UPDATE 22/05/23: The article has been updated to include more details about the GameSquare Esports pro forma financial reports for Q1 2023.
North American esports company GameSquare Esports has released its financial results for the first quarter of 2023, as well as a pro forma income statement for the same period.
Compared to the same time period in 2022, GameSquare Esports’ revenue has remained relatively unchanged at roughly $5m (~£4m), but its overall loss has increased from $3.9m (£3.1m) to $4.25m (£3.42m). The company’s adjusted EBITDA loss has dropped from $2.7m (£2.1m) to $2.2m (£1.8m).
GameSquare is a holding company that operates a range of properties in the esports, gaming and entertainment industries. Its shares are publicly listed on the NASDAQ and Toronto Stock Exchange Venture (TSXV) exchanges.
GameSquare Esports announced a merger with Engine Gaming and Media in late 2022, a move that the company has said will lead to better financial predictability, higher revenues and better client reach. Due to the merger, which was officially completed in April (Q2 2023), GameSquare provided pro forma income statements along with the results.
The company’s pro forma income statements noted that its adjusted EBITDA loss is $5m (£4m), compared to $7.3m (£5.86m) in the previous year. GameSquare CEO Justin Kenna stated that the company has identified $8m in annual cost savings, and expects a gross margin of between 30% and 35% in 2023.
GameSquare CEO Justin Kenna also noted that the merger is behind them and that the combined company is “accelerating business momentum.” To conclude he expects sales for the combined company to be between $75m (£60.2) and $80m (£64m).
The first quarter of 2023 for GameSquare Esports was relatively stable with few changes in either loss or revenue. The total revenue was almost the same as last year, with $5.05m (£4.06) compared to $5.04m (£4.05m) in 2022. Cost of sales has decreased from $3.4m (£2.7m) to $3m (£2.4m), and gross profit climbed from $1.6m (£1.3m) to $2m (£1.6m).
Expenses climbed, from a total of $5.6m (£4.5m) in 2022 to $6.3m (£5m) in 2023. This is due mostly to professional fees, which almost doubled from $393,000 (£316,000) to $855,000 (£687,000). These, and other small increments led to the overall loss increase from $3.9m (£3.1m) to $4.25m (£3.42m).
GameSquare Esports is perhaps most known as the owner of esports organisation Complexity Gaming, which it purchased in June 2021 for $27m (£19.5m).
GameSquare also owns other properties including esports agency Code Red Esports, streaming analytics company Stream Hatchet, digital media company GCN, apparel company Mission Supply, and creative production studio Fourth Frame Studios.