Adjusted EBITDA Improves by 52% Amidst Strategic Acquisitions
Elimination of $35.2 Million in Cash Obligations Strengthens Balance Sheet and Improves Net Working Capital Position to $10.9 Million
TORONTO, Aug. 21, 2024 /CNW/ – OverActive Media Corp. (“OverActive” or the “Company”) (TSXV: OAM) (OTC: OAMCF), a global esports, and entertainment company for today’s generation of fans, released its second-quarter results for the three and six-month periods ended June 30, 2024. The Q2 2024 financials include the impact of the acquisitions of Movistar Riders and the assets of KOI, which have now contributed a full quarter of financial performance. All amounts are in Canadian dollars ($).
Below is a summary of the financial results for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023:
$CAD
‘000’s
Three
months
ended
June 30,
2024
Three
months
ended
June 30,
2023
Variance
(%)
Six
months
ended
June 30,
2024
Six
months
ended
June 30,
2023
Variance
(%)
Revenue
$6,616
$3,860
71 %
$10,275
$5,477
88 %
Operating
Expenses
$8,565
$6,520
-31 %
$14,807
$11,885
-25 %
Adjusted EBITDAi
($1,230)
($2,544)
52 %
($3,052)
($6,285)
51 %
Net Income (Loss)
$6,424
($3,438)
287 %
$2,029
($9,177)
122 %
Net Working
Capital
$10,872
$6,941
57 %
$10,872
$6,941
57 %
Cash &
Equivalents
$9,193
$9,316
-1 %
$9,193
$9,316
-1 %
“We achieved an impressive 71% revenue growth in the second quarter of 2024 with only a 31% increase in associated operating costs only. This resulted in a 52% improvement in Adjusted EBITDA and underscores the strong leverage in our business model and the impact of our strategic acquisitions” said Adam Adamou, CEO of OverActive Media. “We have also significantly strengthened our cash and net working capital positions and reduced cash obligations by over $35 million due to the restructuring of the Call of Duty League, leaving us with one of the strongest balance sheets in the industry.”
Mr. Adamou added, “Our expanding influence in the esports industry is reflected in our partnerships with top global brands. Our teams are leading in viewership across the western world, attracting partners like Bell, Monster Energy, Razer, CUPRA and Telefónica. Our competitive performance across our key games, including League of Legends, Call of Duty, Counterstrike 2, Overwatch 2 and the Esports World Cup have been excellent. We are also driving industry leading revenues via the sale of online digital items across the Call of Duty League, VALORANT Champions Series and CounterStrike 2.”
Q2 2024 Financial Highlights
Revenue for the three months ended June 30, 2024, increased by $2.8 million or 71%, reaching $6.6 million compared to the same period in the prior year. The increase in revenue is attributable to the acquisitions of Riders and KOI and the positive performance of the VALORANT Champions Tour EMEA team, Movistar KOI.Operating Costs for the three months ended June 30, 2024, were $8.6 million, representing an increase of $2.0 million or 31% compared to the same period in 2023. The increase is due to the integration costs associated with the new acquisitions and higher roster payroll costs.Adjusted EBITDA loss for the three months ended June 30, 2024, was $1.2 million, reflecting an improvement of 52% compared to the adjusted EBITDA loss of $2.5 million for the same period in 2023. This significant improvement was driven by increased revenues resulting from our strategic acquisitions, and the change in estimate to record certain league revenues on a straight-line basis, partially offset by higher operating costs associated with the integration of newly acquired entities.Net Income for the three months ended June 30, 2024, was $6.4 million, an increase of $9.8 million compared to a net loss of $3.4 million in the same period in 2023 due to a $9.8 million gain from the termination of the Call of Duty League franchise obligation.As of June 30, 2024, the company had Net Working Capital (Current Assets less Current Liabilities) of $10.9 million vs. $6.9 million for the same period in 2023. The increase in Net Working Capital is related to payments received from the Call of Duty League and the elimination of related payables announced on April 16, 2024 offset by operating losses during the period.As of June 30, 2024, the Company had cash and cash equivalents of $9.2 million, largely unchanged compared with $9.3 million as of the same quarter in 2023.
Six Months 2024 Financial Highlights
Revenue for the six months ended June 30, 2024, was $10.3 million, an increase of $4.8 million or 88% compared to the same period in 2023. The increase was driven by the strategic acquisitions of Movistar Riders and KOI and stronger performance in both the Team Operations and Business Operations segments.Operating Costs for the six months ended June 30, 2024, totaled $14.8 million, reflecting an increase of $2.9 million or 25% compared to the same period in 2023. This increase is associated with higher payroll costs and integration expenses related to the acquisitions.Adjusted EBITDA loss for the six months ended June 30, 2024, was $3.1 million, an improvement of 51% compared to the adjusted EBITDA loss of $6.3 million in the same period in 2023. This improvement reflects the strong revenue growth driven by strategic acquisitions, and the change in estimate to record certain league revenues on a straight-line basis, alongside disciplined cost management, fully offsetting the increased operational costs associated with the integration of new acquisitions.Net Income for the six months ended June 30, 2024, was $2.0 million, an improvement of $11.2 million from the net loss of $9.2 million in the same period in 2023, due primarily to the $9.8 million gain from the termination of the Call of Duty League franchise obligation.
Selected Q2 2024 Achievements
OverActive Media secured new high-profile partnerships with global brands, including Monster Energy, Cupra, Mahou, and OWO. These partnerships will further enhance the company’s market presence and brand portfolio, particularly in the esports and gaming sectors.On April 16, 2024, OverActive Media finalized a new long-term agreement with the Call of Duty League, which included the receipt of a one-time restructuring payment of $2.7 million and the elimination of $35.2 million in outstanding entry fees. This restructuring resulted in a one-time reduction in the net present value of franchise payables of $22.3 million and a net gain of $9.8 million, positively impacting the Q2 2024 financial statements.The Company strengthened its leadership team by appointing Neil Duffy as Chief Commercial Officer for the Americas. Neil brings extensive experience in driving commercial growth, which is expected to bolster OverActive Media’s strategic initiatives across the region.Our Movistar KOI teams across the VALORANT Champions Tournament, CounterStrike 2 and Superliga drove increases in revenue from sponsorships and digital merchandise, underscoring the success of the Company’s recent acquisitions and its growing influence in the esports arena.
Significant Announcements Subsequent to Quarter End
OverActive Media teams performing as Toronto Ultra competed in the 2024 Esports World Cup and earning Esports World Cup Club Championship Points in Overwatch 2 and Teamfight Tactics, showcasing their strength and visibility on an international stage. This event further solidified OverActive Media’s reputation in the global esports community and as an Official Esports World Cup Partner.
The Company’s consolidated unaudited financial statements, notes to financial statements, and Management’s Discussion and Analysis for the three and six-month periods ended June 30, 2024, are available on the Company’s website at www.overactivemedia.com and under the Company’s profile on SEDAR at www.sedarplus.ca.
Conference Call
The Company will conduct a conference call on Thursday, August 22, 2024, at 9:00 a.m. (Eastern Time) to review the second-quarter results, as well as provide an overview of the Company’s recent milestones and growth strategy.
To access the conference call without operator assistance, please register and enter your phone number at https://emportal.ink/3LAnetO to receive an instant automated callback. To dial directly to be entered into the call by an operator, please dial 1-800-836-8184 or, for international callers, 289-819-1370.
A replay will be available shortly after the call and can be accessed by dialing 1-888-660-6345 or, for international callers, 289-819-1450. The entry code for the replay is 55518#. The replay will expire on Thursday, August 29, 2024.
A live conference call webcast can be accessed on OverActive’s website at https://app.webinar.net/Pk3GozkBwxW. An online webcast archive will be available via the same link for three months following the call.
ABOUT OVERACTIVE MEDIA
OverActive Media Corp. (TSXV: OAM) (OTC:OAMCF) is headquartered in Toronto, Ontario, with operations in Madrid, Spain and Berlin, Germany, is a premier global esports and entertainment company for today’s generation of fan. OverActive owns team franchises in professional esports leagues, including the Call of Duty League, operating as the Toronto Ultra, the League of Legends EMEA Championship (LEC), operating as MAD Lions KOI, the VALORANT Champions League (VCT) EMEA, operating as Movistar KOI and other professional esports leagues and competitions.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This press release contains statements which constitute “forward-looking statements” and “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”), including statements regarding the plans, intentions, beliefs and current expectations of OverActive with respect to future business activities and operating performance. Forward-looking statements are often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes information regarding the anticipated financial and operating results of OverActive in the future.
Investors are cautioned that forward-looking statements are not based on historical facts but instead OverActive management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although OverActive believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the OverActive. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements include the following: the potential impact of OverActive’s qualifying transaction on relationships, including with regulatory bodies, employees, suppliers, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws and regulations both locally and in foreign jurisdictions; compliance with extensive government regulation; the risks and uncertainties associated with foreign markets; the ability of the Company to continue to execute on its existing partnerships and business strategy; the ability of the MAD Lions and Call of Duty Leagues to maintain viewership; the successful completion of the Company’s new venue; and other risk factors set out in OverActive’s most recent annual information form and its other filings with Canadian securities regulators, copies of which may be found under OverActive’s profile at www.sedarplus.ca. These forward-looking statements may be affected by risks and uncertainties in the business of OverActive and general market conditions, including COVID-19.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although OverActive has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. OverActive does not intend and do not assume any obligation, to update the forward-looking statements except as otherwise required by applicable law.
NON-IFRS MEASURES
This press release includes references to adjusted EBITDA. Adjusted EBITDA is a non-IFRS financial measure and is defined by the Company net income or loss before income taxes, finance costs, finance income, depreciation and amortization, decrease in net present value of franchise obligations, foreign exchange gains / loss, assistance payments from Franchise League and government assistance, restructuring and business development costs, impairment charges, and share-based compensation. We believe that adjusted EBITDA is a useful measure of financial performance because it provides an indication of the Company’s ability to capitalize on growth opportunities in a cost-effective manner, finance its ongoing operations and service its financial obligations.
This non-IFRS financial measure is not an earnings or cash flow measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS. Our method of calculating such a financial measure may differ from the methods used by other issuers and, accordingly, our definition of this non-IFRS financial measure may not be comparable to similar measures presented by other issuers. Investors are cautioned that non-IFRS financial measures should not be construed as an alternative to net income determined in accordance with IFRS as indicators of our performance or to cash flows from operating activities as measures of liquidity and cash flows.
A reconciliation of Adjusted EBITDA to net income/loss may be found in the Company’s Management’s Discussion and Analysis for the three-month periods ended March 31, 2024.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Overactive Media Corp.
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