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Thank you for standing by, welcome to Snail Inc.'s first quarter 2026 earnings conference call and webcast. I would like to now turn the call over to Steven Shymanski with Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to Snail, Inc.'s first quarter 2026 earnings conference call and webcast. Joining us for today's call are Snail, Inc.'s Chief Executive Officer, Hai Shi, Chief Financial Officer, Heidy Chow, and Senior Vice President, Director of Business Development and Operations, Peter Kang. The company's first quarter 2026 earnings press release was filed earlier today and is available on the investor relations section of Snail, Inc.'s website at snail.com or the SEC's website at 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 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 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 its 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. Now I will turn the call over to Peter Kang, Senior Vice President, Director of Business Development and Operations of Snail. Sir, please proceed.

Thank you, and good afternoon, everyone. Thank you for joining us today to review our financial and operational results for the first quarter ended March 31st, 2026. Coming out of the fourth quarter last year, we reinforced the underlying fundamentals of our business. We exited 2025 with a diversified content pipeline that positioned Snail to deliver more predictable, stable growth. We announced a content roadmap for ARK, including new DLCs, content updates, and game modes that stretches through 2027. In parallel, we continue to strengthen Snail's positioning as a developer with several indie titles in development, and more importantly, three AAA titles now in the final phases of their development cycles. For The Stars, Nine Yin Sutra: Immortal and Nine Yin Sutra: Wushu. I will return to each of these titles later in my remarks.

Beginning with ARK, engagement remained consistent across the franchise during the quarter. ASE sold over 573,000 units. Average DAU was 117,000, and peak DAU was 143,000. ASA average DAU was 127,000. Peak DAU was 188,000. More importantly, ASA total units sold for the quarter rose to 1.4 million, supported in part by the Steam Winter event and the strong momentum from the successful launch of ARK: Lost Colony DLC in December 2025. ARK Mobile total downloads were approximately 11.9 million as of the end of the quarter, with average DAU of over 141,000. Over the next 2 months, we have several ASA updates planned over the coming months. Starting in May is the upcoming Fantastic Tames Season 1 expansion pack.

In June 2026, we plan to release ARK: Tides of Fortune, a new ASA DLC. In tandem, we also expect to officially launch the ASA remake of ARK: Genesis Part 1, which will allow us to recognize approximately $11 million in revenue deferred from revenue balance at time of release. Beyond ARK, we released three new indie titles over the past few months. These include Echoes of Elysium on Steam Early Access, Survivor Mercs 1.0 version, and Above the Snow. We also unveiled two new indie titles in development, Dead Party and Gobby Game. While we are pleased with the consistency and stability ARK provides and the steady expansion of our indie portfolio, we are particularly focused about our broader diversified pipeline for the next several years. For many years, ARK has served as the foundational IP of our business.

Our long-stated strategy has been to build on that foundation and scale into a fully integrated developer and publisher capable of supporting multiple franchises at once. The investments we have made in our organizational development teams over the past several years have been made with that clear goal in mind. The 3 AAA titles currently in development represent the next major step into that strategy. Each is built with the production scope, depth, and marketing skill required to potentially compete in the same tier as ARK. Each is designed for a multiyear lifespan. As discussed on last quarter's call, these games have now entered the final phase of their development cycles. These 3 titles are not designed to compete with one another. They address distinct audiences and markets. For the Stars is a global intergalactic experience built around a phased gameplay vision.

Nine Yin Sutra: Immortal and Nine Yin Sutra: Wushu are based around our historical success with an established IP and a strong user base with our previous launch of Age of Wushu that has held a strong hold in the Chinese market. This edition represents a two-product strategy on that foundational IP. I will now walk through each individually. Beginning with For The Stars, we recently released a new developer diary featuring perspectives from key designers, engineers, and new pre-alpha gameplay footage alongside unreleased concept art. The game is being built around a vast universe with a strong emphasis on world-building that generates an effectively limitless number of solar systems that players can explore and inhabit over time. Development is structured in phases. The initial phase focused on the single player and four to six-player co-op experience.

The long-term vision evolves the experience into an MMO style ecosystem, where large numbers of players online can interact within a shared universe. At a high level, For The Stars is designed as a galactic scale conquest and grand strategy experience, drawing comparisons to titles like EVE. However, the moment-to-moment gameplay emphasizes hands-on exploration, construction, and progression, invoking the feel of the title No Man's Sky and Satisfactory blended together. This combined gameplay experience aims to balance strategic depths with accessible, engaging gameplay that appeals to both hardcore and mainstream audiences. We have a slate of additional announcements planned for For The Stars throughout the year and look forward to sharing further updates as development progresses towards launch. Turning now to our two-product IP strategy with Nine Yin Sutra: Immortal and Nine Yin Sutra: Wushu. The Nine Yin Sutra IP has a large and loyal fan base in China.

Its predecessor, Age of Wushu, accumulated more than 85 million registered accounts across PC and mobile and defined the wuxia genre. The wuxia genre is characterized by content centered on martial arts, heroes, and ancient China. Fans have been waiting for the next chapter in this franchise for more than one decade. We believe the addressable market for these two titles is substantial. The Chinese gaming market remains highly attractive and many international publishers are consistently seeking meaningful entry points into the audience. Snail Games is historically well-positioned. We hold established IP that is beloved with a historical proven user base and development capacity to deliver at scale. Nine Yin Sutra Wushu is the closest sequel to the original Age of Wushu game and will return to the core wuxia genre and universe.

The title will replicate the MMORPG model and is intended to directly address long-standing demand from fans over the past 15 years. The title is being built on Unreal Engine 5 with a goal to deliver a cinematic masterpiece that portrays the ancient China wuxia setting at a level that has not previously been achieved in the genre. We expect to deliver more information during Gamescom later this year. Nine Yin Sutra: Immortal will take a different approach around the cultivation genre. Cultivation is a wuxia adjacent subgenre focused on the progressive development of supernatural power over time. It is also one of the fastest-growing categories across the broader martial arts space. Nine Yin Sutra: Immortal aims to leverage the existing IP to deliver a new cultivation genre experience that aligns with current gaming trends and preferences in China. The game is also being developed on the Unreal Engine 5.

More information will be unveiled during Bilibili World and ChinaJoy events later in the year. The two genre strategy is intentional. It broadens the addressable audience for the Nine Yin Sutra IP within China by serving both longtime fans of the original Age of Wushu and Nine Yin IP, alongside a new generation of players drawn to the cultivation and martial arts genres. We believe this approach can support a multiyear to multi-decade lifespan across both titles and meaningfully expand Snail Games beyond the ARK franchise. Taken together, the combined potential of these three titles is unlike anything Snail Games has worked on since ARK. As we move through final development, we believe Snail is approaching an inflection point within the next several years to define Snail Games as a multi-franchise developer and publisher.

In support of this strategy, I would also like to note that earlier in the month, we amended the exclusive software license agreements for ARK: Survival Ascended. Under the amended terms, annual licensing fees will be reduced by $6 million annually going forward. We intend to reinvest the savings into the business with a particular interest towards development of the upcoming titles I have just described. The future is bright, and we look forward to sharing new information across our games in the pipeline while continuing to deliver new immersive content and experiences within ARK. Thank you for joining us today. I will now turn the call over to Heidy to discuss our financial results for the first quarter ended March 31, 2026. Heidy.

Thank you, Peter. Good afternoon, everyone. Thank you all of joining us today as I reveal our financial results for the first quarter ended March 31st, 2026. We enter 2026 with renewed momentum. The encouraging trends we saw coming out of Q4 2025, along with the strong business fundamentals we highlighted, have carried into 2026 as expected. Our Q1 performance reflects that momentum, and we believe we are well positioned to sustain this trajectory, supported by the robust pipeline Peter outlined. Net revenue increased 35.7% to $27.3 million compared to $20.1 million in the same period last year.

The year-over-year increase was primarily due to an increase of $4.2 million and $2.1 million in revenue related to ASA and Bellwright respectively, and a $2.5 million increase in deferred revenue recognized during the period, offset by a decrease in revenue from ARK Mobile and ASE. Net income increased 210% to $2.1 million, compared to a net loss of $1.9 million in the same period last year. The increase was primarily due to an increase in net revenue of $7.2 million and a decrease in total operating expenses of $300,000, partially offset by an increase in provision for income taxes of $1.6 million, an increase in cost of revenue of $1.4 million, and a decrease in total other income of $500,000.

EBITDA increased 173.3% to $2.4 million, compared to a loss of $3.2 million in the same period last year. The increase was primarily due to an increase in net income of $4.1 million and a decrease in the benefit from income taxes of $1.6 million. Total units though increased 42.6% to 2.2 million compared to 1.5 million units in the same period last year, primarily driven by an increase in sales of ARK franchise IPs of 500,000 units and Bellwright of 200,000 units. As Peter outlined at the outset of the call, ASA unit sale was 1.4 million for the three-month ended period.

The winter sale event supported a spike, which include a sale of both the ASA base games and also the ARK: Lost Colony DLC. Bookings increased 21.1% to $26.9 million, compared to $22.2 million in the same period last year, primarily driven by stronger sales promotions in 2026 compared to 2025, tailwind momentum of the December 2025 ARK: Lost Colony DLC release, and Bellwright's highly regarded content update in late 2025. Lastly, as of March 31st, 2026, unrestricted cash was $14.3 million compared to $8.6 million as of December 31st, 2025. To review our detailed financial statement, please refer to the earnings press release and the Form 10-Q filed with the SEC. Our robust ARK pipeline will be the foundation for sustainable performance throughout 2026.

Looking ahead into the next few years, we foresee our revenue mix to evolve alongside the releases of key titles, including, for the start, Nine Yin Sutra: Immortal, Nine Yin Sutra: Wushu. As Peter outlined, we believe these title offer meaningful upside, and we remain bullish about their potential. We have several gaming events lined up throughout 2026, and we look forward to sharing additional updates on these titles over the course of the year. We remain focused on the fundamentals of Snail's business. We believe continued execution on ARK and realizing the potential of the three aforementioned titles will propel Snail to deliver heightened results and shareholder value. This concludes our prepared remarks. We will now open the line for Q&A. As a reminder, some answers during Q&A session may be answered in Chinese by our CEO before being translated into English. Operator, please proceed.

Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. You'll hear an automated message advising your hand is raised. If you would like to remove yourself from the queue, press star one one again. We ask that you wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. Our first question of the day will be coming from the line of Michael Kupinski of Noble Capital Markets. Please go ahead.

Thank you. Congratulations on a good quarter. A couple of questions. Across your overall game pipeline, it looks like 2026 has a lot of content that's coming up. I was wondering if you can dive into the content game and DLC roadmap for the rest of the year. If I can just add on to that, what is the expected cadence of ARK related content releases over the next 12 months? Which launches are viewed internally as the most important catalyst for bookings growth?

Thank you, Michael. That was a great question. I'll defer the question to Peter Kang.

Michael. Just to recap, we definitely have a lot in the pipeline this year for the ARK franchise and also some of our other internally developed IP. In total, the number is around 11. Anything from, you know, 3 new tames for ARK: Survival Ascended's Fantastic Tames Season 1 pack. Bob's Tall Tales will have another pack coming out. ASA Genesis Part 1. We also intend on releasing, re-releasing, I should say, ARK: Survival of the Fittest, our e-sports mode for ASA. A project called ASA World Creator. Of course, in December, we're gonna be releasing ARK Dragontopia. Along with that, Bellwright will have its console ports arrive this year for both PlayStation and Xbox. We have an internally developed project named Gobby Game that was mentioned earlier.

Those are our internal projects we're working on. Along with that, we have 6 additional licensed IPs that we'll be releasing throughout the year.

Great. In terms of SaltyTV and the short film business, can you briefly explain where we sit on that, in terms of the short video business and the number of videos produced, and maybe some insight into the future outlook for that line of business?

Absolutely. I'm glad you asked that question. It is definitely a market segment that is wide open. We're really trying to take advantage of the timing on this. The SaltyTV app to date has launched over 49 IPs. These are IPs that we've developed internally. In 2026, in total, the number of IPs has grown to 279. We've done this through licensing and other acquisition channels. This represents a 5.7x growth in terms of content. As far as subscribers go, while subscriptions are not the main payment model, it is one that we're very proud of. We had over 6,000 subscribers that have adopted to SaltyTV's subscription model. These subscriptions are either half year or a year long. Total downloads of the app itself, over 400,000 across iOS and Android. This data is through May 12th, 2026.

Sounds like it's off to a good start. A couple of quick ones here. What level of development spending should investors anticipate in 2026 as the company advances its AAA pipeline? When should we start to see operating expenses moderate after the current development cycle?

Thank you, Michael. As you know, for the company is actually while we're working on multiple projects, we are cost-conscious. We're not spending extra significant amount of money while we're building all these kind of different project, different DLCs. Company is remaining as you know, we don't spend as much on the cost side in regards to the operating expenses. And on top of that, Michael, that our CEO, actually Mr. Hai Shi wants to add on top of the SaltyTV side of the business.

Okay. Salty TV.

For SaltyTV, actually, the product is not just the vertical dramas. More importantly, we're also trying to adopt a strategy where we're combining the dramas with the interactive games. This year, we're looking to release two interactive games.

For our internal AAA gaming projects, they are more large scale, and then they are worked on by internal development teams. In terms of the short-term revenues, maybe, we're still looking to improve our strategy. That's also one of the reasons why we are trying to look into the business line of vertical dramas as well as the interactive games. For these two interactive games, the internal development cycle might take around 7 to 8 months. And we have high confidence into the potential performance of these two interactive games once they release, and then we're looking at 1 million unit sold projections. Both of these interactive games will be released around 2, 3 this year.

Great. Thanks for the added color. If I could slip one more question in. Can you please provide a quick update regarding the stablecoin business on specifically the number of states that currently are that you're applying to any general updates on that business?

Yes. This is Peter again, and I'll give you an update on our stable coin business. The USDO coin is definitely moving from building phase to launch phase readiness. We've been working on the platform infrastructure. It's pretty much functionally complete across wallet management, on-chain minting, on-chain burning, blockchain transfers, and KYC verification, covering both enterprise and individual flows. Internal testing of the full digital marketplace is currently underway. On the compliance side of things and licensure, you know, the money transmitter license application is actively progressing across multiple states right now. KYC, AML vendor selection has been approved by the Chairman and CCO with some subcontracting in progress. Integration is already built and operational. Our compliance framework is being finalized in coordination with legal counsel ahead of launch. Distribution-wise, we're positioned across 3 distribution channels operating in parallel.

First of all is the Nitrado Digital Warehouse. It's, you know, Nitrado is getting a new addition. It's gonna be our proprietary gaming digital goods platform with USDO integration for purchases and sales. It will serve as our first go-to-market launch for USDO. Additionally, we have crypto ATM network with a functional prototype already built for internal testing as we target real-world on-ramp for USDO purchases. Sooner or later, we'll likely see, you know, some crypto ATM machines deployed across various locations in the country.

Great. Thanks for the update. Thanks for taking all my questions.

Thank you. This now concludes today's program. Thank you so much for joining. You may now disconnect.

Thank you for standing by, and welcome to Snail, Inc.'s Q4 and Full Year 2025 Earnings Call and webcast. I would now like to turn the call over to Steven Shinmachi with Investor Relations. Please go ahead.

Thank you and good afternoon, everyone. Welcome to Snail, Inc.'s Q4 and Full Year 2025 Earnings Conference Call and webcast. Joining us for today's call are Snail, Inc.'s Chief Executive Officer, Hai Shi, Chief Financial Officer, Heidy Chow, and Senior Vice President, Director of Business Development and Operations, Peter Kang. The company's Q4 and full year 2025 earnings press release was filed earlier today and is available on the Investor Relations section of Snail, Inc.'s 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 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-K that has been 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 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 a historical reconciliation of bookings and EBITDA to the corresponding GAAP measures in the earnings press release and the company's SEC filings. Now I will turn the call over to Peter Kang, Senior Vice President, Director of Business Development and Operations of Snail. Sir, please proceed.

Thank you. Good afternoon, everyone. Thank you for joining us today to review our financial and operational results for the Q4 and full year ended December 31, 2025. The Q4 capped a pivotal year for Snail and the ARK franchise. We closed 2025 with several key milestones, including the successful launch of ARK: Lost Colony DLC, the debut of a robust multi-year content pipeline for ASA, and meaningful advances across our broader portfolio and initiatives. Since ASA's launch in 2023, the remastered title primarily focused on updates which centered on introducing targeted features, improving game stability, and ongoing polishing.

While these enhancements in the release of ARK: Astraeos and ARK: Bob's Tall Tales strengthened the foundation and experience of the game, we had not yet released a full-scale expansion pack that truly brought in the narrative, gameplay depths, or overall scope of the ASA experience to fully realize its long-term engagement potential. ARK: Lost Colony changed that trajectory. Released last December, Lost Colony represents the first of many major standalone DLCs designed specifically to expand the ASA universe and deliver the kind of immersive, content-rich experience our global community has been anticipating. We were very encouraged by the early response of the DLC with pre-sale demands exceeding our internal projections and reinforcing the consumer appetite for deeper ASA content. More broadly, 2025 was a momentum-building year for ASA.

Since launch, the title surpassed four million units sold, supported in part by a meaningful acceleration in Steam, PlayStation, and Xbox downloads during the Q2 of the past year. Taken together, the traction we see across our titles and the sustained levels of player engagement continue to reinforce the durability and long-term strength of the ARK franchise. During the Q4, ASA delivered strong performance with approximately 692,000 units sold, an average DAU of over 91,000, and a peak DAU of over 147,000. ASE also remained a consistent contributor with approximately 580,000 units sold in the quarter, average DAU of roughly 105,000, and peak DAU of about 137,000.

Meanwhile, ARK Mobile surpassed a major milestone of 10 million cumulative downloads and sustained an average DAU of approximately 130,000. Building on the strength of ASA's Q4 performance and the steady, consistent result from both ASE and ARK Mobile, we are entering a content-rich and strategically important period for the ARK franchise, with ASA at the center of this next phase. During our December 2025 Investor Day, we outlined the next chapter of ASA's growth trajectory.

The event featured Studio Wildcard co-founder Jeremy Stieglitz, who unveiled a comprehensive multi-year content roadmap for ASA that includes a robust slate of DLCs and content expansions designed to deepen the ASA universe, elevate engagement, and support durable long-term growth for the franchise. Beginning in 2026, we plan to release four major DLCs and content updates, including the ARK: Survival of the Fittest Remake, followed by ARK: World Creator, ARK: Bob's True Tales - Tides of Fortune, and ARK: Dragontopia to close out the year. Looking ahead in 2027, we plan to launch ARK: Atlantis, ARK: Bob's True Tales - Galaxy Wars, and ARK: Legacy of Santiago. In total, these seven significant releases represent one of the most ambitious expansion cycles ever planned for ASA and provide Snail with meaningful revenue visibility through 2027.

Just last week, during the 2026 Game Developers Conference, we held a private invite-only event to provide additional insights into the timing of some of these upcoming content releases. Jeremy Stieglitz kicked off the event with new details on ARK: World Creator, Bob's True Tales - Tides of Fortune, and Dragontopia. ARK: World Creator is a brand-new in-game content creation tool for ASA that will support both console and PC players. Up till now, user-generated content in ARK was largely limited to PC players using external tools. World Creator removes this barrier and broadens the accessibility of user-generated content to console players as well. While this is not a paid for DLC or expansion pack, ARK: World Creator introduces a wealth of new personalized content tailored to each player's preference that we hope to further drive long-term engagement on ASA.

We are targeting a May release for this new feature. Following that is the launch of ARK: Bob's True Tales - Tides of Fortune DLC scheduled for June, along with the free revamped Genesis: Part 1 map for ASA. We also debuted an event-exclusive trailer highlighting the renewed look for ARK: Survival of the Fittest and provided details around the upcoming ARK: Dragontopia scheduled for December 2026. Separate from ASA, we were pleased to introduce PixARK: Worlds, a new title in development featuring advanced user-generated content designed to expand the ARK universe onto Nintendo Switch 2 console. Needless to say, we are thrilled about the opportunities 2026 presents Snail as we continue to elevate the ARK franchise globally for players across both PC and consoles. Beyond ARK, we also announced several updates across our broader gaming portfolio.

Starting with our indie portfolio, we unveiled a brand-new title, Gobby Gang, during the GDC. Additional indie titles in the pipeline include Stoneguard, Above the Snow, and Survivor Mercs, to name a few. We also recently celebrated Bellwright surpassing one million units sold. In 2026, we will be launching Bellwright's console ports to Xbox and PlayStation while working towards the eventual 1.0 release. We will also see Honeycomb in 2026 for a full 1.0 launch across PC and console platforms. Lastly, we are pleased to announce the significant progress made across three developing titles, For the Stars, Nine Yin Sutra: Immortal, and Nine Yin Sutra: Wushu. These three titles are all triple-A projects, meaning they are high-budget, high-profile games designed to deliver expansive worlds, cutting-edge visuals, and strong marketing campaigns that far exceed typical games we have launched and licensed.

As a reference, ARK is considered a triple-A game as well. While the three games I mentioned are smaller in scale than ARK, these titles offer immense upside potential. We have invested considerable time and resources into each game, and they are now in the final stages of their development cycle. We believe we are approaching the point where our long-term investment can fully realize its potential, and we look forward to sharing updates as we make progress throughout the year and into 2027. At GDC, we shared an event-exclusive trailer and early concept art of For The Stars, providing a deeper look at the title's open universe exploration, player-driven research systems, and evolving frontier civilization themes.

We believe Snail is well-positioned for meaningful upside over the next two years, with ARK remaining the cornerstone of Snail, supported by a rich pipeline of content, continued investment in our indie titles, and three upcoming triple-A games with substantial upside. We're excited about our trajectory and remain committed to delivering consistent long-term results. With that, I will now turn the call over to Heidy to discuss our financial results for the Q4 and full year ended December 31, 2025. Heidy.

Thank you, Peter, and good afternoon, everyone. Thank you all for joining us today as I review our financial results for the Q4 and full year ended December 31, 2025. Net revenue for the fourth quarter was $25.1 million, compared to $26.2 million in the same period last year. The decrease was primarily due to a decrease of deferred revenues that were recognized during 2025 of $3.5 million that were partially offset by our increased sales of the ARK franchise of $1.3 million and our Bellwright franchise of $1.2 million. On a sequential basis, we are pleased to see Q4 net revenue increase 82% compared to $13.8 million in Q3 2025.

Net revenues for the full year ended December 31, 2025 were $81.2 million, compared to $84.5 million in the same period last year. The decrease were primarily due to a decrease in recognition of deferred revenue of $15.5 million related to the ARK franchise. Decrease in Bellwright and Myth of Empires sales of $1.5 million and $1.3 million respectively, offset by an increase in ASE sales of $11.3 million, ARK Mobile sales of $2.4 million, and revenue generated from SaltyTV app of $800,000. Net loss for the Q4 was $900,000, compared to a net income of $1.1 million in the same period last year.

The decrease was primarily due to a decrease in gross profit of $1.7 million and an increase in operating expenses of $2.8 million, partially offset by an increase in other income of $2 million and the benefit from income taxes of $500,000. On a sequential basis, net loss improved significantly compared to the $7.9 million net loss in Q3 2025. Net loss for the full year ended December 31, 2025 was $27.2 million, compared to net income of $1.8 million in the same period last year.

Primarily due to a non-cash tax expense related to the full valuation of our deferred tax assets of $10.1 million, increase in general and administrative expenses of $5.2 million, increase in research and development of $2.9 million, increase in advertising and marketing of $3.7 million, and impairment expenses of $1.5 million. EBITDA for the Q4 was a loss of $1.3 million, compared to $1.6 million in the same period last year. The decrease was primarily due to the increase in operating expenses of $2.8 million. EBITDA for the full year ended December 31, 2025 was a loss of $16.8 million, compared to $3.2 million in the same period last year.

The decrease was primarily due to the increase in general and administrative expenses of $5.2 million, increase in research and development of $2.9 million, increase in advertising and marketing of $3.7 million, and impairment expenses of $1.5 million. While we experienced some one-off non-recurring headwinds during Q2 and Q3, we continue to reaffirm the strong fundamentals of the Snail business. For the year, total units sold increased 32.7% to 6.3 million, compared to 4.7 million units in the same period last year. This growth was primarily driven by an increase of 1.7 million units sold across the ARK franchise, partially offset by a combined decrease of approximately 100,000 units in Bellwright and West Hunt sales.

Bookings for the Q4 increased to $20.8 million, compared to $17 million in the same period last year. The increase was primarily driven by a lower portion of our sales deferred in 2025. Changes in deferred revenue decreased by $4.9 million, while our net revenue decreased $1.1 million. Bookings for the full year ended December 31, 2025 increased 16.2% to $87.8 million, compared to $75.7 million in the same period last year. The increase was primarily due to an increase of ASE sales driven by the launch of ARK: Lost Colony, ARK: Astraeos, and ASE's first sales event in June 2025 since the price drop in August 2023.

Especially with the robust ARK content pipeline for the next two years, we do expect bookings to continue growing on a quarterly basis while adjusting for gradual content launches coming off the backlog. Lastly, as of December 31, 2025, our restricted cash was $8.6 million, compared to $7.3 million as of December 31, 2024. To review our detailed financial statements, please refer to the earnings press release and the Form 10-K filed with the SEC. To close out the call, I would like to reiterate a few of the points Peter highlighted surrounding the significant momentum we carried out of 2025. As Peter mentioned, the latter half of 2025 was an especially exciting period for Snail and the ARK franchise.

The increased visibility of the ARK pipeline we have provided put us in a strong position to deliver consistent annual results over the next two years. We also remain strategic and committed to expanding our broader game portfolio. We continue to invest in smaller titles such as Bellwright, Honeycomb and our indie games, while also advancing our Interactive Films business. As of Q4 end, SaltyTV had released over a hundred short film dramas. Interactive Films also expanded beyond short form content into narrative-driven game development, which is a direction we expect to continue moving forward. Importantly, our three upcoming triple-A titles have reached the final stages of their development cycle. We believe these projects have a tremendous upside for the company, and we have dedicated as much time and resources to meet the potential these games hold.

We expect profit margins to remain meaningfully higher than what we typically see with external licensed titles. Additionally, the expansive content for each title supports a strong overall game lifespan. Beyond our gaming business, we also minted the first official USDO stablecoin during our December Investor Day event. We are currently working towards a potential partnership opportunity tied directly to our stablecoin business, and we look forward to share more details later this year. 2026 and 2027 represent an exciting period for Snail as we further prove our standing in the broader digital entertainment ecosystem. The time and resources invested across many of our projects and initiatives are beginning to bear fruit, and we remain focused on executing our strategy to drive long-term sustainable growth. Thank you all for joining us today. We will now open the line for Q&A. Operator?

Thank you. Ladies and gentlemen, to ask the question, please press star one one on your telephone, then wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Michael Kupinski with NOBLE Capital Markets. Your line is open.

Thank you. I have a couple of quick questions. What is the ending deferred revenue balance in the quarter? Could you just give me that number? If you have it, Heidy.

Thank you, Michael. Our deferred revenue number, I think, is stated on our 10-K. I think around $30 million.

Okay. I was wondering if you could give us an update. I know that we talked about this in the past about the technology gap. Is that still persistent or have there been some changes there?

Good question, Michael. I'll defer this question to our CEO, Mr. Hai Shi. He will answer that in Chinese, and then we'll have a translator as well.

Thank you.

Okay.

Hello, this is translator speaking. Mr. Shi stated that he became full-time CEO at Snail, Inc., in 2024. The main goal for Mr. Shi was to make sure that he could revamp the overall system for Snail as a publicly listed company, so that Snail's main focus could shift from a company that mainly publishes external games to have its own production pipelines.

Especially for game development side. To answer your question, out of the entire Snail system, one of the important projects is For The Stars or FTS. Initially, we're using our internal proprietary game engine. It's called Flexi Engine, to develop that game. The advantage of Flexi Engine includes its server management processing capabilities for big data as well as data security. However, compared to Unreal Engine, we can see that there's disadvantages for Flexi Engine for rendering as well as efficiency.

但是我们在，应该是2024年底，开始就是转向…… 把整个引擎还是转向了虚幻引擎。那么你在转的过程当中呢，我们服务器端还是使用了Flexi引擎，然后在客户端呢，因为虚幻引擎它……因为我们要创造一些，创造的星球是具有……是一个圆形的，并且呢，是可以挖掘的。那在这个方面呢，虚幻引擎并没有成熟的插件，或者它本身也不支持这些东西。那么，这是我们很大的一块移植，这个是在2025年也已经完成了，整个效果是非常好的。所以，目前来看，它拥有了最好的服务器端，也拥有了最好的客户端，包括生产效率。

As a result, we upgraded our engine to Unreal Engine at the end of 2024. Now we're still using Flexi Engine to support the server side, and for the client side, since we really want to create the sphere-shaped planets in game, and also want to make sure that we have deformable terrains, which for Unreal, there's not yet mature enough plugins to support that kind of goals. Right now, we're using Unreal Engine, and it's working very well for us, especially that we have very good server support and client side support, and also, we can guarantee efficiency in development.

最近的话，它已经完全移植到了虚幻引擎5.7，所以在技术上已经完全没有问题。

Very recently, we have fully upgraded to Unreal Engine 5.7. Right now we don't see any technical gap in game development anymore.

Terrific. If I could slip in just a couple of quick ones. Do you have a launch window for your triple A games at this point?

Thank you, Michael. I'll defer that to our CEO, Mr. Shi.

我们整个内部的研发体系，这在这两年内基本上已经完成了转移，所以现在来讲是一个非常好的时机。

Actually our internal development system has been fully transformed and built in the past two years. Right now it's great timing for us.

首先是我们的工作室，我们的工作室从过去在上市体系里面只有一个工作室，就研发工作室，现在增加到了四个研发工作室。那么这四个研发工作室的，今年都会有自己的…… 有三个研发工作室会有自己的产品，并且其中一个研发工作室的营收，从目前来看要翻倍于去年的营收。这是好事。所以整个在工作室的这一块，这个是非常成功的，目前。那么关于我们自己直接内部在做的这三款游戏，它的目标比较大，它不像工作室研发的一些产品，可能目标是在几千万美金的一个营收目标。

Before Snail only had one internal development studio. However, now we already have four development studios, and out of these four, three of them are working on their own in-house projects. For one of the studios, because the revenue trend is very positive, so it's looking like we will be able to double the revenues of last year. We're doing a very successful job at studio development. Then we have this ambitious goals for the three internal in-house titles that we're working on right now. We are looking at about tens of millions of revenues here.

这三款游戏呢，实际上是三个很大的IP，每个IP我们的目标都是在$5亿的一个整体的收入的目标。

All of these three in-house IPs will be immense IPs where we are aiming to achieve $500 million in overall revenues for each IP.

首先就像刚刚提到的For the Stars。For the Stars这是一款太空类的游戏。

The first IP is For The Stars. This is a space-themed game.

所有只要是一个比较成熟的游戏公司，并且能够把这样的题材的IP做出来的，它的营收规模都是很大的。从星空，从星际公民，包括无人升空都可以看到。

First, For The Stars, if for any mature gaming company, they're able to achieve a game of this size, then they will be able to also gain great revenues out of the projects. For example, we have Starfield, No Man's Sky, and Star Citizen.

这款游戏实际上已经研发了将近三年了。那么目前进入了最后的生产阶段。

We have spent three years on the development of For The Stars, and now we are focusing on the development cycle.

核心团队是在美国，然后有部分的生产是在波兰的一个工作室和中国，中国的一些外包。

The core development team is based in the U.S. Some of the production tasks are taken over by the Polish studio, Rustic Root, and some of the tasks were outsourced to our Chinese teams.

这款游戏今年一共是八个冲刺阶段，目前来讲，到今年年底的时候，我们会开始进行对外的测试。整个的宣传计划是从二季度就已经开始，其实GDC已经开始露面了，然后实际的视频会在下半年放出。

The development cycle of this game includes eight sprints in total. By the end of this year, we are anticipating that we will start external testing or public testing of the game. Actually we have initially showcased the game at GDC and we will show more in game capture, in the later half of this year.

基本上这款游戏完成了所有游戏人，或者游戏玩家对于太空游戏的几乎所有的梦想。

In For The Stars, we're able to achieve all the dreams of all the players who are passionate about space games.

另外两款产品的IP呢，是在过去在中国已经成功了，叫九阴真经。

Actually, the other two IPs were based off of the successful IP that we have released in the past in China.

这是一个中国文化的题材的一个IP。那么这个IP在过去的十几年的过程中，它大概产生了八亿美金左右的营收规模。

The IP's name is Nine Yin Sutra. This is coming from the Chinese culture. In the past dozen or so years, the IP has generated more than or about $800 million in revenue.

我们用这个IP现在在做两款产品，一个修仙的，因为现在修仙是一个新的文化题材，而且这个市场非常之大。目前来讲，并没有人把真正的修仙做出来，我们会像过去我们在做九阴真经武侠的时候一样，能够去创造一个完整的修仙世界。

For these two IPs, the first one is Nine Yin Sutra Immortal. We are seeing that there is still great potential market to tap into, especially because this is a new genre for the gaming industry. Because so far there's no real cultivation games yet out on the market. We want to put in just the same efforts as we used to, just like how we developed the Chinese Nine Yin Sutra games.

第二个是九阴真经的武侠。那么过去我们在创造了武侠之后，实际上我们这些年所有的武侠作品还是在原先我们创造的这个框架里面，一直在做，就是并没有什么太大的创新和变化。但是我们这次，整个九阴真经的，可以说是九阴真经二吧。那么我们在整个过程中创造了很多新的东西，并且这些东西是能够让所有的玩家能够耳目一新的，所以我们对它的目标也是非常大。

For the second IP under Nine Yin Sutra, it's called Nine Yin Sutra Wushu. In the past, for the Chinese IP, Age of Wushu, there were not major changes or innovative changes in the original framework. However, now with Nine Yin Sutra Wushu, we can consider it almost as a sequel of the original Chinese IP. We have implemented many different changes and we are hoping that we can impress all the players. That's why we are very ambitious with this IP.

这两款产品今年都会进入测试。

For both of the Nine Yin Sutra IPs, we'll start testing this year.

我们也今年会参加，大概现在确定下来的有三个大的展会，有中国的Bilibili、ChinaJoy和德国的Gamescom。

We have also confirmed that we will showcase all these IPs, or both of these Nine Yin Sutra IPs in three major gaming events this year. They include Bilibili World, ChinaJoy, and Gamescom.

所以整个来讲，宣传计划是全年都在进行，开始进行了。

Which means that we will have the campaign running of the entire year for these IPs.

Terrific. Thank you for that color. I really appreciate it. If I can slip one more question in, you have a very strong release roadmap through 2027. I was wondering if you could just talk a little bit about the impact on margins, particularly as it relates to R&D and marketing spend. If you could just talk a little bit about the marketing spend cadence around the upcoming launches.

Thank you, Michael. I'll defer the question for Mr. Shi to continue to answer the question.

就像我刚刚说的，我们自主内部的这三个主力产品，我们的目标都是比较大的IP的盘子，所以如果要说到具体一点的话，当年我们都希望——至少希望它能够产生六千到八千万的收入，那么这个是一个最基本的想法和要求。所以在这样的一个目标之下，我们不太会让它在没有完成的时候面向市场。当然我们知道我们今年还需要有营收的增长。

As Mr. Shi mentioned earlier, all of these three IPs will be the main revenue drivers of our company, and they're all big IPs that we're working on. To be more specific, we're hoping that the minimum we can have at least $60 million-$80 million in revenues from each IP. That's why we also don't want to fully release the games until they're definitely ready. We have big hopes for the revenues of these IPs.

在2026年的话，我们的营收增长主要是集中在这几块：一个是我们的波兰的驴子工作室，他们的Bellwright这一个项目，他还有他自己的一些原来的老项目。从目前Bellwright来看的话，因为它今年会上主机版本，而且这种题材在主机上是没有的。经过我们目前第一季度的收入来看，以及我们对它主机版本上线的预测，它的收入最少要比去年增加一倍，这是目前已经可以看得到的趋势。

For our revenue growth in 2026, we're mainly looking at several different projects. The first one is Bellwright developed by Donkey Crew in Poland. So far, the revenues of Bellwright is performing quite well. This year we're going to release the console version of Bellwright, and this genre is actually not yet present on consoles yet. Based on the revenues in the first quarter, our projections is that the revenues after console release can at least double the revenues of last year.

从目前来看，驴子工作室应该给整个公司上市公体系带来差不多一年有$1,200万的收入。

It looks like, based on the current performance of Bellwright, we can expect $12 million in revenues from Donkey Crew.

另外，就是那个买它那个工作室，他们去年做了一个海洋DLC，其实这个产品做得还是很不错的，但是在技术上有一些没有准备好，所以给社区造成了一些困扰。但整个工作室已经通过这样的产品，他们已经成熟了，所以今年他会做一个是方舟的电竞，这样会帮助这个方舟的人数再创新高，并且能够让方舟的营收还有所提高。这是一款。

The second one is Studio Sirens who worked on ARK: Aquatica last year. The product itself is quite decent. However, there were certain issues that might not be fully resolved in terms of the technologies which might have caused the concerns among the communities. But through developing this game, Studio Sirens is now more mature with their capabilities overall. This year, they will work on ARK: Survival of the Fittest, which is an e-sports game, and we're hoping that this game can bring a new peak of the ARK players and then also increase the revenues.

第二个呢，我们不仅是在把整个研发力量装进上市公司，其实我们也在把一些IP装进上市公司。他们会接手一个叫PixARK的项目，这个项目营收不高，两百多万，在去年。那么从他们接手的话呢，我们对它希望还是比较大的。但是从过去的经验来看呢，我认为这个工作室差不多会跟驴子工作室走过同样的路，所以今年它也许会完成几百万的收入。

Other than building our development teams in the public company, we also want to include more IPs into our company, which includes PixARK. We want Studio Sirens to take over the development for PixARK, which has made over $2 million last year. We have great hopes for Studio Sirens to work on this project, because based on the past experience, they might go through a similar trajectory like Donkey Crew and can create millions of revenues in the future.

当然他们还有一些其他计划。总的来讲，这个工作室今年可能不需要我们再贴钱了。对。

Studio Sirens also has other plans and other projects to work on. Overall, we will not be at a loss with the studio anymore.

有第三个工作室，是这个叫Hunter那个工作室。他们过去是在帮九阴的修仙在做战斗系统，那现在他们今年会有自己的项目，在夏天也会上线，这个项目也要在GDC上也公布了，期望也比较高。但是呢，这是一种就是快速起量的产品，相对来讲呢，就是它有点像叫Peak，Peak。有点像Peak这样的产品，所以有可能会很火爆，也有可能一般般。

The third studio is Matryoshka Games. In the past, Matryoshka Games was involved in the combat developments for Nine Yin Sutra Immortal. Now this year, they are also working on their own projects, which was announced at GDC, Gobby Gang. We have great hopes for this project as well. Gobby Gang is more of a fastly iterated project, similar to Pick, it's under the friend slots genre. We are hoping that the game can perform very well on the market. If the game's performance is only medium, maybe we can at least sell about 1 million units. However, if we're able to actually achieve the expectations of the development team, it should be easy for us to exceed the one million units target.

We can probably even sell 10 million units. The fourth studio that we have is Rustic Roots, which is based in Poland. Right now they're helping with For The Stars project, so they don't have their own projects to develop.

Okay.

We have another company called Interactive Films, and then this year we will also work on a lot more short dramas with this company. Last year, Interactive Films already produced over 100 short dramas, and then this year we will add another additional 700-800 short drama projects. This year, Interactive Films will also come out with this interactive game that is a Spartacus genre. Our goal for that interactive game is to sell around 5-6 million units. However, we don't really have a successful experience in this field yet, so we cannot really guarantee that success. Our revenue growth for this year mainly comes from the previously mentioned areas and also from the games that we are publishing.

Basically in general, the revenue will have a 20%-30% growth compared to last year. You said that you're interested in the plan for 2027. However, most of the major actions will probably happen by then, and then we hope that we can achieve something very great by the end of this year. If not, then it will happen in 2027.

Terrific. Thanks for the color. Greatly appreciate that. That's all I have.

Thank you, Michael.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. At this time, this concludes Snail, Inc.'s Q4 and Full Year 2025 Conference Call. If your question was not taken, please contact Snail, Inc.'s IR team at [email protected]. Thank you for your participation. You may now disconnect.