Release Date: November 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- OverActive Media Corp (OAMCF, Financial) achieved a significant increase in normalized revenue compared to Q3 2023, demonstrating strong financial performance.
- The company introduced new financial metrics, such as adjusted growth profit and adjusted gross profit margin, providing a clearer view of profitability.
- Strategic acquisitions of Riders and KOI assets have enhanced OverActive Media Corp's presence in Europe and Latin America, fueling growth across key metrics.
- Toronto Ultra emerged as a top performer in Call of Duty League digital MTX sales, showcasing the company's ability to monetize fan engagement.
- Restructuring agreements with publisher and league partners eliminated over $37 million in liabilities, reducing risk and positioning the company for future growth.
Negative Points
- Operating costs for the quarter increased by 42% compared to the same period in 2023, driven by integration costs and expanding operations.
- Year-to-date operating costs totaled $22.4 million, reflecting a 30% increase from the previous year, due to investments in team and corporate operations.
- Adjusted EBITDA for Q3 was slightly breakeven, compared to a gain of $777,000 in the same quarter last year, indicating challenges in maintaining profitability.
- The integration of recent acquisitions, Movistar Riders and KOI, brought about necessary expenses contributing to increased costs.
- Despite improvements, the company reported an adjusted EBITDA loss of $3 million for the first nine months of 2024, highlighting ongoing financial challenges.
Q & A Highlights
Q: Can you elaborate on the strategic acquisitions of Riders and KOI and their impact on OverActive Media's presence in Europe and Latin America?
A: Adam Adamou, CEO: The acquisitions of Riders and KOI have significantly enhanced our presence in Europe and Latin America. The KOI brand, in particular, resonates deeply with fans, fueling growth across key metrics. These acquisitions are part of our strategy to expand our influence and drive fan engagement in these regions.
Q: How has OverActive Media performed in digital merchandise sales, particularly in the Call of Duty League?
A: Adam Adamou, CEO: Toronto Ultra has emerged as a top performer in Call of Duty League digital MTX sales. This success demonstrates our ability to monetize fan engagement and aligns with the future of revenue in esports. We see strong opportunities to grow our digital MTX revenues, especially in the US, Latin America, and China.
Q: What are the financial implications of the recent restructuring agreements with league partners?
A: Rikesh Shah, CFO: The restructuring agreements have eliminated over $37 million in liabilities and given us full ownership of our franchise rights with no future obligations. This reduces risk and positions us to fully capture the upside potential of esports, enhancing our financial flexibility.
Q: Can you discuss the financial performance for Q3 2024 and the first nine months of the year?
A: Rikesh Shah, CFO: In Q3 2024, we posted total revenue of $6.9 million, a 14% increase from last year. Year-to-date revenue reached $17.2 million, up 49% from 2023. Adjusted gross profit for the quarter was $5.1 million with a margin of 74%. These results highlight the success of our strategic initiatives and strong performance across our league and partnership engagements.
Q: What is OverActive Media's approach to managing operating costs amid expansion?
A: Rikesh Shah, CFO: Operating costs for the quarter were $7.6 million, up 42% from last year, primarily due to integration costs and expanding operations. We remain committed to strategic cost management, optimizing operations, and ensuring increased expenditures translate into value creation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
