East Side Games Group Inc.

Good day and thank you for standing by. Welcome to the Eastside Games Group Q2 earnings call. All lines have been placed on mute to prevent any background noise. Should you require any assistance, please press star zero on your telephone keypad and an operator will assist you. During today's call, there will be a question and answer session. If you would like to ask a question during this time, please press star one on your telephone keypad. I will now turn the conference over to Jason Bailey, CEO. Please go ahead.

Thank you, Operator. Welcome everyone to Eastside Games Group's second quarter 2022 results call. On the call today with me is Jim McCallum, our Chief Financial Officer. I will begin by sharing highlights from the second quarter ended June 30th, 2022. I will also be giving an update on our business strategy and key events that have taken place since we last reported on May 12th, 2022. Jim will go into greater detail on our financial results commentary for the period, before I turn it back to myself for some final remarks before we open it up to analyst questions. On May 17th, we officially changed our name to Eastside Games Group Incorporated at our annual general meeting. I'd like to remind you that certain statements made on this call are forward-looking within the meaning of applicable securities laws. This call includes references to non-GAAP measures. Please refer to our second quarter press release in MD&A for cautionary statements relating to the forward-looking information and reconciliations of non-GAAP measures to GAAP results. References to all figures are in Canadian dollars on an IFRS basis unless otherwise noted. Additional materials may be found at the investor section of our website at eastsidegamesgroup.com under the financial information section and an audio replay of this call will also be available on our website. Q2 was another solid quarter. We generated $29.7 million in growth revenue, a 32% increase over Q2 2021. EBITDA was also positive at $0.6 million. We continue to focus on revenue growth, increasing our cash reserves and developing new products. In that pursuit, total revenue for 2022 to date was 65.3 million, a 44% year over year. Our cash from operations in Q2 alone was $10 million. We're sitting on $9.3 million in cash and only $0.3 million in debt. And we have secured access to an additional $10 million in available debt facilities should the opportunity to use it arise. This nets us two notes for $10 million and one for up to $7 million. It's no secret that growth stocks have taken a beating in the first half of 2022. With recession locked in, rampant inflation concerns, the war in Ukraine, and the lingering effects of the pandemic, uncertainty is high. With that came a significant reduction in consumer spend in mobile games. Estimates put that reduction at 15% across the industry. Eastside Games Group is not immune to this. and we have seen this in many of our legacy titles. Fortunately, this is offset by the growth in new titles such as RuPaul's Drag Race and The Office Somehow We Manage. We overcame these 15% headwinds and still managed to put up a 44% year-over-year growth, a testament to the strength and ingenuity of our team, as well as ongoing validation of our business model. Daily active users were up to 347K, up 43% year-over-year. We did this while maintaining only a 7% drop in ARPDAU, which has been very stable over the past year. MAU was up 69% year-over-year to 1.35 million. Our mission at Eastside Games Group is not just to build games into like players. We aim to fundamentally change the way games are built and published. We are investing heavily in our software platform. We are building a publishing infrastructure. We are building best practices playbooks. We are building deep relationships and trust with every major IP holder. We are building talent density across all of our teams. We are building a multi-billion dollar business with a concrete foundation. We are leading $200 billion a year game industry on an innovative new path. These are our two additional super marquee titles for 2022. Star Trek Lower Decks continues to refine in soft launch. Our development partners at Mighty Kingdom continue to demonstrate their world-class talents. Our IP partners at Paramount have been exceptional in their support of this brand, unquestionably one of the world's greatest brands with over $10 billion in revenue generated to date. Star Trek has released 12 television series and over 14 feature films since originally airing in 1966. Doctor Who will be our final big release of 2022. It is currently in the early stages of soft launch and showing good promise. Doctor Who is another massive franchise with 870 episodes since its original launch in 1963. Go to the App Store now and play Bud Farm Munchie Match. It is soft launched in Canada and it is showing unprecedented retention rates and a level of polish that we are extremely proud of. If you don't love this game, then you don't love games. The first one on this call to send me a screenshot of them on level 150 gets a free Eastside Games hoodie. Also watch out for Trailer Park Boys Get Merged coming this year, which is a soft launch in some geos but not Canada yet. We continue to sign new development partners as well as new IP partners as we aim to launch 20 games in 2023, maybe more. Milk Farm Idle Typhoon is a fresh new take on our Idlekit framework. This game launches in September worldwide and is a take that we're super excited about. People need to reiterate the fact that our games and this business prints money, and we are aggressively reinvesting that cash into growth and building an industry-defining platform. If we only ran our games, didn't invest in new titles, didn't build out our software platform, then this is what our business would look like. This is excluding growth titles such as RuPaul in the office, But it does include all the overhead, operating costs, marketing costs, feature development. This isn't cherry picked like the bud farm example I gave last quarter. This is work and all. We put up 20% plus margins all day long. The contingent compensation. This has been written down as we are currently on a $130 million run rate. This doesn't mean we don't make it. I can assure you I will be doing everything we possibly can to make or beat this number. But we've been giving the advice to knock it down. And so this is resulting in a large bump in net profit, but it is adjusted out of EBITDA. We also announced our NCIB today. We believe our stock is the best in fed in town and will act accordingly. Despite the ongoing strength of our business, Our stock is down 50% year-to-date. We have issued our NCRB and officially shown our attempt to buy back as many as 4 million of our own shares. You can also see that insiders have been purchasing stock lately, specifically Mike Edwards, Jonathan Bixby, Jim McCallum, and myself. We expect this to continue.

And now over to Jim for some comments.