Strong Sequential Revenue Growth in Q3 2021 TORONTO, Nov. 01, 2021 (GLOBE NEWSWIRE) -- GameSquare Esports Inc. (CSE: GSQ; FRA: 29Q1) (“GameSquare”, “GameSquare Esports” or the “Company”), an international gaming and esports company, today announced its results for the third quarter ended August 31, 2021 (all amounts in CDN dollars, unless otherwise indicated). The Company has scheduled a conference call to discuss its Q3 FY2021 financial results and provide a business update on November 1, 2021, at 5:00pm ET (2:00pm PT). A complete set of Financial Statements and Management’s Discussion & Analysis for the three and nine-months ended August 31, 2021 are accessible on SEDAR at www.sedar.com under GameSquare’s profile.
Q3 FY2021 Highlights
- GameSquare reported revenue of $2,464,906 which included a full quarter of Code Red and GCN as well as two months contribution by Complexity Gaming, and one month contribution from Cut+Sew;
- For the three months ended August 31, 2021, the Company's Teams segment generated revenue of $254,066 in North America. The Company’s “Teams” segment represents its esports teams which generate revenue through sponsorship, prizes, and player related revenue;
- The Company's Agency services segment generated revenue of $2,210,840 (Europe $1,438,472 and North America $772,368). The Company’s Agency services segment represents its esports agencies which generate revenue through: talent management, influencer promotional fees and consulting;
- The Teams segment generated gross profit of $96,845, while the Agency services segment generated gross profit of $590,192;
- Ended the quarter with $13,079,212 of cash and working capital of $12,365,615;
- Acquired 100% of NextGen Tech, LLC. (dba. as Complexity Gaming) (“Complexity”), a leading esports organization and one of only four esports organizations to have an exclusive partnership with Twitch;
- Closed a private placement for US$7.0 million, which was subscribed to and filled by the Jerry Jones family and Goff Capital, the former majority shareholders of Complexity;
- Closed a bought deal financing of $8.5 million led by Canaccord Genuity, Eight Capital, Haywood Securities and Echelon Wealth Partners;
- Completed the acquisition of Swingman LLC (dba. Cut+Sew and Zoned) (“Cut+Sew/Zoned”), a digital lifestyle marketing agency;
- Appointed Paradigm Sports to GameSquare’s advisory board.
Subsequent Events to Quarter End
- TimTheTatman, one of gaming and esports' biggest personalities, joined Complexity Gaming;
- GCN teamed up with Kraft Heinz brand Bagel Bites to launch the “Unexpected Combinations” relay race;
- GCN partnered with Roc Nation Sports and Uplive to host Call of Duty Tournament with top sports stars;
- GameSquare submitted its application for an OTC QB listing. Management expects its common shares to commence trading on the OTC QB bulletin board in the United States in the very near term;
- The Company generated in excess of $3.5 million of revenue in Q4 as of October 28, 2021, in part as a result of progress in the integration of its acquisitions, the impact of signing TimTheTatman including merchandise sales, and sales initiatives undertaken following the appointment of Sean Horvath as Chief Revenue Officer for GameSquare.
Management Comments and Outlook
"We have made great progress over the last twelve months and Q3 has been truly transformational for GameSquare,” said Justin Kenna, CEO of GameSquare. “We have been active in acquiring assets that enable us to execute on our strategic vision and we have now turned much of our attention to integrating the assets to accelerate revenue growth while keeping profitability top of mind in every decision that we make. The acquisition of Complexity Gaming and the addition of TimTheTatman positions GameSquare as a leading esports organization and we are just getting started. Our agency business was strengthened by the acquisition of Cut+Sew and the work that we have done to realize revenue synergies with GCN and Code Red is happening faster than we expected, as evidenced by the strength of our preliminary Q4 results. I would like to reiterate that early progress in Q4 gives us continued confidence that our illustrative revenue projections of $28 million for calendar 2022 is realistic and achievable.”
“The progress that we made in Q3 has paved the path for the strong financial results that we are seeing across the business in Q4,” added Justin. “We are building a leading esports organization. The strategic partnerships that we have announced and the acquisitions that we have closed are showing real progress and the inbounds that we have had from brands, talent, and potential M&A targets has been remarkable. While our focus through Q3 has been integration of the great companies that we own, we continue to look at great companies run by great people that fit within what we are building. We continue to consider acquisitions of high growth, EBITDA positive agencies with a focus on esports, sports and entertainment in order to strengthen our footprint in Europe and the US; however, we don’t expect to complete additional transactions in 2021. We have built a great platform, with great people that are already doing great things. The trends in esports point to growing engagement by global brands and we believe that the GameSquare family of companies is at the intersection of culture, commerce, and investment.”
Financial Review
GameSquare’s revenues were $2,464,906 for the three months ended August 31, 2021, a 123% increase over Q2 FY2021, and $4,616,977 for the nine months ended August 31, 2021. The core business of Code Red showed strong sequential results as the influencer component of the business posted quarterly revenue of $1,312,685, an 84% sequential increase over the $714,808 reported in Q2 FY2021.
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