Enthusiast Gaming Holdings Inc (EGLX) 2021 Q1 法說會逐字稿

Greetings, and welcome to the Enthusiast Gaming Holdings Inc. first quarter fiscal 2021 financial results conference call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Eric Bernofsky, Chief Corporate Officer. Thank you, Eric, you may begin.

Okay. Thank you, operator. Good afternoon, everyone and welcome to Enthusiast Gaming's first-quarter 2021 earnings call. I'm joined by Adrian Montgomery, our Chief Executive Officer; Alex MacDonald, our Chief Financial Officer; and Thamba Tharmalingam, our Chief Operating Officer. We'll begin with commentary on the quarter before opening the floor to questions from analysts.

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 appear in the company's management discussion and analysis for the three-month period ending March 31, 2021, which are available under the company's profiles on SEDAR and EDGAR, as well as on the company's website. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Company disclaims any intention or obligation, except to the extent required by law to update and revise any forward-looking statements as a result of new information, future events or for any other reason.

Now, I will turn the call over to Adrian Montgomery, CEO of Enthusiast Gaming. Adrian?

Thank you, Eric. Good afternoon and welcome to our first-quarter 2021 financial earnings call and the first such call since the completion of our NASDAQ listing last month.

Before we begin, I would just like to publicly recognize the outstanding contributions of our hardworking Enthusiast Gaming staff all over the world that wake up every day and give it their all in making our company better. Despite the still very difficult challenges of COVID and the impacts that that had and has continue to have on their individual lives. To each and every one of you out there in Enthusiast land, I say thank you.

I am pleased to report that Q1 revenue grew by more than 320% to $30 million from $7 million in Q1 last year, fueled both by our focused acquisition strategy, as well as gains in direct sales, which grew to $2.2 million in the quarter from just $60,000 at this time last year. And subscription revenue led by growth in the number of paid subscribers by 49%. Alex will share more details about our financial performance later in the call.

Our proprietary flywheel strategy that underpins our organic growth is working. The strategy that we deployed in the market in 2020 and discussed in detail on the 2020 year-end financial results conference is gaining traction in the market every single day. This flywheel that consists of a more diversified set of revenue streams, including more direct-to-brand advertising and sponsorship sales, more paid subscriptions, more content licensing, and distribution are all performing within our -- within or ahead of our expectation.

On direct sales, we continue to see a very active pipeline and we're winning deals at an increasing rate as the business scales. On our last conference call in March, I mentioned that we had nearly past direct sales bookings in less than three months of 2021 compared to all of 2020.

In the first quarter, we recognized $2.2 million in direct sales while the overall mix of direct sales to programmatic remain relatively constant despite the seasonably weaker period. One of the deals we highlighted back in March was our integrated content and sponsorship deal that we signed with TikTok to help them drive adoption and bridge the integration of TikTok within the gaming and e-sports industry. Let me take a moment to explain why this deal is so transformational.

Last November, we incubated a concept, Gamers Greatest Talent at our EGLX event online. Our creative teams took that proof of concept and developed the idea into a six-episode series and went to market looking for partners. TikTok signed on and later so did e.l.f. Cosmetics.

Two weeks ago, we sent out a call for auditions for Gamers Greatest Talent with the #TikTokGGT, which, as of today, has been seen almost 12 billion times on TikTok. Last Sunday, we premiered Gamers Greatest Talent with Luminosity judges and our very own Corey Mandell as host of the program. We had incredible audience numbers and we're looking forward to episode two this coming Sunday.

I should also point out that from that germination of an idea in November to 12 billion impressions to episode two to partnerships with TikTok and e.l.f. Cosmetics, we're already planning additional seasons for this new franchise which we own.

Another unique activation we did subsequent to the quarter was our coming out party in Hollywood, and it was for the launch of the Guy Ritchie movie, Wrath of Man starring Jason Statham. We created an athletes-versus-gamers content activation featuring NFL stars, Richard Sherman and Darius Slay, along with new Luminosity member and NBA star, Karl-Anthony Towns, taking on some of Luminosity's pro-gamers in Call of Duty: Warzone. This is a significant breakthrough for us and that we are bridging the gap between Hollywood studios and the Gen Z audience, just like we did last year with the Biden presidential campaign.

We're very excited about the entertainment category, and in particular, Hollywood films, as being a growing direct advertiser as the movie industry gets back on track. It's for these examples above, as well as others in the pipeline that we expect direct sales to continue to increase both in the aggregate and as a percentage of total media revenue in each subsequent quarter of 2021.

One of our most exciting growth opportunities as a business is in the area of subscription. To that end, this morning, we announced plans for a unifying pan-Enthusiast social network with a premium subscription opportunity for our target Gen Z and millennial audiences, code named Project GG. As this audience continues to move away from traditional social networks and turns to gaming as an alternative, Project GG address these trends and will allow gamers to register their unique gaming profiles, compare stats, develop meaningful connection, and share content and ideas.

To facilitate the development of Project GG, we also announced that we have entered into a definitive agreement to acquire Tabwire for USD11 million in cash and stock. Tabwire marks an important milestone for Enthusiast Gaming as we look to bring Project GG to market later this year.

Tabwire is a technology and data platform that enables gamers by way of a registered user profile to track their player and game stats. It has already registered more than 13 million gamer profiles, and it will provide us with essential data capabilities to deliver our customers a complete social offering with a more targeted, integrated, and personalized experience for today's gamer. This was a meaningful next step towards becoming a technology-powered media, e-sport, and entertainment company. The acquisition is expected to close by the end of the second quarter of 2021.

I want to reiterate that M&A has and will continue to be a very important part of our go-forward growth strategy. Do we need to acquire to grow? No. We're just getting started and believe very much in our organic growth strategy built around our proprietary monetization flywheel. And with 300 million gamers connecting with our content and influencers each month, we have the scale to deliver significant revenue and margin growth.

However, we recognize a unique opportunity to continue to consolidate a very fragmented market of fan communities that are dedicated to Gen Z and millennial gamers as evidenced by our recent acquisition of Icy Veins, one of the largest Activision Blizzard fan communities in the world. Acquiring these communities is immediately accretive and unlocks the ability to start monetizing through our differentiated flywheel.

With Icy Veins and other acquisition targets in our pipeline, we see a tremendous opportunity to bring them in and unlock more targeted direct sales and sponsorships, premium subscriptions, content licensing, and e-commerce opportunity.

Turning to paid subscriptions. Subscriptions grew by 49%, ending the quarter at 137,000, would have been nice to get one or two more so I could have said we grew at 50%, but I'll bring that up at another staff meeting. However, recent investments in late 2020 in the areas of [including] pricing and retention experts, are already seeing results as we increase the lifetime value of each subscriber.

We plan to continue to invest in this high growth, high margin, recurring revenue business, and leverage our influencers and other assets to create new, unique premium subscription content. Again, today's announcement of Project GG and premium subscription offering is a testament to our commitment to this area of the business.

On the content licensing and distribution side, we continue to [increase] new distribution partnerships, including with Glued TV, DistroTV, and VideoElephant. And subsequent to the quarter, we announced a partnership with ESPAT TV to produce premium gaming and e-sports content, especially in streaming and social video.

Turning to Luminosity Gaming. Our e-sports organization has never been more popular. In March, Luminosity Gaming was the most popular e-sports organization in the world on Twitch with 40 million hours watch, nearly 60% more than the second-place team. We continue to innovate on the content side and are excited about our growth prospects in this area.

As you can see, we've accomplished a lot in the first quarter of 2021, but we're just getting started and we remain highly optimistic about our growth objectives for the year. There are a lot of exciting opportunities ahead and we are focused on staying on strategy to achieve our goals in 2021 and beyond.

I'm excited as ever for our future and believe that we have the team and the diversified mix of assets to deliver long-term shareholder value. I will now turn the call over to our CFO, Alex MacDonald, for further commentary on our financial results. Alex?

Thank you, Adrian. It's great to be able to comment on a strong Q1, which has really laid the foundation for a very successful 2021 year to come.

I got to start by reminding listeners that the acquisition of Omnia Media occurred on August 30, 2020. The comparative financial figures relating to Q1 2020 and the statements in the MD&A do not include the results of Omnia except where noted, and the references to pro forma figures in our commentary will assume that the acquisition of Omnia Media occurred on the first day of the respective period.

Pro forma adjustments for the acquisition of Omnia are not required for Q1 2021 or for Q4 2020. The March 31, 2021 balance sheet and the comparative December 31, 2020 balance sheet include the full balances of the company, including Omnia, with no pro forma adjustments necessary. For convenience and for future comparison, we have provided pro forma metrics in the MD&A.

I also wish to note that our business is affected by seasonal trends in digital advertising with sequential increases each quarter throughout the year, driven by increasing ad prices and demand, which peaks in Q4. Q1 is seasonally the lowest quarter for our media and content revenue streams and a regular year on the programmatic, we would expect approximately a 40% decline in Q4 to Q1. Also, I note that our results are presented in Canadian dollars. I will now speak to the financial results for Q1 2021.

Q1 revenue was $30 million, up 321% from the reported Q1 2020 revenue of $7.1 million. This increase was driven by our acquisition strategy, including Omnia, as well as strong organic growth in direct sales and subscription. Q1 revenue by source was as follows: media and content, $27 million; subscription, 1.8 million; and e-sports and entertainment, $1.2 million.

The media and content revenue of $27 million compares to a $3.4 million reported in Q1 2020, which is an increase of nearly 7 times. Q1 media and content revenue attributable to Omnia is $20.7 million. And Omnia generated 7.3 billion video views in Q1 compared to 6.9 billion in Q1 2020, which was prior to its acquisition.

Q1 media and content revenue, excluding Omnia is $6.3 million, which increased by $2.9 million, or 85% year over year. The increase in Q1 media and content revenue, apart from the impact of the Omnia acquisition, is mainly due to a net increase of 12 new partner websites added to the web platform in Q1, which caused an increase in page views.

Q1 page views were 2.6 billion compared to 2.3 billion in Q1 2020. And RPM, which was 26% higher in Q1 as compared to Q1 2020, which was caused by our continued internal ad platform optimization efforts, market forces, and a shift in the distribution of views amongst different properties and a significant increase in direct sales, which are primarily recognized in media and content. Total direct sales were $2.2 million in Q1, 2021 as compared to $60,000 in Q1 2020.

Q1 subscription revenue was $1.8 million, which was up 50% from $1.2 million, which we'd bring up at the staff meeting in 2020. The increase in subscription revenue is attributable to an increase in paid subscribers. The vast majority of which are on TSR.

The company had approximately 92,000 paid subscribers as at March 31, 2020. This number increased to approximately 137,000 paid subscribers as at March 31, 2021, and is approximately 145,000 paid subscribers as of today. The company continues to grow the subscriber base on its existing subscription offerings through pricing optimization, promotional events, and marketing initiatives. And the existing subscription offerings are currently limited to three web properties being TSR, Escapist Magazine, and Siliconera.

However, as announced this morning, the company has set in motion a plan towards a pan-Enthusiast subscription offering, which will be available to all of our 300 million web, video, and e-sports audience members. This is a great opportunity to significantly expand our paid subscriber base.

Q1 e-sports and entertainment revenue was $1.2 million as compared to [$1.8 million] (sic - see MD&A, "$2.5 million") in 2020. The decrease is mainly due to the company's largest annual revenue event Pocket Gamer Connects London, not being held as a live event in January due to public health restrictions in the United Kingdom relating to the COVID-19 pandemic.

In January 2021, the London event was held as a virtual event, while in 2020, it was a live event. This resulted in significantly less revenue earned from the event in 2021 compared to 2020. The move to virtual events also results in a decrease in cost of sales as costs incurred in virtual events are significantly less than live events.

In 2020, the London event generated approximately $1.9 million of revenue, whereas the virtual event in 2021 only generated approximately $300,000, which is a decrease of $1.6 million. We are fortunate that as a digital company, we did not face many headwinds from the COVID pandemic. However, the inability to host the annual live event in London and the year-over-year loss of the associated $1.6 million in Q1 revenue is a headwind we face this quarter.

There's another revenue headwind I want to point out. The significant majority of our revenue is earned and measured in US dollars, which is translated into Canadian dollars for presentation and our financial statements. The average USD to CAD exchange rate in Q1 2020 was $134.5, which dropped to $126.6 in Q1 2021. As the exchange rate remained constant at $134.5, revenues in Q1 2021 would have been $1.8 million higher. To aggregate impact between this and the COVID restrictions on our London event was $3.4 million in revenue, assuming an otherwise similar result to the London event in 2021 compared to 2020.

While our events form a small portion of our overall revenue and the FX movements have a similar effect on our cost of sales, and therefore, limited net economic impact, we feel that the strong momentum the company has shown in Q1 should be considered in light of this additional $3.4 million revenue headwind. The exchange rate between the US dollar and our presentation currency of the Canadian dollar should be monitored and considered for analyzing or forecasting results.

Gross profit was $5.9 million for Q1, up 80% from the reported Q1 2020 gross profit of $3.8 million (sic - see press release, "$3.3 million"), driven by both our acquisition and growth strategies. Our growth strategies include higher yield and higher margin revenue streams, such as direct sales, subscription, and content licensing.

As we continue to advance these revenue streams, the impact on gross margin is noticeable. I note that in the last four quarters sequentially, being Q2 2020 through Q1 2021, pro forma gross margin has been 16.7%, 16.8%, 19.1% and 19.8%. This trend aligns nicely with our growth initiatives. And we continue to see the compounding effects of our monetization strategy on both revenue and gross margin.

Operating expenses were $18.7 million in Q1, up substantially from $7.3 million for Q1 in 2020. This increase is due to the acquisition of Omnia, as well as significant non-cash expenses, including $1.6 million of amortization, which relates largely to the initial recognition of intangible assets upon acquisitions; and $5.8 million of stock-based compensation, which relates to option and RSU awards granted in prior periods. As these awards required shareholder approval at the AGM in January, they are deemed granted for accounting purposes in this quarter.

I note that in January, the share price of the common shares of the company was significantly higher than when these awards were granted in 2020, which significantly increased the accounting value and the related expense. The acquisition of Omnia, the amortization, and stock-based compensation represent the majority of the increase in operating expenses year over year.

Net loss and comprehensive loss for Q1 was $13.6 million resulting in a net and comprehensive loss per share both basic and diluted of $0.12 in Q1.

We are actively expanding our operations. Our staffing levels continue to increase in Q1, which we have done to support anticipated growth. We've also been supporting new product initiatives, such as Upcomer, which was launched in April; and Project GG, announced this morning and expected to be launched later this year. We have enhanced our e-sports roster, and for two months in a row, Luminosity Gaming has been the most watched e-sports organization in the world.

I often say, for companies such as ours, our CapEx is in our OpEx. We are investing in order to drive the capacity of the business. There is a tremendous opportunity ahead to monetize our audience. And we are confident in our pursuit of this opportunity. We are, more than ever, of the opinion of the results of operations and the financial condition of Enthusiast Gaming has never been stronger.

In February, we conducted a public offering of common shares issuing approximately 7.4 million shares, with net proceeds of approximately $40 million. The company used a portion of these proceeds to reduce long-term debt by $13.8 million. The company now has unused available credit of $14 million.

In Q1, we also announced the completion of the conversion of $9 million principal amount convertible debentures. Between the conversion of the debentures and the pay down of the long-term debt, the company expects to save approximately $2.5 million in annual interest expense. In addition, between the offering and the conversion of debentures, the balance sheet was strengthened by approximately $50 million.

And of course, I would be remiss if I fail to mention that in April, the company became an SEC registrant. And on April 21, the company commenced trading on the Nasdaq Global Select Market. We are exceptionally proud of this listing and believe it will provide significant long-term shareholder value.

To all the stakeholders joining us today, as a result of that listing, I want to express our appreciation for your time and support, and welcome to the Enthusiast Family. We are going to keep working hard for you. We are going to keep demonstrating the earnings power of our ecosystem of 300 million gamers monthly, and we are going to keep advancing our business. And ladies and gentlemen, our businesses is the business of gaming.

Thank you to our analysts, shareholders, and members of the public, for joining us today. Operator, I kindly turn it back to you.

(Operator Instructions) Mike Crawford, B. Riley.

Thanks. Question on your 300 million global audience. What kind of variance do you see day-to-day, week-to-week, month-to-month, on that audience? And also, any comments on, like, how often these people are coming back within a month?

So, hey, Mike. How are you doing? This is Alex. The variance comes from three places, of course: web, video, and e-sports. And then we use -- especially for web and video, we rely on a third-party data provider. So the variances we see are not that great, which is why we just essentially round the number and say 300 million. It's typically above. To be honest, actually, it's always been above. I don't see it below in a while. But that data is not always extremely timely, so we don't provide a [300 million] 310 million or 315 million, or whatever the variance may be.

With that said, the variance is not that great to be honest. I wouldn't call it material over 300 million. The more important KPI there, which is why we provide this, is the number of views. You're right on saying how often they come back. And the other question is, of course, how much are their watching content? So that's why we provide exact webpage views and video views.

To answer the question of how many times they come back, there's too many properties. It varies drastically. I think on the web, we have certain properties where they're coming back over 20 times a month. And I think the Sims is an example of that. [How many samples of the Sims, Adrian?]

Sure. [We get] some of the audience, we get multiple return, multiple visits even on the same day. And there's seasonality trends when it comes to weekends and months and what have you. I do note that there's a lot of return on the video. The video return is very high. You can see the video views and you can guess how many users are coming from each segment.

To be honest, I'll tell you it's approximately -- it's pretty well distribute in web video and e-sports audiences. And the video views are so high, so they're coming back pretty often. I hope that's helpful. What was the second part? [This thousand?]

No, that was it. That's helpful. And then, so for my second question, so thanks for talking about direct sales going sequentially during the year. And I just want to confirm that that does include sponsorship revenue. But where can that go -- like for example, Manchester United, I think, charges GBP50 million a year for its t-shirt sponsor. So yeah, G FUEL and e.l.f. and a couple of others [on the] Luminosity jerseys, but where can that go for Enthusiast?

Well, again, Mike, our key differentiator in the marketplace is the integrated offering that normally brings a number of these assets to bear sponsorship and media and custom content activation. So again, I think when it comes to actual jersey sponsorship, I think it can only go up certainly as e-sports continues to mature as a pastime.

And look, the number -- if you notice some of the bigger deals that we've announced recently, the Samsung's, the ExitLag's, they're all including e-sports jersey sponsorship. That's a key component that these companies want, and I think that's a really good sign. So there's a lot of growth around e-sports sponsorship.

Okay. Thank you, Adrian.

Thank you.

Rob Young, Canaccord Genuity.

Hi, good evening. I was looking back at some past investor presentations on your company. Phase 1, Phase 2, Phase 3, were building scale, monetizing the subscriptions, licensing. And then the idea of having a social network or broader monetization of this user base, the audience you have, seem like a longer-term driver. And so, now this acquisition that you're announcing Tabwire seems like you're accelerating that.

Is this part of the original plan, or is this something that you're moving more quickly for opportunity? And then maybe if you step back for a second, maybe talk about your relative -- the opportunity set from this step into social -- the pan-subscription. How do those rank when you think about the opportunity relative to direct and the subscription strategy up till now?

Yeah. Thanks, Rob. It's Adrian. I'll start off. Yeah, certainly, we mapped out the various phases of our growth. And you're right in the sense that the social platform was after other initiatives. When we started the conference calls, I think there were some questions around what were we thinking subscription offering. I think some folks were asking, particularly in light of the Cloud9 subscription program, would there be a Luminosity subscription.

And we had indicated -- our perspective was that, yes, we could do that. We could sequentially rollout premium models on individual sites. But if you recall, we also said, we think there's something bigger here. We think there's a pan-Enthusiast offering that we can roll more and more things into. And literally, as we brainstormed the growth of premium, the growth of subscription, we very much saw it linked with the acceleration of the social platform.

And so, the two ideas went from being in silos to really seeing them as more complimentary than we ever had before. And that's why we've accelerated the social platform and we want to tie the social platform to the subscription offering.

Now, for us, we see a void in the marketplace. We do not see, and I think gamers would agree with you, that there really isn't a gaming-centric social platform that spans publishers, that spans game titles, et cetera, et cetera. And with such a large and highly engaged audience, we think we are in prime position to fill that void.

And so -- and we also think that we have certain assets that could be incredibly powerful ally as we build this out, namely, our roster of relationships with content creators, people with really, really large and engaged followings of their own. So to the extent that we can start to involve them in the development of this program, I think that can be our secret sauce.

So we're very bullish about it. We think there's not a lot in the market right now. And just given the fact that we touch publishers, we touch e-sports organization, we touch content creators, we touch the whole ecosystem of gaming, that we can be the gaming platform of choice. And we want that to go hand in hand with an enhanced subscription offering.

Right. And then the new data capabilities that you're talking about you're building with this, maybe talk a little about that. You've talked about the unique set of data that you have given the audience, but do you think capabilities like a social network typically have much stronger targeting? And is that what you're talking about when you're talking about enhanced data capabilities? Maybe give a little more detail there, that'd be helpful.

Yeah. I'd ask our COO, Thamba, to comment on that. This is his first conference call. So everyone give him a warm welcome and go easy on him the first time. He's got a [grizzled debt] like Alex. Go ahead, Thamba.

All right. Thank you, Adrian. And just to add some color to that, in terms of data and what we're looking to accomplish with our pan-Enthusiast subscription offering. So as Adrian mentioned, our value proposition on the social platform will be very unique in that. It's going to address specific gamers' needs that are not addressed by other platforms today, such as gamer identity, such as features on cheater index, and what have you.

When it comes to advanced data capabilities, think of it as us having access to the number of gamer profiles. Now, we have access as part of the acquisition, but it goes further because we now will have first-party relationship with this many gamers and their behaviors, their patterns, their usage, our ability to provide and cater to their needs in terms of gaming needs, right? And yes, they will be -- we will have the advanced ability to do targeted ads, run targeted campaigns in a much more sophisticated fashion than how we're able to execute that today.

Right. Super helpful. If I could sneak one little numbers question in on gross margins. Alex, you're talking about the progression of pro forma. Given the lower level of revenue and the quarter-to-quarter decline in the direct, I'm trying to understand why gross margins went up quarter over quarter and I'll pass the line.

Well, yeah, sure. Mathematically, it'd be pretty simple. Of course, Q1, strong seasonal effects. So media and content revenue is going to come down, it comes down in programmatic. And to be honest, at a similar ratio that it came down on direct, I want to point out from a direct, by the way, what's beautiful about the Q1 is as Adrian mentioned, more direct sales remain in Q1 for future periods than were recognized in Q1. So very proud of the sales team, certainly.

So what happens is that the same time subscription continues to grow, it has a higher percent to the overall bucket, which helps continue to push up that gross margin. And we're confident. That's what I want to see, right? I spoke in the last four quarters; we go to the high 19.8% from 16.1% that you're talking just shy of 1% a quarter.

And that's it; that's what we need on this growth initiative. 1% or 2% a quarter, some tuck-in acquisitions along the way, that's how this P&L profile transforms into that of a traditional media company with high margin, high gross profit. And at the same time, we're growing revenue and those two things compound beautifully. But anyway, that's the mathematical explanation.

Thanks a lot.

Of course.

Brian Kinstlinger, Alliance Global Partners.

Great. Thanks so much for taking my questions and nice quarter. I want to dig in a little bit into Tabwire. Is this mostly an asset acquisition or do they also have a subscription and ad model? And if so, can you break it down? And then once you're completed with Project GG, talk about how you plan an outreach program to your 300 million viewers.

Yeah, thanks. I'll start and then pass to Thamba. Yeah, the great thing about this acquisition for us is that it's a mixture. It's a mixture of tech, it's a key component to executing a strategy. And the data capabilities and the technology capabilities that Tabwire has, I would say conservatively in -- and again this goes back to Rob Young's question, a lot of what made the Tabwire acquisition attractive to us was the fact that, yeah, perhaps this social platform, we saw it coming a little bit later than we now do because, Tab's data and technology capabilities were able to vault us forward, in some cases upwards over a year. So they really compress the timeline in terms of what they have in their toolbox.

The other thing about Tab is Tab is an advertising platform today. They sell ads, they make money. And so, again this is a viable acquisition just on being a partner site we've folded in through our own acquisition strategy. And then when you layer on the fact that it can vault us eight months to 1 year forward in terms of our roadmap for GG, it just made a lot of sense.

Yeah. Just to add to that, this is Thambha. So the two other points to your question in terms of -- perhaps that makes -- think of it as very similar to how we started on the TSR journey. TSR is a property had ad revenue, but now we've got a massive subscription offering on that business and that's doing phenomenally well. Similarly, what we're going to do on Tab stat is we -- it does have ad revenue today, but really, our focus is building it and building the GG platform and launching subscription offerings on that.

And as I said earlier, the subscription offering would not be a paywall to get past ads, but it'll have meaningful propositions that'll resonate with the gamers to command that price premium in the marketplace.

Great. That's helpful. My other question, if you could talk about -- it was early and sounded very important to TikTok strategy, you've got the first episode of Gamers Greatest Talent that you produced and was streamed. How is that being monetized and how do you plan on monetizing these episodes going forward?

Well, right now, it's being monetized through TikTok and e.l.f. Cosmetics, paying us to be affiliated with the program. And that, in and out of itself is -- excuse me for one sec. And that, in and out of itself, is significant. And then, again, this is a franchise that we created and we own. We own the URLs, we own the concept, the trademark, et cetera. And we're now sitting with a property that we developed from scratch that has gone viral around the world on TikTok to the tune of close 12 billion impressions on the hashtag.

So we know we have something special. And now we have to think about how we license it, where we license it, what we do with it, what other form [of ads] could shoot off of it. But it gets back to what we're doing here. And what we're executing again is a strategy to become a media and content company and certainly developing proprietary content, being able to layer in incredibly popular influencers on the LG roster to serve as judges.

We had Chica last week; we've got Anomaly this Sunday; we've got some of the biggest gamers involved in the property. We've got the biggest social platform, arguably being TikTok involved. We have all the ingredients to make this a growing and lucrative franchise for us.

Great. Thanks so much.

Thank you, Brian.

Colin George, Haywood Securities.

Hey, guys, congrats on the quarter. My question is with regards to events going forward. Alex commented on how there was the drop in the revenue year over year with the loss of live event in London, but because the costs are lower gross margins might be a bit higher. So with the reopening happening here at the US and the UK, heading in that direction, do you see going back to live events or sticking with the virtual events and maybe going with a hybrid event going forward?

Yeah, look, I think that we would love to see in-person events resume. We think -- again, we're a business about building communities and there's nothing more powerful for a community than to interact with each other physically. And so, live events, we hope that they resume.

Certainly, we've demonstrated a competency in the past year to relatively seamlessly migrate our physical events to virtual and digital events. And defend -- in some cases improve the margin. So we can do both and we will continue to do both.

And yeah, I would point out that, again, this is our second conference analysts or earnings conference in a row, and in the last two quarters in normal times, we would have had our flagship EGLX event dropped in Q4 to the tune of significant revenue. We would have had our Pocket Gamer London drop in Q1.

So this is our second quarter missing a flagship event and still showing strong quarter-on-quarter, year-on-year growth, which just speaks again to the flywheel and the diversity of the asset mix. And so, we're going to continue to be versatile and opportunistic on the events and experiences aside going forward.

Okay, thanks. That's helpful. That's all for me.

Thanks.

Derek Soderberg, Colliers Securities.

Hey, guys, thanks for taking my questions. I want to start with the pan-Enthusiast offering. Just curious what sort of testing you've done in the market for a subscription service you're proposing? What feedback are you getting on that offering? And what's driving your confidence in that bundled product? Are there a lot of users that consume content on multiple of your standalone web and video assets? Is there some crossover in users between some of those assets?

Yeah. Thamba here, I can take that question. So yes, we have done a couple of market tests to see what the appetite for a pan-Enthusiast offering would be like. Knowing that, we've got this captive audience of 300 million that comes to our properties. We -- one of the opportunities that we have in Enthusiast Gaming is the house of brands. We've got multiple brands through which we interact with our audience.

So we think we've tested it in a couple of properties, as I said earlier. And we know that the pan-Enthusiast offering is going to resonate really well with our audience so that they can unlock using a single sign-on ID or a single brand affiliation. They can unlock various assets across our network, whether it be video, web or other specific assets that we'd be creating for our subscribers.

Got it. And then Alex, how should we be modeling shares outstanding next quarter? And then just generally, how are you feeling about the cash position?

Sure. So the shares outstanding, we have -- the subsequent events to date in the MDA, we got obviously a very decent cap table, the subsequent events layout, the option of warrant exercises and whatnot. I wouldn't anticipate any major movements that's pursuant to an announcement, perhaps some shares issued on Tabwire as our press release stated, which we will include in our press release if that happens. Other than that, there are small amounts of options and whatnot that cycles through most of those -- or all of those data in the subsequent events.

Sorry, can you repeat the second part of the --?

On cash position.

Of course, on cash position, we feel good, right? We did the offering in February. The debt is like extremely low. In fact, I'd say our debt equity ratio is quite low for us right now. And with that said, we also have $14 million untouched credit available. So we're feeling fine about the cash position. And these acquisitions too, these are going to add to not only the gross profit, but also straight to the bottom line. Icy Veins for example, is -- that helps -- it's incremental and it's going to help profitability. So we're feeling good.

Got it. Thanks guys.

(Operator Instructions) There are no further questions at this time. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful evening.