Publicly-traded Canadian gaming and entertainment company Enthusiast Gaming (Nasdaq: EGLX, TSX: EGLX) announced Monday financial results for Q1 2023.
The company recorded revenue of $42.9M CAD ($31.9M USD), compared to $47.2M ($35M USD) in the same period a year ago, with its brand solutions business increasing 92% to $10M ($7.4M USD), esports & entertainment revenue increasing 72% to $3.4M ($2.5M USD), and subscription revenue climbing 19% to $4M ($3M USD).
Total decline in revenue was driven by a 15% decline in media & content revenue at $35.5M ($26.4M USD). The company blamed less video views “due to a separation from a number of non-profitable creator channels,” new language moderation rules on monetized videos from YouTube, and a lower CPM because of an expansion into YouTube Shorts—which has a generally lower CPM rate. The company said that web page views increased by 4%.
Nevertheless, Enthusiast recorded a 24% increase of gross profits at $16.8M ($12.5M USD) in Q1 2023 primarily driven by an increase in direct sales, compared to $13.5M ($10M USD) in Q1 2022.
Ultimately, the company recorded a net loss of $8.7M ($6.5M USD) in Q1 2023, compared to $12.2M ($9M USD) in Q1 2022 and a cash balance of $3.5M ($2.6M USD), compared to $7.4M ($5.5M USD) as of Dec. 31, 2023.
The $3.9M ($2.6M USD) decrease in cash was attributed to $2.6M ($1.9M USD) in costs of operations and the repayment of $1.1M ($816K USD) on the company’s term credit. Enthusiast said that it has successfully extended the maturity dates for the credit facility and the $5M CAD operating facility for an additional year to Dec. 31, 2024.
The company’s highlights for the quarter included:
- Luminosity Gaming won nine championships and recorded 35M impressions across all of its social channels in Q1 2023.
- The company’s Tiktok network achieved over 300M views across 11 channels in Q1 2023.
- Paid subscribers increased 5% to 275K as of March 31, up from 262K at Dec. 31, 2022.
- Renewals or new business with advertisers occurred in Q1 with brands such as Coca-Cola, Paramount Pictures, Universal Pictures, Toyota Canada, Hasbro, Hut8, LEGO, and the US Navy.
- Enthusiast was ranked the #1 gaming property for unique visitor traffic in the United States by Comscore in January (Comscore Media Metrix, Games, January 2023, U.S.).
- Approximately 2,600 attendees from more than 1,200 companies participated in Pocket Gamer Connects London in January.
Enthusiast Gaming holds a management contract for the Vancouver Titans and Seattle Surge through a deal with owners Aquilini Investment Group, and owns a number of esports and gaming media properties including Luminosity Gaming, Storied, Addicting Games, Pocket Gamer, The Sims Resource, UGG, Arcade Cloud, Fantasy Football Scout, Wisecrack, BCC, and many others.
Editor’s note: USD numbers are based on the exchange rate of $1 Canadian Dollar = $0.74262102 U.S. Dollar, as of May 15, 2023. Figures not designated with a descriptor are in CAD.