GameSquare Holdings, Inc.

Greetings and welcome to the Engine, Gaming, and Media third quarter conference call. Please note this conference is being recorded. Before we begin, I would like to caution listeners that comments made by management during the call may include forward-looking statements within the meaning of applicable securities laws. These statements involve material risk and uncertainties, and actual results could differ from those projected in any forward-looking statement due to numerous factors. for a description of these risk and uncertainties please see engines financial statements and mdna for its third quarter its fiscal year 2022 ended may 31st 2022 available on cdar and edgar important qualifications regarding forward-looking statements are also contained in engines earnings released distributed earlier this afternoon and also available on cdar and edgar furthermore the content of this conference call contains time-sensitive information accurate only as of today, July 14, 2022. Engine undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call. I would now like to turn the conference over to Mr. Lou Schwartz, Chief Executive Officer, and Mr. Tom Rogers, Executive Chairman of Engine Gaming and Media. Please go ahead.

Thank you, operator, and thanks to everyone for joining us on our fiscal third quarter earnings call. To begin, total revenue for the third quarter of fiscal 2022 increased 15% to $9.2 million from $8 million in the same period a year ago. This takes into account the disposition of Eden Games. The two key revenue streams of our business are SaaS, also known as software as a service, and advertising. SAS revenue for the third quarter of fiscal 2022 was $2 million, an increase of 22% from $1.6 million in the third quarter of fiscal 2021, and 5% higher sequentially when compared to $1.9 million in the second fiscal quarter of 2022. During the quarter, our SAS business segment experienced double digit percentage growth in the number of clients year over year. Secondly, advertising revenue for the third quarter of fiscal 2022 was 7.2 million, increasing 13% from the year-ago period of 6.4 million and up 2% quarter-over-quarter from fiscal 2022 second quarter revenues of 7.1 million. The second quarter is usually a seasonally low advertising quarter. Turning to expenses, for the fiscal third quarter of 2022, there were 14.9 million an improvement of approximately $1 million when compared to $15.8 million on a sequential basis. The company's run rate expense reduction from the end of this calendar year going forward is expected to substantially improve to the approximate $16 million of expenses being eliminated relative to where the company was a year ago on a go-forward basis. For the quarter, net income improved substantially to 8.8 million versus 1.6 million in the comparable year-ago quarter. Additionally, for the nine-month period ended May 31, 2022, net income was 735,610 compared to a net loss of 25.8 million. For the third quarter, adjusted EBITDA improved on a sequential basis to a loss of 5.2 million, a nearly 1 million improvement compared to the fiscal second quarter of 2022. The company has been taking aggressive action to reduce costs associated with our B2C gaming businesses. These expense reduction initiatives will continue to be more apparent in coming quarters. Additionally, we will continue to rationalize all spending across the company with an eye toward attempting to achieve cash flow breakeven on a run rate basis in fiscal 2023, while continuing to narrow our focus on a core set of assets with predictable streams of revenue and significant growth characteristics. We remain extremely mindful of the turbulence in the U.S. and Canadian capital markets, and we recognize the importance of preserving and allocating capital wisely while working towards maximizing shareholder value. With our cash on hand at the end of the last quarter and the proceeds from the recently completed Eden transaction and subsequent to quarter end completion of the UMG sale, We have sufficient cash to meet our operating needs as we continue to drive shareholder value moving to profitability. I want to note there are many companies in similar positions to that of GAIM who have strong assets and believe their companies are undervalued. We remain open to finding common ground with companies that find themselves facing similar challenges as well as other potential strategic partners to strengthen our businesses to achieve greater scale. I would like to pass it off to our executive chairman, Tom Rogers. Tom?

Thanks, Lou. If you are new to the engine portfolio of companies, it's important to point out we sit at the epicenter of the so-called creator economy and the growing importance of social media influencers. Our key assets in this area include StreamHatchet and Sidekick. Social influencers in both social media and live streaming platforms are now at the forefront of the creator economy and are evolving as vital elements of digital marketing campaigns. These influencers are key to connecting with the hard to reach, especially younger audiences, enabling the influencer to drive brand awareness and direct response campaigns to their loyal followers. ultimately resulting in e-commerce transactions in addition to other services and offerings. We provide our clients up-to-date, accurate, and reliable audience analytics that are particularly vital to navigating where gaming and media meet in social influencer communities. During the third quarter, Stream Hatchet signed numerous extensions and new commercial agreements with AAA game publishers, such as Epic Games, Activision, Electronic Arts, and Take-Two, esports teams such as FaZe Clan, and major endemic and non-endemic gaming brands such as Nestle, NVIDIA, and Benefit Cosmetics. In total, Stream Hatchet's active clients grew 27% in the third quarter compared to the previous year, from 63 to 80 clients. In addition, Stream Hatchet formerly launched Stream Hatchet Brands, a tool and comprehensive database that allows marketers to track earned media value from over 2,300 major brands on video game streaming platforms. Also, another very important development was that Stream Hatchet launched its consumer streamer module, enabling live streaming creators to self-manage first-party demographic data through real-time in-stream paneling. Measuring a brand's impact and audience resonance within social influencer communities is key to building an impactful marketing strategy that drives real ROI. The link between top performing creator content and commerce is stronger than ever. Leveraging the platform tools and features from Sidekiq's offerings make it an invaluable partner to the many companies navigating this complex social influencer sphere. Sidekiq released major updates to its creator relationship management and influencer marketing platform during the third quarter, including optimizations of its campaign management workflow tools, enhancements to its audience insights, an influencer recommendation engine, and improvements to its social commerce conversion and revenue tracking capabilities. Sidekick also signed commercial extensions and added numerous new clients, including Invisalign, Nike, Universal Music Group, Turtle Beach, and Cartoon Network. In total, active clients in the third quarter for Sidekick grew 10%, year over year. We believe that a tougher economy will result in fewer marketing dollars being allocated to brand advertising and increasing allocations to digital advertising and marketing. However, given developments that have resulted from privacy concerns, making many elements of digital advertising less effective, Within digital marketing, we expect increasing dollars to be dedicated to social influencer marketing, where the improved targeting services we offer can be a major enhancement where traditional targeting is now less effective. On the Franklin Media Minute, Franklin Media continues to optimize its advertising solutions technology, now working with 50-plus demand partners to monetize video, including live video on demand and connected TV, display, and mobile in-app inventory, now with partners such as the Trade Desk, Amazon, and Criteo. Frankly increased both third quarter fiscal 2022 CPMs and RPMs by 27% and 13% respectively compared to a year ago period, maintaining its strong performance quarter over quarter, despite increasingly challenging market conditions. As we make significant strides in defining our core portfolio companies by reorienting our focus toward our B2B units, reducing costs, and minimizing corporate overhead, we are moving toward our goal of 2023 run rate break-even. In sum, our narrowed focus on Franklin, Sidekick, and Stream Hatchets D emphasizes our B2C gaming endeavors, increasingly defining the company as one that, through its data and analytics, guides companies active in marketing to gaming audiences, as well as addressing a broader array of brand sponsors, performance marketers, and media sellers' needs. As I outlined, our offerings are bridging and connecting gaps in the creator economy and which is seeing a rapid increase in marketing dollars going forward as toward the growing social influencer space. I think we'll now take a few questions, and thank you.