G5 Entertainment (G5EN) Q1 2026 earnings summary

Executive summary

• Revenue for Q1 2026 was $21.7M, down 11% year-over-year, with gross margin reaching a record 72.7% due to direct-to-consumer channels and reduced distributor commissions.

• G5 Store became the largest distribution channel, accounting for 22.6% of total gross revenue, surpassing Apple App Store and Google Play.

• EBIT was $0.9M (4.0% margin), with adjusted EBIT margin at -1.2% due to FX revaluations.

• Cash position at quarter-end was $26.6M, with no debt and strong liquidity.

• Strategic staff reduction to 180 employees announced, targeting $6.2M in annual savings, with $0.7M in one-off severance costs expected in Q2.

Financial highlights

• Gross profit was $15.8M, down 7% year-over-year, with cost of revenue decreasing 20% to $5.9M.

• Gross margin reached a record 72.7%, up from 69.7% last year, driven by D2C and G5 Store.

• User acquisition spend increased 14% year-over-year to $4.2M, representing 19–19.4% of gross revenue.

• Operating cash flow was $6.5M, up from $5.4M year-over-year; cash flow before financing was $4.2M.

• Operating costs excluding user acquisition fell 13% year-over-year.

Outlook and guidance

• Organizational changes expected to save $6.2M annually, with further cost reductions possible depending on ongoing initiatives.

• Plans to increase UA spend to the higher end of 17–22% of gross revenue, focusing outside the high season.

• Two new games in the pipeline, with one in final scalability testing and another in early soft launch; global launch or cancellation decisions expected by year-end.

• Continued commitment to dividends and buybacks.

• No formal forecasts published; management expects continued margin pressure due to increased UA spend and revenue challenges.