Enthusiast Gaming Holdings Inc.

Good day, everyone, and welcome to the Enthusiast Gaming Holdings Inc. Fiscal Second Quarter 2021 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Eric Bernofsky, Chief Corporate Officer. Please go ahead.

Thank you, Operator. Good afternoon, everyone. Welcome to Enthusiast Gaming's second quarter 2021 earnings call. My name is Eric Bernofsky, the Chief Corporate Officer of Enthusiast Gaming. I'm joined by our Chief Executive Officer, Adrian Montgomery, our Chief Financial Officer, Alex McDonald, and our Chief Operating Officer, Samba Tharmer-Lingham. We'll begin with commentary on the quarter before opening the floor to questions. Before we begin, I'd like to remind everyone that today's presentation contains forward-looking information that involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectations. These statements should not be read as assurances of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. A more complete discussion of the risks and uncertainties facing the company appear in the company's management discussion and analysis for the three-month period ending June 30th, 2021, which are available under the company's profile on CDAR and EDGAR, as well as on the company's website. Your caution 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 statements as a result of new information, future events, or for any other reason. Now, I will turn the call over to Adrian Montgomery, Chief Executive Officer.

Thank you, Eric. Good afternoon and welcome to our second quarter 2021 financial earnings call. It is my pleasure to once again report on the financial and operational accomplishments our team made last quarter and speak about what we believe will be an exciting second half of the year. I'm extremely pleased with our results this quarter and the significant growth we have achieved across all of our financial and operating metrics. And I would like to thank each and every one of the hardworking enthusiast employees for all of their efforts to put us in the position that we are in today. Despite the headwinds posed by unfavorable exchange rates, we managed to exceed expectations across the board on revenue, gross profit, and gross margin. I'm pleased to report the Q2 revenue grew by more than 427% to $37.1 million from $7 million in Q2 last year, and gross profit grew to $8 million from $3.2 million a year ago, while gross margin improved to 21.6%, which is a nearly 200 basis point increase from just one quarter ago. Revenue growth continues to be driven by our focused buy and build strategy. Key organic growth drivers, including direct advertising and sponsorship sales, grew to $4.4 million in the quarter from approximately $500,000 in Q2 last year and double from $2.2 million just a quarter ago. Some of the partners we worked with in this past quarter include major blue chip brands such as State Farm, Bell, Bethesda, Disney+, Mars, PlayStation, GlaxoSmithKline, Microsoft, Red Bull, HBO Max, Twitch, Hasbro, Noom, G Fuel, Riot, Exit Lag, Excedrin, Fireball, eBay, Met365, Sony Pictures, Toyota, and General Motors. The number of paid subscribers at June 30th was 155,000 compared to 111,000 a year ago, an increase of 40%. Most notably, however, is the acceleration of growth we are seeing in paid subscriptions. This quarter, we added 18,000 net new subscribers, the highest quarterly growth in four quarters. This is a direct result of the investment we made in Q4 last year to establish a team dedicated to growing subscriptions. The upward momentum in net new subscribers this quarter is proof that that strategy is working. We remain confident that subscriptions will continue to show meaningful growth in the back half of the year. As we've mentioned previously, we believe subscriptions to be one of our most exciting growth opportunities. That's why we announced our plans to build a pan-enthusiast social network with a premium subscription opportunity for our target Gen Z and millennial audience, codenamed Project GG. We are making strong progress on this front, and I'm pleased to announce today that we expect to release an exclusive alpha version with select gamers toward the end of September. As we've said before, direct sales and subscriptions are two of our highest margin revenue streams, And you can see how the growth this quarter has contributed to gross margin improvement by nearly 200 basis points or nearly two full percentage points. We like the direction both of these businesses are moving in and the upward trajectory they're on as we move through the second half of 2021, which is our busiest time of the year. You've heard me talk about our proprietary flywheel in the past, and I'd like to take a moment to reiterate why we believe This is the right strategy. Every month, millions of video game and esports fans come to one or more of our 100-plus web properties, our 1,000-plus YouTube channels, watch our talented Luminosity Gaming streamers on Twitch, and I would point out we are the number one most watched esports organization in the world this year on that platform. or tune into one of our proprietary shows like Gamers' Greatest Talent or Rising Stars. The first season of Gamers' Greatest Talent aired in Q2, and it was sponsored by TikTok and e.l.f. Cosmetics. Live-streamed on Twitch over six episodes, GGT had a total audience reach of north of 10 million viewers. Discussions are now in full swing on another follow-up season. Another unique content experience we are particularly proud of is our partnership with Grammy Award-winning international music superstars Coldplay. For the event in May, we collaborated with DJ Zoo and Luminosity Gamer Star Fresh to launch an exclusive remix of Coldplay's new hit single, Higher Power, which was live-streamed on Luminosity Gaming's Twitch channel. The collaboration of music and gaming is proving to be a powerful combination for fans and sponsors, and we look forward to more events like this in the future. This is our fan flywheel, which delivers great content and experiences throughout the gamer's fan journey. And we will continue to add meaningfully to this fan flywheel, both through organic and acquisitive means. At the same time, companies across North America are trying to build out and deploy strategies to reach Gen Z and millennials at scale. And we have been out there talking about it in recent months. You can read and see it in places like Bloomberg, the MIT Sloan Management Review, USA Today, Digiday, Washington Post, and others. We are winning in the marketplace because we offer more touch points to Gen Z and millennials than anyone else out there. We're selling integrated packages that include media, sponsorship, unique content, talent activations, and esports. This breadth of offering is proving to be a winning strategy, as is evidenced by the doubling of our direct sales business this quarter to $4.4 million from $2.2 million in Q1 of this year. On a currency-adjusted basis, our Q2 performance in direct sales is similar to the direct sales for all of enthusiasts, in 2020. In Q2, we partnered with the U.S. Ad Council and the COVID Collaborative on their COVID-19 Vaccine Education Initiative, promoting COVID-19 vaccine awareness and education among young adults. It was the largest and most significant public health communications campaign in U.S. history, and we were very proud to be the Ad Council's gaming partner. Hollywood studios and filmed entertainment remain an exciting, growing category for us. This quarter, we completed activations for Universal Pictures to promote the North American release of F9, the latest in the Fast and Furious franchise. We worked with Walt Disney Studios to promote Black Widow, and we partnered with United Artists to promote the Guy Ritchie film, Wrath of Man. Those studios leveraged our innovative platform of video game and esports fan communities, customized content, and integration with top gaming influencers. For F9 specifically, the activation included custom content activations with Luminosity gaming talent and across enthusiast gaming media brands, five exclusive Grand Theft Auto events throughout the launch weekend with Luminosity gaming talent competing against fans using Fast and Furious-inspired mods, and media placement across Arcade, Cloud, and Upcomer, fans versus luminosity all-stars gameplay, even during the finals of Gamer's Greatest Talent. We remain confident that Hollywood and filmed entertainment will continue to be an exciting, growing category for us as we move through the rest of 2021. and the pipeline of opportunities continues to grow. Subsequent to the quarter, we announced a renewed and expanded Luminosity Gaming sponsorship deal with G Fuel, as well as an integrated media and esports partnership with the United States Navy that will include the creation of multiple unique gaming activations, incorporating our company's roster of gamers, creators, and athletes to increase awareness of the wide range of professional opportunities the Navy offers. We are also currently in market with innovative campaigns for State Farm and DoorDash, to name just a few. Another activation I'm particularly proud of is the innovative work we are doing with LEGO. In partnership with LEGO Technic, we have launched the Luminosity Academy to push the boundaries of creativity and guide the development of young gamers. As you can see, we have worked with top brands on their biggest campaigns this quarter. We've executed on many new programs and provided innovative ways for brands to reach the elusive Gen Z audience. And it's working. So anticipating that, we'll continue to build on this exemplary quarter. We are adding more staff. We now have more people in key centers, including New York, London, and Los Angeles. We've added people in Detroit, and we are looking at adding members to our direct sales team in Chicago. Our monetization flywheel, which consists of a diversified revenue stream, continues to gain significant traction each and every month. I've already highlighted the performance of direct to brand sales and paid subscriptions, but we're also seeing gains within our content licensing and distribution segment, particularly on platforms like Snap, where we are distributing more content that leverages our expertise and reach for the type of content gamers want. In May, we launched a new YouTube channel called Arcade Blocks, focused on Roblox-related content. That channel has already garnered almost 100,000 subscribers and nearly 1 million watch hours. We're also pushing deeper into storytelling with original content for a gaming audience. Our new brand, Upcomer, which also launched in Q2, expanded into Snap with two different properties, Livestream Fails and Rage Quit. These are properties we've created from scratch that are already contributing through new subscribers and content. This quarter, we completed our NASDAQ listing and subsequently raised gross proceeds of just over $60 million. This raise significantly improved our balance sheet and has allowed us to accelerate our business plans with a particular focus on mergers and acquisitions. On the M&A front, we successfully closed the IC Veins and Tab Stats acquisitions in the quarter, and they are integrating well into our fan and monetization flywheels. We are well-funded to continue to execute on additional acquisitions that will expand our audience reach, provide a deeper and more authentic fan experience, unlock new revenue streams within our flywheel and be a creative to margin. We anticipate being able to execute on additional exciting transactions this quarter. We're just getting started and believe very much in our buy and build growth strategy centered around our proprietary monetization flywheel. As you can see, we have accomplished a lot in the first half of 2021. and we are confident in our team's ability to continue to grow and to continue to execute in the back half of the year. I will now turn the call over to our CFO, Alex McDonald, for further commentary on our financial results. Thank you, Adrian.