GameSquare Holdings, Inc.: 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

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: [phone]
Email: [e-mail]

Investor Relations
Andrew Berger
Phone: [phone]
Email: [e-mail]

Media Relations
Chelsey Northern / The Untold
Phone: [phone]
Email: [e-mail]

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:
https://www.accessnewswire.com/newsroom/en/computers-technology-and-internet/gamesquare-holdings-reports-2025-first-quarter-results-1028209