Earnings call transcript: East Side Games sees growth in Q2 2025 despite revenue dip

East Side Games Group (EAGR) reported its Q2 2025 earnings, showcasing resilience with a 4% revenue increase from Q1 2025, despite a 6% year-over-year decline. The company’s stock saw a 3.92% rise, closing at $0.53, as investors reacted positively to strategic initiatives and product launches. According to InvestingPro data, EAGR has demonstrated strong momentum with a 17.78% return over the past six months. The earnings call highlighted new game releases and a strong cash position, underscoring the company’s strategic focus on innovation and market expansion. InvestingPro analysis suggests the stock is currently trading below its Fair Value, presenting a potential opportunity for investors.

Key Takeaways

• East Side Games reported Q2 2025 revenue of $19.2 million, a 6% decrease from the previous year.
• The company launched several new games, including RuPaul’s Drag Race Match Queen, which showed strong performance.
• The stock price increased by 3.92% following the earnings call, reflecting investor confidence.
• East Side Games ended the quarter with $4.1 million in cash and no debt.

Company Performance

East Side Games demonstrated resilience in Q2 2025 despite a slight decline in year-over-year revenue. The company reported $19.2 million in revenue, a 6% decrease from Q2 2024, but a 4% increase from Q1 2025. The adjusted EBITDA stood at $1.6 million, representing an 8% margin. With an impressive gross profit margin of 59.98% and an EV/EBITDA ratio of 4.65x, the company shows strong operational efficiency. The company maintained a strong cash position with $4.1 million and no debt, allowing it to focus on strategic investments and innovations. InvestingPro analysis reveals the company maintains a healthy current ratio of 1.67, indicating strong liquidity to meet short-term obligations.

Financial Highlights

• Revenue: $19.2 million, down 6% year-over-year, up 4% from Q1 2025.
• Adjusted EBITDA: $1.6 million, with an 8% margin.
• Cash position: $4.1 million, with zero debt.
• Cash inflow from Apple: $1.37 million in July.

Outlook & Guidance

Looking ahead, East Side Games plans to scale the success of RuPaul’s Drag Race Match Queen in Q3 2025. The company is set to globally launch Squishmallows Match in September and is exploring TikTok as a new user acquisition network. The forward guidance projects an EPS of $0.01 for Q3 2025 and a revenue forecast of $16.22 million. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, which provides detailed analysis of EAGR’s growth potential and competitive position among 1,400+ top stocks.

Executive Commentary

Jim Wagner, Chief Product Officer, noted, "RuPaul’s Drag Race Match Queen has quickly become the highest ARPDAU Match three game in our portfolio." Eileen Johnson, Chief Business Officer, emphasized the cultural impact of the game launch, stating, "This wasn’t just a game launch, it was a cultural moment that lived across platforms." Interim CFO Jason Chad highlighted the company’s strategic share repurchases, saying, "We believe that the shares repurchases at the current pricing level is an allocation of our capital and gives value to our shareholders."

Risks and Challenges

• Market Saturation: The mobile gaming market is highly competitive, posing challenges for user acquisition and retention.
• Innovation Pressure: Continuous innovation is required to maintain user engagement and revenue growth.
• Economic Factors: Macroeconomic pressures could impact consumer spending on mobile games.
• Regulatory Changes: Potential changes in tax credits or regulations could affect financial performance.

East Side Games’ Q2 2025 earnings call reflected a strategic focus on innovation and market expansion, with strong product launches and a robust financial position fueling investor confidence. The company remains optimistic about its growth prospects and strategic initiatives in the coming quarters.

Full transcript - East Side Games Group Inc (EAGR) Q2 2025:

Moderator/Host, Eastside Games Group: Hello. Welcome to the Eastside Games Group q two twenty twenty five earnings call. Today, we’ll be going over the performance of our core portfolio for 2025, the launch of RuPaul match queen, as well as some exciting things coming up in our 2025 launches. I’d like to remind everyone that some of the statements made are forward looking under the applicable securities laws. The details and disclaimer for which can be found at our site at www.eastsidegamesgroup.com.

Thank you.

Jason Chad, Interim CFO, Eastside Games Group: Hi, everyone. I’m Jason Chad, interim CFO of Eastside Games, and here’s our results for q two. We ended the quarter with a top line revenue of $19,200,000, 6% down from q two twenty four, but a 4% increase from q one. The core portfolio remains consistent and strong, contributing positive cash flows that continue to fund our investments and our new growth games. We achieved an adjusted EBITDA of 1,600,000.0, a margin of 8%.

This is a result of our increased marketing spend budget on our new game launch, RuPaul Match, as well as a ramp up of our titles in the latter half of the quarter to take advantage of favorable payback windows whose results we expect to see in q three. On the balance sheet side, we ended the quarter with $4,100,000 in cash with zero debt, down $1,300,000 from q one. The company also received a subsequent inflow of cash from apple of $1,370,000 in July for q two revenue recognized. The core portfolio continues to generate positive operating cash flows that give us the flexibility to continue funding our growth games and future projects. For game metrics, the player base remains strong with an average DAO of 203,000 players and an ARPDAO of $1.04.

Although there were some seasonal pullbacks, we’re starting to see some good payback opportunities going into q three, and we will continue to invest in acquiring users for these games to ensure that the growth is both profitable and sustainable. We also remain active on the previously announced NCIB and have repurchased 517,000 shares in the quarter, bringing us to a total of 4,400,000.0 shares canceled since inception. We believe that the current price of the company’s common shares do not fully reflect their inherent value. We believe that the shares repurchases at the current pricing level is an allocation of our capital and gives value to our shareholders. We are also in a strong position to actively monitor and evaluate all other capital allocation priorities, may include new IP, user acquisition, or M and A.

The company will continue to balance the need for growth with return of capital for shareholders. We’re also seeing some positive changes in the Canadian tax credit environment that will allow us to invest more in the Canadian workforce with increased rates in BC as well as updates to shred, which can further fund our future growth opportunities. The highlight event in q two was the official worldwide launch of RuPaul match, which has quickly become our highest grossing match game in the studio just two weeks into launch at the end of the quarter. This is only the beginning, and we look forward to a robust q three with the launch of another new title in Squishmallow’s match. In summary, q two was a strong quarter of growth for ESG, and we will carry that momentum into the second half of the year as we continue to invest in the growth of these new games while maintaining profitability and stability in the core portfolio.

Thank you for all your support, and I’ll hand it off to Jim.

Jim Wagner, Chief Product Officer, Eastside Games Group: Hello. I’m Jim Wagner, chief product officer. Q two has been another strong quarter for Eastside Games, demonstrating our continued commitment to delivering engaging mobile game experiences and driving sustainable growth. In terms of our core portfolio of idle games, they continued to demonstrate long tail revenue generation and sustained player engagements. Some highlights from Q2 include: Office Somehow We Managed Season Pass reaches 8.5% of monthly revenue, putting it on par with our other narrative driven idle games.

Team leaderboards launched in both Trailer Park Boys Greasy Money and RuPaul’s Drag Race Superstar. As a result, RuPaul’s Drag Race Superstar average revenue per daily active user is up 12% quarter over quarter, and Trailer Park Boys Greasy Money has seen high engagement with the feature, which we also plan to leverage to increase monetization in q three. Experiments in price and offer segmentation on Trailer Park Boys Greasy Money, Cheech and Chong Bud Farm, and Bud Farm Idol Tycoon continue to show increases to event revenue. Going into q three will bring these successes to more games across the portfolio. We’re also excited to share some early insights into the worldwide launch of RuPaul’s Drag Race Match Queen and the promising soft launch metrics for Squishmallows match.

Rupaul’s Drag Race Match Queen saw its worldwide launch in Q2. We are thrilled with the initial performance, and the early metrics are meeting our expectations. Rupaul’s Drag Race Match Queen has quickly become the highest ARPDAU Match three game in our portfolio. To put this into perspective, its average revenue per daily active user is double that of our successful Match three games. This outstanding performance is a testament to our live operations strategy and the deep engagement the game is fostering.

Our retention metrics for RuPaul’s Drag Race match queen are strong, consistently at or above industry benchmarks. This indicates that the players are finding the game highly enjoyable and are returning day after day, which is crucial for long term revenue generation. But we are not resting on our laurels, and our development team is actively working on new features to further enhance RuPaul’s Drag Race Match Queen’s performance. We have several exciting updates in the pipeline designed to boost both revenue and retention, including daily missions. A daily missions feature that will provide players with new objectives and rewards, encouraging consistent engagement.

A new mini game mechanic designed to add variety and new monetization opportunities based on iconic moments from the show. Legacy Collections that will introduce new ways to collect fashion from past seasons to incentivize long term play and provide additional avenues for player progression and monetization. We are confident that these upcoming features will solidify RuPaul’s Drag Race Match Queen’s position as a top performing title in the match three genre. Now let’s turn our attention to Squishmallow’s match, which is currently in its soft launch phase, and we are very encouraged by what we’re seeing in these early stages. With Squishmallows match, we’re introducing fans to a new way to collect, play, and connect with the Squishmallows plush they love.

This casual match three puzzle game blends the collectible spirit of Squishmallows with rewarding gameplay, letting players build scenes, showcase their squads, and engage daily through personalized feeds. With features like season passes, limited time drops, and claw machine rewards, the game drives both engagement and monetization while expanding the Squishmallows brand into mobile gaming. Early metrics such as level funnel and conversion are strong, meeting or exceeding our benchmarks. And we’re collaborating with Jazwares to align in game Squishmallows with real world plush. Our first initiative features a new Squishmallow launching both in game and as a physical product, creating synergy across platforms and enhancing fan engagement.

As of now, all core features for the world wide launch of Squishmallows Match are now implemented. Our current focus is entirely on polish, stability, and bug fixing to ensure a seamless and high quality experience for players upon global release. And we are on track for this global release in September. The promising soft launch metrics for Squishmallows match further validate our diversified portfolio strategy and our ability to develop and launch successful new titles. Coming up in q three, we’ll be rolling out the event piggy bank to more games games following its success in q two on Milk Farm Tycoon, where it increased revenue by 17%.

We’ll be building on the success of the team lead award feature by introducing messaging and chat and more ways to coordinate and interact with your team. We’ll also be adding additional season pass placements to our games to allow players to engage in two seasons in parallel, each with their own pass. And finally, we are also proud to announce a new partnership with Trailer Park Boys. Later this year, we’ll launch Trailer Park Boys Match, our first narrative driven hybrid match game. This game will combine fun, accessible match three gameplay with iconic true to the brand story sequences.

In closing, ESAI Games has had an excellent second quarter, driven by the strong initial performance of RuPaul’s Drag Race Match Queen, the encouraging soft launch results of Squish Balance Match, and the continued strength of our core portfolio. We remain committed to executing on our strategic priorities and delivering long term value to our shareholders.

Marketing/User Acquisition, Eastside Games Group: As Jim mentioned, the first thirty days in Drew Paul’s Drag Race Match Queen launch have been successful on several fronts, particularly due to early full funnel marketing campaigns. With strong early metrics, over 45% day one retention, and ARPDAU above a dollar, we saw a clear opportunity to scale spend while staying within our hundred eighty day payback targets. One of the standout successes has been the impact of full funnel marketing, with branded initiatives driving meaningful improvements across both awareness and performance. When the game appeared on RuPaul’s Drag Race All Stars, we saw more than double the number of organic installs. Paid ads also performed better with double the return on day one.

This shows that brand exposure helps us reach more players and makes our advertising more effective. The first thirty days have been strong, but there’s still a lot of room to grow. As our players stick around longer, we expect to see better returns over time. As for our Q pre plans, our biggest change with the core portfolio is setting stricter daily spend targets for each title to keep daily active users steady or growing. By being more aggressive with spending and balancing growth and profitability, we expect games like The Office, Somehow We Manage, RuPaul’s Drag Race Superstar, Trailer Park Boys’ Greasy Money, and Milk Farm to grow more in q three.

Our goal for q three is to continue to grow Match Queen. We’re increasing collaboration between brand marketing and user acquisition to create more shared content, which should improve installs per impression and lower our cost per install. We’re also working with agencies to produce more user generated content, helping both organic growth and paid advertising. Meanwhile, we continue to explore how to better utilize TikTok as a user acquisition network. We are very excited to launch Squishmallows match in September.

Squishmallows offers a different opportunity compared to MatchQueen. While the RuPaul audience spends well, reaching those users can be expensive. Squishmallows targets a broader audience, which helps us get installs at a much lower cost. In our tech and soft launches, the cost per install has been more than half of what we saw during similar stages for MatchQueen. We will continue working closely with our product marketing team to develop a full funnel approach, integrating all efforts into one unified strategy.

Applying learnings from MatchQueen, we’re investing heavily in creating the assets needed to support successful full funnel launch for Squishmallow’s match.

Eileen Johnson, Chief Business Officer, Eastside Games Group: Hi. I am Eileen Johnson, and I’m the chief business officer at eSight Games. As Hakim touched on earlier, we are already seeing early signs that our full funnel marketing approach for MatchQueen is working. Knowing the user acquisition is more competitive than ever, we invested in a full funnel strategy combining paid media, UA campaigns, creator partnerships, cultural moments, and organic community building into one unified effort. And timing was key.

We launched at the same time as RuPaul’s Drag Race All Stars season 10 that aired on Paramount plus coordinated with sponsored pride campaigns and activated a strategic network of LGBTQ fashion and gaming creators. This wasn’t just a game launch, it was a cultural moment that lived across platforms. And the results are promising. Over the July 4 weekend, we saw strong organic lift. Daily installs doubled and largely fueled by our second in show feature on Paramount plus Social engagement is also gaining a momentum.

A recent Instagram video featuring former Rupaul Streggory’s All Stars winner Trixie Mattel on our social media channels has reached 217,000 views and over 5,500 engagements delivering an engagement rate well above industry benchmarks. We had received outreach on social media from a number of Drag Race queens sharing content of them playing the game or asking how to be part of the game. Media partnerships were central to our strategy. Match Queen was integrated into All Stars episodes on June 20, July 4 and we had multiple integrations and mentions of the game during gaming awards on June 25. Looking ahead to Q3, we’re continuing the full funnel approach to keep Match Queen culturally relevant and highly visible as we scale.

Key moments in Q3 will include placement in the premier episode of Fashion Photo Review Slasheon Royale to accompany the highly anticipated launch of the next iteration of the Drag Race Philippines franchise that premieres August 13. We’re also having a focus on developing our TikTok channel, including ongoing content development with queens and other creators. We’re also hosting a unique event to kick off the New York Fashion Week that centers around the impact of drag culture across mediums. We are gearing up for the launch of our next major title Squishmallows Match with pre registration and pre orders live since August 6. Jazwares is a leader in the toy industry and it’s been an honor to work closely with our amazing team.

Their attention to detail and deep care for the brand have been essential in helping us capture the true spirit of Squishmallows in the game. We worked hard to ensure the game reflects the brand’s essence and delights fans everywhere. For the global launch in September, we’re executing a full funnel marketing strategy, leveraging media influencers and a close collaboration with Jaspers to bring iconic brand moments into the game. This partnership strengthens synergy between digital and physical experiences. We’re also applying key learnings from Ripple’s Drag Race Match Queen with a greater emphasis on product marketing to drive awareness, acquisition, and engagement across the funnel.

As Jim mentioned, we are partnering closely with Jasper’s to align the game with the real world Squishmallows brand. The first integration is a new Squishmallows. Available in game at launch with a giveaway tied to pre registration and pre order. Trailer Porpoise Match. Finally, we’re excited to soon open up pre registration and pre orders for Trailer Porpoise Match.

Trailer Porpoise is a Canadian treasure and we have had a strong relationship with the brand for many years. Over eight years ago we launched Trailer Porpoise Greasy Money. Now it’s time to give fans a fresh experience, one that brings them back to what they love the most, which is the Stores for the Boys.

Moderator/Host, Eastside Games Group: Thank you, everybody. And thank you especially to everybody who joined us today on this earnings call. We hope you enjoyed the information that you got and look forward to our new launches as much as we are. See you in q three.

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