Q3 2024 Snail Inc Earnings Call
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Speaker Change: 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 Millot, Senior Vice President at ICR. Please go ahead.
Speaker Change: 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 Tun, Co-CEO, Heidi Chow, Chief Financial Officer, and Peter Kang, Senior Vice President, Director of Business Development and Operations.
Speaker Change: The company's third quarter 2024 earnings press release was filed today with the SEC after the US stock market closed and it's available in the investor relations section of Snail Inc's website at www.snail.com or the SEC's website.
Speaker Change: During this call, management may make forward-looking statements regarding future events and the future financial performance of the company.
Speaker Change: 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.
Speaker Change: 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 additions 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.
Speaker Change: Additionally, on today's call, we will refer to bookings and EBITDA, which are non-gap measures that provide useful information to the company's investors.
Speaker Change: You will find a historical reconciliation of bookings and EBITDA to the corresponding gap measures in the earnings press release and the company's SEC filings.
Speaker Change: And now, I will turn the call over to Tony Tan, Co-Chief Executive Officer of STALE. Tony?
Thank you, Brad.
Tony Tan: 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.
Tony Tan: Through innovative arts updates and launches within the arts franchise, as such, we remain committed to being pioneers in the world of interactive entertainment, including strategic investment in advanced AI technologies.
Tony Tan: During the third quarter, we released the highly anticipated full-size expansion of DLC.
Tony Tan: Ark Aberration Ascendant and Part 2 of Bob's Totel DLC for Ark Survival Ascendant.
Tony Tan: As the new DLC content continues to engage with our player base, we are continually optimizing our DLC pipeline to further enhance the ARC experience our players have come to know.
Tony Tan: through September 30, 2024. ARC has been played for 3.8 billion hours with an average playing time per user of 162 hours.
Tony Tan: We are thrilled with the success of the ARC franchise and to see so many players enjoying our games as indicated by this data.
for the third quarter of 2024.
Now generating a net revenue of $22.5 million.
Tony Tan: The Release of Aberration and Part 2 of Bob's Tall Tales.
Tony Tan: An increase in total ARC sales of 5.9 million and also an increase in bear right sales of 1.0 million partially offset by other items out of line in our financial statements.
Tony Tan: Net income in the third quarter of 2024 increased significantly to $0.2 million versus net loss of $4.4 million in the third quarter of 2023, as a result of the aforementioned increase in net revenue.
Speaker Change: Thank you all again for joining. With that, I will now hand the call over to Peter Kang, our Senior VP, Director of Business Development and Operations, to review our product roadmap and share some key developments. Peter?
Peter Kang: Thank you, Tony. Now, hello, everyone. Thanks for joining us today.
Peter Kang: Firstly, I'd like to provide some updates on each of our core franchises.
Peter Kang: Earlier in 2024, Donkey Crew released the survival simulation title Bell Rite into Early Access on Steam.
Peter Kang: 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 quote, mostly positive.
Speaker Change: Honeycomb represents Snail Game's dedication to providing a unique gameplay experience within the survival genre.
Moving on to our indie publishing label, Wandering Wizard.
Speaker Change: respectively. The first project is titled The Cecil, The Journey Begins, a horror game set in the legendary Cecil Hotel in Los Angeles and developed by Genie Interactive Games.
Speaker Change: The second title is Chasmal Fear, another horror FPS game developed by two brothers in Macedonia under the Misty Dev banner.
Speaker Change: Since the second quarter of 2024, we have signed two more games.
Castle of Secrets, and Stone Guard.
Speaker Change: Castle of Secrets takes players into the shadowy depths of a psychological horror narrative that follows young Susan's journey through a cursed family legacy, while Stone Guard is an immersive survival strategy game set in a dark medieval world where players must protect the magical life stone from relentless enemies.
Let's turn now to the ARC franchise.
Speaker Change: Firstly, on ARK Survival Ascended, as we mentioned last quarter, our development timeline has slowed down to a cadence of launching a new DLC every three months compared to two months previously.
Speaker Change: This strategy has been successful as we focus further on the quality and level of detail that our fans appreciate from all of the DLCs in the franchise.
Speaker Change: In third quarter 2024, we have released the highly anticipated, full-size expansion, ARK Aberration Ascended for our ARK Survival Ascended players.
Speaker Change: Along with the full-size expansion, we also released Steampunk Ascent, which is Part 2 of a paid DLC, Bob's Tall Tale.
Speaker Change: The updated Dino Adventure on iOS and Android offers the complete, full-scale PC game experience right on your mobile devices. With ARK, the animated series, we are excited by the release of Part 1 of Season 1 and the feedback from our community.
Speaker Change: Thank you, Peter. And hello, everyone. Thank you for joining us today. Net revenue for the three months ended September 30, 2024 was $22.5 million, as compared to $9 million in the three months ended September 30, 2023. Thank you for joining us today.
Speaker Change: The strong increase in net revenue was primarily due to the release of Aberration and Part 2 of Bob's Tall Tales, which resulted in $8.2 million of revenue in the third quarter.
Speaker Change: Bookings for the three months ended September 30, 2024 was $16.1 million as compared to $10.5 million for the three months ended September 30, 2023.
Speaker Change: The 5.6 million, or 53.6%, an increase in booking is due mainly to the release of ARC Survival Ascendant in the fourth quarter of 2023.
Speaker Change: The releases of Bob's Tall Tales and The Bell Rite in the first half of 2024, as well as the releases of ARC Survival Ascended DLC operation in September of 2024.
In addition to increased sales of the aforementioned titles.
Speaker Change: Okim's decreased because of the company recognized deferred revenue of approximately $8.2 million during the three-month end of September 30, 2024, for the release of Aberration and Part 2 of Bob's Tall Tales.
Speaker Change: Partially offset by the deferral of $2.6 million in revenue for sales of ARC Survival Ascended DLCs and the remaining part of Bob's Telltale which have not yet launched.
Speaker Change: During the three-month end of September 30, 2023, the company also deferred $1.8 million in pre-paid royalties for Ark Survival Ascended and Ark II.
Speaker Change: Even though for the quarter end was 500,000 versus a loss of 5.1 million in the prior year period.
Speaker Change: The $5.6 million or 109.7% increase in EBITDA was due to our increase in net income and a decrease in the benefit from income taxes of $1.4 million.
Partially upset by a decrease in interest expenses of $300,000.
Speaker Change: As of September 30, 2024, unrestricted cash and cash equivalents were $10.6 million.
Speaker Change: To review our detailed financial statements, please refer to the earnest press release and our most recently filed Form 10-Q, which was filed today with the SEC. Thank you all for joining us today. We will now open the line for Q&A. Operator.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. As a reminder, please restrict yourself to one question and one follow-up. One moment please while we poll for questions.
Speaker Change: The first question comes from the line of Michael Kupinski with Noble Capital Markets, please go ahead.
Michael Kupinski: Thank you for taking my questions. I got just a couple here.
Michael Kupinski: I just want to know in terms of the steam summer sale, I was just wondering how that affected the quarter in the sales in particular to 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.
Speaker Change: Hey, Michael, thank you. That was a great question. Some of that was great. And then because during the summer, we definitely had so more units and and and our gross profit as well. And it did significantly actually improve for the quarter.
Gotcha, and then I
Speaker Change: 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: Hey, this is Peter. So, you know, the rights to updates on the animated series belongs to our distribution partner at Paramount Plus.
Sorry for that.
Speaker Change: Gotcha. Well, let others ask a question. I'll get back in queue. Thank you.
Speaker Change: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.