East Side Games Posts $1.6 Million in Adjusted Third-Quarter Earnings
Key Facts
East Side Games Group reported on November 12 results for the third quarter ended September 30, 2026, posting $1.6 million in adjusted EBITDA, up 153% year over year. The company said adjusted EBITDA was $617,000 after excluding a development milestone payment. The quarter included a $2.2 million payment from a platform partner, lifting reported revenue to $10.79 million. Reported revenue fell 46% from the same period a year earlier. Adjusted EBITDA therefore reflects an improvement in that metric, but by itself does not establish an accounting net profit.
Revenue was $8.6 million excluding the milestone payment, according to the company’s statement. Core business revenue was below the second quarter, when it was $10.3 million. The company attributed the decline to capital-related limits on user acquisition spending during most of the quarter. It said it managed that spending with a target payback period of 30 to 60 days. That puts the decline in core revenue alongside an increase in reported adjusted EBITDA, while earnings remained $617,000 after excluding the payment.
User metrics showed average daily active users falling to 96,946, down 57.3% year over year. Meanwhile, average revenue per daily active user was $0.97, unchanged year over year. The ratio of daily active users to monthly active users rose to 29.4%, up 25.9% year over year. The indicators present a mixed picture: the daily user base contracted sharply, while daily revenue per user remained stable and the daily-to-monthly activity ratio improved. The company’s reported figures did not link these movements to any additional cause beyond limits on user acquisition spending.
The company completed a restructuring and cost-cutting program on September 1, reducing headcount by about 32%. It said the measures are expected to generate annual savings of about $3.5 million, with most of the impact beginning in the fourth quarter. Those savings add to about $4 million in annual savings the company implemented earlier in 2026. The measures provide context for the quarter’s results, but do not change the fact that reported core revenue declined from the second quarter. The expected savings are also an annualized figure, while most of the restructuring’s impact, according to the company, begins in the following period.
After the quarter ended, East Side Games entered into new credit arrangements, including a C$3 million revolving facility from National Bank of Canada and term loans of up to C$3.5 million backed by tax credits. It also secured a US$4 million term loan from Export Development Corporation. The company said its credit facility with RBC had been repaid in full. The arrangements mark a financing development after the financial period, while the company linked user acquisition spending constraints during the quarter to a lack of capital. The statement did not specify how much of the new financing the company would allocate to that spending.
The company warned that the fourth quarter will not include a milestone payment comparable to the one recorded in the third quarter. It called for comparing revenue and adjusted EBITDA in the coming period with third-quarter figures excluding the payment: revenue of $8.6 million and adjusted EBITDA of $617,000. This means reported third-quarter revenue and adjusted EBITDA include a non-recurring impact, as the company described the payment. In August, the company said it maintained its 2026 adjusted EBITDA forecast at between $485 million and $525 million. It also expected net debt to adjusted EBITDA of about 2.5 times near year-end, and a payout ratio of about 40%.
Chemtrade, which was named alongside East Side Games in the earnings report, had not reported third-quarter results when the news was published on November 12. The company had scheduled the release of results for the three and nine months ended September 30 after market close on November 13. The latest quarterly performance available in the evidence was its second-quarter results, when Chemtrade reported revenue of $578.7 million, up 16.5% year over year, and net earnings of $42.9 million. Adjusted EBITDA was $127.3 million, down 7.8% year over year. The company scheduled an online review of the results for November 16 at 10:00 a.m.