East Side Games Group Q1 2026 Earnings Report

East Side Games Group EPS Results

• Actual EPS: -C$0.05
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

East Side Games Group Revenue Results

• Actual Revenue: $12.45 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

East Side Games Group Announcement Details

• Quarter: Q1 2026
• Date: 5/14/2026
• Time: After Market Closes
• Conference Call Date: Thursday, May 14, 2026
• Conference Call Time: 5:00PM ET

ESGG is a leader in free-to-play mobile gaming, thrilling players with unforgettable experiences that spark lifelong fandom. Fueled by an entrepreneurial spirit, we are driven by creativity, flawless execution, and a laser-focused growth strategy. We develop and publish both original and licensed IP titles, license our cutting-edge GameKit(s) platforms, and strategically acquire studios or games to expand our family. Headquartered in Vancouver with around 120 talent-dense team members, we operate over a dozen titles under East Side Games ('ESG') and LDRLY (Technologies) Inc. ('LDRLY'). Together, we're crafting, launching, and publishing mobile games across our own studios and an extended Game Kit partner network--reaching players on iOS and Android worldwide. We power our success through in-app purchases ('IAP')--offering exclusive, game-enhancing virtual items--and in-game advertising.

East Side Games Group Q1 2026 Earnings Call Transcript

Key Takeaways

• Neutral Sentiment: East Side Games Group said Q1 was focused on a strategic reset toward profitability and cash generation, including a significant reduction in user acquisition spend and a new emphasis on a 30-day return on ad spend.
• Positive Sentiment: The company reported Adjusted EBITDA of CAD 1.74 million with a 14% margin, up meaningfully year over year in margin terms, which management said reflects a leaner and more profitable operating model.
• Negative Sentiment: Revenue fell 32% year over year to CAD 12.45 million, and daily active users declined to 145,581 as the company intentionally cut spending to prioritize higher-quality cohorts.
• Positive Sentiment: Direct-to-consumer revenue increased from 3% to 11% of revenue quarter over quarter, and the company said Google’s upcoming fee changes could add about CAD 0.5 million in annual incremental profit once compliant.
• Positive Sentiment: New and existing live-service titles showed encouraging traction, including Trailer Park Boys Match with over 40% D1 retention in paid cohorts, while the company also said it remains on track to repay bank debt by the end of 2026 and has a private placement of up to CAD 3.6 million underway.

Presentation

[Operator]

This call is being recorded on Thursday, May 14th, 2026. I would now like to turn the conference over to Mr. Jason Bailey. Thank you. Please go ahead.

[Jason Bailey, Executive Chair and CEO at East Side Games Group]

Thank you. Welcome, everybody, to the East Side Games Group Q1 2026 earnings call. I'm Jason Bailey, Board Chair and CEO of East Side Games Group. Today, we will share highlights from the Q1 ended March 31st, 2026. I'd like to remind you that certain statements made on this call are forward-looking within the meanings of applicable securities laws. This call includes references to non-GAAP measures. Please refer to our Q4 press release or Q1 press release and MD&A for cautionary statements relating to forward-looking information and reconciliations of non-GAAP measures to GAAP results. References to all figures are in CAD on an IFRS basis, unless otherwise noted. Additional materials can be found in the Investor section of our website at www.eastsidegamesgroup.com under the Financial Information section.

[Jason Bailey, Executive Chair and CEO at East Side Games Group]

Q1 2026 was focused on improving Adjusted EBITDA and maintaining disciplined cash management across the business. During the quarter, we significantly reduced user acquisition spend as part of a broader strategy to prioritize efficiency and preserve cash. We are now targeting a 30-day return on ad spend, which allows us to focus on acquiring the most profitable player cohorts while improving overall capital efficiency. At the same time, we remain very focused on cash generation and debt repayment, with the goal of eliminating our bank debt by the end of 2026. Overall, we believe these changes position the company well for a stronger and more disciplined remainder of 2026. I will now pass it over to Mr. Chan for some financial highlights.

[Jason Chan, Interim CFO at East Side Games Group]

Thank you, Jason. Today, we reported our results for the company's Q1 ended 31 March 2026. As a reminder, all these amounts are in CAD. Our financial results for the quarter reflect the decisive strategic shift we announced in Q4, which was prioritizing cash flow generation and profitability over top-line growth. Revenue for Q1 was CAD 12.45 million, a decrease of 32% year-over-year, which is a direct result of the disciplined cuts to our user acquisition spend. More importantly, we achieved an Adjusted EBITDA of CAD 1.74 million, down 11.3% year-over-year, but driving a strong Adjusted EBITDA margin of 14%, which is a 32% improvement year-over-year and on pace with our guidance.

[Jason Chan, Interim CFO at East Side Games Group]

The margin expansion shows that our pivot is taking effect in successfully creating a structurally leaner and more profitable business. The user metrics illustrate the outcome of focusing on quality over volume as well. We are taking a more disciplined 30-day approach on ad spend. While our daily active user count has decreased to 145,581, and ARPDAU was CAD 0.95, we maintained a strong high-quality user base, particularly our DAU over MAU stickiness rate, which increased to 28.1%, which is up 14.7% year-over-year, demonstrating the improved engagement and retention of the core audience as we cut inefficiencies in spending. From a capital structure perspective, as anticipated, we saw a temporary increase in debt in Q1 2026 to fund necessary one-time expenditures, including severance and litigation costs.

[Jason Chan, Interim CFO at East Side Games Group]

However, we remain intensely focused on strengthening our balance sheet, and our definitive goal is to pay down our bank debt by the end of 2026. We have made strong progress in managing this process and are actively executing financial arrangements to support this goal, including a private placement of up to CAD 3.6 million this month. Overall, Q1 was a disciplined quarter of execution, confirming that our strategic reset is yielding positive margin and profitability improvements. We are confident this foundation will ensure long-term, stable, and profitable growth for East Side Games Group. I will now pass it on to Mr. Wagner, our Chief Product Officer.

[Jim Wagner, Chief Product Officer at East Side Games Group]

Thank you, Mr. Chan. As we focus on maximizing profitability and cash generation, I'll be highlighting our success in some key initiatives: growing our direct-to-consumer revenue, leveraging our long-tail revenue from our live service portfolio, and the launch of our newest title, Trailer Park Boys Match. Direct-to-consumer, or D2C, revenue continues to climb quarter-over-quarter through our work in rolling out D2C options into more titles and A/B testing UX improvements and player incentives. I'm happy to report in Q1, we increased our revenue coming from D2C from 3% to 11% quarter-over-quarter. As a reminder, currently, any revenue coming from D2C is not subject to the 30% platform fees, but rather a much lower 5%-10% fee from our payment providers. The result is a significant increase to net profit.

[Jim Wagner, Chief Product Officer at East Side Games Group]

By rolling out successful A/B test results across the entire portfolio, we expect this number to further increase in Q2. We continue to work towards compliance with the recently announced program from Google, which will result in a reduction in its platform service fees from the historical 30% rate to a more flexible tiered structure ranging from 10% to 25%, depending on transaction type and billing model. All games are currently working on this and are on track to be compliant well in advance of the changes, which will take effect beginning 30th June 2026. The company expects the revised fee structure to contribute approximately half a million dollars in incremental annual profit.

[Jim Wagner, Chief Product Officer at East Side Games Group]

Our live service titles continue to generate stable revenue and profit for the company. We're excited to announce that in March, we launched Trailer Park Boys Match worldwide. Early numbers are encouraging, with paid cohorts hitting above 40% D1 retention and ARPDAU averaging roughly CAD 0.60. The game builds on the long-term success of Trailer Park Boys Grea$y Money, which has attracted more than 10 million players and remains profitable nearly a decade after launch. We believe Trailer Park Boys Match can benefit from that same loyal fan base, strong retention, and long-tail monetization potential. We believe these changes and new product launches position the company well for a stronger and more disciplined remainder of 2026. With that, I'll pass it to Ms. Lisa Shek.

[Lisa Shek, COO at East Side Games Group]

Thank you, Mr. Wagner. A major milestone in Q1 was transitioning RuPaul's Drag Race Superstar to our internal LiveOps team. Originally launched in November of 2021, the title continues to perform and cater to a very loyal audience base. This move allows us to optimize operations and focus on the player experience. Operating the game directly, we're able to better leverage our shared expertise in idle game mechanics, streamline execution, and apply consistent best practices across all our games. This transition is already contributing to improved efficiency, faster iteration cycles, and a stronger overall player experience, while reinforcing our broader strategy of selectively owning more of the value chain where we see clear operational advantage. We also continue to invest in our next wave of growth, working with our trusted IP partners on two unannounced titles funded through operating cash flow.

[Lisa Shek, COO at East Side Games Group]

Both are tracking towards launches in late 2026 and early 2027, reinforcing our focus on disciplined partner-driven development and a strong long-term content pipeline. Back to you, Jason.

[Operator]

Please continue to stand by. Your conference will begin moment-- will resume momentarily.

[Jason Bailey, Executive Chair and CEO at East Side Games Group]

Thank you, everyone, and thanks to everyone for joining the call today. We will now take any questions from analysts or shareholders who wish to ask them.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. I will now hand the call back to Mr. Jason Bailey for any closing remarks.

[Jason Bailey, Executive Chair and CEO at East Side Games Group]

Thanks for joining us, everyone. We appreciate it. You can always reach out to us directly. I'm Jason at eastsidegames.com. Feel free to reach out. Thank you for joining us today and happy to answer any questions anybody might have in the future. Thank you.

[Operator]

This concludes today's call. Thank you for participating. You may all disconnect.

Participants

Executives

• Jason Bailey, Executive Chair and CEO
• Jason Chan, Interim CFO
• Jim Wagner, Chief Product Officer
• Lisa Shek, COO