Q4 2024 Enthusiast Gaming Holdings Inc Earnings Call

March 31, 2025

Speaker Change: Hello and welcome to the Enthusiast Gaming Holdings Court Quarter 2024 Financial Result Conference call.

Speaker Change: Open to Spence will be in list 99. Should you need a suspense, please signal a conference specialist by requesting the stock yeet followed by Zara.

Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question you may press star then one on your telephone keypad.

Speaker Change: and to withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to JB Elliott, Chief Strategy Officer and General Counsel. Please go ahead.

JB Elliott: Thank you operator. Good afternoon everyone and welcome to the Enthusiast Gaming fourth quarter and year-end 2024 results conference call.

I'm J.D. Elliott, Chief Strategy Officer and General Counsel.

JB Elliott: With me today is interim chief executive officer Adrian Montgomery and our chief financial officer Alex Mcdonald.

JB Elliott: Well, 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 Such statements involve known and unknown risks on certainties 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 months and year ending December 31st, 2024, which are available under the company's profile on Cedar Plus as well as on the company's website at enthusiastsgaming.com You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this presentation.

Speaker Change: 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.

Adrienne Montgomery: Thank you, JB, and thank you everyone for joining us on today's fourth quarter and full year of 2024 Earnings Call.

Adrienne Montgomery: I'm pleased to report that Enthusiast Gaming closed out the year with strong momentum and a business that has been fundamentally rebuilt for long-term success.

Adrienne Montgomery: Before I begin, I want to take a moment to officially welcome back Alex Mcdonald as our Chief Financial Officer.

Alex previously served as our CFO for over four years.

and rejoin the company on January 1st.

Adrienne Montgomery: He knows the business inside and out as he was our first ever employee.

and he brings deep financial and operational expertise.

Welcome back Alex.

Adrienne Montgomery: 2024 was a transformative year for Enthusiast Gaming. We undertook a deliberate refocusing of our business to emphasize what we own and what we operate and to eliminate lower Marching segments and their associated operating costs.

Adrienne Montgomery: Our deep prioritization of the video network and third party web network accounts for the majority of our top line revenue declines.

But this was a strategic trade-off.

We significantly reduced our operating expenses.

Adrienne Montgomery: improved their cost structure and re-centered the business around efficient, high-margin growth.

The result, a dramatic improvement in adjusted EBITDA.

Adrienne Montgomery: In Q4 2024, adjusted EBITDA, improved meaningfully, coming in at 1.9 million compared to a loss of 3 million in Q4 2023.

A $4.9 million swing toward and into profitability.

Adrienne Montgomery: We reported revenue of 17.8 million for the quarter, down from 47.1 million in Q4 of the prior year.

Adrienne Montgomery: and at a significantly higher gross margin, 76% compared to 40% in Q4 of 2023, which is a testament to the strength of our core-owned and operated assets and focus monetization strategies.

Adrienne Montgomery: While Revenue was lower year over year, the profitability of our core operations and cost structure improvements have fundamentally changed the quality of earnings.

Adrienne Montgomery: Operating expenses saw a significant reduction with cash-based quarterly optics down by over $10 million year-over-year in Q4, reflecting discipline cost management and our streamlined focus.

Adrienne Montgomery: On a full year basis, we reported 73 million in revenue in 2024 down from 178 million in 2023 almost entirely due to the deprioritization of the low margin network revenues.

Adrienne Montgomery: However, our adjusted EBITDA improved over 12.8 million from an adjusted EBITDA loss of 13 million in 2023 to an adjusted EBITDA loss of only 153,000 in 2024.

Adrienne Montgomery: Excuse me, which doesn't account for the normalization of the structural changes made throughout 2024. These results reinforce the quality of our go-forward earnings and the sustainability of our refocused business model.

Looking ahead.

to 2025.

Adrienne Montgomery: We are confident in the strength of our gross margins, which we expect to be similar to those achieved in 2024, and maintain our commitment to cost discipline, each of which is a result of the increased efficiency of our monetization model.

Adrienne Montgomery: With support from our playwire partnership, our programmatic revenue is delivering higher yield with lower costs across our owned and operated properties.

and with our subscription products once again gaining momentum.

Adrienne Montgomery: We're seeing more revenue flow directly to the bottom line. That means one thing.

The next step is audience expansion.

Let me be clear, our goal for 2025 and beyond.

is to spend more time with more gamers.

Adrienne Montgomery: This vision, while simple, informs everything we do, from product development to content strategies to how we engage our advertising partners.

Adrienne Montgomery: We serve gamers anytime and anywhere. We entertain them. We inform them. We give them tools to make them better.

Adrienne Montgomery: and that serving of gamers happens through our communities, content creators and experiences.

These four pillars represent the foundation of our ecosystem.

Adrienne Montgomery: and we believe that with an efficient and effective monetization model in place, deepening engagement across our properties.

is the path to lasting value.

Adrienne Montgomery: Let's talk about some of the standout assets powering the success.

Adrienne Montgomery: The Sims Resource had a strong Q4, adding thousands of paid subscribers and ending the year up year over year in subscriber counts, versus December 31st, 2023, despite first half

Adrienne Montgomery: That trend has continued into 2025, with TSR consistently setting new all-time highs for paid subscribers each week.

Adrienne Montgomery: Major product updates are planned for this year, which we believe will take T.S.R. to even greater heights, including its engagement and paid subscriber base.

Adrienne Montgomery: ICV's had an excellent year in 2024, closing Q4 with a strong performance.

Adrienne Montgomery: The site benefited from macro tailwinds like World of Warcraft, the war within expansion in August .

and Diablo IV's vessel of hatred release in October .

Adrienne Montgomery: These combined with an extraordinary effort from the IEC team to expand its coverage across new game titles and deepen its engagement with users through interactive tools.

Drone Record Results

Adrienne Montgomery: with coverage for three new titles already launched through Q1, including a highly successful expansion into Monster Hunter Wilds, which has seen immediate returns for the property.

Adrienne Montgomery: IC has already significantly up year over year and with more expansion modernizations and feature improvements planned throughout 2025 we're confident in another great year ahead.

Adrienne Montgomery: U.GG continued to deliver value for players and advertisers alike.

in 2024 through a best in class product.

2024, Sayu Gigi

Adrienne Montgomery: expand into three new titles, including the Riot Title Teamfight Tactics, the Breakout Success that's Hell Diverse 2, and a Q4 launch of coverage for Deadlock.

Adrienne Montgomery: a highly anticipated first-person MOBA from Valve, while also significantly growing its user base in its proprietary desk-hawk applications for legal legends and valorants.

Adrienne Montgomery: where user retention, engagement, and monetization see drastic improvements versus the website property.

Adrienne Montgomery: Both game title expansion and app conversion remain key and necessary drivers of 3U.GG with six more title expansions planned over the coming quarters.

Adrienne Montgomery: These titles include the latest gaming success story Marvel rivals, which I'm pleased to announce is gone live today, as well as the soon to be free to play Rainbow Six Siege and the highly anticipated Riot Fighting Game 2X Kale.

Adrienne Montgomery: Turning to our Pocket Gamer brand, 2024 was a standout year from Pocket Gamer Connect.

Adrienne Montgomery: Our flagship events in London and Helsinki set new records, and we're expanding in 2025 with three new events, Barcelona and June , Shanghai and July , and another major Southeast Asia event to be announced soon.

Meanwhile, pocketgamer.com, the consumer-focused web companion to our event business.

Adrienne Montgomery: Doubleder's traffic over the course of 2024 and continues to grow as the go-to destination for mobile game news, guides, tear lists, and reviews. We are extremely bullish on both the B2B and consumer growth potential of the Pocket

Adrienne Montgomery: We also made an important strategic decision to sunset our NSL Tuesday night gaming program at the end of 2024.

Speaker Change: While the show made significant waves over its three seasons, we are proud to have shown the industry the art of the possible.

Adrienne Montgomery: at the crossroads of sports and gaming. The economic realities were ultimately clear.

Adrienne Montgomery: The cost structure was high, and thus required significant sponsorship commitments on a more rigid template, which didn't always fit our goal, giving our direct sales clients the access to gaming audiences that they need, but in the budgets, mediums and timing that they want.

The final episode of NFL TNT aired in February .

and the program is now non-recurring.

in these financial results.

Adrienne Montgomery: Going forward, we will focus on a built-in sold model for custom content, a more flexible and profitable approach that aligns better with our customer's needs.

Adrienne Montgomery: This year's version of rising stars has already generated over 300 pieces of content and as well surpassed 300 million impressions. We're building on our production expertise and creative capabilities with a model that protect and enhance its profitability.

Adrienne Montgomery: Although delayed by the law fire our partnership with the NHL also continues.

Adrienne Montgomery: On a timeline that works for all parties for ourselves our sponsors and the league.

Adrienne Montgomery: And with a model that allows more flexibility to align costs with revenues unsold throughout the soaps.

Adrienne Montgomery: As a result, we have reset the timeline with the NHL to run concurrently with the NHL 2025, 26 season, and we are focused on ensuring that the show aligns with sponsor expectations and runs profitably at all times for the company.

Adrienne Montgomery: 2024 was also a year of transition for the direct sales team and yet we ended the year with some encouraging momentum.

Adrienne Montgomery: Amazon was our largest direct sales clients in 2024.

Adrienne Montgomery: Their size and their sophistication. This is a promising indicator of the effectiveness.

Adrienne Montgomery: Of our offerings. They have already returned for more business with us in 2025.

Adrienne Montgomery: Lego State farm and Toyota are also consistent repeat customers through 2024, and now into 2025 also reflecting satisfaction with our offerings by very notable global brands.

Adrienne Montgomery: And finally Ford became a new client in early 2025, and we welcome. The addition of this incredible company to our automotive vertical.

Adrienne Montgomery: We believe this.

Adrienne Montgomery: This is a testament to our improved go to market approach stronger sales materials and the value of our creator and content ecosystem.

Adrienne Montgomery: Stepping back we.

Adrienne Montgomery: We are proud of where we are today.

Adrienne Montgomery: We now have a business model that is profitable high margin and focused on owned and operated properties that we control and scale.

Adrienne Montgomery: Our monetization is efficient or costs are predictable and we are in a strong position to grow.

Adrienne Montgomery: With the foundation firmly in place we are shifting our focus to audience growth across our ecosystem.

Adrienne Montgomery: And importantly, we are operating in a global landscape that continues to validate.

Adrienne Montgomery: Our industry model.

Speaker Change: According to Pwc gaming.

Speaker Change: Gaming remains one of the fastest growing segments in the global entertainment and media industry and.

Speaker Change: And we are well positioned to benefit from that tailwind.

Speaker Change: Additionally, digital advertising is expected to capture over 60% of all AD spend by 2026 according to dentsu.

Speaker Change: With gaming content and creators continuing to command premium value for reaching high intent brand safe audiences.

Speaker Change: Our platform sits squarely at the intersection of these trends.

Speaker Change: As both the media and technology company focused on gaming.

Speaker Change: We are uniquely positioned to monetize this growing attention and scalable and profitable ways.

Speaker Change: In summary.

Speaker Change: Enthused gaming was emerging from its transition in 2024 with.

Speaker Change: With real momentum and a clear vision, we have rebuilt the company with discipline focus and an unwavering commitment to scalable and profitable growth.

Speaker Change: 25 is shaping up to be a year of expansion in both audience and profitability.

Alex McDonald: Thank you to our stakeholders, our partners and our communities for their continued support I will now turn the call over to Alex for a closer look at the financials Alex.

Okay.

Alex McDonald: Thank you Adrian.

Alex McDonald: I'm pleased to be back and enthusiast gaming into rejoined the earnings call in my role as Chief Financial Officer.

Alex McDonald: Having previously served as CFO for over four years I know this business well I'm also pleased to once again be working with an exceptional and hard work and finance team and with our SVP Finance Nathan Teal.

Alex McDonald: And it has been especially rewarding to return at a time, when we're seeing such meaningful financial progress across the organization.

Alex McDonald: 24 marked a turning point for the company, we exited many lower margin lines of business and streamlined our cost base and concentrated our efforts around what we own and what we operate.

Alex McDonald: These decisions led to substantial improvements in our financial profile, notably in the significant reductions in operating expenses and the significant increase in gross margin, bringing the company to what is now consistent recurring profitability with a momentum we are ensuring continues through 2025.

Alex McDonald: And this momentum is underpinned by a healthy monetization structure with higher yields and higher margin coming out of our programmatic streams and through our partnership with play wire.

Alex McDonald: Scriber is a currently climbing rapidly.

Alex McDonald: And our events business is expanding to new locations globally.

Alex McDonald: As we focus on growing these revenue streams and of course, our direct sales incremental revenue now comes in that over 70% gross margin, which combined with our efficient and lower cost structure leads to a continued path towards additional leafs and adjusted EBITDA in 2025.

Alex McDonald: In respect of our more detailed financial results I would first note that our results are presented in Canadian dollars. The significant majority of our revenues and expenses are measured in U S dollars and are translated into Canadian dollars for presentation in our financial statements. The exchange rate between the U S. Dollar in our presentation currency of the Canadian dollar should be monitored.

Alex McDonald: And considered when analyzing our forecasting results.

Alex McDonald: Additionally, it's important to note that the historic financial results for the year end 2024, do not yet fully reflect the changes in revenue mix as well as cost reductions enacted throughout the year and therefore may not bear a strong resemblance to future results now let's speak about the numbers total revenue in Q4 was $17 8 million.

Alex McDonald: Which is down from $47 1 million in Q4 2023. The breakdown of Q4 revenue was as follows media and content revenue was $12 8 million down from $42 6 million in Q4 2023, primarily due to the de prioritization of the low margin Omnia video network E Sports and entertainment revenue was $2 million in Q4.

Alex McDonald: Up from $1 2 million in Q4, 2023, primarily driven by increased event revenue part of this increase relates to the pocket Gamer connects Helsinki event being held in Q4 of last year and being held in Q3 of 2023.

Alex McDonald: <unk> revenue was $2 9 million down from $3 3 million in Q4, 2023, primarily due to the sale of certain legacy casual gaming assets under the addicting games portfolio paid subscribers with 238000 as at December 31, 2024 down from 268000 as at December 31 2023.

Alex McDonald: Due to the sale of the legacy assets, but up from 234000 as of September 32020 for the majority of subscription revenue is sourced from the Sims resource web property paid subscribers and the <unk> resource had periods of decline during 2024, but were fully recovered and up.

Alex McDonald: Year over year as of December 31, and have continued to increase subsequent to year end.

Alex McDonald: The revenue decline, our gross margin improved significantly to 76% up from 40% in Q4 2023. This is largely due to the mix shift in revenue as revenues from owned and operated properties now make up the majority of media and content revenue and events and entertainment and subscription account for an increased percentage of overall.

Alex McDonald: Revenue with those two categories combined accounting for approximately 28% of revenue in Q4.

Alex McDonald: Quarterly cash based operating expenses decreased by over $10 million year over year in Q4.

Alex McDonald: Your savings across effectively every line item, but primarily driven by decreases of $4 1 million in salaries and wages $2 million and technology support web development and content and $2 million in consulting.

Alex McDonald: This new cost structure in Q4 more accurately accurately represents the go forward operating expenses the company with additional cost savings expected in 2025.

Alex McDonald: Adjusted EBITDA was $1 9 million compared to a loss of $3 million. In Q4 2023. This represents a $4 9 million swing into profitability and is our strongest quarterly EBITDA performance in company history. Adjusted EBITDA includes an adjustment for the discontinuing of NN.

Alex McDonald: <unk> T N G. A $2 5 million in Q4 were the same adjustment made in Q4 2023, the year over year improvement in quarterly adjusted EBITDA would still be $3 $7 million in Q4.

From a balance sheet perspective, we ended the year with $4 8 million in cash working capital. Excluding current portion of long term debt current portion of deferred payment liability and contract liabilities. Our deferred revenue was positive approximately $3 3 million current portion of long term debt includes 24.

Alex McDonald: Of amounts under the credit facility, which are not due until July 2028, what are presented as a current liability as of December 31, 2024, due to the company not being in compliance with certain covenants under the facility current portion of long term debt also includes $18 5 million of amounts under the term.

Alex McDonald: Credit and operating credit facilities provided through the commitment letter, which are currently set to mature in June of 2025.

Alex McDonald: The company is working closely with its lenders to amend the terms of each of these facilities, including with an intent to extend the maturity dates under the commitment letter and to amend the covenants to reflects the current operating structure and expected performance for 2025 and beyond.

Alex McDonald: We made consistent principal payments throughout the year, which not only reduce debt, but also reduced interest burden.

Alex McDonald: While continued efforts are needed to secure a long term solution for the debt side of the cap table a significant portion of our debt servicing costs are driven by principal repayments.

Alex McDonald: Our accounts payable and accrued liabilities also decreased meaningfully in 2020 for improving our working capital position and balance sheet flexibility.

Alex McDonald: Looking ahead to 2025.

Alex McDonald: We do expect to maintain high gross margin similar to the levels achieved in 2024 additional operating efficiencies are already being realized in Q1, including savings from the conclusion of NFL Tuesday night gaming, which we which will be realized in the technology supported web development and content expense line.

Alex McDonald: We are investing an additional ramp sellers in 2025 and 2024 due to significant turnover at the start of the year and the refocusing of the business in the first half the company had on average 40% less ramped sellers than in 2023 in the second half of 2024 and in early 2025 the company at.

Alex McDonald: Added new seller head count with a goal to achieve an average ramps stellar head count in 2025, which approaches 2023 levels.

Alex McDonald: We also have a number of exciting product advancements across our owned and operated properties. Our monetization structure is now highly efficient with improved programmatic yield rising subscriber conversion rates and reduced churn as we reinvest in growth through game title expansion on platforms like icy veins and UGG new content in that.

Alex McDonald: <unk> investments and strategic referral partnerships. We believe we are positioned to significantly grow our audience and every new user we acquire we can monetize more effectively than ever before GSR continues to set subscriber records and we believe our upcoming product advancements there will allow us to capture an even larger share of.

Alex McDonald: Its category and potentially expand <unk> target audience beyond players of the Sims game titles.

Alex McDonald: We are also mindful of the broader economic environment. While there is a broad consensus that digital advertising will be strong in 2025, particularly with firmer CPM is returning to the market. There is some caution around the potential impacts of tariffs, especially in the north American market, which remains our largest.

Alex McDonald: We are watching this closely currently we are seeing Cpm's finished Q1, and a reasonably strong position and any further growth in CPM that does materialize. This year will only be incremental to our own success and profitability.

Alex McDonald: We will continue to focus on cash flow disciplined resource allocation and enhancing the profitability of every dollar we generate profitable revenue growth is again, a key focus for the company in 2025. It is being pursued in ways that protect our margins and drive long term value.

Alex McDonald: In closing 2024 was a year of refocusing for enthusiast gaming and a successful one we've dramatically improved our cost structure sharpened our revenue mix and demonstrated our ability to operate efficiently at scale with these achievements behind US. We are now fully focused on turning that efficiency into growing and lasting.

Alex McDonald: Profitability and ultimately.

Alex McDonald: This is the pathway to outsized returns with a stable high margin monetization engine in place our focus turns to growing our audience by scaling across more game titles launching major product improvements expanding our reach through Seo content and partnerships and capturing more user attention Indeed, our mission.

Alex McDonald: Is to spend more time with more gamers and with every new audience member, we increase our monetization potential through programmatic ads, we paid subscriptions and increasingly through our once again growing direct sell down.

Alex McDonald: Our ramping up of the direct sales team means this high value revenue channel. Once again has the opportunity to become a meaningful contributor to top line growth with this foundation. There is a structure in place for efficient growth and increasing EBITDA contribution at scale for our business and of course.

Alex McDonald: Yes.

Alex McDonald: Ladies and gentlemen, our business is the business of gaming.

Alex McDonald: Thank you operator, I kindly turn it back to you.

Alex McDonald: Thank you we will now begin the question and answer session asked a question you May Press Star then one on your telephone keypad. Okay. You open a speaker phone please pick up your home for Perkin Lucky.

Alex McDonald: Which are your question please press fathom.

Speaker Change: The first question comes from Robert Young from Canaccord Genuity. Please go ahead.

Robert Young: Hi, Good evening you noted.

Concluding Q1, and with a positive CPM trend.

Speaker Change: Just thought can you give us a sense of.

Speaker Change: The top line should we assume normal seasonality or would the NFL NHL programs have.

Speaker Change: Challenge that normal negative seasonality in and then Ken EBITDA remained positive. Despite the end of the NFL Tianjin contract, maybe if you could give us some broad thoughts on where Q1 would be topline and EBITDA positive.

Alex McDonald: Sure Hi, Rob Alex here.

Speaker Change: I'll start with CMS.

Speaker Change: Yes.

Speaker Change: Really strong uptick in Q1, but yes, absolutely normal annual seasonality at play certainly decrease from Q4 as would be expected.

Speaker Change: But what I like to see.

Speaker Change: There is also seasonality inside the quarter that happens every quarter as well and we saw a nice pattern through the back half of March.

Speaker Change: Which maintains my optimism.

Speaker Change: For pharmacy Pms this year.

Speaker Change: <unk>.

Speaker Change: For the rest of the year I mean, we're we're we're still bullish and I note that the broad consensus has been firmer CPM.

Speaker Change: But a little cautiously optimistic there I still anticipate some growth year over year in this from CPM.

Speaker Change: And of course, we're cautiously optimistic with the broader macro environment, where we are affecting change there is as is driving audience and our auto.

Speaker Change: And that's where we have the most power to affect change.

Speaker Change: We're investing their SCO content partnerships product advancements game tile expansions, we're using those to bolster audience. Because we are seeing increased yield with our partnership with play wire.

Speaker Change: So it's the next natural move is to increase audience as far as sort of a direct sales with NFL.

Speaker Change: The impacts there.

Speaker Change: Obviously cost savings.

Speaker Change: Certainly they're the adjustment as provided in the MD&A.

That that.

Speaker Change: Savings will be focused on the technology and content online.

Speaker Change: Would suggest that the it would look more similar to a Q3 run rate and then a Q4 before before the show really started to ramp there were two episodes that did air in Q1.

Speaker Change: It will look more similar to our Q3 run rate for that line than Q4.

Speaker Change: And generally a.

Speaker Change: Look see Theres a lot of seasonality at play.

Speaker Change: Annabel, we will have some of course, turning off will have some direct sales impact.

Speaker Change: For Q1, but the clients are back some of our largest drag.

Speaker Change: NFL TNG sponsors are back this year and they are still found the orders they're shopping in the other areas of our portfolio of their shopping and custom content with luminosity, they're buying our display ads they are buying our video ads.

Speaker Change: So where we're pleased to see that it has has little impact on the sponsors they're still backyard enthusiast game in placing their orders for the year, but I would expect some short term impact to direct sales in Q1.

Speaker Change: Which naturally comes with seasonality as well.

Robert Young: Or is there more to the question Robert did I did I cover it.

Speaker Change: There was a lot in there the other piece was just around the <unk>.

Speaker Change: Will you stay positive.

Speaker Change: Adjusted EBITDA is that something that you can do every quarter in 2025 or is that something we should expect.

Speaker Change: In the back half.

Speaker Change: Well certainly its difficult in Q1.

Speaker Change: I would certainly say that theres, a shot but difficult in Q1 with the seasonality, but absolutely for the for the year.

Speaker Change: For the remainder of the year.

Speaker Change:

Okay, and then I think you said that gross margins would be relatively.

Speaker Change: Consistent with 2024 and 2025, so I guess that suggests that the gross margins will dip in Q1, and then improve through the year, if we think about the cadence.

Speaker Change: And you said it would be incremental revenue, 70% plus I think you said in the prepared remarks, and so should we expect it to dip down closer to 70% and then improve through the year.

Speaker Change: Yeah, I think I think I look at it more.

Speaker Change: I think they're they've stabilized at about this point most of last year as you know.

Speaker Change: Queen $70 76.

Speaker Change: I think they're saying, they're going to be stable within that range I would expect them to dip a bit with Q1.

Speaker Change: I I I expect them to be stable in that low seventy's range, yes.

Speaker Change: Okay, two more questions one.

Speaker Change: The NFL contract are there additional opportunities with the NFL going forward or does this conclude the the relationship with them and the NFL sorry, the NHL contract as it is continue to move forward I belief is that correct. Yeah. The NHL is yes.

Speaker Change: I mean, there could be opportunities to work with the NFL in the future and certainly.

Speaker Change: It was a three season relationship first of its kind.

Speaker Change: Et cetera et cetera.

Speaker Change: In terms of.

Speaker Change:

Speaker Change: The costs associated with it.

Speaker Change: As you know the programs that we create like rising stars and the costs associated with it in the organic audiences that they generate.

Speaker Change: There is a far more scalable ROI in building those properties out.

Speaker Change: Then Ah.

Speaker Change: Our relationship with the NFL, but certainly.

Speaker Change: There's all kinds of.

Speaker Change: Chances to do more with organizations such as that we would just need.

Speaker Change: We would just need more clarity and more flexibility in terms of how we bring those properties to life.

Speaker Change: Okay. So this is this is basically.

Speaker Change: Decision by enthusiasts to.

Speaker Change: Walk away from the P&G contract because the economics of the contract just werent in your favor.

Speaker Change: Where you thought they would be or.

Speaker Change: Yeah.

Speaker Change: I would I would very simply say that and the way.

Alex McDonald: A product like PNG works is there is a fixed episode commitment and so like Alex said, you know we have customer.

Alex McDonald: Customers like state farm customers like Amazon, who were <unk> customers, who are still enthusiast customers, but who are spending with us in different areas in different parts of our business.

Alex McDonald: Hum.

Alex McDonald: Far more flexible.

Alex McDonald: And then a very significant mixed episode commitment which carries with it.

Alex McDonald: Inherent each and every week production costs right. So yes.

Alex McDonald: Yes, Theres, a theres a far better way.

Alex McDonald: To leverage custom content.

Alex McDonald: For direct sales than than through significant fixed episode commitment.

Alex McDonald: Production concepts.

Speaker Change: Okay. Since I've got you Adrian I know what you are introduced as interim CEO. So maybe you can just update us on the CEO search and then I'll pass the line.

Alex McDonald: Yeah.

Alex McDonald: The focus really has been.

Alex McDonald: From our board through the management.

Alex McDonald: To getting us through what was you know quite candidly are an uncertain situation as we began last year and I think now.

Alex McDonald: That we have.

Alex McDonald: Crisper vision and a CRISPR a route to scalable profitability I think we can.

Alex McDonald: <unk> on.

Alex McDonald: On.

Alex McDonald: On questions like leadership candidly it hasn't been a priority for the company given.

Alex McDonald: The challenges and opportunities we wanted to Russell.

Alex McDonald: But we're in a in a better place now than.

Alex McDonald: We can revisit those timelines.

Alex McDonald: Okay. Thanks for all that and I'll pass the line.

Alex McDonald: Okay.

Alex McDonald: Thank you.

Speaker Change: Once again, if you wish to ask a question professional learning and testing. Your next question comes from Mike Crawford from Dave Allen He's got home.

Speaker Change: Thank you and just to be clear given that the first quarter is now over.

Speaker Change: Theres not a specific range of revenue and or EBITDA that you're able to give because you don't have control over your financial statements or that data doesn't come until later.

Alex McDonald: Hey, Mike It's Alex good to talk to you again.

Speaker Change: We just we just don't we haven't been able to provide guidance in the rehab.

Alex McDonald: We havent provided guidance in the customary does.

Alex McDonald: Closures in detail I would come with that.

Alex McDonald: As I said, though.

Alex McDonald: We had.

Alex McDonald: Solid Q4, certainly expect normal course seasonal adjustments that will involve.

Alex McDonald: Decreases in media and content specifically.

Alex McDonald: Decreases in direct sales inside of that.

Alex McDonald: The subscription of course.

Alex McDonald: Expect it to not be impacted by seasonality and.

Alex McDonald: The events and entertainment.

Alex McDonald: It was not it was not affected by the annual seasonality in fact, it has the London event. So it's something that we're not we're certainly able to but but we do not have published guidance.

Alex McDonald: But I would expect the seasonal patterns to be customary traditional as we.

Alex McDonald: Seen in the past.

Alex McDonald: Which will results of course and a decrease in.

Revenue and gross profit which is normal.

Alex McDonald: And of course, we have some some savings that we'll achieve from the determination of NFL PNG.

Alex McDonald: I hope that.

Alex McDonald: Guidance guidance sufficiently.

Speaker Change: [laughter], Okay. It's just a little strange I mean, the quarters over but and fourth quarter, what was the TNG revenue and also.

Speaker Change: How about if you could characterize contribution from political ad spend.

Speaker Change: But my.

Speaker Change: Uh huh.

Speaker Change: But won't repeat in 2025.

Speaker Change: Sure I can tell you the the.

Speaker Change: Direct sales in NFL in Q4 was 817000.

Speaker Change: Let's say exact number I'll give you my.

Speaker Change: As far as contributions from political campaigns. There was we were a provider to the.

Speaker Change: Yeah, No no that's fine in the neighborhood of in the neighborhood of a million dollars I would say it was directly related to.

Speaker Change: American political.

Speaker Change: Political campaigns and then.

Speaker Change:

Speaker Change: Obviously, you guys have a more active political cycle, but we're also in the middle of a federal election right now in Canada.

Speaker Change:

Speaker Change: <unk>.

Speaker Change: And so.

Speaker Change: Political opportunities are still in front of us.

Speaker Change: Okay, Great and then.

Speaker Change: I was also pleased to here.

Speaker Change:

Speaker Change: We're pleased with you play wide partnerships, helping programmatic, but can you provide any further metrics on exactly whats changing in programmatic with COVID-19.

Alex McDonald: Yeah, Alex Yeah.

Alex McDonald: So a couple of things that we look at.

Alex McDonald: Certainly I mean, it ultimately comes down to yield of course by session or by bet. You, we have been able to achieve higher CPM.

Alex McDonald: We have been able to do it achieved higher fill rates. So this is obviously the percent of our inventory that is sold naturally some inventory goes unsold in the programmatic world.

Alex McDonald: So they've been able to increase.

Alex McDonald: Our our fill rates.

Alex McDonald: New units.

Alex McDonald: We've been able to launch new video units some reward video.

Alex McDonald:

Alex McDonald: Better video video units overall.

Alex McDonald: And what not so it's generally some of the sites have seen substantial.

Alex McDonald: 30%, 40%, plus sometimes even greater increases in yield.

And then that also there it's enabled us to some of the new units and the sophistication that we built jointly with play wire has enabled us to increase the AD load in some places.

Alex McDonald: Which is the number of impressions you can serve.

Alex McDonald: Pedro.

Speaker Change: With minimal impact to user metrics, such as engagement such as retention.

Speaker Change: So it's across the board. These all of the things that we work with would play wire one thing I will say as CFO one.

Speaker Change: There is another big one and that's a tough business.

Speaker Change: We're grateful to partner with playwear in that business.

Speaker Change: As a as you know.

Does he used to run an AD network, it's a low margin business with a lot of cost to run out networks.

Speaker Change: So that of course in 2024.

Speaker Change: It was also happened to be a very substantial cost savings opportunity that was realized.

Speaker Change: Oh, great. Thanks Adrian.

Speaker Change: Thank you thank you Mike.

Speaker Change:

Speaker Change: Thank you.

Speaker Change: Once again, if you wish to ask a question. Please press star one one plus or minus any further questions.

Adrienne Montgomery: Thank you and I just have a question at this time I'll now hand, the call back over in Montgomery for closing remarks.

Adrienne Montgomery: [laughter].

Adrienne Montgomery: Thank you.

Adrienne Montgomery:

Speaker Change: Once again, just very quickly I want to thank our.

Adrienne Montgomery: Stakeholders.

Adrienne Montgomery: Our lenders.

Adrienne Montgomery: Our shareholders.

Adrienne Montgomery: But most importantly, especially.

When you come.

Adrienne Montgomery: Through a tough year and a transformational year.

Adrienne Montgomery: And in many ways a.

Adrienne Montgomery: Our successful year that positions us well for the future.

Adrienne Montgomery: It cannot be done without the hard work of each and every one of our enthusiasts.

Adrienne Montgomery: Who work for the company.

Adrienne Montgomery: They bring it everyday.

They're smart, they're tenacious, they're creative they're innovative they are aggressive.

Adrienne Montgomery: And it's certainly.

Adrienne Montgomery: Not lost on any of US the value that you all bring to this company every day.

Adrienne Montgomery: And on behalf of the management team the board I want to thank each and every employee.

For what you do what you've done and what you will continue to do for us. Thank you.

Adrienne Montgomery: Yes.

Adrienne Montgomery: [laughter].