East Side Games Group (TSE:EAGR) reported third-quarter revenue of CAD 10.79 million and adjusted earnings before interest, taxes, depreciation and amortization of CAD 1.6 million, as the mobile game developer focused on cost reductions and cash management.
Interim Chief Financial Officer Jason Chan said on the company’s earnings call that adjusted EBITDA margin was approximately 15% for the quarter ended September 30, 2026. The company recorded 96,946 daily active users, average revenue per daily active user of CAD 0.97 and a stickiness rate of 29.6%.
Management expects a softer adjusted EBITDA margin in the fourth quarter as the company increases spending to acquire users. Chan said the investment should be recouped in future quarters, while the company continues to prioritize profitability and debt repayment.
Financing Supports Higher User Acquisition Spending
Board Chair and CEO Jason Bailey said user acquisition spending was reduced during the third quarter as part of an effort to preserve cash and improve efficiency. Campaigns were constrained by available capital and managed to a 30- to 60-day payback target during the second half of the quarter, he said.
Bailey said the company is no longer constrained by capital following the closing of new credit lines and has moved to a 60- to 90-day payback target for the fourth quarter. Chan said East Side Games had finalized its transition to a banking relationship with National Bank in October and secured additional financing through a partnership with Export Development Canada.
Chan said the company was in compliance with updated financial covenants under the new facilities. He described the financing as supporting a strategy focused on profitability and cash flow to pay down debt, rather than the aggressive revenue growth strategy pursued in the prior year.
Cost Cuts and Game Pipeline
Bailey said the company completed cost reduction and operational restructuring initiatives on September 1, reducing headcount by approximately 32% and concentrating resources on its strongest live games. The actions are expected to generate about CAD 3.5 million in annualized savings, in addition to CAD 4 million in annualized savings implemented in January 2026.
Chief Product Officer Jim Wagner said the company prepared a new mobile match game based on an undisclosed intellectual property for a Canadian soft launch in the fourth quarter. The company plans to test user acquisition and monetization before a global launch in 2027.
East Side Games also restarted development of Trailer Park Boys: Get Merged after the resolution of litigation involving Truly Social, Wagner said. The game had been in soft launch before development was paused and is scheduled for global release in the first half of 2027.
Wagner said the company is developing another unannounced game with a major platform partner under an arrangement that pays East Side Games as it completes milestones. The project contributed CAD 1 million to adjusted EBITDA in the third quarter, he said, and the company is in talks about additional paid development projects.
The company is also seeking acceptance into Google Play’s Level Up program, which Wagner said would save it 5% on Android in-app purchase revenue.
AI and Operational Priorities
Chief Operating Officer Lisa Shek said East Side Games is using AI and automation to improve internal workflows, including repetitive production tasks, live operations and manual processes. She said the company is taking a measured approach with safeguards for brand integrity and intellectual property.
Bailey said the company’s revised strategy combines disciplined user acquisition spending, paid game development partnerships, AI in new games and continued support for its core portfolio. No questions were asked during the call’s question-and-answer session.
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’).
