Daily Archives: November 19, 2025

EG7 Q2 2025 Financials Reveal Problems in the House of Daybreak

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Enad Global 7’s Q3 2025 earnings call and reporting landed last week and the tidings were not great.

Enad Global 7

Overall revenue was down for the company, with Q3 2025 continuing the streak of lower revenues every quarter, but by also being down year over year by over 16%.  Ji Ham was out front with some hand waving about Q3 being a slow quarter for releases… but it generally is every year, especially for the Daybreak portion of the company which generally has its annual expansions in Q4.

The market clearly didn’t believe his rosy outlook as shares in EG7 fell of by about 25% on the news.

The Daybreak thing is especially concerning.

Daybreak has been the big, reliable engine for the company since EG7 acquired it back at the end of 2020.  Certainly a lot has changed since then, and some other titles have shown brightly at times, like Big Blue Bubble’s My Singing Monsters, which saw a huge surge of popularity for about a year.  But Daybreak has always been able to deliver.  Even down, it is half of the game studio overall revenue and net earnings.

Revenue Contribution Chart – Slide 8

But Daybreak continues its slide, ringing in the lowest numbers of the year so far and noticeably down from Q3 of 2024.

Daybreak Quarterly Numbers – Slide 8

As it turns out, Q3 2024 was kind of a peak for the company.  If you go back to the Q3 2024 report, which I posted about, you’ll see a similar chart with Daybreak cresting in Q3.

EG7 – Q3 2024 Presentation – Slide 6

Now, it just so happens that Q3 2024 was when Daybreak bought Singularity 6, the studio that made Palia.  As I have pointed out in the past, acquisitions are revenue neutral as the accounting assumes the asset purchased was worth exactly what the company paid for it.  And by all accounts, Palia has done well for Daybreak.  The report gushes about the title as one of the company’s successes, saying the following about the title:

  • Solid performance for Q3
    • First seasonal update in September was a nice success
    • Big new feature with Animal Husbandry
  • High player engagement, reaching same level as May when it released on Playstation 5 and Xbox X/S
  • Monthly KPI comparison – September vs. April 2025 (before PS5 and Xbox X/S release):
    • MAU: +77%
    • mARPU: +141%
    • Payer conversion rate: +99%
  • Excited for Palia’s future
    • A chance to establish one of the leading cozy life-sim games
    • Targeting players that love games like Stardew Valley and Animal Crossing
    • Key differentiation as the only larger-scale multiplayer online cozy life-sim

Everything is coming up roses for Palia!  So where is the problem?  Later in the presentation, the following assessment of Daybreak was included:

  • Net Revenue declined 7% y-o-y in local currency (-15% in SEK)
    • Gross Revenue (total bookings) for Daybreak actually grew in local currency
    • Decline in Net Revenue is due to a combination of the effect from FX conversion to SEK and the difference in revenue recognition accounting y-o-y
  • Contribution to growth came from
    • Strong growth in Palia
    • LOTRO, DCUO and DDO all demonstrated growth over last year
  • Softer performance in the portfolio:
    • EQ and EQ2 – down from big milestone anniversaries boost in 2024
    • Also, EQ negatively impacted by the unauthorized derivative version of EQ
    • MTGO cardsets performed below expectations

So Palia strong, LOTRO, DCUO, and DDO grew over last year, but Norrath titles EQ and EQ2 are in the tank.

Also, a bit of blame cast at The Heroes Journey, though that should cease to be a direct problem for Q4 since it has been shut down by the court pending the outcome of the legal action against it… which has been moved to binding arbitration.  That is a bad sign for THJ.  They were better off in front of a judge, since arbitrators almost always find in favor of the company involved.  But THJ asked for that outcome… shot themselves in the foot again.

But the signs are not good for Daybreak either.  EverQuest II has always been a dicey proposition, never gaining the popularity of the original.  But EverQuest has been at the core of the company’s success since it launched.  As we learned back in 2020, which DCUO was generating much more revenue, EQ was insanely profitable for the amount it cost to maintain and develop, such that the profits from both titles were comparable.

Page 16 – Revenue and Earnings compared YTD through Sep. 30 2020

And EG7 has indicated that remained the case for quite a while.

Monthly Gross Revenue back in 2023

There was also mention of ongoing funding of Cold Iron Studios and their Project Avo, in which Jason Epstein and Ji Ham are part owners, so that isn’t dodgy at all, taking money from the public company you head to fund a private company you own… I mean Elon Musk does it all the time, right… which could be a hit on margins, but should have no impact on revenue.  But don’t worry, Ji Ham says they expect a great return on the investment for the company.

So… not great.  We will have to see if Q4 reverses this downward trend for Daybreak, given that is when three expansions will be landing.

Meanwhile, EG7 continues to push the idea that they have a strong stable of titles with the usual boilerplate.

  • Key first-party brands include:
    • EverQuest, considered to be one of the three most iconic fantasy MMO brands in the world together with World of Warcraft and Ultima Online.
    • H1Z1, the very first battle royale game that was credited as one of the inspirations for Fortnite, with over 40 million life-to-date (LTD) registrations.
    • My Singing Monsters, which has over 185 million (LTD) registrations on mobile and PC, reached top 10 in over 100 countries in the App Store games category and the No. 1 spot in more than 15 countries 10 years after its release.
    • Palia, a cozy community/life simulation game, with over 9 million LTD registrations.
  • Top tier global third-party brands:
    • DC Comics from Warner Bros, with continuing pipeline of content from blockbuster feature films and TV shows.
    • The Lord of the Rings, arguably the most iconic classic fantasy IP in the world.
    • Dungeons & Dragons, the legendary fantasy IP with a passionate fan base worldwide.
    • Magic: The Gathering Online, the world’s number one trading card game from Wizards of the Coast

EQ (or UO) ranking with WoW for fame is some pretty inside baseball, 2007 thinking.  A lot of people who know the EverQuest name from back in the day would probably be surprised to hear it is still around. (Again, same for UO.  If you’re reading this you’re an outlier.)

H1Z1 being anything remains to be seen.  The plans for its revival have yet to have any substance.

First party game plans from 2023

My Singing Monsters had its time in the sun.

And I guess DC Comics is a good brand.  I mean, I keep forgetting Batman is a DC property.

On the plus side, Palia seems to be doing well… I mean, they keep saying that… and LOTRO lost a competitor with the Amazon Game Studio implosion last month.

Anyway, we shall see how Daybreak fares in Q4.  But there do seem to be problems, especially on the Norrath front.  And if EQ is in trouble, that probably reduces the chances of a follow on title in 2028… unless they can buy somebody else’s title and rebrand it as EQ.