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Operator: Thank you for standing by, and welcome to Snail, Inc. First Quarter 2026 Earnings Conference Call and Webcast. I would like to now turn the call over to Steven Shinmachi with Investor Relations. Please go ahead.

Steven Shinmachi: 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 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-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 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 Peter Kang, Senior Vice President, Director of Business Development and Operations of Snail. Sir, please proceed.

Peter Kang: Thank you, and good afternoon, everyone. Thank you for joining us today to review our financial and operational results for the first quarter ended MARKh 31, 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 positions Snail to deliver more predictable, stable growth. We announced a content road map 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, 3 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 and 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.

And 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 3 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 2 new indie titles in development: Dead Party and Gobby Gang. 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 a clear goal in mind. The 3 AAA titles currently in development represents the next major step into that strategy. Each is built with the production scope, depth and marketing scale required to potentially compete in the same tier as ARK and 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 stronghold in the Chinese market. This addition represents a 2-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 4- to 6- 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, evoking the feel of the title No Man’s Sky and Satisfactory blended together. This combined gameplay experience aims to balance strategic depth 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 2-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 a decade. We believe the addressable market for these 2 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 in 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 the 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 2-genre strategy is intentional and broadens the addressable audience for the Nine Yin Sutra IP within China by serving both long-time 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 multi-year to multi-decade lifespan across both titles and meaningfully expand Snail Games beyond the ARK franchise. Taken together, the combined potential of these 3 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?

Heidy Kingwan Chow: Thank you, Peter, and good afternoon, everyone. Thank you all for joining us today as I review our financial results for the first quarter ended March 31, 2026. We entered 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 sold 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 our franchise IPs of 500,000 units and Bellwright of 200,000 units.

As Peter outlined at the outset of the call, ASA units sold was 1.4 million for the 3 months ended period. The winter sale event supported this spike, which include a sale of both the ASA base game and also the 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 31, 2026, unrestricted cash was $14.3 million compared to $8.6 million as of December 31, 2025. To review our detailed financial statements, 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 Stars, Nine Yin Sutra: Immortal, Nine Yin Sutra: Wushu. As Peter outlined, we believe these titles 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 3 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.

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Operator: [Operator Instructions] Our first question of the day will be coming from the line of Michael Kupinski of NOBLE Capital Markets.

Michael Kupinski: 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 POC road map for the rest of the year. And if I can just add on to that, what is the expected cadence of ARK-related content releases over the next 12 months? And which launches are viewed internally as the most important catalyst for bookings growth?

Heidy Kingwan Chow: Thank you, Michael. That was a great question. I’ll defer the question to Peter Kang.

Peter Kang: Michael, so 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. So in total, the number is around 11. Anything from 3 new tames for ARK Survival Ascended, Fantastic Tames Season [ Pass ] Pack, Bob’s True Tales will have another pack coming out, ASA Genesis Part 1. We also intend on releasing — rereleasing, I should say, ASA Survival of the Fittest, our esports mode for ASA, a project called ASA World Creators. And of course, in December, we’re going to be releasing ASA Dragontopia. Along with that, Bellwright will have its console ports arrive this year for both PlayStation and Xbox. And we have an internally developed project named Gobby Gang that was mentioned earlier. And 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.

Michael Kupinski: 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 on to the future outlook for that line of business?

Peter Kang: Absolutely. And I’m glad you asked that question. It is definitely a market segment that is wide open, and we’re really trying to take advantage of the timing on this. So the SaltyTV app to date has launched over 49 IPs. And 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 and is one that we’re very proud of, we had over 6,000 subscribers that have adopted to SaltyTV’s subscription model, and these subscriptions are either half year or a year long. Total downloads of the app itself, over 400,000 across iOS and Android. And this data is through May 12, 2026.

Michael Kupinski: Perfect. It sounds like it’s off to a good start. And then 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?

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

Shi Hai: [Interpreted] For SaltyTV, actually, the product is not just the vertical dramas. More importantly, we’re also trying to adopt the strategy where we’re combining the dramas with the interactive games. So this year, we’re looking to release 2 interactive games. For our internal AAA gaming projects, they are more large scale and then they are working — worked on by internal development teams. So in terms of the short-term revenues, maybe we’re still looking to improve our strategy. And that’s also one of the reasons why we are trying to look into the business line of vertical dramas and as well as the interactive games. So for these 2 interactive games, the internal development cycle might take around 7 to 8 months. And we have high confidence into the performance — potential performance of these 2 interactive games once they release, and then we’re looking at 1 million units of projections.

[Interpreted] Both of these interactive games will be released around Q3 this year.

Michael Kupinski: Great. If I could slip one more question in. Can you please provide a quick update regarding the stablecoin business, specifically the number of states that currently you’re — that you’re applying to and any general updates on that business?

Peter Kang: Yes. So this is Peter again, and I’ll give you an update on our stablecoin 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, 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 sub-contracting 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 [ Noise ] Digital Warehouse. [ Noise ] is getting a new addition. It’s going to 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. So sooner or later, we’ll likely see some crypto ATM machines deployed across various locations in the country.

Operator: Thank you. This now concludes today’s program. Thank you so much for joining. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

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