Ladies and gentlemen, greetings and welcome to the Snail Inc. 3rd Quarter 2025 Earnings Call. At this time, all participants are in the listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stephen Shinmarki, Investor Relations. Please go ahead.

Thank you and good afternoon, everyone. Welcome to Snail Inc.'s third quarter 2025 earnings conference call and webcast. Joining us for today's call are Snail Inc.'s Chief Financial Officer, Heidi Chow, and Senior Vice President, Director of Business Development and Operations, Peter Kang. The company's third quarter 2025 earnings press release was filed earlier today, and it's available on the Investor Relations section of Snail Inc.'s website at www.snail.com or the SEC website at www.sec.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 the SEC, the most recent Form 10-K that was filed with the SEC on March 26, 2025, and other SEC filings. The company makes these forward-looking statements as of today and claims 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 events, conditions, or circumstances on which any such statement is based. Additionally, on today's call, we referred 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 Heidi Chow, Chief Financial Officer of SNAIL. Ma'am, please proceed.

Thank you. And good afternoon, everyone. Thank you for joining us today to review our financial and operational results for the third quarter ended September 30, 2025. The third quarter was a combination of growth, development, engagement, and heightened awareness across our portfolio, highlight them by participation in industry events. The launch of a new indie title awards won by our upcoming indie title, ongoing progress across key projects and initiatives, and sneak peeks into upcoming titles and content. Peter will dive into the detail around the gaming business later in the call, but I will first like to provide an update on our stablecoin project. We continue to make meaningful progress towards our goal of becoming one of the first gaming companies to issue its own proprietary stable coin. Currently, we are developing the underlying infrastructure that will support the coin and advancing through the multi-state regulatory application process. The team we have put together has been instrumental in making such progress since we publicly announced this new project a few months back. While much of the work is happening behind the scenes, we are in a strong position to share more tangible updates with stakeholders in the next couple of months. To reiterate our rationale for pursuing this stablecoin project, by pursuing this initiative, We are positioning Snell as one of the pioneers in a space with significant untapped potential. We believe that the investments we are making today in technology and infrastructure will yield long-term benefits and create a foundation for innovation across the industry. We view stablecoins as the future of digital payments, and as a gaming company, we see endless opportunities. While widespread adoption will acquire an industry shift, passage of the Genius Act a few months ago was a pivotal moment that created a framework to accelerate this transformation. For a sector that relies heavily on online transactions, a digital currency packed to the U.S. dollar offers immerse utility, efficiency, and reliability. Of course, achieving this vision will require many other stakeholders within the industry to embrace such initiatives, which in reality will take time. That said, we believe that the investments we are making now position us ahead of the curve as the bellwether can unlock a wealth and potential opportunities in the future. The progress made so far has been truly exciting, and we look forward to sharing more substantive updates with our shareholders and stakeholders in the near future. Before I turn the call over to Peter to discuss our gaming business, I would like to address our third quarter performance and provide some context behind our reported decline in net revenue for the third quarter. While top-line results for the quarter decreased year over year, this was primarily driven by the timing of revenue recognition rather than a fundamental changes in our business or a reduction in the sales and demand for our products. Under our revenue recognition model, certain sales are deferred and recognized over time as performance obligations are met. We record deferred revenue when payments are received in the event of the fulfillment of our associated performance obligations, such as when we pre-sell certain games and content. During this quarter, deferred revenues increased approximately $10.9 million compared to the same period last year, primarily driven by ARC Survival Ascendance Lost Colony Expansion Path DLC bundle. As the quarter ended, deferred revenue balance was $36.4 million, of which $35.3 million is due to non-refundable payments. More importantly, we do expect to recognize approximately $26.5 million in non-refundable deferred revenue payments within the next 12 months. We also are targeting the launch of ARK Lost Colony in December 2025, which will expect $5.8 million of the deferred revenue balance to be recognized and positively impact our fourth quarter top-line results. Despite our deferred revenues affecting this quarter's results, our core gaming business is still generating cash. with our operating cash flow for the nine-month period remaining solid at approximately $4.2 million. Our bookings for the third quarter also grew 9.3% to $17.6 million compared to the year-ago period, further demonstrating the strong demand and engagement we experienced in the third quarter. We will typically experience the sales spikes during quarters where we launch a new ARC DLC. In addition to the deferred revenues, we expect incremental sales driven by the launch of loss economy from players who did not participate in the pre-sale event. With this new content on the horizon, we also anticipate a corresponding increase in engagement in the SA. Together, this catalyst positioned us for a significantly stronger fourth quarter compared to Q3 and set us up to finish the year on a high note. Demand and engagement across our gaming portfolio remains robust. And with last colony slave for Q4, we are confident in finishing the year on solid footing. Before I dive deeper into our quarterly results, I will hand the call over to Peter to discuss some recent developments in our gaming business and operations. Peter?

Thanks, Heidi, and good afternoon, everyone. As Heidi mentioned, the fundamentals across our gaming business remain unchanged. Our units sold for the quarter increased by 7.8% year-over-year, primarily related to ARC Ascended and its related DLCs. For the nine-month period, total units sold increased 38.7% to $4.8 million. ARC engagement also continued to remain stable. Average DAU for ARC Survival Evolved and ARC Survival Ascended reached approximately 122,658 and 92,876, respectively. As of quarter to end, ARC has been played for 4.2 billion cumulative hours, with the average screen time for users reaching 161 hours. Our Arc mobile title also surpassed 9 million downloads across iOS and Android. An average DAU was approximately 144,750 during the third quarter. Engagement across Arc continues to remain strong and stable and has no material impact on our results for the quarter. Over the last several months, many of our titles were featured at leading industry events, including Gamescom, TwitchCon, and several niche conferences, all focused on driving awareness of current releases as well as new and upcoming indie titles. We recently launched Rebel Engine just last week and officially announced the December 4th release date of our highly anticipated title, Echoes of Elysium. The most impactful event we participated in during the quarter was the 2025 Steam Autumn Sale, which featured our flagship titles, early access projects, and indie portfolio. Notably, ARC Survival Ascended was discounted 50% during the week-long event, where we saw encouraging upticks in sales. The event generated 8.5x ARC Survival Ascended units per day, and 3.5x ARC Survival Ascended revenue per day compared to the preceding non-sale period. This was encouraging to see as the uptick in sales and engagement positions the game well with the upcoming launch of Lost Colony DLC on ARC Survival Ascended next month. These sale events are strategically designed not only to reinvigorate engagement across our titles, but also present an opportunity to showcase the depths of our portfolio, elevate the visibility of our indie games, and broaden each game's player base. A quick review on interactive films. As of September 30, 2025, we released 67 short film dramas through our short-form mobile application, Salty TV. While we remain in the early stages, the growth across Salty TV's portfolio has been encouraging to see. We remain optimistic and look forward to continuing to scale the total number of films available within the app. We also expanded scope of interactive films during the quarter as we developed and released a narrative-driven simulation title, The Fame Game, Welcome to Hollywood. Looking ahead, our primary growth drivers for the fourth quarter will be the upcoming ARC Survival Ascended DLC, Lost Colony. As we previously mentioned, pre-sales for Lost Colony began in June and have delivered strong results as evidenced by strong bookings in Q2 and Q3. As of September 30th, we've sold approximately 306,000 units of Lost Colony expansion pass, exceeding our expectations. A material portion of our deferred revenue balance is comprised of revenue from the Lost Colony pre-sales. And once the DLC is released next month, we expect to recognize this deferred revenue in our Q4 top-line results. To further stimulate demand, we recently enhanced the value of Lost Colony DLC bundle by adding a completely new and exclusive Fantastic Thames Elder Claw to the bundle. As mentioned previously, we are targeting Echoes of Elysium to be released on December 4th, which we anticipate will be more impactful than our typical smaller-scale indie titles. Keeking into 2026, we have a handful of new games and content being developed across both established and indie titles. Across ARK, we have Genesis 1 and 2 coming to ARK Survival Ascended, along with several new projects currently underway. We are also continuing to develop Nanyin Sutra, Vuxiu, Nanyin Sutra, Immortal, and For the Stars. These three titles are larger in scope compared to our typical indie releases, and we also expect them to have more material impact compared to our smaller-scale niche games. As mentioned, we have a healthy backlog of games and content coming in the fourth quarter and throughout 2026, with a handful of unannounced projects at this point also poised to make a strong impact next year. Our team continues to focus on delivering to our core ARC fan base through the launch of Lost Colony next month, and we look forward to delivering innovative content to drive sustainable long-term returns and engagement for our shareholders and player base. With that, I will now turn the call back over to Heidi to discuss our financial results for the third quarter ended September 30th, 2025. Heidi?

Thank you, Peter. Net revenue for the third quarter was $13.8 million compared to $22.5 million in the same period last year. As mentioned earlier, the decrease was not due to fundamental changes in the business, but rather due to an increase in deferred revenue of $10.9 million, primarily from art survival ascendant. In addition to a decrease in revenues related to a bell ride of $500,000, we continue to see strong demand and engagement across our gaming portfolio, with total ARC sales increasing by $2.2 million compared to the same period last year, in addition to an increase in salty TV sales of $300,000. Net revenues for the nine months ended September 30, 2025 were $56.1 million compared to $58.3 million in the same period last year. During the nine-month period, photo art sales increased $13.7 million and Salty TV increased $600,000 compared to the same period last year. This increase was offset by the increase in deferred revenue of $11.9 million, primarily from ARC Survival Ascended, a decrease in revenue related to Bell Ride of $2.6 million, a decrease in Angela Games revenue of $1.2 million, and a non-recurring Angela Games settlement of $600,000 occurring in 2024. To reiterate, as of September 30, 2025, the balance of deferred revenue was $36.4 million, of which $35.3 million is due to non-refundable payments. We are expecting $26.5 million of this balance to be recognized within the next 12 months. $5.8 million of this balance, which consists of the ARC loss colony pre-sale revenue, will be recognized during the fourth quarter. Net loss for the three months ended September 30, 2025 was $7.9 million compared to net income of $233,000 in the same period last year, primarily due to the decrease in net revenue, and the increase in general administrative advertising and marketing, and impairment of film assets expenses. Net loss for the nine months end of September 30, 2025 was $26.4 million, compared to a net income of $700,000 in the same period last year, primarily due to an increase in provision for income taxes of $10.5 million, general and administrative expenses of $4.4 million, research and development of $3.1 million, advertising and marketing of $2.4 million, impairment of film assets of $800,000, an increase in cost of revenue of $3.9 million, a decrease in revenue of $2.1 million, partially offset by an increase in total other income of $100,000. Bookings for the third quarter increased 9.3% to $17.6 million, compared to $16.1 million from the same period last year. The increase was primarily driven by various sales promotions in 2025 that did not occur in 2024, specifically around ARC Survival Evolved and the release of ARC Love Colony and ARC Aquatica in 2025. Bookings for the nine months ended September 30, 2025 increased 14.3% to $67 million compared to $58.6 million in the same period last year. The increase was primarily driven by the releases of ARC Survival Ascended DLC Extraros in the first quarter of 2025. Self-promotions that were the first of their kind on ARC Survival evolved in 2025. The release of ARC Lost Colony to pre-sale in 2025. And the release of ARC Aquatica. EBITDA for the third quarter was $9.7 million loss compared to $500,000 in the same period last year. The decrease was primarily due to an increase in net loss of $8.1 million and a decrease in the provision of income taxes of $1.8 million, partially offset by an increase in interest income and interest income-related parties of $400,000. EBITDA for the nine months ended September 30, 2025, was lost of $15.6 million compared to $1.6 million in the same period last year. The decrease was primarily due to an increase in net loss of $27.1 million, a decrease in in interest expenses of $200,000, partially offset by an increase in provision for income taxes of $10.5 million and a decrease in interest income and interest income-related parties of $400,000. As of September 30, 2025, unrestricted cash and cash equivalents was $12.3 million. To review our detailed financial statements, please refer to the earnings price release and the Form 10Q file with the SEC. To conclude, we remain excited about the progress made on both our stablecoin project and gaming portfolio and pipeline. Our last economy continues to remain growth driver for the fourth quarter, and we look forward to a stronger finish to the year. Thank you all for joining us today. We will now open the line for Q&A. Operator?

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from the line of Michael Kupinski with Noble Capital Markets. Please go ahead.

Hi, it's Jacob Muchler on for Michael Kupinski. I was just curious, could you talk a little bit about the gross margins in the quarter? You know, we noticed that a gross margin was around 30% for Q1 and Q2. So, just curious if you could talk a little bit about what led to that contraction.

Thank you, Jake. This is Heidi, the company. That was a good question. This was really a result of multiple factors. On our cost of the revenue side, while we pay royalties as a percentage to our net revenue, but we do have a fixed license fee to our related parties and approximately about $6 million per quarter. This license fee is actually fixed and is paid on a monthly basis regardless of our recognized revenue, which is also the main reason why the gross profit margin actually decreased this quarter. On our revenue side, we had an increase in our booking, but we defer 5.9, as mentioned earlier, we defer 5.9 million in our sales of lost economy. And additionally, we held significant sales in Q2 of 2025 that we do believe are poor demand forward a quarter for the base game of ASE.

Gotcha. And then if I could just turn to deferred revenue, you know, I know you mentioned the increase in deferred revenue, but could you just talk a little bit about the timing of, you know, when some of that revenue is going to be recognized over the next 12 months?

Sounds good. Thank you, Jake. As mentioned earlier in our earnings call, we do believe that all our deferred revenue is recognizable as of September 30th of 2025. In fact, majority of it will be recognized within the next 12 months or so, assuming there's no delays in delivery of our obligations to our customers and our players. We do expect to recognize 5.9 million of our short-term deferred revenue in Q4 of 2025 related to lost economy. Once the game is released, we'll recognize that as a top-line revenue. And 10.3 million will relate it to Genesis 1 and 2 once Genesis 1 and 2 is released and we'll be able to recognize those as revenue in the upcoming year.

Gotcha. And outside of the Lost Colony, Deferred Revenue, and then Genesis 1 and 2, what is the remaining Deferred Revenue? What does it consist of as far as deliverance?

Yeah, majority of the deferred revenue are actually related to our gaming performance obligations, and also we do have some of the deferred revenue as a deposit for our future games as well.

Gotcha.

Okay, thanks for the cover. I'll hop back in, Keith. Thank you.

Ladies and gentlemen, at this time, there are no further questions. The conference of Snail Inc. has now concluded. it. Thank you for your participation. You may now disconnect your lines. Thank you.