Thank you for standing by. This is the conference operator. Welcome to the Enthusiast Gaming Holdings Inc.'s Second Quarter 2022 Financial Results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Eric Bernofsky, Chief Corporate Officer. Please go ahead.
Thank you, Sachi. Good afternoon, everyone, and thank you for joining Enthusiast Gaming's second quarter 2022 financial operating results call. My name is Eric Bernofsky, Chief Corporate Officer of Enthusiast Gaming. With me today is our Chief Executive Officer, Adrian Montgomery, and our Chief Financial Officer, Alex Macdonald. We'll begin with some prepared remarks from Adrian and Alex before opening the floor to questions. Before we begin, I'd like to remind everyone 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 cause 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 and analysis for the three-month period ended June 30th, 2022, which are available under the company's profiles on SEDAR and EDGAR, as well as the company's website, enthusiastgaming.com. You're 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'm happy to turn the call over to Adrian Montgomery, Chief Executive Officer of Enthusiast Gaming. Adrian?
Thank you, Eric. Good afternoon and Welcome to our Second Quarter 2022 Financial Results Conference Call. I'm pleased to share with you the details of yet another strong quarter, particularly in light of the macroeconomic backdrop we are in. I'll provide some context around our key performance metrics, including revenue growth, and in particular, direct sales growth, subscription growth, gross profit growth, which reached the highest in the company's history this quarter. Lastly, I'll talk about how we see the second half of the year shaping up, which we will expect to be a continuation of the same performance trends we have delivered in previous quarters, led by strong revenue and margin growth. First, I want to address a topic that has been on a lot of shareholders' minds.
Shortly after reporting an extremely strong Q1 this year, in what is typically the seasonally slowest period in our business, a shareholder group spoke out and sought change. While this was an unfortunate and costly distraction which took up the bulk of the second quarter, we respect the voices and opinions of all shareholders, and we listened. Today, we are aligned, and we have already moved forward with a number of changes that we believe are the right ones for our business. Our annual general meeting last month saw the election of four new highly qualified directors, Angela Ruggiero, David Goldhill, Janny Lee, and Scott O'Neil, whose diversity of experiences will help guide our business forward and open up new growth opportunities that will drive lasting shareholder value.
As you know, the new board is conducting a CEO search, and pending completion of that, I will be moving to chair the board and continue to focus on strategy and growth. Last week, we announced that Bill Karamouzis, CEO of Addicting Games, which we acquired late last year, is being appointed as President of Enthusiast Gaming and will bring an enhanced gamer-focused vision to the day-to-day operations of the business. As a lifelong gamer and entrepreneur, Bill Karamouzis, who is based in Los Angeles, has been in the gaming industry for over 20 years with a passion and love for blending gaming, education, technology, and the emerging Web3 space. I look forward to continue to work closely with Bill Karamouzis in his new role. During the first half of 2022, we delivered our strongest half-year results to date, led by accelerated revenue growth and substantial gross margin expansion.
Q2 2022 was impressive, with revenue up 38% year-over-year to CAD 51.1 million. The year-over-year increase in revenue was driven by increased direct sales, including both new and repeat customers, higher subscription revenue, the acquisitions and growth of both Addicting Games and U.GG properties, and higher RPMs across both web and video. Gross profit grew to an all-time record high of CAD 15.3 million, up 91% from CAD 8 million at this time last year. Q2 gross profit was not just a record high for any Q2, but for any quarter in Enthusiast history, and we still have the seasonally strong second half to come. Gross margin expanded to 30% in the quarter, an increase of 840 basis points versus gross margin of 21.6% in Q2 2021.
The increase in gross margin continues to be driven by the strong performance of Addicting Games and U.GG, as well as growth in the higher direct sales and subscription revenue streams. On direct sales, I am pleased to report yet another strong quarter. Direct sales grew 111% to CAD 9.3 million in Q2, compared to CAD 4.4 million in Q2 last year. Renewals and additional business with existing customers accounted for 71% of direct sales revenue. At Enthusiast, we have the largest scaled media offering in gaming, and in Q2, some of our partners included Adidas, the United States Navy, State Farm, HBO Max, LEGO, Universal Pictures, Procter & Gamble, FanDuel, Toyota, Logitech, the Food and Drug Administration, and RBC. We are a one-stop solution for these companies' gaming and e-sports strategies.
A few activations I would like to highlight are the following, which continue to speak to the bespoke solutions that we create for brands looking to connect with the most coveted audience, Gen Zs and Millennials. First, Top Gun. In May, over Memorial Day weekend, Paramount Pictures released Top Gun: Maverick. In the weeks leading up to the movie release, we partnered with one of the largest streamers in North America, Ludwig, to create a four-week competition to find the next big streamer called Ludwig's Flying Aces. Contestants took part in weekly creator challenges, and the winner was able to secure a coveted spot on Ludwig's stream for an entire hour, giving that individual a once-in-a-lifetime opportunity. Second, Adidas Ozworld.
Adidas wanted a cool way to enter the metaverse and drive awareness of Ozworld, a unique platform for self-expression, enabling users to create their own avatars to be used around the web. As part of this campaign, we dropped a custom Fortnite map with three mini-games inspired by Ozworld that delivered 200,000+ organic plays within the first few days of being live. Three, the RBC Gaming Grant. One of the things we pride ourselves on at Enthusiast is helping the next generation of gamers by arming them with the tools they need to pursue a career in gaming. In partnership with RBC, we invited qualified gamers ages 18 to 29 to apply for CAD 75 thousand in grants, as well as mentorship to help gamers advance toward careers in marketing and other related professions. Smirnoff Saturdays.
In partnership with Smirnoff, we launched a 12-week series of live streams where each Saturday our influencers will stream, interact with their chat, and toast their communities every time something cool happens. Subsequent to the quarter, we are excited about some meaningful new work we are doing with Amazon around their back-to-school marketing. There are many others to mention, but the point is to demonstrate the many ways we are working with brands to integrate our communities, content, creators, and experiences. Turning to subscriptions. Subscription revenue grew 75% year-over-year to CAD 3.5 million in Q2. The increase in subscription revenue was driven by an increase in paid subscribers and pricing optimization.
Paid subscribers were 258,000 as of June 30th, 2022, a 66% increase versus paid subscribers of 155,000 as at June 30th, 2021. Again, to reiterate, two of the main reasons we continue to grow margins at a substantially higher rate than revenue is the growing contribution coming from higher-margin areas of the business, like direct sales and subscriptions. You've heard us speak a lot about the importance of our Addicting Games and U.GG acquisitions last year and how their content has become a meaningful part of our flywheel. It's also our way of using some of the assets as we explore commercial opportunities around NFTs and Web3. One of the most talked about topics in gaming right now is in-game advertising.
As you know, we developed EV.IO, a first-person shooter game, which is our way of tackling this important and valuable industry theme. Most similar to Microsoft's mega hit Halo, the beta for EV launched in January 2021 and already has over 1 million monthly active users. This game's key differentiator is the ability for users to acquire actual tradable NFTs just by playing the game. The more they play, the more they earn. Not only is it one of the only games incorporating rewards through NFTs, but brands have the ability to get involved in a variety of different ways. Something as simple as an in-game billboard or more in-depth, like adding a custom element to a game featuring their product. This is what our launch partner, Hyundai, tapped into to great success.
We're excited to see what EV.IO can do, but the early days have been promising as we engage with fans in a meaningful new way. Turning to U.GG, we are pleased with its performance since the acquisition and believe there are a lot of product synergies still to come. Just recently, U.GG passed 1 million downloads for its desktop application that was launched last fall. This is in addition to the millions of daily views visiting the U.GG website for stats and insights on how to become a better League of Legends player. The product teams have been working hard over the summer to build out our new content pipeline for the remainder of 2022. Turning to Luminosity Gaming, our esports organization continues to grow.
One of our franchise teams, the Seattle Surge, that competes in the Call of Duty League, had a major milestone, winning their first ever championship at Call of Duty League's Major III. The Surge were flawless at the event, not dropping a single series the whole way, and concluded their perfect tournament with a win over Atlanta FaZe. We are extremely proud of our team and want to congratulate the players and staff on this exciting milestone. On the events and entertainment side, we have resumed live events within our Pocket Gamer series. In Q2, we returned to Seattle, and subsequent to the quarter, our Pocket Gamer team hosted its first ever event in Toronto, Canada, expanding its reach once again of sponsors and attendees. Later this month, we look forward to hosting events at Gamescom in Germany and next month in Helsinki, Finland.
In conclusion, we delivered another extremely strong quarter, delivering on our key priorities in the face of a weakening economic backdrop. As for the outlook of the balance of the year, I would say the following. One, we will continue to focus on strong revenue and margin growth. Two, we have the available capital to execute our current business plan. Three, we remain on an aggressive path to positive EBITDA. Now I will turn over the call to my CFO, Alex, for further commentary on our financial results. Alex?
Thank you, Adrian. It was indeed a big first half to the year, and that first half got stronger this quarter, our second quarter of 2022. Before I begin my commentary on that, here are my usual notes. I note that our results are presented in Canadian dollars. I note that the significant majority of our revenues and expenses are measured in US dollars and are translated into Canadian dollars for presentation in our financial statements. 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. I 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. This seasonality is isolated to our media and content revenue streams.
Now let's talk business. Q2 revenue was CAD 51.1 million, up 38% from Q2 2021 revenue of CAD 37.1 million. Q2 revenue by source was as follows. Media and content, CAD 45.4 million, subscription, CAD 3.5 million, and esports and entertainment, CAD 2.2 million. The Q2 media and content revenue of CAD 45.4 million compares to CAD 33.5 million reported in Q2 2021, an increase of 36%. The increase was driven by the following. Number one was continued higher demand for our inventory. This increased our RPMs on both our web and video platforms. Our web RPM was up 34%, and our video RPM was up 25% year-over-year in Q2. Number two was, once again, more direct sales.
Direct sales were CAD 9.3 million in Q2 versus CAD 4.4 million in Q2 last year, with the majority of direct sales being recognized in media and content. Number three was continued strong performance in our two larger acquisitions from 2021 being Addicting Games and U.GG. These increases in media and content revenue were offset by a decrease in video views, which were 6 billion as compared to 7.9 billion in Q2 last year. This was caused by the departure of certain large partner channels from the video network, which the company elected for in order to reduce associated operating expenses over the coming year. This was decided due to these channels producing almost no gross profit despite them producing revenue. Seasonal trends in video views and the reduction of COVID-19 restrictions also contributed to this decrease.
Q2 subscription revenue was an all-time record high of CAD 3.5 million, up 73% from CAD 2 million in Q2 last year. This increase was driven by an increase in paid subscribers, which were 258,000 as at June 30th, 2022, as compared to 155,000 as at June 30th, 2021. Q2 esports and entertainment revenue was CAD 2.2 million, up 41% from CAD 1.5 million in Q2 last year. This increase was mostly driven by the return of live events. The company's entertainment division has now hosted a number of live events in key markets this year, including in Q2 of this year, and anticipates being able to do so going forward. The increase in esports and entertainment revenue is also due to an increase in esports sponsorship, which is sourced by our direct sales team.
Gross profit reached an all-time high of CAD 15.3 million in Q2, up 91% from CAD 8 million in Q2 last year. The drivers of the strong gross profit are unsurprising, being direct sales of CAD 9.3 million, subscription revenue of CAD 3.5 million, and the continued strong performance of Addicting Games and U.GG. All of these are high gross margin areas of the business. Therefore, it is also unsurprising that once again, the growth in gross profit on a percentage basis well exceeds the growth in revenue, as reflected in the gross margin. Gross margin was 30% in Q2, up 840 basis points from 21.6% in Q2 last year. Operating expenses were CAD 29.1 million, up from CAD 19.6 million in Q2 of last year.
Operating expenses include amortization and depreciation and stock-based compensation, which totaled CAD 7.6 million in Q2 of this year. Further, the company incurred significant legal and advisory costs towards its annual general meeting held in July of this year. Those costs have been presented as a separate line item on the financial statements and totaled CAD 2.2 million in Q2. As the AGM was held in July, additional AGM costs were incurred in Q3 of a significant but lower amount. These AGM expenses are non-recurring in nature. In addition, included in professional fees and consulting fees, there are additional expenses relating to Q2 corporate activities, including indirect AGM costs and the settlement of the deferred and earn-out payments in Q2. Those costs included in Q2 are approximately CAD 1 million. Other than these items, there was no significant change in operating expenses in Q2 as compared to Q1.
Net loss and comprehensive loss was CAD 13.8 million, up slightly from CAD 12.8 million in Q2 last year, resulting in a net loss and comprehensive loss per share, both basic and diluted, of CAD 0.12 in Q2, up slightly from CAD 0.11 in Q2 last year. Cash provided by operating activities was CAD 2.3 million in Q2, and we ended the quarter with CAD 14.9 million of cash, which is up from CAD 14.1 million as of the end of Q1. While the financial performance and operational cash flows continued to improve, the cash balance was primarily supported by positive changes in working capital in Q2, which the company expects will even out in subsequent quarters.
The company also significantly improved the balance sheet this quarter, settling certain deferred and earn-out payments with a face value exceeding $40 million through the issuance of approximately 16.2 million common shares. As of June 30th, 2022, the company's deferred payment liabilities were CAD 3.3 million, which is down from CAD 48 million as at December 31st, 2021. For all these reasons, we remain of the strong opinion that the results of operations and the financial condition of Enthusiast Gaming has never been stronger. Now I'd like to take a moment to recognize a financial milestone. Following 8 consecutive quarters of sequential increase in gross margin, the business reached a 30% gross margin in Q2. This milestone is more than just a number to us. It is a gross margin which allows for self-sustainability in the business.
The path to a 30% gross margin also provides a glimpse into the future PNL of the company. For example, year-over-year in Q2, we added CAD 14 million of revenue, and in the same periods, we added CAD 7.3 million of gross profit. Since mid last year, we knew that a 30% gross margin was inevitable. It was near term, and it was simply a matter of when. Today, while we remain opportunistic, we have the same belief about profitability. The main drivers of this success ultimately lie in bringing value to the end user, and we are positioning ourselves to continue to do that. We bring value by entertaining them in their preferred mediums, as our content team is doing through their expansions on Snapchat and TikTok.
We bring value by enhancing our product offerings, such as the growth of the U.GG desktop app and the introduction of NFTs and play to earn on EV.IO. We bring value by increasingly viewing the business through a product lens, and it is through this lens that we begin the next leg of our journey to a 40% gross margin and positive operating margins. I remain grateful to the analysts for their continued work on the company. I also wish to thank my team for their work on the quarter, led by our VP Finance, Nathan Teal. Of course, my appreciation goes out to all of the almost 300 strong members of the Enthusiast Gaming family. They are a spectacular group of individuals. They remain, in my judgment as CFO, our most valuable asset.
To our shareholders and other stakeholders, including our lending partners, thank you for your continued trust in us as custodians of Enthusiast Gaming. I also extend a warm welcome and finally, congratulations to Bill Karamouzis on his appointment as President, and my congratulations to all the other individuals recently promoted in the leadership team. I have full confidence that these individuals will bring new strength and glory to our business. Of course, ladies and gentlemen, our business is the business of gaming. Thank you, operator. I kindly turn it back to you.
Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question is from Drew McReynolds from RBC. Please go ahead.
Yeah, thanks very much, and good afternoon. Maybe starting at the high level, just given the board and management transition that's underway, maybe for you, Adrian, just can you comment on at this point, you know, what would be the strategy evolving from what it was before? Are you able to give any timeline associated with a new CEO coming on board? Third part of this, just in terms of the distraction which you allude to in Q2, certainly don't see a lot emerging in terms of the results, but maybe speak to that a little bit and to what extent that disruption could impact Q3.
Sure. Well, from a very high level, the strategy of creating an Integrated, Media and Entertainment company.
In building a leading integrated media and entertainment company for gamers and esports fans remains very much intact. Clearly, from the results we're seeing, outsized growth and a lot of optimism around the path that we're on. Certainly, as we've made some acquisitions that have been very, very good for the company, we've inherited a number of product-based communities. I'm thinking U.GG, Addicting Games, less media, more product, and a bunch of talented developers and gaming technicians. If there's any new focus within the parameters of building that media and entertainment company, I think there's a lot of exciting things you're going to see as we evolve the business on the product side and our ability to create new products that resonate with our fans and our audience. That has me really excited.
I also think that the future of Enthusiast Gaming, and it's reflected in some of the management changes we made recently, elevating Bill Karamouzis to President. The future of this business and the future leadership of this business to fully exploit the potential that we've created for ourselves really does come from the United States and beyond. We started as a Canadian company, but we wanna see more and more of our leaders and our operational leaders come from the United States. This is a really attractive opportunity for the next CEO of the company. The board is committed to finding the right person, and I'm not gonna give a timeline on that, because we don't wanna rush it. If that fantastic person shows up in the short term, great.
If it takes a little bit of time to get it right, I think we're happy with that as well. You know, the search committee has been struck, and we're starting that process as we said we would. Yes. Look, we have to take our shareholders' concerns seriously. We got through the other side of this. We have an aligned shareholder base. That's all good. You know, the people that run Enthusiast Gaming and work here every day have the same common characteristic with the employees of any other business, and that they're human beings. That kind of turmoil and that kind of spotlight can be a distraction.
It's really a testament to the business model, but more specifically, the fantastic people who work here each and every day, that against that backdrop, and that noise, we were able to deliver such a stellar quarter. I think that the resolve of the model and the resolve of the people are going to carry the day next quarter and the quarters to come.
Great. Thanks. Thanks for that additional context. Appreciate it. Just maybe one last one, and then maybe I'll get back in the queue. Just with respect to your outlook for the back half, obviously bucking a trend, I think, to a lot of other companies out there, in this particular space, not unlike what happened in Q1 and frankly, prior quarters. Can you talk to any emerging macro headwinds or revenue headwinds for that matter, that you see at the moment? Or is it genuinely just the bottom-up momentum of all the different growth deltas that you're putting in place, really overshadowing that broader kinda macro picture? Thank you.
Thanks, Drew. Certainly, we're not immune from what the rest of the world is going through. Candidly, there have been conversations and observations from some of our client base that have talked about some headwinds that they see in their business that may impact their spending budgets. I don't think that's out of the ordinary of what other companies are experiencing right now. They're contained at the conversation level right now. What I would point out, you sort of referenced this in the preamble to your question, the real unique thing about Enthusiast Gaming, and when I talk about Top Gun and I talk about the United States Navy, State Farm, H&R Block, the work we do with Adidas and Amazon, et cetera, et cetera, we don't just sell media.
We're not like an IGN, we're not like a pure play YouTube MCN. We really package up content creators' experiences, communities, web, YouTube inventory, custom content, activations, and we really provide that one-stop solution for them. We're somewhat inoculated in the business model that we offer from just being a pure play seller of media. I think that is our secret sauce. We have been able to buck the trend to date. We're not immune from what's going on in the world. While we're on top of this horse, we'll keep trying to buck it.
Very good. Thank you very much.
The next question is from Mike Crawford from B. Riley Securities. Please go ahead.
Thank you. Can you hear me?
Yes. Hi, Mike.
Oh, my earpiece just went bad. Just digging a little bit more into advertising, can you just provide some more color on your strides to monetize available inventory, including direct sales targets, maybe as percent of available inventory or sales? Then what you're seeing regarding ad prices and CPMs overall, and how much of total inventory you can monetize.
Hey, Mike, how you doing? It's Alex. I can provide a couple facts for you there. You know, for our ad inventory, we maintain, you know, we have a vision to get to 10% of our inventory moving through direct sales. That's kind of a medium-term goal. We are at about 2.5%. 10% would, in my judgment, still be below industry normal for large mega publishers like us, like members of the Comscore top 100 list. We are sitting at about 2.5% utilization. We'd like to see that get to 10%. Beyond that, over the horizon, there's room to go significantly beyond that. 10% for us is our stated goal. We're at 2.5%, so far on direct.
As far as utilizing the inventory in other ways, I mean, obviously we do plenty of programmatic sales. We continue to push for increased demand and competition on our bidding networks and try to improve our yield. Our focus really is moving that inventory out of programmatic and into direct.
Just regarding trends on ad prices and CPMs overall, including programmatic.
Yeah. I mean, I see them as steady. I know, echo what Adrian said. We aren't necessarily immune to market movements. The digital industry for digital ad units is one of the most commoditized liquid markets in the entire world. It is subject to market fluctuations. Right now, in my opinion, it's holding in there. I know, echoing again what Adrian said, I remember when some companies cautioned on their Q3 results last year, they were very worried about it. We hadn't seen it yet. We held strong, and right now, it is to be expected. I think July performed to be expected on a pricing basis.
Okay, thanks. Then I just have one more on productization. On EV.IO sounds like a great repeatable playbook. Is there another title that's coming up there? Then just related, I know you've been working on this Project GG for over a year, and what is the status of that project? Thank you.
Sure. Right now, as bullish as we are on Web3, we have something very special. Again, we're quite unique. There's a lot of companies in the space, esports organizations that can embrace Web3. We actually are embracing Web3 with intellectual property that we own and that we control. Right now, EV.IO is experiencing such significant growth that we're gonna use that as our template for a little while longer. Certainly we have other game titles like Little Big Snake and Mope and Shockwave, et cetera. Stay tuned for our next iteration of something special with EV.IO in the days and weeks to come. We're gonna ride that wave till it drops.
As for GG, as we said last quarter, look, GG is something that we feel strongly about internally within the organization. It's our code word for innovation. Against the realities of the world right now, we're taking a cautious approach to it. We're not gonna back the truck up and put the significant investment into it, so we're gonna get it right. Like I said before, I mean, Gmail was in beta for 10 years, so if we have to be prudent and do it right, we're gonna do it right. At the same time, like I said in my answer to Drew, you know, particularly in the back half of last year with Addicting Games, U.GG, Tab, we have some really cool product-based communities.
We have some really talented people at U.GG. We've got Shingo and Alan and their team, Natter at TabStats, Bill Kara, Reese and the team at Addicting Games. We're excited to innovate on the products that are in their minds and on their development timetables to exploit. We're very much innovating. We're very much going down the product road. We're going to incorporate elements of GG into a lot of the stuff that we're doing, and we're gonna take our time on the original GG plan to get it right.
Okay. Thank you. Thanks, Adrian. Thanks, Alex.
Thanks, Mike.
The next question is from Gianluca Tucci from Haywood Securities. Please go ahead. Gianluca, your line is open. You can go ahead.
Hi, good afternoon, guys. Sorry, I was on mute. I'm on the call here on Neal Gilmer's behalf. A couple questions here. First, on gross margins, how are they trending thus far in Q3? How is the outlook for the back half of the year? I think you had mentioned that the target is 40% longer term, but how should we be thinking about the second half?
Hey, good to have you on the call. This is Alex. Look, it's no change. I mean, I spoke about in my commentary eight consecutive quarters of sequential increases. That's kind of what we're here to do. We don't mind if we're building them 40 basis points at a time or 140 basis points at a time. We're taking a step up every quarter. That's how we see it. I wouldn't expect huge leaps at any given point. We typically, you know, are in the 50-100 basis points range. So that's how we see it continuing. That applies to the back half of the year, that applies to next year.
As far as 40%, you know, I just think back to two years ago when we made our march from 16%-30%, our original journey, and we said that's a medium-term target. We accomplished it in eight quarters. That's the next leg of our journey. It's not a short-term to 40% by any means, but that's where we have our sights set next. That's our next journey when it comes to gross margin.
Okay, fantastic. Thanks. Just on EBITDA, my last question here. You guys are clearly on a path to profitability there. Do you have a timeline at the back of your head that you're willing to share on the call here in terms of achieving Adjusted EBITDA profitability?
Yeah. We've discussed it as happening in the very near term, and that's why Alex referenced in his remarks the importance given our OpEx of cresting over that 30% margin threshold. We feel like our original prognostications about the near term likelihood of EBITDA positivity coming in Q4, absent a material macro issue with media and ad spending or absent some form of transformational opportunity that may land on our doorstep. We feel that our prognostications are in line. Again, that's the importance of that sequential margin expansion, getting north of 30%, continuing to drive it higher, stabilizing OpEx. We feel that we're in the zone to deliver on our promise.
Okay. Thanks, guys, and congrats on the good quarter.
Thank you, Gianluca.
This concludes the question and answer session. I would like to turn the conference back over to Adrian Montgomery for any closing remarks.
Thank you. I would just like to thank everyone on the call again for your interest in the Enthusiast story. Really with my final remarks, certainly Q2 was one that we're gonna remember for quite some time for a variety of different reasons. Again, as I said earlier, I just wanna salute the hardworking over 250 person staff of Enthusiast for staying the course, for getting up every day despite what was going on in the outside world and just working hard, delivering, innovating, taking risks, executing, triumphing. You know, a company is only as strong as its people, and we had a unique moment in time where the resolve of our employees was tested as few employees get tested.
You all delivered in spades for the benefit of the company, for the benefit of the shareholders. On behalf of everyone on the management team, just wanna thank all of the Enthusiasts out there, for showing what character is all about. It's meant the world to us, and it's given us so much optimism with the people that we have, that we get to work with each and every day, what the future holds for this great company. Thanks, Enthusiasts. That concludes our conference call.
This concludes today's call. You may disconnect your lines at this time. Thank you for participating, and have a pleasant day.