Snail (SNAL) Q1 2026 Earnings Call Transcript

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DATE

Wednesday, May 13, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Senior Vice President, Director of Business Development and Operations — Peter Kang
• Chief Financial Officer — Heidy Kingwan Chow
• Chief Executive Officer — Shi Hai

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TAKEAWAYS

• Net Revenue -- $27.3 million, up 35.7% year over year, primarily from higher ASA and BellRite revenues and $2.5 million in deferred revenue recognized, offset by lower ARK Mobile and ASC contribution.
• Net Income -- $2.1 million, reflecting a 210% year-over-year increase from a $1.9 million net loss, mainly due to incremental revenue and $300 thousand in lower operating expenses, partially mitigated by a $1.6 million higher income tax provision and $1.4 million higher cost of revenue.
• EBITDA -- $2.4 million, reversing a $3.2 million loss with growth driven by the increase in net income and reduction in tax benefit.
• Total Units Sold -- 2.2 million, up 42.6%, largely on 500 thousand more ARK franchise units and 200 thousand additional BellRite units.
• ASA Units Sold -- 1.4 million, with sales strength attributed to the winter sale event affecting both base game and Lost Colony DLC.
• Bookings -- $26.9 million, rising 21.1% amid stronger 2026 sales promotions and the December 2025 ASA Lost Colony DLC release as well as BellRite content update momentum.
• Unrestricted Cash -- $14.3 million as of March 31, 2026, compared to $8.6 million on December 31, 2025.
• Content Pipeline -- 3 triple-A titles (“For the Stars,” “Nanyan Sutra Immortal,” and “Nanyan Sutra Wuzhou”) are in final development, each targeting multi-year audience lifespans and not competing with one another.
• Ark Franchise Engagement -- ASE sold over 573 thousand units with 117 thousand average DAU, and ASA averaged 127 thousand DAU, peaking at 188 thousand, alongside approximately 11.9 million lifetime ARK Mobile downloads and over 141 thousand DAU at period-end.
• Deferred Revenue -- Approximately $11 million is expected to be recognized when ASA Genesis Part 1 launches.
• Licensing Expense -- Annual ARK Survival Ascended licensing fees to decrease by $6 million moving forward after recent amendment, with savings intended for new title development investment.
• Salty TV -- 279 IPs achieved in 2026 via internal development, licensing, and acquisitions, reflecting 5.7x content growth; 6 thousand subscriptions (half-year or full-year) and over 400 thousand app downloads disclosed through May 12, 2026.
• Upcoming ASA Content -- Near-term expansions include Fantastic Tames Season 1 (May), ASA Astraeos' Tides of Fortune DLC (June), and official ASA Genesis Part 1 remake launch.
• Pipeline Expansion -- Additional output planned this year: BellRite console launch, Gobby Gang internal project, and six new licensed IP releases.
• Development Spending Outlook -- Management stated, “we are not spending extra significant amount of money while we are building all these kind of different,” and described ongoing cost discipline despite a multi-project pipeline.
• Interactive Game Projects -- Two interactive games combining Salty TV dramas and gaming are expected to be released around Q3 with a target of 1 million-unit sales combined, each with a 7–8 month development cycle.
• Stablecoin Initiative -- Yes. So this is Peter again, and I will give you an update on our stablecoin business The GENIUS Coin is definitely moving. From building phase to launch phase readiness. We have been working on the platform infrastructure. it is pretty much functionally complete across wallet management, on chain minting, on chain burning, blockchain transfers, and KYC verification covering both. Enterprise and individual flows. Internal testing of the full digital marketplace currently underway. On the compliance side of things and licensure, you know, the money transmitter license application is actively progressing across multiple states right now. KYC AML vendor selection has been approved by the chairman and CTO. With some subcontracting in progress. Integration is already built and operational. Our compliance framework is being finalized in coordination with legal counsel ahead of launch. Distribution wise, we are positioned across 3 distribution channels operating in parallel. First of all is the Noise Digital Warehouse. it is-- you know, Noise is getting a new addition. it is going to be our proprietary gaming digital goods platform with GENIUS Coin integration. For purchases and sales. It will serve as our first go to market launch for GENIUS Coin. Additionally, we have crypto ATM network with a functional prototype already built for internal testing. As we target real world on ramp. For GENIUS Coin purchases.

SUMMARY

The call highlighted strong year over year financial growth driven by increased ASA- and BellRite-related revenues, coupled with operational leverage as evidenced by rising net income and EBITDA. Management emphasized a multi-year content strategy anchored by three impending triple-A game launches, a broadened ARK franchise roadmap, and an expanding IP slate fueled through both internal development and external licensing. New initiatives, such as the GENIUS Coin stablecoin project and the integration of Salty TV’s interactive content, signal efforts to diversify revenue streams beyond core gaming operations.

• Company leadership communicated targeted reinvestment of cost savings—following a $6 million annual licensing fee reduction—into high-potential new products and pipeline development.
• Management indicated that deferred revenue recognition is poised to accelerate in conjunction with the ASA Genesis Part 1 remake launch, supporting near-term top-line performance.
• The pipeline extends to non-gaming products through Salty TV, with data showing subscriber traction and a substantial content library buildout.
• CEO Shi Hai described confidence in the performance potential of two upcoming interactive games, forecasting a combined 1 million-unit sales target upon release later in the year.
• GENIUS Coin platform infrastructure is functionally complete and currently undergoing internal testing, with the launch pending completion of compliance processes and regulatory approvals.

INDUSTRY GLOSSARY

• DAU: Average Daily Active Users, a measure of active unique users engaged with a game or digital product each day.
• DLC: Downloadable Content, additional digital material made available for an existing game, typically as expansion packs or new game modes.
• MMORPG: Massively Multiplayer Online Role-Playing Game, a game genre where a large number of players interact in a virtual world.
• KYC: Know Your Customer, an identity verification process required for compliance in many financial and digital service businesses.

Full Conference Call Transcript

Peter Kang. Senior vice president, director of business development and operations of Snail. Sir? Please proceed. Thank you, and good afternoon, everyone. Thank you for joining us today. To review our financial and operational results for the first quarter ended March 31, 2026. Coming out of the fourth quarter last year, we reinforced the underlying fundamentals of our business. We exited 2025 with a diversified content pipeline that positions Snail, Inc. to deliver more predictable, stable growth. We announced a content road map for ARK including new DLCs, content updates, and game modes, that stretches through 2027. In parallel, we continue to strengthen SNAIL's positioning as a developer with several indie titles in development and more importantly, 3 triple-A titles now in the final phases of their development cycles. For the SARS, Nanyan Sutra Immortal and Yin Sutra: Wushu. I will return to each of these titles later in my remarks. Beginning with ARK, engagement remained consistent across the franchise during the quarter. ASE sold over 573 thousand units. Average DAU was a 117 thousand. And peak DAU was a 143 thousand. ASA average DAU was 127 thousand. Peak DAU was 188 thousand. And more importantly, ASA total units sold for the quarter rose to 1.4 million. Supported in part by the 2025. Arc Mobile total downloads were approximately 11.9 million. As of the end of the quarter. With average DAU of over 141 thousand. Over the next 2 months, we have several ASA updates planned over the coming months.

Starting in May is the upcoming Fantastic Tames season 1 expansion pack. Then in June 2026, we plan to release Astraeos' Tides of Fortune. A new ASA DLC. In tandem, we also expect to officially launch the ASA remake of ARK Genesis. Part 1. Which will allow us to recognize approximately $11 million in revenue deferred from the revenue balance at time of release. Beyond ARK, we released 3 new indie titles over the past few months. These include echoes of Elysium, on steam early access, Survivor Mercs, 1.0 version, and above the snow. We also unveiled 2 new indie titles in development, Dead Party and Gobby Gang.

While we are pleased with the consistency and stability ARC provides, and the steady expansion of our ND portfolio, we are particularly focused on our broader diversified pipeline for the next several years. For many years, ARC has served as the foundational IP of our business. Our long stated strategy has been to build on that foundation. And scale into a fully integrated developer and publisher capable of supporting multiple franchises at once. Investments we have made in our organizational development teams over the past several years have been made with that clear goal in mind. The 3 triple-A titles currently in development represent the next major step into that strategy.

Each is built with the production scope depth, and marketing skill required to potentially compete in the same tier as ARK. And each is designed for a multiyear lifespan. As discussed on last quarter's call, these games have now entered the final phase of their development cycles. These 3 titles are not designed to compete with 1 another. They address distinct audiences and markets. For the Stars is a global intergalactic experience. Built around a phased gameplay vision. Nanyan Sutra Immortal and Nanyan Sutra Wuzhou are based around our historical success with an established IP and a strong user base with our previous launch of age of Wuxue. That has held a stronghold in the Chinese market.

This addition represents a 2 product strategy on that foundational IP. I will now walk through each individually. Beginning with For the Stars, we recently released a new developer diary featuring perspectives from key designers engineers, and new pre alpha gameplay footage alongside unreleased concept art. The game is being built around a vast universe with a strong emphasis on world building that generates an effectively limitless number of solar systems. That players can explore and inhabit over time. Development is structured in phases, The initial phase focused on the single player and 4- to 6-player co-op experience. The long term vision involves the experience into an MMO style ecosystem.

Where large numbers of players online can interact within a shared universe. At a high level, For the Stars is designed as a galactic scale conquest and grand strategy experience. Drawing comparisons to titles like Eve, However, the moment to moment gameplay emphasizes hands on exploration construction, and progression. invoking the feel of the title No Man's sky and satisfactory blended together. This combined gameplay experience aims to balance strategic depths with accessible, engaging gameplay. That appeals to both hardcore and mainstream audiences. We have a slate of additional announcements planned for the Stars throughout the year. And look forward to sharing further updates as development progresses towards launch.

Turning now to our 2 product IP strategy with Nanyan Sutra Immortal and Nanyan Sutra Wuzhou. The Nanyan Sutra IP has a large and loyal fan base in China. Its predecessor, age of Wuxiu, accumulated more than 85 million registered accounts across PC, and mobile. And defined the wuxia genre. The wuxia genre is characterized by content centered on martial arts heroes in ancient China. Fans have been waiting for the next chapter in this franchise. For more than 10 years. We believe the addressable market for these 2 titles is substantial. The Chinese gaming market remains highly attractive and many international publishers are consistently seeking meaningful entry points into the audience.

Snail Games is historically well positioned We hold established IP that is beloved with a historical proven user base. And development capacity to deliver at scale. Nanyan Sutra Wuzhou is the closest sequel to the original Age of Wushu game. And will return to the core wuxia genre and universe. The title will replicate the MMORPG model and is intended to directly address long standing demand from fans over the past 15 years. The title is being built on Unreal Engine 5 with a goal to deliver a cinematic masterpiece that portrays the ancient China wuxia setting at a level that has not previously been achieved in the genre. We expect to deliver more information during Gamescom later this year.

Nanyan Sutra Immortal will take a different approach around the cultivation genre. Cultivation is a wuxia adjacent subgenre focused on the progressive development of supernatural power over time. It is also 1 of the fastest growing categories across the broader martial arts space. Nanyan Sutra Immortal aims to leverage the existing IP to deliver a new cultivation genre experience that aligns with current gaming trends and preferences in China. The game is also being developed on the Unreal Engine 5. More information will be unveiled during Bilibili World and China Joy events later in the year. The 2-genre strategy is intentional.

It broadens the addressable audience for the Nanyan Sutra IP within China by serving both longtime fans of the original Age of Wuxu and Nanyan IP alongside a new generation of players drawn to the cultivation and martial arts genres. We believe this approach can support a multiyear to multi decade lifespan across both titles. And meaningfully expand Snail Games beyond the Ark franchise. Taken together, the combined potential of these 3 titles is unlike anything Snail Games has worked on since Arc. As we move through final development, we believe Snail, Inc. is approaching an inflection point within the next several years. To define snail games as a multi franchise developer and publisher.

In support of this strategy, I would also like to note that earlier in the month, we amended the exclusive software license agreements for ARC survival Ascended. Under the amended terms, annual licensing fees will be reduced by $6 million annually going forward. We intend to reinvest the savings into the business with a particular interest towards development of the upcoming titles I have just described. The future is bright, we look forward to sharing new information across our games in the pipeline while continuing to deliver new immersive content. And experiences within ARC. Thank you for joining us today.

I will now turn the call over to Heidy to discuss our financial results for the first quarter ended March 31. 2026. Heidy?

Heidy Kingwan Chow: Thank you, Peter and good afternoon, everyone. Thank you all for joining us today as I review our financial results for the first quarter ended March 31, 2026. We entered 2026 with renewed momentum. The encouraging trends we saw coming out of Q4 25 along with the strong business fundamentals, we highlighted have carried into 2026 as expected. Our Q1 performance reflects that momentum. And we believe we are well positioned to sustain this trajectory. Supported by the robust pipeline Peter outlined. Net revenue increased 35.7% to $27.3 million compared to $20.1 million in the same period last year.

The year over year increase was primarily due to an increase of $4.2 million and $2.1 million in revenue related to ASA and BellRite, respectively. And a $2.5 million increase in deferred revenue recognized during the period. Offset by a decrease in revenue from ARK Mobile and ASC. Net income increased 210% to $2.1 million compared to a net loss of $1.9 million in the same period last year. The increase was primarily due to an increase in net revenue of $7.2 million and a decrease in total operating expenses of $300 thousand partially offset by an increase in provision income taxes of $1.6 million.

An increase in cost of revenue of $1.4 million and a decrease in total other income of $500 thousand. EBITDA increased 173.3% to $2.4 million compared to a loss of $3.2 million in the same period last year. The increase was primarily due to an increase in net income of $4.1 million and a decrease in the benefit from income taxes of $1.6 million. Total units sold increased 42.6% to 2.2 million compared to 1.5 million units in the same period last year. Primarily driven by an increase in sales of ARK franchise IPs of 500 thousand units and BellRite of 200 thousand units.

As Peter outlined at the outset of the call, ASA unit sold was 1.4 million for the 3 months ended period. The winter sale event supported this spike. Which include a sale of both the ASA base games and also the Lost Colony DLC. Bookings increased 21.1% to $26.9 million compared to $22.2 million in the same period last year. Primarily driven by stronger sales promotions in 2026. Compared to 2025. Tailwind momentum of the December 2025 Ark Lost Colony DLC release. And Bellwright highly regarded content update in late 2025. Lastly, as of March 31, 2026, unrestricted cash was $14.3 million compared to $8.6 million as of December 31, 2025.

To review our detailed financial statements, please refer to the earnings press release and the Form 10 Q filed with the SEC. Our robust ARK pipeline will be the foundation for sustainable performance throughout 2026. Looking ahead into the next few years, we foresee our revenue mix to evolve alongside the releases of key titles. Including For the Star, Nanyan Sutra Immortal, Nanyan Sutra Wuzhou. As Peter outlined, we believe these titles offer meaningful upside and we remain bullish about their potential. We have several gaming events lined up throughout 2026. And we look forward to sharing additional updates on these titles over the course of the year. We remain focused on the fundamentals of Snail's business.

We believe continued execution on our realizing the potential of the 3 aforementioned titles will propel Snail, Inc. to deliver heightened results and shareholder value. This concludes our prepared remarks. We will now open the line for Q&A. As a reminder, some answers during Q&A session may be answered in Chinese by our CEO, being translated into English. Operator? Please proceed.

Operator: Thank you. As a reminder, if you would like to ask a question, please press 1-1 on your telephone. You will hear an automated message advising your hand is raised. If you would like to remove yourself from the queue, press 1-1 again. We ask that you wait for your name and company to be announced before proceeding with your questions. 1 moment while we compile the Q&A roster. Our first question of the day will be coming from the line of Michael Kupinski of NOBLE Capital Markets. Please go ahead.

Analyst (Michael Kupinski): Thank you, and congratulations on a good quarter. A couple of questions. Across your overall game pipeline, it looks like 2026 has a lot of content that is coming up. Was wondering if you can dive into the content game and deal road map for the rest of the year. And if I can just add on to that, what is the expected cadence of ARC related content releases over the next 12 months and which launches are viewed internally as the most important catalyst for bookings growth?

Heidy Kingwan Chow: Thank you, Michael. That was a great I will defer the question to Peter again.

Peter Kang: Hey, Michael. So just to recap, we definitely have a lot in the pipeline this year for the ARC franchise and also some of our other internally developed IPs. So in total, the number is around 11. Anything from you know, 3 new teams for Arc Survival Ascended's Fantastic Tames season pass pack. Bob's Tall Tales will have another pack coming out. ASA Genesise also intend on releasing rereleasing, I should say, ASA survival of the fittest. Our esports mode for ASA. A project called ASA WorldBuilder. And, of course, in December, we are going to be releasing ASA Necatis. Along with that, BellRite will have its console ports arrive this year. For both PlayStation and Xbox.

And we have internally developed project named Gobby Gang. That was mentioned earlier. And those are our internal projects we are working on Along with that, we have 6 additional licensed IPs that we will be releasing throughout the year.

Analyst (Michael Kupinski): Great. In terms of Salty TV and the short film business, can you briefly explain where we sit on that in terms of the short video business and the number of videos produced? And maybe some insight onto the future outlook for that line of business.

Peter Kang: Absolutely. And I am glad you asked that question. It is definitely a market segment that is wide open, and we are really trying to take advantage of the timing on this So the Salty TV app to date has launched over 49 IPs. And these are IPs that we have developed internally. In 2026, in total, the number of IPs has grown to 279. We have done this through licensing and other acquisition channels. This represents a 5.7x growth in terms of content. As far as subscribers go, while subscriptions are not the main payment model, it is 1 that we are very proud of.

We had over 6 thousand subscribers that have adopted to Salty TV's subscription model, and these subscriptions are either half year or year long. Total downloads of the app is itself over 400 thousand across iOS, and Android. And this data is through May 12, 2026.

Analyst (Michael Kupinski): Sounds like it is off to a good start. And then a couple of quick ones here. What level of development spending should investors anticipate in 2026 as the company advances its AAA pipeline? Should we when should we start to see operating expense moderate after the current development cycle?

Heidy Kingwan Chow: Thank you, Michael. As you know, for the company, is actually while we are working on multiple projects, we are cost conscious. We try to we are not spending extra significant amount of money while we are building all these kind of different project, different DLCs. Company is remaining as you know, we do not we do not spend as much on the cost side in regards to the operating expenses. And on top of that, Michael, that our CEO, actually, Mr. Hai wants to add on top of the Salty TV side of the business. Okay.

Shi Hai: For Salty TV-- actually, the product is not just the vertical drama. More importantly, we are also trying to adopt a strategy where we are combining the dramas with the interactive themes. So this year, we are looking to release 2 interactive themes. For our internal AAA gaming projects, there are more large-scale, and they are working worked on by internal development teams. So in terms of the short term revenue, maybe we are still looking to improve our strategy, and that is also 1 of the reasons why we are trying to look into the business line of vertical dramas and as well as the interactive games.

For these 2 interactive games, the internal development cycle might take around 7 to 8 months. And we have high confidence into the performance potential performance of these 2 interactive games once they are released. And then we are looking at 1 million-unit sales projection. Both of these interactive games will be released around Q3 this year.

Analyst (Michael Kupinski): Great. Thanks for the added color. If I could slip 1 more question in can you please provide a quick update regarding the stablecoin business, and specifically the number of states that you currently are-- that you are applying to and any general updates on that business.

Peter Kang: Yes. So this is Peter again, and I will give you an update on our stablecoin business The GENIUS Coin is definitely moving. From building phase to launch phase readiness. We have been working on the platform infrastructure. it is pretty much functionally complete across wallet management, on chain minting, on chain burning, blockchain transfers, and KYC verification covering both. Enterprise and individual flows. Internal testing of the full digital marketplace currently underway. On the compliance side of things and licensure, you know, the money transmitter license application is actively progressing across multiple states right now. KYC AML vendor selection has been approved by the chairman and CTO. With some subcontracting in progress. Integration is already built and operational.

Our compliance framework is being finalized in coordination with legal counsel ahead of launch. Distribution wise, we are positioned across 3 distribution channels operating in parallel. First of all is the Noise Digital Warehouse. it is-- you know, Noise is getting a new addition. it is going to be our proprietary gaming digital goods platform with GENIUS Coin integration. For purchases and sales. It will serve as our first go to market launch for GENIUS Coin. Additionally, we have crypto ATM network with a functional prototype already built for internal testing. As we target real world on ramp. For GENIUS Coin purchases.

So sooner or later, we will likely see, you know, some crypto ATM machines deployed across various locations in the country.

Analyst (Michael Kupinski): Great. Thanks for the update. Thanks for taking all my questions.

Operator: Thank you. This now concludes today's program. Thank you so much for joining. You may now disconnect.

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