GAME.V - Earnings call 1 2023 | Engine Gaming and Media, Inc.

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Operator

Good afternoon, and thank you for joining us for the GameSquare Holdings Business Update Conference Call.

On the call today, we have Justin Kenna, GameSquare's CEO; Lou Schwartz, President; Paul Bozoki, former CFO of GameSquare Esports; and Mike Munoz, CFO of GameSquare Holdings.

[Operator Instructions]

Before management discusses the results. I would like to remind everyone that certain statements in this call may be forward-looking in nature. our known cause risks, materially actual expressed implied involving factors and from statements or could that results in include and uncertainties unknown other those These statements. forward-looking to differ

for on forward-looking company's about website. on XXXX, factors, our March and For profile the be at information ended found statements quarter can the company's please risk see MD&A our which and XX, sedar.com

to GameSquare's, ahead. I President, Schwartz. call will now go turn Lou, over the please Lou

Louis Schwartz

I'd everyone. our like welcome Thank financial you, filed afternoon, operator, earlier along conference March discuss good you on of to results ending today, today's we with first to to XXXX, period and all XXXX which management's XX, sedar.com analysis. for discussion call the quarter and

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Justin Kenna

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I'll CFO, Mike that, over Munoz, throw the to our highlights. to With QX it financial give

Michael Munoz

from and in higher-margin million period. prior GameSquare margin million improve pro the pro XXXX $XX.X XX.X%. year quarter million XXXX million combining XX.X% and offerings. a to first Thanks, gross amounted On or to increased approximately $X.X our in forma basis, we a Gross revenue of or of expected by growth during to prior results year margin million Gross up margin basis, accelerated $X.X is the Engine, $XX.X the the of for GameSquare as XX.X% XXXX the from Justin. period. see On of forma or $X.X million total in $X.X quarter XXXX year first amounted to in QX first quarter

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Justin?

Justin Kenna

Thanks, Mike.

questions, space. ad our not continue year-over-year. call both to of overall to as line and XXXX its us on spend this want a and the have Before other to end and the our side in am basis, and navigated that extremely guidance tightening out top come extremely I challenging throughout of those remainder real and well immune proud the headwinds for factors a pro year, improve to outlier these up I started bottom forma this set Despite over have who while the occur XXXX. to towards of review of turn seasonality managed in team to March I GameSquare

seen our pleased that growth. in as talk deal revenue and pipeline, have we today, am closures I we report here to improvements steady

in numerous In with of weeks, the sizes couple brand care, X auto fact, CPG, such significant average news coming of north over have past several deal and signed figures. verticals we across as health

to XX% today's of tracking guidance through over are against well halfway As QX and the target our quarter. we call, are

deal the quarters fourth of the and We software and values, deals growth seasonality. in combination our overall of accelerate and to closed expect for larger services strength remainder events third pipeline, the of creative year, to revenue due the

$XX combined XXXX sales we of million result, will company annual a to be in $XX As the between million. believe

In margin in between to addition, will XX%. range XXXX gross we annual believe XX%

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are making by second and of headed that thank the we updating company, support. I in this look to on direction forward excited you on call On are that behalf I'm our I call for want and August. we joining continued you your the progress to for quarter

that, over the With take to will I turn questions. to operator it your

Operator

The Canaccord Genuity. Instructions] Tilchen with question from Jason. [Operator first is

Jason Tilchen

to maybe of some of you're that Congrats changing mentioned remarks, there's deal now and large examples conversations maybe specific how months more you the on on touch set different in prepared several since products over completing the merger. signed start, verticals several been new To with with the the complete recent closed. brands of Can deals across you going has tools. the are been market that a

Justin Kenna

absolutely. Yes,

the really of obviously, towards and brand we've last of well what script a seen, of in start how has trickier this Jason, think, the navigated market year. year you and our the about team spoke I end sort

days the sign ROI on in has pipeline campaigns, away. and promising And that stream for an or gone just think just tournament. to do increased is that sponsored accountability our fallen I on been really brands are happy been event are stronger been. a a the logo really than demand brands ever It's fact, need or an it's and pleasing that in put haven't

being audience. to there's pave a to I our and really applaud way campaigns able for I authentically with connect and team really for need space. in the think the that strategies directly in creativity real And

We're talk having wrap the bringing say from using on of we're perspective, Hatchet, when these having would engine compelling, obviously, kind brands we're Stream really really I helped to brands analytics to the GameSquare about that assets to in data a and front right, using has where has data projects. been talking data ROI end. in-house incredibly to accountability,

certain We eyeballs. have media a network amount of guarantee that a can

it that So to I really accountability. ROI think really down and comes

really provide so I this end show transaction us. on that [indiscernible] to them And provide has talking brands end, a think to for level of to and working, able the back it's on certain and being eyeballs think And front further just enhance being able guarantee I the back we've as them with a And the seen think strong the real end-to-end shift. -- message spend I platform really is started with We've said, I And ROI. think of I things to say, resonating have in I'd really sort come of brands. March, since and pipelines way.

Jason Tilchen

And helpful. follow-up. a just That's really then

the prepared and In terms in What of press the should very that's time the laid cost release into how company the in profitability? reach think eventually for about the line remarks, synergies to breakeven we you helpful. out -- move

Justin Kenna

about the think savings would I annualized $X in savings. million Yes. cost as

we -- have aggressively we pursuing mentioned, profitability. As are

QX, improvements burn realized really the the but of half to lot to, you'll that the have I months, continue a normalized out say, next would pulled $X in have see a in year. start guess, back and we see new, will think of to I We cost and within I million, X start

think I good to way about think a profitability.

companies Nothing talked look, changed at the have And back end has XXXX. about there. profitability both of

it's an think anything. accelerated I if path,

think I good think Jason, look if the of at way QX a million. EBITDA sort $X be in of adjusted it, $X loss about would of million, you this to

is which This a good obviously, from in If last seasonally a standpoint. is lowest our quarter on to and improvement you year, that think big about see. revenue

of loss a million sort in your annualize standpoint. quarter, million you lowest automatically in If that quarter of EBITDA of from cost you million revenue so savings, $X that at $X adjusted terms $X a

build conservative million over and of to of any certainly effectively up sort profit a obviously, end I'm which quarter-by-quarter gross But you're by in million $XX QX, XX%, margin year. giving lower conservative And profit back the here just $X little bit you're a look to million, moving so that's the guidance per terms But a you that end attached in $X in about little we around view moving thinking each take, $XX quarter targets a guidance, of is of lower being and in relation view if quarter. just again, of not of here, at guidance of So million year, means. over take for let's at shy gross if the forward to right? sort forward, that going the more half million of $XX

and if EBITDA you $X million which the million. $X of view So of basis million sort at adjusted both, you look savings, $X of at you of quarter profit, at have look there, cost $X the a loss on would an sort taking the in additional million the gross there's QX additional in conservative

expect in we the terms again, of year that to expand Now growth. over revenue

the it in expect terms margin expand to We year of growth. over

the profitability only to there. QX placed half from in to So year, by we sort business grow particularly scale the obviously of by that the get and we're think really well be going not part and breakeven back to of

start So way a thinking about it. I that's probably to think good

Operator

question next The Noble Michael Capital with comes from Kupinski Markets.

Michael Kupinski

give And Jason color and some the lot the of them. of questions on the current gave about cash thought you company? merger, of position now. is right What the Congratulations a you way. of that asked us little Can a most my on by

Justin Kenna

want to take you one you keep rolling? this or want to do Lou, me

Louis Schwartz

Sure. I can here. jump in

yes. -- So

of goodwill only the sort a to stated sort that other which accounting pro had of at we made, I sort you for say forma because of certain they of sort when look been to would weren't view. We sheet sort didn't of of able our adjustments forma be have sort pro balance of a would make QX we a sort so sort would provide remarks, there closing estimates of the have our combined in as and sort But were or at plus of million So of financing you connection just the cash closing we of cash, the sort it of transaction. about with additional merger. to closer earlier of before expenses the sort special $XX of closing of sort about $X.X of costs of the million completed time in takes other sort and some

Michael Kupinski

key expect some those look Got thoughts you to -- add little you and in then company know you. a of at terms accelerate your pipeline a so the we some that. about on Can plan segment some And about kind can on or going some you how give of I you on should color But second indicated add just not improvement. growth revenue revenue segments, that bit the I you the drivers in talked -- or forth. color for guess, that you half. you how and business do And of to report whether basis us forward? you Can just those of

Louis Schwartz

Sure.

So X obviously about generate sort we sort of we them of the really the sort there's sort is of us. then which our the big sort consolidated through guess, our margin revenues the those is way that our subscription software And buckets. and a bucket have of profiles. are buckets. have several forward of revenues, like of going each team our revenues, franchise. think of I really sort And are Advertising Content agency of you business. SaaS, different to, right, for esports business one is sort production

XX% growth each of in will from a of XX% expect, expect which agency margin gross from indicated productivity margin to the sort based sort the of see the But of percentage us remarks, of see contribution. out a pipeline between expectations Justin's businesses of we sort as profiles earlier somewhere revenues sort contribution the sort team half to of and for margin guidance On drive SaaS break our We higher and we half blended in year. don't our basis, on purposes. and higher back second sort margin of sort to of we

Justin Kenna

-- add Yes. just that I add I don't going to from think -- to to apologies Lou. to

in at was holiday of in gaming combination with GameSquare's a back to so year. around stronger historically the million in reflect and last a of of relation larger GameSquare, Engine half look million back of $XX on sort year. would million number a a the year, half high in you $XX around if forth. the numbers consumer combination that fall half. and the that products revenue, the half think -- sort back the There's first and season and and It's that level of year our of front, $XX of events in the of spend. brand emerging tournaments business obviously It's ad of the I

see and half. on good half both you'll The both year be the probably think than think reaching companies indicator that to historicals the And of guidance. back tends I within stronger I to of So pretty that first path here businesses. should be a the exceeding

Operator

with The Tucci comes next question from Gianluca Securities. Haywood

Gianluca Tucci

on Congrats the merger.

there XXXX your that that any in forecast are implied guidance, top Justin, forecast rather? line in embedded for synergies

Justin Kenna

we've approach a guidance. pretty taken conservative Gianluca, to

if think a provided guidance And you engine you I hasn't raised I in consistently X if think record track has. look the past, at guidance it. as our and we've obviously, over years, past standalone have the beaten a however GameSquare

here taking approach XXXX. are a very similar We to

So we're would comfortable I and definite we build how date, some there talked to we're that terms like about really tracking. closed pipeline there's in real revenue say of in look, for room And upside. some

front. there's buffer But that. within We keep of we'll that on you little bit a really updated good. So feel

Gianluca Tucci

technical on perspective speak like in the will Could And milestones terms technical my view, engine there work, integration, and that the you the that great. from to a integration in torque, the here. Justin? That's of all or objectives

Justin Kenna

working as terms mean team, benefits onto and absolutely payroll one I accounting the that provided. in Yes. on mapping getting lot into right, pieces of and accounts team one CRM, to charts come of have system, honestly, a getting sales of our been integration one one There's assets, it, outstanding.

June, the we're system. underway. by All that well all start be very is on to going of I'd one say of

together finance efficient are incredibly up legal and and well. have set We around now other working teams pieces. processes the And

react that we kind to continuing brands. of to We're ways the and to ways deal with at centralize look

say way I think to easiest it. the is

it is well. currently works incredibly and sales Our centralized team

are centralized creative team. and to implement about We strategy a

a doing sharing we to efficient be this to brands is only a opening and ability then in but game from to not responding proactive. RFPs square more So team up importantly, really and to reactive things are resources way standard, time being

really a to GameSquare. going how we of making market, terms is think, Gianluca, continue revenue. are to progress. pieces go good a I we're and pulling costs. indicator So our I to QX of market out probably you'll how that in brand would a results see there's of we're financial in think QX, We're continue in architecture, pretty and achieving to lot of incredible see on how efficiency in We're positioned costs lot growth

together think will of that to are But a been integration centralization. be outstanding how and indicator I teams be to it's on this our frank. really good point, working

Gianluca Tucci

Okay. That's great.

quicker pipeline, mentioned you've just signed past? getting closing than of are the recently. I'm the few curious, Justin. merger that the terms a X-figure pipeline they in And as And the of deal you in result larger? sizes a deals are in

Justin Kenna

the December are. want through a think lot merger sort really think brand to There's still they don't of ROI. still has turned I little. a a of sentiment was probably handholding to because real Yes, that the But I March of I year entirely this There's that put tough. down and on. going market the

larger scale I is number and helpful. the within talking the pieces manage yes, think enormous mean, which I SideQik has that think But absolutely. as and a I of about opportunity conversations we amount we're that influences to before, was turn, for a there's brands. with of having publishers with I been started an

a into insight, line we into and way and particularly all approach job then our in we're visibility to give Hatchet, integrating Hatchet And Stream Stream in fantastic and has rapid that upsell to with offering to right, doing a of give deals, creative this on adding only access working ensure substantiate data them items been that strategy more them our in and to and into reports. our like team the brand and attack also cost not Jake to strategy but them

car was which Nielsen example really data for good client, item actually actually was year. from a a report we to deal Hatchet. the allowed We that of to line that part subject meaningful And Directors project, client. time a And charged last really Stream the a $XX,XXX Neo did the Group, Nielsen a Energy wrap report for a

So yes, a are I in lot absolutely our that work think there's favor.

ROI us deals I of fact absolutely of that is accountability. from we're little turn And terms benefiting in also of and helping the think standpoint, it's starting sort to from brand I the think closing because the a a sentiment market bit.

Gianluca Tucci

on will talk soon. Justin. great and congrats Lou, the the I to you. and That's color, merger to you to and Thank team, all, you And again

Operator

This concludes I any the for session. closing over Kenna to question-and-answer go would Justin like conference to turn back Please the remarks. ahead.

Justin Kenna

thank with now progress. really and and this the We're you, progress path excited We're making with the you, We're to for joining. a you of way, running on But happy about very and Yes. deliver up we're We're making results but really abreast everyone, catch of integration. we're to joining for us on appreciate ahead. Really lot merger it. profitability. really -- excited Thank today. keep really in excited everyone, behind ever to that able get the the done working obviously along progress to the continue August and that path and

So thank you. really you, for everyone, always, And support. Thank appreciate joining. the we as

Operator

This Financial XXXX Results Conference Call. concludes GameSquare's First Quarter

and day. for your You participating, may pleasant lines. you a Thank have disconnect

Engine Gaming and Media (GAME) 18 May 232023 Q1 Earnings call transcript