GameSquare Holdings, Inc.

Good afternoon, and thank you for joining us for the GameSquare Holdings 2025 Second 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. Following 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 see our 10Q for the quarter ended June 30, 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 GameSquare CEO, Justin Kenna. Justin, please go ahead.

Thank you and good afternoon to everyone joining us on today's call. 2025 is on track to be a transformative year for Gamesquare as we aggressively execute against a bold vision aimed at building a leading digital-first platform at the intersection of media, technology, gaming and on-chain finance. While our roots are in media, technology and gaming, and those businesses continue to deliver strong revenue and operational performance, We have also recently launched a differentiated crypto-native treasury management strategy. Since its official launch in July using the August 13, 2025 closing price, our treasury strategy has already generated over $19 million in unrealized gains. And we now hold 15,630 ETH with a current market value of $74.3 million. We believe GameSquare is one of only a few companies globally that combines a proven high-performing operating business with a large-scale, actively managed Ethereum treasury. This unique model positions us to capture meaningful appreciation and yield from our crypto strategy while leveraging the financial and operating performance of our core businesses. Our operating businesses and on-chain treasury management strategy are complementary. In fact, our growing on-chain presence is beginning to fuel new opportunities in our operating business, creating the potential for a powerful growth flywheel. Our strategy is also designed to smooth the volatility of the crypto market by balancing it with consistent diversified revenue streams. Over time, the cash flow and value creation from our treasury activities are expected to fund additional ETH purchases, opportunistic share repurchases, and reinvestment in our core businesses. With over $71.5 million in trailing 12-month revenue and a scalable on-chain model built for both growth and resilience, this structure sets GameSquare apart and creates an extremely compelling value proposition for our shareholders. So with this, I'll jump into our operating performance before I share our early observations from the launch of our treasury management strategy in the third quarter. As we stated on our first quarter earnings call, our priorities this year are focused on achieving profitability, streamlining operations, and driving higher margin revenue opportunities across our core media technology and gaming businesses. I'm pleased with our progress. On a consolidated basis, we've reduced CNA expenses by 15% and expanded gross margin by 120 basis points, driving a 16% improvement in adjusted EBITDA year over year. Additional restructuring efforts are underway, and we've identified a further $5 million in annualized savings that are expected to begin contributing in the third quarter. We also anticipate stronger gross margin in the second half of the year, supported by higher seasonal revenue and a more profitable mix of business. During the second quarter, we completed the divestiture of Phase Media, selling our remaining 25.5% stake back to its founders. This valued FaZe Media at over $39 million compared to our original $14 million stock-based acquisition of both FaZe Esports and FaZe Media, and further simplifies our business while reducing working capital requirements. Today, GameSquare operates across four focus areas, Fast and Managed Services, Agency and Media, Owned and Operated IP, and FaZe Clan Esports. We believe this differentiated end-to-end platform enables deep partnerships with top game publishers and global brands. Our reach into gaming and Gen Z audiences is unmatched. And as brands compete to share in a challenging economic environment, we are confident in our ability to grow organically, supported by recent partnerships and a robust sales pipeline. While consolidated revenue in the second quarter was slightly below expectation due to extended closing timelines and several large deals, we're entering the seasonally strongest part of our year with significant momentum. The demand environment in our agency business is accelerating. Our pipeline is the strongest it's been all year, and many of the opportunities that shifted out of Q2 are now on track to close in the coming months. We expect meaningful sequential growth with Q3 revenue higher than Q2, and Q4 building further on that growth, supported by both new wins and expansion with existing partners. This momentum positions us for a powerful finish to 2025 and a strong launch into 2026. We are also advancing multiple growth initiatives across the portfolio, including scaling our managed services business, launching new products, and expanding owned and operated relationships. Highlights here include Stream Hatchet signed its largest contract to date, supporting the launch of Monster Hunter Wilds. This week, it also announced a new managed services agreement with Ubisoft to support the launch of Tom Clancy's Rainbow Six Siege. These wins underscore Stream Hatchet's transformation from a pure data analytics provider into a full-service marketing engine, delivering measurable value for customers on a global scale. During the quarter, StreamHatchet launched a proprietary AI-based solution that helps game publishers, global brands, and agencies connect with Gen Z and millennial audiences across leading live streaming and social platforms. This engine uses machine learning to decode creative content, audience sentiment, and engagement patterns, enabling brands to identify high-performing influencers and design campaigns with surgical precision. Within Games Square Experiences, we've launched a collegiate esports program to engage campuses nationwide in partnership with a national retail chain. In July, Games Square Experiences successfully produced and managed 100 Thieves Summer Block Party, further showcasing our ability to execute large-scale, high-profile events. Importantly, the strength of our operating momentum complements our on-chain treasury strategy. The same relationships, reach, and capabilities driving wind in media, technology, and gaming are opening doors with crypto-native companies that see value in our expertise and our access to audiences. We are currently in active discussions with more than 15 crypto native organizations representing eight figures of potential deal value that are seeking partners with proven capabilities to help them reach and engage audiences of scale. GameSquare's established operating platform positions us uniquely to meet this demand. We believe these relationships will not only deepen our presence in the on-chain ecosystem, but also generate incremental high margin revenue streams. Based on our current pipeline, we expect initial wins to begin in the third quarter, like our recently announced $2.5 million agency of record win with Azuki, and building further into the fourth quarter, creating another powerful growth driver for our business. That operating momentum makes this the perfect time to review our emerging on-chain treasury strategy, which we officially launch on July 1. Our goal is straightforward. to build one of the most sophisticated yield-generating Ethereum strategies of any public company, and to do so alongside a high-performing operating platform. Unlike pure crypto plays, our model is designed to compound value while buffering against volatility. We are pursuing a three-pronged crypto-native growth strategy, which includes, firstly, an Ethereum-based treasury strategy through Dialectic's on-chain yield platform, targeting annualised yields of 8% to 14%. This kicked off, and we're excited to provide yield results at the end of the month. Secondly is our financialized art and culture asset strategy that looks to acquire culturally significant digital assets and NFTs targeting 6% to 10% annualized stablecoin yields. And third and finally, a Web3 operating strategy leveraging GameSquare's creative agency and gaming businesses to help crypto-native organizations grow global audiences while also adding high potential digital assets and yield opportunities to our treasury. This has already resulted in $2.5 million of high margin revenue for the back half of the year for our agency and record deal with Azuki. The cash flow and appreciation from these activities are intended to fund additional e-purchases, return capital to shareholders through buybacks, and reinvest in our operating business, creating a self-reinforcing cycle of growth across both pillars of our company. We have built a dedicated on-chain platform supported by best-in-class infrastructure and guided by proven leaders in the crypto and DeFi space. This includes a team of dialectic, who bring deep expertise in structuring, managing and optimising institutional grade on-chain portfolios. Our strategy is also supported by seasoned advisors such as Ryan Zura of Dialectic, Robert Lesner of Superstate and Ryan Lee of Goff Capital, all of whom have been instrumental in refining our portfolio construction, risk management and yield generation strategies. This platform allows us to actively manage our ETH holdings in real time, identify high conviction opportunities and move capital efficiently across strategies. Importantly, the systems we've put in place are built for scale, enabling us to increase capital deployment as our treasury grows while maintaining robust oversight and compliance controls. Although still in its early days, our on-chain strategy has already begun to generate meaningful results. As of August 13, 2025, we held 15,630 ETH with an original cost basis of $55 million and a market value of $74.3 million, reflecting an average cost per ETH of approximately $3,519 and a market price of $4,751. We own one of only 24 eight CryptoPunks in existence. Acquired on July 24, 2025 for 5.15 million or 1,084 ETH. Our NFC yield strategy managed by one of one is targeting annualized yields of 6% to 10%. On August 1, we funded our yield strategy with Dialectic that is currently tracking within our targeted 8% to 14% annualized return range. As of August 13, 2025, our ETH, NFT, and cash totaled $99.4 million, or $1 per share, with total debt of just over $1 million. As you can see, GameSquare has never been in a stronger financial position. This strength provides significant flexibility to pursue strategic initiatives, invest in our operating platform, and return capital to shareholders. Reflecting this confidence, our board of directors has approved a shared repurchase program authorizing the company to buy back up to $5 million of our common stock. The program will be funded directly from the net proceeds of our on-chain yield strategy, ensuring that our treasury activities directly translate into shareholder value creation. So with this overview, I'd like to turn the call over to Mike to review our 2025 second quarter financial results. Mike.

Thanks, Justin. It's important to note that our second quarter financial results do not reflect the July launch of our treasury management strategy. The contribution of this strategy will begin to be reflected in our financial results starting in the third quarter. Comparing our 2025 second quarter reported results to the prior year, total revenue was 15.8 million compared to 17.8 million. The 11% year-over-year decline in revenue was primarily due to a reduction in programmatic advertising revenue partially offset by growth across our other business segments. Gross margin for the 2025 second quarter was 2.4 million or 15.3 percent of sales compared to 2.5 million or 14.1 percent of sales for the same period last year. 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. But Justin's EBITDA loss for the 2025 second quarter was 3.5 million, compared to a loss of 4.2 million last year, and a loss of 3.0 million for the first quarter of 2025. Before I turn the call back over to Justin, I want to quickly review some balance sheet items after the second quarter that take into account our recent equity offerings, on-chain purchases, and debt repayments. As of August 13, 2025, GameSquare had approximately 99 million common shares outstanding, cash and cash equivalents of $20 million, on-chain treasury assets of $79.4 million, total debt of $1.25 million, and a market cap to net asset value ratio of 0.92 times. As you can see, GameSquare has strong financial position with excellent liquidity to pursue strategic initiatives, invest in our operating platform, and return capital to shareholders. So with this overview, I'll turn the call back over to Justin.