East Side Games Group (TSE:EAGR) executives used the company’s Q4 and full-year 2025 earnings call to outline a strategic reset toward profitability and cash flow after what Executive Chair and CEO Jason Bailey described as “a tough year” marked by a challenging mobile gaming market and weaker financial results.
2025 results and market headwinds
Interim Chief Financial Officer Jason Chan said the company finished 2025 with CAD 77.6 million in revenue, down 7% year-over-year, and Adjusted EBITDA of CAD 800,000, a 92% decrease from 2024. Bailey said the company’s 2025 emphasis on “aggressive growth” included the launch of several titles in a new genre in the second half of the year, which he said delivered some of the best engagement and conversion metrics in the company’s history.
Cost actions, operational changes, and margin initiatives
Chan said the company has already taken “decisive actions,” including a reduction in force and the cancellation of “high-risk projects.” He added that East Side Games Group is also moving more live operations work for core games in-house. According to Chan, these efficiency measures are expected to contribute approximately CAD 4 million to free cash flow on an annualized basis going forward.
Chief Operating Officer Lisa Shek said Q4 marked a “deliberate shift from growth to disciplined execution,” including cost reductions across internal teams and the partner ecosystem. She said the company has streamlined the organization to align teams more tightly with the highest-performing titles and has “reset partner economics” toward more sustainable, performance-based structures aligned with profitability.
Shek also described a more active approach to partner portfolio management, including “bringing select titles in-house.” Through these steps, she said the company expects to capture approximately CAD 1 million in incremental net revenue on an annualized basis, while also improving execution speed and player outcomes.
Both Bailey and Shek highlighted a tighter approach to user acquisition (UA) spending. Bailey said the company is moving away from a 365-day return-on-ad-spend model to a “more disciplined 60-day target,” while Shek said the new framework reduces near-term top-line growth but improves cash conversion and reduces risk as the company focuses on debt reduction and balance sheet strength.
Direct-to-consumer payments and platform fee changes
Chief of Product Jim Wagner said the company began an initiative in Q3 2025 to increase direct-to-consumer (D2C) revenue, in response to legal rulings that allow developers to offer off-platform payment options with “dramatically lower fee structures” than traditional in-app billing. He noted that major platforms historically take a 30% fee for purchases using their billing services.
Wagner said East Side Games Group increased the portion of U.S. in-app revenue coming from D2C from 0.2% in Q3 to 5% in Q4, and projected the figure will reach “the high teens” in Q1 2026.
Chan provided an update on the financial impact, saying that by implementing off-platform fee payments the company expects to add 10 to 15 percentage points back to margins, a move he said had already generated CAD 320,000 in benefit “from Q4 to Q1, 2026.”
Wagner also pointed to forthcoming platform fee changes. He said Google has announced a reduction in platform service fees to a tiered structure ranging from 10% to 25% depending on transaction type and billing model, effective June 30, 2026. Wagner said the company expects the revised Google fee structure to contribute approximately CAD 500,000 in incremental annual profit. He added that the industry expectation is Apple will be “forced to follow suit,” which he said would further improve profitability, though the company did not provide a quantified impact for Apple-related changes.
Portfolio metrics, live-ops optimization, and pipeline direction
Chan said the company’s core portfolio continues to be a key strength, citing “high-quality users” and a “strong margin of approximately 14%.” He reported a user base of 196,000 daily active users and average ARPDAU of CAD 1.09.
Wagner said East Side Games Group’s live service portfolio continues to generate profit and that the company optimized revenue in Q4 through feature releases, A/B testing, and dynamic pricing. He gave an example from Bud Farm: Idle Tycoon, where the company rolled out a new currency pass feature called Piggy Bank after testing. Wagner said dynamic segmentation of players with different Piggy Banks drove a 22% increase in event ARPDAU quarter-over-quarter, and he said the feature is planned to roll out across all idle games in the first half of 2026.
Wagner said the company is continuing to introduce new ad placements, game modes, season passes, and event balances across a portfolio of “over 15 live service games.” He added that the company is exploring opportunities beyond mobile, including building a title playable across mobile and connected TV and exploring projects that could be sold on mobile, PC, and console.
Balance sheet, covenant issues, and 2026 outlook
On the balance sheet, Chan said East Side Games Group ended Q4 2025 with CAD 5.3 million in total debt and net debt of CAD 4.9 million. He said elevated funded debt levels combined with lower trailing EBITDA—driven by increased UA and marketing investments and certain one-time costs—resulted in non-compliance with a financial covenant under the company’s credit agreement.
Chan said the company has been in active discussions with its lender and has been told to expect to receive a tolerance or waiver, while cautioning there is “no assurance” such a tolerance or waiver will be provided on acceptable terms or at all. He also said the company expects a temporary increase in debt in Q1 2026 to fund one-time expenses including severance payouts and litigation costs, and that the company is seeking additional accommodations from RBC as restructuring initiatives continue.
Looking ahead, Bailey said the company expects CAD 50 million to CAD 56 million in revenue for 2026 and Adjusted EBITDA of CAD 7.5 million to CAD 10 million, while paying down debt and investing in new titles. He said the company’s renewed focus includes “work-for-hire projects published by larger partners” as a way to “guarantee profitability in a turbulent market.”
The call ended without analyst questions.
About East Side Games Group (TSE:EAGR)
East Side Games Group Inc is a free-to-play mobile game group, that creates engaging games that produce enduring player loyalty. Its studio group entrepreneurial culture is anchored in creativity, execution, and growth through a diverse portfolio of original and licensed IP mobile games that include Archer: Danger Phone, Bud Farm Idle Tycoon, Cheech & Chong Bud Farm, The Goldbergs: Back to the 80s, It’s Always Sunny: The Gang Goes Mobile; Trailer Park Boys Greasy Money, and many more. It generates revenue through in-app purchases (IAP) from the sale of in-game virtual items that enhance the gameplaying experience, and through in-game advertising.
