Snail Q4 2024 Earnings Report

Snail EPS Results

• Actual EPS: $0.03
• Consensus EPS: $0.07
• Beat/Miss: Missed by -$0.04
• One Year Ago EPS: N/A

Snail Revenue Results

• Actual Revenue: $25.00 million
• Expected Revenue: $25.00 million
• Beat/Miss: Met Expectations
• YoY Revenue Growth: N/A

Snail Announcement Details

• Quarter: Q4 2024
• Date: 3/26/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, March 26, 2025
• Conference Call Time: 4:30PM ET

Snail (NASDAQ:SNAL), together with its subsidiaries, researches, develops, markets, publishes, and distributes interactive digital entertainment for consumers worldwide. It offers games, content, and support for various platforms, including game consoles, personal computers, mobile phones, and tablets. Snail, Inc. was founded in 2009 and is headquartered in Culver City, California. Snail, Inc. operates as a subsidiary of Olive Wood Global Development Limited.

Snail Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Thank you for standing by, and welcome to Snail Inc. Fourth Quarter and Full Year twenty twenty four earnings conference call and webcast. I would now like to turn the call over to Brett Malop, Managing Director at ICR. Please go ahead.

[Brett Milotte, Managing Director - Global Media, Sports & Entertainment at ICR]

Thank you. Good afternoon, and welcome to Snail Inc. Fourth quarter and full year twenty twenty four earnings conference call and webcast. On today's call, we have Tony Dunne, Co CEO Peter Kang, Senior Vice President, Director of Business Development Operations and Heidi Chao, Chief Financial Officer. The company's fourth quarter and full year twenty twenty four earnings press release was filed today with the SEC after The U.

[Brett Milotte, Managing Director - Global Media, Sports & Entertainment at ICR]

S. Stock market closed and is available on the Investor Relations section of Snail Inc. 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 and results may differ materially from our expectations, and forward looking statements are subject to certain risks and uncertainties.

[Brett Milotte, Managing Director - Global Media, Sports & Entertainment at ICR]

Please refer to the company's Form 10 K to be 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 will refer to bookings and EBITDA, which are non GAAP financial measures and provide useful information for the company's investors. You will find a 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 Tony Town, Co Chief Executive Officer of Snail.

[Brett Milotte, Managing Director - Global Media, Sports & Entertainment at ICR]

Tony?

[Tony Tian, Co-CEO at Snail]

Good afternoon, everyone, and thank you for joining us today. I'm very excited to share with you our results for the quarter and full year as well as provide you with some updates with our game's portfolio and specifically our ARK franchise. With the release of Extinction DLC and Part three of Boss Tall Tales DLC for ASA in the fourth quarter, we continue to capitalize on increasing popularity of the franchise by engaging new players and continuing to excite our existing community through innovative ARK updates and the launch within the ARK franchise. We remain committed to being pioneers in the world of interactive entertainment, including strategic investments in advanced AI technologies that enhance both creativity and productivity. Now, I will provide some updates on the ARK franchise.

[Tony Tian, Co-CEO at Snail]

During the fourth quarter, we released the highly anticipated next gen ARC mobile game, ARC Ultimate Mobile Edition on iOS and Android platforms. In the December launch month, over 2,000,000 users downloaded the mobile game across the two mobile platforms. Through 12/31/2024, ARKX has been played for three point nine billion hours with an average playing time per user of one hundred and sixty two point one hours. Additionally, as we highlighted previously, the top 21.3% of all players have spent over one hundred hours immersed in the game according to data from Steam. We are thrilled with the continued success of the ARK franchise and to see so many players in change themselves in ARK inverse.

[Tony Tian, Co-CEO at Snail]

Before I hand the call off to Peter and Haley to discuss our results in more detail, let's quickly go over the financials from the quarter. For the fourth quarter of twenty twenty four, Snell generated net revenue of $26,200,000 a decrease from the $28,600,000 in the fourth quarter of twenty twenty three. In fourth quarter of twenty twenty four, net revenue includes the recognition of $8,000,000 in revenue from the release of Extinction and Part three of Box hotels, ARC sales of $15,500,000 and Bell Rite sales of $1,000,000 Thank you all again for joining. With that, I will now hand the call over to Peter Kham, our Senior Vice President, Director of Business Development and Operations to review our product roadmap and share some key developments. Peter?

[Peter Kang, COO & Director at Snail]

Thank you, Tony. Hello, everyone. Thanks for joining us today. I'd like to provide some updates on each of our core franchises. First, an update on Bellrite.

[Peter Kang, COO & Director at Snail]

As of the end of twenty twenty four, we have sold over 367,000 units to date and the wish list count for the game remains over 1,000,000. Regarding Honeycomb, The World Beyond is a survival sandbox game set on exuberant planet, SOTA seven. Explore its vast world and face challenges on your bioengineering journey. Cross breed plants or animals, gather resources, craft items and conduct experiments in order to develop new species. Honeycomb continues to represent Snail Games' dedication to providing a unique gameplay experience within their survival genre.

[Peter Kang, COO & Director at Snail]

We're excited to release this game in 2025. Echoes of Elysium is an airship RPG set in the procedural world of Elysium. Gather resources to design, build and live on your customized airships. Alone or with friends, take to the skies and discover clockwork wonders that clash with ancient mysteries in an untamed paradise. Robots at Midnight bash through gangs of hostile robots and corrupt bosses in this stylish and punchy action RPG.

[Peter Kang, COO & Director at Snail]

Robots at Midnight is a retro futuristic souls like that takes place on Yab, a world now in ruins. Built as a luxury destination, the planet is overrun with dangers, challenging for any human to endure. Be home before midnight. Moving on to our indie publishing label, Wandering Wizard. As mentioned previously, we have expanded our publishing catalog with several games signed earlier this year.

[Peter Kang, COO & Director at Snail]

The Cecil: The Journey Begins, Chasmophir, Castle of Secrets and Stone Guard. All of these indie titles will be gradually released in our pipeline. At the end of twenty twenty four, Wondering Wizard has many game titles at various stages of development and has maintained our commitment to identifying new opportunities that emphasize gameplay excellence and clear market fit. Let's turn now to the ARK franchise. For ARK: Survival Ascended, we released the Extinction DLC and Part III of the Bob's Tall Tale DLC in the fourth quarter.

[Peter Kang, COO & Director at Snail]

On the mobile side, we released the highly anticipated revamp of the original ARK Mobile game, ARK Ultimate Mobile Edition in December of twenty twenty four. Through the year end, ARC Ultimate Mobile Edition has accumulated more than 2,000,000 downloads. Looking ahead to 2025, we are proud to celebrate the launch of the Astrios map as an official partner DLC for Ark Survival Ascended, a significant evolution from its origins as a community created mob by acclaimed map maker Nekatas. Now fully supported as a paid DLC, the Astrios map infuses the ARK universe with a rich Greek mythology twist, delivering immersive new environments and challenges that transform the overall gameplay experience. We are excited to announce the ten year anniversary ARK Survival Evolved Aquatica DLC, a fully underwater gameplay experience.

[Peter Kang, COO & Director at Snail]

Waking up on Aquatica, a crash landed arc submerged with a vast underworld water biome. Survivors are thrust into exotic challenges never before encountered. Extreme environmental hazards, crushing pressures, rapid currents and a host of extraordinary creatures await within the mysterious depths. On the Quantica, survivors will uncover the potential source of element and catch a glimpse of what the future holds for those bold enough to endure. Aquatica is the first official DLC to tell a non canonical myth sickle story, expanding the ARK universe into new dimensions of survival.

[Peter Kang, COO & Director at Snail]

We are excited for the next chapter in the ARK universe with the release of ARK: Lost Colony DLC for ARK: Survival Ascended towards the end of the year. ARK: Lost Colony is a full size canonical expansion pack featuring a new map, creatures, items, structures and the continuation of the story of ARC. I will now pass the call out to Heidi to discuss our financial results in more detail. Heidi?

[Heidy Chow, CFO & Director at Snail]

Thank you, Peter, and hello, everyone. Thank you for joining us. As mentioned, net revenue for the three months ended 12/31/2024 was $26,200,000 as compared to $28,600,000 in the three months ended 12/31/2023. The decrease in revenues during the three months ended 12/31/2024 was due to a reduction in sales of ARC that was partially offset by the recognition of deferred revenue upon the release of ARC's Survival Ascendant DLCs noted in our financial statements. Net revenue for the year ended 12/31/2024 was RMB 84,500,000.0 as compared to RMB 60,900,000.0 in the prior year period.

[Heidy Chow, CFO & Director at Snail]

The increase in net revenues was due to an increase in recognition of deferred revenue of $32,200,000 related to the ARC franchise, an increase in sales belt rights of $5,900,000 partially offset by a decrease in total ARC sales of $13,000,000 a decrease in ARC mobile sales of $1,000,000 and a decrease in the company's other titles of $700,000 Net income in the fourth quarter of twenty twenty four was $1,100,000 versus $2,400,000 in the fourth quarter of twenty twenty three. The decrease in net income is a result of increased research and development cost of $3,000,000 to support our future game releases, partially offset by an increase in gross profit of $1,400,000 dollars and a decrease in advertising and marketing expenses of $900,000 Net income for the year ended 12/31/2024, increased significantly to $1,800,000 dollars versus a net loss of $9,100,000 in the prior year period due to an increase in net revenue of $23,600,000 decreased general and administrative expenses of $2,900,000 partially offset by increased research and development costs of $6,500,000 increased cost of revenue of $5,900,000 and a decrease in income tax benefit of $3,000,000 Booking for the three months ended 12/31/2024 was $17,000,000 as compared to $52,600,000 for the three months ended 12/31/2023.

[Heidy Chow, CFO & Director at Snail]

The decrease in booking is due mainly to the release of ARC's Survival Ascended in the fourth quarter of twenty twenty three. Bookings for the year ended 12/31/2024 was $75,700,000 as compared to $85,700,000 in the prior year period. Bookings decreased by $10,000,000 or 11.7% compared to the year ended 12/31/2023, because of increased sales at a higher ASP driven by the release of ARC survival Ascended in the fourth quarter of twenty twenty three. The releases of Vossed Hotels and Bellroy along with the ARK survival Ascended DLC, Scorch Earth in April 2024, Aberration in September 2024 and Extinction in December 2024 partially offset the decrease in unit sales in 2024, but each product releases was at a lower ASP than the initial release of ARC: Survival Ascended. Additionally, the company recognized $13,200,000 from deferred revenue upon the release of Scorched Earth, Aberration and the first two parts of Bob's Tall Tale in 2024 and deferred $6,700,000 in revenues during the year ended 12/31/2024, for the ARK survival ascendant DLCs have not yet released as compared to $22,000,000 in revenue deferred during the year ended 12/31/2023 for the ARK survival ascendant DLC and parts of Bob's hotels that have not yet launched.

[Heidy Chow, CFO & Director at Snail]

EBITDA for the quarter was 1,600,000.0 versus 3,600,000.0 in the prior year period. The 2,000,000 or 55.6% decrease in EBITDA was due to a decrease in net income of $1,300,000 a decrease in interest expenses and interest expenses related party of $400,000 and a decrease in provision of income taxes of $300,000 dollars EBITDA for the year was $3,200,000 versus a loss of $9,700,000 in the prior year period. The $12,900,000 or 133.4% increase in EBITDA was primarily because of an increase in net income of $10,900,000 and a decrease in the benefit from income taxes of $3,000,000 dollars partially offset by decrease in interest expense and interest expense related party of $800,000 As of 12/31/2024, unrestricted cash and cash equivalent was $7,300,000 To review our detailed financial statements, please refer to the earnings press release, our most recent 10 Q and our 10 K filing. Thank you all for joining us today. We will now open the line for Q and A.

[Heidy Chow, CFO & Director at Snail]

Operator?

[Operator]

Thank you. We'll now be conducting a question and answer session. Our first question is from Michael Kupinski with Noble Capital Markets. Please proceed with your question.

[Michael Kupinski, Director of Research at Noble Financial Capital Markets]

Thank you and congratulations on a solid quarter. I have a couple of questions. When do you anticipate Bellroyte would be available on Xbox? And then how many new games do you have access to Bellroyte or how many new gamers will have access to Bellroyte on Xbox? And could you just talk a little bit about whether or not it would be a good candidate for Game Pass?

[Peter Kang, COO & Director at Snail]

Hi, this is Peter Kang. I'm going to try to give some answers to this question. We do anticipate Bellroy to be available on the Xbox platform in Q4 of twenty twenty five. As far as how many new gamers, well, that's hard to say. There's lots of console gamers out there that enjoy the survival simulation crafting type of gameplay.

[Peter Kang, COO & Director at Snail]

We do believe it is a unique product in that catalog. There's not too many of those types of games on that platform. If I were to have to guess, it might be, at least as much as we have on PC over time. As far as if it would be a good candidate for the Game Pass program, that's up to Microsoft to consider. We do have communications open with their team regarding that subject.

[Peter Kang, COO & Director at Snail]

So hopefully that question can get answered in the future. But as of right now, we don't have a definite confirmation.

[Michael Kupinski, Director of Research at Noble Financial Capital Markets]

Thank you. And another question. I know that the several gaming companies in the past have gotten into a little bit of trouble as they tried to develop more games and then just kind of ran out of resources. I know that you have a different process for that and I was wondering if you can kind of describe that a little bit and then also discuss some of your newer titles, potential release timelines and also the benefits of doing some revenue diversification?

[Peter Kang, COO & Director at Snail]

Sure, sure. That's a very complicated question, but I'll do my best to break it down. So we definitely have increased our licensing pipeline where last year we went out and signed 11 new publishing deals to publish content manufactured and developed by third parties. We also kicked off or continued development of three internal projects. These projects are bigger in scale, using some with new IPs like the Project for the Stars and some with flagship IPs that we have retained for many years named Nyingen Sutra, I believe, right?

[Peter Kang, COO & Director at Snail]

And then as we move on, we're constantly looking for new projects to publish. So we're very active in the sector looking for different projects to publish. The projects that we have signed, Honeycomb, for example, that is coming out on the second half of twenty twenty five, Echoes of Elysium, another, sandbox survival game that will also be arriving second half of twenty twenty five. Robots at midnight is going to be the first half of twenty twenty five, so coming up here in a few months.

[Michael Kupinski, Director of Research at Noble Financial Capital Markets]

And then how do you allocate your resources among the marketing spend against some of the titles and how do you allocate those resources?

[Peter Kang, COO & Director at Snail]

Sure. The resource allocation is mainly based on an analytical approach where we look at the size of the market that the game will be actively trying to establish a presence in. And based on the size of that market, we do some math and we deduce the correct amount of marketing budget that we can afford to spend on the project.

[Michael Kupinski, Director of Research at Noble Financial Capital Markets]

Great. That's all I have. Thank you.

[Operator]

Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for any closing remarks. This concludes today's conference. You may disconnect your line

Participants

Executives

• Tony Tian, Co-CEO
• Peter Kang, COO & Director
• Heidy Chow, CFO & Director

Analysts

• Brett Milotte, Managing Director - Global Media, Sports & Entertainment at ICR
• Michael Kupinski, Director of Research at Noble Financial Capital Markets