00:00Justin, good morning and welcome to the show.
00:07Good morning. How are you doing?
00:08I'm doing great. I always love the opportunity to talk gaming, eSports.
00:12I've got some background in that aspect of it, so excited to chop it up here.
00:16But before we kind of get into the nitty gritty, give us a quick idea of what is it that GameSquare does.
00:21Yeah, absolutely. So GameSquare is an end-to-end sort of next generation media company
00:26connecting game publishers and tier one brands with the huge and growing gaming and eSports communities.
00:33And speaking of which, you had one of the biggest ones in FaZe Clan, ticker F-A-Z-E,
00:38which I believe you recently acquired as well. Give me some insights on why that partnership there.
00:44Yeah, for sure. Funnily enough, I was actually the CFO at FaZe Clan in a previous life,
00:50so I understand the asset really well, so definitely a full circle moment for me.
00:54We acquired FaZe earlier in the year. Very exciting.
00:58FaZe was trading publicly north of a billion dollars at one point in the last sort of 18, 24 months.
01:04So we were able to acquire that for $14 million all stock.
01:07That brand is really, really strong and powerful.
01:10And we've been on an aggressive path to pull a lot of cost out, reignite the brand,
01:15and now really monetize and grow it. So we see a lot of upside there.
01:18Yeah, I mean, I see banks kind of still getting the engagement.
01:21And of course, everyone else in terms of whether it's on Kik, whether it's on Twitch, whether it's on YouTube,
01:25a lot of content, a lot of engagement being created there. So I'm familiar with the story.
01:29You went ahead and reported earnings the other week.
01:31I believe the biggest takeaway, like you mentioned, was the big cost cut,
01:34which is driving, in my opinion, the quarter four adjusted EBITDA profitability aspect of it.
01:39You also have $100 million in annual REV that you've guided as well.
01:43What are some other highlights that you think folks can kind of look forward to,
01:47especially when it comes to getting cash flow positive without having a raise?
01:51Yeah, for sure. And look, that's key. And we know that's key, right?
01:55We are on a ruthless pursuit of profitability, and we think we're on the right path.
02:00Obviously, the acquisition of FaZe was really a growth story.
02:04We knew it would set us back a little bit in terms of immediate profitability,
02:08but I think we've done a really good job.
02:10We pulled out around annualized costs of around $18 million.
02:14We've still got a ways to go, but we improved into Q2 our adjusted EBITDA by $2.5 million.
02:21We expect the same again, if not greater improvement,
02:23and that we think will largely come from definitely continued cost improvement,
02:28but a lot from our margin expansion.
02:30We see a lot of growth in our agency business and our own and operated IP business,
02:34and they are the areas that yield a lot more margin.
02:37So that's certainly something to look for.
02:40From a top-line revenue perspective, we're really well on the way.
02:43We talked about hitting $100 million in revenue pro forma.
02:46We're north of $50 million through the first half of the year.
02:50Normally, seasonality kind of reflects 40-60 in terms of front half, back half.
02:55So we expect a really strong back half of the year,
02:58which is going to help us get to some of that really key profitability by end of year.
03:03When you have an acquisition like you did with FaZe Clan,
03:05I think you've got to go ahead and start things off with a bang.
03:07And what better way to do that than your recent deal with the NFL,
03:10a.k.a. Mr. Jerry Jones, the Cowboys being the largest shareholder.
03:14Tell me a little bit about that.
03:16Yeah, really excited about this one.
03:18We've really bolstered our live events business.
03:22We brought on Paul Aokum as our head of events.
03:25Paul was previously running the Netflix is a Joke Festival, Adult Swim Festival.
03:32He's got a great background, understands the gaming space,
03:36worked closely on experiential 100 Thieves and others.
03:39So he's come in, he helped us run Ninja's New Year's end of last year,
03:42which was hugely successful.
03:44The Epic Games create a roadshow, another big win.
03:47And we've just recently announced what we're really excited about is this program
03:51with the NFL for the fans.
03:55And I would think sort of Pat McAfee College Game Day meets the NFL
04:00with some of the biggest streamers in the world.
04:03So we're really excited about that one.
04:05Kicking off, funnily enough, Thanksgiving in Dallas.
04:08So obviously shout out to the Cowboys and our biggest investors there.
04:14But yeah, we're really excited about this one.
04:16You know, and then I'm going to take that and kind of continue
04:18to the growth that you've had.
04:19By the way, I saw you mentioned 100 Thieves.
04:21I saw Banks, which no one really expected him to beat the CEO of 100 Thieves.
04:27I'm blanking on his name, or Nadeshot.
04:29Nadeshot, yeah.
04:30He finally did.
04:31That was a big event.
04:32Former pro, so.
04:33Yeah.
04:34Yeah, Banks is a closet gamer, you know.
04:39Yeah.
04:40He sort of picked up a controller in a while.
04:42I don't think many people thought he was going to win that.
04:45But that was a really cool event.
04:47A great land that we're able to run with Optic and 100 Thieves
04:50and really bring the community together.
04:52So we're in talks with those guys around doing more together.
04:55And I think, you know, some really exciting stuff.
04:58Optic, another great brand out of Dallas.
05:00I'm sure you guys have plenty of things going on there.
05:02Let's talk about, you know, you had the Esports World Cup that's going on.
05:06I believe you just may have finished in Dubai.
05:09So that's been a great event in itself for the establishment of Esports
05:13taking it to the next level.
05:14You also had FaZe Clan that won a $2 million prize.
05:18Talk to us about that.
05:19Yeah, really exciting.
05:21$60 million prize money at the Esports World Cup, which is crazy.
05:27So, you know, when you hear about people talking about Esports winters,
05:31you know, we certainly don't agree with that.
05:34The prize pools are getting bigger.
05:36The audience numbers are growing.
05:38So, yeah, we were really excited.
05:40We had four top ten finishers and actually finished sixth in the end
05:46of the club championship.
05:47We were really, really close there with PUBG.
05:49Went into the last round on top and ended up finishing third.
05:54The guys played really well and really impressive.
05:57So we're very close to finishing third on the club championship tally,
06:01which I think would have been an extra million dollars in prize money.
06:05So crazy numbers.
06:06But, you know, to take home $2 million in prize money,
06:08the biggest haul ever for FaZe, that'll go into our Q3 numbers,
06:13which is, you know, a big tick when you add in sort of the growth
06:18of our technology business and our agency business.
06:21So extremely excited.
06:22Yeah, looking at other ways that we can continue to grow our presence
06:25in the Middle East and, you know, really get involved next year
06:30in year two at the Esports World Cup.
06:32And that's something that we think will continue to grow
06:35and yield a lot of opportunity for us.
06:37I mean, they had a star-studded lineup as well, right?
06:39You had MBS, the Prince, in the front line as well.
06:42You had Cristiano Ronaldo in the front.
06:44So they really pull out all the stops.
06:46We've seen them invest in different aspects, whether it's golf,
06:48whether it's esports, and other aspects of the world as well.
06:52Before I let you go, Justin, any other thoughts,
06:54any other comments that I didn't get a chance to bring up topic-wise?
06:57The floor is yours to talk to our viewers.
06:59Yeah, no, I think, you know, look, I think for us,
07:02it really is just this path to profitability.
07:06And I think we've clearly shown that, right?
07:08Our Q2 results showed really great top-line growth,
07:13but importantly, continued cost improvement
07:15and real discipline around the business.
07:17So catalyst sort of in the back half a year is to continue
07:21to expect to see improvement on cost.
07:23But what's really going to move the needle is growth
07:26in our agency business, our own and operated IP business.
07:29We had a recent announcement around our agency business,
07:32around $3 million of new revenue wins with Topgolf, Dairymax,
07:385-Hour Energy.
07:40There's a number of others to look for there.
07:42I'd continue to look for some big wins on the phase front.
07:46Certainly phase esports, but also phase media.
07:49You mentioned before, you know, banks back creating content
07:53and the guys really getting a lot of viewership.
07:56We've actually tripled our viewership in the last three months.
08:00So the brand's really hot and expect that to really resonate
08:04through large, you know, seven-figure longer-term deals
08:07with tier-one brands.
08:08So they're really the catalyst to look for in the back half a year,
08:11and, you know, we're really aggressively pursuing
08:14that path to profitability.
08:16We're well into that phase where it's a creator's economy, right?
08:19We've been saying that.
08:20I still think we're in the early innings.
08:21You have folks like Drewski, Kai, Banks,
08:24everyone else getting these deals.
08:25I mean, there was also a rumor, maybe it'll come true,
08:27about how Kevin Hart wants Kai to play him in a movie here and there.
08:30So, like, these are the opportunities that content creators
08:33are getting to take their audience and come to the mainstream
08:36because these eyeballs from your fans will be tuned in
08:39versus the Brad Piss that we're so used to seeing, right?
08:41So there's a pivot happening,
08:42and I think we're still in the early innings as well.
08:44It's exciting to see where we go.
08:46I'll have my people reach out to your people,
08:47see if I can be involved in some of this stuff,
08:49but, man, this is exciting.
08:50I'm happy for the acquisition.
08:51Congrats again with the deal with the NFL in terms of the Cowboys
08:55and the Saudi Arabia prize pool of $2 million as well, Justin.
08:58I'm looking forward to many more milestones for you and the company.
09:01Thank you. Thanks for having me. Appreciate it.
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