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GameSquare Holdings, Inc. (GAME)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $11.3M, down sequentially from Q2 ($15.9M) and below Wall Street consensus ($18.8M), while gross margin expanded sharply to 49.4%; GAAP EPS was -$0.01 and EPS from continuing operations was $0.07. Management reported net income from continuing operations of $5.9M, largely aided by $8.1M in other income tied to digital asset gains . Revenue and EPS outcomes were below consensus for Q3 2025 (Revenue: $18.83M*, EPS: $0.00*) .*
  • Strategic actions (wind-down of Frankly, consolidation into Stream Hatchet, acquisition of Click) improved profitability and mix; adjusted EBITDA loss narrowed to $0.6M from $0.9M YoY and $3.5M in Q2 .
  • Balance sheet strengthened: $81.5M in DAT assets and cash, no debt, shareholders’ equity of $78.7M; company launched buybacks, repurchasing 833,124 shares at ~$0.72 using DAT yield proceeds .
  • Outlook maintained: second-half pro forma guidance of $36.8M revenue and $2.9M adjusted EBITDA; management signaled >20% organic revenue growth and high single-digit to low double-digit adjusted EBITDA margin targets for FY 2026 .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded to 49.4% (vs. 45.3% YoY and 15.3% in Q2) driven by exiting low-margin Frankly and contribution from DAT yield; CEO: “GameSquare has never been in a stronger strategic, operational, or financial position” .
  • Net income from continuing operations reached $5.9M vs. $(3.9)M YoY, supported by $8.1M in other income; CFO highlighted rapid improvement toward breakeven on a pro forma basis with Click included .
  • Platform build-out and commercial momentum: Stream Hatchet EWC partnership and Ubisoft services; Rollbit sponsorship expansion to $3.25M annually; Barnes & Noble College partnership; creator-commerce activation (Hungryboy) expanding into retail .

What Went Wrong

  • Top-line shortfall: Q3 revenue of $11.3M missed consensus $18.8M* and fell sequentially vs. Q2 ($15.9M), reflecting Frankly wind-down and timing of deals .*
  • EBITDA and EPS were below consensus for Q3 (Adj. EBITDA actual -$3.63M* vs. -$1.46M*; EPS -$0.01 vs. $0.00*)—despite non-GAAP improvements, operating scale is still emerging .*
  • Macro/tariff uncertainty continued to slow several China-headquartered gaming deals; management said activity improved broadly but those specific deals remain delayed .

Financial Results

Consolidated P&L trend (YoY and sequential)

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$9.307 $15.853 $11.315
Gross Profit ($USD Millions)$4.215 $2.426 $5.593
Gross Margin %45.3% 15.3% 49.4%
Adjusted EBITDA ($USD Millions)$(0.888) $(3.496) $(0.604)
Adjusted EBITDA Margin %9.5% 22.1% 5.3%
Net Income from Continuing Ops ($USD Millions)$(3.936) $(6.039) $5.947
Diluted EPS - Continuing Ops ($)$(0.13) $(0.15) $0.07
Diluted EPS - Total ($)$(0.18) $(0.08) $(0.01)

Notes:

  • Q3’s “Other income (expense), net” was $8.146M, reflecting crypto-related gains embedded in GAAP results .

Segment Breakdown (Q3 2025)

SegmentRevenue ($USD Millions)
Owned-and-Operated IP$3.7
Agency$5.4
SaaS & Managed Services$1.7
DAT Yield$0.6
Total$11.4 (management rounding)

KPIs and Balance Sheet

KPIQ3 2025
DAT + Cash ($USD Millions)$81.5
ETH Holdings (Units)15,618
Unrealized ETH Gain in Q3 ($USD Millions)$9.3
NFT Holdings (CryptoPunks)8, valued at $6.9M
Altcoin Assets ($USD Millions)$3.8
Onchain Yield (last two months of Q3) ($USD Millions)$0.6
Shareholders’ Equity ($USD Millions)$78.7
Debt OutstandingNone
Accounts Payable ($USD Millions)$18.0 at 9/30/25 (vs. $27.3 at 12/31/24)
Stock Repurchase833,124 shares at ~$0.72

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)2H 2025 (Pro forma)$36.8 $36.8 Maintained
Adjusted EBITDA ($USD Millions)2H 2025 (Pro forma)$2.9 $2.9 Maintained
Organic Revenue GrowthFY 2026—>20% New disclosure
Adjusted EBITDA Margin TargetFY 2026—High single-digit to low double-digit New disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Web3/DAT strategyQ2: DAT launched Aug 1 targeting 8–14% yields; $19.3M unrealized ETH gains; share repurchase to be funded by DAT yield $0.6M yield in two months; 15,618 ETH; $9.3M unrealized gain; continued buybacks from yield Scaling, accretive to margins
Gross margin trajectoryQ1: Margin improvement expected with divestitures and mix; target ~20–25% full-year Margin reached 49.4% with Frankly wind-down and DAT contribution Up strongly; normalization expected ~40%
Tariffs/macroQ2: Chinese-headquartered deals delayed on tariff uncertainty Activity broadly improved; delayed China deals remain ongoing, not closed Mixed; pipeline strong
Agency/Managed servicesQ1: Capcom/Paramount/Jack in the Box momentum; collegiate esports initiative New wins (Rollbit expansion, Barnes & Noble College), creator-commerce retail launch (Hungryboy); Click integration Strengthening
Share repurchase/capital allocationQ2: $5M buyback authorized; to be funded by DAT yield First tranche completed; ~$4.4M authorization remaining; plan to be aggressive at current prices Active
Segment reportingQ2: Segments to be Own-IP, Agency, SaaS & Services, Yield; 10-Q to follow Q3 mix disclosed: Agency $5.4M; Own-IP $3.7M; SaaS $1.7M; Yield $0.6M Greater transparency

Management Commentary

  • “GameSquare has never been in a stronger strategic, operational, or financial position…we reported $5.9 million in net income from continuing operations in the third quarter of 2025.” — CEO Justin Kenna .
  • “Reported gross margin was materially higher than the 15.3% we reported for the 2025 second quarter, which included Frankly.” — CFO Mike Munoz .
  • “I wouldn’t expect 50% [gross margin] to continue, but…it’s the new norm…think about it as 40%.” — CEO Justin Kenna .
  • “Click’s margins generally fall around the 35% range…DAT yield has a 100% margin.” — CFO Mike Munoz .
  • “We will be aggressively pursuing that share buyback…we think it’s a great use of yield funds.” — CEO Justin Kenna .

Q&A Highlights

  • Buyback cadence: Management intends to deploy DAT yield proceeds into share repurchases aggressively at current valuations; ~$4.4M remaining authorization .
  • Macro/tariffs: Overall activity and RFP flow have improved, but China-headquartered gaming deals remain delayed; largest quarter expected in Q4 due to seasonality .
  • 2H pro forma bridge: Subtract Q3 pro forma from 2H guide implies ~$20–21M Q4 revenue; EBITDA trajectory improving toward profitability in Q4 .
  • Crypto strategy risk management: Dialectic’s risk controls; focus on yield vs. “stacking” ETH; opportunistic de-risking without need to liquidate assets in down markets .
  • Margin sustainability: Normalized blended margins expected ~35–45%, mix-dependent (creative deployment lower margin; agency higher; DAT 100%) .

Estimates Context

Results vs Wall Street consensus (S&P Global):

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD Millions)$18.02*$21.66*$18.83*
Revenue Actual ($USD Millions)$14.73*$15.85 $11.32
Primary EPS Consensus Mean ($)$(0.287)*$(0.150)*$0.000*
Primary EPS Actual ($)$(0.1108)*$(0.174)*$(0.00806)*
EBITDA Consensus Mean ($USD Millions)$(3.04)*$(1.62)*$(1.46)*
EBITDA Actual ($USD Millions)$(2.59)*$(3.70)*$(3.63)*
  • Q3: Revenue and EPS both missed consensus; EBITDA missed. Q2: Revenue/EPS/EBITDA missed. Q1: EPS beat; revenue missed.*
  • Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Mix shift and DAT yield drove a step-change in margins; normalization around ~40% blended margin suggests improved earnings quality if agency/SaaS growth persists and DAT continues contributing .
  • Despite pro forma near-breakeven, reported Q3 missed Street on revenue/EPS; watch Q4 execution given implied ~$20–21M revenue needed to meet 2H guide and convert pro forma EBITDA positive .
  • Crypto treasury is a double-edged catalyst: attractive yield and equity buybacks vs. potential valuation volatility; management emphasizes risk controls and non-reliance on ETH price appreciation .
  • Commercial momentum and creator-led commerce (e.g., Hungryboy at H‑E‑B), Rollbit expansion, and campus reach via Barnes & Noble College broaden revenue drivers beyond esports sponsorships .
  • Structural cleanup (Frankly exit, Stream Hatchet consolidation) should support sustained margin elevation and lower OpEx; watch for 10‑Q segment disclosures and further cost synergies from Click .
  • Buyback program funded by DAT yield is an incremental support to per-share value; continued deployment depends on ongoing on-chain yield generation .
  • 2026 targets (>20% organic growth; high single-digit to low double-digit adjusted EBITDA margin) set the bar for sustained operating leverage; track new wins (MENA/Asia) and creative deployment scaling .

Appendix: Additional Q3 Press Releases (Context)

  • Rollbit expands FaZe Clan sponsorship to $3.25M annually (third expansion), aligned with Web3 momentum .
  • Barnes & Noble College partnership to deliver collegiate gaming across 1,100+ campus bookstores .
  • Click Management acquisition (~$8.5M + earnout) with expected 2H pro forma contributions ($14.5M revenue; ~$1.2M EBITDA) and operational optimizations (Frankly wind-down; Sideqik consolidated into Stream Hatchet) .
  • Initial onchain yield for August: 101 ETH, ~7.84% annualized; program scaling across ETH and NFT yielding .