GAME.V - Earnings call 2 2023 | Engine Gaming and Media, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and thank you for joining us for the GameSquare Holdings Second Quarter 2023 Results Conference Call.

On the call today, we have Justin Kenna, GameSquare's CEO; Lou Schwartz, President; and Mike Munoz, CFO of GameSquare Holdings.[Operator Instructions] Before management discusses the results, I'd like to remind everyone that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements.

For information about forward-looking statements and risk factors, please see our MD&A for the quarter ended June 30, 2023, which can be found on our company profile at sedar.com and on the company's website.I will now turn the call over to Justin Kenna, GameSquare's CEO.

Justin, please go ahead.

Justin Kenna

afternoon joining good call. on and you, to us everyone today's Thank is GameSquare Engine merger at exciting Gaming we April. This time transformative as an completed a in with

over update on now opportunities Mike and today recap second the a our the and and X efficiencies in our how successfully capabilities of to merger, first were to driving integration XX, our financial financial result, on strong on merger we the and basis of June pleased components quarter Engine results.Closing seasonally right and blended ended teams companies, implementing performance call with second completing quarter, integration my half the during a a consolidated use then combining expenses. GameSquare capabilities to getting results As second responded. synergies reducing to talent significant integrating how an the are I I'm XXXX.Since presented our critical half I'll the have the provide give on for are on focused Gaming's supporting year. and and the the our focused want time the and turn

we by we that our approximately costs expenses, cost out other improve of quarter, estimated the of the million savings a the to to of the result, annualized $X expense end more quarter. expect from in believe million business opportunities duplicative second adjusted before take saw total public of first be of business-related we year.As including there company the $X.X a EBITDA quarter realized an the have We annualized During million costs. associated $X legal, removed identified corporate with and are and additional

cost-cutting sales, one accounting business EBITDA sales focus We and importantly, more CRM third significantly additional a efforts benefit around one to profitable higher from and one will system, fourth functions expect team. most merger-related on the of synergies mix centralizing quarters actions.Integration and also as we business our in and adjusted improve

as by the changing and [ for commercialization rapidly difficulties pain navigate inability As have developing partners consumer reach media, unique value highlight of intimate audiences brands these a and the we CTV our such end-to-end it points platform strategic navigate forth, result, investment at lastly, technology to is drive challenges and to scale, started such including social solves media myriad advertising, end-to-end audiences, issues, user major media nuances a so we and our to as difficulties with platforms these and long-term and more because development Instagram day, the complete to analytics TikTok, marketplace.GameSquare's key as global success. ROI mobile, expanded turning refine types and ] as failure overall maximize across their go-to-market finding input platform activations, platform to in assess offer an emerging them brands.Every a like well content brand as or help more strategies, to our the market-leading leveraging client complexities strategies relationships to help web, quantifiable across ROI have of understanding Twitch, and integrating of go-to-market campaigns are brands GameSquare to the platforms benchmarks, and

intelligence solutions leveraging GameSquare Engine a only and our technology powerful to assets.After of expanded services greater agencies, Our the are market and we couple with to with gaming customers providing of also services Engine Gaming's provide that best-in-class that technology with e-sports have for AI-driven by solutions platform the our creative simplifies value shop assets clients. months, provided one-stop addition organizations, and a process Gaming, and media span

the improve their to effectiveness also and quickly of market are campaigns.While demand while expanding and teams, we gaining created is have acceptance helping acquisition already been network short compelling because blended of for started since that relatively a our we time influencer we've platform our capabilities have more a increasing our brands creating see We costs impactful it's marketing amount services. performance customer

both sports the billion Cowboys.During quarter, the new the of and our campaigns relationship deals also launching the long-standing and and the of partnerships with Dallas a Game announce GameSquare number by develop Army across economy we global platform.Finally, a within platform partnership April. to increased I'm the We include and average launch transformative brand shortly. emerging we Creator Navy, relationships the secure close company's which UTA, and multimillion of to official Network. company, that an and to new entertainment talent, potentially X multiyear U.S. a recent BEONDTV and company, U.S. care have a $XXX result, wins both our signed Dairy of As and expect community with dollar, value Dallas deal creator activations Time, leading the our thrilled since the with pipeline MAX Highlights entered with and with an is Cowboys gaming health expansion announce of formed

verbal in expected once relationship multiyear is multimillion-dollar will history. the represent with the GameSquare's company. a finalized casino of agreement betting growing This have we First, and rapidly one that largest online contracts

annual XXXX, provide large-scale multiyear GameSquare in figures expect terms performance marketing, If in of influencer mail enters the a the and of leading will representing our largest We with successful and recurring contract underway across subscription a this the assets.Separately, to will our quarterly global Under revenue. services marketing test production, world. be campaign in the businesses is revenue X the expected test of one recognized period. history, launch technology we expected with over be the have campaign, this later to

an goes later completed the performance of if we are marketing also we powerful now merger August. the go in relationships growing deals.Overall, by a platform. pipeline experience end the growing converting in as demonstrate momentum Engine larger we of company have our have the possible excited because provide our And to resources the to of with year.Before of new the into into expect as and CFO, strong, remainder We the well, They our to strong April return on are create I this these call financial we of business Gaming expectations success results review I'll update test will all the year, half in expect within quarter.Both end-to-end over pipeline remains to relationship third the seasonally more be by the and QX large-scale activation our Mike multiyear the the second our enter Munoz, for we our in detail.

Michael Munoz

driven to a between our significant by savings XX% XXXX. anticipate Justin quarter turn $X.X second Engine. and GameSquare to back integration Thanks, finalizing in from operations, Justin. once $X.X the our to Comparing acquisitions will million, our accelerated operating million $XX.X $X.X prior in million XXXX of cost on The down results call Gross over of pro this made basis, total revenue first QX adjusted yield from from guidance is 'XX million to $X.X the second through higher-margin focus start the of 'XX.Gross offerings.We've largely the we of integrations to of and second the a quarter creating growth as period We or of to or our cost EBITDA margin I'll activities our million XX% by integrations loss XXXX cash approximately on in quarter for figures. as first reduction improve $X.X $X basis, million as the improving XXXX. fully in to for Engine first efficiencies approximately the compared is review QX million remainder $XX.X margin million.With in year quarter in our in well quarter EBITDA forma results reductions burn adjusted during GameSquare loss see in to or XX% million amounted $X.X XXXX. quarter for strides increased implemented between annualized of expected amounted the the combined overview, our further On

Justin Kenna

Mike. Thanks,

Before pipeline, seen the and pleased deal we and call of against to want tracking for report, growth, are XXXX. we've closures our I remainder here I to revenue turn today, our guidance. I'm steady the improvements for talk over as well in our guidance review we questions,

quarter-to-date sales half. seasonal in in and already XX% remaining historical fact, trends of exceed quarter second second weeks with quarter.Accelerating follows X deals annual in quarters as fourth business third approximately the In our the the growth in closed sales revenue fall typically

growth half second year, larger and services. strong our events pipeline, closed for a the software addition, strength creative deals multiple of remainder reflects and combination of In of deal the the values,

$XX us sales our range quarter.As the pro quarter. full to cost-saving between believe between sales $XX of be to and are with half year $XX from million.We in second XXXX the the million sales As profitability reach first actions which result, fourth $XX by half in in adjusted to expect EBITDA annual expected improved combined and gross which produce in will the earlier, forma mentioned combined first also expected between million with million of margins we approximately quarter million, and $XX pro forma $X.X help second XX% additional XXXX a XX%, I million

adjusted joining profitable do by excited we additional the the still questions. path profitability, the of in the take turn With business forward are drive sales to thank I are your to we to by extremely that on towards EBITDA accelerate behalf I continued want headed, operator making.On and our to merger, mix third we integrate benefit encouraged expect We I'm improve of direction look all we a fourth to progress and significantly support. for have we the merger-related to sales, that actions.While and your continue and over updating and cost-cutting company, more progress synergies continued make, higher for the from that, significant to and you it I'll quarters you as work our to call this I'm the

Operator

The comes of first Instructions] Tilchen Jason Genuity. [Operator question Canaccord from

Jason Tilchen

will. Two, you if

over far? bit the just little that you more to talk in How performance? parts What we this the relationship line different could for benefits back you in June? in relationship time this when has the was see material so a UTA start some a the business with the how time? -- expect announced benefit And what's First, financial of your and progressed are of could about

Justin Kenna

Yes, absolutely.

a So with X partnership those really space. gaming They are agencies sort big also aware in now this of yes, in and have UTA, heavily sales in #X of space. FaZe invested GameSquare. from They've the with perspective aren't Clan a for terms the that

space, they've closed are number really X in X of clients we and deals. So of large major this multiyear a

of market relationships. in of deep business gives market in backing stage really in the these and brand us with credibility having out early think that of such I a lot an our name UTA for us

progressing been relationship. well.We into that it's months couple of really So, are a

We've Angeles. with meeting our Los of and go-to-market our senior team them refined actually marketing lot kind couple brand and of I'm our leads with a a Now have their of week this strategy new and materials. CRO in

year I'd but for UTA then in and So I marketing on perspective, say actually would from will back sort working helping expect that have performance happen positive really the pipeline very deals we much of have at very of this lot QX script. don't year of into and next be There to they They're performance us.So movement sure obviously well. they us. the marketing beyond, for overnight, are a an expect They multimillion-dollar the that impact standpoint behind a front. other numbers but partnerships larger I us are that aiming those talked multiyear, it's the number on multiyear been test in for there we a from would a half much of the

I'd and to year the half So back see XXXX. of revenue lot in from coming in, the a of expect UTA

Jason Tilchen

really Really, just me. helpful. Great. more And from one

Creator the that important of portfolio to could June launch Network GameSquare in some was the of if what the network? monetize also, time? you to to that the this -- first, having you back the asset announced talk is in just ways And are also how Network. SideQik of different wondering, over You I'm just expect your Creator launch

Lou Schwartz

audiences.Justin that to connect critical our of piece and be of of as able reach is piece terms leadership we're for within are reach the our we attribution campaigns right properly there, -- these an able it figures, opportunity with the sort opportunity sort that marketers, payouts portfolio, macro within not team. supporting able the leverage a with super so upwards set going-forward the have excited influencers all that this is performance Creator the really perform of activating and to followings sort multi-X-figure, influencer of us including leaders -- to able of is execute creator a these brands, the One, Listen, loyal expanded and our all ability to Network amalgamate we which us all of jump targeted connect as the of creator strategy, the marketing and audience and the and affiliated in demonstrate of sort of only relationships have if mentioned sort enable and Jason. this Being about of part of performance critical to sort ability marketing sort initiative. script, right? targeted brands intended to connect of sort it's to reach the on manage gave had to the have to X SideQik.And This marketing activate in some whole them only track feature in pipeline, well of brands our those is of very of The quickly our SideQik, creators leverage very our trusted with in these network become sort brands them space It's manage of that Lou. me right? for us based Let demo. being the performance be we've

Jason Tilchen

And Great. to follow-up quick that. one

come you deals that maybe specific relative the script, contemplated? just X contemplated within were sort guide in the revenue that the guide you see to those are What to -- could earlier if that was that that extent upside out the called earlier reiterated Within contribution some of do deals through? what deals

Justin Kenna

to to on forecast. half goes of relation year. will marketing, the kind the of contract back all spoke if performance of the the I that into baked of Yes, that the we sort look, of potentially and test blow the terms back not that's through year in half in table deals those mean truly size that of sort that's well

reliant any So one the is certainly forecast on not deal.

the are in ago margin, GameSquare, quarters surpassed upside pipeline, that well that think, exciting interested and upside a large of pipeline. QX a spoke brands really couple see that's to, QX Engine with are We historically a and in and be we the front, to marketing test than really the same. by largest QX rather have of to on We've of for on really plenty number some that of but that you program We they're of close a those as weeks X revenue look there.Again, at I sort A revenue. you on.They're and reliant contracts QX. really, really performance deals being opportunities of got if other of already of that QX in to sort sort the on and already that seasonally in other really more strong kind sort not we expect script, baked at QX, amount into we've mentioned will large

those clock importantly, clients starting to to deals, to multiyear And the more clients sort those plenty around the our we're we're delivering for of. So, and see there. of upside working ensure team taking of is that which

Operator

McGowan from MKM. of next question ROTH comes The Sean

Sean McGowan

give projections? a you questions. how up the the had of of couple some against us I in your sense matched quarter revenue internal Could

Justin Kenna

QX where Yes, was were perspective. to are where were we revenue hoping But under from hoping of get for we to. a we ahead cost just

and table, So on have, deals seen. test more anything, being we've the of of that a we because issue some these of just found slower they're still historically of and half We probably that they're the some timing sort first than all opportunities headwinds of little the larger of than these year a closing.

extremely the we're were year. perspective just second a say targeting from and a But ahead up of big I set well we half for cost under internally. So, where would

really the feel to we guidance market. we've good that given So about

Sean McGowan

of that relative you out profitability of characterize in Kind so for X be the would compared margin nature big revenue would kind -- on the a And gross what them you how the year, little average? to deals overall bit of how would you've teased that And the like that what's of terms far this buckets in? profitability, revenue? characterize

Justin Kenna

Yes, absolutely.

complexity. coming spoke of will betting out On to to that that company, the the be partnership we relation in

the doing really the are have a been So interest teams betting of We big Counter-Strike competing in in the terms majors big that well, not really game that there's a do of and we've long [indiscernible] one world Counter-Strike. in in for time.

a be sponsorship of part will and with a that part also complexity So be will then media.

So our through demographics using esports then media real our gate target and network. to some of pros create age specific creators, to content and our

utilizing part relation out esports the a of deal.We very our And the number at opportunity. that be would So in exciting. marketing out for in-house will be marketing of who having XX% then blended sort Red into skills to media of and product product on part in and that be in Stream gives who is performance esports capability the expect of market actually the real bucket agency it that It influencer with which deal building Hatchet out have media a SideQik us margins and is Code build will programs the of a U.K. now out to the a really will and part sort offering. successful platform, performance around the then done front,

perspective helping marketing and that a move the part reducing larger will delivering test be will cost of acquisition we're be really and to small little and them that likely and customers' of will a our platforms.The just ensuring agency a a revenue forward from forth. so So lower part there program, initial a be convert performance margin than absolutely

of really could efficient XX% and in expected expect a So we even XX% But to beyond. be I move-forward get a range. XX% XX% once the sort to on sort be would forward of move to that healthy we think basis,

Sean McGowan

earlier, these baked you not into guidance? And either your said way, Okay. are I think

Justin Kenna

Correct.

Sean McGowan

would could overall is about you step taking up Maybe share could than you the hold you there's thoughts comment changes the the now. back, year? But how environment? of for think year, there you've a the seems macroeconomic to at a maybe this have how kind beginning like the helpful. on there you your some concern advertising positive or seen, going overall of be market negative, in That's advertising more right Okay. view is on of It bit

Justin Kenna

sure. Yes,

and were year go budgets pushed year necessarily didn't but think spend the start of later a this lot a I wait-and-see budgets on quite put of hold away, of end year -- difficult. that more certainly the There was lot definitely last frankly, attitude. were they of into was of in averting to a and of it kind got

had pipeline I We've spoke started very script, deals that that but in to see we think to it have come to strong back. of number -- an here. QX, we expect interest imminently close extremely we a the we

really As start we us again. deals QX spoke to, sort number sort money strong That to spend starting a these come and number budgets helped closed. get point of of a in time.So we of see revenue to by are this back have to

the a ago, think that in sort their were connecting jersey. sponsorships with fans really and esports brands we couple a in of I and seeing on years and of interested of streams logos were and space sponsored putting fans lot gaming

And the resonate. think we to educated to gone. see strategies with starting that now up and back much data are talent ability ROI does think in-house, positions campaigns, days importantly, to access obviously Brands come to brand, access differentiate have we creative those our when and terms up I think that that our more ourselves how accountable to hold ability our that's real now of us.So I then but in I and the us well in are space.

GameSquare to a is the Engine of help us think of cost showcasing reduce a example right, the brands capabilities one, and combined I their build to really good product customers. performance marketing

yes, the that's think sure. another half year the the of So I good for been example. difficult in first But has space

on of in a what's out that seen the come space. You've lot about going users

it I costs. reduced well.We've really think navigated we've

lot a revenue we're base. have that We to build -- recurring starting

seen months of to we lot a from I brand yes, X. are these brand and of have come to and But longer-standing back we think starting starting online, the that QX we've budgets last in expect of convert. sort benefit really couple really to relationships that So in

of lot direction. a more put the much I We're of So hold. start a shift starting on difficult, year see positive in definitely think to a budgets

Operator

conference This XXXX call. GameSquare's Instructions] [Operator concludes second quarter results financial

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

Engine Gaming and Media (GAME) 14 Aug 232023 Q2 Earnings call transcript