OverActive Media Corp. (0RB.F) Earnings Call Transcript & Summary

Good day, everyone, and welcome to OverActive Media's 2025 Second Quarter Conference Call. [Operator Instructions]. The conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of OverActive Media's website. It will remain posted there for the next 30 days. I will now hand the call over to Mr. Babak Pedram, Investor Relations for OverActive Media for introductions and reading the safe harbor statement. Please go ahead, sir.

Thank you, Joanna, and good morning, everyone. Welcome to OverActive Media's Second Quarter 2025 Earnings Conference Call. A copy of the company's earnings press release is available on the Investor Relations section of our website at overactivemedia.com. With us on today's call are Adam Adamou, Chief Executive Officer; and Neil Duffy, Chief Commercial Officer of Americas. Today, we'll review the highlights and financial results for the second quarter 2025 and recent developments. Unless otherwise specified, all amounts mentioned on today's call are in Canadian dollars. Before we begin, I will read our cautionary note regarding forward-looking information. Certain information to be discussed during the call contains forward-looking statements within the meaning of applicable security laws, including, among others, statements concerning the company's 2025 objectives, the company's strategy to achieve those objectives as well as statements with respect to management's beliefs, plans, estimates and intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Such forward-looking statements reflects management's current beliefs and are based on information currently available to the management and are subject to several significant risks and uncertainties that could cause actual results to differ materially from those anticipated. Also, our commentary today will include adjusted financial measures, which are non-GAAP measures. These should be considered a supplement, not a substitute for GAAP financial measures. Reconciliations between the two can be found in our MD&A, which is available on sedar+.ca and our website. At this time, it is my pleasure to introduce Adam Adamou, Chief Executive Officer of OverActive Media. Adam, please go ahead.

Good morning, everyone, and thank you for joining us. Q2 was a quarter of delivery. We broadened our commercial footprint and executed two major events: LEC on the road in Madrid and CDL championship weekend in Canada. Both drove audience growth, strengthened partner demand and supported our agencies and content businesses. The financial results reflect that momentum. Revenue grew 26% year-over-year to CAD 8.36 million and is up 30% year-to-date to CAD 13.36 million. Operating expenses declined 11% to CAD 5.38 million showing disciplined cost control. Gross profit was CAD 4 million with a 48% gross margin versus 62% last year reflecting a first half mix weighted towards events and agencies. We expect margins to improve in the second half as League revenue share, digital merchandise and esports World Cup flows through. Adjusted EBITDA was a loss of CAD 1.02 million, an improvement from a CAD 1.23 million loss last year. We closed the quarter with CAD 5.1 million in cash and positive working capital. On execution, in Spain, LEC on the road grew 18,000 fans over 2 days and 348,000 peak concurrent viewers. In Canada, CDL Champs and Kitchener brought in 11,000 fans on-site and 353,000 peak viewers online. The first time the championship has been staged outside the U.S. We launched Phoenix Club, a new subscription loyalty program, laying the groundwork for recurring revenue. Competitively, Movistar KOI captured the LEC Spring title, securing international births and strengthening the brands with fans worldwide. Looking forward, the second half is one of our highest margin revenues are recognized. These revenues will rebalance the mix and support stronger profitability as we close the year. We're also investing in the future. Earlier this month, I traveled to Shanghai to launch active voices at the China esports Conference. The global reception confirms strong demand for a scalable solution that removes language barriers while keeping creators and control their content and identity. This quarter showed progress on both financial and operational fronts and we believe the second half sets us up for our strongest year yet. With that, I'll hand it over to Neil Duffy, our Chief Commercial Officer in the Americas, to walk through the commercial pipeline and the rollout of active voices with creators, teams and agencies. Neil?

Thank you, Adam, and good morning, everyone. Q2 was a strong commercial quarter in both regions. In Europe, LEC on the road in Madrid, the first regular season LEC matches hosted by a team and Movistar KOI Spring Championship title delivered audience growth, stronger partner demand and real momentum. In North America, we staged the Call of Duty League Championship Weekend presented by Bell. The First Call of Duty World Championship held outside of the United States. This event generated record ticket sales for Toronto Ultra and introduced new provincial and municipal partners. These outcomes drive sponsorship conversion, new content opportunities and direct-to-consumer growth. On partnerships, we recently added non-endemic brands in North America, including Little Caesars Canada and Stonefire Authentic Flatbreads. We will see these begin to flow through in the third quarter. Our founding partner, Bell renewed through 2027, extending telecom exclusivity in Canada. The Bell agreement provides multiyear commercial certainty includes national media support, co-branded content, fan activation, and an always-on digital campaign. It gives us a scale partner to amplify programs and to support new initiatives such as multilingual content and product launches. Let me turn now to ActiveVoices, our newly announced AI-powered language localization platform. The majority of content today is still published in a single language. This limits its reach. There are at least 12 languages with over 100 million native speakers, the largest of which is Mandarin. ActiveVoices creates local language versions of content while keeping ownership and authenticity with its creator. We are well positioned for the rollout, starting with our own network of teams, events, agencies and co-streamers. We introduced the platform in China, the world's biggest market for gaming and esports earlier this month, and we saw immediate interest from both creators and agencies. The pilot program is helping creators prioritize their markets, unlocked their back catalog of content and expand their monetization. For brands, the value in activating the same sponsorship assets globally without having to rebuild assets or campaigns. For overactive, we expect that active voices can be a high-margin recurring revenue stream that scales alongside our existing business lines. Looking ahead to the second half of 2025, our focus is execution. We want to convert the North American sponsorship pipeline into integrated programs across events, creators and retail. We are looking to scale ActiveVoices from pilot to launch with very clear success metrics driven by creator and regions. We want to build on our event agency partnerships and digital MTX to carry momentum into 2026. We now have a global fan base of over CAD 100 million. Teams competing at the highest level and a creator network that expands our reach and a language localization platform that can grow beyond language. Our goal is to grow these channels and use them to deliver value to fans, to partners and most importantly, to shareholders. Adam, back to you.

Thanks, Neil, and thank you all for joining us today. Q2 showed our model working. Strong revenue growth, disciplined costs and major events delivered on both sides of the Atlantic. Looking ahead, the second half is when our highest margin revenues comes through, League share, MTX and esports World Cup and when we begin to scale active voices from pilots to initial deployments. Our priorities are clear: convert the pipeline, expand recurring revenue and maintain cost discipline while investing where returns are strongest. This positions OverActive for our best year yet. Thank you again for your support. Operator, back to you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a good day.