Mr. Adrian Montgomery reports

ENTHUSIAST GAMING REPORTS FOURTH QUARTER AND FULL-YEAR 2023 RESULTS

Enthusiast Gaming Holdings Inc. has released financial results for the three and 12 months ended Dec. 31, 2023.

"We are moving swiftly to simplify and streamline our business in order to improve financial performance," commented Adrian Montgomery, board chair and interim chief executive officer of Enthusiast Gaming. "The actions we have taken in [first quarter] 2024 to focus on our core communities, content and experiences position Enthusiast Gaming to quickly enhance our profitability and position us for growth as we move forward."

Added Mr. Montgomery, "Enthusiast Gaming embarks on this important year of transformation with many strengths: a large and highly engaged audience of gamers and e-sports fans, world-class marketing brands that want to reach them, and an enviable set of strategic partners such as the NFL."

Financial highlights for fourth quarter 2023:

• Revenue decreased by 13 per cent to $47.1-million, with the majority of the decline related to a decrease in lower-margin revenue on the video platform.
• Gross profit increased by 5 per cent to $18.9-million, with margins expanding 670 basis points to 40.2 per cent.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss improved to $3.0-million compared with a loss of $5.2-million in Q4 2022.
• Net loss of $39.5-million includes non-cash impairment charges of $38-million.

Full-year 2023 business highlights:

• Direct sales (included in revenue) for the year ended Dec. 31, 2023, were $41.7-million as compared with approximately $37.4-million for the year ended Dec. 31, 2022.
• Paid subscribers were 268,000 at Dec. 31, 2023, a 2-per-cent increase from 262,000 at Dec. 31, 2022.
• Unique visitors were 52 million, a 4-per-cent increase year over year, extending its position as the No. 1 gaming property in the United States, based on the latest digital media ratings from Comscore (December, 2023).

"Two thousand twenty-four is an important year of transformation for Enthusiast Gaming, including a $10-million cost reduction program implemented in March, to help us achieve profitability and deliver value for our shareholders," said Felicia DellaFortuna, chief financial officer of Enthusiast Gaming. "Some of these actions will result in lower revenue as we deprioritize low-margin activities such as programmatic advertising through the network, but will also drive improved overall profitability in the form of higher gross margins and the foundation for positive adjusted EBITDA."

Fourth quarter 2023 results comparison

Revenue was $47.1-million in Q4 2023, a 13-per-cent decrease compared with $54.0-million in Q4 2022. Media and content revenue decreased 13 per cent to $42.6-million, and subscription revenue decreased 13 per cent to $3.3-million, partially offset by a 9-per-cent increase in e-sports and entertainment revenue to $1.2-million. During the quarter, the company experienced lower views on its Web and video platforms in part due to the strategic decision to deprioritize lower-margin businesses. Direct sales (included in revenue) increased by 3 per cent to $13.2-million in Q4 2023 compared with $12.8-million in Q4 2022.

Gross profit increased 5 per cent to $18.9-million in Q4 2023 compared with $18.1-million in Q4 2022, with gross margins expanding to 40.2 per cent from 33.5 per cent in Q4 2022.

Adjusted EBITDA loss was $3.0-million in Q4 2023 compared with an adjusted EBITDA loss of $5.2-million in Q4 2022. Adjusted EBITDA in Q4 2023 excludes $2.6-million in severance and $400,000 in non-recurring public costs such as annual Nasdaq listing fees.

Net loss was $39.5-million, or 26 cents per share, in Q4 2023, compared with $11.8-million, or eight cents per share, in Q4 2022. Net loss in Q4 2023 includes $38-million of non-cash impairment charges primarily related to goodwill and intangible assets.

Full-year 2023 results comparison

Revenue was $178.2-million in 2023, a 12-per-cent decrease compared with $202.8-million in 2022. Media and content revenue decreased 14 per cent to $154.8-million, partially offset by a 10-per-cent increase in e-sports and entertainment revenue to $8.3-million and a 3-per-cent increase in subscriptions revenue to $15.0-million. Direct sales (included in revenue) increased by 11 per cent to $41.7-million in 2023 compared with $37.4-million in 2022.

Gross profit increased 6 per cent to $67.4-million in 2023 compared with $63.5-million in 2022, with gross margins expanding to 37.8 per cent from 31.3 per cent in 2022.

Adjusted EBITDA loss was $13.0-million in 2023 compared with an adjusted EBITDA loss of $15.1-million in 2022. Adjusted EBITDA for the year excludes $4.0-million in severance and $2.3-million in annual Nasdaq listing fees and D&O insurance costs.

Net loss was $117.7-million in 2023, or 77 cents per share, compared with $76.8-million in 2022, or 54 cents per share. Net loss in 2023 includes $86.2-million of non-cash impairment charges primarily related to goodwill and intangible assets.

Organizational updates

As previously announced by the company, Thomas Hearne was appointed to the board of the company on March 20, 2024. Mr. Hearne has subsequently been appointed chairman of the audit committee of the board. Additionally, the company also announced that Tara Fournier is no longer with the company. Ms. Fournier has served as the company's chief people officer since May, 2023.

Investor conference call

Management will host a conference call and webcast on Monday, April 1, 2024, at 5 p.m. ET, to review and discuss its Q4 2023 results. Conference call details are as follows:

• Dial-in: 1-855-239-1101 or 1-412-317-5231 (conference ID: 10187154);
• A live webcast will be available.

A replay will be available on Enthusiast Gaming's website.

Supplemental information

Enthusiast Gaming's financial statements and management's discussion and analysis are available at SEDAR+ and the Enthusiast Gaming website.

About Enthusiast Gaming Holdings Inc.

Enthusiast Gaming is a leading gaming media and entertainment company, 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 Gen Z and millennial audiences. Through its proprietary mix of digital media, content and gaming assets, Enthusiast Gaming continues to expand its network of communities, reflecting the scale and diversity of gaming enthusiasts today.

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