Stonegate Capital Partners Initiates Coverage on GameSquare Esports Inc. (OTCQB: GMSQF)

DALLAS, TX -- October 21st, 2022 -- GameSquare Esports Inc. (OTCQB: GMSQF): The full report can be accessed by clicking on the following link: https://stonegateinc.com/reports/GMSQF_Initiation_102122.pdf

COMPANY DESCRIPTION

GameSquare Esports Inc. is a vertically integrated, digital media and entertainment company enabling global brands to connect and interact with gaming and esports fans. GameSquare has a reach of 220+ million and targets FY2022 revenue of US$27.5-$30M from its lines of business that include digital agencies, media network, competitive teams, production studio, and merchandise businesses. GameSquare is one of the fastest growing esports orgs and has emerged as a leader in gaming and esports in only two years as a public company. GameSquare Esports trades on the OTCQB (GMSQF) and is listed on the Canadian Securities Exchange under the ticker GSQ.

 SUMMARY

• Large growth opportunity in esports – The global esports business is growing at a rapid pace. According to a report by NewZoo, the esports industry will have an estimated global audience of 600M viewers by 2023, consuming over 100B hours of programming and generating revenue of $200B. Growth drivers include gaming popularity in mainstream culture, technological advancements improved infrastructure, and the emergence of professional esports teams and leagues. Gaming popularity is enticing global brands to invest in the industry, providing GameSquare ample opportunities for growth and expansion.
• Multi-year esports and gaming partnerships – GameSquare works with more than 150 brands, including multi-year deals with Lenovo, Dairy MAX, streaming platform Twitch, and the Dallas Cowboys. The Company entered into a multi-year agreement with Roc Nation Sports, a full-service management and sports agency founded by Jay Z. Fourth Frame Studios is represented by United Talent Agency (UTA), one of the largest and most successful talents agencies in the world. We believe that GameSquare will expand its brand relationships as it continues to grow its revenue.
• Large and engaged audience base – GameSquare knows how to build a large social presence. By reaching an audience of more than 220 million, the Company is one of the largest esports and gaming platforms, which helps attract brands and talent to the company’s platform.
• Significant financial progress already made – GameSquare grew revenue significantly from Q2 FY’21 of $0.9M to Q2 FY’22 of $6.7M, an increase of over 600%. The company has reported that the number and size of RFPs continue to grow and that its sales pipeline is its largest to date. Revenue guidance was increased twice in 2022 to a range of US$27.5M to US$30M.
• Recent $3.0 million private placement – Led by strategic investors at a steep premium to market, the placement strengthens the company’s balance sheet while injecting capital to accelerate revenue growth. Notably, the company has access to an undrawn $5M line of credit backed by its largest investors Jerry Jones and Goff Capital.
• Experienced management team - CEO Justin Kenna brings extensive experience in gaming, esports, and media as former CFO of FaZe Clan where he helped to drive revenue growth of 10x and was responsible for raising over $60M in debt and equity within three years. CRO Sean Horvath is an accomplished executive with more than 18 years of experience in digital marketing and brand partnerships. Sean joined from StreamElements where he was the CRO and grew revenues ~20x. Jan Neumeister, the head of European Operations, brings a proven track record in digital marketing via FaZe Clan, Manchester City FC, and WPP.
• Valuation – We use a comparative analysis to frame valuation. Using an FY2023 Sales forecast, we arrive at a valuation range of US$0.30 to US$0.45.