GameSquare Holdings, Inc. (GAME) December 2025 Conference Transcript

Good day and welcome to the iAccess Alpha Virtual Best Ideas Winter Investment Conference 2025. The next presenting company is GameSquare Holdings Incorporated. If you'd like to ask a question during this webcast, you may do so at any point during the presentation by clicking the Ask Question button on the left side of your screen. Type your question into the box and hit Send to submit. I'd now like to turn the floor over to today's host, Justin Kenner, CEO of GameSquare Holdings Incorporated. Justin, the floor is yours.

Thank you so much, and thank you to everybody joining us today. I will try to be pretty efficient through the deck, give everybody sort of an overview of the company, our model, why it's unique, and really, I think, how well positioned we are for growth and scale from here. and, you know, leave a bit of time for Q&A here at the end. So really, you know, effectively GameSquare, the purpose of GameSquare is really around connecting game publishers and brands with these huge and growing audiences being these gaming and esports communities. You know, we really are built for the next generation. I'll just jump through the forward-looking statements here. This past quarter for us, you know, we believe marks a major turning point. We've doubled down on the creator economy. We've brought brands deeper into our ecosystem and we've built real momentum into our sales pipeline. And we were kind of run through the numbers and how well positioned we are in the back half of the year here and running into 2026 hitting profitability. But, you know, together with this and our digital asset treasury strategy, we've been able to really solidify and clean up our balance sheet. We've become debt-free and unlike other DATs, which we'll jump into and explore, we're really focused on yield generation, which we've proven out here over the past three months, and we're actually driving real revenue for our core operating business. So we're very unique from this sort of traditional kind of DAT, and we believe that in the long term, this will prove out by generating cash within our operating business as well as our digital asset treasury. So just quickly for those of you that may be a little newer to this space, I mean, the video game market has a TAM north of $200 billion. You can see there $230 billion plus. and what we find really interesting is that around 60 to 65 percent of that revenue is actually directly through influences and or creators and this is a really big area of focus for us and you'll sort of see over the back half of the year as we've really cleaned up our balance sheet and our core strategy that this is a major sort of area that we've really doubled down on those we sort of mentioned games because really built for the next generation we're doubling down on the creator economy which is this really the largest part of that tam and and continuing to grow we're embedding brands deeper which we'll touch on and you'll see some of the brands that we're working with in a really really material way we've accelerated our pipeline you know we've got you know q3 was effectively break even q4 will be profitability for the first time for the company which we're you know extremely proud of um and our on-chain strategy is live and differentiated And we'll touch on that. So what is the Gamesco business model and how does it differ to others in the space? I really touched on at the start the whole purpose around connecting game publishers and brands with these huge audiences. You've just seen that TAM. It's really, really large. But what people don't talk about enough is these audiences are really difficult to reach, right? They're very fragmented. They consume media in different ways through multiple platforms. these communities vary and differ even within your sort of endemic gaming audiences call of duty communities are not necessarily fortnight communities and the list goes on so you know these audiences are hard to reach and what we've built is an end-to-end model that really handholds and helps game publishers and brands reach these digitally native audiences at scale and so you can see here from the games ecosystem we have a slide that has a bit more detail of each of these four segments it really certainly from a an end-to-end standpoint and within public markets we really don't have a competitor from an end-to-end standpoint but certainly within these four segments we do have competitors you know we really believe that this end-to-end model is working you know game square just a quick sort of little bit of history here you know it was an rto uh onto the canadian stock exchange in october of 2020 so you know really we're we've got five years in here um and and you know i think there's been a lot of cleanup and a lot of work done to really get this ecosystem a model to the point where you know we're really well positioned for growth and scale and that's you know really where we sit today um this end-to-end model is really resonating with game publishers you know we're working in really material ways with ea with epic games with roblox um and really large-scale brands and we'll touch on some of those but this model is really starting to work and that's kicked off by our data and analytics stream stream hatchet um you know stream hatchet i think the easiest way for those that are newer to the space to think about stream hatchet is what nielsen is to broadcast television is really what stream hatchet is to the gaming and streaming world you know we have nine of the top 10 global game publishers as clients we really are the de facto market leader when it comes to data and analytics in the space we are the official data provider for the esports world cup which is the largest esports event in the world with 60 million dollars of prize money um you know over in the middle east uh each each summer it's 150 um you know of the top global esports teams competing over there this gives us again a really big competitive advantage if you think back to how large that TAM is but the challenge of you know audiences are fragmented they're hard to reach having that data in-house gives us an enormous competitive advantage specifically into you know streams two three and four we touched on you know doubling down on the creator economy. In Q3, we closed the acquisition of Click, which is our talent business. We have 75 to 80 talent that we manage actively. This is a cash flow positive business that we believe it's headquartered in Australia. But really, 70 to 80% of revenue is from the US and really with our access to some of the largest talent in the world um you know this is something that you know we're really starting to pour gasoline on we've signed you know five to six new talent in the us since acquiring clicked we have a number in the in the pipe and this is a part of the business that we're really growing and scaling and again if you think about you know these different streams having talent in-house gives us an enormous competitive advantage um it's a great sales pipeline from brands as we're integrating and activating large campaigns for publishers and brands at scale you know being able to integrate our own talent into these campaigns again is just keeping margin in-house keeping revenue in-house um you know again as a standalone this is a profitable business we are in the process of launching uh create a deployment business under click that's something to look out for uh in 2026 you know we believe that this will be a 15 to 20 million dollar revenue business for us in 2026 uh and really um doubling down again on that creator economy which we mentioned is just such a huge area of growth in this space um our third piece here and the largest and really you know from a scalability and a margin perspective a really big contributor in helping us get the profitability and scale profitability from here and that's our agency services business this is a full service agency broken into two parts zoned and gsx and really the purpose of breaking this into two parts is that zoned is more of your creative and strategy agency think about that as really agency and record and a lot of retainer relationships which is really healthy really nice business certainly in public markets. But, you know, really breaking this into the two brands being Zoned and GSX gives us the ability to work with brands across segments, i.e., you know, we are the agency of record at Zoned for Jack in the Box, but, you know, having GSX in-house gives us the ability to work with KFC, McDonald's, and others. Firstly on Zoned, our creative strategy agency, I mentioned, you know, sort of Jack in the Box We're the agency of record for the Dallas Cowboys. We're the agency of record for Derrymax. We work really closely with Converse, PopGolf. We are the extension in many ways of the creative and strategy team at Epic Games, which has become an extremely lucrative client for us, helping integrate a number of brands into Fortnite and into UESN. Again, for those of you that aren't aware of Fortnite and what Epic Games has done with that game and platform. It's incredibly impressive in terms of taking the most popular game in the world and transforming it into a platform and giving brands and creators the ability to create their own maps within the game and drive audience and actually monetize by driving audience to their own games. We've been able to take advantage of that within Zoned, our game studio, by creating branded maps and launching different programs and product in-game for Samsung, MasterCard, McDonald's, Prime Energy, and most recently really successful in integrating Topgolf into Fortnite, as well as a really lucrative and longstanding relationship with Paramount. We were able to help integrate Teenage Mutant Ninja Turtles into Fortnite. Right. And not only are we creating these maps and monetizing, driving audiences maps, but we're also being paid from a marketing and media perspective. And this, again, is a great example of the GameSquare ecosystem really working. Right. And that is not only are we sort of doing the creative strategy work, but we're doing the marketing media creator influencer deployment around that. You know, we've done such a great job with Paramount that we actually now co-own the IP to SpongeBob SquarePants. With Paramount, we produced our first game earlier in the summer, which we're still collecting sort of monthly royalty from. That was a great success. We've got another five games in the works over the next 18 months. So that's really exciting for us there. GSX is really more focused on the live event space. We've got our live event experiential team that also works really closely with Epic Games and built into our content studio, merchant consumer product business, and media offering. So really, this team works as one large team. It's a full-service agency business. This is one of the largest areas of growth for us as we continue to sign and expand with these large retainer relationships, you know as well as bringing in new business where we have that full service offering um and then you know sort of fourth and finally is our own and operated ip um you know i think to put simply uh instead of just accessing audience for brand and publishers and monetizing you know we also want to create and build our own assets um that we can monetize and access our own audience over time. Some really good examples here, we own Faze Esports, which is one of the largest esports brands in the world by audience. That gives us a lot of access to audience in the space, these endemic audiences and brands that are interested in the space. Earlier this year, we announced the largest ever jersey sponsorship with Rollbit, which is a crypto sponsor of ours, which you know again fits in really well to our dat which i'll touch on um we've closed you know sponsorship deals with uh azuki and rect and you know phase esports is one of the very few profitable esports organizations um we've just moved them in to the headquarters where i sit today uh in frisco texas headquartered at the dallas cowboys you know we're our largest sort of shareholder jerry jones uh obviously owns the the largest the most valuable sporting organization in the world. So bringing Faze Esports into the headquarters here and really professionalizing the esports space with boot camps and content, there's a lot of opportunity for us to scale and grow Faze Esports. We also have SpongeBob that I touched on. We have a piece of IP with the NFL called NFL for the Fans where we activated the Super Bowl and really helped the NFL reach these youth, global, digitally native audiences at scale. We also just recently launched our collegiate esports platform in conjunction with Barnes & Noble, and sort of the list goes on there. So really, this is the GameSquare ecosystem from an end standpoint. Again, you know, we certainly have clients that will engage us just for data or just for media or just for campaigns. But really, we're seeing a lot more of these opportunities with the 200-plus brands that we touch and work with and the ability to upsell and cross-sell and really flex our muscle with this ecosystem really working at scale. You'll be able to see here, and you can dive in in your own time. I want to try to move through this quickly so we can leave time for questions. some more information around stream hatchet data and technology business that you'll be able to look into you know click our talent management business with the recent acquisition and we'll kind of you know give you a bit bit of an overview and a bit more of a deep dive on sort of the numbers there that you can review here you'll see our creative services there's the full service agency business as i touched on you have content for the internet generation in-game activations, IRL live experiences, consumer product, influencer procurement, and media placement. So, again, it's that complete full-service agency that we're really getting to scale. You'll see some detail there around face esports. So jumping into this position for the future, you're now seeing our model, the TAN, the sort of macro environment that we exist within. This, I think, is really key. Number one, we're accelerating our timing to profitability. Our operating business is growing. We're improving margins, and we're bolstered by the yield generation from our debt. We've acquired our first profitable business in Click, and what I would say is we certainly see an opportunity to get to scale here. We'll kind of talk through the numbers here and moving forward so you get an idea. We'll continue to be opportunistic within the M&A space, but certainly I think what has changed in terms of our M&A strategy is we've done a lot of work to get debt-free. We've done a lot of work to get to profitability. We're really well positioned to scale, and we're only interested in looking at creative deals from here on end. Creative talent management is a natural fit for us. We touched on really doubling down on the creator economies. We'll give you a bit of a look at Qlik and what that means for the business. We've divested some pieces over the year. You'll see improvement in that bottom line number, improvement in margin. We divested our programmatic ad business. The reality is we're a next-generation media company. We are media from platform, in-game activations, and really growing for the next generation of fans. And, you know, the programmatic business, while it was nice top line revenue, was a single digit margin and was burning money. We are not interested in burning cash. You know, we think that we have the right model. We're really well positioned for scale from here. And as I mentioned, Q4 is going to be our first profitable quarter, which we're very excited about. And then sort of finally within here is our differentiated digital asset strategy. Again, we'll touch on this. you know we have a DAT that we believe is best in class and by that is you know number one we have an exclusive relationship with Dialectic which is generating you know higher than market yields for us we are sort of generating around 400k of 100% margin free cash flow every month at the moment through our ETH yielding system. And since really kind of investing in this space, we've really opened up our core services to the Web3 and crypto space. And if you think about it, it really does make a lot of sense, right? You have a lot of these blockchain game developers, you know, neobanks looking for first-time depositors, you know, wallets, NFT brands, looking for live events at Art Basel. And there's a lot of opportunity, and the reality is a lot of these Web3 crypto-native companies are really looking to access Web2 audiences at scale, and that's where we come in. So through our agency services, our live event business, our media, our data and technology, we've now opened up a whole new sort of revenue vertical off the back of our data. Jumping in, again, you know, coming up on sort of 10 minutes left, I'll jump through these pretty quickly. At any Q&A I can't get to, you know, I'll reach out to each of those sort of questions personally and make sure they all get answered. Our new acquisitions clinic, again, we've touched on this, makes a whole lot of sense, right? We've worked with influencers and creators within the GameSquare ecosystem, you know, since its existence and now to have a full service talent management business in-house, again, just gives us a huge competitive advantage, right? We are keeping those dollars in-house. It's a really healthy business that we believe we can really scale in a meaningful way. You can see there annualized sort of back half of 25 estimates around $14.5 million of revenue, one and a bit million of EBITDA, and then you start to look at, again, the scale that we can bring with the influences we work with in the U.S., the talent and the brands. And so we're really bullish about, you know, what that's going to look like in 2026. So jumping in here, you know, pro forma guidance back after the year. I mean, you know, what are we sort of trading at right now? We are, you know, a market cap of around, you know, 52 million today. And I think, again, you know, Q3 was a major turning point for us If you look at from Q2 to Q3 in terms of the complete balance sheet transformation that took place, our ability to pay off all of our debt, you'll see in a moment the improvement we made from a bottom-line perspective around EBITDA. It was north of $3 million bottom-line improvement and how really, truly undervalued we are. And we believe that with our Q4 numbers and 2026 profitability, our ability to kind of scale from here, there's a great opportunity for investors to get in here where we are trading really at our ETH holdings. And so if you have a look at our pro-former guidance for the back half of the year, second half revenue around $37 million, around $3 million at EBITDA. Again, huge improvement year on year and showing really Q on Q improvement at the moment. I think a great way to kind of think about 26, we haven't given guidance to market yet, we will, but a great way to kind of think about that sort of 26 number would be annualising these numbers with sort of around 25% organic growth is really where we expect to be in 2026. So really healthy and starting to get to scale. This next slide here I think is a great one, just around sort of showing that improvement. So Q3, and again, I'd touch on Q4 being the largest quarter for us from a seasonality perspective. From our modelling for the back half of the year, we are very much on track to hit our numbers. You can see their gross profit of $6.7 million, really healthy margin, adjusted EBITDA at $200K loss from north of $3 million the quarter before. So you can really see that sequential improvement and net income from continuing opposite around $6 million. So, you know, really proud of those Q3 numbers and how well positioned for growth we are. I'm not usually a huge fan of sort of logo slides, but I love this one because we work with these brands in really meaningful ways. You know, these are wins in the past 90 days of sort of deals of over 200K. So again, some pretty recognizable logos on this one with the Dallas Cowboys star, Epic Games, Mastercard, Paramount, Lego, Fortnite, Ubisoft. We're really proud of this slide and it's going to continue to grow.

So just quickly here, I've touched on this a little bit.

Again, our treasury strategy is very different to other DAX in the space. One is this high-yield strategy. The reality is for us, this is a cash management strategy. We're generating higher than market yields. We're generating higher than cash yields. I kind of mentioned before that around 400K of free cash flow every month. So this is something that is really helping us push margin, and it's generating real cash for our business that we'll be able to buy back shares with, and we're going to continue to, especially down here at these prices, and really investing growth in our business from the cash flow that our ETH is spitting off. um yeah the nfts that we own we actually interestingly enough have a couple of offers on those nfts um you know we're generating yield off of those as well and it really opened up you know a lot of revenue for us into our web3 operating plan having close close to eight million dollars in new revenue deals from web3 sort of projects but what i'd say in the nft piece is you know this is not um you know a major part of the strategy really you know we think about as less than 10% of our overall strategy and certainly something, you know, that we'll continue to look at and be opportunistic with. But we do have some offers on those NFTs currently that we are assessing. You know, and then just having a very quick look, this is the DAT, you know, at the end of Q3. So obviously, this has changed a little bit in terms of the numbers, but it gives you a good idea of the amount of ETH that we hold and really just in comparison to market cap, how truly undervalued we are, which again, you can see here in slide 18, which is as of October 20, but we can get shareholders and those interested in sort of a really up-to-date view here. But again, we are effectively trading at ETH when you think about kind of 2026, close to a $100 million revenue business, it's profitable, it's debt-free. So we think that there's a real opportunity currently for investors to get in at these sort of cheaper prices. If you have a look here, this is our sort of experienced management team and board. We really do have a blue-chip board for a company of our size. You'll see there Tom Walker, who's the CFO of the Dallas Cowboys and the Jones Family Trust. He's the head of our audit committee of Travis Goff, who's the president of Goff Capital. Jeremy Gorman, who runs commercial at Fanatics and all of their ad strategy. She was formerly the chief ad officer at Netflix and the chief business officer at Snapchat. Stu Porter, CEO and founder of Denim Capital. And you can see their key investors with Jerry Jones, the owner of the Dallas Cowboys, and John Goff, you know, CEO of Crescent Real Estate and founder of Golf Capital. So, you know, really experienced management team, but, you know, really a blue chip board for a company of our size. You know, this deck is available, you know, for those wanting to see sort of some of the case studies that we work on. You know, there's a number of case studies here at the back where you can start to see that Gamesquare ecosystem and model, you know, really working at scale. I'm going to jump over to the Q&A tab. I know we've only got four minutes left, so apologies. But as I said, if you want to type in any questions in there, I can also certainly make sure that I get back to each and every one of you. But thanks, everybody, for the time.

And I'll jump over to Q&A quickly now. Okay, so just having a look through some of these.

When will GamesClear purchase more Ethereum? Look, great question. I think that at the moment, we're not purchasing Ethereum because it actually makes more sense to buy back our stock, given where we trade and how sort of undervalued we are. We have a really healthy holding of ETH. We have a very clear strategy on price on the way up as to when we would sort of divest and differentiate strategy there. But at the moment, we're not purchasing more. um you know we're also certainly not selling it um you know our cost base is kind of in the low to mid threes um so we're really comfortable with where all that sits we're not in a position where we need to sell it um but certainly you know right now it makes more sense for us uh to use that cash to buy back our stock um which leads into another question when we'll see larger buy back of game stock um you know i think you'll see uh dennis we've made um you know two different tranches of of buyback so far uh we will continue to be buying back the stock so you rest assured there uh i'm i'm not comfortable by by by any extent in terms of where we trade um so you know we will continue to to buy back stock and be aggressive there we have approval around five million from our board on buybacks um you know i think in 2026 you'll see that increase uh and we'll continue to be aggressive and make sure that you know we get this back trading where it should be um another question can you quantify expected q3 and q4 sequential revenue growth um yeah so i i did in the in the presentation um you know but you can go back and have a look there on the guidance in the back half of the year and hopefully that gives people a good idea of 2026 in terms of sort of revenue growth and EBITDA and what we're looking at in terms of where we think we can hit for 2026. How should investors think about gross margin cadence given the shift towards higher margin mix? Yeah, it's a great question. I think that Q3 was a really high margin quarter the reality is um there will be um some quarters where margin does fluctuate a little bit and that is due to the different sort of natures of the underlying businesses right within if you think about those those four streams and the revenue mix um you know something like phase esports which is a profitable business but quarter to quarter it can fluctuate depending on your prize money and the tournaments and performance uh you know digital sticker revenue and things like that. But as a rough guide, our margins overall since the divestment of our programmatic business has gone from margins in the high teens and to 20% to really now thinking about 40% to 45% margin. So I think a safe kind of number is really around that 40% margin. And I think you'll see margin and revenue really grow in the back half of the year. We're up for time there. I will make sure that I reach out to each of you that's asked the question. But, yeah, thank you so much for the time. Really appreciate it, and I'll make sure that I follow up with all of you.

Thank you very much. That concludes GameSquare Holdings Incorporated presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.