FRISCO, TX / ACCESSWIRE / May 20, 2024 / GameSquare Holdings, Inc. (NASDAQ:GAME), ("GameSquare", or the "Company"), today announced financial results for the first quarter ended March 31, 2024.

"Our first quarter proforma financial performance reflects the progress we are making integrating the FaZe Clan acquisition, optimizing our business model, investing in our long-term growth opportunities, and improving profitability. While proforma revenue declined slightly primarily due to a $4.2 million year-over-year decline of revenue at FaZe Clan, GameSquare and Engine Gaming's revenue increased by $3.6 million. In addition, the $6.4 million, or 45% year-over-year improvement in proforma adjusted EBITDA, was primarily due to the benefits of cost synergies associated with the April 2023 Engine acquisition and the initial synergies of the March 2024 FaZe Clan acquisition. We believe there are $18 million of cost synergies as a result of the FaZe Clan acquisition and expect the majority of these savings to be realized during the 2024 second and third quarters. As a result, we expect to show meaningful improvements to profitability throughout 2024 as we focus on expanding gross margin and reducing operating expenses, while continuing to drive revenue growth and make strategic investments in our business," said Justin Kenna, CEO of GameSquare.

"The recent announcement of an $11 million investment from Matt Kalish for a 49% interest in FaZe Media, a business with approximately $30 million of revenue in 2023, is a significant moment for GameSquare. Matt joins GameSquare's other strategic investors including Jerry Jones the owner of the Dallas Cowboys and John and Travis Goff who have made significant investments in GameSquare because of the disruptive potential of the next-generation media business we have created. In addition, Matt has a proven track record, incredible networks, and understands the creator economy and media businesses as well as anyone. His investment and leadership as a board member of FaZe Media will add tremendous value as we return FaZe Clan back to its roots by empowering its creators and developing powerful connections with its fans. In fact, when FaZe Clan relaunched the brand on April 27, 2024, it experienced unprecedented engagement across social media platforms and was the #1 trending topic on X in the U.S.," Mr. Kenna continued.

"We are excited by the direction GameSquare is headed and we expect 2024 to be a transformative year for the Company. We believe we are clearly on track to meeting our 2024 financial guidance as we complete our business optimization initiatives, expand revenue and improve profitability going forward. As a result, we expect to see accelerated revenue growth in the second half of the year, with sequential improvements in profitability throughout 2024. I want to thank our team members for all their hard work and continued dedication," concluded Mr. Kenna.

Reported first quarter results for the quarter ended March 31, 2024, compared to March 31, 2023

Revenue of $17.7 million, compared to $2.8 million
Gross profit of $3.4 million, compared to $1.3 million
Net loss of $5.3 million, compared to a net loss of $4.3 million
Adjusted EBITDA loss of $4.1 million, compared to a loss of $1.5 million

GameSquare's GAAP financial statements include 24 days of FaZe Clan's results. In addition, Complexity, which was sold in March 2024 has been treated as a discounted operation and Complexity's results has been reclassed into discontinued operations in the Company's 2024 and 2023 first quarter financial statements.

Proforma* first quarter results for the quarter ended March 31, 2024, compared to March 31, 2023

Revenue of $23.5 million, compared to $24.1 million
Gross profit of $3.7 million, compared to $4.0 million
Adjusted EBITDA loss of $7.9 million, compared to a loss of $14.3 million
Adjusted EBITDA loss was 34% of revenue versus 59% of revenue last year

* Proforma financial results removes Complexity from GameSquare's financial statements, includes a full quarter contribution of FaZe Clan in the 2024 period, and includes a full quarter contribution of Engine and FaZe Clan in the 2023 period.

2024 Annual Guidance

Management expects over $100 million in annual revenue and annual gross margin to range between 22.5% to 27.5% for 2024
2024's annual guidance is based on a proforma basis and includes a full 12 months of contribution from FaZe Clan, which was acquired on March 7, 2024.
$18 million of annualized cost savings associated with the FaZe Clan acquisition are expected, with the majority of these costs anticipated being removed during the second and third quarters of 2024
Management anticipates continual quarterly improvements to profitability throughout 2024 supported by sales growth, gross margin improvement, and the benefit of cost saving initiatives

Conference Call Details

Justin Kenna, CEO, Lou Schwartz, President, and Mike Munoz CFO are scheduled to host a conference call with the investment community. Analysts and interested investors can join the call via the details below:

Date: May 20, 2024
Time: 5:30 pm ET
Webcast: https://services.choruscall.ca/links/gamesquare2024q1.html

Corporate Contact
Lou Schwartz, President
Phone: (216) 464-6400
Email: ir@gamesquare.com

Investor Relations
Andrew Berger
Phone: (216) 464-6400
Email: ir@gamesquare.com

Media Relations
Chelsey Northern / The Untold
Phone: (254) 855-4028
Email: pr@gamesquare.com

About GameSquare Holdings, Inc.

GameSquare's (NASDAQ:GAME) mission is to revolutionize the way brands and game publishers connect with hard-to-reach Gen Z, Gen Alpha, and Millennial audiences. Our next generation media, entertainment, and technology capabilities drive compelling outcomes for creators and maximize our brand partners' return on investment. Through our purpose-built platform, we provide award winning marketing and creative services, offer leading data and analytics solutions, and amplify awareness through FaZe Clan, one of the most prominent and influential gaming organizations in the world. With an audience reach of 1 billion digitally native consumers across our media network and roster of creators, we are reshaping the landscape of digital media and immersive entertainment. GameSquare's largest investors are Dallas Cowboys owner Jerry Jones and the Goff family.

To learn more, visit www.gamesquare.com.

Forward-Looking Information

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the Company's and FaZe Media's future performance, revenue, growth and profitability; and the Company's and FaZe Media's ability to execute their business plans. These forward-looking statements are provided only to provide information currently available to us and are not intended to serve as and must not be relied on by any investor as, a guarantee, assurance or definitive statement of fact or probability. Forward-looking statements are necessarily based upon a number of estimates and assumptions which include, but are not limited to: the Company's and FaZe Media's ability to grow their business and being able to execute on their business plans, the Company being able to complete and successfully integrate acquisitions, the Company being able to recognize and capitalize on opportunities and the Company continuing to attract qualified personnel to supports its development requirements. These assumptions, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: the Company's ability to achieve its objectives, the Company successfully executing its growth strategy, the ability of the Company to obtain future financings or complete offerings on acceptable terms, failure to leverage the Company's portfolio across entertainment and media platforms, dependence on the Company's key personnel and general business, economic, competitive, political and social uncertainties including impact of the COVID-19 pandemic and any variants. These risk factors are not intended to represent a complete list of the factors that could affect the Company which are discussed in the Company's most recent MD&A. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. GameSquare assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

GameSquare Holdings, Inc.
Condensed Consolidated Balance Sheets
(unaudited)

	March 31, 2024			December 31, 2023
Assets
Cash	$	7,173,871		$	2,945,373
Restricted cash		647,610			47,465
Accounts receivable, net		25,844,156			16,459,684
Government remittances		1,347,305			1,665,597
Contingent consideration, current		207,673			207,673
Prepaid expenses and other current assets		2,995,649			916,740
Total current assets		38,216,264			22,242,532
Investment		2,673,472			2,673,472
Contingent consideration, non-current		293,445			293,445
Promissory note receivable		7,125,628			-
Property and equipment, net		795,560			2,464,633
Goodwill		22,789,949			16,303,989
Intangible assets, net		27,898,454			18,574,144
Right-of-use assets		2,071,328			2,159,693
Total assets	$	101,864,100		$	64,711,908
Liabilities and Shareholders' Equity
Accounts payable	$	30,238,124		$	23,493,472
Accrued expenses and other current liabilities		13,561,775			5,289,149
Players liability account		47,545			47,465
Deferred revenue		4,193,032			1,930,028
Current portion of operating lease liability		375,155			367,487
Line of credit		4,232,425			4,518,571
Warrant liability		62,818			102,284
Arbitration reserve		333,499			428,624
Total current liabilities		53,044,373			36,177,080
Convertible debt carried at fair value		8,394,207			8,176,928
Operating lease liability		1,898,247			1,994,961
Total liabilities		63,336,827			46,348,969
Commitments and contingencies (Note 14)		-			-
Preferred stock (no par value, unlimited shares authorized, zero shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)		-			-
Common stock (no par value, unlimited shares authorized, 30,316,256 and 12,989,128 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)		-			-
Additional paid-in capital		116,786,455			91,915,169
Accumulated other comprehensive loss		421,915			(132,081	)
Accumulated deficit		(78,681,097	)		(73,420,149	)
Total shareholders' equity		38,527,273			18,362,939
Total liabilities and shareholders' equity	$	101,864,100		$	64,711,908

GameSquare Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(unaudited)

	Three months ended March 31,
	2024			2023
Revenue	$	17,728,224		$	2,790,061
Cost of revenue		14,335,067			1,511,217
Gross profit		3,393,157			1,278,844
Operating expenses:
General and administrative		4,918,630			2,641,680
Selling and marketing		2,221,653			741,028
Research and development		685,153			-
Depreciation and amortization		755,449			140,480
Restructuring charges		-			283,898
Other operating expenses		1,093,420			484,309
Total operating expenses		9,674,305			4,291,395
Loss from continuing operations		(6,281,148	)		(3,012,551	)
Other income (expense), net:
Interest expense		(435,128	)		(23,097	)
Change in fair value of convertible debt carried at fair value		(106,601	)		-
Change in fair value of warrant liability		37,257			-
Arbitration settlement reserve		95,125			-
Other income (expense), net		(117,270	)		(932	)
Total other income (expense), net		(526,617	)		(24,029	)
Loss from continuing operations before income taxes		(6,807,765	)		(3,036,580	)
Income tax benefit		-			5,027
Net loss from continuing operations		(6,807,765	)		(3,031,553	)
Net income (loss) from discontinued operations		1,546,817			(1,313,881	)
Net loss	$	(5,260,948	)	$	(4,345,434	)

Comprehensive loss, net of tax:
Net loss	$	(5,260,948	)	$	(4,345,434	)
Change in foreign currency translation adjustment		553,996			(6,649	)
Comprehensive loss	$	(4,706,952	)	$	(4,352,083	)

Income (loss) per common share attributable to GameSquare Holdings, Inc. - basic and assuming dilution:
From continuing operations	$	(0.39	)	$	(0.55	)
From discontinued operations		0.09			(0.24	)
Loss per common share attributable to GameSquare Holdings, Inc. - basic and assuming dilution	$	(0.30	)	$	(0.78	)
Weighted average common shares outstanding - basic and diluted		17,368,512			5,557,690

Management's use of Non-GAAP Measures

This release contains certain financial performance measures, including "EBITDA" and "Adjusted EBITDA," that are not recognized under accounting principles generally accepted in the United States of America ("GAAP") and do not have a standardized meaning prescribed by GAAP. As a result, these measures may not be comparable to similar measures presented by other companies. For a reconciliation of these measures to the most directly comparable financial information presented in the Financial Statements in accordance with GAAP, see the section entitled "Reconciliation of Non-GAAP Measures" below.

We believe EBITDA is a useful measure to assess the performance of the Company as it provides more meaningful operating results by excluding the effects of expenses that are not reflective of our underlying business performance and other one-time or non-recurring expenses. We define "EBITDA" as net income (loss) before (i) depreciation and amortization; (ii) income taxes; and (iii) interest expense.

Adjusted EBITDA

We believe Adjusted EBITDA is a useful measure to assess the performance of the Company as it provides more meaningful operating results by excluding the effects of expenses that are not reflective of our underlying business performance and other one-time or non-recurring expenses. We define "Adjusted EBITDA" as EBITDA adjusted to exclude extraordinary items, non-recurring items and other non-cash items, including, but not limited to (i) share based compensation expense, (ii) transaction costs related to merger and acquisition activities, (iii) arbitration settlement reserves and other non-recurring legal settlement expenses, (iv) restructuring costs, primarily comprised of employee severance resulting from integration of acquired businesses, (v) impairment of goodwill and intangible assets, (vi) gains and losses on extinguishment of debt, (vii) change in fair value of assets and liabilities adjusted to fair value on a quarterly basis, and (viii) gains and losses from discontinued operations.

Reconciliation of Non-GAAP Measures

A reconciliation of Adjusted EBITDA to the most directly comparable measure determined under US GAAP is set out below.

	Three months ended March 31,
	2024			2023
Net loss	$	(5,260,948	)	$	(4,345,434	)
Interest expense		435,128			23,097
Income tax benefit		-			(5,027	)
Amortization and depreciation		755,449			140,480
Share-based payments		419,228			565,380
Transaction costs		1,093,420			484,309
Arbitration settlement reserve		(95,125	)		-
Restructuring costs		-			283,898
Change in fair value of warrant liability		(37,257	)		-
Change in fair value of convertible debt carried at fair value		106,601			-
Gain on disposition of subsidiary		(3,009,891	)		-
Loss from discontinued operations		1,463,074			1,313,881
Adjusted EBITDA	$	(4,130,321	)	$	(1,539,416	)

SOURCE: GameSquare Holdings, Inc.

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GameSquare Holdings Reports 2024 First Quarter Results