VANCOUVER, BC, Nov. 12, 2026 /CNW/ -- East Side Games Group (TSX: EAGR) (OTC: EAGRF) ("ESGG" or the "Company"), today reported its financial results for the third quarter ended Sept 30th, 2026.

Third Quarter 2026 Financial Highlights:

• Revenue of $10.79M (down 46% YoY) including $2.2M from a development milestone payment from a platform partner. Excluding the milestone payment, revenue was $8.6M.
• Adjusted EBITDA (A-EBITDA) of $1.6M (up 153% YoY) Excluding the Milestone Payment A-EBITDA was $617k.
• A-EBITDA Margin of 14.8% (up 199% YoY) Margin of 7.2% excluding the Milestone Payment.
• DAU (Daily Active Users): 96,946 (down 57.3% YoY)
• ARPDAU (Average Revenue Per Daily Active User):  $0.97  (even YoY)
• DAU/MAU (stickiness rate):  29.4% (up 25.9% YoY)

Third Quarter 2026 Commentary:

The Company delivered A-EBITDA of $1.6M on revenue of $10.79M in the third quarter. Results include $2.2M in revenue from a development milestone payment from a platform partner related to an as yet unannounced title. Fully funded development work of this kind is a deliberate part of the Company's strategy to monetize its studio capabilities, and the milestone payment reflects the quality of that work and the strength of the partner relationship. Milestone payments may recur as further milestones are achieved or new partnerships are secured, but their timing and size are tied to project progress rather than a regular schedule. The Company therefore also presents its results excluding the payment so that investors can evaluate the recurring business on its own terms.

Excluding the milestone payment, base business revenue was $8.6M, compared to $10.3M in the second quarter, reflecting User Acquisition spend that was constrained by capital and managed to a 30-60 day payback target through most of the quarter. As announced in August, the Company began increasing daily User Acquisition spend in mid-August, focused on its most profitable cohorts and highest-margin titles, and the rate of decline in the player base slowed through September. The material expansion of the program was dependent on the closing of the Company's new credit facilities, which occurred in October. Since then, with spend increased further, churn has been largely offset and daily revenue is rising. Because each dollar is measured against a defined payback window, the cost of this investment is reflected in the quarter's A-EBITDA while most of the revenue it generates falls in subsequent periods.

On September 1, the Company completed the cost reduction and operational restructuring initiatives announced on September 3, 2026, reducing headcount by approximately 32% and rationalizing its portfolio to concentrate resources on its highest-performing live titles. These actions are expected to generate approximately $3.5 million in annualized savings, the majority of which will begin to be realized in the fourth quarter, in addition to the approximately $4 million in annualized savings implemented earlier in 2026.

Following the portfolio rationalization, the Company has also begun investing in User Acquisition for its newer titles for the first time, and expects them to become a meaningful contributor to revenue and the primary catalyst for growth in the base business in 2027.

Corporate Update & Strategy: 

During Q3, The Company's User Acquisition strategy targeted a 30-60 day return on ad spend. The Company's current User Acquisition strategy targets a 60–90 day return on ad spend, allowing it to focus on acquiring the most profitable player cohorts while maintaining overall capital efficiency. While this disciplined spending approach has moderated near-term top-line revenue, it has improved capital efficiency and supports the Company's long-term strategy of building a stronger, more profitable business.  Management remains focused on generating cash flow and reducing debt over time.

Subsequent to quarter end, the Company entered into new credit facilities with National Bank of Canada ("NBC") and Export Development Canada ("EDC") (together, the "New Facilities"), providing the flexibility to invest in high-return User Acquisition while continuing to strengthen the balance sheet. The New Facilities consist of: (i) a C$3 million revolving line of credit with NBC bearing interest at prime plus 1%, and up to C$3.5 million in term loans backed by tax credits bearing interest at prime plus 1.25% and maturing when the related tax credits are received; and (ii) a US$4 million term loan with EDC. Amounts available to be drawn from NBC are constrained by estimates of current-year tax credits (75% of accrual). The Company's credit facility with Royal Bank of Canada ("RBC") has been repaid in full.

Outlook:

Beginning in October, with the new credit facilities, the Company materially expanded its User Acquisition strategy by increasing daily spend with a focus on profitable cohorts in the highest-margin games. Each dollar spent is being closely measured and returned within short- to mid-term payback windows. This broader investment approach is expected to maintain revenue while maintaining a disciplined focus on long-term profitability.

With the New Facilities in place and the September restructuring complete, User Acquisition investment is now governed by cohort returns rather than cash availability, and the drag on top-line revenue from under-investment over the past year is coming to an end. Management's priorities for the fourth quarter and into 2027 are to continue scaling User Acquisition where payback metrics support it, to bring the Company's newer titles to a level of spend at which they contribute to revenue, and to continue pursuing fully funded development and platform partnership opportunities.

Through the continued use of AI tools, the Company has improved player targeting in its User Acquisition campaigns, accelerated iteration on advertising creative, and increased coding efficiency. New initiatives are being built with AI as a core tenet, with the expectation that they will be delivered on accelerated timelines and at materially lower cost. Investors should note that fourth quarter results will not include a milestone payment comparable to that recognized in Q3, and the Company's Q4 revenue and A-EBITDA should be evaluated against the Q3 figures excluding the milestone payment presented above. The Company continues to pursue additional platform partnership and fully funded development opportunities, and will report any further milestone payments separately as they are earned.

Looking ahead, the Company remains focused on disciplined execution, strengthening its balance sheet, and driving sustainable, profitable growth through the remainder of 2026 and into 2027.

ABOUT EAST SIDE GAMES GROUP

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 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 100 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. To keep growing, we focus on captivating audiences, keeping them engaged, and unlocking exciting new ways to monetize. We'll drive this momentum by launching bold new titles, enriching our current lineup, innovating discovery, expanding into fresh markets, and exploring new distribution platforms.

Additional information about the Company continues to be available under its legal name, East Side Games Group Inc., at www.sedar.com.

Forward-looking Information

Certain statements in this news release constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always, identified by the use of words such as "expects," "anticipates," "plans," "intends," "believes," "estimates," "projects," "may," "will," "would," "could," "should," and similar expressions. Forward-looking statements in this news release include, without limitation, statements regarding the Company's 2026 outlook, including expected revenue and A-EBITDA margin; expected debt reduction, profitability and EBITDA performance; anticipated benefits from cost reduction initiatives, user acquisition changes and off-platform payments; the expected impact of changes to platform fees; the Company's ability to secure additional work-for-hire contracts or other fully funded development opportunities; and the status or outcome of discussions with RBC, including any tolerance, waiver or other accommodation in respect of covenant non-compliance. Forward-looking statements are based on management's current expectations, estimates, projections and assumptions, including assumptions regarding operating performance, player engagement and monetization, platform policies and fee structures, the implementation and impact of restructuring initiatives, the timing and amount of one-time costs, the availability of new commercial opportunities, and the Company's continued relationship with its lender. Such forward-looking statements are subject to significant risks, uncertainties and other factors that could cause actual results or events to differ materially from those expressed or implied by such statements, including, without limitation, risks relating to the Company's ability to execute on its strategic priorities, generate sufficient cash flow, satisfy or obtain relief from financial covenant requirements, complete restructuring initiatives as planned, realize anticipated cost savings or profitability improvements, maintain or grow player engagement and monetization, benefit from platform fee or policy changes, secure new contracts or platform opportunities, and general economic, market and industry conditions. Readers are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements contained in this news release are made as of the date hereof, and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

SOURCE East Side Games Group Inc.