GameSquare (GAME) - 2025 Q3 - Quarterly Results

Executive Summary & Strategic Highlights GameSquare is undergoing a transformative year, focusing on building a leading digital-first platform and targeting profitability by Q3 2025 Key Business Developments & Strategic Initiatives GameSquare is transforming into a digital-first platform through divestitures, operational restructuring, strategic alliances, and investments in high-growth areas, aiming for profitability by Q3 2025 - 2025 is on track to be a transformative year for GameSquare, building a leading digital-first platform at the intersection of media, technology, esports, and onchain finance[2] - Completed divestiture of FaZe Media on April 1, 2025, restructured operations to streamline costs, formed a strategic alliance with GGTech Entertainment, and doubled down on high-growth areas across Experiences, Managed Services, and Technology[1][2] - Launched a $250 million authorized onchain treasury management program, raising approximately $90 million in gross proceeds to strengthen the balance sheet and fund the initial phase[2] - Actively discussing with over 15 crypto-native organizations for partnerships, expecting incremental, high-margin revenue streams starting Q3 and building into Q4[3] - Targeting profitability for 2025 third quarter, with the second half of 2025 positioned for revenue growth, enhanced margins, and reduced operating expenses[1][4] Treasury Management Update GameSquare established a strong financial position via its treasury management strategy, including significant Ethereum holdings, an NFT asset, and a yield strategy | Asset/Strategy | Details (as of Aug 13, 2025) | | :------------- | :----------------------------- | | ETH Holdings | 15,630.07 ETH | | Original Cost Basis (ETH) | $55 million | | Market Value (ETH) | $74.3 million | | Unrealized ETH Gains | ~$19.3 million | | NFT Holdings | CryptoPunk 5577 (purchased July 24, 2025 for $5.15M) | | NFT Yield Target | 6% to 10% annualized (managed by 1OF1 AG) | | Onchain Yield Strategy | Commenced Aug 1, 2025, targeting 8% to 14% annualized yields (with Dialectic) | | Total ETH + Cash | $99 million ($1.00 per share) | | Total Debt | $1.25 million | Financial Performance Overview GameSquare's financial performance shows decreased revenue but significantly reduced net losses and improved Adjusted EBITDA losses, reflecting operational efficiency Three Months Ended June 30, 2025 (Q2 2025) Q2 2025 saw a revenue decrease but a substantial reduction in net loss and an improved Adjusted EBITDA loss, indicating progress in cost streamlining | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Revenue | $15.9 million | $17.8 million | -10.67% | | Gross Profit | $2.4 million | $2.5 million | -4.00% | | Net Loss Attributable to GameSquare | $3.0 million | $11.6 million | -74.14% | | Adjusted EBITDA Loss | $3.5 million | $4.2 million | -16.67% | | Adjusted EBITDA Loss % of Revenue | 22.1% | 23.4% | -1.3 ppts | Six Months Ended June 30, 2025 (H1 2025) H1 2025 experienced a slight revenue decline but achieved a notable increase in gross profit and a substantial reduction in net loss and Adjusted EBITDA loss | Metric | H1 2025 | H1 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Revenue | $30.6 million | $33.4 million | -8.38% | | Gross Profit | $5.8 million | $4.6 million | +26.09% | | Net Loss Attributable to GameSquare | $8.2 million | $16.9 million | -51.48% | | Adjusted EBITDA Loss | $6.5 million | $8.7 million | -25.30% | | Adjusted EBITDA Loss % of Revenue | 21.1% | 26.0% | -4.9 ppts | Updated 2025 Outlook GameSquare anticipates a significantly stronger operating and financial trajectory in H2 2025, driven by its Ethereum-based treasury management and restructuring Outlook Summary GameSquare expects a stronger H2 2025 due to treasury management and restructuring, planning to reintroduce full-year guidance in Q3 2025 - Company expects to reintroduce full-year guidance in the third quarter of 2025 due to strong performance from treasury management and restructuring[9] - Operating and financial trajectory in the second half of 2025 is expected to be significantly stronger[9] - Combination of improving operating profile and onchain treasury strategy provides a powerful foundation for long-term growth and shareholder value creation[10] Key Drivers for H2 2025 Performance H2 2025 performance is driven by the Ethereum yield strategy, unrealized ETH gains, back-half revenue weighting, pipeline closures, and reduced operating expenses - Launch of Ethereum Yield Strategy on August 1, 2025, targeting annualized onchain yields of 8% to 14%[11] - Unrealized ETH Gains of approximately $19.3 million as of August 13, 2025[11] - Approximately 60% of 2025 core revenue expected in H2, with Agency and Teams revenue improving consolidated gross margin[11] - Pipeline opportunities shifted from Q2 are now on track to close, expecting meaningful sequential revenue growth in Q3 and Q4[11] - Ongoing restructuring initiatives to lower operating expenses in H2 2025, with an additional $5 million in annualized savings starting Q3[11] Company Information & Disclosures This section provides details on GameSquare's conference call, company overview, and important forward-looking information disclosures Conference Call Details GameSquare Holdings, Inc. held a conference call on August 14, 2025, to discuss results, featuring CEO Justin Kenna, President Lou Schwartz, and CFO Mike Munoz - Conference call held on August 14, 2025, at 5:00 pm ET, hosted by CEO Justin Kenna, President Lou Schwartz, and CFO Mike Munoz[12] About GameSquare Holdings, Inc. GameSquare is a media, entertainment, and technology company connecting brands with Gen Z, Gen Alpha, and Millennial audiences, also operating a blockchain-native Ethereum treasury management program - GameSquare (NASDAQ:GAME) is a cutting-edge media, entertainment, and technology company targeting Gen Z, Gen Alpha, and Millennial audiences[13] - Platform includes award-winning creative services, advanced analytics, and FaZe Clan, operating one of the largest gaming media networks in North America[13] - Operates a blockchain-native Ethereum treasury management program to generate onchain yield and enhance capital efficiency[13] Forward-Looking Information This section contains standard forward-looking statements regarding future performance, revenue, growth, profitability, and business plans, subject to risks and uncertainties - News release contains forward-looking statements regarding future performance, revenue, growth, profitability, and business plans[15] - Forward-looking statements are based on estimates and assumptions, subject to known and unknown risks and uncertainties, which may cause actual results to differ materially[15] - Readers should not place undue reliance on forward-looking statements, and the Company assumes no obligation to update them except as required by law[15] Consolidated Financial Statements The consolidated financial statements present GameSquare's balance sheets and statements of operations, reflecting changes in assets, liabilities, and net loss Consolidated Balance Sheets The balance sheet shows a decrease in total assets and liabilities from December 31, 2024, to June 30, 2025, resulting in a shift to a shareholders' deficit | Balance Sheet Item | June 30, 2025 | December 31, 2024 | Change | | :----------------- | :------------ | :---------------- | :----- | | Total Assets | $44,087,793 | $78,730,447 | -$34,642,654 | | Total Liabilities | $49,630,176 | $66,726,199 | -$17,096,023 | | Total Shareholders' Equity | $(5,542,383) | $12,004,248 | -$17,546,631 | | Cash | $4,697,832 | $12,094,950 | -$7,397,118 | | Accounts Receivable, net | $12,954,496 | $21,330,847 | -$8,376,351 | | Goodwill | $5,557,551 | $12,704,979 | -$7,147,428 | | Intangible Assets, net | $5,231,027 | $15,265,736 | -$10,034,709 | Consolidated Statements of Operations and Comprehensive Loss The statements of operations show a significantly improved net loss for Q2 and H1 2025 compared to prior years, partly due to net income from discontinued operations | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $15,852,706 | $17,829,175 | $30,583,937 | $33,406,699 | | Gross Profit | $2,426,454 | $2,521,294 | $5,790,080 | $4,590,642 | | Net Loss | $(3,018,346) | $(12,003,141) | $(10,192,082) | $(17,264,089) | | Net Loss Attributable to GameSquare Holdings, Inc. | $(3,018,346) | $(11,613,551) | $(8,173,950) | $(16,874,499) | | Net Income (Loss) from Discontinued Operations | $3,020,335 | $(2,342,513) | $108,531 | $(533,355) | | Loss per common share (basic and diluted) | $(0.08) | $(0.38) | $(0.22) | $(0.71) | Non-GAAP Financial Measures This section explains GameSquare's use of non-GAAP financial measures like EBITDA and Adjusted EBITDA to provide a clearer view of underlying business performance Management's Use of Non-GAAP Measures GameSquare uses non-GAAP measures like EBITDA and Adjusted EBITDA to assess performance, excluding non-recurring or non-cash expenses for a clearer business view - Company uses non-GAAP measures (EBITDA, Adjusted EBITDA) to assess performance, excluding expenses not reflective of underlying business or one-time/non-recurring items[20][21][22] - EBITDA is defined as net income (loss) before depreciation and amortization, income taxes, and interest expense[21] - Adjusted EBITDA further excludes extraordinary, non-recurring, and non-cash items such as share-based compensation, transaction costs, restructuring costs, impairment, and fair value changes[22] Reconciliation of Non-GAAP Measures This reconciliation details adjustments from net loss to Adjusted EBITDA for Q2 and H1 2025 and 2024, including interest, depreciation, share-based payments, and transaction costs | Reconciliation Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(3,018,346) | $(12,003,141) | $(10,192,082) | $(17,264,089) | | Interest expense | $(44,590) | $192,257 | $4,968 | $627,385 | | Amortization and depreciation | $302,360 | $564,346 | $558,825 | $1,182,368 | | Share-based payments | $5,616 | $602,139 | $34,614 | $1,021,367 | | Transaction costs | $547,188 | $1,037,044 | $1,292,565 | $2,130,464 | | Restructuring costs | $165,328 | $- | $782,541 | $- | | Gain on disposition of subsidiary | $(3,020,335) | $- | $(2,721,953) | $(3,009,891) | | Loss from discontinued operations | $- | $2,342,513 | $2,613,422 | $3,543,246 | | Adjusted EBITDA | $(3,495,651) | $(4,165,198) | $(6,454,379) | $(8,695,287) |