Mr. Nick Brien reports

ENTHUSIAST GAMING REPORTS THIRD QUARTER 2023 FINANCIAL RESULTS

Enthusiast Gaming Holdings Inc. today released its financial results for the three and nine months ended Sept. 30, 2023 (Q3 2023).

Q3 2023 financial highlights

• Revenue of $45.6-million, a decrease of 10 per cent compared with Q3 2022;
• Gross profit of $16.7-million, an increase of 1 per cent compared with Q3 2022, with gross profit margins expanding 400 basis points year over year to 36.7 per cent;
• Operating expenses of $25.0-million, a decrease of 6 per cent compared with Q3 2022;
• Ended the quarter with $2.8-million of cash, along with $4.5-million availability on the operating facility, for total available cash of $7.3-million.

"We are making solid progress against our strategy to build the most scaled gaming communities in North America -- and a platform for significant growth," commented Nick Brien, chief executive officer. "Our efforts include sweeping changes across nearly every facet of the organization that are positioning the company for growth, profitability and value creation. As a measure of our progress, in the quarter we booked our largest branded solutions sale to date. We continue to expect to be profitable in the fourth quarter, entering next year as a self-sustaining business as we shift from a year of transformation velocity in 2023 to a year of growth velocity in 2024.

"The core elements for long-term success are in place," continued Mr. Brien. "We have a revamped management team, engaged communities, clear monetization strategies and technology enablement to significantly fuel profitable growth. Our operational focus demands that these components are efficiently and effectively integrated to create a culture of accountability and agility. We are increasingly excited about the growth opportunities ahead of us and believe 2024 will be the year where the efforts of the last six months translate into value creation for shareholders."

Q3 2023 operational highlights

• Season 2 of the popular video gaming series, NFL Tuesday Night Gaming (NFL TNG) premiered on Sept. 12 on NFL TNG's Twitch, YouTube and X channels, with behind-the-scenes footage published on TikTok and Instagram. Audiences and engagement continues to build week-in and week-out compared with season 1, including a 72-per-cent increase in impressions through week 7 ending Nov. 7. To date, NFL TNG has increased the number of advertisers from 11 in season 1 to season 14 in season 2, including new sponsors such as State Farm.
• As an example of creating unique and immersive experiences for brands that are scalable across digital entertainment and gaming platforms, Enthusiast Gaming collaborated with Netflix and Metavision to launch its first-ever Fortnite Creative in-game experience for One Piece.
• Secured renewals and new additional business with key notable advertisers including Coca-Cola, UPS, Toyota, Shell, The Truth Initiative, FX Networks, AT&T, OLG, Paramount Pictures and ESPN. Renewals and additional business with existing customers accounted for 69 per cent of brand solutions revenue in Q3 2023.
• Pocket Gamer Connects (PGC), the company's B2B (business-to-business) gaming events platform, ran two profitable conferences during the quarter (PGC Toronto and PGC Helsinki) and two other tent-pole events (Metverse Mixer and Top 50 Game Makers Dinner at Gamescom). PGC Toronto increased the number of live delegates by 28 per cent year on year, and PGC Helsinki drew a strong attendance of around 1,200 participants representing 510 companies and 41 countries.
• Luminosity Gaming, the company's e-sports division, launched a new Super Smash channel in August, and reached over two million views and 10,000 subscribers in its first 60 days.
• Luminosity Gaming announced its return to Rocket League in November after a one-year hiatus, and secured two top North American team members, Retals and MaJicBear, positioning Luminosity to be immediately competitive in the North American scene.
• Luminosity Gaming's Call of Duty Mobile team was crowned North American champions at the stage 4 competition and now advances to compete for the world title in December.
• Icy Veins, the company's strategy and guide platform for popular Activision-Blizzard game titles, is generating strong momentum and audience attention, including a record 5.9 million unique visitors in July, as well as 26 million sessions and 1.7 million hours spent on site from users.
• Addicting Games' refresh of the content strategy for its Web properties is resulting in increased user engagement and user retention, as evidenced by the 57-per-cent increase in page views in Q3 2023 (versus Q2 2023) at Shockwave upon adding a new collection of daily games and challenges.
• Paid subscribers were 265,000 at Sept. 30, 2023, a 3-per-cent decrease from 272,000 at June 30, 2023, and 2-per-cent increase from 260,000 at Sept. 30, 2022, as the company is implementing initiatives to drive enhanced subscriber KPIs (key performance indicators) which is having a short-term impact on subscriber trends on both a quarter-on-quarter and year-over-year basis.
• The company extended its position as the No. 1 gaming property for unique visitor traffic in the United States, reaching a new record of 56 million unique visitors, based on the latest digital media ratings from Comscore. The results represent 28-per-cent year-over-year growth in unique visitor traffic to Enthusiast Gaming's digital media property of gaming communities, content and creators (Comscore Media Metrix Multi-Platform, Total Audience, September, 2023, U.S.).
• As previously announced, on Nov. 9, the company's shares were voluntarily delisted from Nasdaq after its board of directors evaluated the benefits and costs of continuing its listing on Nasdaq. The company's common shares continue to be listed and traded on Toronto Stock Exchange.

Third quarter 2023 results comparison

Revenue was $45.6-million in Q3 2023, a 10-per-cent decrease compared with $50.6-million in Q3 2022. Media and content revenue decreased 10 per cent to $39.8-million, e-sports and entertainment revenue decreased 12 per cent to $2.0-million, and subscription revenue decreased 2 per cent to $3.7-million. During the quarter, the company experienced lower programmatic CPMs (cost per impressions) on its Web and video platforms, similar to the trend of the broader programmatic market. The decreased CPMs were offset by an increase in total views (Web and video) of 4 per cent in Q3 2023 compared with the same period last year. Brand solutions (included in revenue) decreased by 3 per cent to $9.8-million in Q3 2023 compared with $10.1-million in Q3 2022.

Gross profit increased 1 per cent to $16.7-million in Q3 2023 compared with $16.6-million in Q3 2022, with gross margin expanding 400 bps (basis points) year over year to 36.7 per cent from 32.7 per cent in Q3 2022.

Net loss was $59.1-million in Q3 2023, compared with $37.1-million in Q3 2022. Net loss per basic and diluted share was 38 cents in Q3 2023 compared with 25 cents in Q3 2022. Results in Q3 2023 and Q3 2022 included a non-cash impairment expense of $51.7-million and $31.3-million respectively.

The company's cash balance was $2.8-million as of Sept. 30, 2023, compared with $7.4-million as of Dec. 31, 2022, and $2.7-million as of June 30, 2023. The $4.6-million decrease is primarily the result of a $300,000 outflow in cash from operations and $3.3-million of repayments on the company's term credit. The company had $4.5-million available on its operating credit facility as of Sept. 30, 2023, for total available cash of $7.3-million. On Oct. 12, 2023, the company extended and expanded its term and operating credit facilities to provide up to approximately $7-million of additional liquidity.

Conference call

Management will host a conference call and webcast on Nov. 13, 2023, at 5 p.m. ET to review and discuss its Q3 2023 results.

Conference call details:

Toll-free:   1-855-239-1101 (conference ID: 10183500)

A replay of the webcast will be available on the investor page of the Enthusiast Gaming website.

About Enthusiast Gaming Holdings Inc.

Enthusiast Gaming is the leading gaming media and entertainment company in North America, building the largest platform for video game enthusiasts and e-sports fans to connect and compete worldwide. Combining the elements of its five core pillars -- creators, content, communities, games and experiences -- Enthusiast Gaming provides a unique opportunity for marketers to create integrated brand solutions to connect with coveted generation Z/millennial audiences. Through its proprietary mix of digital media, content and gaming assets, Enthusiast Gaming continues to grow its network of communities, reflecting the scale and diversity of gaming enthusiasts today.

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