Snail Games announced its financial results for the first quarter of 2024

COULVER CITY, Calif., May 16, 2024 /PRNewswire/ -- Snail, Inc. (NASDAQ: SNAL) ("Snail" or the "Company"), a leading global independent developer and publisher focused on interactive digital entertainment, today announced financial results for the first quarter ended March 31, 2024.

Tony Tian, Co-CEO of Snail Games, commented, "I am very excited and honored to serve as Co-CEO of Snail Inc. The company has a talented team, groundbreaking technology, and iconic games like the Ark franchise, which has nurtured a passionate community of gamers across the globe. As an enthusiastic Ark player, I deeply understand and appreciate these ideas and innovations. I am looking forward to a bright future for Snail Games and looking forward to working with a team full of passion, talent and dedication. "

• 方舟：生存飞升(ARK: Survival Ascended) 。 On October 25, 2023, the company unveiled a remake of the flagship Ark series with the stunning graphics of Unreal Engine 5 and introduced a game-changing cross-platform modification system, ushering in a new era of creativity.
  • Since the game's launch, ARK: Survival Ascension has sold approximately 2 million units and has 121,000 daily active users ("DAUs") and peaked at 308,000.
  • In the first quarter of 2024, the company launched premium mods on PC platforms, with plans to expand the availability of premium mods to other platforms in the coming months.
• 方舟：生存进化（ARK: Survival Evolved ）。 In the three months ending March 31, 2024, Ark: Survival Evolved had an average of 133,000 daily active users.
  • ARK: Survival Evolved sold about 600,000 units in the first quarter of 2024.

net income

$14.1 million for the three months ended March 31, 2024, compared to $13.5 million for the three months ended March 31, 2023. The increase in net income was primarily due to an increase of $5.1 million in total sales of Ark Games, an increase of $1.2 million in revenue related to previously deferred settlements, and an increase of $0.7 million in sales of the Company's other games, partially offset by a decrease of $0.6 million in sales of Ark Mobile Games and an increase in deferred revenue related to the Ark Series of $5.5 million.

Net loss

$1.8 million for the three months ended March 31, 2024, compared to a net loss of $3.0 million for the three months ended March 31, 2023. The decrease in net loss was due to an increase in net income of $0.6 million, a decrease in general and administrative expenses of $2.2 million, and an increase in other income of the Company of $0.2 million, partially offset by an increase of $0.4 million in research and development expenses, an increase in cost of revenue of $1.2 million and a decrease in income taxes of $0.3 million.

Bookings ）

$19.6 million for the three months ended March 31, 2024, compared to $13.3 million for the three months ended March 31, 2023. The increase in order volume is due to the strong launch of ARK: Survival Ascension in the fourth quarter of 2023. In addition to the increased sales of ARK: Survival Ascension, the company deferred approximately $5.5 million in revenue for the three months ending March 31, 2024 due to the unreleased ARK: Survival Ascension DLC expansion.

EBITDA ("EBITDA "）

The loss for the three months ended March 31, 2024 was $1.9 million, a decrease from the loss of $3.4 million for the three months ended March 31, 2023. The decrease was primarily due to a decrease in net loss of $1.2 million and a decrease in income tax benefits of $0.3 million.

As of March 31, 2024, unrestricted cash was $16.1 million.

Non-GAAP Use of Financial Metrics

In addition to its financial results in accordance with U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP), Snail Games believes that bookings and earnings before interest, taxes, depreciation and amortization (EBITDA) are non-GAAP measures that help evaluate its operating performance. Orders and EBITDA are non-GAAP financial measures disclosed as supplemental and should not be considered a substitute for net profit (loss) or revenue, two measures of operating performance, or a measure of cash flows from operating activities, both of which are determined in accordance with GAAP. Snail Games Supplemental Presentation of Subscription Amount and EBITDA are key operating metrics used by management to evaluate financial performance. Subscriptions adjust for the impact of deferred revenue, which Snail Games believes provides a useful indicator of sales in a given period. EBITDA adjusts for items that Snail Games believes do not reflect the continuing results of its business, such as certain non-cash items, unusual or non-recurring items, or items that have changed during the period but are not materially related to its results of operations. Management believes that order volume and EBITDA help investors and analysts understand key operating performance trends, while other metrics may vary depending on long-term strategic decisions such as capital structure, tax jurisdictions in which we are located and capital investments.

Bookings is the net amount of products and services sold digitally or physically during the period. The subscription amount is equal to the revenue minus the impact of the deferral. The following is a reconciliation of total net income to order amounts and is the closest financial measure to GAAP.

For the three months ended March 31
2024	2023
(in millions of United States dollars)
gross income	$ 14.1	$ 13.5
Change in deferred revenue	5.5	(0.2)
Subscription amount	$ 19.6	$ 13.3

We define EBITDA as net profit (loss), net of the following: (i) interest expense, (ii) interest income, (iii) income tax allowance (gain) and (iv) depreciation and amortization expense. The following table provides the reconciliation from net profit (loss) to EBITDA:

For the three months ended March 31
2024	2023
(in millions of United States dollars)
Net loss	$ (1.8)	$ (3.0)
Interest income and related party interest income	(0.1)	-
Interest expense and related party interest expense	0.4	0.3
Income tax gains	(0.5)	(0.8)
Depreciation and amortization expense of property and equipment	0.1	0.1
EBITDA	$ (1.9)	$ (3.4)

Meeting details

The Company will host a meeting today at 4:30 p.m. ET to discuss its first-quarter 2024 financial results. Participants can visit the company's investor relations website to join the live and replay of the session.

Forward-Looking Statements

This press release contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this press release can be identified by the use of forward-looking words such as "anticipate," "believe," "may," "anticipate," "should," "plan," "intend," "forecast," "continue," "estimate," and "potential" or other similar expressions. This press release contains forward-looking statements, including, but not limited to, statements regarding Snail Games' intentions, beliefs or current expectations. These forward-looking statements include information about the possible or hypothetical future results of Snail Games' business, financial condition, results of operations, liquidity, plans and objectives. Statements made by Snail Games are forward-looking statements regarding growth prospects and strategies; additional feature content for the launch of new games and commercially successful games; important drivers of expected future growth; its ability to retain and grow its player base, develop new games, and improve existing games; competition from companies across multiple industries, including other casual game developers and publishers, as well as large and small, public and private internet companies; the ability to attract and retain qualifications management teams and other team members while controlling labor costs; relationships with third-party platforms, such as Xbox Live and Game Pass, PlayStation Network, Steam, Epic Games Store, My Nintendo Store, Apple App Store, Google Play Store, and Amazon Appstore; the size, market share, and market trends of the addressable market; its ability to successfully enter new markets and manage international expansion; protect and develop its brand and intellectual property portfolio; costs associated with defending intellectual property infringement and other claims; future business development, results of operations and financial condition; the impact of the ongoing conflict involving Russia and Ukraine, as well as Israel and Hamas, on its business and the global economy; rulings of courts or other government agencies; share repurchase programs, including when and how they are expected to be repurchased; its plans to conduct and successfully integrate strategic acquisitions; The underlying assumptions of all of the foregoing.

For more information about the risks, uncertainties and other factors that could affect Snail Games' financial results, please refer to Snail Games' filings with the Securities and Exchange Commission (SEC), Annual Report on Form 10-K and Quarterly Report on Form 10-Q from time to time. You should not rely on these forward-looking statements because actual results and achievements may differ materially from those expressed or implied by the forward-looking statements as a result of these risks and uncertainties. All forward-looking statements in this press release are based on management's beliefs and assumptions and information currently available to Snail Games, and Snail Games undertakes no obligation to update forward-looking statements provided to reflect events or circumstances that occur after the date of such statements.

About the snail game

Snail is a leading global independent developer and publisher of interactive digital entertainment to consumers around the world, with a best-in-class portfolio of premium games designed for use on a variety of platforms, including consoles, PCs, and mobile devices.

Contact

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Snail Games and its affiliates Consolidated balance sheet (Unaudited)
March 31, 2024	December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$ 16,068,729	$ 15,198,123
Accounts receivable, net of allowances for credit losses of $523,500 as of March 31, 2024 and December 31, 2023	7,375,179	25,134,808
Accounts receivable - related party	2,585,213	-
Loan and interest receivable - related party	104,252	103,753
Prepaid expenses - related party	4,337,556	6,044,404
Prepaid expenses and other current assets	2,419,201	639,693
Prepaid taxes	9,459,348	9,529,755
Total current assets	42,349,478	56,650,536
Restricted cash and cash equivalents	1,117,310	1,116,196
Accounts receivable - related party, net of current portion	6,000,592	7,500,592
Prepaid expenses - related party	10,842,748	7,784,062
Property, plant and equipment, net	4,599,728	4,682,066
Intangible assets, net - other	271,517	271,717
Deferred income taxes	10,803,281	10,247,500
Other noncurrent assets	169,047	164,170
Operating lease right-of-use assets, net	2,138,285	2,440,690
Total assets	$ 78,291,986	$ 90,857,529
LIABILITIES, NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$ 9,901,360	$ 12,102,929
Accounts payable - related parties	16,951,062	23,094,436
Accrued expenses and other liabilities	2,425,882	2,887,193
Interest payable - related parties	527,770	527,770
Revolving loan	3,000,000	6,000,000
Notes payable	-	2,333,333
Convertible notes, net of discount	702,284	797,361
Current portion of long-term promissory note	2,791,438	2,811,923
Current portion of deferred revenue	21,937,421	19,252,628
Current portion of operating lease liabilities	1,540,086	1,505,034
Total current liabilities	59,777,303	71,312,607
Accrued expenses	254,731	254,731
Deferred revenue, net of current portion	17,102,747	15,064,078
Operating lease liabilities, net of current portion	1,023,216	1,425,494
Total liabilities	78,157,997	88,056,910
Commitments and contingencies
Stockholders' Equity:
Class A common stock, $0.0001 par value, 500,000,000 shares authorized; 9,357,749 shares issued and 8,007,474 shares outstanding as of March 31, 2024, and 9,275,420 shares issued and 7,925,145 shares outstanding as of December 31, 2023	935	927
Class B common stock, $0.0001 par value, 100,000,000 shares authorized; 28,748,580 shares issued and outstanding as of March 31, 2024, and December 31, 2023	2,875	2,875
Additional paid-in capital	25,304,692	26,171,575
Accumulated other comprehensive loss	(273,680)	(254,383)
Accumulated deficit	(15,728,654)	(13,949,325)
Treasury stock at cost (1,350,275 as of March 31, 2024 and December 31, 2023)	(3,671,806)	(3,671,806)
Total Snail, Inc. equity	5,634,362	8,299,863
Noncontrolling interests	(5,500,373)	(5,499,244)
Total stockholders' equity	133,989	2,800,619
Total liabilities, noncontrolling interests and stockholders' equity	$ 78,291,986	$ 90,857,529

Snail Games and its affiliates Consolidated comprehensive income statement (Unaudited)
Three months ended March 31,
2024	2023
Revenues, net	$ 14,115,729	$ 13,458,488
Cost of revenues	12,041,698	10,860,937
Gross profit	2,074,031	2,597,551
Operating expenses:
General and administrative	2,282,040	4,525,751
Research and development	1,776,522	1,373,797
Advertising and marketing	141,030	104,549
Depreciation and amortization	82,338	115,060
Total operating expenses	4,281,930	6,119,157
Loss from operations	(2,207,899)	(3,521,606)
Other income (expense):
Interest income	99,762	31,473
Interest income - related parties	499	493
Interest expense	(395,964)	(294,583)
Other income	227,066	8,175
Foreign currency transaction loss	18,128	(2,367)
Total other income (expense), net	(50,509)	(256,809)
Loss before benefit from income taxes	(2,258,408)	(3,778,415)
Benefit from income taxes	(477,950)	(805,818)
Net loss	(1,780,458)	(2,972,597)
Net loss attributable to non-controlling interests	(1,129)	(1,219)
Net loss attributable to Snail, Inc.	$ (1,779,329)	$ (2,971,378)
Comprehensive loss statement:
Net loss	$ (1,780,458)	$ (2,972,597)
Other comprehensive income (loss) related to currency translation adjustments, net of tax	(19,297)	2,320
Total comprehensive loss	$ (1,799,755)	$ (2,970,277)
Net loss attributable to Class A common stockholders:
Basic	$ (385,722)	$ (642,340)
Diluted	$ (385,722)	$ (642,340)
Net loss attributable to Class B common stockholders:
Basic	$ (1,393,607)	$ (2,329,038)
Diluted	$ (1,393,607)	$ (2,329,038)
Loss per share attributable to Class A and B common stockholders:
Basic	$ (0.05)	$ (0.08)
Diluted	$ (0.05)	$ (0.08)
Weighted-average shares used to compute loss per share attributable to Class A common stockholders:
Basic	7,957,031	7,928,742
Diluted	7,957,031	7,928,742
Weighted-average shares used to compute loss per share attributable to Class B common stockholders:
Basic	28,748,580	28,748,580
Diluted	28,748,580	28,748,580

Snail Games and its affiliates Consolidated Statement of Cash Flows (Unaudited)
For the three months ended March 31,	2024	2023
Cash flows from operating activities:
Net loss	$ (1,780,458)	$ (2,972,597)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization - intangible assets - license, related parties	-	695,652
Amortization - intangible assets - other	200	201
Amortization - loan origination fees and debt discounts	47,729	8,911
Accretion - convertible notes	181,754	-
Depreciation and amortization - property and equipment	82,338	115,060
Stock-based compensation expense	(926,875)	152,595
Interest income from restricted escrow deposit	-	(9,874)
Deferred taxes, net	(555,781)	-
Changes in assets and liabilities:
Accounts receivable	17,759,629	(230,885)
Accounts receivable - related party	(1,085,213)	47,744
Prepaid expenses - related party	(1,351,838)	(2,500,000)
Prepaid expenses and other current assets	(1,779,508)	(632,240)
Prepaid taxes	70,407	-
Accounts payable	(1,938,654)	(1,248,355)
Accounts payable - related parties	(6,143,374)	(377,476)
Accrued expenses and other liabilities	(461,311)	443,528
Interest receivable - related party	(499)	(493)
Lease liabilities	(64,821)	(49,411)
Deferred revenue	4,723,462	(151,130)
Net cash provided by (used in) operating activities	6,777,187	(6,708,770)
Cash flows from financing activities:
Repayments on promissory note	(20,484)	(26,503)
Repayments on notes payable	(2,333,333)	(1,666,667)
Repayments on convertible notes	(269,550)	-
Repayments on revolving loan	(3,000,000)	-
Purchase of treasury stock	-	(257,093)
Payments of capitalized offering costs	-	(92,318)
Payments of offering costs in accounts payable	(262,914)	-
Net cash used in financing activities	(5,886,281)	(2,042,581)
Effect of currency translation on cash and cash equivalents	(19,186)	2,074
Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents	871,720	(8,749,277)
Cash and cash equivalents, and restricted cash and cash equivalents - beginning of period	16,314,319	19,238,185
Cash and cash equivalents, and restricted cash and cash equivalents – end of period	$ 17,186,039	$ 10,488,908
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$ 171,101	$ 285,672
Income taxes	$ 1,871	$ 182,387
Noncash finance activity during the period for:
Debt converted to equity	$ (60,000)	$ -