OverActive Media Corp.

Good day, everyone, and welcome to Overactive Media's 2025 First Quarter Conference Call. At this time, participants are in a listen-only mode. This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of Overactive Media's website. It will remain posted there for the next 30 days. I will now hand the call over to Mr. Babik Pedram, Investor Relations for Overactive Media, for introductions and reading the Safe Harbor Statement. Please go ahead, sir.

Thank you, Joanna, and good morning, everyone. Welcome to Overactive Media's first quarter 2025 earnings conference call. A copy of the company's earnings press release is available on the investor relations section of our website at overactivemedia.com. With us on today's call are Adam Adamu, Chief Executive Officer, and Rakesh Shah, Chief Financial Officer. Today, we'll review the highlights and the financial results for the first quarter 2025 and recent developments. Unless otherwise specified, all amounts mentioned on today's call are in Canadian dollars. Before we begin, I will read our cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements within the meaning of applicable security laws, including, among others, statements concerning the company's 2025 objectives, the company's strategy to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. But forward-looking statements reflect management's current beliefs and are based on information currently available to management and are subject to several significant risks and uncertainties that could cause actual results to differ materially from those anticipated. Also, our commentary today will include adjusted financial measures, which are non-GAAP measures. These should be considered a supplement, not a substitute for GAAP financial measures. Reconciliations between the two can be found in our MD&A, which is available on cedarplus.ca and our website. At this time, it is my pleasure to introduce Mr. Adam Adamu, Chief Executive Officer of Overactive Media. Adam, please go ahead.

Thanks, Bhavik. Good morning, everyone, and thank you for joining us. Q1 set the tone for what we believe will be an important year for Overactive Media. Revenue grew 37% year over year. We reduced operating costs by 8%, and we finished the quarter with a strong cash position. Just as important, we proved again that our fan base is vast, global, and highly engaged. We sold out Madrid twice. First for the Call of Duty League Major in January, and then for the LEC Road Trip weekend in April of this year. Those events drew tens of thousands of in-person attendees and hundreds of thousands online, underscoring the reach of our brands across regions and titles. The full quarter contribution from Foy and Riders is already evident. Combining their production teams, creator networks, and commercial staff with our legacy operations has lowered SG&A, accelerated content output, and opened new revenue verticals such as our influencer agency business. With most integration work now behind us, we're capturing cost synergies faster than planned while benefiting from a deeper presence in Spain, Latin America, and across the Spanish-speaking esports community. Let me highlight three drivers of our momentum. Live event leadership. Our recent success in hosting events in Madrid and the upcoming 2025 CDL Championship in Canada show that we know how to deliver premium live events. These aren't just fan experiences. They're marketing engines. building fandom, deepening engagement, and creating activation opportunities for our partners. Most importantly, we're delivering these events profitably at the EBITDA line, which means they're generating real value for our business and for everyone involved. Second, high-margin digital expansion. We're now converting fan energy into predictable recurring revenue streams. One example is our best-selling in-game digital merchandise, which continues to drive strong performance. But more significantly, we recently launched the Phoenix Club, our first subscription-based direct-to-consumer fan platform. Phoenix Club offers fans exclusive perks like merch discounts, early access to tickets, giveaways, and gated Discord channels to engage directly with content creators and other fans. What makes it unique is that it's inspired by traditional Spanish sports membership models. but reimagined for a digital global fan base. It creates a real sense of belonging and identity for our fans. And here's the important part. Fans are showing that they're willing to pay to be close to our brand. Within days of launch, we sold out of our expectations for our physical founders edition cards and exceeded our internal sales targets. This isn't just a marketing play. It's a proof point that our direct-to-consumer strategy works, that the brand has real pull, and that we're building a scalable, recurring revenue base with high margins. Third, commercial depth and global reach. We continue to grow our commercial business through long-term, high-impact partnerships. We recently renewed and expanded our relationship with Monster Energy, a Tier 1 sponsor connected to Toronto Ultra that aligns perfectly with our brand and audience. That kind of trust and continuity speaks to the value we deliver. We're also opening up new markets. In Latin America, we've entered the Free Fire League in partnership with Telefonica, giving us a foothold in one of the fastest growing mobile esports communities. And in China, the largest esports market in the world, we've launched official channels for Movistar Koi on Weibo and Bilibili, unlocking new fans, new engagement, and new sponsorship opportunities. Together, these initiatives extend our commercial runway and diversify our income streams across geographies, platforms, and products. Looking ahead, the road map is clear. Nail our digital subscription verticals, maximize the monetization of our growing audience, and unlock the operating leverage embedded in our platform. With disciplined, efficient, and focused execution and a solid balance sheet, we remain confident in our plan and the path to profitability by the end of the year. With that, I'll hand the call over to Rakesh to walk you through the financial results in more detail.

Thank you, Adam, and good morning, everyone. Today, I'll briefly review our first quarter financial results and our performance for the first three months of 2025. Please note that the financial information we discussed today is prepared in accordance with international financial reporting standards and is in Canadian dollars unless otherwise indicated. In Q1 2025, we generated $5 million in revenue, and that's up 37% from the $3.7 million in Q1 2024. Growth was driven by a full quarter contribution from Koi and V-Star Riders, stronger league revenue share, and two sold-out Madrid events, and continued momentum in sponsorship and digital merchandise sales, partly offset by the planned exit from Counter-Strike and the associated sticker sales in 2024. These results highlight the scalability of our multi-region platform and disciplined integration execution. For context, on quarterly variability, our revenue mix is inherently seasonal. A portion of lead share revenue is recognized evenly based on guaranteed amounts, with a performance-based balance recognized after the corresponding team season's end. By contrast, sponsorship, partnership, and merchandise revenues flow relatively relatively evenly throughout the year, while live event and ticket sales are booked when each event is delivered. This mix means individual quarters can vary, but drivers balance out over the fiscal year. Our gross profit for the quarter was $2.6 million versus $2.7 million in the prior year quarter, and growth margin came in at 52% compared with 75% in Q1 of 2024. The expected compression reflects the absence of last year's Counter-Strike-related sales and the planned addition of lower-margin influencer and event production revenue acquired with Koi and MovieStar Riders. Even with this deliberate mix shift, the absolute level of gross profit underscores the resilience of our revenue engine and the scalability of our expanded platform. Operating expenses for the first quarter totaled $4.9 million. an 8% reduction from $5.3 million in Q1 2024. The decrease reflects the completion of most integration and restructuring work, disciplined SG&A management, and early synergies from the COI and Movistar writers' acquisitions, partially offset by targeted investment in content production, live event execution, and the rollout of our Phoenix Club subscription-based platform. areas that will fuel future revenue growth while preserving our improving cost structure. Adjusted EBITDA for Q1 2025 was a loss of $2.3 million compared with a loss of $1.8 million in Q1 2024. The wider loss reflects the deliberate mix shift towards lower margin influencer and live event revenues, as well as startup costs tied to launching our Phoenix Club subscription-based platform and staging two large-scale Madrid events. These investments are front-loaded as high-margin digital merchandise and subscription revenues scale and the events calendar normalizes. We expect sequential EBITDA improvement in the back half of the year, keeping us on track towards our positive EBITDA target by the end of 2025. We recorded a comprehensive loss of $2 million in Q1 2025, a 55% improvement from the $4.5 million loss posted in Q1 2024. The significant improvement was driven primarily by higher revenues, disciplined cost management, and a $1.7 million foreign currency translation gain on Euro-denominated assets. The step change in comprehensive results underscores the growing resilience of our balance sheet and the progress we've made in reducing earnings volatility. Our cash and cash equivalents on March 31st, 2025 were $7.9 million, and that's up from the $6.8 million at year end. Networking capital stood at $3.4 million, and our liquidity position remained strong, allowing us to focus capital on high return initiatives such as the Phoenix Club subscription-based direct-to-consumer platform and our upcoming live event slate while maintaining strict cost discipline. Q1 demonstrates sharper cost control and continued expansion of high-margin recurring revenue streams. As we progress through 2025, we expect sequential profitability improvements supported by a richer digital merchandise mix, growing subscription revenue, and the operating leverage inherent in our scaled platform. That concludes my remarks.

I'll now turn back to Adam for closing comments. Thanks, Rakesh. And thank you for joining us today and for your continued support of Overactive Media. Our strategy is working. Our live events engine is reaching more fans than ever, with Madrid showing what we can achieve when we take the lead on premium team-hosted events. We're building direct relationships with fans through new platforms like Phoenix Club, and we're scaling high-margin recurring revenue opportunities that grow our business over time. Across the board, our commercial relationships are strong. We're expanding into new markets and diversifying our revenue streams, all while maintaining disciplined cost control and a solid cash position. Our focus remains clear. Scale with purpose, stay close to our fans, deliver value to partners, and drive long-term returns for shareholders. We have momentum, and we're working every day to turn that momentum into lasting success. Thank you again. Operator, back to you.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a good day.