ELF e l f Beauty Inc

Enthusiast Gaming Holdings Inc. (“Enthusiast Gaming” or the “Company”) (NASDAQ:EGLX; TSX:EGLX), an integrated gaming entertainment company, today announced financial results for the year ended December 31, 2021.

2021 Financial Highlights

• Revenue for 2021 was $167.4 million, representing a 130% increase from revenue for 2020 of $72.8 million
• Gross profit for 2021 was $37.8 million, representing a 102% increase from gross profit for 2020 of $18.7 million
• Direct sales in 2021 of $22.2 million, representing a 344% increase from direct sales in 2020 of $5.0 million. Direct sales are included in revenue
• Paid subscribers as at December 31, 2021, of 220,000, representing an 80% increase from paid subscribers as at December 31, 2020, of 122,000

Q4 2021 Financial Highlights

• Revenue for the three months ended December 31, 2021 (“Q4 2021”), of $56.9 million, representing a 34% increase from revenue for the three months ended December 31, 2020 (“Q4 2020”), of $42.5 million
• Gross profit in Q4 2021 of $13.7 million, representing a 69% increase from gross profit in Q4 2020 of $8.1 million
• Gross margin in Q4 2021 of 24.1%, representing a 500 basis point increase from gross margin in Q4 2020 of 19.1%
• Direct sales in Q4 2021 of $8.8 million, representing a 167% increase from direct sales in Q4 2020 of $3.3 million. Direct sales are included in revenue

“Our momentum continues and we are pleased to confirm our record breaking results from Q4 2021,” commented Adrian Montgomery, CEO of Enthusiast Gaming. “We are seeing strong repeat business in direct sales, continued conversions of viewers into paying subscribers, and strength in our product offerings, particularly in Addicting Games and U.GG. We expect this momentum to carry into 2022 and beyond.”

"Our higher yield and higher margin revenue streams are expanding, with noticeable impacts to the income statement," commented Alex Macdonald, CFO of Enthusiast Gaming. "Direct sales and subscription combined accounted for over 20% of revenue in Q4, helping push quarterly revenue to an all time high and gross margin to over 24%. We maintain a growth oriented position and outlook."

Q4 Operational Highlights

• Expansion of in-game purchasing opportunities and subscription offerings for multiple Addicting Games titles including Little Big Snake, TypeRacer, EV.IO, and mope.IO
• Two new event series launched: Pocket Gamer Connects Digital NEXT, and Beyond Games
• Record U.S. unique visitor traffic of 51.8 million recorded in December 2021 as measured by Comscore
• Acquisition of League of Legends community U.GG, and expansion of the U.GG desktop app
• Luminosity Gaming ranked number one esports team on Twitch according to a study conducted with Nielsen
• Renewals or additional business with key partners including Proctor & Gamble, HBO Max, TikTok, Disney, ExitLag, G FUEL and Square Enix
• New season of Rising Stars announced, co-created with e.l.f. Cosmetics (NYSE: ELF)

Organizational Updates

The Company also announced that due to her recent appointment as Chief Investment Officer of the California Public Employees' Retirement System (CalPERS), Nicole Musicco was required to resign from the Board of Directors of the Company, effective March 25, 2022.

“I am thankful for my time on the Board of Enthusiast Gaming and am impressed with the trajectory of the Company,” said Nicole Musicco. “Adrian and the management team are highly capable and there is a strong vision in place. I look forward to watching the Company continue to grow.”

The Company wishes to thank Nicole for her service, and congratulates her on the appointment at CalPERS.

The Company also announced that Menashe Kestenbaum has transitioned out of the role of President to focus exclusively on strategy and governance as a member of the Board of Directors. As a continuing member of the Board, his experience will continue to help the Company towards achieving its growth objectives.

Other recent appointments at the Company include:

• Scotty Tidwell as Senior Vice President of Talent
• Alex Gonzalez as Head of Luminosity Gaming

Certain information provided in this news release is extracted from financial statements and management’s discussion & analysis (“MD&A”) of the Company for the year ended December 31, 2021, and should be read in conjunction with them. 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 have been published on the Company’s profile on SEDAR and EDGAR.

All amounts are in Canadian dollars.

Earnings Announcement and Supplemental Information

Management will host a conference call and webcast on March 28, 2022, at 5:00 p.m. Eastern Time to review and discuss the fourth quarter and year-end 2021 results.

Please call the following numbers to participate:

North America (toll-free): 1-855-327-6837

International: 1-631-891-4304

Conference ID: 10018468

A live webcast can be heard at https://www.enthusiastgaming.com/shareholder-information/.

If you are unable to join live, an archived recording of the webcast will be available on the Investor Relations page of the Enthusiast Gaming website.

About Enthusiast Gaming

Enthusiast Gaming is an integrated gaming entertainment company, building the largest media and content platform for video game and esports fans to connect and engage worldwide. Combining the elements of its four core pillars; Media, Talent, Esports, and Experiences, Enthusiast Gaming provides a unique opportunity and integrated approach to reach and connect with its coveted GenZ and Millennial audience. Through its proprietary mix of digital media and entertainment assets, Enthusiast Gaming has built a vast network of like-minded communities to deliver the ultimate fan experience.

Contacts

Enthusiast Gaming Investor Relations:Eric Bernofsky, Chief Corporate Officerinvestor@enthusiastgaming.com 

Media Relations:Derek Holota, Provident CommunicationsDerek@providentcomms.com343-422-5606

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

This news release contains certain statements that may constitute forward-looking information under applicable securities laws. All statements, other than those of historical fact, which address activities, events, outcomes, results, developments, performance or achievements that Enthusiast Gaming anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements formed in the future tense or indicating that certain actions, events or results “may”, “could”, “would”, “might” or “will” (or other variations of the forgoing) be taken, occur, be achieved, or come to pass. Forward-looking statements in this news release include, but are not limited to, statements regarding trends in certain financial and operating metrics of the Company, and expectations relating to the financial performance and the financial results of future periods.

Forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, including, but not limited to, expectations and assumptions concerning: interest and foreign exchange rates; capital efficiencies, cost saving and synergies; growth and growth rates; the success in the esports and gaming media industry; the Company’s growth plan, and judgment applied in the application of the Company’s accounting policies and in the preparation of financial statements in accordance with applicable financial reporting standards. While Enthusiast Gaming considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; and future legislative, tax and regulatory developments. Readers are cautioned that the foregoing list is not exhaustive. For more information on the risks, uncertainties and assumptions that could cause anticipated opportunities and actual results to differ materially, please refer to the public filings of Enthusiast Gaming which are available on SEDAR at www.sedar.com. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. Enthusiast Gaming disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Enthusiast Gaming Holdings Inc.
Consolidated Statements of Financial Position
As of December 31, 2021 and 2020
(Expressed in Canadian Dollars)
				December 31, 2021			December 31, 2020
ASSETS
Current
	Cash		$	22,654,262		$	4,323,823
	Trade and other receivables			33,801,990			22,424,596
	Investments			131,342			124,998
	Loans receivable			176,931			194,389
	Income tax receivable			356,366			290,077
	Prepaid expenses			2,145,184			576,802
Total current assets				59,266,075			27,934,685
Non-current
	Property and equipment			247,988			354,850
	Right-of-use assets			2,885,662			2,848,400
	Long-term investment			-			2,606,100
	Investment in associates and joint ventures			885,269			1,026,910
	Long-term portion of prepaid expenses			261,922			263,196
	Intangible assets			129,138,595			81,106,007
	Goodwill			195,097,659			106,181,086
Total assets			$	387,783,170		$	222,321,234
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
	Accounts payable and accrued liabilities		$	34,391,221		$	23,602,547
	Contract liabilities			3,890,569			1,625,594
	Income tax payable			114,094			-
	Current portion of long-term debt			2,000,000			1,250,000
	Current portion of deferred payment liability			27,244,146			636,600
	Current portion of convertible debentures			-			7,546,453
	Current portion of lease contract liabilities			796,835			578,330
	Current portion of other long-term debt			11,121			-
Total current liabilities				68,447,986			35,239,524
Non-current
	Long-term debt			7,681,867			21,651,956
	Long-term portion of deferred payment liability			20,794,275			529,124
	Long-term lease contract liabilities			2,213,512			2,308,336
	Vendor-take-back loan			-			5,559,250
	Other long-term debt			136,324			-
	Deferred tax liability			25,740,885			15,161,987
Total liabilities			$	125,014,849		$	80,450,177
Shareholders' Equity
	Share capital			387,087,948			232,616,997
	Contributed surplus			25,485,361			7,494,164
	Accumulated other comprehensive income (loss)			527,166			45,428
	Deficit			(150,332,154	)		(98,285,532	)
Total shareholders' equity				262,768,321			141,871,057
Total liabilities and shareholders' equity			$	387,783,170		$	222,321,234

Enthusiast Gaming Holdings Inc.
Consolidated Statements of Loss and Comprehensive Loss
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
				December 31, 2021			December 31, 2020
Revenue
	Revenue		$	167,364,286		$	72,758,717
	Gain on player buyout			-			204,764
Total revenue				167,364,286			72,963,481
Cost of sales				129,589,540			54,294,967
Gross margin				37,774,746			18,668,514
Operating expenses
	Professional fees			3,073,330			2,273,088
	Consulting fees			4,591,688			5,805,134
	Advertising and promotion			3,047,149			1,409,084
	Office and general			6,972,055			2,878,813
	Salaries and wages			25,140,326			9,131,447
	Technology support, web development and content			10,640,184			4,734,548
	Esports player, team and game expenses			5,497,165			3,446,652
	Foreign exchange gain			(2,079,774	)		(13,832	)
	Share-based compensation			18,918,489			818,383
	Amortization and depreciation			9,518,471			5,036,787
Total operating expenses				85,319,083			35,520,104
Other expenses (income)
	Transaction costs			1,490,463			1,882,081
	Share of loss from investment in associates and joint ventures			266,641			2,057,135
	Interest and accretion			2,844,956			5,236,482
	Change in fair value of investment			444,764			(183,951	)
	Loss on modification of long-term debt			-			1,140,320
	Gain on repayment of long-term debt			(39,502	)		-
	Gain on settlement of long-term debt			(11,991	)		-
	Loss on settlement of vendor-take-back loan			316,241			-
	Loss on revaluation of deferred payment liability			181,707			-
	Loss on conversion of convertible debentures			-			49,002
	Interest income			(51,529	)		(102,158	)
Net loss before income taxes				(52,986,087	)		(26,930,501	)
Income taxes
	Current tax expense			194,222			5,617
	Deferred tax recovery			(1,133,687	)		(83,786	)
Net loss for the year				(52,046,622	)		(26,852,332	)
Other comprehensive income (loss)
Items that may be reclassified to profit or loss
	Foreign currency translation adjustment			481,738			(44,650	)
Net loss and comprehensive loss for the year			$	(51,564,884	)	$	(26,896,982	)
Net loss and comprehensive loss per share,
	basic and diluted		$	(0.43	)	$	(0.32	)
Weighted average number of common shares
	outstanding, basic and diluted			121,002,659			83,401,398

Enthusiast Gaming Holdings Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2021 and 2020
(Expressed in Canadian Dollars)
			December 31, 2021			December 31, 2020
Cash flows from operating activities
Net loss for the year		$	(52,046,622	)	$	(26,852,332	)
Items not affecting cash:
Amortization and depreciation			9,518,471			5,036,787
Share-based compensation			18,918,489			818,383
Interest and accretion			1,294,774			1,868,063
Deferred tax recovery			(1,133,687	)		(83,786	)
Gain on player buyout			-			(204,764	)
Foreign exchange (gain) loss			(172,776	)		16,409
Gain on repayment of long-term debt			(39,502	)		-
Gain on settlement of long-term debt			(11,991	)		-
Loss on settlement of vendor-take-back loan			316,241			-
Loss on revaluation of deferred payment liability			181,707			-
Loss on conversion of convertible debentures			-			49,002
Capitalized interest and success fee			-			1,494,910
Shares for services			173,567			441,613
Loss on modification of long-term debt			-			1,140,320
Provisions			-			47,716
Change in fair value of investment			444,764			(183,951	)
Share of loss from investment in associates and joint ventures			266,641			2,057,135
Changes in working capital:
Changes in trade and other receivables			(8,322,247	)		(7,114,118	)
Changes in prepaid expenses			(1,599,739	)		(1,777	)
Changes in loans receivable			37,500			-
Changes in accounts payable and accrued liabilities			7,687,368			6,896,882
Changes in contract liabilities			1,284,406			(22,000	)
Changes in income tax receivable and payable			(174,052	)		(292,492	)
Income tax paid			(301,975	)		-
Net cash used in operating activities			(23,678,663	)		(14,888,000	)
Cash flows from investing activities
Cash paid for mergers and acquisitions			(36,222,278	)		(10,500,000	)
Cash acquired from mergers and acquisitions			2,406,356			281,125
Proceeds from disposal of investment			-			680,000
Deferred payment liability			-			(659,832	)
Proceeds from disposal of intangible assets			-			204,764
Investment in associates and joint ventures			(125,000	)		(2,169,750	)
Acquisition of property and equipment			(3,398	)		(7,259	)
Net cash used in investing activities			(33,944,320	)		(12,170,952	)
Cash flows from financing activities
Proceeds from the issuance of shares for offerings, net of
transaction costs			95,146,338			15,609,256
Proceeds from long-term debt, net of transaction costs			10,823,240			26,000
Repayment of long-term debt			(23,773,470	)		-
Proceeds from exercise of warrants			-			2,728,015
Proceeds from exercise of options			784,431			228,536
Repayment of vendor-take-back loan			(6,158,329	)		-
Repayment of other long-term debt			(5,561	)		-
Lease payments			(802,013	)		(404,958	)
Net cash provided by financing activities			76,014,636			18,186,849
Foreign exchange effect on cash			(61,214	)		(15,796	)
Net change in cash			18,330,439			(8,887,899	)
Cash, beginning of year			4,323,823			13,211,722
Cash, end of year		$	22,654,262		$	4,323,823