Release Date: August 13, 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) maintained a stable revenue of $20.5 million in Q2 2024, with an adjusted EBITDA of $2.5 million, marking the seventh consecutive quarter of such performance.
- The company increased its user acquisition spend by $900,000, focusing on match-3 titles, which contributed to a 14% increase in ARPDAU for match users.
- Significant growth was observed in specific titles, such as Milk Farm Tycoon, which saw a 300% increase in top-line revenue, and Doctor Who: Lost in Time, which grew by 200%.
- The launch of Power Rangers Mighty Force was successful, with early metrics indicating it could become the tenth title to generate $1 million per quarter.
- The company is strategically planning new game launches, including a promising collaboration with World of Wonder for a new RuPaul's Drag Race mobile game, expected to leverage the success of the previous title.
Negative Points
- Revenue remained flat from Q1 to Q2 2024, indicating a lack of growth in overall revenue despite increased spending on user acquisition.
- The company's cash on hand increased only modestly by 4.8% from the previous quarter, despite significant investments in user acquisition and share repurchases.
- There is uncertainty regarding the launch timeline for the new RuPaul's Drag Race match-3 game, which could impact future revenue projections.
- The broader app economy and game spending environment remain uncertain, with potential regulatory changes affecting platforms like Apple and Google.
- Despite the success of new titles, there is a risk of cannibalization within the company's portfolio, particularly with multiple games under the same IP.
Q & A Highlights
Q: What factors contributed to the improvement in ARPDAU across various titles, and what strategies are in place to maintain this momentum?
A: Jim Wagner, CPO, explained that the primary driver for ARPDAU growth is the ability to apply successful strategies from one game to others. This includes pioneering new balances and implementing season passes, which have become a significant conversion point for both new and long-term players. Experimenting with the frequency of season passes has also contributed to increased ARPDAU.
Q: Can you elaborate on the target of achieving a $10 million cash balance by the end of the year and the impact of user acquisition spending?
A: Jason Bailey, CEO, stated that the company aims to maintain a $10 million cash balance as a war chest for future launches, particularly for the upcoming RuPaul's Drag Race match-3 game. The company is focused on spending heavily on user acquisition for new titles like Power Rangers, which is performing better than expected, while maintaining a payback window of about 180 days.
Q: Is there any broader market trend contributing to increased confidence in user acquisition spending?
A: Jason Bailey, CEO, noted that while there are positive indicators such as regulatory changes forcing Apple and Google to open up their ecosystems, the primary confidence comes from the performance of their match titles. The broader app economy is slowly improving, but the company's strategies are mainly driven by internal successes.
Q: What are the early performance indicators for the Power Rangers title, and what are the expectations for its revenue generation?
A: Jason Bailey, CEO, mentioned that early indicators for the Power Rangers title are fantastic, and it is expected to generate $1 million per quarter, making it the tenth title in their portfolio to achieve this milestone.
Q: How does the company plan to leverage the success of the first RuPaul's Drag Race title with the upcoming game, and is there concern about cannibalization?
A: Jason Bailey, CEO, explained that there is no concern about cannibalization between the two RuPaul titles. Different game mechanics will appeal to different segments of the audience, and the company expects the new match game to attract a broader audience without affecting the existing game's player base.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
