TD's Flash Notes
Recommendation: SPEC BUY
Risk: SPECULATIVE
12-Month Target Price: C$2.00
12-Month Dividend (Est.): C$0.00
12-Month Total Return: 102.0%
Strong Finish to Fiscal 2021
Event
Q4/21 results; conference call at 9.00 a.m. ET (1-888-390-0605 or 416-764-8609).
Impact: SLIGHTLY POSITIVE
Q4/21 results came in better than our expectations, as outlined in the bullets
and exhibit below. Notably, full-year consolidated revenue of $14.2mm exceeded
consensus of $13.0mm. The beat versus our estimates was driven largely by team
revenues as the timing impacts of league revenue-share payments was greater than
we had expected.
In our initiation report (see here — link), we outlined our view that our forecasts
will increasingly be driven by OAM's business operations, including sponsorships,
partnerships, and brand marketing. We continue to believe that will be the case, given
the list of growing sponsorship partners, including the recent Zilliqa deal (see our
flash note here — link), which will have full-year contributions in 2022. We understand
that business operations revenues have gross margins in the high double digits; so
the focus will be on OverActive's outlook, especially given that this will be the first
quarter the company conducts a conference call.
Furthermore, with OAM's announcement earlier this week to enter the competitive
space in Valorant, an esports game title, we will be looking for updates on the new
team, as well as progress updates on the build timeline and financing of the new
arena on the call.
Consolidated revenue of $5.3mm (+340% y/y) versus TD estimate of $3.8mm.
Like-for-like revenue growth in Q4/21 would have been +49% y/y adjusting for
timing differences related to league revenue-share payments, which is included
in team revenue.
Team revenue of $3.2mm versus TD estimate of $1.5mm.
Business revenue of $2.1mm versus TD estimate of $2.3mm.
Adjusted EBITDA of ($2.5mm) versus TD estimate of ($2.7mm).
EPS of ($0.06) versus TD estimate of ($0.06)