GameSquare Holdings, Inc. (GAME) Q4 2025 Earnings Call Transcript

thank you and good afternoon to everyone joining us on today's call i'm extremely proud of the progress game square delivered in 2025 as the platform we've been building reached an important inflection point during the fourth quarter over the past year we took decisive actions to streamline our business strengthen our balance sheet and build a more focused scalable platform and our efforts reached a clear inflection point in the fourth quarter our fourth quarter results reflect a meaningful step change in profitability driven by the success of our strategic investments improved profitability across the business and the contribution from our recently acquired creative marketing platform click as a result we delivered positive adjusted EBITDA of 1.7 million marking a key milestone for games for and demonstrating the earnings power and scalability of our operating model in fact when considering the contribution from TubeBuddy our adjusted EBITDA would have been even stronger, underscoring the immediate, accretive benefit of the transaction. More broadly, our performance highlights the strength of the integrated ecosystem we've built, combining data and analytics, a scaled creative talent network, integrated agency services and proprietary owned and operated IP. 2025 was all about optimising our model. As a result, GameScript has strengthened its position at the entry point for the creator and expanding our land and expand strategy. While Gamesquare's roots are in gaming, what we've really built is creator economy infrastructure. Across our four units, we offer what no single competitor can, tools that power creator growth, manage creator networks, full service campaign execution, and one of the most recognized creator-led brands in the world. For any brand looking to reach, understand, or activate within the creator economy, Gamesquare is where they can enter. As our platform has evolved, so has our go-to-market strategy. Today, we are operating with a more integrated and intentional approach that reflects the full capabilities of GameSquad's end-to-end ecosystem. At the front end, we are increasingly focused on landing new customer relationships through our technology and agency businesses. These offerings provide measurable performance-driven solutions that align closely with how brands are allocating spend in today's digital and creator economy. They also create a strong entry point into the GameSquare platform, allowing us to demonstrate value quickly and establish long-term partnerships. From there, our model is designed to expand relationships across our broader ecosystem. By leveraging our creative, media and talent capabilities, we are able to deepen engagement and deliver more comprehensive, integrated solutions for our clients. This land and expand strategy is a key driver of our current and future growth model. It enables us to build higher quality, more durable customer relationships while improving revenue visibility and increasing lifetime value. As our platform continues to scale, we believe this approach will drive more efficient customer acquisition, stronger cross-selling opportunities, and ultimately higher margin growth over time. With that as context, I'd like to step back and review the actions we've talked throughout 2025, and more importantly, how those actions have fundamentally repositioned GameSquare for profitable growth and improved operating performance in 2026 and beyond. In 2025, we executed a deliberate strategy to optimise our business model, rationalise our portfolio and build a differentiated end-to-end platform that is both scalable and resilient. Significant actions during the year include divesting our remaining stake in phased media, winding down Franklin Media and acquiring Clit. These operational moves have sharpened our focus, improved efficiency and created a more powerful and unified platform that is purpose-built for scale with multiple durable revenue streams working together. Simultaneously, we fortified our financial foundation through a series of opportunistic capital raises at an average cost of $1.41 per share that raised gross proceeds of approximately $85 million. Through the proceeds of these transactions, we paid off essentially all existing debt, ended the year in a significant net cash position and meaningfully strengthened our capital structure. These moves positioned GameSquare with the strongest, most flexible balance sheet in our history. It provided us with the financial strength and agility to both invest in growth and navigate dynamic market conditions. In parallel, we deployed a portion of our capital into high-performing yield-focused digital asset treasury strategy. While on-chain markets have experienced increased volatility more recently, we believe our discipline's yield-focused approach combined with the strength of our core operating business has created a differentiated and complementary earning stream for GameSquare. As part of our initial on-chain strategy, we also acquired a portfolio of digital assets, including NFTs, most notably the Cowboy 8, which was acquired through a strategic all-stock transaction priced at $1.50 per share. During the first quarter of 2026, we monetized our NFT positions, generating proceeds of approximately $1.5 million in cash and $0.4 million in ETH at the time of the sale, as we actively optimized our treasury allocation. These proceeds were used in combination with the yield we received from our treasury strategy to repurchase our stock. Since we initiated the program in October of 2025 and through March 6, 2026, we have repurchased a total of 5.06 million shares for $2.5 million at an average price of $0.49 per share. We view these repurchases as a highly attractive use of capital, particularly given our confidence in the intrinsic value of the business, and they reflect a disciplined and balanced approach to capital allocation. Overall, we view our treasury management strategy as a dynamic and opportunistic capital allocation lever. As market conditions evolve, we will continue to actively allocate capital, deploying or monetizing assets, where we believe we can maximize risk adjusted returns and drive long term shareholder value. At the same time, I want to emphasize that our core operating business remains the foundation of GameSquare and our primary focus as we move into 2026. So let's look at our core operating business in a bit more detail. Our priorities in 2025 were focused on achieving profitability, streamlining operations and driving higher margin revenue opportunities across our core media, technology and esports businesses. I'm pleased to report that we made significant progress and achieved every one of these strategic priorities and in many cases exceeded them. During the fourth quarter, we successfully executed against several of our 2025 strategic actions. Reported revenue on a year-over-year basis increased by 142%, and gross margin expanded year-over-year by approximately 20 percentage points to 45.9%. The combination of revenue growth, expanding gross margins, and disciplined cost control drove a more powerful financial model. Along these lines, we delivered positive adjusted EBITDA of $1.7 million for the fourth quarter, marking a key milestone for GameSquare and demonstrating the earnings power and scalability of our operating model. The continued improvements to profitability throughout 2025 reflected the second quarter divestiture of phase media, the wind down of Franklin Media in the third quarter of 2025, and the contributions of our improved balance sheet. As we noted in September, we discontinued the operations of Frankly Media, a legacy programmatic advertising solutions provider. The closing of Frankly reflects our strategic shift toward optimizing our business model by exiting non-core, lower margin operations. This decision also aligns with our goal of eliminating operating losses and cash burn, while concentrating on high growth areas such as agency, media and technology. M&A remains a key component of our growth plan. During the third quarter, we acquired Click Management, a leading talent management firm founded in Australia with a growing U.S. presence. Regularly named as one of the top digital creator agencies by Business Insider and recently awarded best talent management agency by industry body AIMCO, So Click Creators delivered 548 million views across YouTube alone in March of 2026 and currently has a total of 123 million YouTube subscribers. Click has assembled one of the largest English-speaking gaming rosters with approximately 85 active talent. It is important to note that talent is at the core of today's creator economy and bringing Click into the GameSquare family accelerates our long-term strategy. Together, GameSquare and Qlik will expand the company's reach into creator-led brand partnerships and activations, accelerate growth opportunities within GameSquare's media, agency, and experience's ecosystem, and drive immediate cost and revenue synergies by integrating Qlik throughout GameSquare's existing platform. We are actively leveraging Qlik's platform to aggressively expand our talent roster. Over the coming months, we expect to add high-impact creators, materially expanding our North American presence and enhancing our ability to drive higher value brand partnerships, increase campaign volume, and improve monetization across our platform. This momentum reflects the strength of Click's platform and our ability to consistently attract and retain top-tier talent in an increasingly competitive market. More recently, in February 2026, we announced the acquisition of TubeBuddy from Ben Labs. In an all-stop transaction, TubeBuddy provides powerful search engine optimization, workflow analytics, and productivity tools powered by proprietary AI, which are used by creators and digital publishers to grow, manage, and monetize their content. The acquisition adds a scaled creative technology layer to our technology platform, which we We believe will accelerate our strategy to build an integrated ecosystem spanning content, community data, and performance marketing. TubeBuddy is a high-performing asset. For 2025, TubeBuddy had revenue of $10.2 million, gross margin of over 88% and an EBITDA margin of over 30%. We are excited by the operational and financial opportunities that TubeBuddy represents. Importantly, the accretive acquisition of TubeBuddy demonstrates the evolution of our M&A strategy. As our scale increases and our capabilities expand, we are focused on pursuing compelling operating assets that we expect to be accretive to Erdix. With the addition of TubeBuddy, GameSquare's platform includes an AI-enabled software platform of proven tools embedded into creator workflows, anticipated increase to recurring software subscription revenue, first-party creator and channel data capabilities, powerful cross-platform brand and performance marketing solutions, creates new integration opportunities across AWS Media, Esports, and creator networks. Our strategy is designed to leverage our existing relationships with some of the world's leading and most forward-looking brands, while also building on the momentum we generated through key customer wins in 2025. Across our platform, We partner with some of the world's most recognized brands, including Lego, Paramount and TurboTax, alongside leading gaming publishers such as Roblox, Epic Games, Capcom and Ubisoft. These engagements highlight our ability to deliver integrated creator-led campaigns at scale. Within our technology and data platform, Streamhatchet continued to strengthen its position as a trusted partner to brands, publishers and creators. We saw strong customer retention and expansion, including renewals of Riot Games, Activision Blizzard, and Electronic Arts, reinforcing the value of our data and analytics capabilities. We also continue to expand our capabilities with new AI-powered tools, and we were selected as an official data provider for the Esports World Cup. In our agency and brand partnerships business, we executed integrated campaigns for leading global brands and publishers, including Capcom, Roblox, World of Dance, Darymax, Jack in the Box, the Dallas Cowboys, MasterCard, and Paramount. Within our talent platform, we recently announced a new partnerships with HEV, while our own media IP and experiential assets drove growth with a new licensing agreement which spun Fox Squarepants and the production of the 2025 100Ds block party. Finally, we continue to expand our relationships across broader gaming ecosystem, including a new management services agreement with Ubisoft. These wins reflect the expanding value of our integrated platform. We are landing customers through our technology and agency capabilities and expanding those relationships across our broader ecosystem, driving higher value engagements and more durable revenue streams over time. Over the past several months, we have made several strategic leadership additions and organizational changes designed to enhance execution, drive revenue growth and improve operational discipline. We recently appointed Doug Rosen as Chief Commercial and Strategy Officer, where he is responsible for leading our global commercial strategy and driving revenue growth across the platform. Doug brings deep experience from leading media and gaming organizations and his focus on building scalable repeatable revenue streams and integrated data market execution is directly aligned with our strategic priorities. In addition, we appointed Anne-Marie Tanawong as Chief Operating Officer, further strengthening our operational leadership. Anne-Marie brings nearly two decades of experience across strategy, finance and operations, including leadership roles at YouTube and other high growth media platforms. In her role, she's focused on driving operational scalability, executional discipline and supporting the launch of new revenue initiatives across our integrated ecosystem. We also continue to evolve our organizational structure to better align with our platform strategy. This includes a promotion of Paul A. Oakham to head of agency, bringing together our agency capabilities under a unified leadership structure to deliver a more cohesive integrated solutions for our clients. These leadership updates reflect a deliberate effort to align our organisation with our long-term strategy, enhancing our ability to scale efficiently, thrive revenue growth and execute with discipline as we enter 2026. As you can see 2025 was a transformative year for GameSquare. We took decisive actions to streamline the business, strengthen our balance sheet and build a more focused, scalable platform. Those efforts are now translating into improved operating performance and a clear step change in profitability. Importantly, we believe we are still in the early stages of realising the full earnings potential on the platform as we move into 2026. So with this overview, I'd like to turn the call over to Mike to review our 2025 fourth quarter financial results. Mike.

Thanks, Justin. Our reported results for the fourth quarter reflect the successful strategies underway to drive profitable growth. Comparing our 2025 fourth quarter reported results to the prior year, total revenue was $18.5 million compared to $7.6 million. The 142% year-over-year increase in revenue was primarily due to growth across our agency and owned and operated IP segments, including the full quarter contribution of Qlik. Reported gross margin for the 2025 fourth quarter was 8.5 million, or 45.9% of sales, compared to 2.0 million, or 25.8% of sales for the same period last year. The 20.1 percentage point improvement in gross margin reflects the ongoing efforts to improve profitability in the margin contribution of our digital asset treasury strategy. Adjusted EBITDA for the 2025 fourth quarter was 1.7 million profit, it compared to 3.1 million loss for the same period last year. The 4.8 million improvement reflects the strategies we are pursuing to drive profitable sales. On a pro forma basis, which includes the contribution of TubeBuddy, revenue was 20.6 million and pro forma adjusted EBITDA was 2.3 million or 11.2% of pro forma revenue. We believe pro forma sales and adjusted EBITDA demonstrate the accretive contribution TubeBuddy will have on our financial performance. As of December 31, 2025, we had cash and cash equivalents and digital asset treasury assets, excluding NFTs, of $52.0 million. We ended the quarter with $35.7 million of shareholders' equity compared to $12 million at the end of the last year. As you can see, GameScore has a strong So with this overview, I'll turn the call back over to Justin.

Thanks, Mike. As you can see, the progress we are making has fundamentally reshaped the company. Over the past year, we've expanded margins, streamlined our cost structure, rationalized our platform, fully cleaned up and strengthened our balance sheet, and added a highly scalable growth engine through Click and TubeBuddy. The result is a business that is managed meaningfully stronger, more focused and more scalable than it was even a few quarters ago. A balance sheet is healthy, our strategic priorities are fully funded and we are entering 2026 with clear operating momentum across every part of the platform. We are winning new programs, expanding relationships with leading brands and publishers, scaling our creative network and continuing to innovate across our operating businesses. We are also positioning the company for our next phase of growth. We are advancing our talent strategy with an expected addition that will bring meaningful creator relationships onto our platform. We plan to extend our agency and platform capabilities to drive growth in the US and internationally, while pursuing opportunities to expand our reach into some of the largest, most high-profile gaming markets. We believe these actions will drive new revenue streams in 2026 and beyond, and further establish GameSquare as a scaled leader in the global creator economy. On a pro forma basis, which reflects our plans for the TubeBuddy business, we are reiterating our previously announced annual guidance for fiscal year 2026. We expect revenue in the range of $85 to $90 million, gross margins of 35 to 40%, an adjusted EBITDA of over $5 million. Our outlook reflects continued strong organic growth and the durability of the improved margin profile we established exiting 2025. With the structural efficiencies we've implemented and the operating discipline now embedded across the organization, we believe we are well positioned to scale profitability as the business grows. We are excited about the opportunities ahead and confident in our ability to deliver sustained value for our shareholders. So with this overview, Mike and I are happy to take your questions. Operator, please open up the call to questions. Thanks all.

Thank you. We will now begin the analyst question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. The first question comes from Jack Codera with Maxim Gates. Please go ahead.

Hi, thanks. This is Jack Codera calling in for Jack VanVert.

Thanks for taking my questions. um yeah it was nice to see the guidance um given all the acquisitions and divestitures are you able to give any color as to what you expect for seasonality going forward maybe you know like a very rough percentage range for each quarter yeah i can i can take that one mike i'd say um probably less so uh than quarter by quarter jack i think the easiest way to think about it is really that the back half of the year is generally a little stronger for a number of reasons. You know, added brand spend ramps a little. You know, we have more activity in the e-force market. You know, you have, you know, holiday buying for the merchant consumer product and so forth. I wouldn't say it's extreme in terms of seasonality, but I think the easiest way to think about it is 40-60 in terms of sort of 40% to the first half of the year, 60% to the back half of the year. You know, within that, I would generally say that Q1 is typically, you know, our weakest quarter and Q4 is typically our strongest. But there can be some fluctuation within that. But the easiest way to think about seasonality is 40-60 on a H1, H2 basis. You know, I would sort of preface that by saying, you know, Q1 is often a, you know, historically strong start you know we have been very busy closing out the year-end order so we haven't closed the books there yet but um you know we certainly feel really really comfortable about you know q1 and the activity that we saw within that quarter okay that's great to hear and I saw the revenue segmentation for the full year but I recognized that that was kind of adjusting for you know some of these acquisitions and divestitures are you able to provide just the revenue segments for the fourth quarter specifically kind of where the

revenues fell into those segments for that quarter for the quarter I can take that one Justin if you want yeah so I know the quarterly segment disclosures and including our financials but of our 18 and a half million of revenue 4.2 million was from our owned and operated IP segment $12.5 million was from our agency segment, which includes our talent agency click. $1.2 million was from our SaaS and managed services segment. And then $560,000 was from our digital asset treasury yield.

Awesome. That's super helpful. You know, congrats again. I'll jump back in the queue.

The next question comes from Greg Gibbous with Nautiline Security. Please go ahead.

Hey, good afternoon, Justin and Mike. thanks for taking the questions. You know, wanted to, I guess, maybe follow up. You mentioned a, you know, strong start to Q1 in terms of the performance there. You know, maybe more broad, what kind of gives you guidance in your 2026 outlook, and could you maybe speak to the growth pipeline of opportunities as it stands today?

Yeah, yeah, I'll take that one, Mike. I would say, You know, we feel really, really comfortable in terms of guidance. You know, we believe that these are really conservative numbers. You know, as mentioned, Q1 is off to an extremely positive start. Some of the areas of sort of growth and I would say outsized growth into 2026, I think to look for, certainly our creative deployment. Businesses, you know, had an enormous Q1. It's a really big area of growth for us. And we talked in the earnings call a little bit about being the entry points in the creator economy and what we've been able to do, you know, through our creator platform and our data business is really layer those together and have a huge competitive advantage in helping game publishers and brands, you know, execute creator deployment campaigns at real scale. we saw a huge amount of activity there within Q1 of the year and that's certainly going to be a large growth area for us in 2026 off of what we did there in 2025. It's been a bit of an area of focus for us, something we're investing into and certainly taking advantage of so you know I'd look to that area as certainly being a big contributor into Q1 and the remainder of the year. So you know really nice sort of flow on within our phase in sports business you know we spoke last year about really professionalizing you know the esports space you we've moved our phase esports business to our headquarters uh in dallas and with that there's some inventory that we've been able to sell against it's been really healthy and we're seeing you know one of the very few sort of profitable north american esports businesses um so you know expect that to be a nice contributor also into q1 um our agency business continues to go from you know, strength to strength. You can see there in the numbers in Q4, but, you know, the most pleasing part of that is just entering 2026, you know, with more locked-in revenue than ever before, right? So certainly, you know, we're still out there looking for new business, but I'd say, you know, with our current client mix and recurring revenue base. So, yeah, Q1 can we feel really, really good about, you know, off to a great start to the year. In terms of sort of guidance, I think some of the areas for outsourced growth that aren't necessarily baked into those numbers, sort of opportunities into new markets. MENA is certainly one for us. We've talked about it before. There's been, you know, obviously increased investment into the esports space with the esports World Cup and everything going on over in Riyadh. There's some really interesting opportunities for us there. We spoke about the talent and creative space. You know, we're just, you know, scraping the surface in terms of the growth into the US. I think the acquisition of Click and the business that they built, you know, with Australian talent and now growing that U.S. base has been incredible. We have an incredible foundation and now, you know, it's really about pouring gasoline on that. So, there's some of the areas I'd look for outsized growth for us to, you know, really sort of hit and exceed guidance, which we very much believe we will do so. But, yeah, in terms of Q1, you know, I'd say really healthy mix of revenue, But certainly, you know, I'd look for a big sort of contribution from that creative deployment managed services space that I mentioned.

Great. That's very helpful. Appreciate the color there and good to hear. You know, if I could secondarily ask about, you know, kind of capital allocation going forward and maybe just starting with your stance on M&A, how, you know, profiles of future M&A would be relative or similar, I guess, to your acquisitions of Click and TubeBuddy more recently or different in any deliberate way? And maybe as it relates to just capital allocation, maybe wondering if you're willing to maybe discuss your stance on share buybacks going forward, considering you've been active the last several quarters.

Yeah, happy to touch on those. So, yeah, I think that profile, Greg, is certainly similar to your assets that we're looking at. You know, I think we touched on it. I think really our focus would be within the technology, performance, marketing, media, gaming space, really in, you know, call it, you know, 10 to 50 million of revenue, you know, 5 to 20% EBITDA margins. It's really the businesses that we're looking at. I think, again, to reiterate, in the past, we acquired some really valuable assets, but assets that were burning cash, we've moved beyond that, and we've now got the profitability and we want to scale it. So we're only looking at assets that are in preview. We've realized the challenge that exists with really trading where we trade today, and obviously using equities, currencies is challenging. So, really the way that we look at these M&A opportunities is relative value deals. And what I would say is, you know, while, you know, this challenge is not only for us, but many, you know, in the micro-cap space in today's markets, within the gaming industry more broadly, you know, we have a great reputation. You know, we get a lot of inbound on M&A for these sort of, you know, small to medium-sized standalone companies that lack access to capital and liquidity, we're a really nice home. And within that, I think a lot of people see the longer-term vision and understand that we're undervalued today, but hey, one plus one could equal five here, and we believe in the long-term vision. So long story short, Craig, I'd say that that profile role of company is certainly what we're looking at, but we are very cognizant of dilution. We are obviously working to increase share price, but within that, it will continue to be optimistic within M&A, but certainly from a relative value type deal. Again, if you look at TubeBuddy, that was exactly what that deal was, right? Five million shares to a company that did 10 million in revenue or 30% EBITDA margin. and it's basically unheard of, and that's finding a partner that really bullies in the long-term vision. So, you know, continue to be active within M&A. There's certainly more opportunistic until, you know, share price really starts to move. And then on share buybacks, you know, I think we've been using the yield we've been generating from our ETH to buy back shares. You know, we've bought back, you know, obviously, you know, over 5 million shares. we have space currently from our current sort of approved approval from the board to do another $2.5 million worth. We will continue to buy back stock. Whether we get more aggressive on the buyback or not remains to be seen. That will really come down to how the share price moves off the back of profitability continued catalysts that we have coming. And what I would say is we are really excited, I'd say, by the progress that we've made and by what lays in front of us. We understand how undervalued we are, we're equally impatient, we share shareholders frustration, and so we will continue to look to buy back stock, and really depending on how, obviously there's macro factors at play as well, but depending on how the stock starts to move based off of the catalyst we have coming here over the next three to six months, we'll really determine how aggressive we are on that front.

Got it. Thanks for your thoughts on those points.

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

Yeah, I just wanted to say thanks, everybody, for joining today and certainly for the continued support. Again, I think it's the elephant in the room is certainly our share price. And, you know, just wanted to reiterate that, you know, we share the frustration, you know, around where the share price sits today. But we really do view this in terms of a longer-term play and building really long-term value for shareholders. You know, what I would say, you know, we've talked about hitting profitability in the back half of 25, you know, for some time. We did a lot of work to get there. You know, I'm really proud of the team and want to really give flowers to all of our team. We've got a really dedicated workforce who works extremely hard. So I just wanted to give a huge shout out to all of our staff. But yeah, I feel really, really good about the progress that we've made in terms of doing the things that we say we will do. And we feel really strongly about where we're headed in 2026. So, again, just wanted to thank everybody who joined the call and our shareholders for the continued support. We're not going to leave any stone unturned in terms of continued progress and growth and ensuring that we drive value for shareholders. And we really believe that things are going to start to turn here in 2026. But thank you, everyone, for joining the call. We're really excited to touch base again and report back on our progress with our Q1 results in very short order here. So look forward to that, and thanks for joining the call.

This brings to a close. GameSquare's 2025 fourth quarter financial results conference fall. You may disconnect your lines. Thank you for participating, and have a pleasant day.