East Side Games Group Q1 Earnings Call Highlights

East Side Games Group (TSE:EAGR) said its first quarter of 2026 reflected a deliberate shift toward profitability, cash generation and debt reduction, as the mobile game developer cut user acquisition spending and focused on higher-quality player cohorts.

Speaking on the company’s earnings call for the quarter ended March 31, 2026, Board Chair and CEO Jason Bailey said the company “significantly reduced user acquisition spend” during the period as part of a broader plan to improve adjusted EBITDA 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,” Bailey said. He added that East Side Games remains focused on cash generation and debt repayment, with a goal of eliminating its bank debt by the end of 2026.

Revenue Falls as Ad Spending Is Reduced

Interim CFO Jason Chan said first-quarter revenue was CAD 12.45 million, down 32% from the prior year. He attributed the decline directly to the company’s reductions in user acquisition spending.

Adjusted EBITDA was CAD 1.74 million, down 11.3% year over year. However, Chan said the company delivered an adjusted EBITDA margin of 14%, which he described as a 32% year-over-year improvement and in line with guidance.

“The margin expansion shows that our pivot is taking effect in successfully creating a structurally leaner and more profitable business,” Chan said.

The company’s operating metrics also reflected the move away from volume-driven growth. Daily active users declined to 145,581, while average revenue per daily active user was CAD 0.95. Chan said the company maintained a “strong high-quality user base,” noting that the DAU-to-MAU stickiness rate rose to 28.1%, up 14.7% year over year.

Company Targets Bank Debt Paydown by Year-End

Chan said East Side Games saw a temporary increase in debt in the first quarter to fund one-time expenditures, including severance and litigation costs. He said the company remains focused on strengthening its balance sheet and reiterated the goal of paying down bank debt by the end of 2026.

Chan also said East Side Games is executing financial arrangements to support that objective, including a private placement of up to CAD 3.6 million during the current month.

“Overall, Q1 was a disciplined quarter of execution, confirming that our strategic reset is yielding positive margin and profitability improvements,” Chan said.

Direct-to-Consumer Revenue Gains Traction

Chief Product Officer Jim Wagner said East Side Games is focused on initiatives that support profitability and cash generation, including direct-to-consumer revenue, its live service portfolio and the launch of its newest title, Trailer Park Boys Match.

Wagner said direct-to-consumer revenue increased from 3% to 11% of revenue quarter over quarter. He said the company has been rolling out direct-to-consumer options across more titles while testing user experience improvements and player incentives.

He noted that direct-to-consumer revenue is not subject to the 30% platform fees typically charged by app stores, but instead carries payment provider fees of roughly 5% to 10%.

“The result is a significant increase to net profit,” Wagner said.

The company also continues to work toward compliance with a recently announced Google program that will reduce platform service fees from the historical 30% rate to a tiered structure ranging from 10% to 25%, depending on transaction type and billing model. Wagner said all games are on track to be compliant ahead of the changes taking effect June 30, 2026. The company expects the revised fee structure to contribute approximately CAD 500,000 in incremental annual profit.

New Launches and LiveOps Transition

Wagner said the company’s live service titles continue to generate stable revenue and profit. In March, East Side Games launched Trailer Park Boys Match worldwide. He said early numbers were encouraging, with paid cohorts posting above 40% day-one retention and ARPDAU averaging roughly CAD 0.60.

The game builds on the performance of Trailer Park Boys Grea$y Money, which Wagner said has attracted more than 10 million players and remains profitable nearly a decade after launch.

Chief Operating Officer Lisa Shek said a major first-quarter milestone was transitioning RuPaul’s Drag Race Superstar to East Side Games’ internal LiveOps team. The title originally launched in November 2021 and continues to serve a loyal audience, she said.

Shek said operating the game directly allows East Side Games to optimize operations, apply shared expertise in idle game mechanics and improve execution across its portfolio.

“This transition is already contributing to improved efficiency, faster iteration cycles, and a stronger overall player experience,” Shek said.

She also said East Side Games is working with intellectual property partners on two unannounced titles funded through operating cash flow. Those titles are tracking toward launches in late 2026 and early 2027.

The call included no analyst questions. Bailey closed by thanking participants and inviting shareholders and analysts to reach out to the company directly.

About East Side Games Group (TSE:EAGR)

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’).