Earnings call transcript: East Side Games Q4 2024 sees strong revenue growth

East Side Games Group Inc (EAGR) reported its financial results for Q4 2024, showcasing a revenue of $83 million and an adjusted EBITDA of $11.6 million, representing a 14% margin. The company highlighted a significant increase in daily active users and average revenue per user. Currently trading at $0.31, InvestingPro analysis suggests the stock is undervalued, with a strong financial health score and robust gross profit margin of 62.45%. Despite these positive results, the stock price has faced pressure, down 38.57% over the past six months, as investors weighed the company’s future guidance and market conditions.

Key Takeaways

• East Side Games reported $83 million in total revenue for Q4 2024.
• Adjusted EBITDA reached $11.6 million, with a 14% margin.
• Daily active users increased to 221,000, with ARPDAU rising 11% from 2023.
• The company introduced new revenue streams and expanded into the Match-3 game genre.

Company Performance

East Side Games demonstrated robust performance in Q4 2024, driven by new product launches and diversified revenue streams. With a market capitalization of $24.03 million, the company maintains strong financial fundamentals, including a healthy current ratio of 1.72 and positive free cash flow yield. The company’s focus on quality over quantity in game releases and strategic expansion into new genres like Match-3 games contributed to its solid financial results. This performance aligns with broader industry trends of increasing mobile gaming engagement and diversification. InvestingPro subscribers can access 8 additional key insights about EAGR’s financial health and growth potential.

Financial Highlights

• Revenue: $83 million, showing strong growth.
• Adjusted EBITDA: $11.6 million, with a 14% margin.
• Daily active users: 221,000, indicating increased user engagement.
• ARPDAU: $1.01, an 11% increase from 2023.
• Cash position: $7.5 million, a 42% year-over-year increase.

Outlook & Guidance

Looking forward, East Side Games plans to continue its focus on profitability and strategic expansion. The company has outlined several planned game launches in 2025 and is exploring new marketing and user acquisition strategies. Analysts tracked by InvestingPro expect positive net income growth this year, with the next earnings report due on April 24, 2025. With ongoing diversification into new game genres and platforms, East Side Games aims to maintain its growth trajectory while leveraging its strong cash position relative to debt levels.

Executive Commentary

Jason Chan, Interim CFO, stated, "We finished off the year strong with an adjusted EBITDA of $11.6 million," highlighting the company’s financial strength. Chief Product Officer Jim Wagner emphasized the strategic shift, saying, "We’ve diversified into a whole new genre, opening up Match-3 as a viable business model."

Risks and Challenges

• Increasing price sensitivity in the mobile gaming market could impact monetization strategies.
• Competition among mobile game developers remains intense, requiring continuous innovation.
• Dependence on successful new game launches to sustain growth may pose risks.
• Economic uncertainties could affect consumer spending on mobile games.

East Side Games’ Q4 2024 earnings call reflects a company in a strong position, with a clear focus on growth and innovation. As the company continues to execute its strategic initiatives, it remains well-positioned to navigate the competitive landscape of the mobile gaming industry.

Full transcript - East Side Games Group Inc (EAGR) Q4 2024:

Jason Bailey, Board Chair and CEO, Eastside Games Group: Hello, everyone, and welcome to the Eastside Games Group Q4 twenty twenty four Results Call. I’m Jason Bailey, Board Chair and CEO of Eastside Games Group.

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Jason Bailey, Board Chair and CEO, Eastside Games Group: to share with you today the highlights from the fourth quarter ended 12/30/2024, as well as some highlights of what we expect to happen in 2025. I’d like to remind you that certain statements made in this video are forward looking within the meaning of the applicable securities laws. This call includes references to non GAAP measures. He referred to our fourth quarter press release and MDMA for cautionary statements related to the forward looking information. I’m going to pass it over to Jason Chan, our Interim CFO for some financial highlights.

Jason Chan, Interim CFO, Eastside Games: Hi, everyone. My My name is Jason Chan, CFO of eSight Games. Let’s take a moment to go over some of the highlights from 2024. We finished off the year strong with an adjusted EBITDA of $11,600,000 on a total revenue of $83,000,000 a margin of 14%. We ended off the year as well with a daily active user count of 221,000 players and an average ARPDAU, so average revenue per daily active user of $1.01 This is an 11% increase over 2023.

And I think it further highlights the strength of the core portfolio we have as a business in terms of consistently delivering us, positive cash flows and profitability, which allows us to then invest in future growth. Our cash position ended the year stronger as well at $7,500,000 It’s a $2,200,000,000 increase or 42% year over year. In addition, we continue to believe that the best investment we can make is ourselves. So to that effect, we are continuing our NCIB program. In 2024, we bought back $1,900,000 worth of shares and we will continue to do so within the restrictions allowed in the exchange.

If we normalize this year and last year for the NCIB effect, our cash position actually increased by $3,600,000 or 60

: Hello, everyone. I’m Jim Wagner, Chief Product Officer, Eastside Games Group. Twenty twenty four was a year of both diversification and consolidation for Eastside Games. We diversified our revenue sources by introducing new revenue streams through subscriptions, season passes, and new advertising placements like interstitial ads and offer walls. To put these initiatives into perspective, on Bud Farm Munchy Match, interstitial ads introduced in 2024 now make up 25 of all ad revenue.

And on True the Park Noise Greasy Money, season pass revenue now makes up 14% of all revenue and subscriptions make up 3% of all revenue with no content requirements and are also subject to a lower platform fee at 15% rather than 30% for all other in app purchases. We’ve built more new features than ever before across the studio and have been diligently running AB Test to definitively prove their value. We’ve constantly worked to optimize pricing, especially in an increasingly price sensitive market, resulting in increases to conversion rates and revenue. In parallel, through this meticulous AB testing and experimentation, we’ve consolidated the best features and practices across our portfolio, allowing all games to benefit from breakthroughs on a single title, thereby maximizing revenue. We’ve diversified into a whole new genre, opening up Match three as a viable business model to apply our expertise in adapting the biggest IPs and brands in the world into engaging mobile game experiences.

And we’ve consolidated all the learnings from that first generation of Match three games and improved on them as we get ready to launch our next generation of match three games with huge beloved IPs. RuPaul’s Drag Race Match Queen and Squishmello’s Match. RuPaul’s Drag Race Match Queen entered into limited soft launch and is already showing the best monetization, retention and engagement metrics of any of our other match games in the same territories.

Lisa Schuck, CLL, VSIGHT Games: Hey, everyone. I’m Lisa Schuck, CLL of VSIGHT Games, and I’m excited to share a look back at 2024 and what’s ahead of us. Last year, we doubled down on profitability, streamlining operations, optimizing costs, and ensuring every decision we made drove sustainable growth. A huge part of that success has been strengthening our leadership team. We brought in industry veterans and subject matter experts across key functions, boosting productivity while significantly improving retention and engagement company wide.

We kept our core team lean at around 120 people, but with all our global development partners, our extended team is over 300 strong, collaborating across all our games to bring amazing player experiences to all of you worldwide. One of the biggest strategic shifts in 2024 was focusing on quality over quantity. Instead of prioritizing the number of releases, we’re doubling down on the titles with the highest potential and biggest reach. That’s why we’re incredibly excited about our next two game launches, With these launches, we’re setting ourselves up for an exciting and successful 2025. Big things are ahead, and we can’t wait to share more soon.

Dave Walls, Founder and President, Funkytron: Hey, everyone. I’m Dave Walls, founder and president of Funkytron. And I just wanna take a minute to talk about how great it’s been working with E Sykes Games on RuPaul’s Match Queen. From day one, ESG has been an incredible publishing partner. With decades of experience working with major IPs like RuPaul’s Drag Race, they know exactly how to translate a beloved brand into a game that feels authentic, engaging, and super fun for players.

And that’s one of the best things about working with ESG, their deep understanding of players. They know what keeps people coming back and their expertise in monetization has helped us hit match metrics I didn’t even think were possible. Their insights and support let us focus on what we do best, developing great games. We couldn’t ask for a better partner, and we’re so excited to bring RuPaul’s Match Queen to life with ESG. It’s been an amazing collaboration, and we can’t wait for the players to experience what we built together.

Danielle Bailey, Director of Product, Eastside Games: Hi. I’m Danielle Bailey, Eastside Games Director of Product. I’ve been with the company for over five years, and I’m so excited to talk about RuPaul’s Drag Race Match Queen and some of the amazing features we’ve built. We’ve taken the best that we’ve learned from fashion, idol, and match gameplay to create a brand new hybrid experience, one that’s incredibly easy to pick up and impossible to put down. Launching with over 1,000 highly polished levels and thousands of fashion items, the game will introduce fresh new seasons every week along with some amazing new features such as season collections, which feature fashion from our feature queens.

Players can complete their collection via purchase with season tokens, through season chests, or IAP purchase. The featured looks are showcased through visual merchandising and show off the best drag fashion from the show. Players can use their collections and fashion prowess in toot or boot, entering themed contests to compete against others for the best look.

Hakeem Harrison, Head of Growth, Eastside Games: Hello. My name is Hakeem Harrison, and I’ve been the head of growth at Eastside Games for just over a year. Three games that we launched in 2024 gave us three distinct opportunities. First, we were able to revamp our creative processes. We’re producing far more net new creative concepts than ever before, and we saw the best performance against creative KPIs in studio history during the Power Rangers Mighty Force launch in last Q3.

Second, we built stronger relationships with our ad network and measurement partners. Third, we learned the nuances of a new genre as we now look to capitalize on one of the strongest IPs in our portfolio by bringing RuPaul’s Drag Race to match in 2025. Through the first few stages of tech and soft launch for RuPaul Match, we are seeing the kind of retention metrics that would make anyone on the ad network side lean in, and they’re already doing so.

Walling Minh, Chief Revenue Officer, eSight Games: I’m Walling Minh, Chief Revenue Officer for eSight Games. Looking ahead to 2025, we continue to look for opportunities to diversify our offerings. With that in mind, I’m excited to talk about the launch of TrailPark Boys’ greasy money onto the Epic Mobile store. As only a handful of developers on the platform, we have benefited from the high visibility since launch. 21% of our installs have come from the Epic Mobile Store, all of which has been organic, non paid traffic.

The success of this new platform also has meaningful benefits for our business beyond driving players. The Epic mobile store only takes a twelve percent platform fee compared to other platforms, which can significantly improve our project margins.

Eileen Johnson, Chief Business Officer, ESA and Games: Hi, everyone. I’m Eileen Johnson, Chief Business Officer at ESA and Games. Last quarter, we focused on our second major crossover event, this time featuring Tradiparm Boyce and Cheet and Chong. This collaboration resulted in one of our highest Art Thou events for Tradepart Voice last year. This success reinforces the idea that crossover events add a significant value and boost player engagement.

Looking ahead to Q1, we will continue our focus on crossover events. Our next one will be with Triggered Boys and All Elite Wrestling set to launch at the end of Q1. Additionally, we are planning another event for Q2, which will serve as a key boost for Rupaul Stregory Superstar. We’re also gearing up for the release of Rupaul Stregory’s Match Queen. Beyond our user acquisition efforts, we are exploring other ways to reach our audience through additional product marketing initiatives.

Lastly, we are excited to share that we are finally ready to showcase some gameplay from Squishmallows Match. This footage was first revealed during Squishmallows Day on March 7, and it generated a lot of buzz and excitement.

Jason Bailey, Board Chair and CEO, Eastside Games Group: Thank you everyone for joining us for this Q4 twenty twenty four earnings call and a wrap up of 2024 as a whole. I hope you’re as excited as I am about the incredible initiatives and the incredible team that we’ve put together and the great things that we’re gonna see happen in 2025. Thank you for joining us. This video will be available on our website for you to review there. Thank you so much.

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