Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- East Side Games Group Inc (EAGRF, Financial) reported a top line revenue of $21.4 million for Q3 2024, marking a 3% growth year-over-year and a 4% growth quarter-over-quarter.
- The company achieved its eighth consecutive quarter of net profit, with $2.56 million in adjusted EBITDA, representing a 12% margin.
- The launch of Power Rangers Mighty Force contributed positively, becoming the highest-ARPDAU game in their portfolio.
- East Side Games Group Inc (EAGRF) ended Q3 with a cash balance of $8.3 million, the highest since Q2 2022, and has zero debt.
- The company has successfully increased season pass revenue by 40% across several games by doubling the frequency of season passes.
Negative Points
- Despite positive financial results, East Side Games Group Inc (EAGRF) believes its market valuation is severely undervalued, indicating a potential disconnect with investor perception.
- The company's share buyback program, while reducing market float, has been a sacrifice to its cash balance.
- The focus on share repurchases has resulted in over $2 million spent, impacting the cash reserves that could have been used for other investments.
- The company faces challenges in educating the market about its value and strategic direction.
- While the Epic Games Store presents new opportunities, its current availability is limited to specific regions, potentially restricting immediate revenue growth.
Q & A Highlights
Q: Can you provide an overview of East Side Games Group's financial performance in Q3 2024?
A: Jason Chan, Interim Chief Financial Officer, reported a top-line revenue of $21.4 million, marking a 3% year-over-year and 4% quarter-over-quarter growth. The company achieved an adjusted EBITDA of $2.56 million, maintaining a 12% margin, and posted its eighth consecutive quarter with a net profit of $2.5 million or more. The cash balance increased to $8.3 million, the highest since Q2 2022, with zero debt.
Q: How has the launch of Power Rangers Mighty Force impacted the company's performance?
A: James Wagner, Chief Product Officer, stated that Power Rangers Mighty Force significantly boosted business performance, achieving nearly 30,000 daily active users shortly after launch. It became the highest-ARPDAU game in the portfolio, contributing to increased top-line revenue and profit margins.
Q: What strategic initiatives are being implemented to enhance user engagement and revenue?
A: Elin Jonsson, Chief Business Officer, highlighted the success of the Intergalactic Friendship Day crossover event, which increased organic traffic and retention. The company plans to replicate this success with new crossover events in Q4. Additionally, season pass revenue increased by 40% due to a higher frequency of releases.
Q: How is East Side Games Group leveraging the Epic Games Store for future growth?
A: Wally Nguyen, Chief Revenue Officer, explained that the Epic Games Store offers a more favorable revenue-sharing model, with a 12% cut for payments processed through Epic. The company plans to launch Trailer Park Boys: Greasy Money on the Epic mobile store in Q4, aiming to reach a broader audience and capitalize on new distribution opportunities.
Q: What are the future plans for game development and partnerships?
A: Lisa Shek, Chief Operating Officer, announced the development of RuPaul's Drag Race Match Queen, a new match-three title in collaboration with Funkitron and World of Wonder. The game is set to launch in early 2025, following the success of RuPaul's Drag Race Superstar, which has become the studio's top-grossing game.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
