GameSquare Holdings, Inc.

Good afternoon, and thank you for joining us for the GameSquare Holdings 2025 First Quarter Conference Call. On the call today, we have Justin Kenna, GameSquare CEO, Lou Schwartz, President, and Mike Munoz, CFO. During the call, all participants are in listen-only mode. During 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. For information about forward-looking statements and risk factors, please refer to our 10-Q for the year ended March 31, 2025, which will be available on the company's website or with the Securities and Exchange Commission. I will now turn the call over to Games Square CEO, Justin Kenna. Justin, please go ahead.

Thank you, and good afternoon to everyone joining us on today's call. Our first quarter results reflect steady progress as we continue to optimize our platform with the goal of achieving profitability and positive cash flow in 2025. Results were in line with expectations and were shaped by seasonal trends lower programmatic advertising revenue, and the final quarter of Faze Media's inclusion in our financials. As a reminder, on April 1, 2025, we completed the divestiture of Faze Media, selling our remaining 25.5% stake back to its founders. The transaction value in Faze Media alone at over $39 million compared to our original $14 million stock-based acquisition of both Faze Esports and Faze Media. Beginning in Q2 2025, Faze Media will no longer be reflected in our financial results, a change we expect to significantly enhance profitability. In Q1, we incurred approximately $2.3 million in operating expenses related to Faze Media, and Faze Media had an adjusted EBITDA loss of $2.3 million. In addition, Gamesco's gross margin would have been nearly 23% if we excluded Faze Media revenue in Q1. The divestiture also strengthened our balance sheet, eliminating approximately $10 million of debt as of April 1, 2025. Today, our only remaining debt includes a $2.8 million line of credit and a $1.6 million convertible note held by one of our directors. With improved profitability and a leaner capital structure, we are well positioned to pursue initiatives that can further reduce our cost of capital. This strategic shift also simplifies our business model and it lowers our working capital needs. GameSquare now operates across four core areas, staff and managed services, agency and media, owned and operated IP, and of course, FaZe Clan Esports. We have built a differentiated platform that enables deep partnerships with top game publishers and global brands. Our platform is uniquely designed to reach valuable gaming and Gen Z audiences at scale. As brands look to gain market share in a challenging economic environment, we are confident in our ability to grow organically, a view supported by recent partnerships, a robust sales pipeline, and strong momentum heading into Q2. As shared in our last call, our 2025 strategy focuses on expanding managed services, scaling our agency and media business, and accelerating growth in phase esports while really prioritizing profitabilities. Our core SaaS business is off to a great start. Earlier this year, StreamHatchet signed its largest contract to date with Capcom to support the launch of Monster Hunter Wilds. In the second quarter, we expect to announce a new strategic partnership with another leading game publisher. These collaborations reflect the growing strength of our platform and StreamHatchet's evolution from a data analytics provider to a full-service marketing engine capable of delivering value to customers on a global scale. The addition of managed services has opened the door to multiple seven-figure opportunities in our pipeline. We anticipate strong growth in this area throughout 2025 and beyond. Furthermore, these engagements are expected to serve as a foundation for long-term SaaS and integrated marketing relationships with major game publishers. Turning to our agency and media segment, our creative agency zone continues to thrive with in-game world-building campaigns and by delivering strategic marketing and activation solutions to top-tier brands. As announced today, we've signed a new license agreement with Paramount Game Studios to develop SpongeBob SquarePants themed games within Fortnite. This strategic partnership deepens our relationship with Paramount and reflects the success of our previous collaborations. Zoned is also seeing momentum in multi-year partnerships. During the quarter, we renewed our variable jack-in-the-box, extending the partnership into its third year. This renewal highlights the effectiveness of our strategy and underscores our capability to bridge gaming and pop culture through high-impact digital marketing. Our agency business is also expanding beyond gaming. They are increasingly recognized as go-to experts in digital and youth culture, enabling collaborations with mainstream brands, community-driven initiatives, and new use cases for GamesQuest proprietary technology assets. We continue to make progress growing our owned and operated IP segment after adding proven team members and resources to our platform over the past 12 months. We are advancing long-term initiatives, including our recently announced partnership with GG Tech to bring the global esports festival Gamergy to Dallas in March of 2026. Since its founding in 2016, Gamergy has hosted over 20 events worldwide in countries including Spain, Argentina, Egypt, Panama, El Salvador, and Mexico. Gamesquare will provide full platform support, including event strategy, design, talent, marketing, and operations. We're currently in phase one of planning for Gamergy Dallas, focused on strategy development, programming, and US market positioning. Phase two will begin in June and will emphasise partnership and sales. I'm pleased to report that we've already had a really big pipeline, a lot of strong interest from brands and publishers on this front. As part of our partnership with GG Tech, we are launching a collegiate esports initiative to foster community engagement across US campuses. GG Tech's university esports program, one of the largest in the world, has reached over 2,000 universities, 9,000 teams and 100,000 participants globally. We see this as a high-potential avenue to deepen our presence in the collegiate gaming space. Turning to our FaZe Clan esports business, FaZe Esports had a really strong first quarter, which included $1 million in prize money from winning the February 2025 Rainbow Six Invitational. We are actively pursuing opportunities that leverage the strength of FaZe Esports and continue to monetise the brand. In the coming months, we plan to announce a new naming rights deal for our headquarters at the Star in Frisco, Texas, transforming it into a performance hub and official home of FaZe Clan Esports. This is part of the broader strategy to elevate FaZe Clan Esports as a premier esports asset and drive long-term value. Overall, I'm encouraged by the direction we're heading. In Q1, we made substantial improvements to adjusted EBITDA compared to pro-forma results last year. These gains reflect improved gross margin and reduced operating expenses. We are continuing to implement cost efficiency initiatives to further strengthen profitability. With a streamlined structure, a robust pipeline and positive momentum across key business units, we believe that we're on track to grow revenue and improve profitability organically in 2025. So with this overview, I'd like to turn the call over to Mike to review our 2025 first quarter financial results. Mike.

Thanks, Justin. We believe it's best to compare our reported Q1 2025 financial results to our Q1 2024 pro forma results, which removes complexity from GameSquare's financial statements and includes a full quarter contribution of phase plan for the three months ended March 31, 2024. Comparing our 2025 first quarter reported results to the prior year, total revenue is 21.1 million compared to pro forma revenue of 23.5 million. The 10% year-over-year decrease in revenue is primarily due to a reduction in programmatic advertising revenue, partially offset by growth across our other business segments. Gross margin for the 2025 first quarter was 3.3 million, or 15.8% of sales, compared to 3.7 million, or 15.7% of pro forma sales for the same period last year. Excluding these media revenue, our gross margin for the 2025 first quarter would have been 22.8%. 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. Adjusted EBITDA loss for the 2025 first quarter was 3.4 million compared to a pro forma loss of 7.9 million last year, an improvement of 4.5 million. We expect the EBITDA trend will continue to improve throughout 2025 with positive EBITDA and cash flow in the second half of 2025 as Justin will outline. So with this overview, I'll turn the call back over to Justin to review our guidance in more detail.