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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.
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 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 analysis for the 3-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. The 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 in 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 hard-working 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 has and has continued 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 continued to see a very active pipeline, and we are winning deals at an increasing rate as the business scales. On our last conference call in March, I mentioned that we had nearly passed direct sales bookings in less than 3 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 esports 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 6-episode series and went to market looking for partners. TikTok signed on and later so did e.l.f. Cosmetics. 2 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 Gamer's 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 2 this coming Sunday. I should also point out that from that germination of an idea in November to 12 billion impressions, to Episode 2, 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 War Zone. This is a significant breakthrough for us in 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 are 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 addressed these trends and will allow gamers to register their unique gaming profiles, compare stats, develop meaningful connections 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 USD 11 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 in-game stats. It has already registered more than 13 million gamer profiles and 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 is a meaningful next step towards becoming a technology-powered media, esport 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 the 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 1 or 2 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 ink new distribution partnerships, including with GluedTV, DistroTV and VideoElephant, and subsequent to the quarter, we announced a partnership with ESPAT TV to produce premium gaming and esports content, especially in streaming and social video. Turning to Luminosity Gaming. Our esports organization has never been more popular. In March, Luminosity Gaming was the most popular esports organization in the world on Twitch with 40 million hours watched, nearly 60% more than the second place team. We continued 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 am 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 MDA do not include the results of Omnia, except where noted. Any 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 MDA. 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. In 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 esports 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 7x. 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'll 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 of 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 3 web properties, being TSR, Escapist Magazine and Siliconera. However, as announced this morning, the company has set a motion of plan towards a pan-Enthusiast subscription offering which will be available to all of our 300 million web, video and esports audience members. This is a great opportunity to significantly expand our paid subscriber base. Q1 esports and entertainment revenue was $1.2 million as compared to $1.8 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 for 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 faced this quarter. There's another revenue headwind I want to point out. The significant majority of our revenue is earned and measured in U.S. dollars, which is translated into Canadian dollars for presentation in our financial statements. The average USD to CAD exchange rate in Q1 2020 was [ 134.5 ], which dropped to [ 126.6 ] in Q1 2021. Had the exchange rate remained constant at [ 134.5 ], revenues in Q1 2021 would have been $1.8 million higher. The aggregate impact between this and the COVID restrictions on our London events was $3.4 million in revenue, assuming an otherwise similar result for 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 U.S. dollar and our presentation currency of the Canadian dollar should be monitored and considered when 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, 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 continued to advance these revenue streams, the impact on gross margin is noticeable. I note that in the last 4 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 noncash 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 continued to increase in Q1, which we have done to support anticipated growth. We have 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 esports roster. And for 2 months in a row, Luminosity Gaming has been the most watched esports 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 that 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 for 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 the ventures, the balance sheet was strengthened by approximately $50 million. And of course, I would be remiss if I failed 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 business is a 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] Our first question comes from Mike Crawford with B. Riley.
A question on your 300 million global audience. What type 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.
Mike, this is Alex. I mean the variance, we -- so it comes -- the variance comes from 3 places for us, web, video and esports. And then we use, especially for web and video, we rely on a third-party data provider. So the variances we see are not -- to be honest, not that great, which is why we just -- we essentially round the number and say 300 million. It's typically above. Actually, it's always been above. Haven't seen it below in a while. But that is not always extremely timely. So we don't provide a 3-0, 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, what -- how much are they watching content? So that's why we provide exact web page 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. Because I think the sims has an example of that. How many coming up on the sims here?
Sure. On the sims, you 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 would -- I do note that there's a lot of return on the video. The video return is very high. I mean, you can see the video views, and you could guess how many users are coming from age segments. I mean, to be honest, I'll tell you, it's approximately -- it's pretty well distributed between web video and esports audiences. And the video views are so high. So they're coming back pretty often. I hope that's helpful. What was the second -- was there a second part -- that was it?
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 wanted to confirm that, that does include sponsorship revenue. But where can that go? Like, for example, Manchester United, I think, charges GBP 50 million a year for its t-shirt sponsor. So you have G FUEL and e.l.f. and a couple of others on your Luminosity jerseys, but what -- where can that go for Enthusiast?
Well, again, Mike, what 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 esports continues to mature as a pastime. And look, the number -- if you notice some of the bigger deals that we've announced recently, the Samsungs, the ExitLags, they're all including esports 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 a lot of growth around esports sponsorship.
Our next question comes from Rob Young with Canaccord Genuity.
I was looking back at some past investor presentations on your company. And 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. Just maybe talk about your relative -- the opportunity set from this sort of step into social the pan subscription. How do those sort of rank in when you think about the opportunity relative to directing the -- the subscription strategy up until now?
Yes. Thanks, Rob. It's Adrian. I'll start off. Yes, 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 about subscription offering. I think some folks were asking, particularly in light of the Cloud 9 subscription program, would there be a Luminosity subscription? And we had indicated our perspective was that, yes, we could do that. We could sequentially roll out 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 freemium, the growth of subscription, we very much saw it linked with the acceleration of the social platform. And so the 2 ideas went from being in silos to really seeing them as more complementary 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 allies 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 esports organizations, 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 that you're building with this. Maybe talk a little bit about that. You've talked about the unique set of data that you have given the audience, but do you think of capabilities like a social network typically have much stronger targeting? And like, is that what you're talking about when you're talking about enhanced data capability, maybe give a little more detail there, that would be helpful.
Yes. 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 not a grizzled vet like Alex or me. Go ahead, Thamba.
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, the -- 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 identities, 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, there will be -- we will have the advanced ability to do a targeted ad, run targeted campaigns in a much more sophisticated fashion than how we're able to execute that today.
Okay. 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 then I'll pass the line.
Yes, sure. I mean, mathematically, it'd be pretty simple. And of course, Q1, strong seasonal effects. So your median content revenue is going to come down. It comes down programmatic. And to be honest, at a similar ratio that kind of came down on direct, I want to point out something in direct by the way, what it's beautiful about 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 at the same time, subscription continues to grow. It has a higher percent of the overall bucket, which helps continue to push up that gross margin. And man, we're confident. That's what I want to see, right? I spoke to the last 4 quarters, it goes to the high 19.8% from a 16.1%. That you're talking like just shy of a percent a quarter. And that's it. That's what we need, right, on this growth initiative? Present it to 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 2 things compound beautifully. But anyway, that's the mathematical explanation.
Our next question comes from Brian Kinstlinger with Alliance Global Partners.
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?
Yes. Thanks. I'll start and then pass to Thamba. Yes, 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, yes, perhaps this social platform, we saw it coming a little bit later than we now do because tabs, data and technology capabilities were able to vault us forward, in some cases, upwards of a year. So they really compress the time line in terms of what they have in their toolbox. The other thing about Tab is -- Tab is -- has been advertising platform today. They sell ads, they make money. And so again, this is a viable acquisition just on being a partner site that we folded in through our O&O acquisition strategy. And then when you layer on the tech, and then when you layer on the fact that it can vault us 8 months to a year forward in terms of our road map for GG, it just made a lot of sense.
Yes. Just to add to that, this is Thamba. So to -- the 2 other points to your question are in terms of perhaps at that mix. Think of it as very similar to how we started on the TSR journey. TSR as a property had ad avenue, 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 around on top of that 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 will have meaningful propositions that will resonate with the gamers to command that price premium in the marketplace.
Great. That's helpful. My other question, if you can talk about -- it was early and sound is very important. The TikTok strategy you've got the first episode of Gamers' Greatness 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 of itself, is -- excuse me for one second. And that in and 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 to 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 formats could shoot off of it. But it gets back to what we're doing here and what we're executing against 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.
Our next question comes from Colin George with Haywood Securities.
My question is kind of with regards to events going forward. Alex commented on how there was the drop in the revenue year-over-year with the loss of a live event in London, but because the cost of lower gross margins might be a bit higher. So with the reopening happening in the U.S. and the U.K. 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?
Yes. 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 and, in some cases, improve the margin. So we can do both, and we will continue to do both. And yes, I would point out that, again, this is our second conference, analyst or earnings conference in a row. And in the last 2 quarters, in normal times, we would have had our flagship EGLX event drop 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 event and experience aside going forward.
Our next question comes from Derek Soderberg with Colliers Securities.
I want to start with the pan-Enthusiast offering. Just curious, what sort of testing you've done in the market for subscription service you're proposing? What sort of 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 stand-alone web and video assets? Is there some crossover in users between some of those assets?
Yes. 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 opportunity that we have is Enthusiast Gaming is a 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 to share just an -- we have -- I mean, the subsequent events, we -- to date, in the MDA, we got obviously a very recent cap table. The subsequent events lay out the option and warrant exercises and whatnot. I wouldn't anticipate any major movements that, unless pursuant to an announcement, perhaps some shares issued on Tabwire as our press release stated, which we will include in the press release that happens.Other than that, there are small amounts of options and whatnot that cycles through. But most of those -- all of those later in the subsequent events. The -- sorry, can you repeat the second part of the...
Cash flow.
Cash flow, of course. So our 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. I mean, these are going to add to not only the gross profit but also straight to the bottom line. Icy Veins, for example, is yes, that helps. That's incremental, and it's going to help profitability. So we're feeling good.
[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. Have a wonderful evening.