Earnings Transcript for SNAL - Q3 Fiscal Year 2024

Operator: Thank you for standing by, and welcome to Snail Inc. Third Quarter 2024 Earnings Conference Call and Webcast. I would now like to turn the call over to Brett Milotte, Senior Vice President at ICR. Please go ahead.

Brett Milotte: Thank you. Good afternoon, and welcome to Snail Inc.'s Third Quarter 2024 Earnings Conference Call and Webcast. On today's call, we have Tony Tian, Co-CEO; Heidy Chow, Chief Financial Officer; and Peter Kang, Senior Vice President, Director of Business Development and Operations. The company's third quarter 2024 earnings press release was filed today with the SEC after the U.S. stock market closed and is available on the Investor Relations section of Snail Inc.'s website at www.snail.com or the SEC's website. 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. Please refer to the company's most recent Form 10-Q that was filed today with the SEC, the most recent Form 10-K that was filed with the SEC on April 1, 2024, 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 measures that 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 Tian, Co-Chief Executive Officer of Sale. Tony?

Xuedong Tian: Thank you, Brett. Good afternoon, everyone, and thank you for joining us today. I'm very excited to share with you our results for the quarter as well as provide you with some updates on our games portfolio and specifically our ARK franchise. Firstly, I would like to give a brief overview of where Snail stands today with the release of the first half of ARK

Peter Kang: Thank you, Tony, and hello, everyone. Thanks for joining us today. Firstly, I'd like to provide some updates on each of our core franchises. Earlier in 2024, Donkey Crew released the survival simulation titled, Bellwright into Early Access on Steam. As a reminder, that launch was an incredible success with over 78% of reviews giving a positive score, and the overall Steam review score being "mostly positive". As such, we have sold over 380,000 units to date and the wish discount for the game remains over 1 million. There are a lot of new developments on this project. Keep an eye out on Bellwright's Steam store page for the most up-to-date sneak peeks at the upcoming content. We are excited to welcome Honeycomb

Heidy Kingwan Chow: Thank you, Peter, and hello, everyone. Thank you for joining us today. Net revenue for the 3 months ended September 30, 2024, was $22.5 million as compared to $9 million in the 3 months ended September 30, 2023. The strong increase in net revenue was primarily due to the release of Aberration and part 2 of Bobs Tall Tales, which resulted in $8.2 million of revenue in the third quarter. Additionally, we saw an increase in total art sales of $5.9 million, and an increase in Bellwright sales of $1 million, partially offset by other items outlined in our financial statements. Net income in the third quarter of 2024 increased significantly to $200,000 versus a net loss of $4.4 million in the third quarter of 2023 as a result of the aforementioned increase in net revenue. Bookings for the 3 months ended September 30, 2024, was $16.1 million as compared to $10.5 million for the 3 months ended September 30, 2023. The $5.6 million or 53.6%, an increase in booking is due mainly to the release of ARK

Operator: [Operator Instructions] The first question comes from the line of Michael Kupinski with NOBLE Capital Markets.

Michael Kupinski: I got just a couple here. I just want to know, in terms of the Steam summer sale, I was just wondering how that affected the quarter and the sales. In particular, too, did that affect gross margins because gross margins look like they were just a little bit lower than what I was looking for. And I was just wondering if you can just comment how successful that Steam summer sale was.

Heidy Kingwan Chow: Michael, thank you. That was a great question. Summer sale was great. And then because during the summer, we definitely had sold more units and our gross profit as well. And it did significantly actually improve for the quarter.

Michael Kupinski: Got you. And then I was just wondering, too, in terms of any updates on The Animated Series. I know you're kind of limiting the questions here. Any updates on The Animated Series viewership, and how well it was received? Any interest for another season? Can you give us an update there as well?

Peter Kang: This is Peter. So the rights to updates on The Animated Series belongs to our distribution partner, Paramount+. So we're not at liberty to disclose. The same goes with viewership numbers. Those analytics are very hard to come by for us. What we do know is that the second half of the first season is on the slate to be released, and we hope that it's well received by the viewership out there.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.