questions thank you we will now begin the analyst question and answer session to join the question queue you may press star then one on your telephone keypad you will hear a tone acknowledging your request if you're using a speakerphone please pick up your handset before pressing any keys to withdraw your question please press star then two the first question comes from jack with Axon Group. Please go ahead.

Okay, great. Good evening, Justin and Mike. Congrats on the strong growth and outlook. Good to see the momentum continuing. So I guess, Justin, the guidance that you reiterated implies an even stronger growth ramp in the back half of the year, which is seasonally normal, but still very strong. Can you maybe, you touched on some examples. There's quite a few examples that are driving this that you're excited about, but maybe just can you speak to the pipeline in any key industry catalysts that maybe support that implied growth ramp? You touched on Marvel Rivals and Tencent and Roblox and got GTA 6 launching, I believe, in November. I'd love to hear your thoughts in more specific catalysts.

Yeah, for sure. Thanks, Jack, and you also part answered your own question so i i also appreciate that but um you know i think that as you sort of mentioned you know that's sort of historically been um you know i wouldn't say that quarter on quarter there's enormous seasonality in our business but you know historically back half of year being a little stronger than first half of the year has proven to be the case year on year um and you know part of that is that there's more live events and esports tournaments you have a holiday season with merchant consumer products, you know, you have sort of that flow-on effect of, you know, these brand and ad budgets where you get those sort of late, you know, dollars in the year that kind of open up with those budgets and last-minute sort of scramble dollars. So we've really seen that across the board year on year, so we're really confident there. But most importantly, I think, you know, sort of internally, we've got more revenue locked in than ever before, right?

So we've got retainer relationships.

You know, we mentioned sort of those AOR relationships that, you know, we have such a high retention rate on, which I think is just, you know, such a huge shout out to our team and the incredible work that they do and execute on is that, you know, we don't lose clients. And we often say that, you know, I think that's proof of that. But, you know, Dairy Max, Jack in the Box, Roblox, Rekt, Izuki, So having a really nice layer of recurring revenue locked in gives us great confidence. We touched on sort of Marvel Rivals and the incredible work that the team did there. And there's a much larger opportunity in December there with the finals, which we're sort of working toward. At the moment, we've got multiple events at Roblox and the list goes on. So, yeah, we've got great visibility into the back half of the year. and I think there's some opportunities certainly for outsized growth beyond our guidance. But, you know, we want to stay conservative and beat our numbers and continue to do so. And I think, you know, we proved that out in Q2 and, you know, we're confident we'll be able to do that in the back half of the year.

So, yeah, I hope that answers your question.

I think there's certainly macro factors, but, you know, beyond macro, we're just really confident in the way we've been able to execute the visibility we've got on the rest of the year and our ability to get our hands on more IP. we're being trusted by, you know, these world-class publishers and IP owners to go and execute against IP. And I think that's an area of growth you'll certainly see is, you know, our ability to bring IP in the house and monetize it.

No, excellent. No, that's great color, Justin. And maybe just two more quick questions. As a follow-up, maybe you talked about the pipeline, how that's in revenue being locked in. can you may just touch on our deal sizes average deal sizes are there synergies between I guess some of the businesses that you've acquired and integrated now as well just touch on like kind of just the I guess the evolution of your average deal sizes and insert that visibility in the pipeline yeah for sure it's a great question average deal side has deal size has absolutely increased and it's something that we monitor internally and we can start to track and include in these calls as well because I think it's a good point

and gives great visibility into the progress so we can provide some more clarity there as a KPI moving forward but yeah, I think what's really pleasing and you kind of touched on it there, Jack is our ability to integrate into the GameSquirt ecosystem so being able to bring Plink and ShootBuddy in And, you know, Click will double revenue this year by being part of the GameSquare ecosystem, right? We've been able to sign massive US talent. We're now looking at lifestyle and athlete talent, I think, and being able to, you know, obviously there's huge benefits, you know, on the GameSquare front by bringing Click in. But, you know, equally, I think the Click team is just seeing this enormous pipeline of activity that's generated from GameSquare. And that really is great evidence of our ecosystem working, right? And so these bigger names that we talk about, Epic Games, Fortnite, Roblox, the creator showdown, the piece of IP that we created, Marvel Rivals, these are great examples of the GameSquare ecosystem working, right? This isn't just, you know, hats off to our agency team, which, you know, hats off to our agency team, but they're partnering with our data business, right? So we can measure absolutely everything we do, integrating in creators from Click, executing with our own production team, overlaying with our own media, and that is the GameSquare ecosystem working. So that's really pleasing to see. It's not that we're getting outsized growth from any one area. It's that the GameSquare ecosystem is working. We're upselling, we're cross-selling, we're working as a team, and I think everybody within our four walls understands that. That's how we're going to win, and that's how we are winning. So, yeah, really pleased to see that. Can certainly provide more information around average deal size, you know, by segment and overall blended by GameSquare, but it's certainly increasing. You know, we're a bit more selective now, Jack, with some of the work that we're taking on. You know, three, four years ago, we would, you know, be out there sort of fighting for RFPs and taking on, you know, any client work where we are selective now with the work that we do. We're targeting bigger projects and, you know, we want to be more strategic with our clients, which ultimately delivers better results for them and, you know, helps us expand our margins.

Excellent, Collar. Just one more quick one. I appreciate your comments earlier about the capital allocation strategy, and you obviously have continued share buybacks and a strong debt asset portfolio. You recently, it sounds like successfully have integrated Click and TubeBuddy, and you've been active in M&A in the past. Just any updates or how are you thinking about M&A going forward? Thank you.

Yeah, so I think sort of two parts. One, on the capital allocation piece, you know, if anyone who missed it, we have started liquidating some of our ETH. We do still have a large holding, which you can see in the press release. You know, I think the reality for us is that we're extremely undervalued. We do feel bullish about the news that we've got coming, the results that we're proving out. And so, you know, we are certainly hopeful that we're going to start to get reward for effort. But like I mentioned last time, you know, we are willing to take that into our own hands and continue to liquidate further and buy additional shares back. So I'm sure that's something that you will see in conjunction. We've got a very healthy, you know, balance there. But, you know, the priority is our operating business. We've said that since day one. We're proving that out. And so, you know, I think people will continue to see that. And certainly from the feedback I'm getting is that, you know, many shareholders will be happy to hear that. M&A, you know, sort of similar story, Jack, obviously can't share too much. I would say that we are actively looking at, you know, a couple of interesting acquisitions that can help get us to scale. Like always, I'd say we're extremely cognizant of dilution. So, you know, we only approach these conversations from a relative value standpoint. We know how undervalued we are. We are not going to go and, you know, acquire an entity for a, you know, headline value, right? There would need to be relative value, understanding that, you know, we are undervalued and this is a one plus one equals five situation. In saying that, you know, I think there are, we're a very attractive buyer. You know, I think we've got a great name in our space. We're getting more and more market share. You know, obviously having access to capital markets, a clean balance sheet, clean cap table, and a great board. It's pretty attractive. So we're certainly always looking at ways to get better. I'd say that we feel really comfortable from where we sit in terms of our ability to execute from a service provider standpoint within the space. Something that we think is pretty interesting is getting our hands on more IP. So I think that's something to look for, whether that's bringing IP in-house that we can directly monetize or continuing to partner with IP holders and owners, some of which we've announced recently. So, you know, I'd say certainly active in that space, Jack, constantly looking at ways to get better, cognizant of dilution, but, you know, really want to get to scale. So, you know, I certainly would sort of think about it But from that aspect, and certainly from an aspect that we would only consider accretive deals, nothing's burning cash, we really went close here to starting to generate quarter-on-quarter cash for shareholders. That's really where we want to get to and get to quickly.

Okay, excellent. Well, I appreciate the time and wish you the best of luck going forward.

The next question comes from Greg Gibbous with Northland Securities. Please go ahead.

Hey, good afternoon, Justin and Mike. Congrats on the results and the nice profitability. Appreciate your commentary on share of purchases and just how you view the stock. Wanted to maybe follow up on guidance, on the other hand, as it relates to what's maybe changed since you last reported and how you're kind of, in terms of the growth pipeline that is, and perhaps how you're viewing Q3 versus Q4 cadence.

Yeah, Greg, I would say that we're more confident, you know, in guidance today and certainly in our pipeline, you know, than we've been, you know, at any point from the time of coming out with guidance, you know, to today, we're extremely confident in achieving and exceeding guidance. I think that there was a conversation around increasing guidance, but we want to stay on the conservative side of things and beat our number. As you all know, Q2 is ahead of target. We're kind of ahead of where we thought we would be, and we're certainly ahead of where we thought we'd be in terms of pipeline and locked in recurring revenue. So all of that is really pleasing, but we're certainly still frustrated by where we trade and we want to get to scale and, you know, we want to blow the doors off this thing is the reality. So we feel really confident in it, but we do, you know, we obviously want to remain somewhat conservative and continue to deliver and continue to beat number. So, yeah, extremely comfortable in sort of how things are tracking. You know, back half of the year shaping up, you know, really, it's going to be really healthy. So, you know, I would think of Q4 as historically it's been our largest quarter and there's a number of sort of large projects that will, you know, they may sort of struggle the line of Q3 and Q4, but we'll probably live in Q4. I would expect Q4 to be the largest quarter of the year, but, you know, kind of holding firm on the fact that the back half of the year is sort of 60%, front half 40%. I think you start to think about that operating leverage, right? I don't think you're not going to see, you know, much of an increase, if any, you know, from an OPEX standpoint. In Q3 and 4 in comparison to Q2, I think that's kind of a pretty good way to think about our OPEX. There may be some slight fluctuations, but it's not going to be material. So, you know, I think we start to get a bit of operating leverage, you get a bit of growth in revenue. So certainly 60-40 back after the year, and I would expect Q4 to be larger than Q3.

Great. Understood. That's very helpful. Appreciate the color, Justin. And, you know, along the lines of kind of what you spoke to is being very comfortable with, you know, I guess locked in or more recurring revenue. You know, are you able to maybe provide an idea of kind of what within guidance is implied or what is more recurring revenue implied by guidance, like how much is kind of reflected there versus what's more variable?

Yeah, obviously, if I try to base off entity, I'd say from a blended margin standpoint, we're probably around 70% of books locked in revenue. And that 30%, I'd say our pipeline would suggest that we'll sort of far exceed that. But I think that if you looked at this two, three years ago, it would probably be around 30%. So, you know, I think that has been a huge improvement and increase for us, you know, going to having such a large amount of revenue locked in, you know, as we sit here today, kind of, you know, early, mid Q3, knowing, you know, a lot of what our Q4 looks like. Now, there are some bigger programs, some upsides, some pipeline. There's, you know, things that always can come in last minute, but obviously pleasing to know that, you know, if nothing additional or new was to come into the business, that there's a large amount of sort of revenue that already exists that we're, you know, well on the way to kind of hitting that target. And that's, you know, that's a combination of, I think, the incredible work that our agency business does, you know, specifically kind of that retainer agency of record portion of that, in addition to some of these acquisitions, right, with Click. Obviously, StreamHatch has always had sort of really high retention, but obviously also now bringing in TubeBuddy for its first quarter, which also should mention, you know, as you kind of look at the numbers and dissect, you know, big ticks from revenue. OpEx has probably gone up a little bit because you've got the full quarter of TubeBuddy. but relatively this is a margin play. Like our margin expanded, you know, in Q2, and that's, you know, for the SaaS business, that's close to 90% margin, or it's 88% margin. So, yeah, it's a few factors, but certainly really pleasing.

That's great to hear. Thanks again, and I'll pass it on.

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

Thank you. Thanks, everyone, for joining today's call. I'll keep this short and sharp. I'm sure you've heard enough from me today. We appreciate the continued support. Hopefully, our results reflect the incredible progress that we're making. We're ahead of target halfway through the year. Pipeline's increasing. We're building meaningful, long-term strategic relationships with world-class game publishers and clients. and we expect that to continue. So, you know, again, you know, elephant in the room to share price. We're undervalued. We know that. You know, we feel really bullish. And again, you know, we talked about the capital allocation strategy. We'll continue to look to allocate capital to buy back our stock until we break the back there. And, you know, I think that our focus is on long-term shareholder value and, you know, we're going to get there. So thank you again for the support.

And, you know, we're really looking forward to catching up and providing progress on Q3.

And I'm sure you'll see and hear plenty of news from us between now and then. So thanks to everyone.

This brings to a close GameSquare's 2026 second quarter financial results conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.