do those

Speaker Change: Increase in Q3, did they, you know, can you talk about like how big the direct sales staff is right now and you know your plans on...

Felicia DellaFortuna: Additionally, direct sales contributed to the year prior to client decreasing from 8.7 million in Q2 2023 to 4.1 million in Q2 2024. A reduction of 4.6 million or around 50 percent largely due to having half the number of grant sellers versus the year ago period. However, despite these decreases, net revenue retention for direct sales deals over 50,000 remained consistent at around 60 percent. 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.

Speaker Change: that unit going forward. Just any thoughts? Just on both the OPEX base going forward here and then just your direct seller's structure. Thanks.

Speaker Change: So in Q2 2024, it did not include any content spend associated with either the NSL or the NHL, and so we do anticipate

Speaker Change: Increases in Q3 and Q4 in OPEX associated with the launch of those two in the back half, but not a material increase.

Felicia DellaFortuna: Said another way, there is a healthy base of large recurring customers to continue to generate a significant portion of our direct sales revenue. This gives us a foundation of repeat business from which to grow. While revenue retention remained consistent, the number of new logos decreased year over year due to a reduced number of grant sellers from the year ago period. However, looking at head to Q3 2024, we have successfully increased our seller count with more grant sellers in Q3 2024 than Q1 of this year.

Speaker Change: quarter over quarter as we focus on profitability and then with the with the addition of the ramp sellers so

Speaker Change: We are, you know, at the end of QT, we were at about half of the sellers relative to the year-ago period, and so adding seven sellers will slightly increase the seller count.

Speaker Change: versus where we were in 2023, which we are excited about in terms of investment. But that should also not be a material driver of the operating expense in Q3-Q4.

Felicia DellaFortuna: We are also excited about the new and returning logos we're seeing in Q3 2024, including major brands such as Donalds, Amazon, State Farms, Serginso, and Whitecloth. The remainder of the decrease in median content revenue is attributable to a decrease in programmatic web revenue, primarily driven by fewer page views. This resulted from a more selective approach to a represented site, instead improving overall profitability. This focus led to a 71% increase in RPM in Q2 2024 compared to Q2 2023, which substantially offset the loss in page views.

Speaker Change: Got it. So just to be just to get again you at the end of Q2 or in Q2 you had half the number of sellers as of at the end of Q3 but that'll go up by seven sequentially?

Speaker Change: Correct.

Speaker Change: Got it. Okay, that's it for me. Thanks again.

Speaker Change: Thank you.

Speaker Change: Thank you. This does conclude the Q&A portion of today's conference, ladies and gentlemen. This concludes your conference call for today. We thank you for participating and ask that you please disconnect your line. Have a lovely day.

Felicia DellaFortuna: E-sports and entertainment revenues decreased by 700,000 year-over-year from 1.7 million in Q2 2023 to 1 million in Q2 2024, primarily due to a shifted event timing. And finally, subscription revenue decreased by 900,000 or 23% from 4 million in Q2 2023 to 3.1 million in Q2 2024, primarily due to the sale of certain non-core non-profitable assets under addicting games on April 15, 2024. Gross profit was 9.7 million in Q2 2024 down 35% compared to the 15 million of gross profit reported in Q2 2023.

Speaker Change: [music]

Felicia DellaFortuna: Gross margin increased from 35.2% to 66.2%. This significant margin improvement highlights the enhanced contribution and focus of our owned and operated properties direct sales and subscription revenue to our overall revenue profile. Additionally, the increase in gross margin reflects the impact of our strategic decision to see prioritize certain represented video channels.

Felicia DellaFortuna: Total operating expenses in Q2 2024 were 11.6 million down over 50% from the year ago quarter. This figure includes non-cache items of depreciation and amortization of 700,000 and share-based compensation of 400,000. In Q2, we achieved an adjusted EBITDA loss of 400,000, a significant improvement from the 3.4 million dollar loss reported in Q2 of last year. This quarter suggested EBITDA excludes approximately 100,000 in severance costs and 200,000 in public company costs relating to incremental listing fees and dino insurance costs, which are non-recurring following our

Q2 2024 Enthusiast Gaming Holdings Inc Earnings Call

Request a DemoDemo

EGL

Enthusiast

Earnings