OverActive Media Reports Second Quarter 2022 Financial Results

Year-Over-Year Revenue Growth of 11% Powered by Multi-Year Partnership Renewals

Toronto, Ontario, CANADA


TORONTO, Aug. 10, 2022 (GLOBE NEWSWIRE) -- OverActive Media (“OverActive” or the “Company”) (TSXV: OAM) (OTCQB: OAMCF), a global sports, media and entertainment company for today’s generation of fans, today released its second quarter results for the three-and six-month period ended June 30, 2022.

  • Total revenues grew organically by 11% year-over-year driven by a 52% increase in Business Operations revenue due to higher sponsorship revenue.
  • OverActive hosted 8,000 fans at Canada’s first-ever Call of Duty League tournament, Toronto Ultra Major III presented by Bell.
  • A third-party transaction in the League of Legends European Championship (“LEC”) was completed at a reported valuation of $55 million (€34 million). This is significantly higher than the $12 million that OverActive paid for its LEC franchise in 2019.

“We continue to see positive momentum and value opportunities around the strong and scalable business that we are building,” said Chris Overholt, President and CEO, OverActive Media. “Not only are we winning through our focus on partnerships as indicated by significant renewals with Bell and TD, but the year-over-year growth of the industry and the third-party validation of the tremendous increase in value of our franchise assets continues to substantiate our core business thesis.”

Overholt continued, "Our expenses and net loss were higher in the current quarter, driven in part by our investment in hosting the first-ever Call of Duty League Major in Toronto in June. This event was a tremendous success for our fans, partners and the city. Year-over-year business operations revenue growth of 52% further supports the momentum we are seeing, positioning the Company well for the back half of the year.”

Second Quarter 2022 Financial Highlights

  • Second quarter 2022 total revenue increased by 11% to $2.3 million, driven primarily by a 52% increase in sponsorship revenue. Team Revenue declined by $0.5 million in the quarter due to non-recurring prize money earned in the comparative prior-year period. In 2021, total revenue for the three months ended June 30, 2021 of $2.1 million represented 15% of 2021 Financial Year End (“FYE”) total revenue. We expect that a similar seasonality pattern will continue in 2022.
  • Revenue for the first six months of 2022 was $4.4 million, a 30% improvement year-over-year, driven primarily by a 47% increase in Business Operations revenue. Team Revenue declined by $0.2 million year-over-year owing to a decline in non-recurring prize money earned in 2021. In 2021, total revenue for the six months ended June 30, 2021 of $3.4 million represented 24% of 2021 FYE total revenue. We expect that a similar seasonality pattern will continue in 2022.
  • Adjusted EBITDA1 loss of approximately $(3.9) million, a 109% increase compared to Adjusted EBITDA loss of approximately $(1.9) million during the comparative prior-year period. The increase is attributable to increases in operating costs.
  • Adjusted EBITDA loss was $(5.9) million for the first six months of 2022 increased by 39% year-over-year, driven by increases in operating costs, partially offset by increases in other income of 137%.
  • Net loss was $(2.3) million, a 47% improvement compared to $(4.4) million during the comparative prior-year period. The improvement is a result of higher revenues offset by higher operating costs over the prior-year period. Net loss for the quarter included $1.7 million in non-operating income, compared to $2.7 million in non-operating costs in the comparative prior-year period. 
  • Net loss was $(7.0) million for the first six months of 2022, a 15% improvement from the comparative 2021 period.
  • As of June 30, 2022, the Company had cash and cash equivalents of $22.0 million, compared to $15.7 million as of June 30, 2021.

Second Quarter 2022 Operating Highlights

  • OverActive announced multi-year partnership renewals with Bell on June 2, 2022, and TD Bank Group on June 16, 2022. Bell, Canada’s largest communications company and a key strategic investor in OverActive extended its partnership for another three years. TD is the official bank of OverActive and its two Canadian professional esports teams – Toronto Ultra and Toronto Defiant and signed on for a multi-million-dollar, five-year agreement.
  • June 2 to 5, OverActive hosted the Call of Duty League’s Major III at the Mattamy Athletic Centre in Toronto where Toronto Ultra had a strong showing, finishing in third place. The event saw approximately 8,000 fans over the course of the tournament. Major III reinforced the market for live events and that OverActive can deliver world-class esports experiences.

Team Performance Highlights

  • MAD Lions' League of Legends team is in first place in the LEC as it looks to win its third championship and qualify for the World Championship for the fourth consecutive time.
  • Playing under the MAD Lions brand, OverActive’s VALORANT team had an incredible regular season, finishing with a 17-1 record in its first-ever season and placing in the Championship Final.
  • Toronto Ultra recently wrapped up their season finishing top six at the Call of Duty League Championship Weekend held in Los Angeles, CA August 4 to 7.
  • The Toronto Defiant of the Overwatch League is sitting in eighth place in the West conference, focused on the Toronto Defiant Summer Showdown presented by Bell.

Notable Industry Transactions

  • On July 27, 2022, Esports organization, Misfits Gaming Group, announced the sale of its League of Legends European Championship ("LEC") franchise slot to Team Heretics at a reported value of $55 million (€34 million). The deal marks the second sale of an LEC slot, following Team BDS’ acquisition of an LEC franchise slot from Schalke 04 for a reported $39 million (€26.5 million) in 2021. OverActive acquired an LEC franchise in 2019 that operates under the MAD Lions brand for $12 million (€8 million)2.

The Company’s consolidated unaudited financial statements, notes to financial statements, and Management's Discussion and Analysis for the three and six-month period ended June 30, 2022, are available on the Company’s website at www.overactivemedia.com and under the Company’s profile on SEDAR at www.sedar.com. Unless otherwise specified, all amounts are in Canadian dollars ($).

Conference Call
The Company will conduct a conference call tomorrow, Thursday, August 11, 2022, at 9:00 a.m. (Eastern Time) to review the second quarter 2022 results as well as provide an overview of the Company's recent milestones and growth strategy.

To access the conference call, please dial 1-855-669-9657, or for international callers, 1-877-870-4263 and use participant passcode 10169590. A replay will be available shortly after the call and can be accessed by dialling 1-855-669-9658, or for international callers, 1-877-344-7529. The entry code for the replay is 4354432. The replay will expire on Thursday, August 18, 2022.

A live webcast of the conference call can be accessed on OverActive’s website at www.overactivemedia.com or directly via https://app.webinar.net/1v5XG4zoW3N. An online archive of the webcast will be available via the same link for 90 days following the call.

The following table presents a reconciliation of Net income (loss) to Adjusted EBITDA (loss) for the periods ended:

 Three months endedSix months ended
 June 30, 2022June 30, 2021June 30, 2022June 30, 2021
(In thousands of Canadian dollars)$$$$
Net loss for the period(2,343)(4,425)(6,981)(8,210)
Income tax recovery(17)(239)(6)(480)
Depreciation305 299 616 597 
Amortization203 85 283 512 
Decrease in net present value of franchise obligations(4,778)- (4,778)- 
Finance cost1,210 1,343 2,647 2,333 
Foreign exchange loss (gain)774 (290)507 (691)
Share-based compensation671 1,376 1,664 1,657 
Restructuring costs110 - 110 - 
Adjusted EBITDA(3,865 )(1,851 )(5,938 )(4,282 )

OVERACTIVE MEDIA CORP.
Condensed Consolidated Interim Statements of Financial Position
(expressed in thousands of Canadian dollars, unaudited)

As at June 30, 2022 and December 31, 2021

  June 30,December 31,
   2022  2021 
Assets   
    
Current assets:   
Cash and cash equivalents $21,991 $29,577 
Trade and other receivables  3,099  4,906 
Prepaid expenses and other current assets  1,683  1,208 
Total current assets  26,773  35,691 
    
Non-current assets:   
    
Property and equipment  2,445  2,698 
Right-of-use assets  1,378  1,827 
Intangible assets  88,520  89,648 
Goodwill  5,661  5,596 
Total non-current assets  98,004  99,769 
    
Total assets $            124,777 $            135,460  
    
Liabilities and Shareholders' Equity   
    
Current liabilities:   
Trade payables and accrued liabilities $2,890 $3,651 
Provisions  1,987  1,987 
Notes payable  63  63 
Current portion of lease liabilities  894  1,005 
Current portion of contract liability  1,198  1,619 
Current portion of payable related to franchise assets  1,686  7,359 
Current portion of long-term debt  174  186 
Current portion of deferred grant income  32  33 
Total current liabilities  8,924  15,903 
    
Non-current liabilities:   
Deferred tax liability  14,855  14,757 
Long-term portion of lease liabilities  626  955 
Long-term payable related to franchise assets  25,178  21,405 
Long-term debt  261  350 
Long-term deferred grant income  59  80 
Other long-term liabilities  84  90 
Total non-current liabilities  41,063  37,637 
    
Total liabilities  49,987  53,540 
    
Shareholders' equity:   
Share capital  133,638  133,638 
Warrants reserve  621  621 
Contributed surplus  8,292  6,855 
Accumulated other comprehensive loss  (6,238) (4,652)
Deficit  (61,523) (54,542)
Total shareholders' equity  74,790  81,920 
    
Total liabilities and shareholders' equity $             124,777 $            135,460  

OVERACTIVE MEDIA CORP.
Condensed Consolidated Interim Statement of Net Loss and Comprehensive Loss
(expressed in thousands of Canadian dollars, except per share amounts, unaudited)

For the three and six months ended June 30, 2022 and 2021

  For the three months ended For the six months ended
  June 30,June 30, June 30,June 30,
   2022  2021   2022  2021 
       
Revenue $2,340 $2,104  $4,439 $3,402 
       
Operating costs  6,364  4,104   12,459  8,515 
Loss before the undernoted  (4,024) (2,000)  (8,020) (5,113)
       
Depreciation  305  299   616  597 
Amortization of intangible assets  203  85   283  512 
Foreign exchange loss (gain)  774  (290)  507  (691)
Decrease in net present value of      
franchise obligations  (4,778) -   (4,778) - 
Finance costs  1,210  1,343   2,647  2,333 
Share-based compensation  671  1,376   1,664  1,657 
Other income  (49) (149)  (1,972) (831)
Loss before income taxes  (2,360) (4,664)  (6,987) (8,690)
       
Income tax recovery  (17) (239)  (6) (480)
Net loss for the period  (2,343) (4,425)  (6,981) (8,210)
       
Other comprehensive loss:      
Foreign currency translation  (632) (55)  (1,586) (1,535)
       
Comprehensive loss for the period $(2,975)$(4,480) $(8,567)$(9,745)
       
Loss per share:      
Basic and Diluted $(0.03)$(0.07) $(0.09)$(0.14)
       

OVERACTIVE MEDIA CORP.
Condensed Consolidated Interim Statements of Cash Flows
(expressed in thousands of Canadian dollars, unaudited)

For the three and six months ended June 30, 2022 and 2021

  For the six months ended
  June 30,June 30,
   2022  2021 
    
Cash provided by (used in) :   
    
Operating activities:   
Net loss for the period $(6,981)$(8,210)
Adjustments for:   
Depreciation  616  597 
Amortization of intangible assets  283  512 
Foreign exchange loss (gain)  507  (691)
Share-based compensation  1,664  1,657 
Finance cost  2,647  2,333 
Decrease in net present value 
of franchise obligations
  (4,778) - 
Income tax recovery  (6) (480)
Other  (15) (12)
Change in non-cash operating working capital:   
Decrease (increase) in trade and other receivables  1,807  (330)
Increase in prepaid expenses and other current assets  (723) (1,283)
(Decrease) increase in trade payable and accrued liabilities  (255) (499)
(Decrease) increase in contract liabilities  (421) 285 
   (5,655) (6,121)
    
Financing activities:   
Repayment of long-term debt  (90) (31)
Proceeds from shares issued on private placement   
and brokered private placement, net  -  16,708 
Net proceeds on shares issued in prior period  
received from cash held in trust
  -  1,098 
Principal payment of lease liability  (431) (394)
Payment of interest portion of lease liability  (79) (117)
    
   (600) 17,264 
    
Investing activities:   
Purchase of property and equipment  (428) (645)
Purchase of player contracts  (700) (128)
Intangibles acquired  (5) (41)
    
   (1,133) (814)
    
(Decrease) increase in cash and cash equivalents  (7,388) 10,329 
Cash and cash equivalents, beginning of period  29,577  5,585 
Effect of exchange rate changes on cash and cash equivalents  (198) (254)
    
Cash and cash equivalents, end of period  $21,991 $15,660 
    

FOR FURTHER INFORMATION, PLEASE CONTACT:

Leah Gaucher, Director, PR & Communications, OverActive Media

(647) 924-2614

lgaucher@oam.gg

Babak Pedram, Investor Relations, Virtus Advisory Group Inc.

(416) 955-8651

bpedram@virtusadvisory.com

ABOUT OVERACTIVE MEDIA

OverActive Media (TSXV: OAM) (OTCQB: OAMCF) is headquartered in Toronto, Ontario, with operations in Madrid, Spain and Berlin, Germany. OverActive’s mandate is to build an integrated global company delivering sports, media and entertainment products for today’s generation of fans with a focus on esports, videogames, content creation and distribution, culture, and live and online events. OverActive owns team franchises in (i) the Overwatch League, operating as the Toronto Defiant, (ii) the Call of Duty League, operating as the Toronto Ultra, (iii), and the League of Legends European Championship (“LEC”), operating as the MAD Lions, (iv) the Superliga, operating as the MAD Lions Madrid, and (v) VALORANT Regional League France: Revolution, operating as the MAD Lions. OverActive also operates both live and online events, operating as OAM Live and maintains an active social media presence with its fans and community members, operates fan clubs, and other fan-related activities that increase the reach of its brands.

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: 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 annual information form for the year ended December 31, 2021, a copy of which may be found under OverActive’s profile at www.sedar.com. 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 does 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 as net income or loss before income taxes, finance costs, depreciation and amortization, decrease/increase in net present value of franchise obligations, foreign exchange gains/loss, restructuring costs, 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.

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.

1 Adjusted EBITDA is a non-IFRS measure. Refer to “Non-IFRS Measures” at the end of this press release.
2 Misfits Gaming Group sells LEC franchise slot to Team Heretics - Esports Insider