East Side Games Group Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Eastside Games Group third quarter 2023 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session for analysts only. I would now like to hand the conference over to your speaker today, Jason Bailey, board chair, CEO, and founder of Eastside Games Group. Thank you. Please go ahead.

Thank you, operator, and welcome everyone to Eastside Games Group's Q3 2023 results call. On the call with me today is Jason Chan, our interim chief financial officer. We are also joined by our chief operating officer, Lisa Sheck, and our chief product officer, Jim Wagner. I'm very excited to share highlights from our third quarter and the September 30th, 2023 results. I will also be giving an update on our business strategy and key events that have taken place since we last reported in August. Mr. Chan will go into greater detail in our financial results commentary for the period before turning it over to Lisa and Jim for some final remarks before we open it up to analyst questions. I'd like to remind you that certain statements made on this call are forward-looking within the meaning of applicable securities law. This call includes references to non-GAAP measures. Please refer to our third quarter press release and MD&A for cautionary statements relating to 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 can be found in the investor section out on our website at www.eastsidegamesgroup.com. Under the financial information section and an audio replay of this call will also be available on our website. Q3 was a quarter of continued transition and reaction to the ongoing changes in the global games market. We aggressively restructured our business to ensure ongoing profitability, independent, and long-term positive cash flow. Many of the changes made will be fully reflected in Q4 as we benefit from a full quarter of the new paradigm. This was achieved primarily through cost reductions and smart fiscal management by our new C-suite. We have talked about this refocus extensively on the past few earnings calls, and Q3 continues to show the fruits of that labor. We have a business that is profitable, stable, and lean, a business with a strong pipeline of new products to layer on top of our existing strong foundation and our focus on a long-term profitability. We have a company with zero debt, sufficient cash, an easily sustained run rate, and a pipeline of exciting releases with massive potential. I'll now pass it to Mr. Jason Chan, our interim chief financial officer, for some comments.

Thank you, Jason. As mentioned, this quarter we pursued a strategic shift to set us on the path to future sustainable growth while maintaining profitability. The restructure for Q3 resulted in $5 million of annualized all-tax savings. We expect to start realizing these efficiencies in Q4 with minimal expected impact on our top line. Q3 had us end at $20.8 million in revenue and adjusted EBITDA of $3.1 million. roughly a 15% margin. This is our fourth straight quarter of positive adjusted EBITDA over $2.5 million and the highest we've had since Q1 of 2022. We continue to realize efficiencies in our yearly spend. Q3 year-to-date, we spent $15.3 million compared to $31.3 million last year. For Q4, we will continue to increase spend on campaigns that have a proven payback period as we improve and adapt to this changing market landscape. Our average daily active users for the quarter were 239,000, which is down from T2, but our rate of repeat daily users is up slightly at 29% business rates. The drop is mainly due to a combination of seasonality trends, along with the realignment of our marketing focus to campaigns targeting more profitable segments of our mobile gaming audience. As Jason mentioned, our cash on hand on September 30th ended at $3.6 million. This represents a $2 million swing in net cash positions from Q2 and is the most cash we've had on hand since Q1 of this year. We anticipate healthier cash flows to come in the future as part of our switch to shift for increased profitability. We've also purchased 733,879 shares under our normal course issuer bid through September 30th at an average cost of $0.95 per share. and we're currently looking to acquire as much as restrictions allow going forward. In conclusion, we've seen immediate returns from our restructure this August, and we remain confident that the changes implemented will lay the groundwork for a stronger Q4 and 2024. Thank you for your continued support, and now I will pass it on to our Chief Product Officer, Mr. Jim Wagner.