Snail, Inc.

Thank you for standing by, and welcome to Snail, Inc.'s second quarter 2026 earnings conference call and webcast. I would now like to turn the call over to Stephen Shinmachi with Investor Relations.

Thank you, and good afternoon, everyone. Welcome to Snail, Inc.'s second 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, Heidi Chow, and Senior Vice President, Director of Business Development and Operations, Peter Kang. The company's second 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.scc.gov. 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 SEC and other SEC filings. The company makes these forward-looking statements as of today. It disclaims any duty or obligation to update them or to release public updates or revisions to any forward-looking statements to reflect any change. and its expectations or any change in events, conditions or circumstances on which any 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 the 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 and Director of Business Development and Operations of Snail. Sir, please proceed.

Thank you and good afternoon, everyone. Thank you for joining us today to review our financial and operational results for the second quarter ended June 30th, 2026. Over the last several months, we have made encouraging strides across our gaming pipeline and diversified content roadmap through DLC releases, console launches, Chow, Chow, Chow, Chow ASC sold approximately 574,000 units with average DAU of approximately 105,000 and peak DAU of approximately 131,000. ASA sold approximately 1.2 million units with average DAU of approximately 120,000 and peak DAU reaching over 155,000. and across ARC Mobile, average DAU was approximately 129,000, while total downloads exceeded 13 million. We are also pleased with the progress we have made in executing our ARC content pipeline. Starting in May, we released the ARC Fantastic Tames Season 1 Pack, which included three DLC creatures. Burlback, Cerberax, and Enigmasaur. Burlback was available at launch, while the latter two creatures are scheduled for release during the third and fourth quarter, respectively, to extend the pack's content cadence through year end. And more recently, early July marked the return of the iconic Genesis Part 1 DLC to ASA. and the Unreal 5 Engine Experience. In tandem with Genesis, we released ARK Tides of Fortune, a new premium expansion that transformed the Genesis Ocean into a massive map-wide natural frontier. And alongside these two DLC releases, we also shadow dropped ARK Dragontopia. Content for the Dragontopia DLC will be released in phases throughout 2026, with DOC owners expected to receive included content updates throughout Q3 and Q4. Together, these launches further expanded the ASA experience and established a strong foundation for the additional ARC content planned through 2027. Beyond ARC, we officially launched Bellrite on PlayStation and Xbox during the second quarter. Tellwright originally launched in 2024 as an Early Access Steam title and has since achieved over 1 million lifetime units sold, over 46.4 million playtime hours, and maintained a very positive Steam rating for the past two years. The strong and established Steam following carried into the console launch as well. Following the launch on console platforms, Bellwright reached the top five paid games list on Xbox and earned strong early user ratings on both PlayStation and Xbox. Additionally, during the first 30 days after the console launch, combined console DAU demonstrated positive early engagement, suggesting console monetization potentials. During a relatively measured second quarter for new game and content releases, Felrise Sales helped support our overall performance. More importantly, its success reinforces our confidence in expanding beyond the Arc IP. Our rich history in the sandbox survival genre continues to support our broader diversification strategy, and we remain focused on growing this portfolio as we evaluate New Investments and Pipeline Opportunities. Operationally, we are pleased to report a new initiative through our subsidiary, Eaglefold, which is focused on the development of our new AI technology. Just last week at the AI4 conference, we introduced the AI Ranch Initiative and unveiled a new product called the Non-Human Player, or NHP. At its core, NHP is an AI companion designed for gamers. Unlike traditional NPCs or scripted bots, NHP is intended to behave, learn, and adapt like a real human teammate to ultimately create a personalized and dynamic AI partner through a player's gaming journey. What makes NHP unique is its approach to understanding games. Rather than relying on scripts, APIs, or game modification, NHP observes the game the same way a human player would. It watches the screen, interprets what is happening in real time, understands players, objectives, environments, and user interfaces, develops a plan, and then executes actions through standard keyboard and mouse inputs. Over time, The technology is designed to learn from each user's play style and preference, creating an increasingly personalized companion experience. Our vision is for NHP to accompany users across multiple game titles, helping them not only enjoy games more, but also improve their skills and shorten the learning curve when entering new games. We believe this technology has the potential to address several common challenges faced by both casual and hardcore gamers. These include difficulties finding reliable teammates, frustrations with inconsistent multiplayer experiences, the repetitive nature of content grinding, and the time required to learn increasingly complex games. NHP is being developed to serve as an AI partner that adapts to each player's individual goals and preferences to help elevate the overall gaming experience. To illustrate the concept, imagine a virtual pet that can play chess against you, learn how you play, and help you improve your game. That is the type of personalized consumer experience NHP aims to deliver. This new initiative reflects a broader effort to expand Snail's growth platforms while staying anchored in the communities, creators and gameplay experiences that define our core business. As we move through the second half of the year and into 2027, We are pairing this new initiative with a clear slate of gaming content designed to sustain engagement, broaden our portfolio, and support long-term revenue diversification. As we look ahead to the rest of the year, our gaming content pipeline is well-defined. Across ARK, we have phased releases planned for the Fantastic Games Pack and Dragontopia DLC throughout Q3 and Q4. In addition, ArcMaker, our content creation tool, and the return of survival of the fittest are slated for launch in the second half of 2026. At IGN Live in June, we unveiled a teaser trailer for ArkMaker as we continued preparing for the tool's official launch and also released new details about the upcoming Ark animated series ahead of Part 2's return to Paramount+. We're also pleased to share updates across the PixArk franchise. In addition to PixArk Worlds, which we unveiled in March, We recently announced the upcoming PixArc TerraCrypt DLC. TerraCrypt marks the largest paid DLC expansion for PixArc and is planned to introduce more than 200 hours of gameplay, 80 new creatures, and a vast new environment designed to extend player progression and exploration opportunities within the PixArc universe. We were pleased to showcase a playable demo at the China Joy event as we are preparing to launch the DLC this fall. With much of the upcoming ARC content centered around ASA, we are pleased to include Pixar's largest paid DLC expansion into our pipeline as well. Lastly, we are pleased to highlight continued progress across our three highly anticipated AAA titles in development. For the stars, Nyan Sutra Immortal and Nyan Sutra Musha. In April, we released a new developer diary for For the Stars, offering an in-depth look at the upcoming game's development progress, new pre-alpha footage, and unreleased concept art. We also plan to showcase For the Stars at the upcoming Gamescom event later this month, alongside ASA, Bellwright, Honeycomb, and another internally developed AAA title. In addition, Nyan Sutra Immortal headlined our attendance at the ChinaJoy event. Making its public debut at the event, we released a new trailer alongside the game's official Steam page, marking a significant moment in the title's development cycle ahead of its release. As a reminder, the two Nyan Sutra titles currently in development builds on established Eiji Wushu IP. which has a loyal fan base in China. Nian Sutra Immortal will aim to deliver an open-world sandbox cultivation experience aligned with current Chinese gaming market trends and preferences while introducing a new experience to that established community. To reiterate, the three AAA titles in our pipeline continue to represent a significant growth driver for Snail These titles mark an important step in diversifying beyond the Arc IP and establishing new, lasting franchises at a larger scale than we have historically pursued. As we advance these projects towards launch, we are focused on building durable communities, expanding our addressable audience, defining ourselves as a multi-franchise developer and publisher, and positioning Snail Thank you, Peter, and good afternoon, everyone.