GameSquare Holdings, Inc. Q2 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

  • Merger with Engine Gaming: Completed in April 2023; Q2 marks the first quarter with consolidated financials. Integration efforts have focused on synergy realization, efficiency improvements, centralized systems, and a unified sales strategy.
  • Cost Reductions: Achieved $5M in annualized cost savings by Q2; targeting a total of $8M annualized savings by year-end through synergies and cost cutting actions.
  • Revenue: Q2 2023 revenue was $14.2M, up from $13.7M in Q1 2023 – an increase of $0.5M.
  • Gross Margin: Held steady at $4.1M (29%) in Q2 vs $4.2M (30%) in Q1. Margins expected to improve with growth in higher-margin segments.
  • Adjusted EBITDA: Q2 loss of $4.1M improved by 21% vs Q1 loss of $5.1M, driven by cost optimization and synergy realization.
  • Pipeline & Demand: Increase in both deal volume and average deal size since the April merger. Q3 and Q4 expected to benefit from seasonal strength and stronger pipeline momentum.
  • Guidance:
    • H2 2023 revenue expected between $47M and $52M.
    • Full-year 2023 pro forma revenue estimated between $75M and $80M (H1 revenue was $28M).
    • 2023 gross margin expected to range between 30% and 35%.
    • Profitability targeted in Q4 2023.

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Operator: Good afternoon. And thank you for joining us for the GameSquare Holdings Second Quarter 2023 Results Conference Call. On the call today we have Justin Kenna, GameSquare's CEO; Lou Schwartz, President; and Mike Munoz, CFO of GameSquare Holdings. During the call, all participations are in listen only mode. Following the presentation, we will conduct a question-and-answer session. Before management discusses their results, I’d like to remind everyone that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. For information about forward-looking statements and risk factors, please see our MD&A for the quarter ended June 30, 2023, which can be found on our company's profile at sedar.com and on the Company's website. I will now turn the call over to Justin Kenna, GameSquare's CEO. Justin, please go ahead. Justin Kenna: Thank you. And good afternoon to everyone joining us on today's call. This is an exciting time at GameSquare as we completed a transformative merger with Engine Gaming in April. As a result, GameSquare and Engine Gaming's financial results are now presented on a consolidated basis for the second quarter and first half ended June 30, 2023. Since completing the merger, we have focused on successfully integrating the two companies. Combin

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