Enthusiast Gaming Records $42.7M Loss in Q3 2023, Available Cash Totals $2M

Enthusiast Gaming reports financial results for Q3 2023. Credit: Enthusiast Gaming

North American esports and gaming company Enthusiast Gaming (TSX: EGLX) announced financial results for the third quarter of 2023 that ended on Sept 9, recording a net loss of $59.1M CAD ($42.7M USD) during the three-month period, compared to $37.1M ($26.8M) loss in Q3 2022. Addressing the recent Q3 spikes in losses, Enthusiast Gaming noted in a release that Q3 2023 and Q3 2022 included a non-cash impairment expense of $51.7M ($37.4M) and $31.3M ($22.6M), respectively.

At the end of Q3, Enthusiast had a cash balance of $2.8M ($2M), compared to $7.4M ($5.4M) as of Dec. 31, 2022. It attributed that $4.6M ($3.3M) decrease in available cash to a $0.3M ($0.2M) “outflow in cash from operations” and $3.3M ($2.4M) in “repayments on the Company’s Term Credit.” Enthusiast added that it has $4.5M ($3.3M) available on its operating credit facility, “for total available cash” of $7.3M ($5.3M). The company noted that it “extended and expanded its term and operating credit facilities to provide up to approximately $7 million [CAD or $5M USD] of additional liquidity” on Oct. 12. 

Revenue for Q3 was $45.6M ($33M), a 10% decrease compared to $50.6M ($36.6M) in the same period a year ago. Media and Content revenue decreased 10% to $39.8M ($28.8M), its esports and entertainment revenue decreased 12% to $2.0M ($1.5M), and subscription revenue decreased 2% to $3.7M ($2.7M). Enthusiast said that it experienced lower programmatic CPMs (“cost per thousand” impressions, an advertising spending metric commonly used in the digital media industry) on its web and video platforms—”similar to the trend of the broader programmatic market”—but that decreased CPMs was offset by an increase in total views (web and video) of 4% in Q3 2023 compared to the same period last year. Brand Solutions (included in revenue) decreased by 3% to $9.8M ($7.1M) in Q3 2023 compared to $10.1M ($7.3M) in Q3 2022.

Gross profit did increase slightly by 1% to $16.7M ($12.1M) in Q3 2023, compared to $16.6M ($12M) in Q3 2022.

The company also provided some milestones it hit during the quarter: 

• Season 2 of NFL Tuesday Night Gaming (NFL TNG) premiered on Sept. 12 on NFL TNG’s Twitch, YouTube, and X channels, with behind-the-scenes footage published on TikTok and Instagram. The new season saw a 72% increase in impressions through Week 7 ending Nov. 7. To date, NFL TNG has also increased the number of advertisers from 11 in Season 1 to 14 in Season 2, including new sponsors such as State Farm.
• Enthusiast Gaming collaborated with Netflix and Metavision to launch its first-ever Fortnite Creative in-game experience for One Piece.
• Enthusiast secured renewals and new additional business with key advertisers including Coca-Cola, UPS, Toyota, Shell, The Truth Initiative, FX Networks, AT&T, OLG, Paramount Pictures, and ESPN. Renewals and additional business with existing customers accounted for 69% of Brand Solutions revenue in Q3 2023. 
• B2B gaming events platform Pocket Gamer Connects (PGC) ran two profitable conferences during the quarter (PGC Toronto and PGC Helsinki) and two other tentpole events (Metaverse Mixer and Top 50 Game Makers Dinner at Gamescom). PGC Toronto increased the number of live delegates by 28% year-on-year, and PGC Helsinki drew around 1,200 participants representing 510 companies and 41 countries.
• Luminosity Gaming launched a new Super Smash channel in August, and reached over 2M views and 10K subscribers in its first 60 days.
• Luminosity Gaming announced its return to Rocket League in November after a one-year break, and secured two top North American team members: Retals and MaJicBear.
• Luminosity Gaming’s Call of Duty Mobile team was crowned North American champions at the Stage 4 competition and advanced to compete for the world title in December.
• Strategy and guide platform Icy Veins saw a record 5.9M unique visitors in July, as well as 26M sessions and 1.7M hours spent on-site from users.
• Addicting Games saw a 57% increase in page views in Q3 2023 (vs. Q2 2023) attributed to adding a new collection of daily games and challenges.
•  The company remained the #1 gaming property for unique visitor traffic in the United States, reaching a new record of 56M unique visitors, according to data from digital media ratings from Comscore. This represents a 28% year-over-year growth in unique visitor traffic to Enthusiast Gaming’s digital media properties (Comscore Media Metrix Multi-Platform, Total Audience, September 2023, U.S.).
• On Nov. 9, the company’s shares were voluntarily delisted from Nasdaq after a decision from its Board of Directors  The company’s common shares continue to be listed and traded on TSX.