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GameSquare Holdings Reports Third Quarter 2023 Results
GameSquare Holdings, Inc.
GameSquare Holdings, Inc.
Wed, November 15, 2023, 4:05 PM EST
In this article:
Third quarter revenue increased 58% year-over-year to a quarterly record of $16 million, reflecting the contribution from the Engine Gaming acquisition, and strong organic growth
GameSquare expects accelerating sales growth in the fourth quarter and in 2024
TORONTO, ON / ACCESSWIRE / November 15, 2023 /GameSquare Holdings, Inc. ("GameSquare", or the "Company") (NASDAQ:GAME)(TSXV:GAME) today announced financial results for the three and nine-months ended September 30, 2023.
"2023 is shaping up to be a transformative year for GameSquare with the completion of the Engine Gaming acquisition in April, and the planned acquisition of FaZe Clan that was announced in October. Acquisitions are an important component of our strategic growth plan and support our efforts to quickly reach scale and drive profitability, while simultaneously creating a modern, end-to-end platform to connect global brands with gaming and youth audiences. We are also experiencing strong organic growth as record third quarter sales increased 13% from the 2023 second quarter, and our pipeline remains at record levels," said Justin Kenna, CEO of GameSquare.
"I am pleased with the progress we are making integrating the Engine Gaming acquisition. Since the acquisition closed,
we have removed $6.1 million of annualized cash operating expenses, when comparing proforma combined results from the 2023 first quarter to the 2023 third quarter. In addition, the recently announced definitive agreement to
sell Frankly Media's radio assets for $4 million will further strengthen our balance sheet and streamline our business to support our core marketing, gaming, creative, and technology solutions and capabilities."
"We are also benefiting from significant revenue synergies as we offer more services to more customers. A great example is the growth we are experiencing in performance marketing activations as we combine the science of Engine Gaming's technology assets with GameSquare's creative agencies. Performance marketing initiatives alone are expected to produce $8 to $10 million in annual revenue in 2024. We are excited to replicate the success of the Engine Gaming acquisition with the recently announced FaZe Clan acquisition. The acquisition of one of the biggest names in gaming serves as a perfect illustration of how we have built a powerful infrastructure with expansive scale that we can use to leverage the full spectrum of resources within the GameSquare ecosystem," Mr. Kenna continued.
"As we look to the seasonally strong fourth quarter, and into 2024, I am extremely excited by the direction we are headed and the opportunities we have to create significant value for our shareholders. While the economic environment has remained difficult throughout 2023, we believe we are well positioned to navigate any near-term challenges because of the strong platform we have assembled and the value we provide brands," concluded Mr. Kenna.
Definitive Agreement to Acquire FaZe Holdings Inc. ("FaZe Clan")
On October 20, 2023, GameSquare and FaZe Clan announced that the two companies have entered into a definitive agreement pursuant to which GameSquare will acquire FaZe Clan in an arm's length all-stock transaction. The acquisition brings together two complementary businesses to create one of the world's leading content, media and entertainment companies focused on gaming, esports, and youth culture. The combined company will be powered by a progressive end-to-end platform of leading media and agency organizations, gaming and esport teams, creative services, and technology capabilities. Combined, FaZe Clan and GameSquare generated annual revenue of approximately $138 million and achieved a 26.3% gross margin in 2022. Management expects to realize over $18 million in run-rate cost savings from the FaZe Clan acquisition, supported by reduced duplicate corporate costs and other cost savings.
