East Side Games Group (TSE:EAGR) reported second-quarter 2026 revenue of C$10.3 million and adjusted EBITDA of C$1.36 million, representing an adjusted EBITDA margin of 13.2%, as the mobile game developer prioritized profitability, cash preservation and debt reduction.
CEO and Board Chair Jason Bailey said the company significantly reduced its user-acquisition budget during the quarter to focus on capital efficiency and profitable player cohorts. The company targeted a 30-day return on advertising spend during the period, a strategy that affected top-line revenue but was intended to strengthen cash generation and support debt repayment.
New banking relationship and expanded user acquisition
East Side Games said it expects to begin transitioning to a new banking relationship with a major Canadian financial institution in mid-August, pending final approval. Interim CFO Jason Chan said the arrangement is expected to improve the company’s access to capital, provide additional borrowing options and restore compliance with financial covenants.
With the new relationship in place, the company intends to materially increase user-acquisition spending beginning in August. The expanded strategy will target a 60-day payback window, compared with the 30-day return-on-ad-spend target used during the second quarter.
Bailey said the broader investment approach is intended to support higher revenue while maintaining a focus on long-term profitability. Chan added that the company plans to target profitable cohorts in its highest-margin games and measure spending against short- to mid-term returns.
During the quarter, East Side Games raised C$2.95 million in outside capital to support cash flow and reduce debt. The company also settled its litigation with Truly Social Games. Bailey said the settlement includes C$3 million in payments, with C$1 million already paid and the remaining balance scheduled in four C$500,000 payments every six months.
User engagement and direct-to-consumer progress
Chan said daily active users totaled 118,872 during the quarter, while average revenue per daily active user, or ARPDAU, was C$0.95. The company’s stickiness rate, measured as daily active users divided by monthly active users, rose 22% year over year to 29.6%.
Chief Product Officer Jim Wagner said the company concentrated its product efforts on expanding direct-to-consumer sales, lowering platform fees and increasing revenue through new features and A/B testing.
East Side Games’ share of revenue from direct-to-consumer channels increased to 13% in the second quarter from 11% in the first quarter. Wagner attributed the improvement to tests involving incentive placements and user-interface designs. The company plans to further expand direct-to-consumer initiatives in the third quarter through web shops, daily bonuses and availability in more territories.
- A secondary season pass introduced in Bud Farm: Idle Tycoon increased revenue by 8% while also benefiting engagement, according to Wagner.
- A season-pass pricing test in the United States increased ARPDAU by 26% for Cheech & Chong: Bud Farm.
Wagner said the company expects to apply successful testing results across other games in its portfolio.
Platform-fee opportunity and cost management
The company is also working toward enrollment in Google Play’s Level Up program, which Wagner said could reduce platform fees on in-app purchases from 30% to as low as 20%, as well as provide a 10% fee on the first C$1 million of revenue per game annually. The program is scheduled to take effect Oct. 1, 2026, and East Side Games said it is on track to enroll at launch.
Chief Operating Officer Lisa Shek said the company continued to optimize its cost structure, maintain a lean organization and direct resources toward titles and activities that generate the greatest value. She said East Side Games is seeking to use shared capabilities, technology and artificial intelligence to increase productivity without adding unnecessary expense.
Management also said it is reviewing external-partner spending and agreements to improve title-level economics while maintaining game quality and player experience.
Bailey said the company revised its guidance to reflect constraints experienced in recent quarters and expected into the third quarter, though no updated guidance figures were discussed on the call. He said management remains optimistic about the company’s prospects through 2026 and into 2027, citing its core portfolio, including The Office: Somehow We Manage, Trailer Park Boys: Greasy Money, Bud Farm: Idle Tycoon and RuPaul’s Drag Race Superstar.
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’).
