Gamehaus Holdings Inc. (GMHS) Q4 2026 Earnings Call Transcript

Good day, ladies and gentlemen. Thank you for standing by, and welcome to Game House's fourth quarter and full year of Fiscal 2026 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. I will now turn the call over to today's speaker host, Ms. Ali Wong. Ali, please proceed.

Thank you, Operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss the financial results of Gamehouse for the fourth quarter and full year of fiscal 2026. We released our earnings results earlier today. The press release is available on the company's website as well as from Newsbar Services. On the call with me today are Mr. Brian Xie Fung, Chairman of the Board, Mr. Carl Tai Yiming, Chief Executive Officer, and Mr. Sean Zhang, Head of Capital Markets and Investor Relations. Brian will review business operations and company highlights, followed by Sean, who will discuss detailed financial results. They will all be available to answer your questions during the Q&A session. Before we proceed, I would like to remind you that this call may contain forward-looking statements which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, please refer to our filings with the SEC. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. With that, I would like to introduce our Chairman, Brian. Brian will deliver his remarks and Chinese, and I will follow up with corresponding English translations. Please go ahead, Brian. Good day, everyone, and thank you for joining Gamehouse Conference Call for the fourth quarter and full year of FISCO 2026.

At the 8th of the month, we announced the strategy of the company's strategy. This year is the beginning of this change in the beginning of the year. This is the result of the financial news. It is the result of the trade-off decision before moving forward. It is also the first impact of this decision in the financial sector.

Fiscal year 2026 was Gamehouse's last full fiscal year under its previous business model. Earlier in August, we announced a strategic transformation for the company. This quarter marks the beginning of the execution phase of that transformation. As a result, today's discussion covers both our operating performance before the decision was made and the initial financial implications of the transformation. 财年第四季度,公司实现总营收2430万美元,落在我们之前给出的2300万至2600万美元季度业绩执行区间之内,季度定律软为90万美元。 For the full fiscal year 2026, total revenue was $104.7 million, and net income was $3.9 million. In the fourth quarter, total revenue was $24.3 million, within our previously announced outlook range of $23 million to $26 million, and net income was $0.9 million.

在当前的行业环境下,我们观察到休闲品类的货客经济已经发生结构性变化, 成熟市场的受众规模的增长长期停滞, 平台测的归因与定向能力持续弱化,买量环境竞争进入了存量状态, 这些因素共同压缩了发行环节的利润空间, 这不是某一款产品或者某一个季度的问题, 而是这一业务模式所处环境的长期变化, Against the current industry backdrop, we have seen a structural shift in the economics of user acquisition for casual games.

The player base and mature markets have remained stagnant for an extended period, while platform attribution and targeting capabilities have continued to weaken. At the same time, competition for user acquisition has increasingly become a zero-sum game within a largely fixed pool of users. Together, these factors have continued to compress margins in game publishing. We do not view this as an issue with any single title or any particular quarter. Rather, we believe it reflects a longer-term change in the environment surrounding this business model. Based on this assessment, we decided to proactively adjust our resource allocation and redirect more resources toward new opportunities opened up by generative AI.

This has been done since the 7th of December, and the three of the three things that have been covered in the past. We expect that the flow rate of demand will be gradually increased. This will be reflected in the next week's guidance of the next week.

In terms of execution, beginning this quarter, we have changed the way we manage our existing portfolio of casual and social casino mobile games, with a greater focus on cash flow and profitability. User acquisition spending will also be reallocated across titles based on expected returns. We began implementing these changes in July, so their impact is not yet reflected in the period we are reporting today.

We expect revenue from our existing portfolio to gradually decline, and this is reflected in the outlook we will provide later for the next quarter. 本季度的月银书记已经体现出这一管理方式的方向 第四季度日均活跃用户与月均活跃用户较商年同期有所下降 但单日活跃用户平均收入由0.517美元提升至0.577美元 同比增长11.6% 日均付费转化率由2.3%提升至2.5% In the background of the strategy, we will continue to increase the production quality and to be able to build the value of the user's presence and maintain the quality of the user's presence.

Our operating metrics this quarter already reflect the shift and focus. While both DAUs and MIUs declined year over year in the fourth quarter, ARP DAU increased 11.6% to $0.577 from $0.517. An average daily payer conversion improved to 2.5% from 2.3%. As we execute this strategic transformation, we will remain focused on improving the quality of our operations, maximizing the value of our existing player base, and maintaining a strong player experience. at the same time our financial position and cash reserve remain solid as of June 30th 2026, we had $17.6 million in cash and cash equivalents, up from $15.2 million at the end of the prior fiscal year. During the fiscal year, we remained profitable, increased our cash reserve, and continued executing our shared repurchase program. We believe our current financial position provides a solid foundation for executing those strategic the transformation. As we manage our existing business under this new approach, we are also continuing to increase our DTC penetration. By the end of the fiscal quarter, our company-wide DTC revenue mix had reached 16.2 percent, up further from the previous quarter. DTC reduces platform commissions and directly improves growth margin for our gains, driving the year-over-year improvement in growth margin this quarter. Importantly, this improvement does not depend on the level of our user acquisition spending. It is structural in nature and should become more meaningful as DTC penetration continues to increase. DTC remains one of the few areas where we continue to invest across our existing portfolio.

Our goal is to increase overall DTC penetration to more than 20% by December 31, 2026. 关于前面提到的新方向 我也向大家简要说明目前的进展 本财连类公司完成了一笔最早期AI游戏生成工作史的少数股权投资 自6月起 我们与该团队共同完成了完整生产流程的验证 并识别出当前生产能力上不能覆盖的环节 目前的工作重点是确定切入市场的产品形态 Let me also briefly update you on the new direction I mentioned earlier.

During the fiscal year, we made a minority investment in an early-stage AI game generation studio. Since June, we have worked with the team to validate the end-to-end production process and identified areas that current generative capabilities cannot yet handle. Our current focus is on determining the right product format to bring to market. This work is still at an early stage and we are not providing specific product targets or timelines at this point. We will share an update when we have meaningful progress. At the same time, we are closely evaluating opportunities for AI-generated content in other areas of our business, with the goal of developing new growth drivers as quickly as possible and over time becoming an AI-driven global content production and distribution platform.

HOS ARATENT 系统 这是一套公司级的 AR 统一入口 与治理平台 部署在公司自由的服务器上 为全体的员工 提供统一的高质量模型介入 分成额度管理和全链路监控 目前已经介入 十余款国内外模型 截至7月16日 该系统对全公司员工使用 覆盖率提升至70% 本季度管理费用同比 下降6.6% 其中一部分正是来自AR工具在行政职能的应用所带来的效率提升 在自研工具方面 本财联类公司持续建设内部数据与中台基础设施 包括实时投放数据体系 内部数据接口服务和数据仓库件能力 同时迭代了AR广告视频生成工具 并为其增加了视频评估校验的机制 用于提升素材生产效率与质量 展望未来

In parallel, we are building the internal AI capabilities needed to support this transformation. At the end of June 2026, we officially launched the Gamehouse AI agent system. This is a company-wide AI access and governance platform deployed on our own servers. It provides employees with centralized access to high-quality AI models, tiered usage limits, and end-to-end monitoring, and currently integrates more than 10 domestic and international models. As of July 16, adoption of the new system had reached 70% of employees across the company. G&A expenses declined 6.6% year-over-year this quarter, partly reflecting efficiency gains from the use of AI tools across our administrative functions. For our self-developed tools, throughout the fiscal year, we continued to build out our internal data and shared technology infrastructure, including real-time advertising data systems, internal data interface services, and data warehouse capabilities. We also continued to enhance our AI-powered ad video generation tool and added video evaluation and validation capabilities to improve both the efficiency and quality of creative production. Looking ahead, in line with our strategic transformation, our focus will be on moving from broad AI adoption to deeper usage, turning AI from a collection of individual productivity tools into reusable organizational infrastructure. and extending these capabilities into more specific areas of our operations. to the same way to the transition to the transition to the transition to the transition to the transition to the transition to the transition to the transition turning to shareholder return as of June 30th, 2026 we had repurchased approximately 518,000 Class A ordinary shares for approximately $600,000 on August 27th our boards approved a one-year extension of the existing $5 million share repurchase program through August 28, 2027, with all other terms remaining unchanged. Our decision to continue the program as we enter the execution phase of our strategic transformation reflects our confidence in the company's financial foundation and long-term value. Taking into account our new approach to managing the existing business as part of our strategic transformation, we expect total revenue for the first quarter of fiscal year 2027 to be in the range of approximately 20 million to 23 million dollars. Now, I will turn the call over to Sean to walk you through our financial performance.

Thank you, Brian. And hello, everyone. I will now walk through our financial results in more detail for the fourth quarter and full fiscal year 2026, which ended June 30, 2026. Please note that all figures are in U.S. dollars and all comparisons are made on a year-over-year basis unless otherwise stated. Let me start with our fourth quarter revenue performance. Total revenue for the quarter was $24.3 million, a decrease of 20.8% from $30.7 million in the same period last year. As Brian mentioned, during the quarter we continued to take a disciplined approach to user acquisition spending and adjusted our marketing strategy in response to changes in the market environment. At the same time, we continued to improve monetization efficiency through ongoing content optimization and targeted live ops initiatives. Revenue remained broadly in line with our expectations. Looking at the revenue breakdown, in-app purchases revenue was $21.7 million, down $22.2 million percent from $27.9 million a year ago. Advertising revenue was 2.6 million compared with with 2.8 million in the previous year period. Improvements in ARPGAU and payer conversion reflected our continued progress in monetization efficiency and helped partially mitigate the impact of lower user volumes. For the full fiscal year 2006, revenue totaled $104.7 million, a decrease of 11.4% from $118 million in the period fiscal year. The full-year decline was mainly driven by the same factors we discussed for the quarter, as we became more selective in user acquisition spending and continue to refine our marketing approach across our portfolio. In-app purchase revenue was $94.5 million, down 11.2% from $106.3 million in the previous fiscal year. While advertising revenue was $10.2 million compared with $11.7 million last year. Moving on expenses, total operating costs and expenses were $25.1 million, a decrease of 14.4% from $29.3 million in the same period last year. Reflecting our continued focus on operating efficiency and discipline resource allocation, cost of revenue decreased 17.4 percent to 12.0 million mainly due to lower platform commission expenses and reduced profit sharing payments to game developers as certain mature titles move further along in their life cycle. R&D expenses were 1.5 million compared with 1.4 million a year ago. The modest increase reflected our continuing investment in game development projects already underway and related R&D initiatives. Selling and marketing expenses were $10.2 million, compared with $11.8 million in the per year period. The decrease was mainly driven by lower advertising spend, reflecting our continued efforts to improve marketing efficiency. GNA expenses were $1.4 million, a decrease of 6.6% from $1.5 million a year ago. The improvement reflected lower personnel costs and efficiency gains from the increasing adoption of AI-enabled tools across our administrative functions. For the full fiscal year 2026, total operating costs and expenses were 103.3 million, a decrease of 9.9% from 114.7 million in the previous fiscal year. This reflects our discipline cost management in the challenging environment. Cost of revenue declined 11.4% to 49.5 million, reflecting lower platform commission expenses and reduced profit-sharing payments to game developers as certain mature titles move further along in their life cycle. R&D expenses were $6.3 million, up 11.4% from $5.7 million, reflecting our continued investment in game development and related R&D initiatives. Marketing and marketing expenses were $41.0 million, down 15.2% from $48.4 million, mainly due to a $7.3 million reduction in advertising spent on player acquisition and retention as we maintain a disciplining approach to marketing investment. G&A expenses were $6.4 million, up 36.5% from $4.7 million in the previous fiscal year. The increase primarily reflected higher personnel costs and continued investment in our public company infrastructure and our organizational capabilities. This increase was partially offset by headcount reductions and efficiency improvement during the fourth quarter. Moving down the income statement, operating loss for the quarter was $0.8 million compared with operating income of $1.4 million in the same period last year. Operating margin was negative 3.1% compared with positive 4.6% a year ago. For the full fiscal year 2026, operating income was 1.4 million compared with 3.4 million in the prior fiscal year. Operating margin was 1.3% compared with 2.9% last year. Other income net was $1.6 million compared with $0.1 million in the prior year period. For the full fiscal year 2026, other income net was $2.5 million compared with $0.6 million in the prior fiscal year. Net income was $0.9 million compared with $1.5 million a year ago. 9 income attributed to Game House shareholders per ordinary share was 0.02 compared with 0.03 in the prior year period. For the full fiscal year 2026, 9 income was 3.9 million compared with 3.8 million in the prior fiscal year. non-income attributed to Game House shareholders per ordinary shares was 0.08 in both fiscal years. We ended fiscal year 2026 with $17.6 million in cash and cash equivalents, compared with $15.2 million as of June 30, 2025. Including short-term and long-term investments, our combined cash and investment balance was approximately $25 million. We believe this provides a solid foundation to support our operation and future initiatives. Turning to capital allocation, as a reminder, our board approved a one-year extension of the existing $5 million U.S. share repurchase program, extending it through August 28th, 2027. As of June 30th, 2026, we have repurchased approximately 518,000 Class A ordinary shares for approximately $600,000 U.S. Going forward, we will continue to evaluate repurchase activity based on market conditions, share price performance, and our broader capital allocation priorities. Looking ahead, as Brian mentioned earlier, for the first quarter of fiscal year 2007 ending September 30th, 2026, we expect total revenue to be in the range of approximately 20 million to 23 million. To wrap up, fiscal year 2026 was a year of discipline execution and continued investment in our long-term capabilities. While we made deliberate adjustments to our investment approach, we continue to improve monetization efficiency, maintain cost discipline, and strengthen our financial foundation. As we enter fiscal year 2007, we remain focused on executing our strategic transformation, managing our existing portfolio with greater emphasis on cash flow and profitability, advancing our AI-related initiatives, and maintaining a balanced approach to profitability, capital allocation, and long-term growth. With that, we are happy to take your questions. Operator, proceed.

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Additionally, when asking a question, please state your questions in Chinese first, then immediately translate them into English for the convenience of everyone on the call. Again, it is star then 1 to ask a question. At this time, we will pause momentarily to assemble our roster. The first question comes from Ronghua with Jinyu Asset.

Please go ahead. 想请问一下,接下来需要完成哪些关键步骤,才能推动相关产品进入商业化的阶段? 第二个问题,关注到公司全年的营业利润是140万美元,净利润是390万美元,差额主要来自其他收入, 与此同时,公司正把资源投向一个尚未产生收入的新方向。 请问公司目前的现金储备能支持这个转型多久? 公司是否需要外部的融资? My next question is, we note that full-year operating income was $1.4 million, while the net income was $3.9 million, with the difference coming largely from other income. At the same time, the company is directing resources toward a new area that does not yet generate a revenue. How long does the company believe its current cash reserves can support this transition? And will the company need to raise external financing? That's my question. Thank you.

Okay, thank you for your question. I'm going to answer the first question here. Currently, the company's AI game development has completely gone through the production process of the production process of a single-to-end. In terms of the game, we can basically make a game of a game in one week. We have received a full test on the production效率. Next stage, our work center will be placed on the level of players' experience. It is also one of the most important aspects of the game. In the last few years, the company will still continue to develop several games-based games. On the other hand, in the traditional games, it will help AI with a higher效率, to perform the product's peak, and to produce more quality. On the other hand, we will also actively explore AI-based games, and hope we can build a new game experience in the future of AI.

Thank you for your question. Let me take your first question. We have now fully validated the end-to-end production pipeline for AI-generated games. For casual titles with relatively simple mechanics, a complete game can essentially be produced within one week, which fully demonstrates the efficiency of the pipeline. In the next phase, our focus will shift primarily to refining the player experience, including level design, difficulty curve calibration, and other key elements to ensure that our products are not only produced quickly, but produced well. At the same time, identifying gameplay prototypes that the market genuinely embraces is critical. Games ultimately have to win over players, and being fun is the prerequisite for any commercialization. Discovering gameplay that is truly engaging is therefore one of our most important priorities at this stage. In the second half of the year, the company will continue to test and validate across a range of game genres. On one hand, for established traditional gameplay, we will use AI to bring products to market with greater efficiency and to operate them at lower cost. On the other hand, we will also actively explore AI native gameplay with the ambition of creating an entirely new game experience for the AI era.

Thank you, Hwaron. I'm Sean. I'll answer your second question. First, from our financial level of income, 截止26年6月30号公司现在是有现金及现金等价物大概1760万美元 是高于上亿财年末的1520万美元 其实可以看到在我们营收可能下降了有11.4%的这一年当中 公司的现金position其实是不降反增的 而且总体保持在了一个比较充裕的位置上 我觉得这个是说明我们在过去一年当中 在持续观察固有业务的市场变化的同时 也是一直保持了相对比较谨慎的一个运营的态度 那第二个方面来讲 我觉得我们存量的休闲以及这个社交博弈的游戏 是一组成熟产品 它的用户基础稳定 收入也是可预测的 我们从本季度起以现金流和回报为目标 来管理这些产品 也正是为了让他们持续稳定的产生现金的回报 转型期的投入很多 我觉得将由这部分现金去支持 那么公司计划将现金储备 重点投入到AI生成内容的新方向的发展上 这个也是我们改变存量组合管理方式的原因 把这组成熟的产品运营成稳定的现金来源 那么是为了让这些现金能够去支持我们新方向的一个建设 那在节奏上呢 我觉得我们会按照方向验证的这个进度啊 分阶段去投入 而不是说我们一次进去铺开 那么随着验证的推进呢 那这个投入的规模呢 会相应的提升 那么我们到时候会在有进展的时候呢 向市场去做说明 关于您提到这个融资的这个方面啊 我觉得公司目前会持续去评估各种资本市场的这个工具 并且呢在符合股东利益以及公司整体发展需要的前提之下呢 综合去做这个判断 那我们目前为止呢暂时也没有需要和大家汇报的跟这个融资相关的安排 这个是我的问题的我的这个回答谢谢 Thank you.

This is Sean. Let me take your second question. Starting with the absolute level of cash. As of June 30, 2026, the company held cash and cash equivalents of $17.6 million, up from $15.2 million at the end of the prior fiscal year. As you can see, in a year in which revenue declined 11.4%, our cash position increased rather than decreased and remains at a fairly ample level overall. This reflects the fact that over the past year, while we continue to monitor the changing market conditions facing our legacy business, we maintain a relatively prudent approach to running the company. Second, our legacy casual and social casino games are a set of mature products with a stable user base and predictable revenue. Managing this portfolio for cash flow and return, which we began this quarter, is precisely intended to make it generate cash on a consistent and stable basis. Much of the investment required during that transition will be funded from that cash. And the company plans to direct its cash reserves primarily toward developing those new direction and AI-generated content. That is also the reason we change how we manage the legacy portfolio. Operating these mature products as a stable source of cash is what enables that cash to support the build-out of the new direction. In terms of pacing, we will deploy capital in stages as the direction is validated, rather than committing everything at once. As validation progresses, the scale of investment will increase accordingly, and we will update the market as substantive progress is made. As for financing, the company will continue to evaluate the range of capital market pools available to it and make financing decisions based on the interests of shareholders and the company's broader development needs. We have no financing arrangements to report at this time. This is my answer.

Thank you. The next question comes from Ji Li with Zhishang Securities.

Please go ahead. 请问这个变化预计将在未来几个季度如何的去影响公司整体的收入和盈利表现 第二个问题是公司给出的27年财年第一季度的收入质盈大概在2000万到2300万美元 这个中值会比这个会比本季度的这个2430万的这个收入还是继续下降 在整个存量业务还在持续的收缩 但是新方向还没有产生收入的这个情况下,投资人该如何地去预估公司未来整个收入水平呢? fiscal 2027 revenue guidance is 20 million to 23 million U.S. dollars, which implies a further decline at a midpoint from 24.3 million U.S. dollars this quarter. With the legislation business continuing to contract, and the new direction not a generating revenue, how should investors think about the company's further revenue level?

Okay, thank you for your question. From both sides, we will also improve the performance of the net income. One is to continue to increase DTC, the net income value of the net income, to improve the entire net income. Two is to surround the old users' storage. We will develop the more connected to the needs of the net income, in order to increase the location of the net income, and the depth of the net income.

Thank you for your question on the revenue side with the more prudent and discipline control over marketing spend that we have applied to the existing portfolio since July. We expect revenue from this portfolio to see some degree of moderation over the next one to two quarters. To improve our revenue performance, we are working on two fronts. First, continuing to increase the share of revenue coming from our direct-to-consumer channels in order to optimize our channel cost structure, and second, carrying out more refined operations tailored to the needs of our existing user base so as to improve retention and monetization depth. On the cost side, we will continue to exercise strict discipline over the scale of our marketing spend, concentrating on campaigns with shorter payback periods and higher efficiency, while steadily advancing the optimization of operating costs.

We expect these measures to effectively offset the impact of the revenue moderation and to drive an overall improvement and profitability. 这个话我想分三个层面去回答 第一个是我们这次guidance的一个收缩 我觉得它跟我们对存量业务战略调整的方向是完全一致的 刚刚靠在之前第一个问题当中回答也是非常清楚 我就这个地方不进一步展开了 所以我们希望市场在评估我们未来收入的时候 把我们存量的组合去理解成为一条我们主动去管理的一个曲线 而不是一个被动下滑的这么一个曲线 那第二个方面我想说明一点背景 这个回望之前的几个季度 如果感兴趣的话也可以看一下 就是说即使在我们这个业务策略还没有调整的时期 其实公司的管理层也已经观察到了进一步增长的压力 对吧 我们看到成熟市场的受众规模正在收缩 平台侧的归因和定向的能力在持续弱化 买量的环节也是进入了一个存量竞争的环节 也就是说我们认为固有业务它不是策略调整造成了收缩 而是说客观条件上来看 继续沿原有的路径去投入 去带来可持续的增长 可以说是难度比较大的 所以说在这样的判断下 本着对投资人市场负责的立场 公司的工作重点 一定是寻找一个重新返回增长的路线 那么第三个方向 关于这个增长的来源 我觉得反正可以非常肯定的去说 就是公司未来的增长 一定是来自将来自于AI生成内容业务所带来的新动能 那么我们目前呢正处于这个新旧动能转换的节点上 那我们不回避啊存量的业务会继续收缩这个事实 目前的话呢公司的精力会主要放在这个第二增长曲线 尽快形成的准备工作上 那么这部分工作呢也是正在推进当中 我们呢也期待能够尽快向市场去汇报有关的进展 This is Sean.

I will take your second question. I take the essence of the question to be where this declining curve bottoms out and where the upward momentum comes from. Let me address it in three parts. First, this guidance is fully consistent with the strategic adjustment we are making to legacy business. Carl covered this fairly clearly in his answer to an earlier question, so I will not go into further detail here. What we would ask is that the market read the legacy portfolio as an actively managed curve rather than a passively declining one when assessing our future revenue. Second, I would like to provide some context. Looking back over the past several quarters, management had already observed mounting pressure on future growth even before any change in business strategy. The player-based and mature markets have been contracting, platform-side attribution and targeting capabilities have continued to weaken, and user acquisition has become a zero-sum contest. In other words, it is not that a change in strategy costs the legacy business to contract. Rather, given the objective conditions, it would be quite difficult to deliver sustainable growth by continuing to invest along the prior path. Based on that assessment and out of a sense of responsibility to our investors, the company's priority must be to find the route back to growth. Third, on where that growth will come from. We can say with confidence that the company's future growth will come from the new momentum of the AI-generated content business. We are currently at the transition point between old and new sources of momentum. We do not shy away from the fact that the legacy business will continue to contract. At present, our primary focus is on laying the groundwork to establish our second growth curve as quickly as possible. That work is underway, and we look forward to reporting related progress to the market in the near future. That's my answer to your second question. Thank you.

There are no additional questions at this time.

I will now hand back to the management team for any closing remarks thank you operator and thank you all for participating on today's call and thank you for your support we appreciate your interest and look forward to reporting to you again next quarter on our progress thank you the conference has now concluded thank you for attending today's presentation you may now disconnect