GameSquare Holdings Reports Second Quarter 2023 Results
- GameSquare expects accelerated revenue growth in the second half of 2023 due to record pipeline and recent contract wins. Merger integration with Engine Gaming is underway, with $8 million of annualized cost savings expected in 2023. The company reiterates its full-year guidance of $75 to $80 million in sales and gross margins of 30% - 35% for 2023.
- None.
Record pipeline and recent contract wins expected to accelerate revenue growth in second half of 2023
Merger integration underway with
Company reiterates 2023 full-year guidance reflecting sales of
and gross margins of
TORONTO, ON / ACCESSWIRE / August 14, 2023 / GameSquare Holdings, Inc. ("GameSquare", or the "Company") (NASDAQ:GAME)(TSXV:GAME) today announced financial results for the three and six-months ended June 30, 2023.
"Throughout the second quarter we focused on completing the integration of the April 2023 merger with Engine Gaming, while optimizing our cost structure and combining our enhanced offerings and talent. We removed an estimated
"Our newly acquired market intelligence and AI driven technology assets significantly enhance the value of our marketing services by combining data into our commercialization strategies. This creates a powerful performance marketing platform that helps us improve our clients' customer acquisition costs by expanding the effectiveness of our influencers and our campaigns. As a result, we have seen both the number and average value of our pipeline increase over the past three months. In addition, we have recently closed multiple seven figure, multi-year deals with customers across the healthcare, automotive, and CPG sectors," Mr. Kenna continued.
"I am excited by the opportunities we are pursuing as we enter the seasonally strong second half of the year, supported by strong closed revenue quarter-to-date and
Three months ending June 30, 2023, compared to June 30, 2022
- Revenue of
$14,238,810 , compared to$6,655,892 - Gross margin of
$4,068,174 , compared to$3,017,161 - Net loss of
$4,095,166 , compared to a net loss of$2,524,825 - Adjusted EBITDA loss of
$4,084,862 , compared to a loss of$1,296,131
Six months ending June 30, 2023, compared to June 30, 2022
- Revenue of
$19,189,523 , compared to$11,695,966 - Gross margin of
$5,997,677 , compared to$4,662,362 - Net loss of
$8,453,439 , compared to a net loss of$6,518,454 - Adjusted EBITDA loss of
$6,440,697 , compared to a loss of$4,038,303
Three months ending June 30, 2023, compared to Proforma March 31, 2023
- Revenue of
$14,238,810 , compared to$13,743,347 - Gross margin of
$4,068,174 , compared to$4,167,983 - Net loss of
$4,095,166 , compared to a net loss of$12,250,604 - Adjusted EBITDA loss of
$4,084,862 , compared to a loss of$5,145,947
Conference Call Details
Justin Kenna, CEO, Lou Schwartz, President, and Mike Munoz CFO are scheduled to host a conference call with the investment community. Analysts and interested investors can join the call via the details below:
Date: Monday, August 14, 2023
Time: 5:00 pm ET
Webcast: https://services.choruscall.ca/links/gamesquare2023q2.html
Media and Investor Relations
Andrew Berger
Phone: (216) 464-6400
Email: IR@gamesquare.com
About GameSquare Holdings, Inc.
GameSquare Holdings, Inc. (NASDAQ: GAME | TSXV: GAME) is a vertically integrated, digital media, entertainment and technology company that connects global brands with gaming and youth culture audiences. GameSquare's end-to-end platform includes GCN, a digital media company focused on gaming and esports audiences, Cut+Sew (Zoned), a gaming and lifestyle marketing agency, USA, Code Red Esports Ltd., a UK based esports talent agency, Complexity Gaming, a leading esports organization, Fourth Frame Studios, a creative production studio, Mission Supply, a merchandise and consumer products business, Frankly Media, programmatic advertising, Stream Hatchet, live streaming analytics, and Sideqik a social influencer marketing platform. www.gamesquare.com
Forward-Looking Information
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the Company's future performance and revenue; continued growth and profitability; the Company's ability to execute its business plan; and the proposed use of net proceeds of the Offering. These forward-looking statements are provided only to provide information currently available to us and are not intended to serve as and must not be relied on by any investor as, a guarantee, assurance or definitive statement of fact or probability. Forward-looking statements are necessarily based upon a number of estimates and assumptions which include, but are not limited to: the Company being able to grow its business and being able to execute on its business plan, the Company being able to complete and successfully integrate acquisitions, the Company being able to recognize and capitalize on opportunities and the Company continuing to attract qualified personnel to supports its development requirements. These assumptions, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: the Company's ability to achieve its objectives, the Company successfully executing its growth strategy, the ability of the Company to obtain future financings or complete offerings on acceptable terms, failure to leverage the Company's portfolio across entertainment and media platforms, dependence on the Company's key personnel and general business, economic, competitive, political and social uncertainties including impact of the COVID-19 pandemic and any variants. These risk factors are not intended to represent a complete list of the factors that could affect the Company which are discussed in the Company's most recent MD&A. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. GameSquare assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
GameSquare Holdings Inc. Second Quarter Financial Results
Unaudited Condensed Interim Consolidated Statements of Financial Position
| June 30, 2023 | December 31, 2022 | |||||||
| $ | $ | |||||||
ASSETS | ||||||||
Current | ||||||||
Cash | 4,249,602 | 977,413 | ||||||
Restricted cash | 47,465 | - | ||||||
Accounts and other receivables | 14,115,331 | 8,331,120 | ||||||
Government remittances | 1,146,493 | - | ||||||
Prepaid expenses and other current assets | 1,459,381 | 788,227 | ||||||
| 21,018,272 | 10,096,760 | |||||||
Non-Current | ||||||||
Investment at FVTPL | 3,188,749 | - | ||||||
Property and equipment | 2,790,738 | 3,001,883 | ||||||
Goodwill | 23,710,499 | - | ||||||
Intangible assets | 23,237,813 | 4,609,837 | ||||||
Right-of-use assets | 2,198,025 | 2,385,330 | ||||||
| 55,125,824 | 9,997,050 | |||||||
| 76,144,096 | 20,093,810 | |||||||
| June 30, 2023 | December 31, 2022 | |||||||
| $ | $ | |||||||
LIABILITIES | ||||||||
Current | ||||||||
Accounts payable | 17,729,367 | 4,848,854 | ||||||
Accrued liabilities | 6,325,496 | 3,180,208 | ||||||
Consideration payable | 30,000 | 260,000 | ||||||
Players liability account | 47,465 | - | ||||||
Deferred revenue | 2,070,323 | 1,092,982 | ||||||
Lease liabilities, current | 729,575 | 336,229 | ||||||
Credit facility payable | - | 802,328 | ||||||
Promissory notes payable | 481,149 | - | ||||||
Warrant liability | 276,544 | - | ||||||
Convertible debt, current | 5,093,287 | - | ||||||
Arbitration reserve | 730,109 | - | ||||||
| 33,513,315 | 10,520,601 | |||||||
Convertible debt, non-current | 1,566,804 | - | ||||||
Lease liabilities, non-current | 2,182,499 | 2,362,448 | ||||||
Deferred tax liability | 50,117 | 55,096 | ||||||
| 3,799,420 | 2,417,544 | |||||||
| 37,312,735 | 12,938,145 | |||||||
SHAREHOLDERS' EQUITY (DEFICIENCY) | ||||||||
Share capital | 84,115,256 | 43,375,158 | ||||||
Contributed surplus | 4,496,528 | 3,296,668 | ||||||
Warrants | 20,000 | 1,925,238 | ||||||
Contingently issuable shares | - | 131,184 | ||||||
Accumulated other comprehensive (loss) income | (380,406 | ) | (269,053 | ) | ||||
Deficit | (49,420,017 | ) | (41,303,530 | ) | ||||
| 38,831,361 | 7,155,665 | |||||||
| 76,144,096 | 20,093,810 | |||||||
Unaudited Condensed Interim Consolidated Statements of Income (loss)
and Comprehensive Income (loss)
| For the three months ended | For the six months ended | |||||||||||||||
| June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
CONTINUING OPERATIONS | $ | $ | $ | $ | ||||||||||||
REVENUE | ||||||||||||||||
Revenue | 14,238,810 | 6,655,892 | 19,189,523 | 11,695,966 | ||||||||||||
Cost of sales | 10,170,636 | 3,638,731 | 13,191,846 | 7,033,604 | ||||||||||||
Gross profit | 4,068,174 | 3,017,161 | 5,997,677 | 4,662,362 | ||||||||||||
EXPENSES | ||||||||||||||||
Salaries, consulting and management fees | 5,872,434 | 2,368,223 | 8,522,847 | 5,029,112 | ||||||||||||
Player compensation | 527,396 | 449,355 | 1,026,798 | 889,040 | ||||||||||||
Professional fees | 56,991 | 594,670 | 428,050 | 987,913 | ||||||||||||
Advertising and promotion | 475,270 | 176,627 | 651,656 | 459,065 | ||||||||||||
Office and general | 1,284,581 | 774,293 | 1,871,727 | 1,381,515 | ||||||||||||
Technology expenses | 158,914 | - | 158,914 | - | ||||||||||||
Amortization and depreciation | 1,034,804 | 678,060 | 1,626,164 | 1,360,618 | ||||||||||||
Share-based payments | 317,005 | 441,084 | 882,385 | 941,227 | ||||||||||||
Interest expense | 180,148 | 127,727 | 262,666 | 214,812 | ||||||||||||
(Gain) loss on foreign exchange | (222,550 | ) | (49,876 | ) | (221,618 | ) | (45,980 | ) | ||||||||
Transaction costs | 1,013,672 | - | 1,497,981 | - | ||||||||||||
Arbitration settlement reserve | (739,644 | ) | - | (739,644 | ) | - | ||||||||||
Restructuring costs | 10,388 | - | 294,286 | - | ||||||||||||
Legal settlement | 183,724 | - | 183,724 | - | ||||||||||||
Change in fair value of warrant liability | (1,710,878 | ) | - | (1,710,878 | ) | - | ||||||||||
Change in fair value of convertible debt | (455,009 | ) | - | (455,009 | ) | - | ||||||||||
| 7,987,246 | 5,560,163 | 14,280,049 | 11,217,322 | |||||||||||||
Net loss for the period before discontinued operations and taxes | (3,919,072 | ) | (2,543,002 | ) | (8,282,372 | ) | (6,554,960 | ) | ||||||||
Income tax recovery | - | 18,177 | 5,027 | 36,506 | ||||||||||||
Net loss for the period before discontinued operations | (3,919,072 | ) | (2,524,825 | ) | (8,277,345 | ) | (6,518,454 | ) | ||||||||
DISCONTINUED OPERATIONS | ||||||||||||||||
Gain (loss) from discontinued operations | (176,094 | ) | - | (176,094 | ) | - | ||||||||||
Net loss for the period from discontinued operations | (176,094 | ) | - | (176,094 | ) | - | ||||||||||
Net loss for the period | (4,095,166 | ) | (2,524,825 | ) | (8,453,439 | ) | (6,518,454 | ) | ||||||||
Other comprehensive loss | ||||||||||||||||
Items that will subsequently be reclassified to operations: | ||||||||||||||||
Foreign currency translation | (104,704 | ) | (238,992 | ) | (111,353 | ) | (135,217 | ) | ||||||||
Total comprehensive loss for the period | (4,199,870 | ) | (2,763,817 | ) | (8,564,792 | ) | (6,653,671 | ) | ||||||||
(Loss) profit for the period attributable to: | ||||||||||||||||
Owners of the parent | (4,095,166 | ) | (2,524,825 | ) | (8,453,439 | ) | (6,532,172 | ) | ||||||||
Non-controlling interest | - | - | - | 13,718 | ||||||||||||
| (4,095,166 | ) | (2,524,825 | ) | (8,453,439 | ) | (6,518,454 | ) | |||||||||
Basic and diluted net loss per share - continuing operations | (0.32 | ) | (0.49 | ) | (0.89 | ) | (1.27 | ) | ||||||||
Basic and diluted net loss per share - discontinued operations | (0.02 | ) | - | (0.02 | ) | - | ||||||||||
Basic and diluted net loss per share | (0.34 | ) | (0.49 | ) | (0.91 | ) | (1.27 | ) | ||||||||
Weighted average number of common shares outstanding - basic and diluted | 12,131,409 | 5,188,719 | 9,283,340 | 5,118,603 | ||||||||||||
Adjusted EBITDA Loss Reconciliation
We believe Adjusted EBITDA is a useful measure to assess the performance of the Company as it provides more meaningful operating results by excluding the effects of expenses that are not reflective of our underlying business performance and other one-time or non-recurring expenses. We define "Adjusted EBITDA" as EBITDA adjusted to exclude extraordinary items, non-recurring items and, other non-cash items, including, but not limited to (i) share based compensation expense, (ii) non-recurring arbitration settlement costs (iii) intangible and goodwill impairments and loss on disposal of assets (iv) loss from discontinued operations (v) transaction costs related to merger and acquisition activities, (vi) change in fair values on warrants and convertible debt and (vii) restructuring costs.
Reconciliation of Non-IFRS Measures
A reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable measure determined under IFRS is set out below for the three and six months ended June 30, 2023 and 2022.
| For the three months ended | For the three months ended | For the six months ended | For the six months ended | |||||||||||||
| June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
Net income (loss) attributable to owners of the Company | (4,095,166 | ) | (2,524,825 | ) | (8,453,439 | ) | (6,518,454 | ) | ||||||||
Interest expense | 180,148 | 127,727 | 262,666 | 214,812 | ||||||||||||
Income tax recovery | - | (18,177 | ) | (5,027 | ) | (36,506 | ) | |||||||||
Amortization and depreciation | 1,034,804 | 678,060 | 1,626,164 | 1,360,618 | ||||||||||||
Share-based payments | 317,005 | 441,084 | 882,385 | 941,227 | ||||||||||||
Transaction costs | 1,013,672 | - | 1,497,981 | - | ||||||||||||
Arbitration settlement reserve | (739,644 | ) | - | (739,644 | ) | - | ||||||||||
Restructuring costs | 10,388 | - | 294,286 | - | ||||||||||||
Legal settlement | 183,724 | - | 183,724 | - | ||||||||||||
Change in fair value of warrant liability | (1,710,878 | ) | - | (1,710,878 | ) | - | ||||||||||
Change in fair value of convertible debt | (455,009 | ) | - | (455,009 | ) | - | ||||||||||
(Gain) loss from discontinued operations | 176,094 | - | 176,094 | - | ||||||||||||
Adjusted EBITDA | (4,084,862 | ) | (1,296,131 | ) | (6,440,697 | ) | (4,038,303 | ) | ||||||||
SOURCE: GameSquare Holdings, Inc.
View source version on accesswire.com:
https://www.accesswire.com/774061/GameSquare-Holdings-Reports-Second-Quarter-2023-Results
FAQ
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