Enthusiast Gaming Holdings Inc.

Good day and welcome to the Enthusiast Gaming Holdings Inc. First Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. Should you need any 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. To ask a question, you may press star then one on your telephone keypad. 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 J.B. Elliott, Chief Strategy Officer and General Counsel. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and welcome to the Enthusiast Gaming First Quarter 2024 Results Conference Call. I'm J.B. Elliott, Chief Strategy Officer and General Counsel. With me today is Interim Chief Executive Officer Adrian Montgomery and our Chief Financial Officer Felicia De La Fortuna. 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 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 can be materially different from those implied by such statements. A more complete discussion of the risks and uncertainties facing the company appears in the company's management discussion and analysis for the three-month period ending March 31, 2024, which are available under the company's profile on CDAR+, as well as on the company's website at enthusiastgaming.com. You are cautioned 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 statement as a result of new information, future events, or for any other reason. Now I'd like to turn the call over to Adrian Montgomery. Adrian, the call is yours.

Thank you, JB. It's been an eventful four months since I returned to the CEO role. During this time, I've been energized by the ongoing enthusiasm within our communities, the robust demand for our product innovations, the traction gained through our direct sales initiatives with top-tier brands, and the dynamic collaborations with our enviable strategic partners, including the National Football League. In these areas, we've been diligently advancing our efforts while also sharpening our focus on driving profitable revenue, expanding gross margins, and optimizing our cost structure. I'm proud to share that our team's hard work has already translated into consistent victories across all of these fronts, which I will be outlining for you today. But before diving into details, I'm thrilled to kick off with a significant announcement, one that underscores Enthusiast Gaming's position as the premier platform for engaging gamers. I am pleased to announce that we have just signed our latest strategic partnership, a collaboration with the National Hockey League to launch an entertainment series bringing together celebrity athletes and sports fans with gaming influencers and gaming enthusiasts. It is a multi-year partnership which will launch with the 2024-2025 season. We look forward to announcing the details of the series and the launch date jointly with the NHL in the near future. This announcement follows a number of catalysts achieved over the last four months, which are rapidly advancing and stabilizing the business, having already led to our best reported quarterly adjusted EBITDA in company history, and that was in Q1, which is our slowest quarter of the year. On the business front, we previously stated that we wanted to focus on profitable revenue streams, particularly around owned and operated properties, and drive significant gross margin expansion. all while being as disciplined and efficient as possible on our costs. We are accomplishing this. In March, we announced a $10 million cost reduction program, which has already shown benefits in our Q1 numbers, with such benefits to increase as they normalize in Q2 and thereafter. Also in March, we announced an ad tech partnership with Playwire in order to partner with a global leader to monetize our properties, enabling us to increase our yield and drive growth to our bottom line. This partnership is already live, and we are quickly seeing a significant increase in yield while also realizing substantial cost savings. In April, we announced the sale of a small subset of a certain non-core, non-profitable casual gaming assets for a purchase price of over $4 million, further trimming our adjusted EBITDA loss and adding liquidity to our balance sheet. And, of course, today we announced our next strategic partnership, a collaboration with the National Hockey League. This will further strengthen our direct sales offering and open up new channels to bring additional Fortune 500 brands to Enthusiast Gaming. These moves have brought a new spark to the business, and the results are already showing, including in our strong Q1 adjusted EBITDA results. However, we've also been busy on the product front, which is our lifeblood, over the last four months. In U.GG, advancements continue, most recently demonstrated by the platform's expansion into another game title, being the popular Riot Games title Teamfight Tactics. This brings the total number of game titles in UGG to four, also including League of Legends, World of Warcraft, and Valorant. These advancements have helped continue the growth of U.GG as one of our flagship products, with the desktop application having now surpassed 2.5 million downloads. These enhancements to U.GG will continue, with more planned expansions to additional game titles including Helldivers 2 and 2XKO, both coming soon. The Sims resource continues to dominate as the largest and most engaged Sims fan community. Time spent per user on TSR continues to be nearly triple that of the largest competitor, and our thesis remains that when we bring users to TSR, they will stay for the long run. To that end, TSR has now deployed its very own first-party data analytics platform. This will enable us to be more targeted and expansive with our acquisition approach. The high engagement already enjoyed by the site is translating into a healthier and more profitable paid subscriber base. As of today, the majority of our subscription activations are into premium plans, which we define as 3, 6, or 12-month packages. This is a new achievement for TSR. Premium subscribers have a much higher LTV and generate much more upfront value, which will enable us to put more resources towards customer acquisition, thereby allowing TSR to grow its status as the number one fan community for all things SIMs, for years to come. Icy Veins has been expanded to cover the game title Last Epoch, offering guides, news, and trusted character builds for fans of the game. Icy Veins has a promising year ahead with this expansion now live. But more notably, with the much anticipated World of Warcraft expansion, The War Within, scheduled for release in the fall of 2024, and the much anticipated Diablo 4 expansion, Vessel of Hatred, scheduled for release in late 2024. This will be a double header for Icy Veins, as these expansions into major game titles supported by Icy Veins typically bring vast increases of traffic to the site, and this year we are getting two of them. Luminosity Gaming has been hard at it in the first few months of this year, packing venues across North America and running its own events for tens of thousands of live viewers online, along with tens of millions of views on its recently launched Smash channel. Luminosity Gaming recently started working directly with Amazon to create Boost Blitz, a fun twist on the traditional Rocket League tournament. We are honored and humbled that one of the largest companies in the world, Amazon, continues to choose us as a trusted partner to reach gaming and esports audiences, and we expect that relationship only to grow in the coming months and years. Luminosity Gaming also held the Kroger Smash Invitational in April, and this weekend is hosting the Get On My Level Smash and Fighting Game Live event in Toronto. The Kroger Smash Invitational had an average watch time of 84 minutes, and peaked at over 16,800 concurrent live viewers, and the Get On My Level live event is expected to be attended by over 2,000 attendees this weekend. Pocket Gamer is celebrating its 10th anniversary year and is lined up to have a busy year full of record events, both existing and new. The year started strong for Pocket Gamer with our flagship event, Pocket Gamer Connects London, being held in January. PGC London was the largest Pocket Gamer event ever, with over 150 sponsoring partners and over 2,600 delegates representing 1,300 companies. Further in March, we held the first ever Pocket Gamer Connect San Francisco, with over 1,000 delegates in attendance. And just recently, two weeks ago, we held the second annual Dubai Game Expo Summit, which also set records. including approximately 1,400 delegates in attendance. The 10th anniversary year is just getting started for Pocket Gamer, with large events still to come, including the Mobile Game Awards in Germany in August, PGC Helsinki and the Top 50 Game Developers Series in October, and PGC Jordan in November. We see continued demand for our B2B mobile gaming events and are evaluating other opportunities across Europe, the Middle East, and Asia for additional events both this year and next. Fantasy Football Scout remains one of the top choices for Fantasy Sports and Premier League fans and has had a strong start to the year, including a current 20% increase in partnership and sponsorship revenue year over year. Through FFS, we are working directly with the Premier League, UEFA, Sky Sports, and DraftKings, among other notable partners. I'm pleased to announce that FFS is currently working with UEFA on a Euro 2024 fantasy game to be hosted in June and July alongside the launching of a dedicated podcast. FFS has launched new tools and features for members this year. And as of recently, its content even appears in the UK's third largest publication. And of course, in Q1 this year, we finished Season 2 of NFL Tuesday Night Gaming. Season 2 saw a tremendous increase in engagement over Season 1, with 5 million weekly average impressions and over 111 million impressions for the entire season, resulting in a 53% increase in engagement year over year. Notable sponsors of Season 2 of NFL TNG included Lego, Campbell's, and Carnival. NFL TNG is a tremendous asset for our direct sales team, and the recent leaps in engagement make us excited for its future. Based on these results, I am pleased to announce that along with our partner, the NFL, we will be bringing NFL TNG back for Season 3, starting this fall with a renewed creative concept focusing on our most successful segments and evolving consumer demand trends details of which will jointly follow with the NFL closer to the launch of Season 3. Underlying these and all of our other owned and operated assets lies a coveted community of gaming audiences, and I identify these as our most valuable assets. And the underlying strategy remains the same. Leverage our large and highly engaged audience to derive a higher percentage of direct sales and subscription revenue with less reliance on network revenue. This will and is leading to significantly expanded gross margins, which, when paired with disciplined spending, will allow us to generate stable and increasing returns. And we are quickly realizing these benefits. The adjusted EBITDA loss reported in Q1 was a record low $1.8 million, a 42% improvement year over year. There are two reasons why this is extremely notable. One, the $10 million cost reduction program was finalized in March, and the resulting savings are not yet fully normalized and flown through the Q1 numbers. And two, Q1 is the seasonally lowest quarter of the year, and the results are expected to continue to improve substantially and sequentially as we move throughout the rest of the calendar. There has been a lot of work done in a very short period of time to set the company up for success this year, bringing new focus, stability, and excitement to the business. Some of this work involved making decisions around shedding large segments of low margin network revenue, resulting in a significant decrease in top line revenue, which was 23.3 million in Q1 as compared to 42.9 million last year. However, This enabled us to shed significant costs with little impact to gross profit, which was $14.1 million as compared to $16.8 million last year, resulting in our record low Q1 adjusted EBITDA loss of $1.8 million compared to $3.1 million last year. Those of you who know me will know that decrease is not a word I like to use. Growth is in this company's DNA. and we are quickly getting back to growth. These last few months, we've had to make changes to rapidly position ourselves to support and sustain profitable growth in this new environment. These changes have created a streamlined business model designed for sustainable and scalable profitability and focused on what we are and what we own and control. We are a media and entertainment company for gamers. We own and control our highly engaged communities, which are best in class in their respective verticals. We are focused on increasing the size and engagement of our vast audience, and we are now streamlined and efficient with gross margins of over 60%. This means that we can reach break-even and profitability at a much lower gross profit threshold. significantly enhancing our ability to scale profits rapidly and sustainably. Therefore, we are investing in high-margin revenue-producing areas of the business to drive profit. We are investing in direct sellers to continue to unlock the value of our vast digital inventory and to capitalize on our unique offerings, including our partnerships with both the NFL and the NHL. We are investing in our product offerings, including more game titles on U.GG and IC Games and more events in Pocket Gamer and Luminosity. And we are investing in existing and new subscription offerings, such as the Sims Resource and Fantasy Football Scout, which boasts the highest quality offerings as measured by engagement, but still have plenty of market share to conquer. We find ourselves here today following a wave of positive catalysts in the first few months of the year with record adjusted EBITDA loss results posted in Q1 and seasonal tailwinds at our back. Because of this, I remain of the strong opinion that our outlook has never been stronger and I have full confidence that 2024 will be a prosperous year for Enthusiast Gaming. We've set the stage to make that happen. and will keep working hard to maintain this momentum. Thank you, and I will now turn the call over to Felicia to provide further commentary and details on the financial results. Felicia.