Enthusiast Gaming Holdings Inc.

Hello and welcome to the Enthusiast Gaming Holdings 4th 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. And 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 fourth quarter and year-end 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 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 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 months and year ending December 31st, 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. And thank you everyone for joining us on today's fourth quarter and full year 2024 earnings call. I'm pleased to report that Enthusiast Gaming closed out the year with strong momentum and a business that has been fundamentally rebuilt for long-term success. Before I begin, I want to take a moment to officially welcome back Alex McDonald as our Chief Financial Officer. Alex previously served as our CFO for over four years and rejoined the company on January 1st. He knows the business inside and out as he was our first ever employee and he brings deep financial and operational expertise. Welcome back, Alex. 2024 was a transformative year for Enthusiast Gaming. We undertook a deliberate refocusing of our business to emphasize what we own and what we operate and to eliminate lower margin segments and their associated operating costs. Our deep prioritization of the video network and third-party web network accounts for the majority of our top-line revenue declines, but this was a strategic trade-off. We significantly reduced our operating expenses, improved our cost structure, and re-centered the business around efficient, high-margin growth. The result? A dramatic improvement in adjusted EBITDA. In Q4 2024, adjusted EBITDA improved meaningfully, coming in at $1.9 million compared to a loss 3 million in Q4 2023, a $4.9 million swing toward and into profitability. We reported revenue of 17.8 million for the quarter, down from 47.1 million in Q4 of the prior year, but at a significantly higher gross margin of 76% compared to 40% in Q4 of 2023, which is a testament to the strength of our core owned and operated assets and focus monetization strategies. While revenue was lower year over year, the profitability of our core operations and cost structure improvements have fundamentally changed the quality of our earnings. Operating expenses saw a significant reduction with cash-based quarterly OpEx down by over $10 million year over year in Q4, reflecting disciplined cost management and our streamlined focus. On a full year basis, we reported 73 million in revenue in 2024 down from 178 million in 2023, almost entirely due to the deprioritization of the low margin network revenues. However, our adjusted EBITDA improved over 12.8 million from an adjusted EBITDA loss of 13 million in 2023 to an adjusted EBITDA loss of only 153,000 in 2024, which doesn't account for the normalization of the structural changes made throughout 2024. These results reinforce the quality of our go-forward earnings and the sustainability of our refocused business model. Looking ahead to 2025, we are confident in the strength of our gross margins. which we expect to be similar to those achieved in 2024, and maintain our commitment to cost discipline, each of which is a result of the increased efficiency of our monetization model. With support from our Playwire partnership, our programmatic revenue is delivering higher yield with lower costs across our owned and operated properties. And with our subscription products once again gaining momentum, we're seeing more revenue flow directly to the bottom line, That means one thing. The next step is audience expansion. Let me be clear. Our goal for 2025 and beyond is to spend more time with more gamers. This vision, while simple, informs everything we do, from product development to content strategies to how we engage our advertising partners. We serve gamers anytime and anywhere. We entertain them, we inform them, we give them tools to make them better. And that serving of gamers happens through our communities, content creators, and experiences. These four pillars represent the foundation of our ecosystem. And we believe that with an efficient and effective monetization model in place, deepening engagement across our properties, is the path to lasting value. Let's talk about some of the standout assets powering this success. The Sims resource had a strong Q4, adding thousands of paid subscribers and ending the year up year over year in subscriber counts versus December 31st, 2023, despite first half declines. That trend has continued into 2025, with TSR consistently setting new all-time highs for paid subscribers each week. Major product updates are planned for this year, which we believe will take TSR to even greater heights, including its engagement and paid subscriber base. Icy Veins had an excellent year in 2024, closing Q4 with a strong performance. The site benefited from macro tailwinds like World of Warcraft's The War Within expansion, in August and Diablo IV's Vessel of Hatred release in October. These, combined with an extraordinary effort from the IC team to expand its coverage across new game titles and deepen its engagement with users through interactive tools, drove record results. With coverage for three new titles already launched through Q1, including a highly successful expansion into Monster Hunter Wilds, which has seen immediate returns for the property, ICY is already significantly up year over year, and with more expansion, modernizations, and feature improvements planned throughout 2025, we're confident in another great year ahead. U.GG continued to deliver value for players and advertisers alike in 2024 through a best-in-class product. 2024 saw UGG expand into three new titles, including the Riot title Teamfight Tactics, the breakout success Helldivers 2, and a Q4 launch of coverage for Deadlock, the highly anticipated first-person MOBA from Valve, while also significantly growing its user base in its proprietary desktop applications for League of Legends and Valorant, where user retention, engagement, and monetization see drastic improvements versus the website properties. Both game title expansion and app conversion remain key and necessary drivers of growth for U.GG, with six more title expansions planned over the coming quarters. These titles include the latest gaming success story, Marvel Rivals, which I'm pleased to announce has gone live today, as well as the soon-to-be free-to-play Rainbow Six Siege and the highly anticipated Riot fighting game, 2X K.O. Turning to our Pocket Gamer brand, 2024 was a standout year for Pocket Gamer Connects. Our flagship events in London and Helsinki set new records, and we're expanding in 2025 with three new events, Barcelona in June, Shanghai in July, and another major Southeast Asia event to be announced soon. Meanwhile, PocketGamer.com, the consumer-focused web companion to our events business, doubled its traffic over the course of 2024 and continues to grow as the go-to destination for mobile game news, guides, tier lists, and reviews. We are extremely bullish on both the B2B and consumer growth potential of the Pocket Gamer brand. We also made an important strategic decision to sunset our NFL Tuesday Night Gaming program at the end of 2024. While the show made significant waves over its three seasons, and we are proud to have shown the industry the art of the possible at the crossroads of sports and gaming, the economic realities were ultimately clear. The cost structure was high and thus required significant sponsorship commitments on a more rigid template, which didn't always fit our goal of giving our direct sales clients the access to gaming audiences that they need, but in the budgets, mediums, and timing that they want. The final episode of NFL TNG aired in February, and the program is now non-recurring in these financial results. Going forward, we will focus on a built-if-sold model for custom content, a more flexible and profitable approach that aligns better with our customers' needs. Custom content, however, remains an important part of our long-term strategy. Projects like Luminosity's Rising Stars which has returned in 2025, allow for high engagement, lower cost activations with top creators and strong brand alignment and are an incredible example of the type of content we will continue to pursue. This year's version of Rising Stars has already generated over 300 pieces of content and has well surpassed 300 million impressions. We're building on our production expertise and creative capabilities with a model that protects and enhances profitability. Although delayed by the LA fire, our partnership with the NHL also continues, but on a timeline that works for all parties, for ourselves, our sponsors, and the league, and with a model that allows more flexibility to align costs with revenues on sold-through episodes. As a result, we have reset the timeline with the NHL to run concurrently with the NHL's 2025-26 season, and we are focused on ensuring that the show aligns with sponsor expectations and runs profitably at all times for the company. 2024 was also a year of transition for the direct sales team, and we ended the year with some encouraging momentum. Amazon was our largest direct sales client in 2024. Given their size and their sophistication, This is a promising indicator of the effectiveness of our offerings. They have already returned for more business with us in 2025. Lego, State Farm, and Toyota are also consistent repeat customers through 2024 and now into 2025, also reflecting satisfaction with our offerings by very notable global brands. And finally, Ford became a new client in early 2025. and we welcome the addition of this incredible company to our automotive vertical. We believe this is a testament to our improved go-to-market approach, stronger sales materials, and the value of our creator and content ecosystem. Stepping back, we are proud of where we are today. We now have a business model that is profitable, high margin, and focused on owned and operated properties, that we control and scale. Our monetization is efficient, our costs are predictable, and we are in a strong position to grow. With a foundation firmly in place, we are shifting our focus to audience growth across our ecosystem. And importantly, we are operating in a global landscape that continues to validate our industry model. According to PwC, gaming remains one of the fastest growing segments in the global entertainment and media industry, and we are well positioned to benefit from that tailwind. Additionally, digital advertising is expected to capture over 60% of all ad spend by 2026, according to Dentsu, with gaming content and creators continuing to command premium value for reaching high-intent, brand-safe audiences. Our platform sits squarely at the intersection of these trends. As both the media and technology company focus on gaming, we are uniquely positioned to monetize this growing attention in scalable and profitable ways. In summary, Enthusiast Gaming is emerging from its transition in 2024 with real momentum and a clear vision. We have rebuilt the company with discipline, focus, and an unwavering commitment to scalable and profitable growth. 2025 is shaping up to be a year of expansion in both audience and profitability. Thank you to our stakeholders, our partners, and our communities for their continued support. I will now turn the call over to Alex for a closer look at the financials.