GameSquare Holdings, Inc. Q4 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

GameSquare Holdings - 2023 Full Year Earnings Summary

  • Revenue Growth: Full-year revenue increased 85.2% year-over-year to $52.0 million in 2023, up from $28.1 million in 2022. Including a full-year contribution from Engine Gaming, pro forma revenue would have been $61 million.
  • Gross Margin: Gross margin decreased to 25.9% in 2023 from 34.4% in 2022. This decline was largely due to a shift in sales mix towards lower-margin programmatic advertising and pulled client budgets in Q4.
  • Adjusted EBITDA: Adjusted EBITDA loss was $15 million, an increase from a $13.2 million loss in 2022. However, loss as a percentage of revenue improved from 47.2% to 28.8%.
  • Strategic Acquisitions:
    • Engine Gaming: Acquired April 2023, resulting in integration benefits including $7 million of annualized cost savings and accelerated NASDAQ listing.
    • FaZe Clan: Acquired March 2024 for approx. $14 million (all-stock deal); FaZe had ~$43 million in 2023 revenue. Integration is expected to yield over $18 million in future cost savings.
  • Divestitures:
    • Sold Frankly Media radio assets in December 2023, adding $2.75 million in non-dilutive capital (plus $650,000 in contingencies).

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Operator: Good afternoon and thank you for joining us for the GameSquare Holdings 2023 Full Year 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-K for the year ended December 31, 2023 which is available on the company's website or with the Securities and Exchange Commission. I will now turn the call over to GameSquare's CEO, Justin Kenna. 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 are making at GameSquare as we pursue strategic priorities aimed at creating a next-generation media business. Since GameSquare's inception in August of 2020, we have quickly scaled revenue primarily through an M&A strategy focused on acquiring industry-leading technology, media and creative assets and we ended 2023 with $52 million in annual revenue, compared to $28 million in 2022 and just $11 million in 2021. Growth in 2023 would have been stronger had we owned Engine

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