管理層發言
Good afternoon and thank you for joining us for the GameSquare Holdings 2026 Second Quarter conference call. On the call today, we have Justin Kenna, GameSquare CEO, and Mike Munoz, CFO. 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 more information about forward-looking statements and risk factors, please see our 10-K for the quarter ended June 30, 2026, 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. GameSquare delivered a strong second quarter that marked an important step forward in our financial performance. Revenue increased 137% year-over-year to $18.5 million. Gross margin expanded by nearly 20 percentage points to 49% and adjusted EBITDA improved to a second quarter record of $1.0 million. These results were ahead of our expectations and represented a meaningful acceleration from both the first quarter and the prior year period. Most importantly, our second quarter results demonstrate that GameSquare is generating profitable growth from its underlying operations. Our performance also reflects the strengths of the integrated platform we've built and the early benefits of recent acquisitions, including Click and TubeBuddy. Click has expanded our creative marketing, talent management, and campaign execution capabilities, while TubeBuddy adds a high-margin technology and SaaS layer that supports creators and publishers with workflow analytics, optimization, and AI-enabled tools. Together with Stream Hatchet's data, measurement, and creator intelligence capabilities, these businesses position GameSquare as a differentiated entry point into the creator economy, helping brands and publishers identify the right creators, activate campaigns, optimize content, and measure performance through a single platform. Our second quarter results are encouraging and we're excited as we enter the seasonally strong second half of the year. I want to use my time today to review our second quarter performance in more detail, discuss the progress that we're making across the business, and provide an update on our expectations for the balance of 2026. GameSquare's profitable growth in the second quarter demonstrates that our operating strategy is producing the intended results. As revenue scales, a higher margin business mix and prudent operating expense management are driving meaningful operating leverage across the platform. This progress reinforces our confidence in the scalability and earnings potential of our operating model. When combined with our strong financial position, we believe we have the resources and flexibility needed to continue investing in high return growth initiatives, including technology, premium intellectual property, creator relationships, and other opportunities that can deepen customer engagement, expand margins and create long-term shareholder value. Talent remains an important growth engine for GameSquare and a key differentiator of our platform. During the second quarter, we continued to expand Click's roster with the signing of SypherPK, one of the world's largest and most influential gaming creators. Sypher reaches more than 20 million followers and subscribers across YouTube, Twitch, Instagram and other major platforms, making him Click's highest profile creator addition to date. The addition of Sypher builds on the momentum we saw last quarter, including the appointment of Justin Miclat as Chief Growth Officer of Click, and the signing of Steak, the second largest Roblox creator. Together, these additions have expanded Click's creator network to more than 60 million followers across major social platforms and premium creator inventory available to our brand partners. They also create additional opportunities across brand partnerships, content, live experiences, commerce and intellectual property. Our talent strategy is also expanding beyond gaming into athlete and lifestyle creators, where we are building a sizable pipeline. A recent example is a new partnership that we were able to get for UFC athlete Max Holloway with Whatnot. These adjacent categories broaden our audience reach and create additional opportunities to monetize talent across content, commerce, sponsorships, and experiences. As we scale these relationships across GameSquare's platform, we believe that talent can drive higher value programs, greater campaign volume and attractive operating leverage. Our integrated platform continues to drive strong commercial momentum. One recent example is our work with Marvel on the Marvel Rivals Ignite 2026 Mid-Season Finale. Following quarter end, GameSquare produced a 4-day global esports event in Los Angeles, providing turnkey production and talent management, as well as monetization services across sponsorship sales, ticketing and merchandise. The event generated approximately 699,000 hours watched, reached peak concurrent viewership of 54,600 and was distributed across 64 channels in more than five languages. The relationship is an important validation of GameSquare's platform. Marvel, part of The Walt Disney Company, trusted GameSquare to create and deliver a major global competitive moment around one of the world's most recognized and carefully protected intellectual properties. Our team managed the event end-to-end, including event design, broadcast, tournament operations, venue logistics, sponsorship integration, talent management, and real-time measurement through Stream Hatchet. This is the type of opportunity our integrated platform was built to support by helping leading IP owners activate and monetize their properties across live experiences, content, creative sponsorship, merchandise, and data-driven measurement with one partner accountable for execution. The successful mid-season finale also positions us to build on the relationship as the Marvel Rivals competitive season advances toward the Ignite Grand Finals later this year. Beyond Marvel Rivals, we have booked a broad range of additional high-profile projects we expect to contribute to second half revenue growth, including a new relationship with Tencent with our influencer marketing business, our selection to produce the first ever innovation awards at the upcoming Roblox Developer Conference, support for a Red Bull event featuring our newly signed talent SypherPK, and a renewed relationship with Rekt for 2027. We also expect the second half to benefit from the expansion of FaZe Esports, new strategic marketing services and creator and community activations in conjunction with TikTok for an upcoming NBA gaming crossover event in Los Angeles with leading NBA talent. These projects add to recently announced wins with Riot Games, the Esports World Cup, the U.S. Army and Corsair. More broadly, GameSquare has developed a proven track record bringing to life leading gaming entertainment and sports IP, including work with Fortnite, Roblox, Marvel Rivals, LEGO, and the Dallas Cowboys. Across these relationships, we combine creators, content, live production sponsorships, experiential execution, data and measurement to create compelling fan experiences and commercial programs. This capability is becoming an important differentiator and a source of larger repeatable opportunities across our ecosystem. Our recurring client relationships are also strengthened. Our agency of record clients have maintained a 100% renewal rate to date in 2026, and our content division is on track for a record year, supported by work for TurboTax, HyperX, Roblox, and Marvel Rivals. In parallel, we are expanding access to premium IP and commercial rights through World of Dance, the Esports Awards and the Mobies, creating differentiated inventory that can be monetized across multiple parts of the GameSquare ecosystem. We are encouraged by the visibility we have into the seasonally strongest second half of 2026. Our confidence is supported by booked programs across GameSquare Experiences, influencer marketing, our content team, esports, talent and technology, as well as a growing pipeline of global brands, publishers and IP owners. Historically, approximately 60% of our revenue has occurred in the second half of the year, and current activity reinforces our confidence in our full-year plan. We are also expanding our creative and strategy capabilities in the UK with the addition of Tom Wilde, who brings experience from Publicis and Mindshare. This strengthens our ability to serve clients across Europe and supports a disciplined international pipeline. We're also developing opportunities in additional markets, including the Middle East, and we'll pursue expansion where we can leverage our existing platform efficiently and profitably. Our talent pipeline and technology products provide additional growth opportunities. Click's expanding roster creates new brand partnerships, content, commerce, and experiential opportunities, while Stream Hatchet's creator communities extend our capabilities from analytics into creative discovery, activation, campaign management and performance reporting. We expect initial commercialization efforts to begin contributing during this second half. TubeBuddy is also showing encouraging early results from its new AI-powered video ideation tool, which uses creators' proprietary channel data, audience comments, and identity to generate personalized data-backed recommendations. Since active marketing began in early July, TubeBuddy has experienced approximately a 10% increase in new subscribers, while users who activate the feature have converted to paid subscribers at roughly 10 times the rate of non-activated users. These results support our view that AI-driven product innovation can support engagement, conversion, and recurring technology revenue. Together with Stream Hatchet's creator intelligence and campaign measurement capabilities, TubeBuddy strengthens GameSquare's position as an entry point into the creator economy for brands, publishers, and creators. Collectively, our booked programs, recurring customer relationships, expanding talent pipeline, and developing technology offerings provide meaningful visibility into the balance of the year. We expect to announce additional customer wins, creative relationships and commercial partnerships over the coming months. Combined with improving operating leverage, this pipeline reinforces our confidence in continued growth and, importantly, profitability. As GameSquare's operating platform continues to scale and generate improving profitability, our capital allocation strategy is also evolving. Our objective is to allocate capital towards the opportunities we believe offer the most attractive risk-adjusted returns and the greatest potential to create long-term shareholder value. We remain optimistic on the long-term potential of ETH and other digital assets, as well as revenue opportunities from a growing pipeline of Web3 and on-chain brand customers. At the same time, we recognize that digital asset values can be volatile and are largely influenced by external market conditions. As a result, we tend to opportunistically monetize portions of our digital asset treasury when we believe the capital can generate a more attractive return elsewhere. We started to do that, which is evidenced by the PR around some of the liquidity within our ETH holdings and our recent buybacks under our share repurchase program. Our current priorities include repurchasing GameSquare shares when we believe they trade at a meaningful discount to the underlying value of the business and investing in high return growth initiatives across our operating platform. These uses of capital are more directly within our control and allow us to leverage the capabilities, customer relationships and intellectual property we've built to drive revenue growth, margin expansions and increase profitability. Since the beginning of our repurchase program, we have repurchased more than 8.8 million shares for approximately $4.1 million, including 2.8 million shares during the second quarter and an additional 1 million shares in July. We believe repurchasing shares at attractive valuations can be a highly accretive use of capital particularly as the underlying operating performance of the business continues to improve. Ultimately, our approach is not based on maintaining a fixed allocation to any one asset class. We will continue evaluating the relative return potential of our digital asset treasury, share repurchases, organic investments and strategic opportunities, and we'll deploy capital where we believe it can create the greatest value for shareholders. In addition to deploying capital thoughtfully, we are taking steps to preserve the flexibility needed to support GameSquare's long-term growth. As disclosed in our recently filed proxy statement, stockholders will vote at an August 13 special meeting on authorizing the board to enact a potential reverse stock split, if necessary, to regain compliance with Nasdaq's minimum bid price requirement. Beyond supporting our continued Nasdaq listing, a potential reverse stock split provides flexibility to support a more appropriate share price, and potentially broaden GameSquare's appeal to institutional investors whose investment mandate may limit their ability to own lower-priced securities. Overall, our second quarter results demonstrate that GameSquare is building a larger, higher margin and increasingly profitable operating platform. We're encouraged by the progress across the business and believe our improving financial performance and evolving capital allocation strategy position us well to invest in growth while creating value for shareholders. We remain focused on disciplined execution and converting our strong commercial momentum into sustained revenue growth, operating leverage and profitability. So, with this overview I'll turn the call over to Mike to review our 2026 second quarter financial results. Mike.
Thanks, Justin. Our reported results for the second quarter of 2026 reflect the strategies underway to drive profitable growth. Total revenue was $18.5 million compared to $7.8 million in the prior year period. The 137% year-over-year increase was primarily driven by the acquisitions of Click and TubeBuddy, as well as growth across our marketing agency and owned and operated IP operating segments. The reported gross margin for the 2026 second quarter was $9.0 million or 49% of sales compared to $2.3 million or 29.4% of sales for the same period last year. The significant increase in gross margin reflects a mix of higher margin sales and our ongoing focus on profitability. Adjusted EBITDA for the 2026 second quarter was positive $1.0 million compared to an adjusted EBITDA loss of $3.2 million for the same period last year. The $4.2 million improvement reflects a combination of revenue growth, higher blended gross margin, and greater leverage on fixed operating expenses. As of June 30, 2026, we had cash and cash equivalents and digital asset treasury assets of $25.9 million. I am pleased with the progress we are making in growing sales and improving profitability. GameSquare has a strong financial position and 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.
Thanks, Mike. Based on the momentum we see across the platform, our confidence remains strong and we're encouraged by how 2026 is shaping up. On a pro forma basis, which reflects our plans for the TubeBuddy business, we are reiterating our previously announced annual guidance for fiscal year 2026. We expect revenue in the range of $85 to $90 million, with gross margin of 35% to 40%, and adjusted EBITDA of over $5 million. Our outlook reflects continued organic growth and improving year-over-year profitability. With the structural efficiencies we've implemented and the operating discipline now embedded across the organization, we believe that we are well positioned to scale profitability as the business grows. Our focus remains on executing against our booked pipeline, converting growth into sustained, positive, adjusted EBITDA, and, importantly, cash flow, and allocating capital toward the opportunities we believe offer the highest returns for shareholders. So with this overview, Mike and I are happy to take your questions. Operator, please open the call to questions.
分析師問答
The first question comes from Jack Vander Aarde with Maxim Group. Please go ahead.
Okay. Justin, Mike, congrats on the strong growth and outlook. Good to see the momentum continuing. So I guess, Justin, the guidance that you've reiterated implies an even stronger growth ramp in the back half of the year, which is seasonally normal, but still very strong. Can you maybe, you touched on some examples. There's quite a few examples that are driving this that you're excited about, but maybe just can you speak to the pipeline and any key industry catalysts that maybe support that implied growth ramp? You touched on Marvel Rivals and Tencent and Roblox and you've got GTA VI launching, I believe, in November. We'd love to hear your thoughts in more specific catalysts.
Yes, for sure. Thanks, Jack. You also partly answered your own question. As you mentioned, historically the back half of the year has been stronger due to more live events and esports tournaments, holiday season merchandise and consumer products, and late-year advertising budget activity. We see that trend continuing. More importantly, internally we have more revenue locked in than ever before, including retainer relationships with a high retention rate. Clients such as Dairy MAX, Jack in the Box, Roblox, Rekt, Azuki and others provide a layer of recurring revenue that gives us strong confidence. We touched on Marvel Rivals and the work the team did there; there is a much larger opportunity in December with the finals, which we're working toward. At the moment we have multiple events at Roblox and many other booked projects. We have great visibility into the back half of the year. There are opportunities for outsized growth beyond our guidance, but we prefer to stay conservative and beat our numbers, which we proved in Q2. We're confident in the rest of the year and in our ability to secure and monetize IP. Our ability to bring IP in-house and monetize it is an area of growth you will see.
Excellent. No, that's great color, Justin. And maybe just two more quick questions. As a follow up, you talked about the pipeline and how that revenue is locked in. Can you maybe touch on deal sizes, average deal sizes, and whether there are synergies between some of the businesses you've acquired and integrated? Just touch on the evolution of your average deal sizes and visibility in the pipeline.
Yes, great question. Average deal size has absolutely increased and it's something we monitor internally and can include as a KPI moving forward. What's really pleasing is our ability to integrate into the GameSquare ecosystem. Bringing Click and TubeBuddy into GameSquare has driven substantial growth. Click will double revenue this year by being part of the GameSquare ecosystem, and the Click team has seen an enormous pipeline generated from GameSquare activity. This demonstrates our ecosystem working: bigger names, Epic Games with Fortnite, Roblox, the Creator Showdown, Marvel Rivals — these are examples of GameSquare's ecosystem. Our agency team partners with our data business so we can measure everything we do, integrate creators from Click, execute with our production team, and overlay with our media. We are upselling and cross-selling, and average deal size is increasing. We're more selective with the work we take now, targeting bigger projects and being more strategic with clients, which delivers better results for them and helps us expand margins.
Excellent color. Just one more quick one. I appreciate your comments earlier about the capital allocation strategy, and you obviously have continued share buybacks and a strong digital asset portfolio. You recently, it sounds like, successfully integrated Click and TubeBuddy and you've been active in M&A in the past. Any updates or how are you thinking about M&A going forward?
Yes, it's two parts. On capital allocation, we have started monetizing portions of our ETH holdings and that is evidenced by related PR and our recent buybacks. We still hold a significant ETH balance but our priority remains the operating business. We are undervalued and we are willing to continue monetizing assets and repurchasing shares. On M&A, we are actively looking at a couple of interesting acquisitions that could help us scale. We are very cognizant of dilution and would only pursue transactions that make sense from a relative value perspective. We want 1+1=5 outcomes. We are an attractive buyer with a clean balance sheet and strong market position. We are particularly interested in getting our hands on more IP, whether bringing IP in-house to monetize directly or partnering with IP owners. We would only consider accretive deals, nothing that burns cash. We are close to generating quarter-on-quarter cash for shareholders and we want to get to that quickly.
The next question comes from Greg Gibas with Northland Securities.
I appreciate your commentary on share purchases and how you view the stock. I wanted to follow up on guidance as it relates to what's changed since you last reported and how you're interpreting the growth pipeline. How are you viewing Q3 versus Q4 cadence?
Yes, Greg, we are more confident in guidance today and in our pipeline than we've been at any point since we came out with guidance. We're extremely confident in achieving and exceeding guidance. There was internal conversation about increasing guidance, but we want to stay conservative and continue to beat our numbers. Q2 is ahead of target and our pipeline and recurring revenue are stronger than expected. The back half of the year is shaping up to be healthy. Historically roughly 60% of revenue occurs in the second half of the year. Think of Q4 as our largest quarter; some large projects may straddle Q3 and Q4 but will likely reside in Q4. From an OpEx standpoint, you should not expect a material increase from Q2 into Q3 and Q4; there may be slight fluctuations but nothing material. That dynamic gives us operating leverage as revenue grows. So plan for roughly a 60/40 back half versus front half split, with Q4 larger than Q3.
Great. Understood. That's very helpful. Appreciate the color, Justin. Along the lines of what you spoke to about being comfortable with locked-in or recurring revenue, are you able to provide an idea of how much of guidance is implied recurring revenue versus what's more variable?
Yes. It varies by entity, but on a blended basis I'd say around 70% of booked revenue is locked in. Historically two to three years ago that would have been closer to 30%, so this is a major improvement. Our pipeline suggests we will exceed that. That locked-in revenue comes from our agency retainer AOR relationships, high retention from Stream Hatchet, and contributions from TubeBuddy. You should note TubeBuddy's SaaS business has very high gross margins, roughly in the high 80s. There are a few factors behind margin and revenue mix, but overall it's very pleasing to have a large base of already secured revenue as we approach Q4.
This concludes the question and answer session. I would like to turn the conference back over to Justin Kenna for any closing remarks. Please go ahead.
Thanks, everyone, for joining today's call. I'll keep this short. We appreciate the continued support. Our results reflect the progress we're making. We're ahead of target halfway through the year. The pipeline is increasing. We're building meaningful long-term strategic relationships with world-class game publishers and clients, and we expect that to continue. The share price is an issue; we believe we are undervalued and feel bullish. We will continue to allocate capital to buy back stock when attractive. Our focus is on long-term shareholder value and disciplined execution. We're looking forward to providing progress on Q3 and you will see and hear plenty of news from us between now and then. Thank you again for the support.
This brings to a close GameSquare's 2026 Second Quarter Financial Results Conference Call. You may disconnect your lines. Thank you for participating and have a pleasant day.