GameSquare Sells Non-Core Content Management Software and PR Media Distribution Assets
GameSquare Holdings (NASDAQ: GAME) announced the sale of its non-core Content Management Software (CMS) and PR distribution business. Sold to Immergo and XPR respectively, these assets generated an annual revenue of $1.6 million and were sold for $2.2 million, to be paid over three years. This move reduces GameSquare's annual operating expenses by $2.3 million. CEO Justin Kenna highlighted that this sale aligns with GameSquare's strategy of focusing on high-growth, high-margin businesses and reducing costs. Over the past six months, GameSquare has divested four non-core assets for $16 million and acquired FaZe Clan for $14 million in stock, while selling 49% of FaZe Media to Matt Kalish for $11 million.
- GameSquare sold non-core CMS and PR distribution assets for $2.2 million.
- Asset sale reduces annual operating expenses by $2.3 million.
- Recent non-core asset divestitures total nearly $16 million.
- GameSquare acquired FaZe Clan for $14 million in stock.
- 49% of FaZe Media sold to Matt Kalish for $11 million.
- Non-core asset sales completed at an average valuation of 1.4x trailing-12 month sales.
- CMS and PR distribution assets generated $1.6 million in annual revenue, which will be lost.
- Total consideration of $2.2 million for non-core assets is spread over three years.
Insights
GameSquare's divestiture of non-core assets is a clear strategic move aimed at streamlining operations and shoring up financials. The sale generated
From a valuation perspective, it's noteworthy that these non-core assets were sold at approximately 1.4x trailing 12-month sales, while the company's current market capitalization is around 0.4x trailing 12-month proforma sales. This discrepancy suggests that the market may be undervaluing GameSquare’s core operations. For investors, this could imply a potential upside if the market realigns its valuation metrics or if the company's profitability initiatives bear fruit in the near future.
GameSquare's strategy to focus on high-growth, high-margin businesses aligns well with industry trends where media and technology companies are increasingly concentrating on core competencies to drive profitability. The esports and gaming sector, particularly with entities like FaZe Clan, is seeing considerable interest due to its appeal among Gen Z, Gen Alpha and Millennials. By divesting non-core segments, GameSquare is not only optimizing its financial structure but also sharpening its focus on market segments that offer substantial growth potential.
For retail investors, this means the company is potentially positioning itself for stronger long-term growth in the dynamic and lucrative gaming and digital media markets. The divestiture also appears to be part of a broader trend where companies streamline to better compete in niches they can dominate. The cost reduction of $2.3 million annually adds another layer of confidence in GameSquare's management's ability to execute strategic decisions effectively.
FRISCO, TX / ACCESSWIRE / June 3, 2024 / GameSquare Holdings, Inc. ("GameSquare") (NASDAQ:GAME) , announces that on May 31, 2024, GameSquare and its Frankly Media LLC subsidiary ("Frankly") sold certain non-core assets. Immergo acquired Frankly's Content Management Software ("CMS") and XPR acquired Frankly's PR distribution business. Combined Frankly's CMS and PR distribution assets generated approximately
"We continue to pursue strategies that streamline our business, add non-dilutive capital, and prioritize our high-growth, high-margin businesses. Over the past six months we have divested four non-core assets for a total consideration of nearly
"I am pleased to announce that recent non-core asset sales have been completed at an average valuation of approximately 1.4x trailing-12 month sales, compared to GameSquare's current market cap of approximately 0.4x trailing 12-month proforma sales. I believe this reflects the strategies we are following to unlock and create value for our shareholders," concluded Mr. Kenna.
ABOUT GAMESQUARE:
GameSquare's (NASDAQ: GAME) mission is to revolutionize the way brands and game publishers connect with hard-to-reach Gen Z, Gen Alpha, and Millennial audiences. Our next generation media, entertainment, and technology capabilities drive compelling outcomes for creators and maximize our brand partners' return on investment. Through our purpose-built platform, we provide award winning marketing and creative services, offer leading data and analytics solutions, and amplify awareness through Faze Clan, one of the most prominent and influential gaming organizations in the world. With an audience reach of 1 billion digitally native consumers across our media network and roster of creators, we are reshaping the landscape of digital media and immersive entertainment. GameSquare's largest investors are Dallas Cowboys owner Jerry Jones and the Goff family.
Forward-Looking Information
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Corporate Contact
Lou Schwartz, President
Phone: (216) 464-6400
Email: ir@gamesquare.com
Investor Relations
Andrew Berger
Phone: (216) 464-6400
Email: ir@gamesquare.com
Media Relations
Chelsey Northern / The Untold
Phone: (254) 855-4028
Email: pr@gamesquare.com
SOURCE: GameSquare Holdings, Inc.
View the original press release on accesswire.com
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