GameSquare Holdings, Inc. Q2 FY2024 Earnings Call

· Earnings call transcript and AI-powered summary

GameSquare Holdings Q2 2024 Earnings Summary

  • Revenue: $28.6 million on a pro forma basis, up 24% year-over-year from $23.1 million, and up 22% from Q1 2024.
  • Adjusted EBITDA: Loss improved to $5.4 million, a significant improvement from $10 million in Q2 2023 and $7.9 million in Q1 2024. This equates to an adjusted EBITDA margin improvement from -43.5% to -18.9% year-over-year.
  • Gross Margin: $4.2 million or 14.8% of revenue, down from $4.6 million or 20.1% in Q2 2023. Decline attributed to a higher mix of lower-margin programmatic revenue; margins expected to improve in the second half of 2024.
  • FY 2024 Guidance: Revenue expected to exceed $100 million, with gross margins between 22.5% to 27.5%. Profitability targeted by Q4 2024.

Strategic Business Updates

  • FaZe Clan Acquisition: Closed March 2024; all-stock deal valued at $14 million. Integration in progress.
  • FaZe Media Reboot: Now a standalone entity under FaZe Banks. Matt Kalish (DraftKings co-founder) invested $11 million and joined the board.
  • Stake Sale: In June, GameSquare sold a 25.5% interest in FaZe Media to an entity controlled by FaZe Banks, maintaining voting control for 2 years. FaZe Media valued at $14 million.

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Operator: Good afternoon, and thank you for joining us for the GameSquare Holdings 2024 Second Quarter Conference Call. On the call today, we have Justin Kenna, GameSquare's CEO; Lou Schwartz, President; and Mike Munoz, CFO. [Operator Instructions]. Before management discusses the 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 10-Q for the quarter ended June 30, 2024, which will be available on the company's website or with the Securities and Exchange Commission. I would now like to turn the call over to GameSquare's CEO, Justin Kenna. Justin, please go ahead. Justin Kenna: Thank you, and good afternoon to everyone joining us on today's call. I'm extremely excited to review the progress we're making at GameSquare as we pursue strategic priorities aimed at creating a fast-growing, highly profitable and next-generation media business. Activity across our business is high, and we are making significant progress towards optimizing our business model, investing in our long-term growth and improving profitability. While we still have work to do, we believe our pro forma results demonstrate the meaningful accomplishments we are making

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