Snail Inc (SNAL) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 12, 2026

CALL PARTICIPANTS

• Investor Relations - Steven Shinmachi
• Chief Financial Officer - Heidy Chow
• Senior Vice President, Director of Business Development and Operations - Peter Kang

TAKEAWAYS

• Net Revenue -- $33.1 million, increasing 139.2% primarily due to a $13.9 million change in deferred revenue and higher sales from the ARK: Survival Ascended base game.
• Net Income -- $6.7 million, compared to a net loss of $7.9 million reflecting an increase in gross profit of $17.6 million.
• Total Units Sold -- 2 million, rising from 1.1 million driven by a 700,000 unit increase in ARK: Survival Ascended sales.
• Bookings -- $23 million, representing a 30.4% increase due to higher sales of the ARK: Survival Ascended and Bellwright titles.
• EBITDA -- $7.2 million, improving from a loss of $9.7 million driven by higher net income and changes in tax provisions.
• ARK: Survival Ascended Units Sold -- 1.2 million, reflecting the impact of the Genesis Part 1 Ascended, Tides of Fortune, and Dragontopia DLC launches.
• ARK: Survival Ascended Daily Active Users -- 121,000 average and 184,000 peak, validating ongoing investments in expanding the title's ecosystem.
• ARK: Survival Evolved Units Sold -- 559,000, as the title continues to mature and players transition to newer versions of the franchise.
• ARK: Survival Evolved Daily Active Users -- 99,000 average and 126,000 peak during the quarter.
• Bellwright Revenue -- $1 million increase, supported by a console launch and the title surpassing 1 million lifetime units sold earlier in the year.
• ARK Mobile Downloads -- 14.5 million, with average daily active users reaching approximately 134,000 as of Sept. 30, 2026.
• Unrestricted Cash -- $12.1 million, compared to $8.6 million as of Dec. 31, 2025.
• Operating Expenses -- $10.5 million, increasing from $9.9 million due to higher research and development costs.
• Nine-Month Revenue -- $80 million, representing 42.6% growth driven by ARK: Survival Ascended and Bellwright performance.
• Nine-Month EBITDA -- $6.5 million, compared to a loss of $15.6 million.
• HoneyComb: The World Beyond Revenue -- $400,000 increase, contributing to the quarter's top-line growth.
• SaltyTV Revenue -- $200,000 decrease, partially offsetting gains in the gaming segments.
• Deferred Revenue Balance -- $22.6 million total, consisting of $17.3 million current and $5.3 million noncurrent portions.
• Accounts Payable - Related Parties -- $16.6 million, representing a decrease from $20.1 million as of Dec. 31, 2025.

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RISKS

• Peter Kang reported that the release timeline for ARK: Survival of the Fittest has been pushed to 2027 to allow for continued development and refinement of the competitive player-versus-player experience.
• Heidy Chow stated, "While our fourth quarter content slate is more modest than Q3, we entered the final few weeks of the year with recent launches complemented by additional content across the portfolio," noting the seasonal variation in product releases.
• Management reported that revenue from ARK: Survival Evolved decreased $500,000 for the quarter as consumer demand transitioned toward newer downloadable content.

SUMMARY

Snail, Inc. (NASDAQ:SNAL) reported a transition in its financial performance driven by the expansion of the ARK franchise and the integration of deferred revenue. Management stated that the successful deployment of three major downloadable content packs for ARK: Survival Ascended served as the primary catalyst for revenue and booking growth. The company reported progress in its long-term strategy to diversify its portfolio through the development of three upcoming AAA titles and the introduction of creator-focused digital platforms. Financial results for the year-to-date period reflect a recovery from the previous fiscal year, supported by unit sales growth across multiple platforms and increased cash reserves.

• The company's subsidiary, Egofold, debuted the AI Ranch initiative featuring Non-Human Players (NHP) intended to behave, learn, and adapt like human teammates to address barriers for casual and hardcore gamers.
• Peter Kang noted three additional ARK: Survival Ascended DLCs are planned for 2027, including ARK Atlantis, Galaxy Wars, and the Legacy of Santiago.
• The Noiz 4.0 update focuses on reducing creator payoff processing times and expanding into the Noiz Digital Warehouse for CD key and digital asset sales.
• Management reported that the AAA pipeline, including 9 Yin Sutra: Immortal, 9 Yin Sutra: Wuxia, and For The Stars, is progressing through the final stages of development.
• Peter Kang stated, "this is a great indication of a continuation of the storyline and rabid fans eager to consume," regarding the player response to recent ARK content extensions.
• The upcoming Noiz Digital Store will begin alpha testing in the coming months as part of an expanded partnership to drive authentic game promotion through micro-influencers.

INDUSTRY GLOSSARY

• ASA: ARK: Survival Ascended, the modernized version of the company's flagship survival game.
• ASE: ARK: Survival Evolved, the original title in the ARK franchise.
• DLC: Downloadable Content, additional content created for an already released video game.
• NHP: Non-Human Player, an AI gaming companion designed to adapt to human gameplay styles.
• DAU: Daily Active Users, a metric measuring the number of unique users who engage with a product in a 24-hour period.
• Noiz: A platform connecting gaming micro-influencers with developers for authentic game promotion.
• AAA: A high-budget, high-profile video game title typically produced by a mid-sized or large publisher.
• Bookings: A non-GAAP measure representing the net amount of products and services sold digitally or physically during a specific period.

Full Conference Call Transcript

Operator: Thank you for standing by, and welcome to Snail, Inc.'s Third Quarter 2026 Earnings Conference Call and Webcast. I would now like to turn the call over to Steven Shinmachi with Investor Relations.

Steven Shinmachi: Thank you, and good afternoon, everyone. Welcome to Snail, Inc.'s Third Quarter 2026 Earnings Conference Call and Webcast. Joining us for today's call are Snail, Inc.'s Chief Financial Officer, Heidy Chow; and Senior Vice President, Director of Business Development and Operations, Peter Kang. The company's third quarter 2026 earnings press release was filed earlier today and is available on the Investor Relations section of Snail, Inc.'s website at www.snail.com or the SEC's website at www.sec.gov/edgar. During this call, management may make forward-looking statements regarding future events and the future financial performance of the company. Actual events or results may differ materially from our expectations and forward-looking statements are subject to certain risks and uncertainties.

Please refer to the company's Form 10-Q that has been filed with the SEC and other SEC filings. The company makes these forward-looking statements as of today and disclaims any duty or obligation to update them or to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additionally, on today's call, we refer to bookings and EBITDA, which are non-GAAP financial measures and provide useful information for the company's investors. You will find the historical reconciliation of bookings and EBITDA to the corresponding GAAP measures in the earnings press release and the company's SEC filings.

And now I will turn the call over to Peter Kang, Senior Vice President, Director of Business Development and Operations of Snail. Sir, please proceed.

Peter Kang: Thank you, and good afternoon, everyone. Thank you for joining us today to review our financial and operational results for the third quarter ended September 30, 2026. The third quarter marked an exceptionally strong period for Snail, reflecting the successful execution and progress of our content road map across multiple titles and franchises. Our primary performance driver was the same-day launch of 3 major ASA DLCs in early July, including Genesis Part 1 Ascended, Tides of Fortune and Dragontopia. Together, these releases represented one of ASA's most meaningful content deployments in recent periods, generating substantial engagement within the ARK community and monetization opportunities to capitalize on.

In addition to these major DLC launches, we continue to strengthen engagement across the broader ASA ecosystem. During the quarter, we launched a major update for the ARK Astraeos DLC and released the Cerberax Tame under Fantastic Tames Season 1 Pack. These launches reinforce the strength of our content monetization strategy and demonstrated the ability of the ARK ecosystem to consistently drive engagement when supported by meaningful content updates and release. For the quarter, ASA sold 1.2 million units with average and peak DAU reaching approximately 121,000 and 184,000, respectively. The strong engagement from players across the title continues to validate our ongoing investment in expanding the ASA title.

Beyond ASA, we expanded the PixARK universe with the official release of the Terracrypt DLC. Our indie pipeline also continued to contribute as we executed our broader content road map. The third quarter demonstrated how our strategy can drive engagement and monetization across a broad range of titles, reinforcing our confidence in the established road map we have ahead for future quarters. While our strong Q3 results underscore the strength of our content portfolio, we believe they are only part of this quarter's story. Equally important to the revenue-generating achievements this past quarter was the progress we made on the future growth drivers of Snail's pipeline and portfolio.

Over the last several months, we strategically leveraged some of the gaming industry's largest global events, not simply as marketing opportunities, but as a milestone marker to demonstrate progress across our development pipeline. During the third quarter, we participated in ChinaJoy and Gamescom, both serving as valuable platforms to showcase the breadth of that pipeline, particularly for our 3 anticipated AAA titles, 9 Yin Sutra: Immortal, 9 Yin Sutra: Wuxia and For The Stars. At ChinaJoy, we publicly unveiled 9 Yin Sutra: Immortal, our next-generation open world sandbox cultivation game.

Against the backdrop of rising interest in the cultivation genre in the Chinese market, and an existing IP fan base from its predecessor, Age of Wushu, we showcased a new trailer and officially launched the game's Steam page, giving players worldwide an opportunity to follow its development ahead of its anticipated release. Alongside 9 Yin Sutra: Immortal and a few smaller indie games, we debuted the first public demo of ARK: Survival of the Fittest at ChinaJoy. Attendees had an exclusive opportunity to experience the refined gameplay systems of this competitive fast-paced title.

The release time line has been pushed to 2027 as we continue to develop and refine the PvP action experience, but we were encouraged by the traction and feedback we received as we work to bring back the stand-alone competitive experience for ASA. A few weeks later, we returned to Gamescom, where our headlining title was 9 Yin Sutra: Wuxia, the close sequel to the original Age of Wushu title. Our CEO unveiled the title during the event and in tandem, officially launched its Steam page. Showcasing the 9 Yin Sutra titles at the respective industry events allowed us to share our continued development progress, and we received encouraging positive feedback from the event attendees.

By taking distinct creative directions with the 2 9 Yin Sutra titles, we aim to expand the IP's creative potential while giving each game a unique identity and gameplay experience. Alongside 9 Yin Sutra: Wuxia, we also showcased For The Stars at Gamescom through a new gameplay trailer, an exclusive demo for members of the media and additional insight into its development. We are pleased with the title's progress and particularly encouraged by feedback from members of the media who experienced the demo firsthand, together with the 9 Yin Sutra titles, For The Stars remains a future growth driver intended to diversify Snail's portfolio beyond the ARK IP.

We look forward to sharing further development updates and sneak peeks ahead of these titles' official launch. Operationally, as shared on our last quarter's earnings call, our subsidiary, Egofold, officially unveiled the AI Ranch initiative and publicly debuted NHP or nonhuman players. Designed as AI companions, NHPs are intended to behave, learn and adapt like human teammates to serve as a dynamic partner throughout a player's gaming experience. We continue to believe this personalized experience has the potential to address the barriers faced by both casual and hardcore gamers. We look forward to further refining the NHP software and capabilities and updating the market as we achieve key milestones.

Roughly 1.5 months into the fourth quarter, we've had a couple of new game releases, including the successful launch of The Fame Game II: L.A. Heartbreaker, which to date has received an overwhelmingly positive rating on Steam. The early success this title has had, especially in the Chinese market is encouraging to see, and we are pleased with the milestones and the continued development of the interactive films portfolio. A major content update for Bellwright is also expected in the fourth quarter. Featured during Gamescom, attendees previewed games highly requested traversal feature, which received positive reviews. Bellwright has been a standout title this year, surpassing 1 million units sold during the first quarter.

For the 9-month period, Bellwright sales increased $4.6 million, supported by a console launch on PlayStation and Xbox in June. We remain committed to refining the title, sustaining a strong player base and exploring new monetization and player engagement strategies. More recently, we showcased 9 Yin Sutra: Immortal and For The Stars at IGN Fan Fest and released new demos for Dead Party, Whispers of West Grove and Veil of Madness during the Steam Next Fest. Another industry event Snail will be participating in December is The Game Awards show, which will feature a number of our portfolio titles with new announcement trailers.

The Noiz Digital Store is also another developing initiative, which will begin alpha testing in the coming months. This is an expansion of our partnership with the Noiz platform. As a reminder, Noiz is the platform operating since 2017 that connects gaming micro influencers with publishers and developers like Snail to drive authentic game promotion. At the upcoming TwitchCon event, we plan to build on this foundation by engaging with content creators, onboarding new users to the Noiz platform and showcasing new titles in a relaxing setting. New developments of the Noiz platform are expected to come soon as the core platform completes its Noiz 4.0 update.

The focus here is reducing creator payoff processing times, and we plan to address the sources of delay in stages. We expect to share further updates here in the coming months. We are also preparing to launch the Noiz Digital Warehouse, which will initially offer CD keys with plans to expand into other digital assets over time. The Noiz Digital Warehouse is expected to enable creators to participate as affiliates or wholesalers, providing additional revenue opportunities through direct sales of digital goods. We're excited to advance strategic initiatives with Noiz and like our NHP project, the opportunities we are pursuing through Noiz are intended to support Snail's revenue diversification strategy beyond traditional game development and publishing.

As we close out the year, 2 major content releases scheduled for the fourth quarter include the upcoming Tames and content releases for the ARK: Fantastic Tame Season 1 Pack and the Dragontopia DLC. Notably, the Dragontopia DLC update will introduce boundless skyworld map. These releases and activity round out a robust year of content where our road map extends beyond 2026. As previously announced, we have another substantial slate of ARK releases planned for 2027. Three additional ASA DLCs are slated for release throughout next year. These include ARK Atlantis, Galaxy Wars and Legacy of Santiago DLC. Also planned for 2027 are the ARK Maker content creation tool intended as an engagement driver tool for ASA console players.

ARK: Survival of the Fittest, which, as I mentioned earlier, was demoed at ChinaJoy and a brand-new PixARK Worlds title. Alongside ARK content, we have a slate of smaller indie titles scheduled throughout 2027, including Dobby Game, which has undergone internal alpha testing over the last few months. We also expect to continue sharing substantial development updates on our 3 aforementioned AAA titles throughout the year. After a challenging 2025, we are pleased to see the bounce back recovery experienced year-to-date, and we aim to sustain this positive momentum as we close out the year and head into 2027. Thank you for joining us today.

I will now turn the call over to Heidy to discuss our financial results for the third quarter ended September 30, 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 third quarter and 9 months ended September 30, 2026. Net revenue for the quarter increased to $33.1 million compared to $13.8 million in the same period last year.

The increase was primarily due to a $13.9 million change in deferred revenue, a $4.9 million increase in sales from ASA, primarily driven by the base game and the release of Tides of Fortune and Dragontopia DLC, a $1 million increase in sales of Bellwright and a $400,000 increase in sales of Honeycomb: The World Beyond, partially offset by a decrease of $500,000 sales from ASE, decrease in ARK Mobile sales of $200,000 and a decrease in SaltyTV sales of $200,000. Net revenue for the 9-month period increased to $80 million compared to $56.1 million in the same period last year.

The increase was primarily due to a change in deferred revenue of $19.2 million, an increase in ASA sales of $4.8 million, which was primarily driven by sales of the base game, ARK: Bob's Tall Tales, Lost Colony and the newly released Tides of Fortune and Dragontopia DLCs, an increase in Bellwright's sales of $4.6 million and a $400,000 increase in sales from Honeycomb: The World Beyond. The increase in revenue was partially offset by a decrease in revenue from ASE of $3.2 million, a decrease in ARK Mobile revenue of $1.5 million and a decrease in SaltyTV revenue of $400,000.

Net income for the quarter was $6.7 million compared to a net loss of $7.9 million in the same period last year. The improvement was primarily due to an increase in gross profit of $17.6 million. Net income for the 9-month period was $5.8 million compared to a net loss of $26.4 million in the same period last year. The improvement was primarily due to an increase in revenue of $23.9 million, a decrease in provision of income taxes of $10.4 million, a decrease in cost of revenue of $300,000, partially offset by an increase in total operating expenses of $1.9 million and total other expenses of $600,000.

EBITDA for the quarter improved to $7.2 million compared to a loss of $9.7 million in the same period last year. The increase was primarily driven by $14.5 million increase in net income, a decrease in interest income and interest income related parties of $400,000 and an increase in the provision of income taxes of $2 million. EBITDA for the 9-month period increased to $6.5 million compared to a loss of $15.6 million in the same period last year. The increase was primarily due to an increase in net income of $32.1 million, partially offset by a decrease in provision of income taxes of $10.4 million.

Total units sold for the quarter increased to 2 million compared to 1.1 million in the same period last year. The increase was primarily due to an increase in ASE sales of 700,000 units and an increase in Bellwright sales of 100,000 units. Total units sold for the 9-month period increased to 6.2 million compared to 4.8 million in the same period last year. The increase was primarily due to an increased ASA sales of 1.7 million units and an increase in Bellwright sales of 300,000 units, partially offset by a decrease in ASE sales of 800,000 units. Bookings for the quarter increased to $23 million compared to $17.6 million in the same period last year.

The increase was primarily due to higher sales of ASA and Bellwright, partially offset by lower bookings from ASE. Bookings for the 9-month period increased to $71.7 million compared to $67 million in the same period last year. The increase was primarily due to a higher sales of ASA and Bellwright, which benefited from promotional pricing during the period, offset by ASE as the title continued to mature and consumer demand shifted toward ASA and its related downloadable content. Lastly, as of September 30, 2026, unrestricted cash was $12.1 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.

Building on Peter's remarks, our fourth quarter performance will be supported by scheduled release of upcoming tames and content releases planned for ARK: Fantastic Tames Season 1 and ARK: Dragontopia DLC. These additions complement the recent successful launch of The Fame Game II: L.A. Heartbreaker and the indie title launches, rounding out our content slate for the remainder of the year. While our fourth quarter content slate is more modest than Q3, we entered the final few weeks of the year with recent launches complemented by additional content across the portfolio. It is important to view that outlook in the context of the full year rather than against the strength of Q3 alone.

We are encouraged by the growth achieved today and expect our full year results to reflect continued growth compared with both 2025 and 2024. Looking beyond the remainder of this year, we aim to carry that positive momentum into 2027. As Peter outlined, another strong slate of ARK content is scheduled throughout 2027 and will serve as the anchor of the year. Alongside that content slate, 2027 will be another important year for advancing our broader development pipeline. For The Stars, 9 Yin Sutra: Immortal and 9 Yin Sutra: Wuxia are progressing through their final stages of development as we prepare for their eventual commercial launches.

We remain excited about these upcoming titles and their potential to contribute to our longer-term portfolio. Thank you for joining us today, and this concludes our prepared remarks. We will now open the line for Q&A. Operator, please proceed.

Operator: [Operator Instructions] Our first question comes from George Proost of NOBLE Capital Markets.

George Proost: This is George Proost filling in for Mike Kupinski. Congratulations on the quarter. My first question is, so Q3 was your biggest unit quarter in a while. Beyond the numbers, what did it show you about the ARK players and what they actually pay for? And how does that change to what you build in 2027?

Peter Kang: This is Peter. So this is definitely a great indication for the franchise as this is one of the first new DLCs, meaning an extension of the storyline and narrative that we're releasing since transferring the franchise from ARK: Survival Evolved to ARK: Survival Ascended. So this is a great indication of a continuation of the storyline and rabid fans eager to consume.

George Proost: And a follow-up to that is, is the next wave just more paid maps? Or is there a different way of generating revenue?

Peter Kang: So as we look at the 2027 pipeline, we do continue to rely on DLCs to drive primary sales. Along with that, you'll see cosmetic-related and tame-related DLCs such as the Fantastic Tames package. So as we continue to evolve, you see us getting into UGC via the partnership with Overwolf. And that side of things continues to evolve with the community as most of the content is player-driven.

George Proost: And between Noiz, the Digital Warehouse, the ARK Maker, it kind of sounds like you're building a creator economy around your games. Long term, do creators become a real sales channel for Snail? And how big could that get compared to, say, Steam?

Peter Kang: Right. That's a very perspective. We're definitely building a very large ecosystem that will encompass not only gaming, but other digital offerings that content creators can endorse and take a part in sales. The offering from Noiz itself will also continue to evolve and we'll start to prioritize the ability for brands to activate the value in CD keys and other digital assets.

George Proost: So if creators are reselling keys as wholesalers, how does that keep you from -- how does that keep them from undercutting your own pricing on Steam?

Peter Kang: The price will maintain. It's really a matter of profit. So we're not too ready to disclose the complete mechanics of how that business will turn. But rest assured, we have considered every part of the puzzle, and there's a little bit more to the story, and we'll be releasing it when we're ready.

George Proost: Got you. And I have one more question. So if AI cuts the cost of building a DLC map in half over the next few years, does that make ARK's position stronger? Or does it make it easier for competitors to copy?

Peter Kang: That's a very curious question. Certainly, we're in the state of things where that field is rapidly advancing. I'd say the way we perceive intellectual property needs to expand as well with the market to make sure that as keepers of the original code, we're able to profit and monetize from usage of it as well. So we're going to lean on our business development capabilities and try our best to protect our interest. As far as AI decreasing the cost, that's still left to be seen, right? We haven't fully committed to full utilization of AI in every aspect of game development. So it is going to take a little bit for us to see where the needle lands.

Operator: Thank you. This concludes Snail, Inc.'s Third Quarter 2026 Conference Call. If your question was not taken, please contact Snail, Inc.'s IR team at snal@gateway-grp.com. Thank you for your participation, and you may now disconnect.

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