Snail(SNAL) - 2025 Q2 - Quarterly Results

Company Introduction Snail, Inc. is a leading global independent developer and publisher of interactive digital entertainment - Snail, Inc. (Nasdaq: SNAL) is a leading global independent developer and publisher of interactive digital entertainment[2] Second Quarter 2025 and Recent Operational Highlights Snail, Inc. reported strong Q2 2025 operational highlights, including robust ARK sales, new game launches, content updates, and a strategic stablecoin initiative - Announced intention to explore a strategic digital asset initiative, including the development and introduction of its own proprietary stablecoin, retaining Dr. George Cao as an external consultant[6] - Launched pre-order for ARK: Lost Colony and celebrated the 10-year anniversary of ARK: Survival Evolved (ASE)[6] ARK Franchise Updates The ARK franchise showed strong Q2 2025 performance with significant unit sales, daily active users, major content updates, and a 10-year anniversary celebration - ARK: Survival Evolved (ASE) sold approximately 1,196,583 units in Q2 2025, with an average daily active users (DAU) of 156,947 and peak DAU of 258,708[6] - ARK: Survival Ascended (ASA) sold approximately 807,065 units in Q2 2025, achieved 8 million downloads via PlayStation Plus in May 2025, and surpassed 6.9 million total downloads by June 30, 2025[6] - Launched seasonal Eggcellent Adventure and Anniversary event, the first major ARK: Astraeos update, and ARK: Ragnarok Ascended[6] ARK Franchise Key Metrics (Q2 2025) | Metric | ARK: Survival Evolved (ASE) | ARK: Survival Ascended (ASA) | | :----- | :-------------------------- | :--------------------------- | | Units Sold (Q2 2025) | ~1,196,583 | ~807,065 | | Average DAU (Q2 2025) | 156,947 | 84,585 | | Peak DAU (Q2 2025) | 258,708 | 163,455 | | PlayStation Plus Downloads (May 2025) | N/A | 8 million | | Total Downloads (as of June 30, 2025) | N/A | >6.9 million | Game Portfolio Updates Snail, Inc. expanded its game portfolio with new content for Bellwright, acquired publishing rights for two new titles, and launched several new games - Celebrated Bellwright's one-year Early Access anniversary and introduced significant new content and player-requested features[6] - Announced the acquisition of publishing rights for Whispers of West Grove and Rebel Engine[6] - Launched The Cecil: The Journey Begins, Chasmal Fear, Castle of Secrets, Robots of Midnight, and Zombie Rollerz: The Last Ship[6] Business Updates Snail, Inc. announced a strategic digital asset initiative to develop a proprietary stablecoin, establishing a new subsidiary and initiating capital formation - Announced its intention to explore pursuing a strategic digital asset initiative that includes the development and introduction of its own proprietary stablecoin[6] - Retained external consultant Dr. George Cao, the founder and CEO of AscendEX, a full-stack cryptocurrency financial platform, and seasoned legal advisors[6][9] - Established Snail Coins LLC, a new wholly owned subsidiary, to serve as the dedicated entity responsible for the issuance, management, and operations of its proprietary USD-backed stablecoin project[9] - Announced an At The Market Offering Agreement to initiate capital formation for the reserve asset backing its stablecoin project[9] - Company subsidiary Interactive Films LLC announced the development of The Fame Game: Welcome to Hollywood and signed a Memorandum of Understanding with Mega Matrix Inc. for joint development, production, and global distribution of short dramas[6][9] Management Commentary Management highlighted Q2 2025 as a pivotal period, driven by the strategic stablecoin initiative and strong core gaming business performance, particularly the ARK franchise - Co-Chief Executive Officer Hai Shi commented on the pivotal and transformative period, highlighted by the official announcement to develop and launch a proprietary stablecoin, aligning with long-term vision and digital financial innovation[7] - Co-Chief Executive Officer Tony Tian noted strong momentum in the core gaming business, driven by the annual Steam Publisher Sale event and the 10-year anniversary of the ARK franchise[8] Co-CEO Hai Shi's Remarks Hai Shi highlighted the strategic stablecoin initiative as a transformative move, supported by the GENIUS Act, aiming for compliant digital assets and game integration - The stablecoin initiative represents a significant evolution in Snail's business model, aligning with both its long-term vision and broader momentum in digital financial innovation[7] - The decision to enter the stablecoin space was catalyzed by the recent passage of the GENIUS Act, establishing a formal regulatory foundation[7] - Envisions the stablecoin unlocking a wide range of external use cases and integrating functionality within the core gaming business to enhance game economies and facilitate seamless transactions[7] - Deliberate steps include retaining strategic consultant partners and legal advisors, actively building technological infrastructure and compliance architecture, and entering an at-the-market offering agreement for capital formation[8] Co-CEO Tony Tian's Remarks Tony Tian underscored continued strong core gaming momentum, especially the ARK franchise, driven by sales events and a focus on consistent content updates and new launches - Core gaming business continues to demonstrate strong momentum, with notable performance in June driven by the annual Steam Publisher Sale event[8] - The ARK franchise remains a key pillar of the content ecosystem, celebrating its 10-year anniversary with new content drops and updates[8] - Committed to delivering consistent value through regular content updates and expansions for ARK, while strategically pursuing opportunities to develop, acquire, and launch titles within the indie portfolio[8] - Teams are focused on preparing for the launch of ARK: Lost Colony and simultaneously advancing a slate of indie titles in the pipeline[8] Financial Highlights Snail, Inc. reported increased net revenues and bookings for Q2 and six months ended June 30, 2025, but experienced net losses and negative EBITDA due to higher expenses and a deferred tax asset valuation allowance Key Financial Highlights (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Revenues | $22.2 million | $21.6 million | +$0.6 million | | Net Loss (Income) | $(16.6) million | $2.3 million | $(18.9) million | | Bookings | $27.1 million | $22.9 million | +18.5% | | EBITDA | $(2.4) million | $3.1 million | $(5.5) million | Key Financial Highlights (Six Months 2025 vs. Six Months 2024) | Metric | 6M 2025 | 6M 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Revenues | $42.3 million | $35.7 million | +18.4% | | Net Loss (Income) | $(18.5) million | $0.5 million | $(19.0) million | | Bookings | $49.4 million | $42.4 million | +16.3% | | EBITDA | $(5.8) million | $1.2 million | $(7.0) million | Second Quarter 2025 Financial Performance In Q2 2025, net revenues increased slightly to $22.2 million, but the company reported a net loss of $(16.6) million and negative EBITDA of $(2.4) million, primarily due to increased operating expenses and a $12.9 million deferred tax asset valuation allowance Second Quarter 2025 Financial Performance | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Revenues | $22.2 million | $21.6 million | +$0.6 million | | Net Loss (Income) | $(16.6) million | $2.3 million | $(18.9) million | | Bookings | $27.1 million | $22.9 million | +18.5% | | EBITDA | $(2.4) million | $3.1 million | $(5.5) million | | Unrestricted Cash (as of June 30, 2025) | $7.9 million | $7.3 million (Dec 31, 2024) | +$0.6 million | - Net loss was primarily due to increases in the cost of revenues and operating expenses (increased headcount, research and development, and marketing expenses) and the recognition of a valuation allowance against the Company's deferred tax assets of $12.9 million[11] - Bookings 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 to presale in 202