GameSquare (GAME) Q3 2024 earnings summary

Executive summary

• Achieved record third-quarter revenue of $26.4 million, up 10% year-over-year on a pro forma basis, reflecting strong organic sales growth and successful integration of acquisitions.

• Adjusted EBITDA loss narrowed to $2.2 million from $10.4 million year-over-year and $5.4 million sequentially, showing significant profitability improvements.

• Gross margin expanded by 500 basis points sequentially, with operating expenses reduced by 11.1% and a $3.2 million improvement in Adjusted EBITDA quarter-over-quarter.

• Completed integration of FaZe Clan, divested non-core assets, and focused on leveraging owned IP, agency, media, and SaaS technology for profitable growth.

• Management expects to end 2024 with record revenue, a record backlog, more customers on retainer, and a growing pipeline, positioning for strong growth and improved profitability in 2025.

Financial highlights

• Revenue grew 10% year-over-year to $26.4 million for Q3 2024 on a pro forma basis.

• Gross margin improved to $5.2 million (19.8% of sales) from $3.4 million (14%) year-over-year.

• Adjusted EBITDA loss reduced to $2.2 million (8.2% of revenue) from $10.4 million (43.4%) year-over-year.

• FaZe Esports contributed $4.8 million in revenue and positive Adjusted EBITDA for the quarter.

• Over $17 million in annualized costs removed compared to Q3 2023, with further reductions expected.

Outlook and guidance

• Projecting full-year 2024 revenue between $105 million and $110 million, including a full year of FaZe Clan contribution.

• Expecting record revenue, backlog, and retainer customers by year-end, with strong growth and improved profitability in 2025.

• Anticipating continued margin expansion as higher-margin agency and SaaS businesses grow.

• Management anticipates continued quarterly profitability improvements in 2024, driven by sales growth, gross margin expansion, and cost-saving initiatives.

• Additional cost reductions from FaZe Clan integration expected in Q4 2024.