Snail Inc. Q4 2022 Earnings Call
Thank you for standing by and welcome to snail, Inc's fourth quarter and full year 2022 earnings conference call and webcast I would now like to turn the call over to Jake Fasano, Vice President at ICR.
Thank you and good afternoon, and welcome to snail, Inc's fourth quarter and full year 2022.
<unk> conference call and webcast.
On today's call are Jim <unk>, Chief Executive Officer, and Heidi Chow.
Chief Financial Officer.
By now everyone should have access to the company's fourth quarter and full year 2022 earnings press release filed today after market close.
This is also available on the Investor Relations section of snail, Inc's website at Www Dot nail dotcom.
During this call management may make forward looking statements within the meaning of the federal Securities laws. These forward looking statements are subject to the risks and uncertainties as described in the company's press release, the other filings with the SEC.
On today's call, we will refer to bookings that EBITDA, which are non-GAAP financial measures provide useful information for our investors.
We'll find out historical reconciliation of bookings at EBITA to the corresponding GAAP measures in the earnings press release, and the company's SEC filings and now I would like to turn the call over to Jeff.
Thank you and Hello, everyone.
Pleasure to speak with you on our 2022 fourth quarter and full year earnings call.
For those of you.
Not familiar with now we are a leading global independent developer and publisher of interactive entertainment for consumers. We have built a premium portfolio of premium video game designed for use on a variety of platforms, including Council P.
And mobile devices.
We have had many great accomplishments in 2022 that I would like to briefly highlight.
Sure.
Denver, We officially began trading on NASDAQ. This March a tremendous milestone for our company and we are excited to leverage the.
NASDAQ as we continue our journey into 2023.
We are thrilled to announce that the.
The Bible ball has achieved incredible set yet on the Nintendo switch platform over the past five years.
We owe it all to our passionate community of players who have demonstrated unbelievable loyalty to our game and brand.
Your support has helped us reach new Heights, and we are excited to share some of our leasing accomplishments with you.
Since its launch on the Nintendo switch in 2018 off survival you'd ball is continuing to sell strong year. After year in 2018, we sold 150406 units of the game on the platform, which was just the beginning about June .
In 2019, we sold 57404 units and despite the challenge faced in 2020, we manage to sell 92169 units.
On the Nintendo switch platform.
As a gaming industry continue to evolve we kept pushing ourselves to deliver the best possible experience for our players in 2021, we saw a whopping 135150 unit after Bible ball.
Which was a testament to our commitment to creating and Thursday.
Agent survival game and even in 2022, we continue to achieve that said with the total 159065 units offset by boat your ball so being kicked off switch.
I am pleased to announce that our retail package sell a box the Bible he ballgame.
Sustainable and continue to thrive.
By the gains age over seven years. It is a testament to the game popularity and our team's dedication to ensuring that the game remains yes.
Its players.
It is not.
For the game product that has been in the market for over seven years to occupy the retail shop shelf space and continue to sell at a steady pace.
As we move forward, we are committed to ensuring the game remains rather than an exciting for all claims we.
We will continue to invest in the development and introduce new features to keep the games fresh and engaging.
In November 2022, we relaunched in Nintendo switch version of the asks about what you're ball with a continuous upset or has been on Nintendo digital best sellers do that.
It was the bank.
Number nine best selling game in Japan in the fourth week of February .
In February we launched the new arc random walk map, which continued to grow Williams engagement on the switch and the new extension.
Pension Man AC did you release for Nintendo switch in April .
Beyond that we are total of a more mass that we expect to spud to pop them over that this year up 'twenty 'twenty suite, including our survival defeated a battle Royale mode.
And we expect the games play a base on switch will continue to grow with each of them.
Later this year, we expect to re launch our new mobile version of the Bible Your ball for AOS and enjoy.
This new version will feature all of that monetize content gain.
Game play mechanic, and overall performance and vigil, which exists on the PC and console version of art.
We saw strong user engagement during the year with or the play more than 425 million hours. We sold five 5 million units during the year compared to $6 6 million units in the prior year. This is directly related to that.
Seasonality of our business.
Things, we did that.
Any new title or DLC during 2020 chip.
With that and say I like to touch on our initiatives for 2023.
Excited to announce our upcoming plans.
There'll be no open world survival game that has captivated millions of players worldwide. We had three major update to share with you today. Firstly, we are thrilled to announce that our new title Bill exclusively for the ex U S.
And that's in.
And place agent by consoles in its development and expected to be available. Later. This year is a new art game would be powered by Unreal engine version, five <unk>, which will take arch emerged and we listen again play to the next step.
We can't wait to share more detail about this exciting New addition to the franchise in the coming months.
Secondly, we are excited to reveal that a new expansion pack is also expected to come this year available on old platforms. We are also striving to push the boundaries of what's possible with spark the expansion will introduce new.
Creatures biome gameplay mechanics to challenge, even dispose season sabbaticals.
Can't wait to see how the community will adapt and thrive in this new environment.
Finally, we have food youll feedback and are pleased to announce that we.
Two we deal and updating our content roadmap in the next few months.
Well, Matt will detail our plan for the game over the next year.
Including new content.
Balance changes and quality improvements, we want to ensure that the experience continues to evolve and improve and we can't wait to share our claims with Ya Li.
Later this year, we expect to release our flagship title to this completely revamped game dissolve unreal engine side.
Players and immersive gaming experience, which is true.
<unk> graphics of new features including advanced technology in the hands and amazing that dynamic if I am but that would be ball based on players action. We can wasteful players experience all of that part two has to offer with that I would like to share the latest.
Chocolate Oh shoot a breakthrough.
In integrating core game mechanics into Unreal engine side with this next generation technology, we can take the immersion and release the game play or choose to new Heights. We believe this will be a game changer for the franchise and we cannot wait to share more detail.
Would you in the coming months.
We have reached significant milestones in our game.
Political slight tested our game has worked tirelessly to ensure that and we expect to meet and exceed our communities high expectation. We are excited to see how our players will respond to the new feature and mechanics that we have test it.
<unk> successfully built out a massive content production process for option from new creatures and biomes and game play mechanics, and so really we are committed to delivering.
The most immersive and engaging.
Yet our team has been working very hard to bring this version to light and we can't wait to share more detail about the content we have installed.
We are grateful for their continuous support of our dedicated community and we want to assure you that we are working hard to make our to the bassi can be yeah.
Excited about the depths of games and design our current.
Product roadmap Intel's, we planed to continuously evaluate that our content.
Content strategy to improve further.
Our games, we seek opportunities to expand our gaming pipeline and did all media in the esports content related to our game.
For example.
We continue building out the west Hum tidal published by wondering whether the social detection game has performed exceptionally and yield a higher return than the initial investment. We recently launched west Hum one data March 23rd.
And the Nintendo switch Port it's expected to be released shortly wondering whether promote this title.
Pets eat export a few days ago.
In summary, we are excited to built on our existing platform. Both games titles. This includes acquiring new IP and providing multi platform entertainment franchise to create new independent mediums for our consumers.
By listing on NASDAQ, we now have the resource to focus on the execution and design next generation games and entertainment experience.
We are currently focused on the development of <unk>.
Two which will provide our customers with even better gaming experience and take advantage of leading innovation in game development.
I will now hand, it over to Heidi to review, our financial highlights from the quarter.
Thank you Jim.
Hello, everyone and thank you for joining our fourth quarter and full year 2022 car.
Revenue for the three months ended December 31st 2022 was $15 3 million, a 35% decrease compared to $23 5 million in 2021.
The decrease was primarily a result of a decrease in arc units sold.
Alright related revenue decreased by $4 8 million attributable to the age of the game.
Self normalizing in 2022 after the initial release of Genesis two in June 2021.
One off payments and revenue recognized.
Previous contract came out of that $1 2 million.
Of the 6 million decrease in arc <unk> arc mobile itself.
Net loss for the fourth quarter of 2022, West $2 3 million compared to a net loss of $9 1 million in the prior year period due to the reduced sales of art that the licensing fees.
Increased general and administrative costs and the increase in research and development expenses.
Revenue for the year ended December 31st 2022 was $74 4 million, a decrease of 32.3 million or 30% compared to revenue for the year ended December 31st 2021.
The decrease in that revenue was due to a decrease in sales of art attributable to the age of the game.
And increasing the number of free week promotions in 2022, and the Genesis two releases in 2021.
Yeah, one no DLT releases in 2022, and no free download promotions in 2020 one.
Our sales decreased by 33 million and deferred revenue from contract decreased by $3 7 million offset by additional one off payment in 2022 of them seven 5 million.
Some of our smaller titles decreased by a collective 3.1, the only partially offset by 500000 earned in 2022 from the release.
Huh.
Net income for the full year of 2022 was 1 million compared to a net income of $7 91 in the prior year period due to the reduced sales of art static licensing fees increased general and administrative costs and an increase in research and development.
Yeah.
We present booking and EBITDA because they are a key operating measures used by management to assess our financial performance.
Bookings adjusts for the impact of deferrals and we believe provides a useful indicator of cells in a given period.
Well the three months ended December 31st 2022 bookings decreased by $8 8 million or 43% compared to the same three months period of the prior year.
Primarily as a result of declining art related revenue.
For the three months ended December 31st 2022, EBIT that was a loss of $5 three pneumonia versus a loss of $11 8 million in the same three months period of the pie.
This is mainly due to the decrease in revenue.
Bookings for the year ended December 31st 2022 decreased by $28 8 million or 31% to $63 7 million compared to the pie yep here at <unk>.
Primarily as a result of a declining argue they do it.
Decrease is primarily due to the decrease of sales in 2022 due to the age of the game free download promotion and no DLT is he's doing the year ended December 31st 2022, while 2021 felt that relieves us of our Genesis to DLC and none of the freedom.
Hello promotions.
EBIT for the year ended December 31st 2022 was a loss of 700000 compared to a gain of $9 2 million in the prior year period.
As of December 31st 2022, our unrestricted cash was $12 9 million versus 10 point, Julie O'neill as of December 31st 2021.
To review our detailed financial statement. Please refer to the earnings press release and 10-K filing.
We will not be providing 2023 financial guidance at this time.
Thank you for joining us today and now let's go to the questions.
Operator.
Thank you and ladies and gentlemen at this time, we will be conducting our question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press. The star key followed by the number two if you would like to remove your question from the Q.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again to ask a question press star one on your telephone keypad.
Our first question comes from Pat Mccann with Noble capital. Please state your question.
Hey, Thanks for taking my questions. My first question relates to the games and deal CS outside of art to it.
The arc franchise, all with the other games you offer could you give sort of an update on what might be the release schedule.
For any of those gains.
Alternative games.
Here in 2023 that is.
Thank you thank you Pat and Heidi.
Great question, so in 2023.
Other than more weeks, but are still what we plan. It says we are perennially working at Honda DLC. So doing the 'twenty two 'twenty three we will not only will have DLC that we'll be releasing we are also working on a train game was the unreal engine.
All of this will be a relief.
In 2023.
Yeah.
Okay.
And then also I was wondering with with arc too and I guess with the wish list on steam.
I take it as that's kind of a way too.
Hi.
Judge the some of the anticipation for the game ahead of its release I was wondering if theres any color you could give on what.
What kind of clamber youre seeing from from gaming fans for arch to maybe be a steam wish list or any other ways you can kind of judge.
What the level of excitement is and whether thats up to expectations.
Thank you Pat Great question actually you know, we we know that I have lots of great fan people are waiting for Archie she'll come out and we just noticed that perennial west yeah more than one point almost one 4 million people I actually had it on on their wish list a burst mode.
Right.
Gotcha, Okay. Thanks.
And then I had a question about the just sort of the E sports genre in general and the opportunities that could.
Could provide to the company.
Is there any color you can provide on the appetite for.
E sports in the sandbox survival games genre, and what what the prospects for arc would be.
Yes, Hi, this is Jim tie.
Ill smell I would take this question.
It's a good question that this genre of survival game has been on for more than five six years, and we didn't always thinking about how to bring this IP to a different genre E sports.
And we actually just relaunched the survival of the fittest.
Is trading to be an E sports, but the E sports genre or are we talking about.
Wanted to be a very different and also esports survival general has it been.
In the market and our continued testing and we are very patient and we listen to the player. We are continually updating but on this year, particularly early this year that you are able to see a lot of good feedback on the re launch of the survival. This is.
Gotcha, Okay, and then one more question if I may.
Would just be with regard to our two is there any is there any expansion of our gaming platforms are counsels that arch to will expand the franchise to over and above what the original arc a game was available on.
So yeah.
Yes. Thank you.
Jim again.
Yes, we absolutely.
Well done from the art.
The progress in Q3, how the B L D a.
Launch after the art.
But very importantly is that we want to listen to the player what would they like and how they respond when the op two launch and how we can update it ought to and more deals.
Tied the DLC that'd be in trains when the up to launch.
Gotcha.
Okay. Thanks, so much that's all that's all I have.
Thank you.
I understand you I'll just ask a question press star one will pause for another moment to see if there are any additional questions.
Yeah.
There appears to be no additional questions. One just came in one moment.
Yeah.
This question comes from Jay Kim with Alpine Global Please state your question.
Hi.
Just curious.
And that's the last question.
Oh yeah.
Yeah.
The number.
Goodbye.
Xbox Playstation.
Excuse me.
P C.
Hum.
A switch.
Yes.
Are you available.
Arc to be pretty much the same as last year.
Or will you be supporting something like steam backhaul.
Other platforms.
Would that be the same number or do you think that would be.
That game.
Our platform.
Mr. Ken we can't hear you that well could you take yourself off speaker phone and repeat the question.
My headset.
Yeah.
Can you hear me better yes.
Yes, much better go ahead.
Okay.
So what I'm wondering is you know last year you had made.
A major car flaws.
Pcs.
Switch.
This year it looks like.
The steam deck is.
Becoming.
A real thing.
Is there any is there an opportunity for harte should be available on an additional.
Hum.
Nice four for this coming year for 'twenty three.
Yeah.
Hi, This is Jim Hi, Hi, Jay.
With the voice again.
Good question I think if we look back to the.
Progression.
And obviously at the end of the day, we want this ought to be on every platform that it can be.
We try to be on the <unk>.
Cloud server computing.
Gaming platform, we've been young team, but you look at the years not just the DLC.
Deploy to a different platform.
I don't want to say slowly, but we just are progressing.
Ah cautiously.
As we one when the platform update is not just a conversion of the platform, but also accumulate all the players.
News and a recommendation to have the best version moving forward. So on the two it's just it will be the same a little starting with P. C X box because it is to buy best Cross platform play experience and we will learn that because our COO.
Yes.
Well, it's very important multi player.
And then we would either.
Either DLC or new platform deployed it will come at a time when we have more players coming in and what they're so Jackson.
And we would have all of the platform. That's adaptable either is the existing platform by suite and mobile or maybe that's a new platform and then we will continue to explore.
Okay alright, thank you.
Youre welcome.
There are no further questions at this time I'll hand, the floor back to management for any closing remarks. Thank you.
Yeah.
Thank you everyone for joining our conference call.
Thank you all parties may disconnect now have a good day.