The Fort Worth Press - GameSquare Holdings Reports 2025 First Quarter Results

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GameSquare Holdings Reports 2025 First Quarter Results
GameSquare Holdings Reports 2025 First Quarter Results

GameSquare Holdings Reports 2025 First Quarter Results

First quarter 2025 gross margin, excluding FaZe Media of 22.8%

Significant year-over-year improvement in first quarter 2025 adjusted EBITDA

Completed remaining divestiture of FaZe Media on April 1, 2025, which is expected to expand gross margin and eliminate approximately $2.5 million in quarterly cash burn going forward

Improved first quarter profitability in line with expectations and supports GameSquare's strategic focus on achieving positive cash flow and adjusted EBITDA in 2025

Text size:

FRISCO, TEXAS / ACCESS Newswire / May 15, 2025 / GameSquare Holdings, Inc. (NASDAQ:GAME), ("GameSquare", or the "Company"), today announced financial results for the three-months ended March 31, 2025.

Justin Kenna, CEO of GameSquare, stated, "Our first quarter financial results were in line with expectations and reflect both the final quarter of FaZe Media's impact on profitability and typical seasonal trends within our agency and programmatic advertising businesses. With the April 1, 2025 divestiture of our remaining 25.5% stake in FaZe Media, we eliminated $10 million in convertible debt from our balance sheet and anticipate an improvement in gross margin and reduction of over $2 million in quarterly operating expenses beginning in the second quarter of 2025. We continue to own 100% of FaZe Clan Esports, which contributed to revenue and was accretive to gross margin in the first quarter of 2025. As one of the top global esports teams, we are excited to capitalize on FaZe Clan Esports success and leverage the brand to drive profitable revenue opportunities."

"Our SaaS business segment is well positioned for strong growth in 2025, driven by an expanded managed services offering and the integrated capabilities of the broader GameSquare platform. We are also seeing strong momentum in our creative agency business, particularly from successful world-building campaigns and in-person activations," Mr. Kenna continued.

"As we continue to optimize our operating structure, achieving profitability remains a core objective of our 2025 strategy. In the first quarter, we significantly improved proforma, adjusted EBITDA from the same period a year ago reflecting a significant reduction in operating expenses. We expect to benefit from higher gross margin and additional cost-saving measures throughout the year. Based on the progress made in the first quarter, we believe we are on track to organically grow sales, and improve profitability in 2025 and beyond," concluded Mr. Kenna.

Three months ended March 31, 2025, compared to March 31, 2024

  • Revenue of $21.1 million, compared to $17.7 million

  • Gross profit of $3.3 million, compared to $3.4 million

  • Net loss attributable to GameSquare of $5.2 million, compared to a net loss of $5.3 million

  • Adjusted EBITDA loss of $3.4 million, compared to a loss of $4.1 million

  • Adjusted EBITDA loss was 16.1% of revenue, versus 23.3% of revenue last year

Reported results for the three months ended March 31, 2025, compared to proforma* results for the three months ended March 31, 2024

  • Revenue of $21.1 million, compared to $23.5 million

  • Gross profit of $3.3 million, compared to $3.7 million

  • Operating expenses of $8.6 million, or 40.7% of revenue, compared to $11.6 million or 49.3% of revenue last year

  • Adjusted EBITDA loss of $3.4 million, compared to a loss of $7.9 million last year

  • Adjusted EBITDA loss was 16.1% of revenue, versus 33.7% of revenue last year

* Proforma financial results for the three months ended March 31, 2024, removes Complexity from GameSquare's financial statements and includes a full quarter contribution of FaZe Clan

2025 Annual Guidance

  • Annual proforma revenue in 2025 between $100 million to $105 million

  • Annual gross margin of approximately 20% to 25% benefiting from a more profitable mix of revenue and the April 1, 2025, FaZe Media divestiture

  • GameSquare expects annual cash operating expenses in 2025 to improve by approximately $15 million from cash operating expenses in 2024 of $35 million, as a result the FaZe Media divestiture and a continual focus on reducing operating expenses and driving efficiencies

  • EBITDA and cash flow to improve throughout 2025 with positive EBITDA and cash flow in the second half of 2025

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: May 15, 2025
Time: 5:00 pm ET
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=BU7rSscH

Corporate Contact
Lou Schwartz, President
Phone: (216) 464-6400
Email: [email protected]

Investor Relations
Andrew Berger
Phone: (216) 464-6400
Email: [email protected]

Media Relations
Chelsey Northern / The Untold
Phone: (254) 855-4028
Email: [email protected]

About GameSquare Holdings, Inc.

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 Esports, one of the most prominent and influential gaming organizations in the world. With one of the largest gaming media networks in North America, as verified by Comscore, 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.

To learn more, visit 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 and FaZe Media's future performance, revenue, growth and profitability; and the Company's and FaZe Media's ability to execute their business plans. 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's and FaZe Media's ability to grow their business and being able to execute on their business plans, 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. 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.

 

GameSquare Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)

March 31
2025

December 31,
2024

Assets
Cash

$

4,675,226

$

12,094,950

Restricted cash

1,137,735

1,054,030

Accounts receivable, net

18,305,786

21,330,847

Government remittances

150,529

119,721

Promissory note receivable, current

475,994

379,405

Prepaid expenses and other current assets

1,060,982

1,493,619

Total current assets

25,806,252

36,472,572

Investment

2,199,909

2,199,909

Promissory note receivable

9,307,979

9,212,785

Property and equipment, net

266,548

303,950

Goodwill

12,704,979

12,704,979

Intangible assets, net

15,099,765

15,265,736

Right-of-use assets

2,394,432

2,570,516

Total assets

$

67,779,864

$

78,730,447

Liabilities and Shareholders' Equity
Accounts payable

$

23,559,503

$

27,349,372

Accrued expenses and other current liabilities

10,647,154

13,694,179

Players liability account

47,535

47,535

Deferred revenue

2,734,063

2,726,121

Current portion of operating lease liability

756,524

748,916

Line of credit

2,851,175

3,501,457

Promissory note payable, current

2,786,083

-

Convertible debt carried at fair value

1,641,954

6,481,704

Warrant liability

8,991

14,314

Arbitration reserve

143,791

199,374

Total current liabilities

45,176,773

54,762,972

Convertible debt carried at fair value

10,217,808

9,908,784

Operating lease liability

1,871,009

2,054,443

Total liabilities

57,265,590

66,726,199

Commitments and contingencies (Note 14)
Preferred stock (no par value, unlimited shares authorized, zero shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively)

-

-

Common stock (no par value, unlimited shares authorized, 38,825,619 and 32,635,995 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively)

-

-

Additional paid-in capital

124,962,870

119,441,634

Accumulated other comprehensive loss

(46,091

)

(208,617

)

Non-controlling interest

12,924,155

14,942,287

Accumulated deficit

(127,326,660

)

(122,171,056

)

Total shareholders' equity

10,514,274

12,004,248

Total liabilities and shareholders' equity

$

67,779,864

$

78,730,447

GameSquare Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)

Three months ended March 31,

2025

2024

Revenue

$

21,109,659

$

17,728,224

Cost of revenue

17,776,605

14,335,067

Gross profit

3,333,054

3,393,157

Operating expenses:
General and administrative

5,757,613

4,918,630

Selling and marketing

2,023,375

2,221,653

Research and development

768,966

685,153

Depreciation and amortization

581,795

755,449

Restructuring charges

577,871

-

Impairment expense

-

-

Other operating expenses

745,377

1,093,420

Total operating expenses

10,454,997

9,674,305

Loss from continuing operations

(7,121,943

)

(6,281,148

)

Other income (expense), net:
Interest expense

(49,558

)

(435,128

)

Loss on debt extinguishment

-

-

Change in fair value of convertible debt carried at fair value

333,477

(106,601

)

Change in fair value of investment

-

-

Change in fair value of warrant liability

5,347

37,257

Arbitration settlement reserve

55,583

95,125

Other income (expense), net

(73,780

)

(117,270

)

Total other income (expense), net

271,069

(526,617

)

Loss from continuing operations before income taxes

(6,850,874

)

(6,807,765

)

Income tax benefit

-

-

Net loss from continuing operations

(6,850,874

)

(6,807,765

)

Net income (loss) from discontinued operations

(322,862

)

1,546,817

Net loss

(7,173,736

)

(5,260,948

)

Net loss attributable to non-controlling interest

2,018,132

-

Net loss attributable to attributable to GameSquare Holdings, Inc.

$

(5,155,604

)

$

(5,260,948

)

Comprehensive loss, net of tax:
Net loss

$

(7,173,736

)

$

(5,260,948

)

Change in foreign currency translation adjustment

162,526

553,996

Comprehensive loss

(7,011,210

)

(4,706,952

)

Comprehensive income attributable to non-controlling interest

2,018,132

-

Comprehensive loss

$

(4,993,078

)

$

(4,706,952

)

Income (loss) per common share attributable to GameSquare Holdings, Inc. - basic and assuming dilution:
From continuing operations

$

(0.13

)

$

(0.39

)

From discontinued operations

(0.01

)

0.09

Loss per common share attributable to GameSquare Holdings, Inc. - basic and assuming dilution

$

(0.14

)

$

(0.30

)

Weighted average common shares outstanding - basic and diluted

36,719,712

17,368,512

Management's use of Non-GAAP Measures

This release contains certain financial performance measures, including "EBITDA" and "Adjusted EBITDA," that are not recognized under accounting principles generally accepted in the United States of America ("GAAP") and do not have a standardized meaning prescribed by GAAP. As a result, these measures may not be comparable to similar measures presented by other companies. For a reconciliation of these measures to the most directly comparable financial information presented in the Financial Statements in accordance with GAAP, see the section entitled "Reconciliation of Non-GAAP Measures" below.

We believe 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 "EBITDA" as net income (loss) before (i) depreciation and amortization; (ii) income taxes; and (iii) interest expense.

Adjusted EBITDA

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) transaction costs related to merger and acquisition activities, (iii) arbitration settlement reserves and other non-recurring legal settlement expenses, (iv) restructuring costs, primarily comprised of employee severance resulting from integration of acquired businesses, (v) impairment of goodwill and intangible assets, (vi) gains and losses on extinguishment of debt, (vii) change in fair value of assets and liabilities adjusted to fair value on a quarterly basis, (viii) gains and losses from discontinued operations, and (ix) net income (loss) attributable to non-controlling interest.

Reconciliation of Non-GAAP Measures

A reconciliation of Adjusted EBITDA to the most directly comparable measure determined under US GAAP is set out below. (Unaudited)

Three months ended March 31,

2025

2024

Net loss

$

(7,173,736

)

$

(5,260,948

)

Interest expense

49,558

435,128

Amortization and depreciation

581,795

755,449

Share-based payments

28,998

419,228

Transaction costs

745,377

1,093,420

Arbitration settlement reserve

(55,583

)

(95,125

)

Restructuring costs

577,871

-

Change in fair value of warrant liability

(5,347

)

(37,257

)

Change in fair value of convertible debt carried at fair value

(333,477

)

106,601

Gain on disposition of subsidiary

298,382

(3,009,891

)

Loss from discontinued operations

24,480

1,463,074

Net loss attributable to non-controlling interest

2,018,132

-

Net loss attributable to non-controlling interest (adjustment for NCI share of add backs to Adjusted EBITDA)

(164,561

)

-

Adjusted EBITDA

$

(3,408,111

)

$

(4,130,321

)

SOURCE: GameSquare Holdings, Inc.



View the original press release on ACCESS Newswire

G.Dominguez--TFWP