Justin Kenna, CEO of GameSquare Holdings Inc GAME, was recently a guest on Benzinga's All-Access. GameSquare is a next-generation media company that aims to revolutionize the way brands and game publishers connect with hard-to-reach Gen Z, Gen Alpha, and millennial audiences. Its media, entertainment, and technology capabilities aim to drive compelling outcomes for creators and maximize its brand partners' return on investment. The company's purpose-built platform provides award-winning marketing and creative services, offers data and analytics solutions, and amplifies awareness through FaZe Clan, a professional esports and entertainment organization.
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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.