East Side Games Group Inc.

Good afternoon, ladies and gentlemen, and welcome to Eastside Games Group's fourth quarter 2025 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would now like to turn the conference call over to Jason Bailey. Please go ahead.

Welcome everybody to the Eastside Games Group Q4 and full year 2025 earnings call. I'm Jason Bailey, Board Chair and CEO of Eastside Games Group, and today we will share highlights from the fourth quarter ended December 31st, 2025. 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, and please refer to our fourth quarter press release and MD&A precautionary statements regarding 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 can be found in the investor section of our website at www.eastsidegamesgroup.com under the financial information section. I want to start by addressing our strategy and performance over the past year and the shift in focus for 2026 and beyond. Our focus in 2025 was on aggressive growth, which led to the launch of several titles in a new genre in the second half of the year. These titles demonstrated some of the best metrics, player engagement, and conversion rates in our history, proving they were the most polished games ever built by ESET Games Group. However, this strategy was unsustainable due to difficult market environment. We faced high saturation and increasingly expensive user acquisition costs, consumers entrenched in existing games, and aggressive platform fees that compress margins. Consequently, our traditional marketing spend no longer justified the returns, so we had to pivot back to near-term profitability and strategy in order to rebuild our war chest. Crucially, one of several bright spots has been the successful execution of the initial milestones of our fully funded platform exclusive titles, This low-risk model leverages eSight Games Group's strengths with IP partners to secure more stable, guaranteed revenues, profits, and cash flows. For 2026 and beyond, we are fundamentally shifting our SHAP strategy. Our focus will transition from top-line growth to pure profitability and cash flow generation. We will continue to concentrate on fully funded deals for exclusive license titles on major platforms, and in order to In order to quickly rebuild cash reserves, we are also moving away from a 365-day return on ad spend model to a more disciplined 60-day target and to ensure the users we do acquire are of the highest quality from both retention, monetization, and a lifetime value standpoint. The C team will now provide further insights and details. First up is our Chief Financial Officer, Mr. Chan.

Thanks, Jason. Today, we reported our results for the company's fourth quarter and year-to-date periods ending December 31st, 2025. As a reminder, all amounts provided are in Canadian dollars. We ended 2025 with $77.6 million in top line revenue, a 7% decrease from 2024 year-on-year, and an adjusted EBITDA of $800,000, a 92% decrease from 2024. We've already taken decisive actions, including a necessary reduction in force to right-size our team and the cancellation of high-risk projects. Additionally, we are moving more of the live operations of our core games in-house. These efficiency measures are expected to contribute approximately $4 million Canadian to free cash flow annualized on a go-forward basis. Furthermore, we are capitalizing on expected industry changes, particularly with platform fee structures. By implementing off-platform fee payments, We expect to add 10 to 15 percentage points back to our margins, a move that has already generated $320,000 back into our bottom line from Q4 to Q1 2026. Our core portfolio remains our greatest strength, with high-quality users who continue to monetize above industry standards, maintaining a strong margin of approximately 14%. The user base remains at 196,000 daily active users with an average ARPDAU, average revenue per daily active user, of $1.09. From a capital structure perspective, the company ended Q4 2025 with a total debt of $5.3 million and a net debt of $4.9 million. Elevated funded debt levels combined with lower trailing EBITDA driven by increased use acquisition, marketing investments, and certain one-time costs resulted in noncompliance of financial covenant under the company's credit agreement. The company has been in active discussions with its lender and has been told to expect to receive a tolerance or waiver in respect of such non-compliance. However, there can be no assurance that any such tolerance or waiver will be provided on terms acceptable to the company or at all. In the near term, the company expects a temporary increase in debt in Q1 2026 to fund certain one-time expenses, including severance payouts and litigation costs. And the company is seeking additional accommodations from RBC as restructuring initiatives continue. These short-term impacts do not reflect a change in strategic direction. The company's current plan is focused on maximizing profitability with a view to return to positive EBITDA and materially reducing debt over the remainder of 2026 and the next 12 months. However, these expectations are forward-looking and are subject to a number of risks and uncertainties. Ultimately, this strategic shift isn't just a pivot. It's a firm and necessary reset for the business. Similar to our pivot back to profitability back in 2023, we have convictions that our profitability strategy which includes the right-sizing, the project cancellations, and the in-house moves, will ensure a long-term stable and profitable growth for ESG. We appreciate your patience and support as we execute the path ahead. I will now pass it on to Ms. Sheck, our Chief Operating Officer.