Q2 2024 GameSquare Holdings Inc Earnings Call
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GameSquare
Operator: Jul 6, 2018 AceShowbiz Good afternoon and thank you for joining us for the GameSquare Holdings 2024 Second Quarter Conference Call. On the call today, we have Justin Kenna, GameSquare's CEO, Lou Schwartz, President, and Mike Munoz, CFO. During the call, all participants are in listen-only mode.
Speaker Change: Good afternoon and thank you for joining us for the GameSquare Holdings 2024 second quarter conference call. On the call today we have Justin Kenna Game Square's CEO, Lou Schwartz, President, and Mike Munoz, CFO.
Speaker Change: During the call, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Before management discusses the results, I'd like to remind everyone that certain statements in this call may be forward-looking in nature.
Operator: Following the presentation, we will conduct a question and answer session. Before management discusses the results, I'd like to remind everyone that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements.
Speaker Change: These include statements involving known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements.
Operator: For information about forward-looking statements and risk factors, please see our 10Q for the quarter ended June 30, 2024, which will be available on the company's website or with the Securities and Exchange Commission. I would now like to turn the call over to GameSquare's CEO, Justin Kenna. Justin, please go ahead.
Speaker Change: For information about forward-looking statements and risk factors, please see our 10Q for the quarter ended June 30, 2024, which will be available on the company's website or with the Securities and Exchange Commission.
Speaker Change: I would now like to turn the call over to GameSquare's CEO, Justin Kenna. Justin, please go ahead.
Justin Kenna: Thank you and good afternoon to everyone joining us on today's call. I'm extremely excited to review the progress we're making at GameSquare as we pursue strategic priorities aimed at creating a fast-growing, highly profitable, and next-generation media business. Activity across our business is high, and we are making significant progress towards optimizing our business model, investing in our long-term growth, and improving profitability. While we still have work to do, we believe our proforma results demonstrate the meaningful accomplishments we have made so far to create lots of value for our channel.
Justin Kenna: Thank you and good afternoon to everyone joining us on today's call.
Justin Kenna: I'm extremely excited to review the progress we're making at Gamesquare as we pursue strategic priorities aimed at creating a fast-growing, highly profitable and next-generation media business.
Speaker Change: Activity across our business is high and we are making significant progress towards optimising our business model, investing in our long-term growth and improving profitability. While we still have work to do, we believe our pro forma results demonstrate the meaningful accomplishments we are making.
Speaker Change: to create loss and value thresholds.
Speaker Change: On a per-forma basis, revenue was $28.6 million for the 2024 second quarter, representing a 24% increase year-over-year and a 22% increase in 2024 first quarter.
Justin Kenna: Strong revenue growth during the second quarter reflects the initial success of the actions we've taken and the strategies we are pursuing to rapidly grow our business. I'm extremely pleased with the significant improvement in profitability as our pro forma adjusted EBITDA loss for the 2024 second quarter improved to $5.4 million from $10 million for the same period last year and $7.9 million for the 2024 first quarter. The $2.5 million improvement in adjusted EBITDA loss over the past three months provides us with growing confidence in our efforts to reach profitability by the 2024 fourth quarter.
Speaker Change: Strong revenue growth during the second quarter reflects the initial success of the actions we've taken and the strategies we are pursuing to rapidly grow our business.
Speaker Change: I'm extremely pleased with the significant improvement in profitability of our pro-performer adjusted EBITDA loss for the 2024 second quarter.
Speaker Change: Improved to 5.4 million
Speaker Change: from $10 million for the same period last year and $7.9 million for the 2024 first quarter.
Speaker Change: The $2.5 million improvement in adjusted EBITDA loss over the past three months provides us with growing confidence in our efforts to reach profitability by the 2024 fourth quarter as we expect further revenue growth.
Justin Kenna: As we expect further revenue growth.., higher gross margin and additional OPEX reductions to benefit our business in the second half of the year. As you can see, we expect to see the same, if not greater, dollar improvement in adjusted EBITDA in the third and fourth quarters as we approach profitability. Our operating plan for 2024 focuses on three main components. First, to complete the integration of the phase plan acquisition and significantly reduce our cost structure.
Speaker Change: higher gross margin, and additional OPEX reductions to benefit our business in the second half of the year. As you can see, we expect to see the same, if not greater, dollar improvements in adjusted EBITDA in the third and fourth quarters as we approach profitability.
Speaker Change: Our operating plan for 2024 focuses on three main components. First, to complete the integration of the phase plan acquisition and significantly reduce our cost structure.
Justin Kenna: Second, to strengthen our balance sheet and diverse non-core assets. And third, to leverage our platform of owned and operated IP, agency and media, and SaaS technology assets to drive profitable growth. I'm pleased with the progress we have made executing our plan during the first half of the year which I believe will result in accelerating revenue growth and significantly enhanced profitability in the second half of the year. We'll use the rest of my time today to provide a business update before turning the call over to Mike who will review our second call of results in more detail.
Speaker Change: Second, to strengthen our balance sheet and divest non-core assets. And third, to leverage our platform of owned and operated IP, agency and media, and SaaS technology assets to drive profitable growth.
Speaker Change: I'm pleased with the progress we have made executing our plan during the first half of the year, which I believe will result in accelerating revenue growth and significantly enhanced profitability in the second half of the year.
Speaker Change: I'll use the rest of my time today to provide a business update before turning the call over to Mike, who will review our second quarter results in more detail.
Justin Kenna: As a reminder, in March of 2024, we completed the acquisition of PhaseClear in an all-stock transaction valued at $14 million, but it's only comprised of two parts. FaZe Esports, which is one of the world's best and most recognized esports organizations, and FaZe Media, which is one of the largest followed gaming brands in the world.
Mike Munoz: As a reminder, in March of 2024, we completed the acquisition of PhaseClear, an all-stop transaction valued at $14 million.
Speaker Change: FaZe Clan is comprised of two assets, FaZe Esports, which is one of the world's best and most recognized esports organizations, and FaZe Media, which is one of the largest followed gaming brands in the world.
Operator: Good afternoon, and thank you for joining us for the GameSquare Holdings 2024 second quarter conference call.
Operator: On the call today, we have Justin Kenna, GameSquare's CEO, Blue Shorts, President and Mike Munoz, CFO. During the call, all participants are in listen only mode. Following the presentation, we will conduct a question and answer session before management discusses the results.
Justin Kenna: As part of our strategy for the FAZE acquisition, we understood that in order for FAZE Media to be successful, its founders and creators must be able to have an ownership stake in the organization and be empowered with creative direction. As a result, we've completed two important transactions at Faze Media to align GameSquare, Faze's founders, and other key stakeholders around a plan to return the brand to its roots and reboot Faze Media for success in 2024 and beyond.
Speaker Change: As part of our strategy for the FASE plan acquisition, we understood that in order for FASE Media to be successful, FASE's founders and creators must be able to have an ownership stake in the organisation and be empowered with the creative direction.
Operator: I'd like to remind everyone that certain statements in this call may be forward looking in nature. These include statements involving known and unknown risks, uncertain days, and other factors that could cause actual results to defer materially from those expressed or implied in our forward looking statements. For information about forward looking statements and risk factors, please see our 10 queue for the quarter ended June 30 to 2024, which will be available on the company's website or with the Securities and Exchange Commission.
Speaker Change: As a result, we've completed two important transactions at Faze Media to align GameSquare, Faze's founders, and other key stakeholders around plans to return the brand back to its roots and reboot Faze Media for success in 2024 and beyond.
Justin Kenna: First, in May, we formed FaZe Media as a separate standalone entity that combines the FaZe creative talent roster and non-esports assets into a creator-led IP and internet media company under the leadership of CEO FaZe Banks and original FaZe Sound. We simultaneously closed an $11 million investment in Faze Media from Matt Kalish, a founder of DraftKings, who now serves on the board of Faze Media. Second, in June, we agreed to sell a 25.5% interest in Faze Media to an entity controlled by Faze's CEO, Faze Banks, which is now using Faze Media at $14 million.
Speaker Change: First, in May, we formed Faze Media as a separate stand-alone entity that combines the Faze creative talent roster and non-esports assets into a creator-led IP and internet media company under the leadership of CEO Faze Banks and original Faze founder.
Justin Kenna: I would now like to turn the call over to GameSquare CEO, Justin Kenna. Justin, please go ahead. Thank you and good afternoon to everyone joining us on today's call.
Speaker Change: We simultaneously closed an $11 million investment in Faze Media from Matt Kalish, a founder of DraftKings, who now serves on the board of Faze Media.
Speaker Change: Second, in June, we agreed to sell a 25.5% interest in FaZe Media to an entity controlled by FaZe's CEO, FaZe Banks, with the amount in FaZe Media at $14 million.
Justin Kenna: I'm extremely excited to review the progress we're making at GameSquare as we pursue strategic priorities aimed at creating a fast growing, highly profitable and next generation media business. Activity across our business is high. We are making significant progress towards optimizing our business model, investing in our long-term growth and improving profitability. While we still have work to do, we believe our pro-former results demonstrate the meaningful accomplishments we are making to create last and value for our shareholders.
Justin Kenna: Under the terms of the transaction, GameSquare retained voting control of the transferred shares for a period of two years, during which each phase meeting will continue to be consolidated into GameSquare's financial statement. We believe these transactions create the proper infrastructure for Fave Media to be successful. Fave Media is now truly a creator-led IP and media company supported by the leadership and expertise of Matt Kalish and the full resources of GameSquare. When we acquired FaithClan, the brand was suffering from significant losses, declining community engagement, and no clear strategic direction.
Speaker Change: Under the terms of the transaction, GameSquare retained voting control of the transferred shares for a period of two years, during which Phase Media will continue to be consolidated into GameSquare's financial statements.
Speaker Change: We believe these transactions create the proper infrastructure for FaZe Media to be successful. FaZe Media now truly is a creator-led IP and media company supported by the leadership and expertise of Matt Kalish and full resources of Gamesquare.
Justin Kenna: On a pro-former basis, revenue was 28.6 million for the 2024 second quarter, representing a 24% increase year over year and a 22% increase in 2024 first quarter. Strong revenue growth in the second quarter reflects the initial success of the actions we've taken and the strategies we have pursuing the rapid growth business. I'm extremely pleased with the significant improvement in profitability as our pro-former adjusted EBITDA loss of the 2024 second quarter improved to 5.4 million from 10 million for the same period last year and 7.9 million for the 2024 first quarter.
Speaker Change: When we acquired FaithClan, the brand was suffering from significant losses, declining community engagement, and no clear strategic direction.
Justin Kenna: I'm extremely proud of our efforts to turn around FaZe Hope's performance and bring the brand back to life. This is a direct result of the return and hard work of the FaZe founders under the leadership of CEO FaZe Banks, the strength of GameSquare's platform, our history with and knowledge of the brand, and most importantly, our belief that if managed correctly, FaZe can re-engage with an extremely committed community and lead to monetization opportunities in the coming months and quarters. I'd like to use this opportunity to thank everyone at GameSquare Enphase for their hard work and dedication over the past two quarters. He's faced me in his reboot in April of 2024.
Speaker Change: I'm extremely proud of our efforts to turn around facelift performance and bring the brand back to life.
Speaker Change: This is a direct result of the return and hard work of the FACE Founders.
Speaker Change: and the leadership of CEO of Dice Bank.
Speaker Change: The strength of GameSquare's platform, our history with and knowledge of the brand, and most importantly, our belief that if managed correctly, FaZe can re-engage with an extremely committed community and lead to monetization opportunities in the coming months and quarters.
Justin Kenna: The $2.5 million improvement in adjusted EBITDA loss over the past three months provides us with growing confidence in our efforts to reach profitability by the 2024 fourth quarter. As we expect further revenue growth, higher growth margins and additional off-ex reductions to benefit our business in the second half of the year. As you can see, we expect to see the same if not greater dollar improvement in adjusted EBITDA in the third and fourth quarters as we approach profitability.
Speaker Change: I'd like to use this opportunity to thank everyone at Gamesquare and FaZe for their hard work and dedication over the past two quarters.
Justin Kenna: The re-engagement of the community has been fantastic. A couple of myelites include four of Faser talent roster who are in the top 50 most watch streamers worldwide in July. Faze's creator roster has gained 4.5 million new followers since May and now have 173 million followers in total. FaZe's roster garnered over 1.2 billion total views in Q2 2024, a 28% increase in three months. And finally, from April to July, FaZe Clan's weekly viewership has increased from 1.5 million hours watched to a peak of 4.8 million hours watched, an impressive 3x increase in just four months since the brand's reboot.
Speaker Change: His Faze meeting is rebooted in April of 2024 and the re-engagement of the community has been fantastic. A couple of highlights include, four of Faze's talent roster were in the top 50 most watched streamers worldwide in July .
Speaker Change: FaZe's creator roster has gained 4.5 million new followers since May and now have 173 million followers in total.
Justin Kenna: Our operating plan for 2024 focuses on three main components, first to complete the integration of the play plan acquisition and significantly reduce our cost structure. The akin to strengthening our balance sheet and by this non-corathletes, and third to leverage our platform of owning operating IP, agency and media and SaaS technology assets to drive profitable growth. I'm pleased with the progress we have made executing a plan during the first half of the year which I believe will result in accelerating revenue growth and significantly enhanced profitability in the second half of the year.
Speaker Change: Phase's roster garnered over 1.2 billion total views.
Speaker Change: in Q2 2024, a 28% increase in three months. And finally, from April to July , FaZe Clan's weekly viewership has increased from 1.5 million hours watched to a peak of 4.8 million hours watched, an impressive 3X increase in just four months since the brand's reboot.
Justin Kenna: I think engagement with FaZe's community is an important indicator of future growth opportunities for GameSquare as engagement helps support a robust pipeline of brand deals and future monetization opportunities. In fact, we have multiple seven-figure deals that we expect to convert to partnerships in the coming months. In addition to GameSquare's ownership and voting control in FaZe Media, we continue to own 100% of FaZe Esports. As one of the top esports organizations in the world, we believe there is an enormous opportunity to profitably grow FaZe Esports, following a similar strategy that successfully grew our former esports team by over 220% in just two years. Supporting FaZe's brand overall is important for FaZe Esports too.
Speaker Change: I think engagement with FaZe's community is an important indicator of future growth opportunities for GameSquare, as engagement helps support a robust pipeline of brand deals and future monetization opportunities.
Justin Kenna: I'll use the rest of my time today to provide a business update before turning the call over to Mark who will review our second call of results in more detail. As a reminder, in March of 2024, we completed the acquisition of Phase Clant in all stock transactions, though, to $14 million. Phase Clantist comprises two assets, Phase Esports, which is one of the world's best and most recognized Esports organizations and Phase Media, which is one of the largest followed gaming brands in the world.
Speaker Change: In fact, we have multiple seven-figure deals that we expect to convert to partnerships in the coming months.
Speaker Change: In addition to GameSquare's ownership and voting control of FaZe Media, we continue to own 100% of FaZe Esports.
Speaker Change: As one of the top esports organisations in the world, we believe there is an enormous opportunity to profitably grow, say, these spots. Following a similar strategy that successfully grew, our former esports team by over 220% in just two years.
Justin Kenna: We're currently working on several opportunities to begin monetizing FaZe Esports with a new multi-year sponsorship and partnership deal offer. As you can see, in just a short period of time, we are quickly rebuilding FaceGland, creating a proper foundation and developing new monetization opportunities that we believe will support multi-year, high-margin revenue opportunities for GameSquare. We are also focused on driving efficiencies and reducing costs at FaZe Media and FaZe Esports. When comparing the second quarter 2024 and 2023 results of FaZe Land, we have removed approximately $18 million of annualized costs and believe there are opportunities to remove additional costs throughout the remainder of 2024.
Justin Kenna: As part of our strategy for the Phase Clant acquisition, we understood that in order for Phase Media to be successful, Phase Founders and Creators must bid to help have an ownership stake in the organization and be empowered with the creative direction. As a result, we've completed two important transactions of Phase Media to align GameSquare. Phase Founders and other key stakeholders, ground plans to return the brand's actual goods and reboot Phase Media for success in 2024 and beyond.
Speaker Change: Supporting FaZe's brand overall is important for FaZe Esports too. We're currently working on several opportunities to begin monetizing FaZe Esports with a new multi-year sponsorship and partnership deal opportunities.
Speaker Change: As you can see, in just a short period of time, we are quickly rebuilding FaceGland, creating a proper foundation and developing new monetization opportunities that we believe will support multi-year, high-margin revenue opportunities for GameSquare.
Speaker Change: We are also focused on driving efficiencies and reducing costs.
Justin Kenna: First, in May, we formed Phase Media as a separate standalone entity that combines the Phase Creator Talent roster and non-ESports assets into a Creator-led IP and Internet Media company under the leadership of CEO, Phase Banks, an original Phase Founder. We simultaneously closed an $11 million investment in Phase Media from Matt Kalish, a founder of draft kings who now serves on the board of Phase Media. Second, in June, we agreed to sell a 25.5-cent interest in Phase Media to an entity controlled by Phase CEO, Phase Banks, as a monthly Phase Media at $14 million.
Speaker Change: and faith media and faith news boards.
Speaker Change: When comparing the second quarter 2024 and 2023 results of Baseland, we have removed approximately $18 million of annualised costs and believe there are opportunities to remove additional costs throughout the remainder of 2024.
Justin Kenna: With a more efficient operating model and a more disciplined management structure, we believe there is a lot of opportunity to drive profitable growth at FaZe Media and FaZe Esports, especially at each business scale. Our second quarter improvement in adjusted EBITDA reflects the initial benefits of our integration strategy and we expect additional enhancements to our cost structure in the coming quarters. We are extremely excited about the opportunities the base plan acquisition represents and how the brand fits into the games for ICOs.
Speaker Change: With a more efficient operating model and a more disciplined management structure, we believe there is a lot of opportunity to drive profitable growth at Face Media and Face Esports, especially as each business scales.
Speaker Change: Our second quarter improvement in adjusted EBITDA reflects the initial benefits of our integration strategy and we expect additional enhancements to our cost structure in the coming quarters.
Justin Kenna: Under the terms of the transaction, GameSquare retained voting control of the transfer cheers for a period of two years during which Phase Media will continue to be consolidated into GameSquare's financial statements. We believe these transactions create the proper infrastructure for Phase Media to be successful and Phase Media now truly is a Creator-led IP and Media company supported by the leadership and expertise of Matt Kalish and full resources of GameSquare. When we acquired Phase Clan, the brand was suffering from significant losses, declining community engagement, and no clear strategic direction.
Speaker Change: We are extremely excited by the opportunities that Baseplant Acquisition represents and how the brand fits into the Gamesquare ecosystem.
Justin Kenna: As part of our plan throughout 2024, we have sold non-core business assets to optimize our business and strengthen our balance sheet. Yesterday, GameSquare raised over $36 million of non-diluted capital, raised over $16.5 million of new capital through a private placement and a prepaid advance agreement, and paid off the principal balance of our senior secured notes.
Speaker Change: As part of our plan throughout 2024, we have sold non-core business assets to optimize our business and strengthen our balance sheet.
Speaker Change: Yesterday, Gamesquare raised over $36 million of non-diluted capital, raised over $16.5 million of new capital through a private placement and a prepaid advance agreement, and paid off the principal balance of our seniors' secured notes.
Justin Kenna: As a result, we have significantly strengthened our balance sheet and capital position and have the financial resources in place to support the growth strategies we are pursuing that take advantage of growing demand trends currently underway across our global markets. The final component of our plan in 2024 I want to review today is the opportunities we are pursuing across our owned and operated IP, agency and media, and SaaS technology assets, profitable growth and improve profitability. Since our first quarter call, we've made progress growing our owned and operated IP, agency and media, and SaaS technology assets. Starting with owned and operated IP.
Justin Kenna: We're extremely proud of our efforts to turn around Phase Performance and bring the brand back to life. This is a direct result of the return and hard work of the Phase Founders, under the leadership of CEO, Phase Banks, the strength of GameSquare's platform, our history with and knowledge of the brand, and most importantly, our belief that if managed correctly, Phase can re-engage with an extremely committed community, and lead to monetization opportunities in the coming months and quarters.
Speaker Change: As a result, we have significantly strengthened our balance sheet and capital position and have the financial resources in place to support the growth strategies we are pursuing that take advantage of growing demand trends currently underway across our global markets.
Speaker Change: The final component of our plan in 2024, I want to review today, the opportunities we are pursuing across our owned and operated IP, agency and media, and SaaS technology assets to profitable growth and improve profitability.
Justin Kenna: I'd like to use this opportunity to thank everyone at GameSquare and Phase for their hard work and dedication over the past two quarters. Phase Media's reboot in April of 2024, the re-engagement of the community has been fantastic. A couple of highlights include 4 of Phase Italian roster from the top 50 most watch streamers worldwide in July. Phase in Creator roster has gained 4.5 million to be followed since May, and now have 173 million followers in total.
Speaker Change: Since our first quarter call, we've made progress growing our owned and operated IP, agency and media, and SaaS technology assets, starting with owned and operated IP.
Justin Kenna: As I mentioned previously on today's call, Faze Media's highly successful reboot and new talent roster is driving engagement within the community, which is supporting our deal pipeline and beginning to contribute to GameSquare's revenue growth. In addition, during the second quarter, we launched a Faze Clan co-branded product line with SteelSeries to retailers globally. And we recently announced a partnership with the NFL to launch a new traveling creative series called NFL For The Fans Live. This innovative series blends the excitement of NFL fandom on game day with interactive gaming and creator-driven content accessible for an in-person and online audience during the 2024 NFL season.
Speaker Change: As I mentioned previously on today's call, SageMedia's highly successful reboot and new talent roster is driving engagement within the community, which is supporting our deal pipeline and beginning to contribute to GameSquare's revenue growth.
Speaker Change: In addition, during the second quarter, we launched a phase plan co-branded product line with SteelSeries to retailers globally. And we recently announced a partnership with the NFL to launch a new traveling creative series called NFL For The Fans Live.
Justin Kenna: Faces roster garnered over 1.2 billion total views in Q224, a 28% increase in 3 months. And finally, from April to July, Faces claimed weekly viewership has increased from 1.5 million hours watch to a peak of 4.8 million hours watch. The impressive 3X increase in just 4 months since the brand's reboot. I think engagement with the Faces community is an important indicator of future growth opportunities for GameSquare. As engagement helps support a robust pipeline of brand deals and future monetization opportunities.
Speaker Change: This innovative series blends the excitement of NFL fandom on game day with interactive gaming and creator-driven content accessible for an in-person and online audience during the 2024 NFL season.
Justin Kenna: We are also starting to see a growing revenue contribution from our newly created events business, director brand experiences with partners such as EPIC, owned IP such as the recently announced NFL partnership in the Creative Series, programming partner opportunities such as our Seacon partnership in Las Vegas, and large-scale esports production with the state's Halo Championship Major. In fact, events in the second quarter contributed over 5% of consolidated revenue. We are continuing to develop this area of the business with more partnerships and announcements which we expect to come in the second half that will showcase this continued revenue growth and our growing expertise.
Speaker Change: We are also starting to see growing revenue contributions from our newly created events business.
Speaker Change: sort of GameSquare direct-to-brand experiences with partners such as Epic.
Speaker Change: Owned IP such as the recently announced NSL partnership in the Creative Series, programming partner opportunities such as our...
Speaker Change: C-contact ship in Los Vegas and large scale e-sports production with the paint halo championship major. In fact, events in the second quarter contributed over 5% of consolidated revenue.
Justin Kenna: In fact, we have multiple seven-figure deals that we expect to convert to partnerships in the coming months. In addition to GameSquare's ownership and voting control and phase media, we continue to own 100% of phase esports. As one of the top esports organizations in the world, we believe there is an enormous opportunity to profitably grow phase esports. Following a similar strategy that successfully grew our former esports team by over 220% in just two years.
Speaker Change: We are continuing to develop this area of the business with more partnerships and announcements which we expect to come in the second half that will showcase this continued revenue growth and our growing expertise.
Justin Kenna: Looking towards growth in our media and agency businesses, we continue to pursue opportunities that expand our publisher relationships with major players like Epic Games and leverage the rapid success of our UEFN world-building business. Just last week we announced over $3 million of total new brand partnerships with renowned brands including PopCult, 5-Hour Energy, and Dairymax, as well as multiple soon-to-be-announced projects with leading global sports, media, and entertainment companies.
Speaker Change: Looking towards growth in our media and agency businesses, we continue to pursue opportunities to expand our publisher relationships with major players like Epic Games and leverage the rapid success of our UEFN world-building business.
Justin Kenna: Supporting phase's brand overall is important for phase esports too. We're currently working on several opportunities to begin monetizing phase esports with a new multi-year sponsorship and partnership deal opportunities. As you can see in just a short period of time, we are quickly rebuilding base class, creating a proper foundation and developing new monetization opportunities that we believe will support multi-year high margin revenue opportunities for GameSquare. We are also focused on driving efficiencies in reducing costs and phase media and phase esports.
Speaker Change: Just last week, we announced over $3 million of total new brand partnerships with renowned brands including Popgolf, 5-Hour Energy, and Dairymax, as well as multiple soon-to-be-announced projects with leading global sports, media, and entertainment companies.
Justin Kenna: Our pipeline continues to grow and we expect to announce additional new partnerships as we enter the seasonally strong second half of the year. Finally, on the SaaS and technology side of our business, we continue to combine our data and insights capabilities with our creative management and activation platform to deliver a more comprehensive solution that's for game publishers and brands looking to drive targeted audiences and improve revenue performance. In addition, we have developed an innovative AI-supported solution that leverages our data and technology stack to uncover influences and create a space on unique search criteria.
Speaker Change: Our pipeline continues to grow and we expect to announce additional new partnerships as we enter the seasonally strong second half of the year.
Justin Kenna: We're comparing the second quarter of 2024 and 2023 results of phase class. We have removed approximately $18 million of annualized costs and believed there are opportunities to remove additional costs throughout the remainder of 2024. We have a more efficient operating model and a more disciplined management structure. We believe there is a lot of opportunity to drive possible growth in phase media and phase esports, especially in each business and each business scale. Our second quarter improvement is just reflecting the initial benefits of our integration strategy and we expect additional enhancements of our cost structure in the coming quarters.
Speaker Change: Finally, on the SaaS and technology side of our business, we continue to combine our data and insights capabilities with our creative management and activation platform to deliver a more comprehensive solution set for game publishers and brands looking to drive targeted audiences and improve revenue performance.
Speaker Change: In addition, we have developed an innovative AI-supported solution that leverages our data and technology stack to uncover influences and creatives based on unique search criteria.
Justin Kenna: By utilizing our platform for data analysis and audience insight, companies can identify the most influential creators to partner with for their marketing efforts. We believe that this data-driven approach ensures that campaigns are effectively targeted and yield high-performing ROI and performance-based returns. Our new AI solution is set to launch in the coming weeks with a customer that operates one of the largest online mobile games. We plan to make this capability available to other customers as part of our broader rollout plan throughout the quarter. Additionally, we are excited to announce the expansion of our managed services to include even more tailored solutions for our clients. This will include end-to-end campaign management, content creation, and performance optimization.
Speaker Change: By utilising our platform for data analysis and audience insight, companies can identify the most influential creators to partner with for their marketing efforts.
Justin Kenna: We are extremely excited by the opportunities the base plan acquisition represents and how the brand fits into the game's ecosystem. As part of the plan throughout 2024, we have sold non-core business assets to optimize our business and strengthen our balance sheet. Yesterday, days goes raised over $36 million of non-diluted capital raised over $16.5 million of new capital to a private placement and a pre-paid advanced agreement and pay off the principal balance of our seniors secured notes.
Speaker Change: We believe that this data-driven approach ensures that campaigns are effectively targeted and yield high-performing ROI and performance-based returns. Our new AI solution is set to launch in the coming weeks with a customer that operates one of the largest online mobile games.
Justin Kenna: As a result, we have significantly strengthened our balance sheet and capital position and have the financial resources in place to support the growth strategies we are pursuing to take advantage of growing demand trends currently underway across our local markets.
Speaker Change: We plan to make this capability available to other customers as part of our broader rollout plan throughout the quarter.
Speaker Change: Additionally, we are excited to announce the expansion of our managed services to include even more tailored solutions for our clients. This will include end-to-end campaign management, content creation, and performance optimization.
Justin Kenna: By offering these comprehensive services, we can now provide a one-stop shop for companies looking to enhance their marketing efforts through creator and influencer-led partnerships. As we look to the back half of the year, we are excited by the direction we are headed. We believe we will start to see the benefits of the investments we made in the first and second quarters throughout the second half of 2024. In addition, we are already seeing positive momentum underway across several of our markets as our refined platform resonates with global brands. While 2024 has already been a busy and transformative year for GameSquare, we believe we are just getting started.
Speaker Change: By offering these comprehensive services, we can now provide a one-stop shop for companies looking to enhance their marketing efforts through creator and influencer-led partnerships.
Justin Kenna: The final component of our plan is 2024. I want to review today's opportunities. We have to show it across our own and operated IP. I can see in media and staff technology assets, to profitable growth and to produce profit and do it. Since our first quarter, our first quarter of call, it made progress going out on an operated IP, 18.5 million staff technology assets, starting with on an operated IP. As I mentioned previously on today's call, SAGE Media's highly successful reboot and new talent roster is joining engagement within the community, which is supporting our deal pipeline and beginning to contribute to GameSquare's revenue growth.
Speaker Change: As we look to the back half of the year,
Speaker Change: We are excited by the direction we are headed.
Speaker Change: We believe we will start to see the benefits of the investments we made in the first and second quarters throughout the second half of 2024. In addition, we are already seeing positive momentum underway across several of our markets as our refined platform resonates with global brands.
Speaker Change: While 2024 has already been a busy and transformative year for GameSquare, we believe we are just getting started, and I'm optimistic about reporting on our continued success on future calls. So with this overview, I'd like to turn the call over to Mike to review our second quarter financial results.
Justin Kenna: And I'm optimistic about reporting on our continued success on future calls. So with this overview, I'd like to turn the call over to Mike to review our second quarter financial results.
Justin Kenna: In addition, during the second quarter, we launched a paid plan to create a product line with SteelSeries to retail and globally. And we recently announced the partnership with the NFL, towards a new traveling creator series called NSL for the fair and wide. This innovative series blends in with NFL fandom on-game dates, with interactive gaming and creative driven content accessible for an in-person and online audience during the 2024 NFL season. We are also starting to see growing revenue contributions from our newly created events business.
Mike Munoz: As a reminder, 2024's financial results include multiple corporate actions, most significantly the March 7, 2024 acquisition of FaZe Clan in the March 1, 2024 sale of Complexity Gaming, which has been treated as a discontinued operation in our 2024 and 2023 year-to-date results. We also further divested non-core assets during the year on May 31, 2024. As a result, we believe it is best to look at our business on a pro forma basis, which includes a full year-to-date contribution of phase planning.
Mike Munoz: Thanks, Justin. As a reminder, 2024's financial results include multiple corporate actions.
Mike Munoz: Most significantly, the March 7, 2024 acquisition of FaZe Clan and the March 1, 2024 sale of Complexity Gaming, which has been treated as a discontinued operation in our 2024 and 2023 year-to-date results.
Justin Kenna: So, GameSquare directs to brand experiences that partner such as Epic, owned IP, such as the recently and out there. So, partnership in the creative series, programming partner opportunities such as our C-con partnership in Los Vegas, and large-scale e-sports production with the State Halo Championship Major. In fact, events in the second quarter contributed over 5% of consolidated revenue. We are continuing to develop this area of the business with more partnerships and announcements with queer Spectrum.
Speaker Change: We also further divested non-core assets during the year on May 31, 2024.
Speaker Change: As a result, we believe it is best to look at our business on a pro forma basis, which includes a full year-to-date contribution of phase plan.
Mike Munoz: Comparing our 2024 second quarter pro forma results to prior year, total revenue was $28.6 million compared to $23.1 million. The 24% year-over-year increase in revenue was primarily due to growth from phase plan operations and programmatic advertising. Gross margin on a pro forma basis for the 2024 second quarter was $4.2 million, or 14.8% of sales, compared to $4.6 million, or 20.1% of sales for the same period last year. The declining gross margin for the year reflects a less profitable mix of sales, which temporarily impacted gross margin in the second quarter.
Speaker Change: Comparing our 2024 second quarter pro forma results to prior year, total revenue was $28.6 million compared to $33.1 million.
Speaker Change: The 24% year-old year increase in revenue was primarily due to growth from face-clin operations and programmatic advertising.
Justin Kenna: In the second half of the showcase, this continued revenue growth and our growing expertise. Looking towards the growth in our media and agency businesses, we continue to pursue opportunities to expand our publisher relationships with manager players like Epic Games and leverage the rapid success of our UES and world-building business. Just last week we announced $3 million on total new brand partnerships with around brand including pop golf, 5-hour energy and dairy max, as well as multiple soon-to-be-an-our-projects leading global sports media and entertainment companies.
Speaker Change: Gross margin on a pro forma basis for the 2024 second quarter was $4.2 million or 14.8% of sales compared to $4.6 million or 20.1% of sales for the same period last year.
Speaker Change: The declining gross margin for the year reflects a less profitable mix of sales which temporarily impacted gross margin in the second quarter. We expect gross margin to improve going forward, supported by a more profitable revenue mix in the second half, and actions underway to improve gross margin.
Mike Munoz: We expect gross margin to improve going forward, supported by a more profitable revenue mix in the second half and actions underway to improve gross margin. As Justin mentioned, we have made significant strides in improving our operating cash burn figures over the last 12 months. On a pro forma basis, adjusted, even a loss for the 2024 second quarter amounted to $5.4 million compared to a loss of $10 million last year.
Justin Kenna: Our pipeline continues to grow and we expect to announce additional new partnerships as we enter the seasonally strong second half of the year. Finally, on the SaaS and technology side of our business, we continue to combine our data and insights capabilities with our creative management and activation platform to deliver a more comprehensive solution that's game publishers and brands looking to drive targeted audiences and improve revenue performance. In addition, we have developed an innovative AI-supported solution that leverages our data and technology stack to uncover influences and creatives based on unique search criteria.
Speaker Change: As Justin mentioned, we have made significant strides in improving our operating cash burn figures over the last 12 months.
Justin Kenna: On a pro forma basis, adjusted even a loss for the 2024 second quarter amounted to $5.4 million, compared to a loss of $10 million last year.
Justin Kenna: As a percentage of revenue, our adjusted EBITDA loss improved from 43.5% for the 2023 second quarter to 18.9% for the 2024 second quarter.
Mike Munoz: We believe the integration activities between GameSquare and PhaseClan will yield annual cost savings of approximately $18 million in 2024 when comparing GameSquare and PhaseClan Proforma combined results in Q4'23 to the combined results in Q4'24.
Justin Kenna: We believe the integration activities between GameScore and PhaseClan will yield annual cost savings of approximately $18 million in 2024 when comparing GameScore and PhaseClan pro forma combined results in Q4'23 to the combined results in Q4'24.
Justin Kenna: By utilizing our platform for data analysis and audience inside, companies can identify the most influential creators to partner with for their marketing assets. We believe that this data-driven approach ensures that campaigns are effectively targeted and yield high-performing ROI and performance-based returns. Our new AI solution is set to launch in the coming weeks the customer that operates one of the largest online mobile games. We plan to make this capability available to other customers as part of our broader rollout plan throughout the quarter.
Justin Kenna: With this overview, I'll turn the call back over to Justin.
Speaker Change: [inaudible]
Operator: Before we open the call out to questions, I want to review our expectations for the remainder of the year. After solosos, we believe we're extremely well positioned to achieve well over 100 million annual reps, is an annual gross margin to range between 22 and a half to 27 and a half percent. We anticipate revenue growth to accelerate in the third and fourth quarters. In addition, we remain committed to pursuing strategies that expand gross margin, reduce SG&A expenses, and drive profitability.
Speaker Change: Thanks, Mark.
Speaker Change: Before we open the call to questions, I want to review our expectations for the remainder of the year.
Speaker Change: After a solid first half, we believe we are extremely well positioned to achieve well over $100 million in annual revenue, with an annual gross margin to range between 22.5% to 27.5%.
Speaker Change: We anticipate revenue growth to accelerate in the third and fourth quarters.
Speaker Change: In addition, we remain committed to pursuing strategies that expand gross margin, reduce SG&A expenses, and drive profitability.
Justin Kenna: Additionally, we are excited to announce the expansion of our managed services to include even more tailored solutions for our clients. This will include end-to-end campaign management, content creation and performance optimisation. By offering these comprehensive services, we can now provide a one-stop shop for companies looking to enhance their marketing efforts through creator and influencer-led partnerships.
Operator: As we look to the seasonally strong second half of the year, we believe we are well positioned to achieve our guidance and benefit from dramatic improvements in profitability. I believe our strong first-half financial and operating performance supports our initial success in creating a fast-growing, highly profitable and next-generation media business. I look forward to updating investors on our success on our third quarter conference call in November. Lou, Mike, and I are happy to take questions.
Speaker Change: As we look to the seasonally strong second half of the year, we believe we are well positioned to achieve our guidance and benefit from dramatic improvements in profitability.
Speaker Change: I believe our strong first half financial and operating performance supports our initial success in creating a fast-growing, highly profitable, and next-generation media business.
Justin Kenna: As we look to the back half of the year, we are excited by the direction we are headed. We believe we will start to see the benefits of the investments we made in the first and second quarters throughout the second half of 2024. In addition, we are already seeing positive momentum underway across several of our markets as our refined platform resonates with global breadth. While 2024 has already been a busy and transformative year for GameSquare, we believe we are just getting started, and I'm optimistic about reporting on our continued success future goals.
Speaker Change: I look forward to updating investors on our success on our third quarter conference call in November . So with this,
Operator: Operator, please open up the line to any questions. Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys.
Speaker Change: Lou, Mike, and I are happy to take questions. Operator, please open up the line to take questions. Thank you.
Operator: To withdraw your question, please press star then 2. We will pause a moment as callers join the queue. Once again, if you have a question, please press star, then one. The first question comes from Sean McGowan with Rock Capital. Please go ahead.
Speaker Change: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2.
Michael Munoz: With each other's view, I'd like to turn the call over to Mark to review our second quarter financial results. Thanks, Justin. As a reminder, 2024's financial results include multiple corporate actions. Most significantly, the March 7, 2024 acquisition of phase plans in the March 1, 2024 sale of complexity gaming, which has been treated as a discontinued operation in our 2024 and 2023 year-to-date results. We also further divested non-core assets during the year on May 31, 2024.
Speaker Change: We will pause the moment as Carlos joined the queue.
Speaker Change: John McGowan, Justin Kenna, Michael Munoz, GameSquare
Speaker Change: Once again, if you have a question, please press star, then 1.
Speaker Change: [inaudible]
Sean McGahn: The first question comes from Sean McGowan with Rock Capital. Please go ahead.
Sean McGowan: Thank you. Thanks a lot for your time. I don't know if this is a question for Mike or Justin or Lou or anybody, but can you tell us if there were any unusual items that drove the gross margin to its level in the second quarter? Because it looks like your target for the year implies a pretty steep rebound in the back half of the year. So was there anything in the quarter that was unusual, and what gives you the confidence that it can rebound that much? Yeah, I can kick off and we will, Mike, feel free to add in to this.
Sean McGahn: Thank you. Thanks a lot for the time.
Michael Munoz: As a result, we believe it is best to look at our business on a pro-charmabasis, which includes a full year-to-date contribution of phase plans. Comparing our 2024 second quarter pro-charmab results to prior year, total revenue was 28.6 million compared to 23.1 million. The 24% year-over-year increase in revenue was primarily due to growth from phase plan operations and program advertising. Growth margin on a pro-charmabasis for the 2024 second quarter was 4.2 million or 14.8% of sales, compared to 4.6 million or 20.1% of sales for the same period last year.
Speaker Change: I don't know if this is a question for Mike or Justin or Lou or anybody, but can you tell us if there were...
Speaker Change: any unusual items that drove the gross margin to its level.
Speaker Change: in the second quarter, you know, because it looks like your target for the year implies, you know, a pretty steep rebound in the back half of the year. So was there anything in the quarter that was unusual and, you know, what gives you the confidence that it can rebound that much?
Speaker Change: Yeah, I can kick off and Lou or Mike, feel free to add in to this.
Justin Kenna: Sean, the Q2 results had a higher percentage of programmatic revenue within the mix, which is our lowest margin area, and they kind of dragged the blender down. You'll see from some of the recent news, you know, the $3 million that we spoke about in recent sort of brand wins, they're from, you know, being driven from the agency side of the business, which are much higher in nature. So, you know, we do tend to see a fair spike on the agency side and the owner and operator side in the back half of the year.
Speaker Change: um
Speaker Change: showing the Q2 results.
Speaker Change: had a high percentage of programmatic.
Michael Munoz: For the declining growth margin for the year, it reflects a less profitable mix of sales, which temporarily impacted growth margin in the second quarter. We expect growth margin to improve going forward supported by a more profitable revenue mix in the second half, and actions underway to improve growth margin.
Speaker Change: revenue within the mix.
Speaker Change: which is our lowest margin area, they kind of drag the blender down.
Speaker Change: You'll see from some of the recent news, you know, the $3 million that we spoke about in recent sort of brand wins.
Speaker Change: They're from being driven from the agency side of the business, which are much higher in nature, so we do tend to see a fair spike.
Michael Munoz: As Justin mentioned, we have made significant strides in improving our operating cash burn figures over the last 12 months. On a pro-charmabasis, adjusted even a loss for the 2024 second quarter amounted to 5.4 million, compared to a loss of 10 million last year. As a percentage of revenue are adjusted even a loss improved from 43.5% for the 2023 second quarter to 18.9% for the 2024 second quarter. We believe the integration activities between game score and phase plan will yield annual cost savings of approximately 18 million in 2024, when comparing game score and phase plan pro-charmab-combined results in Q423 to combine results in Q424.
Justin Kenna: So you will see that seasonally we are stronger in the back half of the year than the first half of the year, and that tends to come from that higher margin revenue. So it may seem like a bigger jump just based on the numbers, but you know, for each dollar of growth within agency and owner and operator IP, you're going to see a real increase in margins. So we still feel very confident in being able to hit that number.
Speaker Change: on the agency side and the owned and operated IPD side in the back half of the year. So you will see that seasonally we are...
Speaker Change: stronger in the back half of the year than the first half of the year, and that tends to come from that higher margin revenue. So it may seem like a bigger jump just based on the numbers, but for each dollar of growth within agency and owned and operated IP, you're going to see
Speaker Change: a real increase in margins. But we still feel very confident in being able to hit that number. We expect back half of the year margins to be.
Justin Kenna: We expect back half of the year margins to be far greater. We still expect revenue to grow, but I think the mix of that revenue will come more from the agency and owner and operator IP areas rather than large sort of growth from programmatic. Okay, thank you. And two kind of housekeeping questions.
Operator: With this overview, I'll turn the call back over to... Thanks, Mike.
Speaker Change: We still expect revenue to grow, but I think the mix of that revenue will come more from the agency and owner-operated IP areas rather than large sort of growth from programmatic.
Mike Munoz: Can you remind us where on the income statement we would see embedded, you know, things like the transaction costs and, you know, is stock-based copy in one line, or is that kind of spread around? Yeah, I can answer that. So all stock-based costs and general administrative expenses we don't spread them between the three primary operating costs. And sorry, Sean, what was the former question?
Operator: Before we open the Court's questions, I want to review our expectations for the remainder of the year. After a solid first half, we believe we're extremely well positioned to achieve well over 100 million annual revenues. Is it annual gross margins raised between 22 and a half to 27 and a half percent? We anticipate revenue growth to accelerate the third and fourth quarters. In addition, we remain committed to pursuing strategies of spanned gross margin, reduce SGNA expenses and drive profitability.
Speaker Change: Okay, thank you. And two kind of housekeeping questions. Can you remind us of where on the income statement we would see...
Speaker Change: embedded, you know, things like the transaction costs and, you know, is stock-based copy in one line or is that kind of spread around?
Speaker Change: Yeah, I can answer that. So, all thought-based costs and general administrative expense, we don't spread it between the three primary operating costs.
Operator: As we look to the seasonly strong second half of the year, we believe we are well positioned to achieve our guidance and benefit from dramatic improvements in profitability. I believe our strong first half financial and operating performance supports our initial success in creating a fast growing, highly profitable and ex-generation media business.
Speaker Change: Sorry, Sean, what was the former question? Where is transaction cost embedded in the P&L? Transaction cost, yeah, roll up into other operating expenses.
Mike Munoz: Okay. All right, thank you. And then my last question is kind of a general question, I guess, for you, Justin.
Speaker Change: Okay.
Speaker Change: All right. Thank you. And then my last question is kind of a general question, I guess, for you, Justin.
Operator: I look forward to updating investors on our success and our third quarter conference call in November.
Justin Kenna: You know, we're in a weird economic time. We get good news, some days we get bad news. We've got election stuff, you know, a lot of moving parts. What's your sense among, you know, your advertising partners as to what to expect as we go into the holiday season? Yeah, it's certainly been tricky, Sean.
Operator: So with this, Luke, Mike and I were happy to take questions. Operator, please open up the line to end questions. Thank you.
Speaker Change: You know, we're in a weird economic time. We get good news, some days we get bad news. We got election stuff, you know, a lot of moving parts. What's your sense among, you know, your advertising partners as to what to expect as we go into the holiday season?
Operator: We will now begin the question and answer session. To join the question, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause a moment as callers during the queue. Once again, if you have a question, please press star then one.
Justin Kenna: I think that there was a lot of discussion earlier in the year that ad and brand spend was back, and we found that our pipeline was really growing, but brands were still quite hesitant to spend. But we're in a really strong position. I mean, that pipeline that we've been working on is starting to really resonate and close and translate into real revenue. Again, we mentioned some of the brands attached to sort of the new three million of agency recent wins.
Justin Kenna: Yeah, it's certainly been being tricky, Sean. I think that
Speaker Change: There was a lot of discussion earlier in the year that...
Adam Brandspend: ad and brand spend was back, and we found that our pipeline was really growing, but brands were still quite hesitant to spend, but we're in a really strong position. I mean, that pipeline that we've been working on is starting to really resonate.
Adam Brandspend: and close and translate into real revenue. Again, we mentioned some of the brands attached to sort of the new three million of agency recent wins.
Justin Kenna: I think we mentioned there are a couple of sort of seven-figure deals on the phase side that we're in the process of closing out, and there's real pipeline into the back half of the year. So there's definitely mixed stories coming out of ad and brand world, but we're certainly feeling like we're breaking through, and we expect that to continue. So Q3, Q4 is looking really strong for us. We talked about the growth of our events business. There's a lot of events in the back half of the year from a gaming perspective. You have a lot of majors from the esports perspective.
Sean McGowan: The first question comes from Sean McGon with Rob Capital. Please go ahead. Thank you. Thanks a lot for the time. I don't know if it's a question for Mike or Justin or Lou or anybody, but can you tell us if there were any unusual items that drove the gross margin to its level in the second quarter? Because it looks like your target for the year implies a pretty steep rebound in the back half of the year.
Speaker Change: I think we mentioned there are a couple of sort of seven-figure deals on the FAY side that we're in the process of closing out and there's real pipeline into the back half of the year. So there's definitely mixed stories coming out of Ad and Brandwell.
Wesson Lee: We're certainly.
Wesson Lee: feeling like we're breaking through, and we expect that to continue. So, you know, Q3, Q4 is looking really strong for us. We talked about the growth of our events business.
Sean McGowan: So was there anything in the quarter that was unusual and what gives you the confidence that you can rebound that much? Yeah, I can kick off and Lou or Mike feel free to add in to this. Sean, the Q2 results had a higher percentage of programmatic revenue within the mix, which is our lowest margin area that kind of drags the blended down. You'll see for some of the recent years, you know, the $3 million that we spoke about in recent sort of brand-winds, they're from being driven to the agency side of the business which are much higher in nature.
Justin Kenna: There's TwitchCon. We have an NFL creator series. So there are a number of real catalysts there, but just from the advertising perspective, yeah, we're closing deals right now. And I think that this is certainly a space where we are starting to see those dollars finally kind of flow in. So yeah, we feel really good about the back half of the year. Okay. Thank you.
Wesson Lee: There's a lot of events in the back half of the year from a gaming perspective.
Wesson Lee: You know, you have a lot of majors from the eSports perspective.
Wesson Lee: TwitchCon, we have an NFL Creator Series.
Wesson Lee: So there's a number of real catalysts there, but just from the advertising.
Wesson Lee: perspective. Yeah, we're closing deals right now and you know I think that this is certainly a space where we are starting to see those dollars finally kind of flow in. So yeah, we feel really good about the back half of the year.
Speaker Change: Okay, thank you.
Operator: This concludes the question and answer session. I would like to turn the conference back over to Justin Kenna for any closing remarks. Please go ahead.
Speaker Change: This concludes the question and answer session. I would like to turn the conference back over to Justin Kenna for any closing remarks. Please go ahead.
Sean McGowan: So, you know, we do tend to see a fair spike on the agency side in the owned and operated at the East Side in the back half of the year. So, you will see that seasonally we are stronger in the back half of the year than the first half of the year and that tends to come from that higher margin revenue. So, they seem like a bigger job to space on the numbers, but you know, for each dollar of growth within agency and owned and operated on, you're going to see a real increase in margins.
Justin Kenna: Thanks everyone for joining the call today. We sort of touched on the fact that we're very much looking forward to giving another update in November and we are, you know, this is certainly, you know, we've been working tirelessly around the integration of phase and the cleanup on that front. I think you've seen some of the benefits in the adjusted EBITDA improvement, but we expect that to really continue in a material way.
Justin Kenna: Thanks, everyone, for joining the call tonight.
Speaker Change: We're very much looking forward to giving another update in November .
Speaker Change: Certainly, we've been working tirelessly around the integration of phase and the cleanup on that front. I think you've seen some of the benefits in the adjusted EBITDA improvement, but we expect that to really continue in a material way. So we're excited to see that.
Justin Kenna: So we're excited to continue sort of putting runs on the board and, you know, this is sort of our first real combined, you know, set of financials and we're very much looking forward to showing that continued improvement and like we talked about getting to profitability and we are, you know, we are very aware that that is going to be key in these markets. So we're well on track and looking forward to catching up with everyone in November. So thanks for joining and thanks for the continued support. Cheers. This concludes GameSquare's 2024 second quarter financial results conference call. You may disconnect your lines. Thank you for participating and have a pleasant day. [inaudible]
Sean McGowan: So, we still feel very confident in being able to hit that number. We expect back half of the year margins to be far greater. We still expect revenue to grow, but I think the mix of that revenue will come more from the agency and owned and operated on the areas rather than large sort of growth from programmatic. Okay. Thank you. And two kind of housekeeping questions. Can you remind us of where on the income statement we would see embedded things like the transaction costs and stock based cop in one line, or is that kind of spread around?
Speaker Change: It continues sort of putting runs on the board and, you know, this is...
Sean McGowan: Yeah, I can answer that. So, all of the stuff based cop in general administrative expense, we don't spread it between the three primary operating costs. And sorry, Sean, what was the former question? Where is transaction cost embedded in the P&L? Transaction costs yet roll up into other operating expenses. Okay. All right. Thank you. And then my last question is kind of a general question. I guess for you, Justin, we're in a weird economic times.
Speaker Change: with our first real combined.
Speaker Change: Yeah.
Speaker Change: set of financials, and we're very much looking forward to showing that continued improvement.
Speaker Change: And like we talked about, getting to profitability and we are very aware that that is going to be key in these markets. So, we're well on track and looking forward to catching up with everyone in November. So, thanks for joining and thanks for the continued support. Cheers.
Speaker Change: This concludes GameSquare's 2024 Second Quarter Financial Results Conference Call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Sean McGowan: We get good news. Some days we get bad news. We've got election stuff. A lot of moving parts. What's your sense among your advertising partners as to what do we expect as we go into the holiday season? Yeah, it's certainly been been tricky, Sean. I think that there was a lot of discussion earlier in the year that Adam Brandspin was back. And we found that our pipeline was really growing, but brands were still quite hesitant to spend that we're in a really strong position.
Sean McGowan: I mean, we had that pipeline that we've been working on is starting to really resonate and close and translate into real revenue. Again, we mentioned some of the brands attached to sort of the new three million of agency recent wins. I think we mentioned there are a couple of sort of seven figure deals on the face side that were in the process of closing out. And there's real pipeline into the back half of the year.
Sean McGowan: So there's definitely mixed stories coming out of Adam Brandwell, but we're certainly feeling like we're breaking through. And we expect that to continue. You know, Q3Q4 is looking really strong for us. We talked about the growth of our events business. There's a lot of events in the back half of the year from a gaming perspective. You know, you have a lot of majors from the eSports perspective. There's TwitchCon, we have an NFL creators series.
Sean McGowan: So there's a number of real catalysts there, but from just from the advertising perspective. Yeah, we're closing deals right now. And, you know, I think that this is certainly a space where we are starting to see those dollars finally kind of flow in. So yeah, we feel really good about the back half of the year. Okay, thank you. This concludes the question and answer session. I would like to turn the conference back over to Justin Kenner for any closing remarks. Please go ahead. Thanks everyone for joining the call tonight. [inaudible] This concludes GameSquare 2024, second quarter financial results conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.