Publicly-traded esports and gaming company GameSquare Holdings (NASDAQ:GAME, TSXV:GAME) announced that GameSquare Esports has filed its standalone financial results for the first quarter that ended on March 31. These results reflect GameSquare Esports’ results as a stand-alone entity and include costs associated with the merger between the company and Engine Gaming and Media (“Engine Gaming”), which was announced at the end of 2022 and finalized on April 11 (in other words, after the quarter).
For the first quarter, GameSquare Esports as a stand alone entity reported revenue of $5.05M USD, compared to $5.04M in the same period a year ago; a gross margin of 40.2%, compared to 32.6%; a net loss of $4.23M, compared to a net loss of $3.99M; and an adjusted EBITDA loss of $2.26M, compared to a loss of $2.74M.
It is important to note that on April 11, GameSquare Esports and Engine Gaming and Media finalized their merger (Engine Media shareholders approved the merger in March), becoming GameSquare Holdings—meaning that consolidating the company into a single entity has just begun, and is an ongoing process taking place now.
The new consolidated company provided a pro-forma income statement for Q1 2023 and expects to file second quarter 2023 consolidated financial results in August of 2023.
Excluding costs associated with the merger (pro forma), the combined GameSquare Holdings reported revenue of $13.8M, compared to $12.9M in Q2 2022; a gross margin of $4.27M or 30.8% in Q1 23; a net loss of $12.15M in Q1 23, and an adjusted EBITDA loss of $5.05M compared to an adjusted EBITDA loss of $7.33M in the same period a year ago. It should be noted that “pro forma financials” are not calculated using generally accepted accounting principles (GAAP), provide conservative estimates on things such as revenue and gross margins, and typically exclude one-time expenses that would not typically be part of a company’s operations, such as restructuring and other costs associated with a merger.
GameSquare CEO Justin Kenna said in a release announcing the results that, with the merger completed at the end of March, the company is already seeing acceleration in its business, signing “brand deals across numerous verticals, including healthcare, automotive, and CPG, with average expected contract values north of seven figures.” Following the merger, Kenna claims that GameSquare “serves approximately 350 brands, 1,500 creators, and has an aggregate audience reach over 500 million.”
Looking ahead, Kenna said that the company expects “pro-forma annual sales” of the combined company in 2023 will be between $75M – $80M, annual cost savings of $8M, and annual gross margins between 30% – 35%.
GameSquare owns and operates Texas-based esports organization Complexity Gaming, esports focused media company GCN, gaming lifestyle marketing company Cut+Sew (Zoned), UK-based talent agency Code Red, creative studio Fourth Frame Studios, merchandise company Mission Supply, programmatic advertising firm Frankly Media, live streaming analytics firm Stream Hatchet, and social media marketing platform Sideqik.
