Snail, Inc. Class A Common Stock Q2 FY2026 earnings call

• Core ARK Franchise Updates

  • Q2 2026 saw unit sales of 574,000 for ASC and 1.2 million units for ASA, with strong daily active user metrics.
  • The ARK Fantastic Tames Season 1 Pack launched in May 2026, with one of three planned DLC creatures released in Q2, and the remaining two scheduled for Q3 and Q4 2026.
  • Early July 2026 brought the launch of Genesis Part 1 DLC (remastered for Unreal Engine 5), the new premium ARK Tides of Fortune expansion, and a shadow drop of the ARK Dragontopia DLC, all of which will deliver content in phases through the end of 2026.
  • Upcoming ARK launches in H2 2026 include the ArcMaker content creation tool, the return of Survival of the Fittest, and the new PixARK TerraCrypt DLC (the largest paid expansion for the PixARK franchise, launching fall 2026 with over 200 hours of new gameplay).

• Portfolio Diversification and Non-ARK Content

  • Bellwright, originally launched as an Early Access Steam title in 2024, launched on PlayStation and Xbox in Q2 2026, reaching the top 5 paid games list on Xbox and earning strong user ratings, with positive early console engagement that supports untapped console monetization potential. It has surpassed 1 million lifetime units sold and 46.4 million total playtime hours.
  • Three in-development AAA titles (For the Stars, Nyan Sutra Immortal, Nyan Sutra Musha) are progressing toward launch. For the Stars released a new developer diary in April 2026 and will be showcased at Gamescom; Nyan Sutra Immortal made its public debut at ChinaJoy 2026 with a new trailer and official Steam page, targeting the large existing fanbase for the Eiji Wushu IP in China. These titles are the company's core effort to establish new long-term franchises beyond ARK.

• New Strategic Business Initiatives

  • Subsidiary Eaglefold launched the AI Ranch Initiative and unveiled Non-Human Player (NHP), an AI companion that observes and plays games like a human user (without relying on scripts or game modifications) to adapt to a player's individual playstyle. NHP is designed to work across multiple games to address pain points including finding reliable teammates, inconsistent multiplayer, repetitive grinding, and long learning curves for new games.
  • The USDO stablecoin initiative has completed core platform infrastructure for wallet management, minting/burning, blockchain transfers, and KYC. Money transmitter license applications have been submitted to multiple U.S. states, and the company is evaluating an initial real-world on-ramp via crypto ATMs in California.

• Operational Financial Notes

  • The Q2 2026 revenue base is impacted by launch timing shifts: the July 2026 launches of Genesis Part 1 and ARK Tides of Fortune will have their revenue recognized in Q3 instead of the originally planned Q2. Phased revenue recognition for multiple DLCs will defer remaining revenue to Q3 and Q4 2026 as content is delivered.

Snail, Inc. reports net revenue of $19.7 million for Q2 2026, down from $22.2 million in Q2 2025. By game segment:

• ARK: Survival Ascended (ASA): Revenue decreased by $4.2 million year-over-year; 1.2 million units sold in the quarter, average DAU of 120,000 and peak DAU over 155,000. Contributed ~40% of total Q2 unit sales.
• ARK: Survival Evolved (ASE): Revenue decreased by $1.8 million YoY; 700,000 fewer units sold year-to-date as demand shifted to ASA. Contribution to total revenue ~15% in Q2 2026.
• ARK Mobile: Revenue decreased by $400,000 YoY; average DAU of approximately 129,000, total downloads exceeded 13 million. Contribution to total revenue ~5% in Q2 2026.
• Bellwright: Revenue increased by $1.5 million YoY; 100,000 additional units sold in Q2, over 1 million lifetime units sold following its Q2 2026 console launch on PlayStation and Xbox. Contribution to total revenue ~12% in Q2 2026.
• Saughty TV and other miscellaneous titles: Revenue decreased by a combined $400,000 YoY, contributing ~8% of total Q2 2026 revenue.

Year-to-date net revenue totaled $47 million, an 11% increase from $42.3 million in the first half of 2025. Net loss improved to $3 million in Q2 2026 from $16.6 million in Q2 2025, and improved to $900,000 for the first half from $18.5 million in the prior year first half. Non-GAAP EBITDA was a loss of $3 million in Q2 2026 compared to a loss of $2.4 million in Q2 2025, and a loss of $600,000 year-to-date compared to a $5.8 million loss in the prior year first half. Total units sold were 2 million in Q2 2026, compared to 2.1 million in Q2 2025.

• No formal full-year financial guidance was provided, but management confirmed that approximately $11 million in deferred revenue related to the Genesis Part 1 Ascended DLC will be recognized in Q3 2026, alongside additional revenue from the ARK Tides of Fortune launch.
• Remaining two-thirds of revenue from the May 2026 Fantastic Tames Season 1 Pack will be recognized in Q3 and Q4 2026 as the remaining two DLC creatures are delivered.
• All Dragontopia DLC revenue will be recognized in phases during Q3 and Q4 2026 as scheduled content updates are delivered.
• Management expects no significant future increases in R&D expenses as development of the three AAA pipeline titles nears completion, and G&A expenses are expected to remain consistent quarter-over-quarter for the second half of 2026.
• The full slate of H2 2026 content launches is expected to build revenue and user engagement momentum through the remainder of the year.

• No explicit discussion of material operational risks or failures was included in the call. Management noted that all forward-looking statements are inherently uncertain, and actual results may differ materially from expectations due to general business and market risks, as outlined in the company's SEC filings.

Q: The quarter was the first under the reduced ARC license fee structure, with an expected $1.5 million in quarterly savings. How much of this savings was realized in Q2, and is the company retaining the savings or reinvesting it? / A: The full $1.5 million in monthly savings ($500,000 per month) was realized in Q2 2026. The full savings are being reinvested into internal development of future games, and the cost reduction also improved the company's Q2 gross margin. Chow also clarified that deferred revenue accounting for the delayed Genesis Part 1 launch pushed all related revenue into Q3, as the launch occurred in early July after the quarter closed.

Q: Operating expenses increased in Q2 alongside higher gross margins. What is the expected expense run rate for H2 2026, and are R&D levels approaching a peak as AAA titles advance in development? / A: Most investment into the pipeline of upcoming AAA games is nearing completion, so no significant future increases in R&D expenses are expected in coming quarters. G&A expenses will also remain consistent quarter-over-quarter, with no significant changes anticipated for the second half of the year.

Q: What are the remaining key hurdles to complete the rollout of the USDO stablecoin? / A: The company has already submitted money transmitter license applications to all of the initial states where it plans to operate. The next step is waiting for regulatory review and approval from state regulators, which is the primary remaining milestone to full launch readiness.