Snail(US:SNAL)2025-11-12 21:07Revenue Performance - The ARK franchise generated 88.4% of revenues in Q3 2025, down slightly from 88.7% in Q3 2024, and 90.3% for the nine months ended September 30, 2025, compared to 82.0% in the same period of 2024 [205]. - Net revenue for Q3 2025 was $13.8 million, a decrease from $22.5 million in Q3 2024, while net revenue for the nine months ended September 30, 2025, was $56.1 million, down from $58.3 million in the same period of 2024 [206]. - Net revenues for the three months ended September 30, 2025 decreased by $8.7 million, or 38.7%, compared to the same period in 2024, totaling $13.8 million [236]. - For the nine months ended September 30, 2025, net revenues were $56.1 million, a decrease of $2.2 million, or 3.7%, compared to the same period in 2024 [250]. User Engagement - Daily active users (DAUs) for ARK: Survival Evolved and ARK: Survival Ascended averaged 216,000 and 233,000 in Q3 2025, compared to 210,000 and 212,000 in Q3 2024 [205]. - The company sold 1.1 million units of games in Q3 2025, consistent with sales in Q3 2024, and has sold a total of 54.6 million units since January 1, 2016 [209]. - Units sold increased by 1.3 million, or 38.7%, for the nine months ended September 30, 2025, attributed to higher sales of ARK franchise titles [270]. Financial Losses - The company reported a net loss of $7.9 million for Q3 2025, compared to a net income of $0.2 million in Q3 2024, and a net loss of $26.4 million for the nine months ended September 30, 2025, compared to a net income of $0.7 million in the same period of 2024 [206]. - The income (loss) from operations for the three months ended September 30, 2025 was $(9.9) million, a decrease of $10.3 million compared to the same period in 2024 [236]. - For the three months ended September 30, 2025, EBITDA decreased by $10.2 million, or 2,038.6%, compared to the same period in 2024, primarily due to an increase in net loss of $8.1 million [279]. - For the nine months ended September 30, 2025, EBITDA decreased by $17.2 million, or 1,053.9%, compared to the same period in 2024, mainly due to an increase in net loss of $27.1 million [280]. Expenses - General and administrative expenses increased by $1.0 million, or 26.0%, for the three months ended September 30, 2025, totaling $4.8 million [240]. - Research and development expenses decreased by $0.2 million, or 4.0%, for the three months ended September 30, 2025, totaling $3.7 million [241]. - Advertising and marketing expenses increased by $0.4 million, or 78.4%, for the three months ended September 30, 2025, totaling $0.9 million [242]. - General and administrative expenses rose by $4.3 million, or 48.9%, primarily due to increased salaries and wages [255]. - Research and development expenses increased by $3.1 million, or 41.4%, driven by outsourced development and internal team expansion [256]. - Advertising and marketing expenses surged by $2.4 million, or 178.8%, due to increased presence at industry events and marketing campaigns [257]. Cash Flow and Financing - As of September 30, 2025, unrestricted cash was $12.3 million, up from $7.3 million as of December 31, 2024 [282]. - Net cash flows provided by operating activities for the nine months ended September 30, 2025 increased by $2.2 million, or 104.1%, compared to the same period in 2024 [287]. - Net cash flows used in investing activities for the nine months ended September 30, 2025 were $4.1 million, compared to none in the same period in 2024 [292]. - Net cash flows provided by financing activities for the nine months ended September 30, 2025 were $4.9 million, compared to $(6.7) million for the same period in 2024 [293]. Debt and Liabilities - The company had a net loss of $(26.4) million for the nine months ended September 30, 2025, a decrease of $27.1 million compared to a net income of $0.7 million in 2024 [289]. - As of September 30, 2025, the company had a balance of $3.0 million on its 2021 Revolving Loan, due in June 2026 [284]. - The Company amended its revolving loan agreement in June 2023, reducing the maximum balance from $9.0 million to $6.0 million, with $3.0 million outstanding as of September 30, 2025 [301]. - The Company did not meet the minimum debt service coverage ratio of 1.5 to 1.0 for the trailing twelve months ended September 30, 2025, and received a waiver for this breach [311]. - The long-term portion of the 2021 Promissory Note and 2025 Term Loan has been reclassified as a current liability due to non-compliance with debt covenants [311]. Strategic Initiatives - The company launched a short film mobile application, SaltyTV, with 67 short film dramas released by September 30, 2025, and plans for consistent new releases [223]. - The company is exploring a strategic digital asset initiative, including the potential introduction of its own proprietary stablecoin, subject to various factors [224]. - The Lost Colony Expansion Pass pre-sale exceeded expectations, selling over 306,000 units through September 30, 2025 [221]. - The new DLC map ARK: Astraeos sold 574,000 units across platforms since its release in February 2025 [217].