Q4 2024 GameSquare Holdings Inc Earnings Call
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Speaker Change: Good afternoon, and thank you for joining us for the game by holiday 2020 for fourth quarter Conference call.
Speaker Change: On the call today, we have Justin cannot games Crazy, Oh, really sharp president and Mike Manjarrez CFO.
Speaker Change: During the call all participants are in listen only mode. Following the presentation, we will conduct a question and answer session Hello.
Speaker Change: Hello management discusses the results I'd like to remind everyone that certain statements in this call maybe forward looking in nature.
Speaker Change: These include statements involving known and unknown risks uncertainties and other factors that could cause actual results could differ materially from those expressed.
Speaker Change: Implied in our forward looking statements.
Speaker Change: For information about forward looking statements and risks.
Speaker Change: Okay.
Speaker Change: See our 10-Q for quarter ended December 31st 2024.
Speaker Change: It will be available on the Companys website, all with the Securities and Exchange Commission.
Speaker Change: Now I'll turn the call over to James question, Oh, Jeff and Kevin.
Speaker Change: Please go ahead.
Speaker Change: Thank you and good afternoon to everyone joining us on today's call.
Speaker Change: Our founding in August of 2020, we have followed a strategic plan.
Speaker Change: Quickly building a diverse set of media agency technology in esports assets to help global brands and guys had hotter H E sports and use audiences at scale.
Speaker Change: At 2020 full financial results reflect the success of the first phase of our plan driven by the differentiated platform, we have created and the organic and M&A growth strategies, we have pursued.
Speaker Change: And a lesson for us getting scores at Chegg to $100 million in pro forma revenue through our team's efforts to develop next generation solutions and draw a connection between the world's largest video game publishers talk to brands.
Speaker Change: Our global gaming and esports communities.
Speaker Change: As we've stated on prior calls our operating plan for 24 was focused on three main components.
Speaker Change: To complete the integration of the <unk> acquisition and <unk>.
Speaker Change: Significantly reduced our cost structure.
Speaker Change: To strengthen our balance sheet and divest non core assets.
Third to leverage our platform.
Speaker Change: Agency and media and SaaS advertising assets to drive profitable growth I believe that recent performance demonstrates the progress we made throughout the year.
Speaker Change: When things have been successfully behind US we are excited to begin the next phase of our multiyear strategic plan.
Speaker Change: On reaching positive adjusted EBITDA and cash flow in 2025 given.
Speaker Change: Given the rapid pace of our growth over the past.
Speaker Change: Plus years, we understand theres been a lot of moving parts to our business.
Speaker Change: I want to use the rest of my prepared remarks to outlaw the recent phase <unk> diverse show.
Speaker Change: Well the future and our go forward platform. The strategies, we have pursued to optimize the model in 'twenty four and why we believe we are positioned for a strong organic growth and profitability in 'twenty five.
Speaker Change: So let me start by providing an overview of our 2020 full face clat acquisition and integration.
Speaker Change: As a reminder, in March we completed the acquisition of Iceland in all stock transaction valued at $14 million.
Speaker Change: Since completing the acquisition with strategically split by declining to two assets Vice clad esports, which is one of the world's best and most recognized any sports organizations and media, which we regard as one of the largest followed gaming brands in the world.
Speaker Change: As part of our strategy, we understood that the phase <unk> to be successful by users down isn't created has had to be at the helm.
Speaker Change: I noticed your stake in your organization and be empowered with creative direction. Since March 2024, we focused on recruiting the phase Brad.
Speaker Change: Reducing operating costs and positioning phase media for success as a standalone business.
Speaker Change: Reboot media happened faster than expected and we successfully divested phase media on April one 2025 versus our original expectation of December 31 2025.
This divestiture just media was valued at over $39 million compared to the original purchase price, but bauxite esports insight maybe a.
Speaker Change: $14 million in stock.
Speaker Change: Ice class entitle had pro forma revenue of nearly $45 million and pro forma adjusted EBITDA loss of 32 million in 2023.
Speaker Change: Pro forma revenue of $38 million and pro forma adjusted EBITDA loss of $9 3 million in 2024.
Speaker Change: The majority of the revenue and EBITDA loss of five client was beautiful.
Speaker Change: I for one divestiture Vice media is no longer consolidated guidance with financial statements is also important to note that with the April one.
Speaker Change: Divestiture of <unk>.
Speaker Change: As media, we have eliminated approximately $10 million of debt that was on our balance sheet.
Speaker Change: At December 31, 2024.
Speaker Change: In addition, since separating price class esports Enphase media in the second half of 2024.
Speaker Change: Esports had revenue of $7 $3 million and was EBITDA positive, we still own 100% of face class esports.
Speaker Change: Finally guidance quit will remind the agency of record for face media, which we expect to contribute $500000 to our agency business in 2025.
Speaker Change: So our platform consists of SaaS and managed services.
Speaker Change: You can see in media and owned and operated IP assets as well as our esports team based on esports.
Speaker Change: Important to note that from a financial reporting standpoint, we break out our segments by teams I can see SaaS and advertising going forward in 2025, we expect to adjust our segment.
Speaker Change: Segment reporting to align with how we view our business.
Speaker Change: Overall, we believe we have created a differentiated platform at scale.
Speaker Change: False relationships with the world's largest game publishers and brands. In addition, our platform is uniquely positioned to help our customers engage with hard to reach gaming use audiences.
Speaker Change: As brands look to drive market share in the current economic environment. We believe we are well positioned to grow organically.
Speaker Change: Our confidence is supported by recent one solid partnerships and a robust order book and pipeline.
Speaker Change: That we expect to really start to accelerate revenue in the second quarter.
Speaker Change: With the success with the successful divestiture of Phase media. We are focused on executing the next phase of our strategic plan and profitably growing our business.
Speaker Change: The 2025, we believe we can grow organically by 20% to 25% from annual pro forma sales in 2024, as a result of new and existing customer relationships and cross sell opportunities.
Speaker Change: Our growth strategy for 'twenty five is focused on pursuing managed service opportunities within our SaaS and advertising business leveraging the growing success of our agency media and experience and experiences business and accelerating the growth of ice class esports.
Speaker Change: Our core SaaS business delivered strong performance in 2024 with gross margins exceeding 70%.
Speaker Change: It's pretty Apache continues to lead with cutting edge analytics and business intelligence solutions.
Speaker Change: And to the live streaming and gaming industries.
Speaker Change: Long standing client relationships, including multiyear agreements with riot games every game Tencent tick tock and many others underscore the platform strategic value.
Speaker Change: In 2020 full stream hatchet launched our proprietary AI powered Influencer discovery tool, which leverages data for more than $50 million Maria just to match brands with optimal partners for campaign success the.
Speaker Change: The tool was initially saw forging partnerships globally.
Speaker Change: Publisher of monopoly GUL and stumbled gods to validate its performance.
Speaker Change: Boeing a successful pilot we plan to rollout the solution to our global customer base throughout 2025.
Speaker Change: Our key growth initiatives in this segment is focused on expanding our managed services offering.
Speaker Change: <unk> is a high touch solution designed for customers looking to outsource the entire the entire influencer marketing lifecycle from discovery and vetting of Korea, just a full campaign activation a managed services how you got to the complex needs of game publishers and tier one brands.
Speaker Change: This model combines <unk> proprietary technology with hands on execution, allowing us to deliver turnkey progress with measurable impact.
Speaker Change: Providing managed services also has the potential to drive cross selling opportunities across games squares ecosystem.
Speaker Change: In early 2025 stream actually signed the largest contract in its history with Capcom to support the launch of months. Most of Hunter was disengagement demonstrates the value of our managed services model and the strength of our integrated platform.
Speaker Change: By adding managed services to our portfolio, we have unlocked multiple seven figure opportunities in our pipeline and expect to see significant growth in this area through 2025 and beyond.
Speaker Change: We also see accelerating momentum.
Speaker Change: Influencer marketing and create a relationship management platform.
Speaker Change: He has quickly become the platform of choice for the world's largest game publishes in tier one brands with over 50% of game publisher revenue now attributed to Influencers and creators managing these relationships with the same rigor and enterprise customer data has become a strategic imperative.
Speaker Change: So I'll kick is now finally tune to me the highly specialized needs all game publishers, including capabilities. The case software distribution, but pre released titles integrated just called channels for creative Communications and Duck you saw on enable contract workflows.
Speaker Change: He's focused product position as a critical system of record for managing Influencer programs at scale.
Speaker Change: In addition to signing a multiyear partnership with <unk> in 2024 to support expanded marketing efforts in gaming and esports stock. He has developed a strong sales pipeline and expect to see above average growth in 2025 and beyond as demand for scalable credit relationship tools accelerate.
Speaker Change: To further enhance customer value, we are actively integrating stream Hudson psychic into a unit into a unified platform.
Speaker Change: Single site is now available across both systems and old product roadmap planning centered on delivering a seamlessly integrated experience by combining analytics reporting and Influencer relationship management into one platform. We are creating a powerful data driven solution for brands and publishers to manage every aspect of their creative strategy.
Speaker Change: From a single interface.
Moving to our agency and media business, we experienced strong growth across our agency.
Speaker Change: And maybe your assets led by a year over year revenue increase of 115% zone.
Speaker Change: Is that correct right you can see that is experiencing success for in game World building campaigns, and providing top tier brands with strategic marketing and activation solutions.
Speaker Change: The 2024, we launched custom wells inside Metaverse style games like Fortnite, the brands, including top golf theory, Max ESPN and Spongebob Squarepants.
Speaker Change: Building campaigns drive about 125 million minutes of gameplay and generated $3 $9 million in revenue in 2024.
Speaker Change: We have a really strong pipeline and expect revenue from well building projects to increase over 100% in 2025.
Speaker Change: In addition to 2025, we are pursuing opportunities to license IP and building game wells, where we can capture more of the revenue we generate within these activations. We are finalizing an agreement with Paramount to life and Spongebob Squarepants to develop additional <unk> games and expand on last year's success.
Speaker Change: We plan to launch several custom wells of popular brands that we have losses during the year.
Speaker Change: In addition to well building campaigns agency and media assets are seeing demand for broader opportunities in the digital age.
Speaker Change: I guess, you've continued to grow their capabilities as sort of gaming and are quickly becoming the go to experts all things Internet and youth culture.
Speaker Change: It includes new collaboration opportunities with within mainstream cultural Staples, new community focused initiatives and crossover opportunities to leverage guidance, Chris technology assets for brand clients.
Speaker Change: Cross selling is an important growth initiative highlighting the end to end capability of gangster is next generation platform nowhere is this more impactful than within our owned and operated IP strategy as it touches all aspects of our business, including in game World building.
Speaker Change: <unk> and technology assets.
Speaker Change: Can you square experiences combines all of this together by connecting our owned and operated IP content live event and consumer product assets under one team to highlight the connectivity of experiences.
Speaker Change: The growth strategy for games grew experiences is aligned with emerging trends that we are seeing across our markets as interest is growing for them since countless and brand experiences that connect with audiences through compelling storytelling digital engagement and unforgettable in real life are all touch points.
Speaker Change: To support our efforts and customer demand, we added Paul I hope them as of Jan of games could experiences in late 2023.
Speaker Change: Since then we have created a world class event, such as Mangers News Eve and the NFL for defense law of coagulate events epic games as well as successful Activations for Tesla and you just got record that.
Speaker Change: <unk> Cowboys and ESPN.
Speaker Change: The 2024 games cruise experiences business was a multimillion dollar revenue division and sort of 150% increase in revenue from Q3 24 to Q4 'twenty four we expect annual revenue from our experiences business to increase year over year by far that in 2025, as a result of existing and new partners and achieve.
Speaker Change: Over 30% in gross margin.
Speaker Change: In 2025, we added proven lost all multi cultural marketing gaming and entertainment executives experienced sustained.
Speaker Change: They know how to produce manage and organize large scale activations supported by the capabilities of <unk> platform.
Speaker Change: I still market interest in our sales pipeline, we recently announced the expansion of experiences business. This includes delivering moments for fans and consumers by partnering with top tier brands Cagny committees and Maggie festivals across the U S.
Speaker Change: This includes the recently announced strategic partnership with <unk> to bring the Premier Global Esports Festival game of G to Dallas in March of 2026, I'm going to use one of the world's largest esports and gaming events tailored for video gaming through use of all ages and backgrounds.
Speaker Change: Since its inception in 2016 guidance. He has successfully organized over 20 global additions, including festivals in Spain, Argentina, Egypt, Panama, El Salvador and Mexico. Thanks.
Craig: Thanks, Craig we'll leverage our full platform of capabilities to provide strategy advanced design talent recommendations marketing and operations the game would be 2026.
Speaker Change: To provide additional details on guidance for 2026.
Speaker Change: Yes.
Speaker Change: In addition, <unk> launching a new collegiate esports initiatives aimed at building community and engagement across University campuses as part of our strategic partnership with <unk>, We will bring new experiences to students in the U S through JJ Tech's, leading university esports IP.
<unk> eight <unk>.
Speaker Change: D G takes esports new.
Speaker Change: Can you just takes has partnered with over 2000 global universities non <unk> than 100000 users to provide gaming experiences for students.
Speaker Change: Scaling to meet the demands of global market.
Speaker Change: Mobile gaming markets as a result University esports has become one of the top collegiate esports organizations in the world.
Speaker Change: Outstanding events and experiences to be is a key pillar of the company strategic vision, we believe events can drive cross selling opportunities across Grimes, Thanks, Chris business, and we look forward to additional announcements as these events are formalized.
Speaker Change: Turning to our first quarter esports business. After a strong 2024, we are extremely excited by the potential of ice class esports in 2025.
Speaker Change: I sent an E sports had a strong showing in the 2020 for esports World Cup receiving points being fixed games and two podium finishes in total.
That's one approximately 2 million prize winning in the 'twenty 'twenty four esports World Cup the largest ever tournament wings.
Speaker Change: I guess kind of esports will return to Riyadh, Saudi Arabia for the 2025 esports World Cup.
Speaker Change: This year's event will offer the largest prize pool in esports history of over $60 million in total cash prizes in page 24 of the most popular esports titles across all major gaming genres, not only we'll fight that esports will be participating at these marquee event, but other games great businesses will be supporting these massive activation.
Speaker Change: And I look forward to updating investors in future calls.
Speaker Change: I'm also pleased to announce it on February 16, 2025, but he's got a sports one the fixed invitation of 2024 in Boston and taking out $1 million in prize money. It was price not esports largest ever wranglers six wings.
Speaker Change: As you can see esports is one of the world's top performing esports teams and we believe we can significantly Alabama and monetize attained in 2025.
Speaker Change: We have plans to leverage our corporate headquarters at the stop in Frisco, Texas by creating a performance hub at home to face client esports. This includes adding partners, who see the value enterprise brands and location at the headquarters of the Dallas Cowboys.
Speaker Change: We are following a prudent strategy that sogang squirt increased sales of our prior esports team.
Speaker Change: 220% in just two years as a result, we believe we have the right asset and formula to Godfrey and esports.
Speaker Change: And he'd.
Speaker Change: Ability in 2025 and beyond.
Speaker Change: Finalizing two seven figure licensing deals within a five star sports business.
Speaker Change: Depending on the timing, but I see the company get to profitability sooner.
Speaker Change: As you can say 2024 was a transformative year for games square.
Speaker Change: Looking forward. We are excited to begin the next phase of our multi year strategic plan and focus on reaching positive EBITDA and cash flow in 2025 before I review, our financial expectations in more detail I'd like to turn the call over to Marc to review, our 2020 financial results.
Speaker Change: Yeah.
Marc: Thanks, Justin as a reminder, 2021st financial results include multiple corporate actions most significantly the March seven 2020 for acquisition of Faze clan and the March one 2024 sells complexity gaming, which have been treated.
Marc: Continued operation of our 2024 and 2023 results.
Marc: We also further divested noncore assets during the year on May 31, 2024.
Marc: As a result, we believe it's best to look at our business on a pro forma basis, which includes a full year to date contribution to Faze clan for both 2024 and 2023.
Marc: Comparing our 2024, our pro forma results to the prior year total revenue was 102.0 million compared to $94 8 million or seven six year over year increase in revenue was primarily driven due to growth across our agency segment.
Marc: Gross margin on a pro forma basis for the 2020 for full year was $15 6 million or 15, 3% of sales compared to $13 9 million or 14, 7% of sales for the same period last year.
Marc: We expect gross margin to improve going forward supported by a more profitable revenue mix in 2025, and additional actions underway to improve gross margin.
Marc: On a pro forma basis adjusted EBITDA loss for the 2020 for full year was $19 8 million compared to a net loss of $46 1 million last year, an improvement of $26 3 million.
Marc: We expect the EBIT the trend will continue to improve throughout 2025% with positive EBITDA and cash flow in the second half of 2025 is just in one.
Speaker Change: So with this overview I will turn the call back over to Justin to review our guidance in more detail.
Justin: Thanks, Paul.
Justin: We expect annual pro forma revenue in 2025 of 100 million to $105 million.
Justin: Our revenue guidance for 2025 does not include $27 million of annual revenue from fees media that occurred in 2024.
Justin: Implies year over year pro forma revenue growth of at least 33% in 2025.
Justin: As I mentioned earlier, we are seeing current deals in our pipeline close across our SaaS and managed services you can see in media and owned and operated IP assets.
Justin: Strong within that pipeline and we expect to see additional high margin seven figure deals announced throughout the remainder of the year.
Justin: In particular, the second quarter is shaping up ahead of schedule as we expect to sign multiple seven figure contracts over the next two months.
Justin: First we expect to announce a deal for a major deneke sponsor.
Justin: Esports performance Center, which is also home to games cause hiccups second we are finalizing a multimillion dollar licensing partnership with next generation Blockchain network and.
Justin: And finally, we are working to close a deal with a major game publisher. If all these deals the close of the next two months. We believe we will achieve positive adjusted EBITDA within the second quarter.
Justin: Potential wins from Phase 10 esports during the remainder of 2025 are not included in our upside expectations for 2025.
Justin: We expect a natural lift to gross margin as a result of a more profitable mix of revenue as well as overall improvements in margin and the divestiture of <unk> media.
Justin: The 2025, we currently expect gross margin to grow to 'twenty.
Justin: So 20% to 25% of annual sales.
Justin: We expect annual cash operating expenses in 2025 to improve by approximately $15 million.
Justin: Cash operating expenses in 2024 or $35 million.
Justin: The estimated 40 plus percent reduction in annual cash operating expenses.
Justin: The phase media divestiture and recent actions to reduce full year operating expenses by approximately 10%.
Justin: Organic revenue combined with higher gross margin and lower operating expenses are expected to improve profitability in 2025.
Justin: As we have mentioned historically seasonality will impact first quarter revenue and profitability, but we expect improving trends starting in the second quarter, which is shaping up to be ahead of schedule.
Justin: In addition, we currently expect to achieve positive cash flow and adjusted EBITDA in the second half of 2025.
Justin: Is that really important milestones and I look forward to reporting on our success during the year. So with this overview Lew Mark and I are happy to take your questions. Operator, Please open the call to questions.
Justin: Thank you.
Speaker Change: We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad you live here John acknowledging your quest.
Speaker Change: A speakerphone please pick up your handset before pressing any key to Vitaly a question. Please press Star then two.
Greg: The first question comes from Greg Goodbye Northland Securities. Please go ahead.
Greg: Hey, good afternoon, Justin Lou and Mike Thanks for taking the questions.
Greg: Wanted to just follow up on kind of your growth expectations for 2025, So you maybe to.
Greg: To highlight the primary drivers there I mean, it sounds like World building looking strong SaaS and managed services as well and then the agency business and then you mentioned some pretty big deals for licensing deals for phase E. Sports. So just wanted to get a little bit more color on what gives you confidence in that outlook is it pretty much well rounded and it did sound like even though.
Greg: Q1 is seasonally slower it was off to a pretty solid start and if you could touch on that as well that'd be helpful.
Speaker Change: Yeah, absolutely I can kick off and then Lew Mark feel free to jump in.
Yeah, Greg.
Speaker Change: A really healthy mix I think across the businesses.
Speaker Change: Sort of acquiring Iceland early.
Speaker Change: In 2024, we've seen it.
Speaker Change: Really impressive growth from the phase esports business and as you mentioned we have.
Speaker Change: Two to three seven figure deals that are.
Speaker Change: I don't know why stage or sort of ads available there.
Speaker Change: Moving forward really well, we didn't face any sports business as you mentioned.
Speaker Change: And then we're seeing a lot of really healthy organic growth from our SaaS and managed services businesses as you mentioned and then also.
Speaker Change: I can see and experiences business continuing to grow.
Speaker Change: Licensure epic games, and Paramount and so forth I think.
Speaker Change: To the second part of your question what gives us great confidence is.
Speaker Change: I think.
Speaker Change: Many many people wishing to understand sort of the challenges in the market I think what has been really pleasing is.
Speaker Change: Some of these deals in Q4 that we were hoping would close.
Speaker Change: <unk> done it because they've just been a little slower to get type it in for it a lot but.
Speaker Change:
Speaker Change: At close we seen in Q1 or at closing within Q2s, I'd say all of that set of ambitious.
Speaker Change: So the revenue growth targets.
Speaker Change: They're not as ambitious as a nice thing because a lot of that revenue is he's already locked in and papers and they'll committed so we feel really really good about that number.
Speaker Change: We've talked about the importance of getting to breakeven certainly EBITDA positivity and then generating cash flow, but this is the first time that we've actually given guidance.
Speaker Change: <unk> EBITDA positivity and generating cash so we have great confidence.
Speaker Change: Yeah.
Speaker Change: If you hit these numbers.
Speaker Change: We certainly believe the back half of the year will represent that.
Speaker Change: A couple of these deals that we are finalizing at the moment.
Speaker Change: Q2, Q2 might be a little bit unexpected we might we might hit this a little earlier than we we certainly believe it'll be a real inflection point for us.
Speaker Change: It really healthy growth across the business I'd say.
Speaker Change: The area that's.
Speaker Change: Probably not investing.
Speaker Change: Currently as much and probably not seeing as much quality is really a media programmatic business. We've talked to this before it is still an area of business that generates a ton.
Speaker Change: One for us, but it is lower in margin. So I think you'll see that mix of revenue and the margins increase but really healthy growth in SaaS and managed services I can see and experience the business and certainly from phase esports and I think the confidence really comes from you know.
Speaker Change: Verbal commitments LOI signed recurring revenue locked in longer term relationships and certainly think that you'll see that translate into our financials.
Speaker Change: Year.
Jonathan: Great that's helpful. Jonathan.
Jonathan: I wanted to follow up if you could give me a little bit to it but some incremental color I guess on your expectations for profitability and cash flow improvement this year.
Jonathan: It sounds like in the back half you are expecting profitability.
Jonathan: Mentioned, possibly in Q2, depending on maybe the timing of some of those seven figure deals.
Jonathan: One I guess could you maybe.
Jonathan: Provide kind of a little bit clarity in terms of the level of costs or expenses that are removed from the business in relation or that are kind of tied to that phase media divestiture.
Jonathan: Kind of based on your commentary there to assume EBITDA positivity expected for the full year 2025.
Jonathan: Yes.
Jonathan: If you look at sort of operating system, we touched on a little bit in the script.
Jonathan: We expect in 2025.
Jonathan: Yeah, opex to improve by around $15 million.
Jonathan: So obviously a material amount due.
With the reduction.
Jonathan: Obviously, the divestiture of <unk> media is a part of that with the bed.
Jonathan: Yes.
Jonathan: Media for the year however.
Jonathan: We've also undertaken a project, we think Q1 to reduce a further 10% of Opex. So I think you'll start to see that.
Jonathan: Throughout the year and yes, we believe that we will be EBITDA positive for the year, but certainly the exit.
Jonathan: Exit run rate from Q3 and Q4.
Jonathan: It'll be substantial we've touched on the fact Q1 does represent seasonality for us. It is generally a little little wider audience himself.
Jonathan: Just sort of add brand media spend.
Jonathan: But certainly it was kind of touched on we think that.
Jonathan: You know Q2 is going to be a major inflection point for us Q3 and four.
Jonathan: Certainly representing not only sort of adjusted EBITDA positivity, but the cash flow and certainly you know until the year end exit run rate will be quite substantial so it's not just I guess the.
Jonathan: Divestiture of phase made ear in terms of the reduction of Opex. We've also taken on.
Jonathan: We had a sort of projected earlier in the year.
Jonathan: Fine.
Jonathan: Now listen, it's 10% of annualized Opex, which.
Jonathan: We think so.
Jonathan: Executing and pulling out throughout Q1, and I think you'll start to see.
Jonathan: The results of that certainly in our Q1 results and as top stores.
Jonathan: Our Q2 financials.
Jonathan: Great well, hey, thanks, and congrats on the momentum you are seeing so far this year.
Jonathan: Pass it on thanks for the color.
Speaker Change: Our next question comes from Jack Vander <unk> with Maxim Group. Please go ahead.
Speaker Change: Okay, great. Thanks for the update guys.
Speaker Change: And thanks for taking my questions.
Speaker Change: Justin maybe maybe just to follow up on that to better understand the guidance, there's a lot of moving parts here obviously.
Speaker Change: Really really robust organic growth outlook and margin upside baked into that.
Speaker Change: Just so unclear the 2025 revenue guidance of 100 plus million 100 to 105 deaths.
Speaker Change: That's all organic revenue and is that all from continued operations only meaning it excludes <unk>.
Speaker Change: First quarter 'twenty five from phase media.
Speaker Change: Yeah. So I think I think the easiest way to think about that Jack is that sized media contributed $27 million to.
Speaker Change: The pro forma number in 2024.
Speaker Change: And I think not only is certainly from a revenue perspective, which we'll touch on but I think the areas for us at a lower margin. It really a media programmatic business that we talked about and certainly made it in Wisconsin.
Speaker Change: Afflicting sort of some of the burden that existed.
Speaker Change: I do think there's a divestiture.
Speaker Change: Certainly.
Speaker Change: Got that.
Speaker Change: Alrighty, then we talked about around getting to EBITDA positivity and certainly generating cash so the mix of the revenue I think he is also really important but.
Speaker Change: That is to represent you know.
Speaker Change: We believe.
Speaker Change: We see that we can.
Speaker Change: Certainly meet or exceed the number that we hit in 2024, and we see the pro forma number for 2024 was $102 million.
Speaker Change: Our full year revenue and certainly for 2025.
Speaker Change: Instead of $100 million to $105 million in revenue went out and did you say.
Speaker Change: Obviously, you're removing the band that you are removing some topline which is around $27 million in revenue for the year, which in terms of where that is coming from we certainly expect such.
Speaker Change: Substantial growth from five sports I think the reality is that.
Speaker Change: If media or to esports prior to us.
Speaker Change: Barring Faze clan.
Speaker Change: It was really one P&L and phase esports.
Speaker Change: Really didn't have the data kind of commercial team.
Speaker Change: Selling specifically against the esports business, we've done that we're doing that in terms of you know we've moved the sports business to the headquarters in Dallas.
Speaker Change: Sounds like a sort of seven figure 19 raw steel currently we have a number of sponsorship.
Speaker Change: Sponsorship opportunities lots of setting up a change like that to launch Z sports our invention.
Speaker Change: The us lawn and the list goes on so we see really substantial growth from Z sports and certainly I'm.
Speaker Change: Expecting real profitability from from that part of the business.
Speaker Change: Got it got sonar SaaS managed services business starting to cause some major deals in the home was what we announced earlier in the year. We've made some hires in this part of the business and we're really focusing on sort of.
Speaker Change: Tyler Customizable managed services project solutions for Big brands, and so I think you're going to see a number of seven figure deals come into this part of the business, which which is great I think you've seen this.
Speaker Change: Part of the business is obviously really high margin.
Speaker Change: Great recurring revenue.
Speaker Change: But its probably be hard to scale.
Speaker Change: In prior years.
Speaker Change: Because for us so I think you'll see a number of really large seven figure deals coming there did it sort of being finalized.
Speaker Change: Finalized at the moment, there's a really strong pipeline there.
And then lastly, yeah, that's sort of touching a little bit.
Speaker Change: C and events business and working hand in hand.
Speaker Change: Hum.
Speaker Change: Never had more locked in revenue there.
Speaker Change: Multiyear deals.
Continuing to grow in scale. So yeah, we certainly think that we will.
Speaker Change: More than make up for that delta from the seismic business.
Speaker Change: Yeah, certainly obviously, you know $27 million of top line is nothing to these things that are.
Speaker Change: But we have a lot of that already accounted for in.
Speaker Change: Italy early wins in the year locked in revenue and certainly seeing a lot more upside not only in accounting for that top one that we mentioned that gets at a 101 hundred $5 million this year.
Speaker Change: But certainly what is most important is increasing our gross margin and certainly seeing that reflected in our bottom line. So again just to reiterate you had gone into the 100 or 105 million revenue without media.
Speaker Change: Yeah.
Speaker Change: Revenue is locked in for the year. There is certainly additional upside and in deals that we're working on but.
Speaker Change: We're expecting to hit profitability in the back half of the year, but certainly with a couple of these deals were finalizing hit currently it could be sooner. We think Q2 is going to be a major inflection point for us.
Speaker Change: Okay, Great I appreciate all that extra color.
Speaker Change: Thats definitely encouraging to hear.
Speaker Change: In terms of maybe the order book as well I'd be curious to know just because there's so many distinct segments here and with phase six media being.
Speaker Change: Remove now what is the.
Speaker Change: Do you have an order book and our pipeline.
Speaker Change: Kind of metrics and just sort of philosophy built out for each of your segments.
Speaker Change: So for teams agency and then the SaaS and advertising lines.
Speaker Change: Each of those do you have the most visibility into and do you actually have a pipeline that goes out that extends multiyear for all three segments or are some of those.
Speaker Change: More events driven in.
Speaker Change: As we go just help me understand the order book between the segments.
Speaker Change: Yeah for sure.
Speaker Change: We have an enterprise sales team that is going to market as gang square.
Speaker Change: Which is.
Speaker Change: It's really been a focus of ours over the last 12 months and I think we're starting to really see the results.
Speaker Change: So we have obviously specialists within that team.
Speaker Change: But we are seeing a lot more opportunities coming into the group and I think what it does is it's taking.
Speaker Change: It'd be smaller six figure to transactional type opportunity into longer term seven figure plus opportunities that provide cross sell across the business right because we're going to brands.
Speaker Change: Gaiam square with a complete end to end solution.
Speaker Change: And helping them solve whatever problem that might be and whether that's a data and analytics, whether its immediate need whether it's a launch campaign and so forth, we're finding that that.
Speaker Change: He is really resonating.
Speaker Change: We do have specialists within the three areas that we certainly have a really robust pipeline I would say across the three businesses.
Speaker Change: The easiest way to probably think about that.
Speaker Change: As I kind of touched on within the SaaS business.
Speaker Change: We see we've seen really healthy kind of growth year on year Nice margin business. The challenge. There is how do you get to scale I think we're solving for that I think you'll see that.
Speaker Change: With deals like cap call. There's a couple of others I think you'll see.
Speaker Change: Sort of announced the market over the coming months.
Speaker Change: Really sort of poor gasoline on that part of the business that pop one is really strong.
Speaker Change: Born in a couple of God's work involving in our managed services team is doing a fantastic job.
Speaker Change: A couple on the hires that we're looking at to really bolster our commercial team and continue growing there.
Speaker Change: But you'll certainly see a lot of cars.
Speaker Change: You can see in our men's business is really work hand in hand, so an experienced team that we touched on has really benefited from our agency team in there.
Speaker Change:
Speaker Change: You can get through relationship with epic games with ESPN and what we're doing now instead of just creating sort of strategy.
Speaker Change: Containment campaigns for.
Speaker Change: So these brands went out also.
Speaker Change: Eloping in building and producing want events.
Speaker Change: Saying that the combination of.
Speaker Change: Those business units as being a.
Speaker Change: Really fruitful and we expect that to continue.
Speaker Change: And finally, five Z sports I think the.
Speaker Change: Secret sauce, there is really just pain focusing on the value that that esports business brings us touching a little bit before but.
Speaker Change: Prior you know.
Speaker Change: Phase esports was a bit of a secondary thought within the ecosystem around it because it was one of the pieces.
Speaker Change: The focus was really around the talent rather than the esports business.
Speaker Change: A lot of success and we don't want to growth.
Speaker Change: Hum.
Speaker Change: <unk> team really focusing on the growth of complexity, which is a much smaller brand and face Glenn.
Speaker Change: We achieved 220% of revenue growth over the three years that we own complexity, we took it from quite a large burn to break even in that time and we're already seeing the success of that and we've seen feis Clinton right and that is our commercial team really going out and focusing on that segment.
Speaker Change: Bringing in large opportunities and I certainly think that.
Speaker Change: Good quarters in Dallas.
Speaker Change: And bring a lot of commercial opportunities as well, Rob we've got a lot of brands that are interested in Sydney.
Speaker Change: Certain programming opportunities I mentioned, the 19 rights deal with building out.
Speaker Change: Podcast studio really a hub for innovation and content creation and Theres a lot of opportunities to really monetize there as well so.
Speaker Change: Overall games glad we had a really great baas pipeline I think the pleasing part of it is it's not all pop one right we have more locked in revenue than ever.
Speaker Change: And as I mentioned I feel really confident as we talked about that Q2 is going to be really outsized and a major inflection point for us because of all the deals that.
Speaker Change: Roy or beyond that.
Speaker Change: But I think we'll be able to go and ask the market here really soon.
Speaker Change: Yes.
Speaker Change: Excellent and maybe just just one more.
Speaker Change: I'd like to get your thoughts just this is a big year for the gaming industry as a whole just any any color or any anything you can touch on.
Speaker Change: Do you see opportunities or catalysts with some of these kind of flagship launches that are coming out with Nintendo switch come out the latest one.
Speaker Change: In GTA and is.
Speaker Change: As on track just any of these big announcements or anything in the industry that you are looking and saying hey that that's an opportunity for upside or that gets you excited or that's not baked into your plan.
Speaker Change: Or things that are just they're just thinking about I mean.
Speaker Change: Great. Thanks.
Speaker Change: Yeah. It's a great question I think it was being a little bit of a lull in terms of.
Speaker Change: In your game launches and certainly I think that D. C is going to be an exciting along with GTI. As you mentioned I think for US the way that we're looking at it is.
Speaker Change: Opportunity I think is around a lot of the IP pieces that we're continuing to provide great.
Speaker Change: Right services to publishers and brands when they want to connect with the audience, but something that we've seen really develop for us is the opportunity to call on IP that we can really generate.
Incremental revenue fraud, and some examples of that is NFL fans.
Speaker Change: A piece of it.
Speaker Change: With the NFL and I think the other one is.
Speaker Change: Yes.
Speaker Change: Spongebob Squarepants is is a piece of IP to.
Speaker Change: And we're working on with Paramount to tie goes to the license there from a gaming perspective, but I think for us the opportunity is.
Speaker Change: To continue to grow that part of their business to take advantage of things, what GTA and unlocking style opportunities to build out games that we can directly monetize and drive audience to Robin just providing services.
Speaker Change: I think the gaming space more broadly is probably calling out for some of these big launches. So I think it is a really exciting year to your point we're.
Speaker Change: We're continuing to see.
Speaker Change: Hum.
Speaker Change: Just a lot more sort of in the publishes coming into the space, which I think again provides more opportunity.
Speaker Change: Growth within blockchain gaming and really I think it might just come back to the esports.
Speaker Change: There's been a lot of negative press around esports because of some of the large valuations that existed coming out of Covid.
Speaker Change: But you know we're seeing audience numbers continue to rise we're seeing continued investment.
Speaker Change: Esports World Cup, we touched on the amount of prize money that exist but.
Speaker Change: Even just more broadly and globally. So we see big opportunity there as well I think it's going to be a major year. So despite the numbers all indicate that I think we're really well positioned to take advantage of you know a lot of them almost in a floating into the ecosystem.
Speaker Change: Excellent well I appreciate the color.
Speaker Change: I guess, we'll talk again in May when you report the first quarter. Thank you.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Justin Kennedy for any closing remarks. Please go ahead.
Justin Kennedy: Thank you Jenna and thanks, everyone for joining today's call.
Justin Kennedy: It's been a challenging period in the market.
Justin Kennedy: Certainly some from our perspective, we were very appreciative of.
Justin Kennedy: Yeah.
Justin Kennedy: Shareholders and.
Justin Kennedy: Patients.
Justin Kennedy: I have a whole Charlotte.
Certainly extremely bullish.
Justin Kennedy: 25. This is a major inflection point for our business, we touched on the fact that we've really cleaned up that balance sheet.
Justin Kennedy: Yeah.
Justin Kennedy: We are really knocking on the door here.
Justin Kennedy: The ability, which I think we've.
Justin Kennedy: We haven't sort of shied away from the fact that we noted that that is.
Justin Kennedy: Extremely important in again instead of a major inflection point for us as a business.
Justin Kennedy: Certainly looking forward to to getting a few of these announcements out to the market and we're certainly looking forward to a continued.
Justin Kennedy: Continuing to sort of get some runs on the board here and I'm.
Justin Kennedy: Certainly share it with you.
Justin Kennedy: Throughout 2024, and provide a lot of value for shareholders. So just wondering really genuinely thank everybody for their support and.
Justin Kennedy: We're really excited for 2024 and once it hits the guidance Chris Thanks, everybody.
Justin Kennedy: Okay.
Justin Kennedy: 2020 for fourth quarter financial results Conference call. You May now disconnect your line. Thank.
Justin Kennedy: Thank you for participating and have a pleasant day.
Justin Kennedy: [music].