GameSquare Q2 2026 Earnings Call Transcript

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Provided by Quartr
August 10, 2026

Key Takeaways

  • Positive Sentiment: Q2 revenue rose 137% year over year to $18.5 million, while gross margin expanded to 49% from 29.4% and adjusted EBITDA improved to a record $1.0 million from a $3.2 million loss.
  • Positive Sentiment: Management cited strong second-half visibility, with approximately 70% of revenue already booked or locked in, a 100% renewal rate for agency-of-record clients, and major programs involving Marvel Rivals, Roblox, Tencent, TikTok, and others.
  • Positive Sentiment: GameSquare reiterated 2026 pro forma guidance for revenue of $85 million-$90 million, gross margin of 35%-40%, and adjusted EBITDA above $5 million, while expecting Q4 to be its largest quarter and operating expenses to remain relatively stable.
  • Positive Sentiment: The company has repurchased more than 8.8 million shares for approximately $4.1 million and plans to continue buybacks when management believes the stock is undervalued, while selectively monetizing digital-asset holdings to fund higher-return opportunities.
  • Negative Sentiment: GameSquare faces Nasdaq’s minimum bid-price requirement and will ask shareholders to authorize a potential reverse stock split, highlighting continued share-price and listing-related risk despite management’s confidence in the business.
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Earnings Conference Call
GameSquare Q2 2026
00:00 / 00:00

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Operator

Good afternoon, and thank you for joining us for the GameSquare Holdings 2026 second quarter conference call. On the call today, we have Justin Kenna, GameSquare CEO, and Mike Munoz, CFO. During the call, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Before management discusses the results, I'd like to remind everyone that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. For information about forward-looking statements and risk factors, please see our 10-K for the quarter ended June 30, 2026, which will be available on the company's website or with the Securities and Exchange Commission. I will now turn the call over to GameSquare CEO, Justin Kenna. Justin, please go ahead.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Thank you, and good afternoon to everyone joining us on today's call. GameSquare delivered a strong second quarter that marked an important step forward in our financial performance. Revenue increased 137% year-over-year to $18.5 million. Gross margin expanded by nearly 20 percentage points to 49%, and adjusted EBITDA improved to a second quarter record of $1 million. These results were ahead of our expectations and represented a meaningful acceleration from both the first quarter and the prior year period. Most importantly, our second quarter results demonstrate that GameSquare is generating profitable growth from its underlying operations. Our performance also reflects the strength of the integrated platform we've built and the early benefits of recent acquisitions, including Click and TubeBuddy.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Click has expanded our creative marketing, talent management, and campaign execution capabilities, while TubeBuddy adds a high-margin technology and SaaS layer that supports creators and publishers with workflow analytics, optimization, and AI-enabled tools. Together with Stream Hatchet's data measurement and creator intelligence capabilities, these businesses position GameSquare as a differentiated entry point into the creator economy, helping brands and publishers identify the right creators, activate campaigns, optimize content, and measure performance through a single platform. Our second quarter results are encouraging, and we're excited as we enter the seasonally strong second half of the year. I want to use my time today to review our second quarter performance in more detail, discuss the progress that we're making across the business, and provide an update on our expectations for the balance of 2026. GameSquare's profitable growth in the second quarter demonstrates that our operating strategy is producing the intended results.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

As revenue scales a higher margin business mix and prudent operating expense management are driving meaningful operating leverage across the platform. This progress reinforces our confidence in the scalability and earnings potential of our operating model. When combined with our strong financial position, we believe we have the resources and flexibility needed to continue investing in high-return growth initiatives, including technology, premium intellectual property, creator relationships, and other opportunities that can deepen customer engagement, expand margins, and create long-term shareholder value. Talent remains an important growth engine for GameSquare and a key differentiator of our platform. During the second quarter, we continued to expand Click's roster with the signing of SypherPK, one of the world's largest and most influential gaming creators. Sypher reaches more than 20 million followers and subscribers across YouTube, Twitch, Instagram, and other major platforms, making him Click's highest-profile creator addition to date.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

The addition of SypherPK builds on the momentum we discussed last quarter, including the appointment of Justin Miclat as Chief Growth Officer of Click and the signing of Steak, the second-largest Roblox creator. Together, these additions have expanded Click's creator network to more than 60 million followers across major social platforms and increased the premium creator inventory available to our brand partners. They also create additional opportunities across brand partnerships, content, live experiences, commerce, and intellectual property. Our talent strategy is also expanding beyond gaming into athlete and lifestyle creators, where we are building a sizable pipeline. A recent example is a new partnership that we were able to get for UFC athlete Max Holloway with Whatnot. These adjacent categories broaden our audience reach and create additional opportunities to monetize talent across content, commerce, sponsorships, and experiences.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

As we scale these relationships across GameSquare's platform, we believe that talent can drive higher-value programs, greater campaign volume, and attractive operating leverage. Our integrated platform continues to drive strong commercial momentum. One recent example is our work with Marvel on the Marvel Rivals Ignite 2026 mid-season finale. Following quarter end, GameSquare produced a four-day global esports event in Los Angeles, providing turnkey production and talent management as well as monetization services across sponsorship sales, ticketing, and merchandise. The event generated approximately 699,000 hours watched, reached peak concurrent viewership of 54,600, and was distributed across 64 channels in more than five languages. The relationship is an important validation of GameSquare's platform. Marvel, part of The Walt Disney Company, trusted GameSquare to create and deliver a major global competitive moment around one of the world's most recognized and carefully protected intellectual properties.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Our team managed the event end-to-end, including event design, broadcast, tournament operations, venue logistics, sponsorship integration, talent management, and real-time measurements through Stream Hatchet. This is the type of opportunity our integrated platform was built to support by helping leading IP owners activate and monetize their properties across live experiences, content creation, sponsorship, merchandise, and data-driven measurement with one partner accountable for execution. The successful mid-season finale also positions us to build on the relationship as the Marvel Rivals competitive season advances toward the Ignite Grand Finals later this year.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Beyond Marvel Rivals, we have booked a broad range of additional high-profile projects that we expect to contribute to second half revenue growth, including a new relationship with Tencent within our influencer marketing business, our selection to produce the first-ever Innovation Awards at the upcoming Roblox Developer Conference, support for a Red Bull event featuring our newly signed talent, SypherPK, and a renewed relationship with Rekt for 2027. We also expect the second half to benefit from the expansion of FaZe Esports, new strategic marketing services, and creator and community activations in conjunction with TikTok for an upcoming NBA gaming crossover event in L.A. with leading NBA talent. These projects add to recently announced wins with Riot Games, the Esports World Cup, the U.S. Army, and Corsair.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

More broadly, GameSquare has developed a proven track record, bringing to life leading gaming entertainment and sports IP, including work with Fortnite, Roblox, Marvel Rivals, Lego, and the Dallas Cowboys. Across these relationships, we combine creators content, live production sponsorships, experiential execution, data and measurement to create compelling fan experiences and commercial programs. This capability is becoming an important differentiator and a source of larger, repeatable opportunities across our ecosystem. Our recurring client relationships are also strengthening. Our agency of record clients have maintained 100% renewal rate to date in 2026, and our content division is on track for a record year, supported by work for TurboTax, HyperX, Roblox, and Marvel Rivals. In parallel, we are expanding access to premium IP and commercial rights through World of Dance, the Esports Awards, and The Mobies, creating differentiated inventory that can be monetized across multiple parts of the GameSquare ecosystem.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

We are encouraged by the visibility we have into the seasonally stronger second half of 2026. Our confidence is supported by booked programs across GameSquare Experiences, influencer marketing, our content team, esports, talent and technology, as well as a growing pipeline of global brands, publishers and IP owners. Historically, approximately 60% of our revenue has occurred in the second half of the year, and current activity reinforces our confidence in our full year plan. We are also expanding our creative and strategy capabilities in the U.K. with the addition of Tom Wilde, who brings experience from Publicis Groupe and Mindshare. This strengthens our ability to serve clients across Europe and support a disciplined international pipeline. We are also developing opportunities in additional markets, including the Middle East, and will pursue expansion where we can leverage our existing platform efficiently and importantly, profitably.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Our talent pipeline and technology products provide additional growth opportunities. Click's expanding roster creates new brand partnerships, content, commerce, and experiential opportunities. While Stream Hatchet's Creator Communities extends our capabilities from analytics into creative discovery, activation, and campaign management and performance reporting. We expect initial commercialization efforts to begin contributing during this second half. TubeBuddy is also showing encouraging early results from its new AI-powered video ideation tool, which uses creators' proprietary channel data, audience comments, and identity to generate personalized data-backed recommendations. Since active marketing began in early July, TubeBuddy has experienced approximately 10% increase in new subscribers, while users who activate the feature have converted to paid subscribers at roughly 10 times the rate of non-activated users. These results support our view that AI-driven product innovation can support engagement, conversion, and recurring technology revenue.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Together with Stream Hatchet's creator intelligence and campaign measurement capabilities, TubeBuddy strengthens GameSquare's position as an entry point into the creator economy for brands, publishers, and creators. Collectively, our booked programs, recurring customer relationships, expanding talent pipeline, and developing technology offerings provide meaningful visibility into the balance of the year. We expect to announce additional customer wins, creator relationships, and commercial partnerships over the coming months. Combined with improving operating leverage, this pipeline reinforces our confidence in continued growth and again, importantly, profitability. As GameSquare's operating platform continues to scale and generate improving profitability, our capital allocation strategy is also evolving. Our objective is to allocate capital towards the opportunities we believe offer the most attractive risk-adjusted returns and the greatest potential to create long-term shareholder value.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

We remain optimistic on the long-term potential of ETH and other digital assets, as well as revenue opportunities from a growing pipeline of Web3 and on-chain customers. At the same time, we recognize that digital asset values can be volatile and are largely influenced by external market conditions. As a result, we tend to opportunistically monetize portions of our digital asset treasury when we believe the capital can generate a more attractive return elsewhere. We started to do that, which is hopefully being evidenced by the PR around some of the liquidity within our ETH holdings and also our recent buybacks and our share repurchase program. Our current priorities include repurchasing GameSquare shares when we believe they trade at a meaningful discount to the underlying value of the business and investing in high-return growth initiatives across our operating platform.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

These uses of capital are more directly within our control and allow us to leverage the capabilities, customer relationships, and intellectual property we've built to drive revenue growth, margin expansions, and increase profitability. Since the beginning of our repurchase program, we have repurchased more than 8.8 million shares for approximately $4.1 million, including 2.8 million shares during the second quarter and an additional 1 million shares in July. We believe repurchasing shares at attractive valuations can be a highly accretive use of capital, particularly as the underlying operating performance of the business continues to improve. Ultimately, our approach is not based on maintaining a fixed allocation to any one asset class. We will continue evaluating the relative return potential of our DATs, share repurchases, organic investments, and strategic opportunities, and we'll deploy capital when we believe it can create the greatest value for shareholders.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

In addition to deploying capital thoughtfully, we are taking steps to preserve the flexibility needed to support GameSquare's long-term growth. As disclosed in our recently filed proxy statement, stockholders will vote at an August 13 special meeting on authorizing the board to enact a potential reverse stock split, if necessary, to regain compliance with Nasdaq's minimum bid price requirement. Beyond supporting our continued Nasdaq listing, a potential reverse stock split provides the flexibility to support a more appropriate share price and potentially broaden GameSquare's appeal to institutional investors whose investment mandate may limit their ability to own lower-priced securities. Overall, our second quarter results demonstrate that GameSquare is building a larger, higher margin, and increasingly profitable operating platform. We're encouraged by the progress across the business and believe our improving financial performance and evolving capital allocation strategy position us well to invest in growth while creating value for shareholders.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

We remain focused on disciplined execution and converting our strong commercial momentum into sustained revenue growth, operating leverage, and profitability. With this overview, I'll turn the call over to Mike to review our 2026 second quarter financial results. Mike?

Michael Munoz
Michael Munoz
CFO at GameSquare Holdings

Thanks, Justin. Our reported results for the second quarter of 2026 reflect the strategies underway to drive profitable growth. Total revenue was $18.5 million, compared to $7.8 million in the prior year period. The 137% year-over-year increase was primarily driven by the acquisitions of Click and TubeBuddy, as well as growth across our marketing agency and owned and operated IP operating segments. Reported gross margin for the 2026 second quarter was $9.0 million, or 49% of sales, compared to $2.3 million or 29.4% of sales for the same period last year. The significant increase in gross margin reflects a mix of higher margin sales and our ongoing focus on profitability. Adjusted EBITDA for the 2026 second quarter was positive $1.0 million, compared to an adjusted EBITDA loss of $3.2 million for the same period last year.

Michael Munoz
Michael Munoz
CFO at GameSquare Holdings

The $4.2 million improvement reflects the combination of revenue growth, higher blended gross margin, and greater leverage on fixed operating expenses. As of June 30, 2026, we had cash and cash equivalents and digital asset treasury assets of $25.9 million. I am pleased with the progress we are making in growing sales and improving profitability. GameSquare has a strong financial position and liquidity to pursue strategic initiatives, invest in our operating platform, and return capital to shareholders. With this overview, I will turn the call back over to Justin.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Thanks, Mike. Based on the momentum we see across the platform, our confidence remains strong, and we are encouraged by how 2026 is shaping up. On a pro forma basis, which reflects our plans for the TubeBuddy business, we are reiterating our previously announced annual guidance for fiscal year 2026. We expect revenue in the range of $85 million-$90 million, with gross margin of 35%-40%, and adjusted EBITDA of over $5 million. Our outlook reflects continued organic growth and improving year-over-year profitability. With the structural efficiencies we have implemented and the operating discipline now embedded across the organization, we believe that we are well-positioned to scale profitability as the business grows. Our focus remains on executing against our booked pipeline, converting growth into sustained positive adjusted EBITDA and, importantly, cash flow and allocating capital toward the opportunities we believe offer the highest returns for shareholders.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

With this overview, Mike and I are happy to take some questions. Operator, please open the call to questions.

Operator

Thank you. We will now begin the analyst question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. The first question comes from Jack Vander Aarde with Maxim Group. Please go ahead.

Jack Vander Aarde
Jack Vander Aarde
SVP and Senior Research Analyst of TMT, Gaming and Entertainment at Maxim Group

Okay. Great. Good evening, Justin and Mike. Congrats on the strong growth and outlook. Good to see the momentum continuing. I guess, Justin, the guidance that you reiterated implies an even stronger growth ramp in the back half of the year, which is seasonally normal, but still very strong. You touched on some examples. There's quite a few examples that are driving this that you're excited about, but maybe just can you speak to the pipeline and any key industry catalysts that maybe support that implied growth ramp? You touched on Marvel Rivals and Tencent and Roblox, and you got Grand Theft Auto VI launching, I believe, in November. Would love to hear your thoughts in more specific catalysts.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Yeah, for sure. Thanks, Jack, and you also part answered your own question, so I also appreciate that. I think that as you sort of mentioned, that's sort of historically been, I wouldn't say that quarter on quarter, there's enormous seasonality in our business. But historically, back half of the year being a little stronger than first half of the year has proven to be the case year on year. And part of that is that there's more live events and esports tournaments. You have a holiday season with merchant consumer products. You have sort of that flow on effect of these brand and ad budgets where you get those sort of late dollars in the year that kind of open up with those budgets and last minute sort of scramble dollars. So we've really seen that across the board year on year, so we're really confident there.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

But most importantly, I think, sort of internally, we've got more revenue locked in than ever before, right? So we've got retainer relationships. We mentioned sort of those AOR relationships that we have such a high retention rate on, which I think is just such a huge shout out to our team and the incredible work that they do and execute on, is that we don't lose clients and we often say that, and I think that's proof of that. But Dairy MAX, Jack in the Box, Roblox, Rekt, Azuki, all of this. So having a really nice layer of recurring revenue locked in gives us great confidence. We touched on sort of Marvel Rivals and the incredible work that the team did there, and there's a much larger opportunity in December there with the finals, which we're sort of working toward.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

At the moment, we've got multiple events with Roblox, and the list goes on. We've got great visibility into the back half of the year, and I think there's some opportunities certainly for outsized growth beyond our guidance. We want to stay conservative and beat our numbers and continue to do so. I think we proved that out in Q2, and we're confident we'll be able to do that in the back half of the year. I hope that answers your question. I think there's certainly macro factors, but beyond macro, we're just really confident in the way we've been able to execute the visibility we've got on the rest of the year and our ability to get our hands on more IP. We're being trusted by these world-class publishers and IP owners, to go and execute against IP.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

I think that's an area of growth you'll certainly see is our ability to bring IP in-house and monetize it.

Jack Vander Aarde
Jack Vander Aarde
SVP and Senior Research Analyst of TMT, Gaming and Entertainment at Maxim Group

No, excellent. That's great color, Justin. Maybe just two more quick questions. As a follow-up, maybe you talked about the pipeline, how that's in revenue being locked in. Can you maybe just touch on are deal sizes, average deal sizes? Are there synergies between, I guess, some of the businesses that you've acquired and integrated now as well? Just touch on kind of just the, I guess, the evolution of your average deal sizes and sort of that visibility in the pipeline.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Yeah, for sure. It's a great question. Average deal sizes has absolutely increased and something that we monitor internally, and we can start to track and include in these calls as well. I think it's a good point and gives great visibility into the progress. We can provide some more clarity there as a KPI moving forward. I think what's really pleasing, and you kind of touched on it there, Jack, is our ability to integrate into the GameSquare ecosystem. So being able to bring Click and TubeBuddy in. Click will double revenue this year by being part of the GameSquare ecosystem, right? We've been able to sign massive U.S. talent. We're now looking at lifestyle and athlete talent, I think. Obviously, there's huge benefit on the GameSquare front by bringing Click in.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

But equally, I think the Click team has just seen this enormous pipeline of activity that is generated from GameSquare, and that really is great evidence of our ecosystem working, right? These bigger names that we talk about, Epic Games with Fortnite, Roblox, the Creator Showdown, pieces of IP that we have created, Marvel Rivals. These are great examples of The GameSquare ecosystem working. This is not just hats off to our agency team, but they are partnering with our data business. So we can measure absolutely everything we do. Integrating in creators from Click. Executing with our own production team. Overlaying with our own media, and that is the GameSquare ecosystem working. So that is really pleasing to see. It is not that we are getting outsized growth from any one area, it is that the GameSquare ecosystem is working.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

We are upselling, we are cross-selling, we are working as a team, and I think everybody within our four walls understands that that is how we are going to win, and that is how we are winning. So yeah, really pleased to see that. Can certainly provide more information around average deal size by segment and overall blended by GameSquare, but it is certainly increasing. We are a bit more selective now, Jack, with some of the work that we are taking on. 3, 4 years ago, we would be out there sort of fighting for RFPs and taking on any client work. We are selective now with the work that we do. We are targeting bigger projects, and we want to be more strategic with our clients, which ultimately delivers better results for them and helps us expand our margins.

Jack Vander Aarde
Jack Vander Aarde
SVP and Senior Research Analyst of TMT, Gaming and Entertainment at Maxim Group

Excellent color. Just one more quick one. I appreciate your comments earlier about the capital allocation strategy, and you obviously have continued share buybacks and strong debt asset portfolio. You recently, it sounds like successfully have integrated Click and TubeBuddy, and you have been active in M&A in the past. Just any updates or how are you thinking about M&A going forward? Thank you.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Yeah. So I think there is sort of two parts to that. One, on the capital allocation piece, if anybody who missed it, we have started liquidating some of our ETH. We do still have a large holding, which you can see in the press release. I think the reality for us is that we are extremely undervalued. We do feel bullish about the news that we have got coming, the results that we are proving out, and so we are certainly hopeful that we are going to start to get reward for effort. But like I mentioned last time, we are willing to take that into our own hands and continue to liquidate further and buy additional shares back. So I am sure that is something that you will see in conjunction. We have got a very healthy ETH balance there. But the priority is our operating business. We have said that since day one.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

We're proving that out, and I think people will continue to see that. And, certainly from the feedback I'm getting, is that many shareholders will be happy to hear that. M&A, sort of similar story, Jack. I would say that we are actively looking at a couple of interesting acquisitions that could help get us to scale. Like always, I'd say we're extremely cognizant of dilution. We only approach these conversations from a relative value standpoint. We know how undervalued we are. We are not going to go and acquire an entity for a headline value. There would need to be relative value understanding that we are undervalued, and this is a one plus one equals five situation. In saying that, I think we're a very attractive buyer. I think we've got a great name in our space.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

We're getting more and more market share. Having access to capital markets, a clean balance sheet, clean cap table, and a great board. It's pretty attractive. So, we're certainly always looking at ways to get better. I'd say that we feel really comfortable from where we sit in terms of our ability to execute and from a service provider standpoint within the space. Something that we think is pretty interesting is getting our hands on more IP. So I think that's something to look for, whether that's bringing IP in-house that we can directly monetize or continuing to partner with IP holders and owners, and some of which we've announced recently. So, I'd say certainly active in that space, Jack. Constantly looking at ways to get better, cognizant of dilution, but really want to get to scale.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

I certainly would think about it from that aspect, and certainly from an aspect that we would only consider accretive deals. Nothing that's burning cash. We're close here to starting to generate quarter-on-quarter cash for shareholders. That's really where we want to get to, and get to quickly.

Jack Vander Aarde
Jack Vander Aarde
SVP and Senior Research Analyst of TMT, Gaming and Entertainment at Maxim Group

Okay, excellent. Well, I appreciate the time and wish you the best of luck going forward. Thanks.

Operator

The next question comes from Greg Gibas with Northland Securities. Please go ahead.

Greg Gibas
Greg Gibas
Senior Research Analyst at Northland Securities

Hey, good afternoon, Justin and Mike. Congrats on the results and the nice profitability. Appreciate your commentary on share purchases and just how you view the stock. Wanted to maybe follow up on guidance on the other hand, as it relates to what's maybe changed since you last reported and how you're kind of, in terms of the growth pipeline that is, and perhaps how you're viewing Q3 versus Q4 cadence.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Yeah. Greg, I would say that we're more confident in guidance today, and certainly in our pipeline, than we've been at any point from the time of coming out with guidance. To today, we're extremely confident in achieving and exceeding guidance. I think that there was a conversation around increasing guidance, but we want to stay on the conservative side of things and beat our number. As you all know, Q2 is ahead of target, right? We're ahead of where we thought we would be, and we're certainly ahead of where we thought we'd be in terms of pipeline and locked-in recurring revenue. All of that is really pleasing. But we're certainly still frustrated by where we trade and we want to get to scale and we want to blow the doors off this thing, is the reality. We feel really confident in it.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

We obviously want to remain somewhat conservative and continue to deliver and continue to beat numbers. Yeah, extremely comfortable in how things are tracking. Back half of the year shaping up. It's going to be really healthy. I would think of Q4 as, historically it's been our largest quarter, and there's a number of large projects that they may straddle the line of Q3 into Q4, but will probably live in Q4. I would expect Q4 to be the largest quarter of the year. But holding firm on the fact that the back half of the year is 60%, front half 40%. I think it's, you start to think about that operating leverage, right? I don't think you're not going to see much of an increase, if any, from an OpEx standpoint into Q3 and Q4 in comparison to Q2.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

I think that's a pretty good way to think about our OpEx. There may be some slight fluctuations, but it's not going to be material. I think we start to get a bit of operating leverage. You get a bit of growth in revenue. Certainly 60/40 back half of the year, and I would expect Q4 to be larger than Q3.

Greg Gibas
Greg Gibas
Senior Research Analyst at Northland Securities

Great. Understood. That's very helpful. Appreciate the color, Justin Kenna. Along the lines of what you spoke to is being very comfortable with, I guess, locked in or more recurring revenue. Are you able to maybe provide an idea of what within guidance is implied? Or, sorry, what is more recurring revenue implied by guidance? How much is reflected there versus what's more variable?

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Yeah. It obviously fluctuates based off entity. I'd say from a blended margin standpoint, we're probably around 70% of books locked in revenue. That 30%, I'd say our pipeline, would suggest that we'll far exceed that. But I think that if you looked at this two, three years ago, we'd probably be around 30%. I think that has been a huge improvement and increase for us, going to having such a large amount of revenue locked in, as we sit here today, early mid Q3, knowing a lot of what our Q4 looks like. Now, there are some bigger programs, some upsides, some pipeline. There's things that always can come in last minute.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

But obviously pleasing to know that if nothing additional or new was to come into the business, that there's a large amount of revenue that already exists, that we're well on the way to hitting that target. That's a combination of, I think, the incredible work that our agency business does. Specifically that retainer agency of record portion of that. In addition to some of these acquisitions, right, with Click. Obviously Stream Hatchet's always had really high retention. But obviously also now bringing in TubeBuddy for its first quarter, which also should mention, as you look at the numbers and dissect, big ticks from revenue. OpEx has probably gone up a little bit because you've got the full quarter of TubeBuddy. But relatively, this is a margin play. Our margin expanded in Q2, and that's from a SaaS business, that's close to 90% margin, or it's 88% margin.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Yeah, it is a few factors, but certainly really pleasing.

Greg Gibas
Greg Gibas
Senior Research Analyst at Northland Securities

That is great to hear. Thanks again, and I will pass it on.

Operator

This concludes the question and answer session. I would like to turn the conference back over to Justin Kenna for any closing remarks. Please go ahead.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Thank you. Yeah, thanks everyone for joining today's call. I will keep this short and sharp. I am sure you have heard enough from me today. But we appreciate the continued support. Hopefully, our results reflect the incredible progress that we are making, right? We are ahead of target halfway through the year. Pipeline is increasing. We are building meaningful long-term strategic relationships with world-class game publishers and clients, and we expect that to continue. Again, elephant in the room is the share price. We are undervalued, we know that. We feel really bullish. Again, we talked about the capital allocation strategy. We will continue to look to allocate capital to buy back our stock until we break the back there. I think that our focus is on long-term shareholder value and we are going to get there.

Justin Kenna
Justin Kenna
CEO at GameSquare Holdings

Thank you again for the support and we are really looking forward to catching up and providing progress on Q3. I am sure you will see and hear plenty of news from us between now and then. Thanks to everyone. Cheers.

Operator

This brings to a close GameSquare's 2026 second quarter financial results conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Executives
    • Justin Kenna
      Justin Kenna
      CEO
    • Michael Munoz
      Michael Munoz
      CFO
Analysts
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