Oprah, Lasers, and Numbers

Yeah, it's been a weird Thursday, but here's some Q2 2024 results to chew on.

Aug 22, 2024

I have been thinking a lot about politics this week. Despite what you read on social media networks, watch on cable television, or listen to in podcasts, YouTube and TikTok videos, and on Twitch and Kick livestreams, America is not as divided and divisive as you think it is.

Americans—and most communities in the rest of the civilized world—come together, interact, and help each other every day regardless of beliefs, creed, color, or political persuasions.

If a man is dying of a heart attack and he has a political sign for Donald Trump on his front lawn, the emergency responder (who may be a Kamala Harris or RFK supporter) isn’t going to let them die. If a volunteer at a soup kitchen or a food pantry is feeding the less fortunate, they don’t care if you're a Muslim, a Buddhist, or a Christian; if there’s a flood or a fire, no one cares if the occupant is gay or transgender—because we help, aid, rescue, and save our neighbors. That is what Americans do.

We live, breathe, and interact with each other every day, and the people out there causing trouble and strife for clicks, views, or the modern day equivalent of 10 minutes of fame, are the lesser demons among us, because the rest of us are the best of us.

In other words, there is more that connects than separates us, and the online world is not the real world.

Think about these things as you read all strife online during another rough and tumble political season. (editor’s note: this sounds a lot like the speech Oprah Winfrey gave at the Democratic National Convention on Wednesday evening, but I assure you, I wrote this Wednesday morning and I don’t have an intimate relationship with the biggest daytime TV star in American history).

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A personal note: This week I learned that I have a polyp the size of a match head on my voice box. On Aug. 29, I’ll have surgery to remove it. While I won’t be talking to anyone after that for a bit, it’s a pretty safe and straightforward procedure, which I should be able to (in theory) recover from quickly. I have never had any kind of surgery, never broken a bone, and have rarely been sick (except a couple of bouts with COVID and the Flu), so yeah, I'm mildly nervous about it. Anyone who has talked to me over the last six months can now understand why I sounded like trash in those calls, so here’s to hoping that after this I'll have the voice of an angel (or the voice of an angle) again. I can’t do anything about my face—sorry!

Anyway, thanks for reading all that—now onto some interesting stories in the world of esports gaming. - James Fudge.

Esports Business Q2 2024 Results - By The Numbers

HyperX Arena owner Allied Gaming & Entertainment (NASDAQ: AGAE) revealed financial results for the second quarter of 2024 that ended on June 30. The numbers, according to AGAE:

Revenues: $2.6M, a decrease of 19% compared to $3.3M in Q2 2023.
Costs & Expenses: $7.9M - an increase of 70% compared to Q2 2023.
Net Loss: $3.9M, compared to a net loss of $691K in Q2 2023 - the increase in loss was partly due to $3M in expenses related to legal actions from United Pastures and its hostile attempt to take over Allied.
Adjusted EBITDA Loss: $1.4M, compared to a loss of $1.1M in Q2 2023.
Working Capital Position: $61.8M compared to $66.4M as of Dec. 31, 2023.
Outstanding Common Stock: 38.2M shares of outstanding common stock.
Cash & Short-Term Investment Positions: $95.2M - including $5M in restricted cash, compared to $78.6M as of Dec. 31, 2023.

AGAE's HyperX Arena hosted 65 event days in Q2 2024, with 25 event days and 40 third-party event days. Third-party events included the WPT Choctaw Championship, WPT Seminole Hard Rock Poker Showdown final table, Mobile Legends Bang Bang 2024 NACT Spring Grand Finale, 2024 Licensing International Excellence Awards, and the Sonic Boombox Unofficial LVL Up Afterparty. The company also announced at the end of the quarter the launch of the World Mahjong Tour ("WMT"), a series of events to bring the game of Mahjong to a global stage.

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GameSquare (NASDAQ:GAME) reported financial results for the second quarter ended June 30:

Revenue: $28.6M, compared to $11.4M in Q2 2023.
Gross Profit: $4.2M, compared to $2.8M in Q2 2023.
Net Loss: $12M, compared to a net loss of $4.1M in Q2 2023.
Adjusted EBITDA Loss: $5.4M, compared to a loss of $3.3M in Q2 2023.

Proforma results for Q2 2024 (which includes a full quarter contribution of FaZe Clan in the 2024 periods, and includes a full quarter contribution of Engine and FaZe Clan in the 2023 periods):

Revenue: $28.6M, compared to $23.1M in Q2 2023.
Gross Profit: $4.2M, compared to $4.6M in Q2 2023.
Operating Expenses: $10.0M or 35.1% of revenue, compared to $14.7M or 63.6% of revenue in 2023.
Adjusted EBITDA Loss: $5.4M, compared to a loss of $10M in 2023 and a loss of $7.9M for the quarter ended March 31, 2024—equates to 18.9% of revenue versus 43.5% of revenue last year, and 33.7% of revenue for the quarter ended March 31, 2024, according to GameSquare.

H1 2024 Results:

Revenue: $46.3M, compared to $14.2M in H1 2023.
Gross Profit: $7.6M, compared to $4.1M in H1 2023.
Net Loss: $17.3M compared to a net loss of $8.4M in H1 2023.
Adjusted EBITDA Loss: $9.5M, compared to a loss of $4.8M in H1 2023.

Proforma H1 2024 results for the six months ended June 30, 2024 (includes a full year-to-date contribution of FaZe Clan in the 2024 period, and includes a full year-to-date contribution of Engine and FaZe Clan in the 2023 period.):

Revenue: $52.1M, compared to $47.2M in H1 2023.
Gross Profit: $7.9M, compared to $8.6M in H1 2023.
Operating Expenses: $21.6M, or 41.5% of revenue, compared to $32.9M or 69.8% of revenue last year.
Adjusted EBITDA loss: $13.3M, compared to a loss of $24.3M in H1 2023.
Adjusted EBITDA loss: 25.6% of revenue versus 51.5% of revenue last year.

Looking ahead, GameSquare expects over $100M in annual revenue and annual gross margin to range between 22.5% to 27.5% for 2024. The company noted that this annual guidance “is based on a proforma basis and includes a full 12 months of contribution from FaZe Clan, which was acquired on March 7, 2024.”

For more context and comments from CEO Justin Kenna, check out this release.

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OverActive Media revealed Q2 and H1 2024 financial results for the three and six month period that ended on June 30.

Q2 2024 Results:

Revenue: $6.6M CAD, an increase of 71% compared to $3.86M CAD in Q2 2023.
Operating Costs: $8.6M, a 31% increase from $6.52M CAD in Q2 2023.
Adjusted EBITDA loss: $1.2M CAD, a 52% improvement compared to the adjusted EBITDA loss of $2.5M in Q2 2023.
Net Income: $6.4M CAD ($4.7M USD), an increase of $9.8M CAD ($7.2M USD) compared to a net loss of $3.4M CAD ($2.5M USD) in Q2 2023. This includes a $9.8M CAD ($7.2M USD) gain from the termination of the Call of Duty League franchise obligation.
Net Working Capital: $10.9M CAD ($8M USD) vs. $6.9M CAD ($5.1M USD) in Q2 2023.
Cash & Cash Equivalents: $9.2M CAD ($6.8M USD), largely unchanged compared with $9.3M CAD ($6.8M USD) in Q2 2023.

H1 2024 Results:

Revenue: $10.3M CAD ($7.6M USD), an increase of 88% compared to $5.48M CAD ($4M USD) in H1 2023.
Operating Costs: $14.8M CAD ($10.9M USD), a 25% increase compared to $11.88M CAD ($8.7M USD) in H1 2023.
Adjusted EBITDA loss: $3.1M CAD ($2.3M USD), a 51% improvement compared to the adjusted EBITDA loss of $6.3M CAD ($4.6M USD) in H1 2023.
Net Income: $2M CAD ($1.5M USD), an improvement of $11.2M CAD ($8.2M USD) from the net loss of $9.2M CAD ($6.8M USD) in H1 2023. This includes a $9.8M CAD ($7.2M USD) gain from the termination of the Call of Duty League franchise obligation.

During Q2, OAM signed partnerships with Monster Energy, Cupra, Mahou, and OWO.

On April 16, OAM finalized a new long-term agreement with the Call of Duty League, which included a one-time restructuring payment of $2.7M CAD ($2M USD) and the elimination of $35.2M CAD ($25.9M USD) in outstanding entry fees. This gave the company a net gain of $9.8M CAD ($7.2M USD).

Recently acquired Movistar KOI teams performed well across multiple leagues including Valorant Champions Tour EMEA, Counter-Strike 2, and Superliga, which in turn drove increases in revenue from sponsorships and digital merchandise.

For more details, context and comment from company executives, check out this official release.

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