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GameSquare Holdings, Inc. (GAME)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 revenue was $26.41M, up 129.6% year-over-year, with gross profit of $5.24M and gross margin ~19.9%; EPS improved to $(0.18) from $(0.42) a year ago, while net loss attributable to GameSquare narrowed to $(5.48)M .
  • Management raised 2024 proforma revenue guidance to $105–$110M (from “over $100M”), and reiterated sequential profitability improvements supported by mix and cost actions; Q3 adjusted EBITDA loss improved to roughly $(2.17)M versus $(3.95)M in Q3 2023 and $(5.41)M in Q2 2024 .
  • Segment mix: Teams $9.41M, SaaS + Advertising $13.69M, Agency $3.31M; U.S. drove $25.28M of $26.41M total revenue .
  • Additional catalysts included FaZe Media’s revived multi-year G FUEL sponsorship (including an equity component) and a month-long subathon in September, signaling brand and creator momentum .
  • Note: S&P Global Wall Street consensus data was unavailable; estimate comparisons are therefore not provided (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

  • Raised FY24 proforma revenue guidance to $105–$110M, citing strong Q3 and YTD momentum and improved profitability trajectory (“transformative year… build a profitable organization”) .
  • Sequential margin and profitability improvement: Q3 gross margin increased vs Q2 (Q3 gross profit $5.24M on $26.41M revenue vs Q2 gross profit $4.23M on $28.59M revenue), and adjusted EBITDA loss improved to $(2.17)M (from $(5.41)M in Q2) .
  • Commercial traction: increased customers on retainer, +46% average contract value, more than tripled UEFN world-building campaigns, and record monthly contract wins in August per CEO commentary .

What Went Wrong

  • Sequential revenue declined to $26.41M from $28.59M in Q2, reflecting mix and startup costs in new programs despite YoY strength .
  • Continuing losses and liquidity constraints: Q3 net loss attributable was $(5.48)M; working capital deficiency of $16.6M and going concern uncertainty noted in Q3 10-Q .
  • Nasdaq minimum bid price notice received (30 consecutive business days < $1.00), with a 180-day compliance window to April 14, 2025, increasing listing risk if not remedied .

Financial Results

MetricQ3 2023Q2 2024Q3 2024
Revenue ($USD Millions)$11.50 $28.59 $26.41
Gross Profit ($USD Millions)$2.51 $4.23 $5.24
Gross Margin %21.8% (calc) 14.8% 19.9% (calc)
Adjusted EBITDA ($USD Millions)$(3.95) $(5.41) $(2.17)
Net Loss Attributable ($USD Millions)$(5.05) $(11.61) $(5.48)
EPS (Loss per share, basic & diluted)$(0.42) $(0.38) $(0.18)

Notes: Gross margin % for Q3 2023 and Q3 2024 are calculated from gross profit and revenue in the cited filings.

Segment breakdown (GAAP segments):

Segment Revenue ($USD Millions)Q3 2023Q3 2024
Teams$0.00 $9.41
Agency$2.83 $3.31
SaaS + Advertising$8.67 $13.69
Total$11.50 $26.41

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (Proforma)FY 2024“Over $100M” $105–$110M Raised
Gross Margin %FY 202422.5%–27.5% Not explicitly updated (Q3 preannounce cited mix-driven improvement) Maintained (implied)
Adjusted EBITDA / ProfitabilityQ4 2024Target positive adjusted EBITDA in Q4 (path to profitability) “Approaches breakeven” with sequential improvements Maintained direction
Cost Savings (FaZe)CY 2024 (12 months)~$18M annualized removal $18+M cost savings expected for 12 months ended Dec 31, 2024 Maintained / reaffirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2024)Trend
UEFN/Technology initiativesQ2: expanding demand for UEFN creative services ; Q1: platform mix established (Stream Hatchet, Sideqik, Frankly) More than tripled UEFN world-building campaigns deployed; higher mix benefits gross margin Accelerating execution
Programmatic advertisingQ2: anticipating $55–$60M higher-margin H2 revenue, programmatic growth ; Q1: SaaS/ad rev ramp begins Q3 SaaS + Ads reached $13.69M; YoY growth primary driver Strengthening
FaZe integration / creator momentumQ2: reboot/new roster, 1.2B quarterly views (+28% 3mo) G FUEL multi-year sponsorship incl. equity; September subathon; brand revival focus Building brand and monetization
Regulatory / ListingNot noted in Q2/Q1Nasdaq minimum bid price notice; 180-day remediation period New risk emerged
GeographyQ1/Q2: U.S.-centric revenue base Q3 U.S. $25.28M of $26.41M total Consistent concentration

Management Commentary

  • “2024 is shaping up to be a transformative year for GameSquare, as we benefit from the strategies underway to drive organic sales growth, complete the integration of our recent acquisitions, and build a profitable organization.” – CEO Justin Kenna .
  • “With the strong performance during the third quarter and year-to-date, we are increasing our annual revenue guidance and now expect annual proforma revenue of $105 million to $110 million for 2024.” – CEO Justin Kenna .
  • “Over the past nine months, we have increased the number of customers on retainer, grown our average contract value by 46%, more than tripled the number of UEFN world building campaigns deployed, and achieved record monthly contract wins in August 2024.” – CEO Justin Kenna .
  • “Reuniting with G FUEL is a full circle moment… it’s a revival of the legendary history from the OG FaZe days.” – FaZe Banks, CEO of FaZe Media .

Q&A Highlights

  • The earnings call was held November 14, 2024; transcript and webcast were posted on the company’s IR site .
  • Discussion focused on trajectory to breakeven adjusted EBITDA in Q4, revenue mix (Teams vs SaaS/Advertising), and integration of FaZe assets under FaZe Media; management emphasized sequential profitability improvements and cost actions .
  • Analysts probed revenue quality and sustainability (e.g., programmatic ad growth and retainer stability) and potential remedies for Nasdaq bid-price compliance, per call context and disclosures .

Estimates Context

  • S&P Global consensus for Q3 2024 was unavailable at the time of this report; therefore, comparisons to Wall Street estimates are not provided (S&P Global data unavailable).
  • Management’s preannouncement indicated results in line with Q3 preannounce; final reported revenue of $26.41M and EPS $(0.18) were consistent with the company’s narrative of sequential profitability improvement .

Key Takeaways for Investors

  • Trajectory to profitability: Adjusted EBITDA loss narrowed meaningfully (Q3 $(2.17)M vs Q2 $(5.41)M); management continues to guide to breakeven/positive adjusted EBITDA in Q4, supported by mix and cost actions .
  • Revenue quality: YoY growth is robust (Q3 +129.6%), led by SaaS + Advertising and Teams; watch for sequential stabilization and conversion of pipeline/retainer growth into sustained margins .
  • Guidance credibility: Raised FY24 proforma revenue to $105–$110M; near-term execution on cost savings ($18M+) and segment mix should be the key driver of margin outcomes .
  • Brand monetization: G FUEL multi-year deal and subathon activity support FaZe brand revival and creator-led monetization; monitor incremental revenue contribution and equity partnership economics .
  • Balance sheet and liquidity: Working capital deficiency and going concern language require continued financing discipline; subsequent note financings and standstill arrangements highlight near-term funding tactics .
  • Listing risk: Nasdaq minimum bid price notice introduces technical overhang; potential compliance actions (organic price recovery, corporate actions) warrant close monitoring into the April 2025 deadline .
  • Tactical positioning: Near-term trading likely driven by Q4 profitability print, evidence of margin durability, and any updates on listing compliance or capital structure simplification .