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Canada

Enthusiast Gaming Reports Preliminary Fourth Quarter 2021 Results

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Enthusiast Gaming Reports Preliminary Fourth Quarter 2021 Results

 

Q4 2021 Revenue Expected at $56.9 Million, Year-over-Year Increase of 34%
2021 Annual Revenue Expected at $167.4 Million, Year-over-Year Increase of 130%

Enthusiast Gaming Holdings Inc., a media and content platform for video game and esports fans to connect and engage, is providing select preliminary unaudited financial results for the three months ended December 31, 2021 (“Q4 2021”).

The audited annual consolidated financial statements of the Company for the year ended December 31, 2021 (“the Financial Statements”), and related Management Discussion and Analysis (the “MD&A”) are expected to be released on March 24, 2022.

Financial Highlights:

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  • Revenue in Q4 2021 is expected to be $56.9 million, representing a 34% increase from revenue for the three months ended December 31, 2020 (“Q4 2020”), of $42.5 million, resulting in expected annual revenue in 2021 of $167.4 million (2020 – $72.8 million).
  • Gross profit in Q4 2021 is expected to be $13.7 million, representing a 69% increase from gross profit in Q4 2020 of $8.1 million, resulting in expected annual gross profit in 2021 of $37.8 million (2020 – $18.7 million).
  • Gross margin in Q4 2021 is expected to be 24.1%, representing a 500 basis point increase from gross margin in Q4 2020 of 19.1%.
  • Direct sales in Q4 2021 are expected to be $8.8 million, representing a 167% increase from direct sales in Q4 2020 of $3.3 million, resulting in expected annual direct sales in 2021 of $22.2 million (2020 – $5.0 million). Direct sales are included in revenue.
  • Paid subscribers as at December 31, 2021, are expected to be 220,000, representing an 80% increase from paid subscribers as at December 31, 2020, of 122,000.
  • Cash balance as at December 31, 2021, is expected to be $22.7 million compared to $4.3 million as at December 31, 2020.

“These preliminary Q4 results again demonstrate the strength of our unique model, and show our momentum heading into 2022,” said Adrian Montgomery, CEO of Enthusiast Gaming“We expect to have generated record quarterly revenues in the fourth quarter of 2021, led by our continued strength in direct sales, our ability to acquire and integrate assets such as Addicting Games and U.GG, our ability to attract and retain paying subscribers, and ultimately our flywheel of communities, creators, content, and experiences.”

“Q4 2021 revenue growth is expected to be strong at 34% year-over-year, but is outpaced by the expected gross profit growth of 69%. This is resulting in continued gross margin expansion,” said Alex Macdonald, CFO of Enthusiast Gaming“Higher yield and higher margin revenue is core to our business model, and we continue to invest in operations that drive this type of growth.”

Fourth Quarter Operational Highlights:

  • Completion of the acquisition of League of Legends community U.GG, and expansion of the U.GG desktop app.
  • Renewals or additional business with key partners including Proctor & Gamble, HBO Max, TikTok, Disney, and Square Enix.
  • Record U.S. unique visitor traffic of 51.8 million recorded in December 2021 as measured by Comscore.
  • Expansion of in-game purchasing opportunities and subscription offerings for multiple Addicting Games titles including Little Big Snake, TypeRacer, ev.io, and mope.io.

The financial and operating results included in this news release are based on preliminary unaudited estimated results which have not yet been finalized or, in the case of annual results, audited, and will be updated and superseded by the Financial Statements and MD&A of the Company which are expected to be released on March 24, 2022. It is only in the context of the fulsome information and disclosures contained in the Financial Statements and MD&A that an investor can properly analyze this information. The Financial Statements and MD&A will be published under the Company’s profile on SEDAR and EDGAR.

All amounts are in Canadian dollars.

Canada

IAGR announces Toronto as host city for 2025 conference

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Hot on the heels of its most attended conference in history, the International Association of Gaming Regulators (IAGR) is excited to announce that its 2025 conference will take place in Toronto, Canada, from October 20 to 23, 2025.

The event will be held in partnership with the Alcohol and Gaming Commission of Ontario (AGCO) at the Westin Harbour Castle, offering stunning waterfront views and a premier, downtown Toronto location.

‘Fresh off the success of our Rome conference, we’re thrilled to continue the momentum with next year’s event in Toronto,’ said Ben Haden, IAGR President.

‘The IAGR 2025 conference promises to be another unparalleled opportunity for our global community to come together, collaborate and shape the future of gaming regulation. We’re looking forward to working with AGCO to bring it all together.’

AGCO CEO and Registrar Dr. Karin Schnarr, added, ‘We’re excited to welcome IAGR and its members to Toronto. This partnership provides a great opportunity to share Ontario’s innovative regulatory practices and foster meaningful discussions that drive positive change in the industry.’

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Stay tuned for registration details early next year.

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Canada

ESE Entertainment Completes Acquisition of Gaming Production Company, Bombee Americas

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ESE Entertainment Inc., a gaming company that provides a range of services to leading video game developers and publishers, has announced that it has acquired Bombee Global Entertainment Ltd. (Bombee Americas), the North American arm of Bombee Event Production AB, (Bombee), a global production company specialized in live production, special effects, broadcast, and event management for the gaming sector.

Bombee has successfully collaborated with ESE to bring its premier event production services and world class customer service to North America and beyond. The North American arm of Bombee, Bombee Americas, will continue to grow and scale in this new organizational structure under ESE, while maintaining its entire team and global support.

Konrad Wasiela, CEO of ESE, said: “Today marks the next stage of ESE—a 2.0 version of our company. With the acquisition of Bombee Americas, we are not only solidifying our presence in North America but also paving the way for growth and innovation in the gaming industry. This is a major step, positioning us to deliver even greater value to our partners and elevate the gaming experience for our clients globally. We’re thrilled about the opportunities ahead and the exceptional talent joining our team.”

Transaction Terms

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The Acquisition was completed by way of a share purchase agreement (the SPA) among the Company, Bombee Americas, and the shareholders of Bombee Americas (the Vendors). Pursuant to the SPA, ESE acquired all of the outstanding shares of Bombee Americas in exchange for: (i) $750,000 in cash paid on closing, (ii) $375,000 in cash to be paid six (6) months following closing, subject to customary adjustments based on the working capital of Bombee Americas on closing, (iii) $375,000 in cash to be paid twelve (12) months following closing, and (iv) 30,000,000 common shares of ESE (the Consideration Shares), issued at a deemed issue price of $0.10 per share.

In connection with the Acquisition, the founders of Bombee Americas have signed three-year service agreements and will continue to run the business following the closing, along with the rest of the personnel of Bombee Americas who will remain in place, ensuring a smooth transition of operations. As part of the Acquisition, the Company has acquired the liabilities of Bombee Americas, mainly consisting of customary current obligations incurred in the ordinary course of business for Bombee Americas, which are not expected to have a material impact on the Company’s operations or financial position.

No finder’s fees were paid or payable in conjunction with the Acquisition.

The Acquisition was an arm’s length transaction within the meaning of the policies of the TSX Venture Exchange (the Exchange) and constituted an “Expedited Acquisition” in accordance with Exchange Policy 5.3 – Acquisitions and Dispositions of Non-Cash Assets. The Acquisition remains subject to the final approval of the Exchange.

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Canada

Suspected Digital Fraud Coming from Canada Up Nearly 11% Since H1 2023, Reveals New TransUnion Analysis

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In the first half (H1) of 2024, Canada saw a significant increase in suspected Digital Fraud attempts, with nearly 5.74% of all attempted digital transactions where the consumer was located in Canada involving suspected Digital Fraud, revealed a new TransUnion® (NYSE: TRU) analysis. This is nearly an 11% year-over-year (YoY) rate increase from H1 2023, and TransUnion also documented an 11% increase in the volume of suspected Digital Fraud from Canada during this period, despite a less than a one percent (0.7%) YoY increase in the volume of transactions.

According to a recent TransUnion survey,1 more than half (54%) of Canadians said they were recently targeted by email, phone call or text message fraud attempts. Phishing was the most common scheme type (45%), followed by smishing (42%) and vishing (39%).

The increasing use of digital transactions, combined with rising suspected Digital Fraud attempts are also impacting businesses as they potentially face revenue losses and increased operational costs due to fraud. According to a TransUnion business survey for the H2 2024 Update to the State of Omnichannel Fraud report, 200 Canadian business leaders said their companies lost approximately 6% of equivalent revenue – representing $78 billion – over the past year due to fraud. The most prominent causes of fraud loss cited by them were:

  • Scam/Authorized fraud (31%): Dishonest scheme intended to trick a person into giving up something of value (e.g., account access, money, information)
  • Account takeover (19%): Unauthorized individuals taking over someone’s online account (e.g., bank, social media, email) without their permission
  • Synthetic identity fraud (18%): Use of a combination of personal information to fabricate a person or entity to commit a dishonest act for financial or personal gain

TransUnion also found that suspected Digital Fraud attempts – where the consumer was transacting in Canada and targeted businesses globally – increased on average by 10.5% YoY in H1 2024 compared to H1 2023 and impacted all industries.

Top Three Industries Globally with Highest Rate of Suspected Digital Fraud Attempts Coming from Canada in H1 2024

  1. Gambling (online sports betting, poker, etc.) – 9.6%
  2. Retail – 9.2%
  3. Government – 7.7%

Top Three Industries Globally with Highest YoY Increase (H1 2024 vs H1 2023) in the Rate of Suspected Digital Fraud Attempts Coming from Canada

  1. Logistics – 172.9%
  2. Gambling – 79.3%
  3. Video gaming – 67.8%

“Protecting customers and their businesses from fraud is essential to enabling safe and tailored consumer experiences. These findings reveal that despite the good-faith efforts that are being undertaken by companies to identify and prevent fraud to date, fraudsters continue to evolve and it’s vital that fraud prevention methods keep up with the changing times,” said Patrick Boudreau, head of identity management and fraud solutions at TransUnion Canada.

“Businesses that aren’t already doing so should ensure that they are taking advantage of fraud prevention technologies such as identity verification, IP intelligence, device reputation and synthetic identity detection as critical components of their fraud prevention programs,” he added.

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