49% Year-to-Date Revenue Growth and 71% Adjusted Gross Margin Drive OAM’s Path to Profitability
TORONTO, Nov. 27, 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 third-quarter results for the three and nine-month periods ended September 30, 2024.
Note to reader: A significant portion of the Company’s revenue is derived from “League Revenues,” which have historically varied in the quarter they were received, making period-over-period comparisons less meaningful. To address this, the Company has adopted a straight-line revenue recognition model, distributing revenue evenly over 12 months. This approach ensures more consistent quarter-to-quarter comparisons. The normalized financials in this press release reflect this change, providing clearer insights into the Company’s performance. All amounts are presented in Canadian dollars ($).
Below is a summary of the financial results for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023:
$CAD (000’s)
Three
months
ended
September
30, 2024
Three
months
ended
September
31, 2023
Variance
(%)
Three
months
ended
September
30, 2023
(Normalized)
Variance
(%)
Normalized
Nine
months
ended
September
30, 2024
Nine
months
ended
September
30, 2023
Variance
(%)
Nine
months
ended
September
30, 2023
(Normalized)
Variance
(%)
Normalized
Revenue
$6,881
$6,015
14 %
$3,998
72 %
$17,156
$11,492
49 %
$10,819
59 %
Adjusted Gross Profiti
$5,071
$4,837
5 %
$2,820
80 %
$12,194
$7,717
58 %
$7,044
73 %
Adjusted Gross Margini
74 %
80 %
-8 %
71 %
4 %
71 %
67 %
6 %
65 %
9 %
Operating Expenses
$7,609
$5,374
42 %
$5,374
42 %
$22,416
$17,259
30 %
$17,259
30 %
Adjusted EBITDAi
$4
$777
-99 %
($1,240)
100 %
($3,048)
($5,508)
45 %
($6,181)
51 %
Net Income (Loss)
($1,790)
($1,993)
10 %
($4,010)
55 %
$239
($11,170)
102 %
($11,843)
102 %
Net Working Capital
$9,423
($4,260)
321 %
($4,260)
321 %
$9,423
($4,260)
321 %
($4,260)
321 %
Cash & Equivalents
$8,861
$9,695
-9 %
$9,695
-9 %
$8,861
$9,695
-9 %
$9,695
-9 %
i Adjusted EBITDA and Adjusted Gross Margin/Profit are non-IFRS measures. Refer to “Non-IFRS Measures” at the end of this press release.
“Our third-quarter results demonstrate OverActive Media’s disciplined execution and growth. With year-to-date revenue up 49% to $17.1 million and positive net income of $239,000, we are making significant progress,” said Adam Adamou, CEO of OverActive Media. “This growth is driven by strategic changes, including renegotiated league agreements, increased digital revenue, and contributions from our KOI and Riders acquisitions, as well as our entry into the VALORANT EMEA ecosystem. We delivered positive Adjusted EBITDA this quarter and significantly reduced year-to-date Adjusted EBITDA losses by 45%, illustrating our strong path forward.”
Mr. Adamou continued, “Restructuring agreements with Activision earlier this year eliminated over $35 million in liabilities, strengthening our net working capital to $9.4 million. Additionally, post-quarter, we finalized a new Riot Games agreement that eliminated the remaining $2 million franchise fee for our LEC team, securing full ownership of our franchises without future obligations. These restructured agreements have enabled us to generate high-margin revenue streams, especially in digital merchandise and microtransactions.
Mr. Adamou concluded, “Today, we are operating from a position of financial strength — debt-free, globally diversified, and supported by partnerships with iconic brands like Pepsi, AMD, Telefónica, and Bell. With a clear strategy, strong margins, and transformative agreements in place, we are focused on expanding our opportunities and driving sustainable, profitable growth in the near future.”
Q3 2024 Financial Highlights
Revenue for the three months ended September 30, 2024 totaled $6.8 million, reflecting a 14% increase compared to $6.0 million in the same period of 2023. On a normalized basis—accounting for changes in revenue recognition—revenue increased by $2.8 million, or 72%. This growth was driven by several strategic initiatives, including the acquisition of Riders and KOI assets in the first quarter and our entry into the VALORANT EMEA ecosystem in February. Additionally, stronger performance across both our Team Operations and Business Operations segments, particularly from digital merchandise (MTX) sales, contributed significantly to this revenue expansion.Operating Costs for the three months ended September 30, 2024 totaled $7.6 million, compared to $5.4 million for the same period in 2023, reflecting a 42% increase. This rise in costs is primarily attributed to higher payroll expenses across both corporate and team operations, driven by the integration of the recently acquired Riders and the KOI assets. Additionally, one-time restructuring costs incurred as part of our strategic efforts to streamline operations and improve efficiency have also contributed to this increase.Adjusted Gross Profiti for the quarter (defined as revenue less direct costs) remained strong at $5.1 million, resulting in an Adjusted Gross Margini of 74%, compared to $4.8 million and 80% for the same period in 2023. On a normalized basis, Adjusted Gross Profit improved from $2.8 million to $5.1 million for the quarter and Adjusted Gross Margin improved from 71% to 74%. The stability in Adjusted Gross Profit, despite the increase in operating costs, highlights the effectiveness of our revenue growth initiatives, particularly from digital merchandise sales and contributions from our expanded portfolio. These results underscore the scalability of our business model as we continue to execute on strategic opportunities to drive long-term profitability. Adjusted EBITDAi for the three months ended September 30, 2024 was essentially break-even, compared to an Adjusted EBITDA gain of $777,000 in the same period in 2023. This year-over-year decline is primarily due to changes in the timing of revenue recognition for certain league earnings and in-game microtransactions (MTX). On a normalized basis, Adjusted EBITDA showed a significant improvement, moving from a loss of $1.2 million in Q3 2023 to a gain of $4,000 in Q3 2024. This improvement was driven by increased revenues from strategic acquisitions, and successful team performances in key tournaments.Net Loss for the three months ended September 30, 2024 was $1.8 million, representing a 10% improvement compared to a Net Loss of $2.0 million in the same period in 2023. This improvement was driven by strong revenue growth and disciplined cost management, even as the Company absorbed additional expenses related to acquisitions and integration.Net Working Capital (current assets less current liabilities) as of September 30, 2024 improved dramatically to $9.4 million, compared to negative working capital of $4.3 million in the same period in 2023 — a positive shift of $13.7 million. This significant change is primarily the result of the acquired businesses and the restructuring of our league partnerships, which resulted in the elimination of substantial league payables.Cash and Cash Equivalents as of September 30, 2024 totaled $8.9 million, compared to $9.7 million at the same time in 2023. This modest decrease reflects careful asset management, with planned investments directed toward operating activities and acquisition integration costs. The Company’s approach underscores a commitment to balancing strategic growth with operational efficiency while maintaining a strong liquidity position.
Nine Months 2024 Financial Highlights
For the nine months ended September 30, 2024 Revenue totaled $17.2 million, a 49% increase compared to $11.5 million during the same period in 2023. After normalizing for changes in revenue recognition, Revenue grew by $6.3 million or 59%. This growth was driven by strategic acquisitions of Riders and KOI, stronger performance across Team Operations and Business Operations segments, and contributions from our marketing and influencer activities.Operating Costs for the nine months ended September 30, 2024 were $22.4 million, a 30% increase compared to $17.3 million in the same period in 2023. This increase reflects higher payroll expenses, costs associated with integrating acquired businesses, and one-time restructuring expenses. These costs align with the Company’s strategic focus on streamlining operations and positioning for sustainable growth.Adjusted Gross Profit for the period stood at $12.2 million, with an Adjusted Gross Margin of 71%, compared to $7.7 million and 67% for the same period in 2023. On a normalized basis, year-to-date Adjusted Gross Profit significantly improved from $7.0 million to $12.2 million and Adjusted Gross Margin improved from 65% to 71%. The growth in Adjusted Gross Profit underscores the scalability of our revenue model, particularly from digital merchandise and expanded team contributions.Adjusted EBITDA loss for the nine months ended September 30, 2024 was $3.0 million, a 45% improvement from the $5.5 million loss reported for the same period in 2023. This improvement reflects robust revenue growth from acquisitions and changes in revenue recognition, offset by integration and restructuring costs.Net Income for the nine months ended September 30, 2024 was a gain of $239,000, compared to a Net Loss of $11.2 million in the same period in 2023. The shift to profitability was driven by strong revenue performance, disciplined cost management, and a gain from the termination of the Call of Duty League franchise obligation.
Selected Q3 2024 Achievements
OverActive Media’s teams, competing as Toronto Ultra at the 2024 Esports World Cup (EWC) in Saudi Arabia, delivered a strong international performance, earning valuable Club Championship Points in Overwatch 2, Teamfight Tactics, and Call of Duty to secure an 11th place global finish. This achievement underscores OverActive Media’s growing influence in the global esports ecosystem and highlights its role as an Official Esports World Cup Partner.OverActive Media secured new high-profile partnerships with global brands, including Pepsi, and renewed previous announced partnerships with AMD, SCUF and Bell. These partnerships continue to enhance the Company’s market presence and brand portfolio, particularly in the esports and gaming sectors.Toronto Ultra finished in third place at the CDL World Championships in Texas, capping off a successful year that included winning Major 1 in the first quarter and leading all CDL teams in team branded digital merchandise sales globally.
Significant Announcements Subsequent to Quarter End
OverActive Media’s esports team, Movistar KOI, partnered with Ecoembes, a leader in circular economy and packaging recycling, to drive sustainability within the esports community. This strategic sponsorship positions Movistar KOI as an advocate for environmental responsibility in European esports, focusing on recycling awareness, packaging recovery, and carbon neutrality. The partnership also includes Movistar KOI’s commitment to the United Nations Sports for Climate Action Framework, reinforcing OverActive Media’s dedication to sustainable growth.OverActive Media’s League of Legends team MAD Lions KOI qualified for the World Championship tournament for the sixth consecutive time, drawing peak viewership of almost 2.5M concurrent viewers.OverActive Media has secured a new long-term partnership with Riot Games for the League of Legends EMEA Championship (LEC), reinforcing its presence in one of the world’s premier esports leagues. The agreement eliminates all future franchise obligations from OAM’s balance sheet, significantly improving future cash flows and ensuring full ownership of its franchises with no remaining liabilities. This milestone positions the company for enhanced revenue opportunities and long-term growth in the global esports ecosystem.
The Company’s consolidated unaudited financial statements, notes to financial statements, and Management’s Discussion and Analysis for the three and nine-month periods ended September 31, 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, November 28, 2024, at 9:00 a.m. (Eastern Time) to review the third-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/3O6qT40 to receive an instant automated callback. To dial directly to be entered into the call by an operator, please dial 1-888-699-1199 or, for international callers, 416-945-7677.
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 27822#. The replay will expire on Thursday, December 5, 2024.
A live conference call webcast can be accessed on OverActive’s website at https://app.webinar.net/ZXxR8X7pPLM. 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, 9.
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 Gross Profit and Adjusted Gross Margin. These non-IFRS financial measures are not earnings or cash flow measures recognized by IFRS and do not have standardized meanings prescribed by IFRS. Our method of calculating these financial measures may differ from the methods used by other issuers and, accordingly, our definition of these non-IFRS financial measures 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.
Adjusted EBITDA 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. A reconciliation of Adjusted EBITDA to net income/loss may be found in the Company’s Management’s Discussion and Analysis for the three and nine-month periods ended September 30, 2024.
Adjusted Gross Profit is defined by the Company as revenue less the direct operating costs incurred by the Company in generating revenue. Direct operating costs include merchandise, sponsorship and agency expenses, live event expenses and the portion of team prize money revenue paid to team members but do not include other team operation expenses or other indirect operating costs. Adjusted Gross Profit Margin is the percentage that Adjusted Gross Profit represents of total revenue. We believe that Adjusted Gross Profit and Adjusted Gross Profit Margin are important measures of financial performance because they focus on the profitability of our core revenue-generating activities by excluding indirect operating costs. These metrics provide investors with a clearer view of the Company’s ability to deliver value to fans, sponsors, advertisers, and league partners, while maintaining sustainable margins in our primary operations. This distinction helps investors evaluate the underlying performance and efficiency of our revenue streams before considering broader expenses.
A reconciliation of revenue to Adjusted Gross Profit and Adjusted Gross Profit Margin for the periods indicated is as follows:
Three months ended
September 30,
Nine months ended
September 30,
2024
2023
2024
2023
$
$
$
$
Revenue for the period
6,881
6,015
17,156
11,492
Normalized revenue for the period
6,881
3,998
17,156
10,819
Less:
Merchandise, sponsorship and agency expenses(1)
625
126
1,542
595
Live event expenses
510
888
2,157
1,999
Team prize money expense(2)
674
163
1,263
1,181
Total Direct Costs
1,810
1.178
4,962
3,775
Adjusted Gross Profit
5,071
4,837
12,194
7,717
Normalized Adjusted Gross Profit
5,071
2,820
12,194
7,044
Adjusted Gross Profit Margin
74 %
80 %
71 %
67 %
Normalized Adjusted Gross Profit Margin
74 %
71 %
71 %
65 %
Notes:
(1) These are selling, general and administrative operating costs that the Company treats as direct costs.
(2) Represents the portion of team operations constituting prize money the portion of team prize money revenue paid to team members.
The following tables presents a reconciliation of net loss to adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023:
Three months ended
September 30,
Nine months ended
September 30,
2024
2023
2024
2023
$
$
$
$
Net income (loss) for the period
(1,790)
(1,993)
239
(11,170)
Income tax expense (recovery)
176
152
(334)
148
Depreciation
546
435
1,688
1,313
Amortization
318
51
744
159
Decrease in net present value of franchise obligations
–
–
(9,838)
–
Finance income
(64)
(44)
(222)
(182)
Finance costs
150
1,332
1,603
3,843
Foreign exchange (gain) loss
(70)
610
903
119
Share-based compensation
254
122
368
(55)
Restructuring and development costs
484
112
1,801
317
Adjusted EBITDA
4
777
(3,048)
(5,508)
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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