Adjusted EBITDA in esports company results: what it leaves out

On April 8, 2026, GameSquare Holdings, the Nasdaq-listed owner of FaZe Clan, put one number in the headline of its results for the last quarter of 2025: its first positive adjusted EBITDA quarter, at US$1.7 million. The same release showed a net loss from continuing operations of US$28.2 million for the same three months. Both figures are correct. They answer different questions, and the distance between them is set out, line by line, in a table most readers never reach.

Three listed companies that own or have owned esports teams publish this measure beside their accounts. OverActive Media, the Toronto owner of Movistar KOI and Toronto KOI, gives it in its annual release. Enthusiast Gaming, the former owner of Luminosity, reports it in its quarterly releases, the latest of them for the first quarter of 2026. For a fan or a sponsor who wants to know whether the business behind a team makes money, it is often the first figure on the page.

This guide explains what the letters stand for, what the word "adjusted" adds, how each of the three companies builds its own version, and how to read the reconciliation, the table that walks from the net result to adjusted EBITDA. The worked examples are the companies' own published releases up to mid-June 2026.

GameSquare Holdings, fourth-quarter and full-year 2025 results, Form 8-K exhibit of April 8, 2026. Unaudited quarterly figures.

Why the measure matters

A company's accounts end on one line: the net result, profit or loss, after every cost, charge, gain and tax of the period. That line is fixed by the accounting standards the company reports under. GameSquare, a US company, reports under the generally accepted accounting principles used in the United States, known as GAAP. OverActive Media and Enthusiast Gaming, both based in Toronto, report under IFRS, the international standards.

The net result mixes very different things. It includes the cost of paying staff and producing content, but also the write-down of a brand bought years ago, the change in market value of an investment, interest on loans and the result of businesses already sold. Managements argue that some of these say little about how the business ran during the quarter. So they publish a second figure that leaves them out.

GameSquare's release says management believes adjusted EBITDA is a useful measure to assess the performance of the company, and that it uses such measures for internal budgeting and forecasting. The companies also say, in the same documents, that the measure is their own and should not replace the reported result. Both statements matter, and both are printed in every release.

From net result to EBITDA

EBITDA stands for earnings before interest, taxes, depreciation and amortization. Each letter removes one kind of cost from the net result:

• Interest is what the company pays on its borrowings, net of what it earns on its cash. It depends on how the company is financed, not on how it operates.
• Taxes are income taxes, which depend on where the company is and on its past losses.
• Depreciation spreads the cost of physical assets, such as equipment, over the years they are used.
• Amortization does the same for intangible assets, such as software, brands or customer contracts bought with an acquisition.

GameSquare's release defines EBITDA as net income or loss before depreciation and amortization, income taxes and interest expense. That is the common form. None of the four lines disappears from the accounts: EBITDA simply stops counting before them.

What remains is closer to the result of the operations themselves, before financing and before the accounting cost of past investment. It is also a figure no accounting standard defines, and each company decides what goes into it.

What the word adjusted adds

Adjusted EBITDA goes further. On top of the four letters, the company removes a list of items it considers outside its normal running. The list is the company's choice, and it is published in the release.

The three companies use three different lists, and they do not start from the same place.

The differences are not cosmetic. An item that one company treats as a normal cost, another removes. OverActive Media takes out foreign exchange gains and losses; the other two do not list them. Enthusiast Gaming takes out the insurance it still pays for directors and officers because of a listing on Nasdaq it no longer has. GameSquare takes out the whole result of the businesses it has sold.

Reading a reconciliation, line by line

Every release that publishes adjusted EBITDA also prints the reconciliation: a table that starts from the result under the accounting standards and adds or subtracts each item until it reaches the adjusted figure. A positive line means a cost that was added back. A negative line means a gain that was taken out.

GameSquare's table for the fourth quarter of 2025 starts from a net loss of US$31,118,090. That is the total loss, including the businesses the company has sold or closed, which the release reports apart as discontinued operations. Thirteen adjustments later it arrives at a positive US$1,731,170. In all, US$32.8 million of net adjustments separate the two figures.

The largest line, US$20.3 million, is the realized and unrealized loss on digital assets and an investment fund that the company holds, as the release labels it. The other large add-backs are set out below.

Going the other way, the reconciliation takes out a gain of US$7.4 million on the warrant liability, the change in value of rights to buy GameSquare shares that the company had issued, and a gain of US$817,883 on shares issued to settle amounts owed to suppliers. Both reduced the net loss; both are removed so that they do not flatter the adjusted figure.

The four letters themselves are small in this quarter. Amortization and depreciation came to US$394,670. Interest was a net income of US$276,419, so it is subtracted, and income tax was US$63,721. In a company like this one, almost all of the distance between the two figures comes from the adjustments, not from the letters.

Cash costs and non-cash charges

The items removed are not all of the same kind, and the difference matters for anyone trying to read what happened to the money.

Some are charges that move no cash in the period. An impairment is a write-down: the company reduces the value at which it carries an asset, such as a brand or the premium paid for an acquisition, because that value is no longer supported. A fair-value change records that an investment or a liability is now worth more or less on paper. Both change the profit and the equity of the year without any payment.

Share-based payments are a cost the company pays in its own shares or options rather than in cash. No money leaves the company, but each share issued spreads ownership more thinly among existing shareholders.

Other items are paid in cash and still removed, because the company classes them as one-off. Transaction costs are the fees of buying or selling businesses. Contract exit costs are what a company pays to leave agreements. GameSquare's definition calls such items extraordinary or non-recurring. Its own reconciliations show how often they appear:

• Transaction costs were US$6.3 million in 2024, US$2.9 million in 2025 and US$1.1 million in the first quarter of 2026, which the release ties to its purchase of TubeBuddy, a software service for YouTube creators.
• Contract exit costs were US$19,848 in 2024, US$1.4 million in 2025, and US$150,855 in the first quarter of 2026.

Each was removed in each period shown. Whether a cost that returns year after year belongs in a measure of normal running is a judgment the measure itself does not settle; the reconciliation gives the figures to make it.

When adjustments run the other way

Adjusted EBITDA is not always the kinder figure. When a company books a large accounting gain, removing it makes the adjusted result worse than the net result.

OverActive Media's accounts show it clearly. In 2024 the company recorded a non-cash gain of C$11.5 million from a decrease in the net present value of its franchise obligations, the amounts it owed for places in leagues, measured in today's money. That gain pulled the net loss for the year down to C$629,000. Its reconciliation takes the gain out, along with the other items, and arrives at an adjusted EBITDA loss of C$3.6 million, nearly six times the net loss.

In 2025 there was no such gain, and the order flipped back. The net loss was C$11.4 million and the adjusted EBITDA loss C$5.8 million. Read side by side, both losses grew between the two years, at very different rates: the net loss about eighteenfold, the adjusted loss by about three-fifths.

OverActive Media's 2025 table holds a second case. Share-based compensation is a negative line, a reduction of C$457,000 for the year and of C$1.5 million in the fourth quarter, so the reconciliation subtracts it instead of adding it back. It shows that the direction of each line has to be read, not assumed.

Different starting points

GameSquare and OverActive Media both start their reconciliation from the net loss at the bottom of the income statement. Enthusiast Gaming starts higher up.

Its release builds EBITDA from gross margin, the revenue left after the direct cost of sales. It subtracts operating expenses, then adds back share-based compensation and amortization and depreciation. For the first quarter of 2026 that gives EBITDA of C$1,036,502. It then adds back severance of C$126,533, the C$82,380 of insurance tied to the former listing and C$455,034 of other non-recurring items, to reach adjusted EBITDA of C$1,700,449, against C$656,265 a year earlier.

Revenue for the quarter was C$9.4 million, up 5%, and the gross margin 85%. Chief executive Alex Macdonald summed up the period in one line of the release: "Q1 delivered another quarter of meaningful profitability for Enthusiast Gaming."

The release also gives the net loss from continuing operations, C$1.2 million, so the distance between the two figures is about C$2.9 million. Because the calculation starts from gross margin, nothing below the operating expenses enters it at all, and the reconciliation does not list those lower lines one by one. Interest on borrowings, one of the letters of EBITDA, is among what stays outside, and the company carries a large debt: the release shows a current portion of long-term debt of C$45.9 million at March 31, 2026, debt classed as due within a year. It refers to the expiry of the forbearance terms agreed with its secured lenders, a forbearance being a lender's agreement not to enforce its rights for a time, and says the company continues to evaluate refinancing and recapitalization alternatives, while a special committee of the board reviews strategic alternatives.

Continuing and discontinued operations

A company that sells or closes a business reports that business apart, as discontinued operations, and shows the result of the businesses it keeps as continuing operations. Both lines sit in the accounts. The question is which one a reader is looking at.

GameSquare's reconciliation starts from the total net loss, which includes the sold businesses, and adds back their loss as one of its lines: US$2.9 million in the fourth quarter of 2025 and US$14.8 million over the year. That is why its release can show a total net loss of US$31.1 million for the quarter and a net loss from continuing operations of US$28.2 million, both correct.

Enthusiast Gaming reports discontinued operations separately too. Its sale of its direct sales business, including Omnia Media, to Vertiqal Studios closed on August 30, 2025, the company announced; Vertiqal's own release of August 19, 2025 described the deal as the purchase of Omnia and Luminosity. In the first quarter of 2026 they cost C$343,128 in net loss, out of a total net loss of C$1.5 million, and the release gives their contribution to adjusted EBITDA apart, as a loss of about C$0.3 million. The company's adjusted EBITDA of C$1.7 million is the figure for continuing operations.

The point for a reader is to compare like with like: a continuing result next to a continuing adjusted EBITDA, a total next to a total.

Pro forma figures and guidance

Some releases add a third version of the numbers. Pro forma results recalculate the period as if an acquisition had been part of the group from its start. They are not the reported accounts, and the releases present them apart.

GameSquare uses them because of two purchases: Click, a business it acquired in 2025, and TubeBuddy, whose purchase was agreed on February 20, 2026. Its pro forma fourth quarter of 2025 includes TubeBuddy, and shows revenue of US$20.7 million and adjusted EBITDA of US$2.3 million, against the reported US$18.5 million and US$1.7 million. The pro forma full year adds TubeBuddy for all of 2025 and Click from January 1 to September 11, 2025, before it was acquired, and reaches revenue of US$66.6 million and an adjusted EBITDA loss of US$0.4 million, against a reported loss of US$4.6 million.

For the first quarter of 2026, the pro forma adjusted EBITDA was a loss of US$0.7 million on pro forma revenue of US$15.8 million, against a reported loss of US$1.1 million on reported revenue of US$14.5 million. The release gives no line-by-line reconciliation for the pro forma figure.

A pro forma figure answers a narrower question: what the group as it stands today would have produced over a period it did not yet fully own. It is useful for following a company that is growing by acquisition, and it is never the same figure as the one in the accounts.

Companies also use adjusted EBITDA in their forecasts. GameSquare's guidance for 2026, reiterated in its April and May releases, is pro forma revenue of US$85 million to US$90 million, a gross margin of 35% to 40% and adjusted EBITDA above US$5 million.

That target comes without a reconciliation to a forecast net result. The release says one is not provided because of the uncertainty of forward-looking items and the effort it would take, and that the target excludes transaction costs, impairments and other one-time items. A reader therefore knows what the company expects on its own measure, but not what net result that would correspond to.

The first quarter gives a reference point on the same basis. With a pro forma loss of US$0.7 million after three months, more than US$5.7 million of pro forma adjusted EBITDA would have to be earned between April and December to pass the target.

Why figures cannot be laid side by side

The warnings on comparability are meant literally. A positive adjusted EBITDA at GameSquare and a positive adjusted EBITDA at Enthusiast Gaming in the same season are not the same achievement measured twice.

The definitions differ, as the table above shows. The starting points differ: one company starts from gross margin, two from the net loss. The accounting standards differ, US GAAP for one and IFRS for the other two, and so do the currencies, US dollars and Canadian dollars, which these releases never convert. Even within one company, the list of items removed can change from one period to the next as new lines appear, such as the change in fair value of contingent purchase consideration, a deferred acquisition payment, that GameSquare added in the first quarter of 2026.

Within one company, the measure is more useful. Read across periods under the same definition, it shows whether the running of the business is improving: GameSquare's adjusted EBITDA loss went from US$11.9 million in 2024 to US$4.6 million in 2025, while its revenue went from US$27.5 million to US$45.0 million. Whether that is the right lens for a particular question depends on the question; for cash in the bank or debt due, the balance sheet and the cash flow statement answer it, and adjusted EBITDA does not.

Where the esports sits in the figures

None of the three releases gives an adjusted EBITDA for the teams fans follow. GameSquare presents FaZe Esports as one part of a platform that also includes creative services and analytics, and gives no separate figure for it. OverActive Media reports revenue for its Business Operations, but its adjusted EBITDA is a single figure for the whole company. Enthusiast Gaming no longer owns Luminosity, so its figure says nothing about the team.

So the measure says something about the companies that own teams, and very little about the teams themselves. A positive quarter at the group level can sit beside a team with a hard season, and the other way around.

What the releases do give is enough to rebuild the path from one figure to the other. The reconciliation table names every item, its amount and its sign. Read top to bottom, it shows what the company chose to leave out, and how much each choice was worth in the period.

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