GameSquare Reports 137% Revenue Growth in Q2 2026 Amid Nasdaq Deadline Approaching

GameSquare Holdings has announced impressive second-quarter revenue of $18.5 million, marking a 137% increase compared to the same period last year. This comes just weeks before a Nasdaq compliance deadline that could potentially lead to the delisting of the owner of FaZe Esports.

In its earnings release on August 10, the company reported a gross profit of $9.0 million, up from $2.3 million a year prior, resulting in a gross margin increase to 49.0% from 29.4%. Adjusted EBITDA hit a record $1.0 million for the quarter, a significant turnaround from a loss of $3.2 million in the same quarter of 2025. The company noted that these figures are preliminary and unaudited, and may differ from those reported in its Form 10-Q.

“Revenue surged 137% year-over-year to $18.5 million, gross margin expanded nearly 20 percentage points to 49.0%, and adjusted EBITDA reached a record $1.0 million for the second quarter,” said GameSquare CEO Justin Kenna.

However, the net loss from continuing operations increased to $10.6 million from $4.0 million a year earlier. This loss included a $7.8 million adjustment in the fair value of digital assets, along with other fair value changes and one-time transaction costs related to mergers and acquisitions.

For the first half of 2026, revenue totaled $33.0 million, up from $15.2 million the previous year, while the net loss from continuing operations widened to $28.2 million from $7.8 million. A significant portion of this loss, $22.4 million, was attributed to fair-value losses on digital assets. Adjusted EBITDA for the half-year was a loss of $0.1 million.

These digital assets stem from an Ethereum treasury strategy authorized by GameSquare’s board in July 2025, with a budget of up to $100 million. The initial phase was funded through an $8 million public offering priced at $0.95 per share. As of June 30, the company held 15,080.51 ETH valued at $23.5 million, alongside $2.1 million in cash and $2.4 million in restricted cash, totaling $25.9 million or $0.25 per share.

These results come as the company navigates a grace period for compliance with Nasdaq listing requirements.

A Form 8-K filed on March 11 revealed that GameSquare received a notice from Nasdaq on September 10, 2025, indicating that its bid price had fallen below $1.00 for 30 consecutive business days, violating the minimum bid price requirement. The company was initially given 180 days, until March 9, 2026, to regain compliance, but did not meet this deadline.

On March 10, Nasdaq granted a second 180-day period, expiring on September 7, 2026, contingent on the company meeting all other initial listing requirements and its intent to address the deficiency through a reverse stock split if necessary. If compliance is not achieved by that date, Nasdaq will notify the company of its intent to delist, a decision that can be appealed to a Nasdaq Hearings Panel.

The effective deadline is earlier than September 7. To regain compliance, the stock must close at or above $1.00 for at least 10 consecutive business days, with Nasdaq potentially requiring up to 20 days. The filing also states that any reverse split must be completed no later than 10 business days before the compliance period ends, effectively pushing the company’s deadline into the last week of August.

GameSquare has planned a remedy. A definitive proxy statement filed on July 15 announced a virtual special meeting of stockholders on August 13 to authorize the board to implement a reverse stock split at a ratio between 1-for-2 and 1-for-8, depending on what the board decides, to meet Nasdaq’s minimum bid price requirements. The board adopted this resolution on July 1. The proxy clarifies that this proposal is not part of a going-private transaction, and if approved, the board intends to execute the split as soon as possible.

During the August 10 earnings call, Kenna mentioned another reason for the split. Beyond supporting the Nasdaq listing, he noted that a split would provide “the flexibility to support a more appropriate share price and potentially broaden GameSquare’s appeal to institutional investors whose investment mandates may limit their ability to own lower-priced securities.” He did not specify a ratio, and neither of the analysts who asked questions during the call raised the compliance deadline.

The company is treating the approval process seriously. A proxy supplement filed on July 29 revealed that GameSquare has engaged a proxy solicitor to assist in gathering votes, with an expected cost of around $25,000. The meeting agenda also includes a proposal to adjourn if support for the split is insufficient or if the meeting fails to reach its quorum of 34,347,671 shares.

The authorized range is telling. GameSquare shares closed at $0.3873 on August 10, up 7% for the day. With approximately 103 million shares outstanding as of the July 13 record date, this suggests a market capitalization of nearly $40 million. A 1-for-2 split at that price would yield a share worth about $0.77, still below the threshold the split aims to clear. A 1-for-3 split is the first authorized ratio that exceeds $1.00, providing about 16% headroom to pass a 10-day compliance test.

Some market data services still report GameSquare’s share count at 93.7 million, the figure noted in its Q1 Form 10-Q in May, which would imply a market cap closer to $36 million. However, the company’s own report of $0.25 per share in combined ETH, altcoin, and cash holdings suggests a higher count. The share count has increased even as GameSquare has repurchased stock, rising from 93,696,723 on May 14 to 103,043,011 on July 13.

This market capitalization also indicates an unusual valuation. Subtracting the $25.9 million in ETH, altcoins, and cash from the August 10 market cap leaves about $14 million attributed to all other assets GameSquare owns, including FaZe Esports, the Stream Hatchet analytics business, TubeBuddy, Click Management, and the GSX experiential division, against a full-year pro forma revenue guidance of $85 million to $90 million. This comparison is approximate, as the balance sheet is dated June 30 while the share price is current, and the value of the company’s ETH position fluctuates daily.

Management believes the shares are undervalued. Kenna referred to the share price as the “elephant in the room” during the call, echoing the company’s July statement to investors that the stock was trading at “a significant disconnect from the underlying value of our business.”

Meanwhile, the company has continued to return capital to shareholders, increasingly by liquidating the treasury it built last year. It repurchased 2.8 million shares at an average price of $0.43 during the second quarter and an additional 1.0 million shares at $0.38 in July. As of August 7, it had repurchased over 8.8 million shares for nearly $4.1 million, averaging about $0.46, since the buyback program began in October 2025, with roughly $10.9 million remaining under the current authorization.

On July 15, the same day it filed the proxy for the special meeting, GameSquare disclosed that it had liquidated 1,209 ETH and planned to use part of the proceeds for the buyback, reporting holdings of approximately 14,300 ETH as of July 14. Kenna confirmed during the earnings call that the company intends to continue this strategy, stating it is “willing to take that into our own hands and continue to liquidate further and buy additional shares back.” These repurchases have coincided with the bid price deficiency, despite a cash balance of $2.1 million at the end of the quarter.

GameSquare reaffirmed its full-year 2026 guidance of $85 million to $90 million in pro forma revenue, a gross margin of 35% to 40%, and adjusted EBITDA exceeding $5 million. Kenna informed analysts that approximately 70% of revenue is already secured, and he anticipates the fourth quarter will be the strongest of the year.

Both the compliance issue and the proposed remedy have close parallels in the esports industry, including within GameSquare itself.

FaZe Clan faced a similar Nasdaq deficiency warning in March 2023 and prepared a reverse stock split to regain compliance. Its filing at that time included a disclaimer similar to GameSquare’s current one, stating that the board “does not intend for this transaction to be the first step in a ‘going private transaction.’” Shareholders approved a split of 1-for-20 or 1-for-30 in July 2023, when the share price was around $0.50. GameSquare acquired the company the following March, and FaZe common stock ceased trading on March 8, 2024, about 20 months after going public through a $725 million SPAC.

Esports Entertainment Group provides a cautionary example. The operator executed a 1-for-100 reverse stock split on February 21, 2023, to address a minimum bid price deficiency, followed by a 1-for-400 split that December — a combined consolidation of 1-for-40,000 within 10 months. It left Nasdaq in February 2024, not due to bid price issues, but voluntarily delisted while under a Nasdaq Panel Monitor and out of compliance with the exchange’s stockholders’ equity requirement. A reverse split adjusts the share count but does not inherently change the market’s valuation of the underlying business or address subsequent listing rules.

Key uncertainties remain, including the ratio the board will choose if stockholders approve the split, how much further GameSquare plans to reduce its Ethereum holdings, what caused the approximately 9.3 million share increase between May and July, and whether the company would pursue an appeal to a Hearings Panel if compliance is not achieved by September 7.

The operational outlook is genuinely improving, with gross margins nearing 50% and a positive adjusted EBITDA quarter indicating that GameSquare’s acquisition strategy is yielding a functioning business rather than just a collection of assets. However, it has yet to achieve a share price above $1.00. GameSquare funded its Ethereum treasury by selling stock at $0.95 a share in July 2025 and is now liquidating that treasury to buy back shares at an average of $0.46, while seeking shareholder approval to consolidate what remains. The strategic question remains whether a rapidly growing business can overcome a capital structure that is currently undervalued, and whether it can do so before the looming deadline at the end of August.