Enthusiast Gaming Holdings Inc.

and welcome to the Enthusiast Gaming Third Quarter 2023 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. 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 Matt Chesler, Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to the Enthusiast Gaming third quarter 2023 results conference call. I'm Matt Chesler of FNKIR. And with me today is our Chief Executive Officer, Nick Bryan, and our Chief Financial Officer, Alex McDonald. 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 results to differ materially from current expectations. These statements should not be read as assurances of future performance or results. A more complete discussion of the risks and uncertainties appears in the company's management discussion and analysis for the three-month period ending September 30th, 2023, which are available under the company's profile on CEDAR, as well as on our website at enthusiastgaming.com. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as 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. And now I'd like to turn the call over to Nick Bryan, CEO of Enthusiast Gaming. Take it away, Nick.

Thank you, Matt, and welcome to everyone joining our call today. We are making solid progress against our business strategy to build the most scaled gaming communities in North America, creating a platform for infinite growth. The core building blocks are our sites, panels, events, and esports, Our creator communities are producing the most compelling content to engage with their communities as we witness their growing influence in today's creator-led economy. As we continue to invest in our vision to become the leading gaming, media, and entertainment company in North America, we are extremely thoughtful and deliberate, focusing on our largest opportunities. Today, over 56 million users visit our site games, and channels each month to play, learn, create, and connect. Certainly, traditional media's declining audiences across linear TV and movies helps us maintain our position as America's number one gaming media platform as measured by ComScore. Our single-minded focus is to achieve profitability in quarter four by prioritizing high-margin brand solutions revenue in favor of low margin programmatic media revenues. The decision we took in quarter two to focus primarily on North America is bearing fruit as we continue to drive cost efficiencies and consolidation across every area of the business. Today's clear operating model built on a unified technology platform and supported by the most professional functions is reducing internal friction and increasing our speed to market for each of our products and services. Collectively, these initiatives will enable us to exit the year as a profitable business. We're fortunate to operate in the largest and fastest-growing entertainment sector globally. The continuing growth of diverse gaming audiences worldwide demonstrates their passion to play and connect with like-minded communities and the immersive gaming experiences that the industry imagines. There are today 3.4 billion gamers worldwide in an industry expected to reach $665 billion in value by 2030 with a CAGR of 13.4%. This exponential growth will demand innovation to craft the next generation of tools, products, and platforms to satisfy gamers' hunger for stimulation and creativity. It's clear that the impact of video games will not be limited to the video game industry. Innovation, skilled talent, and a large audience supported by deep-pocketed developers will flow across entertainment sectors. We're already seeing the convergence, as the Unreal Engine is now powering games and revolutionizing film and TV production. Game IPs are becoming hit movies, and Wave VR and other studios are transforming live musical performances. The industry's growth across all age ranges defies the traditional game of stereotypes as young men playing console games in their parents' basements. Microsoft closed their largest ever acquisition of Activision Blizzard, completing their vision to bring great games to players everywhere on any end point. Already with Game Pass, they are redefining how games are distributed, played, and discovered. I'm not alone in believing that the high price also reflected, the high price they paid, also reflected the value of Activision's gaming IP, given the player spent hundreds of hours over many years with the games that they love, creating remarkable brand equity for some of the most famous games in the world. We are witnessing the continuing transfer of gaming IP to Hollywood, with leading creators being hired by top gaming companies to ensure that their content strategies are not only creative and compelling, but also authentic and faithful to their original game design. The power of gaming IP in such a crowded digital media world supports Netflix's decision to create a streaming video game service as the next big growth bet. Gaming is increasingly exciting to brands and their agencies. There is a growing realization that gaming media is no longer a nice to do, but a need to do, as their elusive Gen Z audiences abandon traditional media to focus their attention on social media, gaming content, and interactive experiences. Brands are now competing for attention in the creative economy, where content is created and consumed in fundamentally different ways than even five years ago. It's exciting for us to pioneer the next generation gaming media and entertainment company for players, creators, and brands. Operationally, we have consolidated as one company on a unified technology platform to ensure that our products and services are streamlined to create more efficient brand solutions for marketeers and advertisers. Our rapidly improving programmatic stack ensures that our ad networks is optimized to reduce unsold impressions and increase yield. We recently initiated a cloud services review to ensure that our web hosting costs are optimized, our critical AI functionality is fully integrated across the business. Across our site, we continue to demonstrate our ability to capture momentum and audience attention around tentpole game releases. u.gg The leading data and insights player site for the League of Legends, with over 9 million users, strengthens its product-to-platform strategy as it extends to the World of Warcraft site with data source from Blizzard's API. U.GG launched its League of Legends desktop app in alpha in quarter three to enhance gamers' performance and provide a personalized experience. we've gotten over 250,000 downloads without a dollar in marketing spend. In the month of September, we recorded 630,000 user sessions with an average session duration of an hour and 18 minutes. This is 819,000 hours of audience attention. The time on site metric is indicative of the stickiness and the added value of desktop apps. It's able to provide real time, live, data-driven insight and advice through our user base. This success informs our decision to pursue additional desktop app properties, and the next launch will be Valorant in November. IT Vein has launched a brand new content management system to support Diablo 4, and in the month of July, IT Vein set a record for unique users in a month, 5.9 million, 26 million sessions and 1.7 million hours of time spent on-site from our user base. This gives us a positive use case to further expand our CMS to enable us to repeat this success over and over to make IC Veins and U.GG the dominant multi-type of gaming community and insights platform. Addicting Games continues to rationalize its portfolio of casual games and strengthen the competitiveness of its key titles. Shockwave has added a new collection of daily games, resulting in a 57% increase in page views in quarter three, up 18 million from quarter two. Tight Racer has seen a 250% increase in subscriptions from quarter two to quarter three by simply increasing the number of accepted payment methods. Akes.io underwent technical refactoring to reduce load time by 90%, leading to a 13% growth in users and 15% more new users compared to quarter two, 2023. With this impressive improvement in growth, we're now focusing on in-game economy and user retention with daily bonuses. The Sims resource is a vital contributor within our portfolio, providing a unique resource to enable the Sims 4 community to celebrate its creativity and culture across generations. Our strategic initiatives kicked off in quarter two to focus on converting free traffic into paid subscribers while increasing LTV and ARPU and low insurance. We've launched several projects to ensure smooth payment processing globally while aligning pricing geographically to optimize for conversion. This includes a soon-to-be-launched change on the site, which will require all users to provide us with an email address in order to perform a free download of our content. The TSR team is using landing pages, email marketing, paid media, and social media to drive conversions, engagement, and education with the goal to increase retention and conversion rates. Social media and community engagement are providing users and visitors with a strong sense of value from the TSR offering, as well as driving new traffic into TSR. The momentum continues into quarter four and beyond, with a new email marketing platform with new data attributes to help us drive engagement and conversion rates. A new landing page platform will enable rapid testing and optimization of new billing and pricing configurations, an option to determine the most effective scenarios to increase conversion rates globally and drive overall revenue growth. Pocket Gamer remains the preeminent mobile games conference organizer globally. During quarter three, we ran two Pocket Gamer Connect conferences, one in Toronto and one in Helsinki, and two fringe events, the Metaverse Mixer and the Top 50 Games Makers Dinner at Gamescom in Germany. Pocket Gamer celebrated its eighth edition of PG Connect Helsinki, and next year, Pocket Gamer Connect celebrates its 10th anniversary. In that time, we've hosted over 44 Pocket Gamer Connect conferences in 14 countries with over 40,000 delegates attending. All event activity generated a profit in quarter three, with Helsinki registering a 52% gross profit, while Pocket Gamer Toronto live delegate numbers increased by 28% year-on-year. Following a successful June event in Dubai, we're now currently in negotiations for a three-year partnership with the Dubai Economic Forum to run the Dubai Games Expo Summit powered by PG Connect from 2024 to 2026. We'll also have an active discussion with the local agencies in Singapore about potential activity in the APAC SEA region in 2024 to 2025. Gaming communities continue to demonstrate their insatiable desire to consume gaming-related content. whether on the major streaming channels such as Twitch and Kik, or leading social media networks such as YouTube and TikTok. Content remains, therefore, a major strategic pillar of our business. Final Boss Studios, which launched in quarter two, now operates in five key verticals to maximize content resources and cross-functional support in post-production, tentpole creation, the NFL Tuesday Night Gaming and the ONO Activation, animation for families, and luminosity content. Our content calendar, with new content series and channels, is spanning the cross-section of gaming, esports, and popular culture. Our channel expansion strategy begins with Bit Slam Comedy, which sold out the Bourbon Room in LA within 24 hours. This innovative approach for leading gamers playing against leading comedians generated partnership interest in some of the biggest names in the comedy business. Luminosity, our esports and talent organization, continues to thrive and expand throughout the esports winter that sees many larger competitors struggling with unsustainable business models. Throughout 2023, we have pursued a prudent cost structure that will lead to a sustainable and profitable esports business in 2024. This is a key part of building our creator community to fuel our growing talent needs while directly supporting our various sites and channels. We launched the Luminosity Smash Channel, breaking 2 million views in the first 60 days since launch, as well as our Pokemon Unite documentary, which surpassed 10,000 views in a week. There is no shortage of creators who want to become part of the enthusiast network, whether it's through Luminosity or Omnia Media, as they understand the value that enthusiast gaming can bring to them throughout their creative journey, leading to increased revenue and brand activation opportunities. New brand partners tapping into our internal talent rosters on Nintendo, Bandai, Netflix, Nickelodeon, Coca-Cola, and many more. Brand solutions continues to improve its performance since its establishment in quarter two, both in the revenue and a gross margin point of view. We've strengthened the team with some key external hires. George Devado joined us in Barstool Sports to lead revenue operations. Madison Lockhart joined from Epic to lead product marketing. And Jerry Liu just joined us from Sony to drive our thought leadership effort while coordinating all our research and insights. Account management has now been fully integrated into the brand solutions org, enabling a deeper specialization of sales support to flip our approach from reactive selling to proactive solutions creation and delivery, creating engaging campaigns that can span multiple business units. We have an exciting pipeline of new brand partnerships in quarter three, with both new and returning clients, including Coca-Cola, State Farm, the UPS store, AT&T, Toyota, Netflix, Shell, and Dove for men. State Farm and Dove are both new sponsors for the NFL Tuesday Night Gaming, with State Farm being a six-figure deal and the largest deal in our history. AT&T, Shell, Netflix, and the UPS Store have all partnered with us to create custom maps in leading games. It's growing appetite by gamers to explore user-generated content, in many of the biggest games, such as Roblox, Minecraft, and Fortnite, is only set to continue. Our industry-leading partnership with the NFL continues to bear fruit as we iterate and optimize NFL's Tuesday night gaming week in and week out to improve program innovation and strengthen user engagement. Year-to-date, we've generated 40 million total impressions across all NFL TNG platforms, representing a 72% growth in overall impressions compared to Season 1. To date, the NFL Tuesday Night Gaming has increased the number of advertisers from 11 in Season 1 to 14 in Season 2. Our sponsors include some of North America's most recognized brands, Campbell's Chunky, Carnival Cruise Lines, State Farm, Lego, USAA, The Wonderful Company, Travel Texas, Little Caesars, Netflix, the US Navy, Warner Brothers, DAZN, and ESPN. Our active creative success with the NFL has reinforced our ability to work with major IP holders, leading to active conversations with other leading US sports leagues. Our commitment to operational excellence is the opportunity to harness the power of automation and AI to improve our product and business performance across the entire organization. We're actively using the testing chat GPT as the most widely applicable AI chat bot for campaign creative concept brainstorming to coding QA. Active campaign for sales email marketing to leverage subscriptions and remarketing. Unbounce to build landing pages for A-B testing, testing subscriptions. QBuddy is a tool to drive channel growth for YouTube. ZIQ for channel analytics of all YouTube videos. And SEMrush for SEO optimization. tracking, and search ranking. We currently utilize a number of automation applications such as Power BI for data visualization and revenue dashboards, Monday.com as a program management tool, BoostUp for all order management, media plan development, rate card management, and ad server management, and assertive yield for automated, centralized reporting for our programmatic performance of all SSPs. We have made significant operational progress in establishing a stable platform for profitable growth. Much of this progress has not yet been reflected in our income statement, as we have eliminated low margin revenue that represented a drag on profitability and focused on strategic or higher margin opportunities. These initiatives are resulting in significant gross margin expansion, a reduction in unsold impressions, and higher CPM. and serve as the foundation for future financial improvement. We expect you will see this progress manifested in the fourth quarter, and we look into 2024 with a fully integrated, efficient platform for sustained profitable growth. No great business was ever built on its capabilities alone. We believe passionately that a more disciplined and accountable culture is necessary to build long-term success for all stakeholders. We also recognize that great cultures require sustained effort and commitment to ensure that the most talented people are fully motivated to deliver their best performance each and every day. Leveling up is easier said than done. Our people and culture function continues to make great strides in many important areas of talent management, specifically in DEIB progress and women in gaming and women in leadership roles. We have tripled the number of female senior leaders since inception in April 2023. We signed the California Equal Pay Pledge. We've established a Raise Your Game, ERG, employee resource group focused on elevating women in gaming and supporting women enthusiasts in career growth and leadership opportunities. It was launched in April and it already has 26 members. We're partnering with the Historically Black College and Universities And these HBCUs are providing us with mentoring, career opportunities, and a development pipeline of great talent. Last but not least, we are committed to creating the highest standards of commercial acumen across the organization to ensure that we are optimizing the yield of every single dollar of revenue we earn. Today, I'm pleased to announce that we have hired Felicia de la Fortuna as our new Chief Financial Officer. Felicia joins us from BuzzFeed, where she has worked for the past eight years. Felicia joined BuzzFeed in 2015 after serving as a senior finance director of Viant Technology, the parent company of MySpace, and various financial leadership roles at 19 Entertainment and Ernst & Young. Felicia's deep digital media expertise across BuzzFeed's many media brands, content channels, commerce sites, and live events makes her ideally suited to help us fully optimize our portfolio of assets today. At the same time, her extensive public markets and fundraising experience strengthens our commercial prowess as we focus on reducing cash burn and driving profitability. Alex McDonald has performed a pivotal role in both the creation and growth of Enthusiast Gaming. We're extremely proud and grateful for the massive contribution Alex has made from day one to diversify our business, serve our community, and build a strong team that lays the foundation for our future profitable growth. Alex will transition to the role of a consultant and work with me and the board on a number of key strategic projects while collaborating with Felicia to ensure the smoothest handover of all finance, and accounting functions. This ends my prepared remarks, and I'd like to now hand over to Alex McDonald to talk through the details of our financials. Over to you, Alex.