Enthusiast Gaming Holdings Inc.

and welcome to the Enthusiast Gaming Holdings, Inc. Third Quarter 2024 Financial Results Conference Call. All participants will be in 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. 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.

Thank you, operator. Good afternoon, everyone, and welcome to the Enthusiast Gaming Third 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 Della 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 to 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 September 30, 2024, which is available under the company's profile on CDAR+, as well as on the company's website at enthusiastgaming.com. The precaution not to place undue reliance on these forward-looking statements would 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'd like to turn the call over to Adrian Montgomery. Adrian, the call is yours.

Thank you, JB, and thank you, everyone, for joining us on today's third quarter earnings call. I am thrilled to share that Q3 marks a transformational milestone for Enthusiast Gaming. For the first time, we achieved profitability on an adjusted EBITDA basis, which has changed for Enthusiast Gaming. This result is more than a financial achievement. It is a powerful testament to the stability, resilience, and growth potential of our business. The shift to profitability is particularly significant as it reflects the success of our comprehensive strategic refocusing, which we have been undertaking since Q1 of this year. This quarter, We delivered $3.6 million in adjusted EBITDA improvement year over year, a trend we are determined to continue. By carefully optimizing our operations, streamlining costs, and focusing on high-margin areas, we have positioned Enthusiast Gaming for a future of sustainable growth on an efficient footing, driving forward as a higher-margin and, most importantly, consistently and increasingly profitable business. Our cost reduction efforts have been instrumental in this transformation. I'm pleased to announce that we have now achieved over $20 million in annual cost savings, doubling our original goal of $10 million. What makes this achievement even more impactful is that we realize these savings without sacrificing the growth of our communities or the quality of our content. In fact, Page views across our core web properties increased quarter over quarter in Q3, reaching 1.9 billion, up from 1.8 billion in Q2, underscoring our ability to expand our reach while maintaining disciplined cost control. With this stable foundation, we have laid the groundwork for a sustainable growth engine that enables us to scale efficiently with predictable expenses. Our direct sales team, a major focus this year has undergone significant change. We took essential steps to rebuild and refocus this team in 2024 with a sharpened emphasis on cultivating long-term relationships and high-value partnerships. Given the longer sales cycles that typically accompany direct sales, changes in this area naturally take time to fully reflect in our financial results. However, we are already seeing very promising indicators of growth. Amazon, our largest direct sales client year to date, increased its spend with us by 107% this quarter compared to Q2, and our early booked sales for 2025 are as strong as they've ever been at this point in the year. Our media mix has realigned with our core strength, a custom sponsorship heavy focus. In Q3, Custom sponsorships accounted for 56% of our direct sales, up from 28% in Q2. This shift towards high-value campaigns is delivering results across multiple offerings, including custom campaigns and sponsored streams for the Kamala Harris campaign, a project that even Elon Musk felt compelled to reference on his personal social channels. This momentum has placed us in an enviable position as we head into the final stretch of the year. We anticipate that seasonal trends will favorably impact our profitability, particularly in our programmatic advertising and direct sales channels. Seasonality drives higher CPMs and increased advertising demand as we enter the holiday period, creating a natural tailwind that will amplify our profit potential across our entire product lineup. From direct sales to programmatic channels, the seasonal boost builds on an already profitable base, positioning us for a robust close to the year. Our programmatic ad revenue structure continues to benefit from ongoing optimism, as well as our partnership with Playwire, which has equipped us with a robust monetization engine that allows us to target high-value audiences on our core properties while maintaining stable costs. This translates into more profitable revenue. This quarter's total revenue was $16.8 million, which is down from $45.5 million in Q3 2023, primarily due to divestments and our strategic refocus on high-quality assets. However, our revenue is now significantly more profitable. Our gross margin in Q3... 3%, up from 36.7% last year, underscoring the profitability of our core web properties and the stability of our cost structure, including our cost of goods sold. Every dollar of revenue now has a higher impact on our bottom line, thanks to those efficiency and market improvements. And in addition to these financial advancements, our core products continue to drive engagement and growth across multiple channels. The SIMS resource has seen tremendous progress of late, particularly with its premium subscriptions. This month will mark the sixth straight month of paid subscriber growth for TSR, following a previous four months of decline. Conversion rates on the SIMS are now as high as they've ever been, and the shift toward premium annual packages, driven by the launch of free trials and adjustments to our pricing models, has created a steady upward trajectory in revenue and customer lifetime value while simultaneously reducing churn. As our most financially successful property, TSR provides a model for how we can expand our high value offerings. And we are actively exploring additional ways to technology and expand its reach, including the potential for expansion into other game titles. Icy Veins continues to deliver impressive results, solidifying its position as the go-to destination for fans of Blizzard game titles. The recent War Within expansion for World of Warcraft drove significant traffic to the site in Q3, and with the Diablo 4 expansion, Vessel of Hatred, released in October, Icy Veins is on track for a record year. We're committed to maintaining this momentum and ensuring Icy Veins site for fans of Blizzard content, as its consistent growth rate reflects the depth of engagement within our communities. U.GG is another standout, experiencing steady growth as a trusted resource for League of Legends players. We were able to quickly expand U.GG's offering to include new features for the League of Legends swarm mode, capturing even more League players within our ecosystem. while advancing upcoming title expansions for 2xKO, the upcoming Riot fighting game, and Deadlock, Valve's highly anticipated MOBA title. This growth has been amplified by the recent League of Legends World Championship, which concluded in early November. We're riding a wave of heightened interest, and U.GG is in a prime position to continue capturing the attention community, as well as the broader gaming community, which it services through its expansion. With U.GG's reach expanding and its feature set becoming more robust, we're confident it will continue as a valuable resource that draws both dedicated players. In addition to our ongoing product success, our events business, including Pocket Gamer Connects, has shown impressive growth. PGC's Mobile Games Awards, the Oscars of Mobile Gaming, were held in Germany and saw record attendance. And although our PGC Helsinki event took place in early Q4 of this year, pre-sales and engagement were strong in Q3, with the event expected to positively impact Q4 results. We are also planning for 2025, including expansion in Asia and a new European event in Barcelona, among others. Pocketgamer.com has continued to see robust traffic, averaging over 2 million users per month and 9.6 million page views per month, a sign of the sustained engagement we're building across our properties. Fantasy Football Scout also had a strong quarter with the launch of the Fantasy Premier League 2024-25 season and its new app. Premium subscription revenue increased for the fifth consecutive year, successful partnerships with the English Football League, UEFA, and the Premier League, as well as team partnerships with Aston Villa, Chelsea, and Manchester City. This consistency in growth and engagement reflects the strength of our brands and their appeal to a loyal fan base. Our strategic partnerships with the NFL and NHL are also key pillars of enthusiasts' content and engagement strategy. In Q3, we aired six episodes of NFL Tuesday Night Gaming's third season, which features an all-new format that has successfully drawn even more interest. This year, we had a success of 93 million impressions in Q3, a 467% increase year-over-year compared to Q3 of last year. This incredible growth reflects the strong connection NFL Tuesday Night Gaming has forged with both sports and gaming audiences, showcasing our ability to bridge these two dynamic worlds in a way that captivates fans. Building on this success, we're excited for the launch of NHL Puck and Play in Q1 2025. This initiative with the NHL will allow us to tap into the energy and loyalty of hockey fans creating new high-engagement content and revenue opportunities that deepen our position at the intersection of gaming and professional sports. Looking ahead, we see a clear path to sustained and increasing profitability. As we move into Q4 and beyond, we are fully prepared to leverage both our stable foundation and targeted growth initiatives. With seasonal trends driving higher ad rates and increased engagement, we are poised to close the year on a strong note. For example, our revenue per thousand, or RPM, is up 139% compared to Q3 2023. And with our high-value partnerships performing well, including our NFL Tuesday night gaming property and our soon-to-launch NHL partnership, we are in an ideal position to capitalize on favorable industry tailwinds. Let's talk about the future. For Enthusiast Gaming, the future is a return to sustainable, high-quality growth built on a solid and efficient foundation. With streamlined operations and a robust monetization engine in place, we are now able to drive more dollars from our core audience while focused on growing that audience even further. Every page view is now worth more and every page view flows directly to the bottom line. This optimized structure means that as our reach expands, our profitability grows right alongside it, allowing us to turn each interaction into meaningful value. We're no longer just capturing attention, we're transforming it into tangible returns that fuel our long-term success. It is also essential to remember that we operate within an expanding market. According to a recent report by PWC, gaming remains one of the most growing large sectors in the entertainment and media universe, and we are better positioned than ever to capitalize on that growth. As the gaming audience widens, so does the potential for Enthusiast Gaming to capture and engage new users, drawing them into our ecosystem of platform content. In addition, according to Dentsu, digital remains the fastest growing area of advertising, and it is expected to capture 62% of all advertising spend in 2026. The growth of these two sectors have a compounding effect for enthusiast gaming. We also see significant opportunities to drive growth across several strategic areas. First, there's continued room to expand our existing platforms into additional game titles, with Icy Veins and U.GG both poised to capture even larger audiences, as evidenced by the success of Icy's expansion into Diablo 4. Additionally, the Sims resource provides a technological blueprint we can use to create new, scalable platforms across other game titles. We also see ample opportunity for growth in search engine optimization and in the social media space, where targeted efforts can extend our brand, reach, and attract more engaged users. Finally, as our profitability continues to rise each quarter, our capacity to reinvest now expands, positioning us to explore new markets, enhance our current offerings, and drive long-term value for our shareholders. In summary, EGLX's future is one of efficiency, high margins, and a commitment to profitable growth. Our path forward is measured, strategic, and built on creating sustained and scalable value. We are not only focused on once again gaining significant ground, but on making every gain count toward our bottom line. Thank you. all for your support as we move forward into this exciting next phase. I will now turn the call over to our CFO, Felicia, for more details on the financial results.

Thank you, Adrian. Our deliberate and strategic shift to focus on our most engaged owned communities and the high-value revenue streams they generate has once again delivered a record for enthusiast gaming. adjusted EBITDA profitability. This shift has given the company an operating expense structure that supports sustainable growth, where each incremental top-line dollar earned contributes at a 70% gross margin. At the start of the year, we set ambitious goals on a path toward a sustainable and profitable future. I'm proud to report that we have delivered on these commitments, creating a foundation for long-term success. Let's discuss what we set out to achieve and how we've surpassed those goals. First, we committed to reducing operating expenses by 10 million within the calendar year. Not only met this target, we exceeded it, reducing total operating expenses year-to-date by 35 million through September 30th, with cash-based operating expenses now down well over 20 million on an annualized basis. Second, we aim to strengthen our balance sheet. reducing our accounts payable in accrued positions by $32.4 million since December 31, 2023, and narrowing our net working capital deficit, excluding the current portion of long-term debt, to $1.9 million as of September 30, 2024, compared to $14.1 million at year-end 2023. Third, we set out to increase our overall gross margins. Here, too, we succeeded, expanding gross margins by over 3,000 basis points, from 36.7% in Q3 2023 to 70.3% in Q3 2024. And finally, we focused on enhancing our programmatic web business and increasing the value of our owned and operated properties. We delivered here as well, achieving 139% increase in RPM this quarter compared to Q3 2023 nearly offsetting the traffic declines from deprioritized represented sites. Together, these achievements mark a significant milestone in the company's journey, our first ever quarter of adjusted EBITDA profitability. This accomplishment is a powerful testament to our team's hard work and our commitment to building an increasingly profitable future. We're also seeing non-financial metrics. highlighting the overall health and sustainability of Enthusiast Gaming, as well as the positive trajectory of our highly engaged community. We increased our page view traffic in Q3 2024 relative to the previous quarter, all while significantly enhancing monetization. When excluding the video platform, we increased unique visitors in Q3 2024 relative to Q2 2024 by 16%, This was largely driven by content related to key game releases, which highlights the relevance of our brands and communities in delivering timely, engaging content. On the Sims resource, subscriber count has now grown for five consecutive months, soon to be six, following four months of stagnation. NFL Tuesday Night Gaming continued its impressive performance with six episodes aired in Q3 2024, generating 467% year-over-year growth in impressions through our cross-promotional efforts. And Luminosity's live events continue to be a success, with Luminosity recently hosting its second invitational Super Smash Brothers Ultimate Event of the Year. This event drew over 600,000 hours watched, with viewership peaking at around 60,000 concurrent viewers during the Grand Finals. Together, these achievements mark a significant inflection point in our financial. one we've reached without compromising the strength and engagement of our communities. With these milestones completed, we look forward to focusing our energies on 2025 and resuming growth. In respect of our more detailed financial results, I would first note that our results are presented in Canadian dollars. The significant majority of our revenues and expenses are measured in U.S. dollars and are translated into Canadian dollars for presentation in our financial statements. The exchange rate between the U.S. dollar and our presentation currency of the Canadian dollar is considered when analyzing or forecasting results. Additionally, it's important to note that the historical financial results don't fully reflect the changes in revenue mix as well as cost reductions enacted, and so historical financials will likely not bear a strong resemblance to future results. Turning to the financial results, We ended the quarter with $6.9 million in cash as of September 30th, 2024. We also reduced our short-term debt from $21.9 million as of December 31st, 2023 to $19.7 million as of September 30th, 2024. We reduced our accounts payable in $18.7 million for the period ending September 30th, 2024 as compared to $47.1 million for the period ending December 31st, 2023. The result of this is a healthy and manageable networking capital deficit, excluding the current portion of long-term debt of $1.9 million as of September 30, 2024, compared to $14.1 million at year-end 2023. Now to our P&L. For the three months ended Q3 2024, revenue totaled $16.8 million, a 63% decrease compared to $45.6 million in Q3 2023. Media and content revenue decreased from $39.8 million to $11.9 million, a 70% reduction, or $27.9 million. The primary driver behind this decline was our strategic decision to deprioritize lower margin revenue on our video platform, which accounted for approximately $21.3 million to $28 million decrease in media and content revenue. Additionally, overall direct sales, the majority of which is included in media and content revenue, contributed to the year-over-year decline, decreasing from 9.8 million in Q3 2023 to 4.8 million in Q3 2024, or around 50% largely due to having half the number of ramp sellers versus the year-ago period. However, despite these decreases, we saw an increase in closed dollars per ramp seller of 15% in Q3 2024 relative to Q3 2023, And we are excited with our early indicators for the 2025 year. With direct sales dollars closed for the 2025 year showing over 100% increase relative to this point in time last year for the 2024 year. The remainder of the decrease in median content revenue is attributable to a decrease in programmatic web revenue primarily driven by fewer page views. From a more selective approach to represented sites aimed at improving overall profitability. This focus led to an improvement in gross profit for programmatic web revenue and contributions in Q3 2024 that were on par with Q3 2023. Esports and entertainment at 1.9 million from Q3 2023 to Q3 2024. And finally, subscription revenue decreased by 900,000 or 32% from 3.7 million in Q3 2023 to 2.8 million in Q3 2024, in part due to change in mix, as well as lower subscriber count year over year on the CIMS resource, and in part due to the sale of certain non-core, non-profitable assets under addicting gains sold in April 2024. Gross profit was 11.8 million in Q3 2024, down 30% compared to the 16.7 million of gross profit reported in Q3 2023. Gross margin increased from 36.7% to 70.3%. The significant margin improvement highlights the enhanced contribution and focus of our owned and operated properties, direct sales, and subscription revenue to our overall revenue profile. Additionally, the increase in gross margin reflects the impact of our strategic decision to deprioritize certain represented Vizio channels. Total operating expenses in Q3 2024 were $12.7 million, down approximately 50% from the year-ago quarter. This figure includes non-cash items of depreciation and amortization of $60,000 and share-based compensation of $80,000. In Q3 2024, we achieved an adjusted EBITDA profit of $74,000, a significant improvement from the $3.5 million loss reported in Q3 of last year. This quarter's adjusted EBITDA excludes approximately $20,000 in service insurance costs and $201,000 in public company costs primarily related to D&O insurance costs, which are non-recurring following our delisting from NASDAQ and SEC deregistration. In addition, in the year-to-date period ending September 30, 2024, we have improved adjusted EBITDA by $7.9 million. Net loss and comprehensive loss was $7.3 million in Q3 2024, a substantial reduction from the $57.2 million reported in Q3 of last year. In closing, we are proud to have achieved a significant milestone with adjusted EBITDA profitability and a strengthened balance sheet. Reaching this point was no small feat and is a direct result of the relentless hard work of our team here at Enthusiast. We're dedicated to creating lasting value for our shareholders. With these foundational achievements in place, we are energized and ready to focus on what we do best, cultivating an environment that continues to engage, inspire, and grow our thriving communities. Thank you, operator. I kindly turn it back to you.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. And our first question comes from Kevin Krishnaradhan with Scotiabank. Please go ahead.

Hey, good afternoon. You made a comment a couple of times. You're seeing an increase in the sales dollars closed for 25%, 100% versus the same time last year. Can you talk about what's driving that between, say, new clients? or existing clients repeating and upsizing, you know, number of deals? Are the deals getting larger? Just any color you can provide on what's driving that big growth.

Sure, Kevin. One of the things that has impacted it positively is, I think if you'll remember from last quarter, we Had indicated that we were adding sellers we were really trying to be thoughtful in our recruitment process about bringing sellers with Deep relationships and existing client books and They're starting to make an impact and make an impact rather early in the life cycle of what we're normally used to in terms of ramping up sellers and we're seeing larger RFPs, larger deal sizes, and we're starting to see more repeat business coming more quickly from, so the confluence of all those things is resulting in these encouraging trends.

I would also note that in Q3, we saw an increase in the revenue mix towards sponsorships, and these sponsorships are largely what's yielding the increase as well in 2025 relative to 2024.

Okay, got it. Helpful. On the direct side, I think earlier this year, there were some deals that were projected to close in Q2, and they were pushed to fall into H2. Did any of that land in this quarter, or is there more to come in Q4?

We have seen delays in the timing just as a result of the number of ramp sellers, and so we do anticipate those coming through in Q4, and we are seeing positive trajectory with the seasonal lift in Q4 relative to Q3.

Got it. Maybe the last one from me just on the revenue, the programmatic side of the business, all your own content. Now, I think it's good to see the stability from Q2 to Q3, it looks like on the map there. Can you talk about, you know, we obviously understand there's seasonality in the Q4. Can you talk about what we can expect to see on the programmatic line and any Any thoughts you can give us there for modeling the uplift that you'll see? You've got a couple drivers, CPMs, page views. Any thoughts? Appreciate it. Thanks.

So as we look out to Q4, we integrated PlayWire mid-Q2, and we did see a significant increase in our overall monetization as it related to Q3. And we also saw more of our revenue than ever before coming from our owned and operated sites relative to our represented sites. So as we look out to Q4, we are seeing indicators of CPM lift. We are seeing our page view traffic have positive impact as it relates to the releases and such. So we are anticipating, you know, in Q4 relative to Q3 on the programmatic business. with the majority coming from our owned and operated sites.

Got it. Okay, that's it for me. I'll pass the line. Thank you very much.

And the next question comes from Robert Young with Canaccord Genuity. Please go ahead.

Good evening. Given what looks like success adding mature and experienced salespeople, what's the plan for adding future headcount, or are you going to let the season... If I missed something in the prepared remarks, I apologize, but is there a plan to grow that?

To grow what?

The sales headcount. You added sales headcount? Yes. Are you pausing here or are you going to continue to add?

We are first ensuring that we have more ramp sellers in Q4 relative to Q3. Okay. And as we continue to see a positive trajectory on closed dollars per seller, we will continue to add.

Okay. But did you already see those trends in Q3 so far? Direct sales has gone up quarter over quarter. Presumably part of that is driven by seasonality, but some of it would be driven by the additional salespeople. Why not continue it?

Yeah, look, I think that... You know, we saw in Q3 and we're seeing in Q4 some of our newest hires make significant impacts. And so we're feeling like we are going to model to increase because it's producing for us. I think right now, Rob, it's... You know, Q4 is a tough time to recruit and to add sellers just because they're tied to their year-end commissions and are reluctant to leave. But certainly success with ramping up the kinds of sellers in New York, in Los Angeles, in Chicago. And so it more than pays for itself. So we're going to continue to be on the lookout for good talent. It's just not happening at this part of the year.

Okay, that's fair. The gross margins expansion over the last few quarters is very impressive. How should we expect gross margins to trend from here? Is it going to grow lockstep with the mix of direct sales and subscription, or how should we think about that going forward?

We do anticipate some additional margin expansion in Q4 relative to Q3. And then I think as it relates to our Q4 gross margin, that will probably be a better indicator of steady state. What's amazing now with our focus on subscription, direct sales, and web, they are all high margin businesses all in themselves. And so we're not partial to what is going to show a material lift quarter over quarter. All three lines are very strong contributors to our gross margin.

Okay. Last question. Probably an easy one. Adrian, I see you've still got interim in front of the CEO title. So what's going on there? I'll pass the line.

We've just been really, really focused on executing this turnaround to profitability. And so Neither the company nor I are looking to make a change right now, and we'll have more to say on it, but we're well on the path, and our focus is on tactical execution right now.

Okay, thanks.

Great to see the profitability adjusted. Pass the line.

And the next question comes from Matthew Miles with B. Riley. Please go ahead.

Hi, this is Matthew on for my Crawford. Thanks for taking my questions. So, 1st, I was wondering how much of an impact is the peak political ad spending have on the quarter.

If any impact at all, it will have an impact in Q4 as Adrian mentioned. It was exciting for us to to take part in the Kamala Harris campaign. and to have that custom execution in Q4. So we are anticipating that to be one of the factors of lift. In addition to the seasonal lift, we would anticipate going into the holidays.

All right, great. And I know you've been focusing on cutting video programmatic sales. And if I remember correctly, last quarter, you mentioned that Q3 would be a base point going forward. So are you sticking with that, or do you see room to cut further?

I see this as our base level, and so I still stand by the comment in Q2.

Got it. Okay. And just one more from me.

I heard earlier that there's a sharp increase in RPM year over year. I was wondering what the key drivers for that were and how we should expect that growth going forward.

Sure. So we looked across all of our owned and operated properties and be diligent as it related to the types of ads that we were running on each of the sites. And so that plus the density itself and the page views created this outsized impact on our overall RPMs, quarter over quarter, and year over year. So we do anticipate that trend continuing into Q4, with all three of those factors being looked at, density, traffic, as well as CPMs, and then Ideally, from there, we have better knowledge of where to further expand as it relates to game title expansion and the rest.

All right. Sounds great. Thanks for taking my questions. Again, if you have a question, please press star, then 1.

Our next question comes from Drew McReynolds with RBC. Please go ahead.

Yeah, thanks very much. I guess three for me. On the increase in cost savings from $10 to $20 million, if you can maybe just unpack where that increase just generally comes from. Second, maybe Adrian, just to the overall health of the ad market, it seems like things are finally kind of trending in the right direction after a couple of years of kind of mixed you know, tailwinds and headwinds, just depending on where you were in the ad market. Just love your latest thoughts on the health of the market. And then lastly, as we get into Q1, just what are the things to keep in mind as we model the NHL puck and play into the mix? Thank you.

So on your first question, as it related to cost savings, we had set out to do a couple of different things. We had a headcount reduction at the start of Q1 of approximately 30 percent. And we have been able to maintain that throughout the year, all while scaling profitability and seeing indicators of growth on top line revenue. So we do have a very stable compensation structure overall. The second thing we had set out to do was in-source our production. And so rather than outsourcing our flagship NFL Tuesday Night Gaming, we brought that in-house. And so that had also significantly reduced our costs this year relative to last year. And that was a big driver. And then across the board, we looked at all our non-compensation expenses, whether it be real estate, certain service providers, you know, certain consultants and things like that. And we were able to materially consolidate this year faster than we had anticipated. On your second question, which was about the advertising trends, I will pass to Adrian.

Yeah, look, I think it has been a little bit challenging this year. And But we're starting to see through deal size, RFP size, there's significant opportunity on the custom content and custom sponsorship side. Like we said in the prepared remarks, we're overjoyed that a company such as Amazon has become one of our largest partners, our largest partner this year. And that was really custom content, more than scaled media. The work that we did with one of the presidential campaigns was custom content and activation and influencer driven. So we see opportunity as our clients get more sophisticated about understanding the ROI that custom content sponsorship and influencers can play in their marketing campaigns. Q4, we're seeing encouraging signs. Again, though, for a business like ours, we did meaningful work for a presidential candidate. That's a very good thing. We also saw companies tell us that you know what, they treat election cycles as something that they don't necessarily, not all, let me make it more, not all companies want to be advertising right next to all this political stuff. And so, you know, they've paused and delayed. And so there's puts and takes, but we're seeing encouraging signs on the sponsorship and content side that we're working with like Amazon, like Netflix, like White Claw, are getting a lot out of what we're delivering and we're starting to see that in return RFPs and increased deal size. So net positive, certainly it has from a macro perspective this year, but we're encouraged.

And as it relates to your final question as to what to expect for Q1, we are anticipating across programmatic web and direct drop in Q1 versus the seasonal highs in Q4. However, we do have the continuation of NFL in Q1 2025, and we will be launching the NHL as well in Q1 2025. So both of those should um should partially off traditional seasonal declines we would see going into q1 in addition in q1 we have our largest event with pocket gamer in london and so that will be a bit of an increase in q1 relative to q4 overall Because we made such significant changes in Q1 2024, I do still anticipate that being a harder comp. And then in Q2 2024, when we get into 2025, that should be, you know, all of the things that we put into play, a better comp as to what we anticipate for go forward.

Okay. That's very helpful. Thank you both.

No further questions. This concludes our question and answer session, and thus the conference is now concluded. Thank you for attending today's presentation. Have a great rest of your day. You may now disconnect.