East Side Games Group reported second-quarter 2026 revenue of $10.3 million, achieving an adjusted EBITDA of $1.36 million. The company maintained a disciplined approach to cash management, significantly reducing user acquisition spend to prioritize efficiency.

The adjusted EBITDA margin stood at 13.2%. Daily active users reached 118,872, with an average revenue per daily active user (ARPDAU) of $9.95. Stickiness, defined as the ratio of daily active users to monthly active users, increased 22% year over year to 29.6%.

Financial Highlights

Balance Sheet and Capital Allocation

East Side Games raised $2.95 million in outside capital during the quarter to reduce debt and support working capital. The company also settled its litigation with Truly Social Games for $3 million; $1 million was paid immediately, with the remaining balance structured as four payments of $500,000 every six months.

Management is transitioning to a new banking relationship with a major Canadian financial institution, expected to provide improved access to capital and more appropriate covenants. This transition is scheduled to begin in mid-August 2026.

What the Numbers Show

The company’s strategy of constraining user acquisition spend directly impacted top-line growth while preserving margins. With revenue at $10.3 million and adjusted EBITDA at $1.36 million, the 13.2% margin reflects the trade-off between volume reduction and cost discipline. The settlement of the Truly Social Games lawsuit removes legal uncertainty, though it creates a defined near-term cash outflow obligation of $2 million spread over two years.

Operational Strategy

Looking ahead, East Side Games plans to materially expand user acquisition starting this month, targeting a 60-day payback window. This marks a shift from the previous quarter’s focus on a 30-day return on ad spend. The company aims to acquire profitable cohorts in its highest-margin games while measuring every dollar for short- to mid-term returns.

Product initiatives included increasing direct-to-consumer (D2C) sales share from 11% in Q1 to 13% in Q2 through successful A/B testing. The company is also enrolling in Google Play’s Level Up program, effective October 1, 2026, which will reduce platform fees from 30% to as low as 20% for in-app purchases and 10% on the first million dollars of revenue per game per year.

East Side Games Group Inc. (TSX: EAGR) reduced its workforce by approximately 32% effective September 1, 2026, as part of a broader restructuring plan designed to improve free cash flow and strengthen its balance sheet.

The Vancouver-based mobile game developer expects the headcount reduction, combined with operational efficiencies, to generate $3.5 million in annualized cost savings. These savings are projected to begin materializing in the fourth quarter of 2026.

Restructuring Details

The company implemented the workforce reduction through a combination of layoffs and furloughs, cutting approximately 30 employees from its total headcount. This move follows earlier cost-cutting measures that yielded $4 million in annualized savings year-to-date.

Beyond personnel changes, East Side Games is rationalizing its development portfolio by pausing or scaling back certain titles. The company stated it will concentrate resources on its highest-performing live games and those with the greatest long-term potential.

Additionally, the firm is restructuring payment terms with select development and publishing partners. This adjustment aims to align cash outlays more closely with project performance and cash flow generation.

What the Numbers Show

The scale of the restructuring is significant relative to the company's size. With only 30 employees representing 32% of the total headcount, East Side Games operates with a lean team of roughly 94 people. The decision to cut nearly a third of this small workforce suggests a severe pressure on unit economics or cash reserves, necessitating immediate margin protection over long-term growth investments.

Jason Bailey, CEO of East Side Games Group, described the moves as necessary to build a leaner organization capable of delivering consistent profitability while maintaining investment in key franchises.

Forward-Looking Information

This press release contains forward-looking information regarding expected cost savings, timing of charges, and future operating performance. These statements are based on current expectations and are subject to risks including the ability to realize savings on time, outcomes of discussions with RBC regarding credit facility covenants, and general industry conditions.