Snail Q3 2025 Earnings Report

Snail EPS Results

• Actual EPS: -$0.21
• Consensus EPS: -$0.05
• Beat/Miss: Missed by -$0.16
• One Year Ago EPS: N/A

Snail Revenue Results

• Actual Revenue: $13.82 million
• Expected Revenue: $22.00 million
• Beat/Miss: Missed by -$8.18 million
• YoY Revenue Growth: N/A

Snail Announcement Details

• Quarter: Q3 2025
• Date: 11/12/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, November 12, 2025
• Conference Call Time: 2:00AM ET

Snail (NASDAQ:SNAL) Inc. (NASDAQ: SNAL) is a digital entertainment company focused on the development, publishing and operation of free-to-play online games for PC and mobile platforms. The company’s portfolio spans a variety of genres that include massively multiplayer online role-playing games (MMORPGs), strategy titles, and casual mobile games. Snail manages its games throughout the entire lifecycle, providing design, development, server hosting and community support services to engage players worldwide.

Founded in the early 2000s and headquartered in Xiamen, China, Snail has expanded its footprint with regional offices in North America, Europe and Southeast Asia. Flagship titles in its library include fantasy-themed MMORPGs and real-time strategy games that have attracted millions of users across Asia before being adapted for Western markets. In addition to in-house development, the company licenses its proprietary game engine technology and offers publishing partnerships to independent studios seeking access to its global distribution channels.

Snail’s business model combines in-game monetization through virtual item sales and subscriptions with advertising and co-development agreements. This diversified approach helps the company manage risks associated with the hit-driven nature of the gaming industry. While Snail remains primarily focused on entertainment software, it continues to explore complementary opportunities in cloud gaming infrastructure and esports event hosting.

Snail Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Stablecoin project is advancing — Snail is building the infrastructure and progressing through multi‑state regulatory applications, with management promising more tangible updates in the next few months as a potential long‑term growth driver.
• Positive Sentiment: The company reported a $36.4M deferred revenue balance (about $35.3M non‑refundable) and expects ~$26.5M to be recognized within 12 months, including ~$5.8M tied to ARK: Lost Colony in Q4, which should boost near‑term top line.
• Negative Sentiment: Q3 net revenue fell to $13.8M from $22.5M year‑over‑year due to revenue‑recognition timing, and the company reported a Q3 net loss of $7.9M (nine‑month net loss $26.4M) with EBITDA losses and unrestricted cash of $12.3M, highlighting near‑term profitability and liquidity concerns.
• Positive Sentiment: Underlying demand and engagement remain healthy — bookings rose 9.3% to $17.6M, units sold increased 7.8%, ARK DAU and engagement metrics stayed strong, and ARK mobile surpassed 9 million downloads, supporting ongoing monetization.
• Positive Sentiment: Product pipeline momentum — Echoes of Elysium (Dec 4) and recently launched indie titles plus larger 2026 projects (including ARK Genesis 1 & 2 and several bigger indie games) give management visibility to revenue catalysts beyond Q4.

Presentation

[Operator]

Ladies and gentlemen, greetings and welcome to the Snail Q3 2025 earnings call. At this time, all participants are in the listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stephen Shinmachi, Investor Relations. Please go ahead. Thank you.

[Steven Shinmachi, Investor Relations Associate at Gateway Group]

Thank you, and good afternoon, everyone. Welcome to Snail's Q3 2025 earnings conference call and webcast. Joining us for today's call are Snail's Chief Financial Officer, Heidy Chow, and Senior Vice President, Director of Business Development and Operations, Peter Kang. The company's Q3 2025 earnings press release was filed earlier today and is available on the Investor Relations section of Snail's website at www.snail.com or the SEC website at www.sec.gov/echo. 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, the most recent Form 10-K that was filed with the SEC on March 26, 2025, and other SEC filings.

[Steven Shinmachi, Investor Relations Associate at Gateway Group]

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. I will turn the call over to Heidy Chow, Chief Financial Officer of Snail. Ma'am, please proceed.

[Heidy Chow, CFO and Director at Snail Inc]

Thank you. Good afternoon, everyone. Thank you for joining us today to review our financial and operational results for Q3 ended September 30, 2025. Q3 was a culmination of growth, development, engagement, and heightened awareness across our portfolio, highlighted by participation in industry events. The launch of a new indie title, awards won by our upcoming indie title, ongoing progress across key projects and initiatives, and sneaks into upcoming titles and content. Peter will dive into the detail around the gaming business later in the call, but I would first like to provide an update on our stablecoin project. We continue to make meaningful progress towards our goal of becoming one of the first gaming companies to issue its own proprietary stablecoin. Currently, we are developing the underlying infrastructure that will support the coin and advancing through the multi-state regulatory application process.

[Heidy Chow, CFO and Director at Snail Inc]

The team we have put together has been instrumental in making such progress since we publicly announced this new project a few months back. While much of the work is happening behind the scenes, we are in a strong position to share more tangible updates with stakeholders in the next couple of months. To reiterate our rationale for pursuing the stablecoin project, by pursuing this initiative, we are positioning Snail as one of the pioneers in a space with significant untapped potential. We believe that the investments we are making today in technology and infrastructure will yield long-term benefits and create a foundation for innovation across the industry. We view stablecoins as the future of digital payments, and as a gaming company, we see endless opportunities.

[Heidy Chow, CFO and Director at Snail Inc]

While widespread adoption will require an industry shift, the passage of the Genius Act a few months ago was a pivotal moment that created a framework to accelerate this transformation. For a sector that relies heavily on online transactions, a digital currency pegged to the US dollar offers immense utility, efficiency, and reliability. Of course, achieving this vision will require many other stakeholders within the industry to embrace such initiatives, which in reality will take time. That said, we believe that the investments we are making now position us ahead of the curve as a bellwether and unlock a wealth of potential opportunities in the future. The progress made so far has been truly exciting, and we look forward to sharing more substantive updates with our shareholders and stakeholders in the near future.

[Heidy Chow, CFO and Director at Snail Inc]

Before I turn the call over to Peter to discuss our gaming business, I would like to address our Q3 performance and provide some context behind our reported decline in net revenue for the Q3. While top-line results for the Q4 decreased year over year, this was primarily driven by the timing of revenue recognition rather than fundamental changes in our business or a reduction in the sales and demand for our products. Under our revenue recognition model, certain sales are deferred and recognized over time as performance obligations are met. We record deferred revenue when payments are received in advance of the fulfillment of our associated performance obligations, such as when we pre-sell certain games and content. During this quarter, deferred revenues increased approximately $10.9 million compared to the same period last year, primarily driven by ARK: Survival Ascended's Lost Colony Expansion Pass DLC bundle.

[Heidy Chow, CFO and Director at Snail Inc]

As the quarter ended, deferred revenue balance was $36.4 million, of which $35.3 million is due to non-refundable payments. More importantly, we do expect to recognize approximately $26.5 million in non-refundable deferred revenue payments within the next 12 months. We also are targeting the launch of ARK: Lost Colony in December 2025, which we expect $5.8 million of the deferred revenue balance to be recognized and positively impact our Q4 top-line results. Despite our deferred revenues affecting this quarter's result, our core gaming business is still generating cash, with our operating cash flow for the nine-month period remaining solid at approximately $4.2 million. Our bookings for the Q3 also grew 9.3% to $17.6 million compared to the year-ago period, further demonstrating the strong demand and engagement we experienced in the Q3. Snail also typically experiences sales spikes during quarters where we launch a new ARK DLC.

[Heidy Chow, CFO and Director at Snail Inc]

In addition to the deferred revenues, we expect incremental sales driven by the launch of Lost Colony from players who did not participate in the pre-sale event. With this new content on the horizon, we also anticipate a corresponding increase in engagement in the SA. Together, these catalysts position us for a significantly stronger Q4 compared to Q3 and set us up to finish the year on a high note. Demand and engagement across our gaming portfolio remain robust, and with Lost Colony slated for Q4, we are confident in finishing the year on solid footing. Before I dive deeper into our quarterly results, I will hand the call over to Peter to discuss some recent developments in our gaming business and operations. Peter?

[Peter Kang, SVP and Director of Business Development and Operations at Snail Inc]

Thanks, Heidy. Good afternoon, everyone. As Heidy mentioned, the fundamentals across our gaming business remain unchanged. Our units sold for the quarter increased by 7.8% year over year, primarily related to ARK: Survival Ascended and its related DLCs. For the nine-month period, total units sold increased 38.7% to $4.8 million. ARK engagement also continued to remain stable. Average DAU for ARK: Survival Evolved and ARK: Survival Ascended reached approximately 122,658 and 92,876, respectively. As of quarter end, ARK has been played for 4.2 billion cumulative hours, with the average screen time for users reaching 161 hours. Our ARK: Mobile title also surpassed 9 million downloads across iOS and Android, and average DAU was approximately 144,750 during Q3. Engagement across ARK continues to remain strong and stable and has no material impact on our results for the quarter.

[Peter Kang, SVP and Director of Business Development and Operations at Snail Inc]

Over the last several months, many of our titles were featured at leading industry events, including Gamescom, TwitchCon, and several niche conferences, all focused on driving awareness of current releases as well as new and upcoming indie titles. We recently launched Rebel Engine just last week and officially announced the December 4 release date of our highly anticipated title, Echoes of Elysium. The most impactful event we participated in during the quarter was the 2025 Steam Autumn Sale, which featured our flagship titles, early access projects, and indie portfolio. Notably, ARK: Survival Ascended was discounted 50% during the week-long event, where we saw encouraging upticks in sales. The event generated 8.5x ARK: Survival Ascended units per day and 3.5x ARK: Survival Ascended revenue per day compared to the preceding non-sale period.

[Peter Kang, SVP and Director of Business Development and Operations at Snail Inc]

This was encouraging to see as the uptick in sales and engagement positions the game well with the upcoming launch of Lost Colony DLC on ARK: Survival Ascended next month. These sale events are strategically designed not only to reinvigorate engagement across our titles but also present an opportunity to showcase the depths of our portfolio, elevate the visibility of our indie games, and broaden each game's player base. A quick review on interactive films: As of September 30, 2025, we released 67 short-film dramas through our short-form mobile application, Salty TV. While we remain in the early stages, the growth across Salty TV's portfolio has been encouraging to see. We remain optimistic and look forward to continuing to scale the total number of films available within the app.

[Peter Kang, SVP and Director of Business Development and Operations at Snail Inc]

We also expanded the scope of interactive films during the quarter as we developed and released a narrative-driven simulation title, The Fame Game: Welcome to Hollywood. Looking ahead, our primary growth drivers for Q4 will be the upcoming ARK: Survival Ascended DLC, Lost Colony. As we previously mentioned, pre-sales for Lost Colony began in June and have delivered strong results, as evidenced by strong bookings in Q2 and Q3. As of September 30, we've sold approximately 306,000 units of Lost Colony Expansion Pass, exceeding our expectations. A material portion of our deferred revenue balance is comprised of revenue from the Lost Colony pre-sales, and once the DLC is released next month, we expect to recognize this deferred revenue in our Q4 top-line results.

[Peter Kang, SVP and Director of Business Development and Operations at Snail Inc]

To further stimulate demand, we recently enhanced the value of Lost Colony DLC bundle by adding a completely new and exclusive Fantastic Tames: Elderclaw to the bundle. As mentioned previously, we are targeting Echoes of Elysium to be released on December 4, which we anticipate will be more impactful than our typical smaller-scale indie titles. Peaking into 2026, we have a handful of new games and content being developed across both established and indie titles. Across ARK, we have Genesis 1 and 2 coming to ARK: Survival Ascended, along with several new projects currently underway. We are also continuing to develop Nian Yan Sutra: Wushu, Nian Yan Sutra: Immortal, and For the Stars. These three titles are larger in scope compared to our typical indie releases, and we also expect them to have more material impact compared to our smaller-scale niche games.

[Peter Kang, SVP and Director of Business Development and Operations at Snail Inc]

As mentioned, we have a healthy backlog of games and content coming in the Q4 and throughout 2026, with a handful of unannounced projects at this point also poised to make a strong impact next year. Our team continues to focus on delivering to our core ARK fanbase through the launch of ARK: Lost Colony next month, and we look forward to delivering innovative content to drive sustainable, long-term returns and engagement for our shareholders and player base. With that, I will now turn the call back over to Heidy to discuss our financial results for the Q3 ended September 30, 2025. Heidy?

[Heidy Chow, CFO and Director at Snail Inc]

Thank you, Peter. Net revenue for the Q4 was $13.8 million compared to $22.5 million in the same period last year. As mentioned earlier, the decrease was not due to fundamental changes in the business, but rather due to an increase in deferred revenue of $10.9 million, primarily from ARK: Survival Ascended. In addition to a decrease in revenues related to Bellwether of $500,000, we continue to see strong demand and engagement across our gaming portfolio, with total ARK sales increasing by $2.2 million compared to the same period last year, in addition to an increase in Salty TV sales of $300,000. Net revenues for the nine months ended September 30, 2025, were $56.1 million compared to $58.3 million in the same period last year. During the nine-month period, total ARK sales increased $13.7 million, and Salty TV increased $600,000 compared to the same period last year.

[Heidy Chow, CFO and Director at Snail Inc]

This increase was offset by the increase in deferred revenue of $11.9 million, primarily from ARK: Survival Ascended, a decreased revenue related to Bellwether of $2.6 million, a decrease in Angela Games revenue of $1.2 million, and a non-recurring Angela Games settlement of $600,000 occurring in 2024. To reiterate, as of September 30, 2025, the balance of deferred revenue was $36.4 million, of which $35.3 million is due to non-refundable payments. We are expecting $26.5 million of this balance to be recognized within the next 12 months. $5.8 million of this balance, which consists of the ARK: Lost Colony pre-sale revenue, will be recognized during the Q4.

[Heidy Chow, CFO and Director at Snail Inc]

Net loss for the three months ended September 30, 2025, was $7.9 million compared to net income of $233,000 in the same period last year, primarily due to the decrease in net revenue and the increase in general administrative, advertising and marketing, and impairment of film assets expenses. Net loss for the nine months ended September 30, 2025, was $26.4 million compared to a net income of $700,000 in the same period last year, primarily due to an increase in provision for income taxes of $10.5 million, general and administrative expenses of $4.4 million, research and development of $3.1 million, advertising and marketing of $2.4 million, impairment of film assets of $800,000, an increase in cost of revenue of $3.9 million, a decrease in revenue of $2.1 million, partially offset by an increase in total other income of $100,000.

[Heidy Chow, CFO and Director at Snail Inc]

Bookings for the Q3 increased 9.3% to $17.6 million compared to $16.1 million from the same period last year. The increase was primarily driven by various sales promotions in 2025 that did not occur in 2024, specifically around ARK: Survival Evolved and the release of ARK: Lost Colony and ARK: Aquatica in 2025. Bookings for the nine months ended September 30, 2025, increased 14.3% to $67 million compared to $58.6 million in the same period last year. The increase was primarily driven by the releases of ARK: Survival Ascended DLC extra rolls in the Q4 of 2025, sales promotions that were the first of their kind on ARK: Survival Evolved in 2025, the release of ARK: Lost Colony to pre-sale in 2025, and the release of ARK: Aquatica. EBITDA for the Q4 was $9.7 million loss compared to $500,000 in the same period last year.

[Heidy Chow, CFO and Director at Snail Inc]

The decrease was primarily due to an increase in net loss of $8.1 million and a decrease in the provision of income taxes of $1.8 million, partially offset by an increase in interest income and interest income related parties of $400,000. EBITDA for the nine months ended September 30, 2025, was loss of $15.6 million compared to $1.6 million in the same period last year. The decrease was primarily due to an increase in net loss of $27.1 million, a decrease in interest expenses of $200,000, partially offset by an increase in provision for income taxes of $10.5 million, and a decrease in interest income and interest income related parties of $400,000. As of September 30, 2025, unrestricted cash and cash equivalents was $12.3 million. To review our detailed financial statements, please refer to the earnings press release and the Form 10Q file with the SEC.

[Heidy Chow, CFO and Director at Snail Inc]

To conclude, we remain excited about the progress made on both our stablecoin project and gaming portfolio and pipeline. ARK: Lost Colony continues to remain growth driver for the Q4, and we look forward to a stronger finish to the year. Thank you all for joining us today. We'll now open the line for Q&A. Operator?

[Operator]

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from the line of Michael Kupinski with Noble Capital Markets. Please go ahead.

[Jacob Muchler, Analyst at Noble Capital Markets]

Hi, it's Jacob Muchler on for Michael Kupinski. I was just curious, could you talk a little bit about the gross margins in the quarter? You know, we noticed that the gross margin was around 30% for Q1 and Q2. So just curious if you could talk a little bit about what led to that contraction.

[Heidy Chow, CFO and Director at Snail Inc]

Thank you, Jake. This is Heidy, CFO of the company. That was a good question. This was really a result of multiple factors. On our cost of the revenue side, while we pay royalties as a percentage to our net revenue, we do have a fixed license fee to our related parties, and approximately about $6 million per quarter. This license fee is actually fixed and is paid on a monthly basis, regardless of our recognized revenue, which is also the main reason why the gross profit margin actually decreased this quarter. On our revenue side, we had an increase in our booking, but we deferred $5.9 million. As mentioned earlier, we deferred $5.9 million in our sales of Lost Colony. Additionally, we held a significant sales in Q2 of 2025 that we do believe will pull demand forward the quarter for the base game of ASE.

[Jacob Muchler, Analyst at Noble Capital Markets]

Gotcha. If I could just turn to deferred revenue. You know, I know you mentioned the increase in deferred revenue, but could you just talk a little bit about the timing of when some of that revenue is going to be recognized over the next 12 months?

[Heidy Chow, CFO and Director at Snail Inc]

Sounds good. Thank you, Jake. As mentioned earlier in our earnings call, we do believe that all our deferred revenue is recognizable as of September 30, 2025. In fact, the majority of it will be recognized within the next 12 months or so, assuming there's no delays in delivery of our obligations to our customers and our players. We do expect to recognize $5.9 million of our short-term deferred revenue in Q4 of 2025 related to Lost Colony. Once the game is released, we'll recognize that as a top-line revenue. $10.3 million will relate to Genesis 1 and 2 once Genesis 1 and 2 is released and we'll be able to recognize those as revenue in the upcoming year.

[Jacob Muchler, Analyst at Noble Capital Markets]

Gotcha. Outside of the Lost Colony, deferred revenue, and then Genesis 1 and 2, what is the remaining deferred revenue? What does it consist of as far as the...

[Heidy Chow, CFO and Director at Snail Inc]

Yeah. Majority of the deferred revenue are actually related to our gaming performance obligations. We do have some of the deferred revenue as a deposit for our future games as well.

[Jacob Muchler, Analyst at Noble Capital Markets]

Gotcha. Okay. Thanks for the cover. I'll hop back in here. Thanks.

[Operator]

Thank you. Ladies and gentlemen, at this time, there are no further questions. The conference of Snail has now concluded. Thank you for your participation. You may now disconnect your lines. Thank you.

Participants

Executives

• Heidy Chow, CFO and Director
• Peter Kang, SVP and Director of Business Development and Operations

Analysts

• Jacob Muchler, Analyst at Noble Capital Markets
• Steven Shinmachi, Investor Relations Associate at Gateway Group