Snail, Inc. Reports Fourth Quarter & Full Year 2023 Financial Results
- Strong sales of ARK: Survival Ascended with 1.6 million units sold and high daily active users.
- Significant increase in net revenues for Q4 2023 compared to the previous year.
- Decrease in full-year net revenues due to various factors including decreased Ark Mobile sales and deferred revenues.
- Positive net income for Q4 2023 and net loss for the full year.
- Increase in bookings for both Q4 and full year 2023.
- EBITDA increase for Q4 2023 but decrease for the full year.
- Unrestricted cash increased from December 2022 to December 2023.
- Use of non-GAAP measures like Bookings and EBITDA to evaluate operating performance.
- Webcast scheduled to discuss financial results.
- Decrease in full-year net revenues by 18.2% compared to the prior year.
- Net loss of $9.1 million for the full year 2023.
- Various factors contributing to the decrease in net revenues such as decreased Ark Mobile sales and deferred revenues.
- Decrease in EBITDA for the full year 2023 by 1,198.1%.
Insights
The recent earnings report from Snail, Inc. highlights a mixed financial performance that warrants a nuanced analysis. The launch of ARK: Survival Ascended is a significant event, with the game selling 1.5 million units to date, which is a strong performance in the competitive gaming industry. This success contributed to a substantial increase in quarterly net revenues from $15.3 million to $28.6 million year-over-year. However, annual net revenues saw an 18.2% decline, which raises concerns about the company's ability to sustain growth.
The reported increase in bookings, from $11.9 million to $52.6 million in Q4, suggests a solid demand for the new release, which is a positive indicator for future revenue recognition. The strategy to defer $22.0 million in revenues for unreleased DLCs indicates a potential for future earnings, but also reflects in the reported net loss of $9.1 million for the year. This loss, alongside increased R&D and marketing costs, suggests that the company is investing heavily in its product pipeline and market presence.
From a liquidity standpoint, the slight increase in unrestricted cash to $15.2 million provides some cushion, but the overall decrease in net income year-over-year is a point of concern for investors focused on profitability and cash flow sustainability. The company's use of non-GAAP measures like Bookings and EBITDA can offer additional insights into operational performance, but investors should also consider the GAAP figures to understand the full financial health of the company.
The gaming industry is highly dynamic, with consumer preferences and technology evolving rapidly. Snail, Inc.'s focus on leveraging Unreal Engine 5 for ARK: Survival Ascended showcases their commitment to staying at the forefront of technology, which is imperative to maintain relevance in this sector. The introduction of a cross-platform modding system could potentially foster a loyal community and drive long-term engagement, a trend that has been successful for other leading games.
However, the decrease in year-over-year unit sales for ARK: Survival Evolved could indicate market saturation or competition from newer titles. The company's ability to innovate and keep their existing titles fresh will be critical to maintaining user engagement. The gaming industry's shift towards digital sales and the emphasis on recurring revenue through DLCs and microtransactions is reflected in Snail's strategy, which could provide a steady revenue stream if managed effectively.
Marketing and advertising efforts, which saw an increase in costs, will need to be carefully optimized to ensure a high return on investment, as the gaming market is notorious for its high customer acquisition costs. Snail's performance in the next quarters will be telling of their ability to capitalize on the strong launch of their latest title and translate that into sustained financial success.
The financial disclosures by Snail, Inc. demonstrate a clear adherence to regulatory requirements, as evidenced by their detailed reconciliation of GAAP to non-GAAP financial measures. The transparency in reporting Bookings and EBITDA alongside traditional financial metrics allows stakeholders to assess the company's performance from multiple angles. It is important to note that while non-GAAP measures can provide additional context, they should not overshadow GAAP results, which remain the standard for legal financial reporting.
The reduced expenses related to compliance and litigation indicate that the company has likely streamlined its operations in these areas, which could result in cost savings. However, investors should monitor any future legal or compliance-related expenses as these could impact the company's financial position. The decrease in professional expenses is a positive development, but it is essential to ensure that this does not compromise the company's ability to navigate the complex legal landscape of the gaming industry, which includes intellectual property rights, international regulations and consumer protection laws.
CULVER CITY, Calif., April 01, 2024 (GLOBE NEWSWIRE) -- Snail, Inc. (NASDAQ: SNAL) (“Snail” or “the Company”), a leading, global independent developer and publisher of interactive digital entertainment, today announced financial results for its fourth quarter and full year ended December 31, 2023.
Jim Tsai, Chief Executive Officer commented, “This past year has been filled with exciting milestones for Snail. We launched ARK: Survival Ascended, which sold more than 600,000 units within the first two weeks and surpassed 1.5 million units in sales to date. We are pleased to see the continued engagement in the ARK series and plan to build on this momentum in 2024.”
Fourth Quarter & Full Year 2023 Highlights
- ARK: Survival Ascended. On October 25, 2023, the Company launched its flagship remake of the ARK franchise leveraging Unreal Engine 5's stunning graphics and introduced a game-altering cross-platform modding system, ushering in a new era of creativity.
- ARK: Survival Ascended was ranked the top #1 selling game on Steam on launch day.
- Since its launch, ARK: Survival Ascended sold 1.6 million units and has an average of 182,000 daily active users (“DAUs”) with a peak of 308,000 DAUs.
- ARK: Survival Evolved. In the three months and year ended December 31, 2023, ARK: Survival Evolved averaged a total of 192,000 DAUs and 235,000 DAUs, respectively.
- ARK: Survival Evolved units sold increased for the fourth quarter 2023 compared to the same period in 2022; approximately 0.7 million vs. 1.6 million, respectively.
- Units sold decreased for the year ended December 31, 2023 compared to the same period in 2022; approximately 4.4 million vs. 5.5 million, respectively.
Net revenues for the three months ended December 31, 2023 was
Net revenues for the year ended December 31, 2023 decreased by
Net income for the three months ended December 31, 2023 was
Net loss was
Bookings for the three months ended December 31, 2023 was
Bookings for the year ended December 31, 2023 was
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the three months ended December 31, 2023 increased by
EBITDA for the year ended December 31, 2023 decreased by
As of December 31, 2023, unrestricted cash was
Use of Non-GAAP Financial Measures
In addition to the financial results determined in accordance with U.S. generally accepted accounting principles, or GAAP, Snail believes Bookings and EBITDA, as non-GAAP measures, are useful in evaluating its operating performance. Bookings and EBITDA are non-GAAP financial measures that are presented as supplemental disclosures and should not be construed as alternatives to net income (loss) or revenue as indicators of operating performance, nor as alternatives to cash flow provided by operating activities as measures of liquidity, both as determined in accordance with GAAP. Snail supplementally presents Bookings and EBITDA because they are key operating measures used by management to assess financial performance. Bookings adjusts for the impact of deferrals and, Snail believes, provides a useful indicator of sales in a given period. EBITDA adjusts for items that Snail believes do not reflect the ongoing operating performance of its business, such as certain non-cash items, unusual or infrequent items or items that change from period to period without any material relevance to its operating performance. Management believes Bookings and EBITDA are useful to investors and analysts in highlighting trends in Snail’s operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which Snail operates and capital investments.
Bookings is defined as the net amount of products and services sold digitally or physically in the period. Bookings is equal to revenues excluding the impact from deferrals. Below is a reconciliation of total net revenue to Bookings, the closest GAAP financial measure.
| Three Months ended December 31, | Years ended December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||
| (in millions) | (in millions) | |||||||||||||
| Total net revenue | $ | 28.6 | $ | 15.3 | $ | 60.9 | $ | 74.4 | ||||||
| Change in deferred net revenue | 24.0 | (3.4 | ) | 24.8 | (10.7 | ) | ||||||||
| Bookings | $ | 52.6 | $ | 11.9 | $ | 85.7 | $ | 63.7 | ||||||
We define EBITDA as net income (loss) before (i) interest expense, (ii) interest income, (iii) income tax provision (benefit from) and (iv) depreciation and amortization expense. The following table provides a reconciliation from net income (loss) to EBITDA:
| Three Months ended December 31, | Years ended December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||
| (in millions) | (in millions) | |||||||||||||
| Net (loss) income | $ | 2.4 | $ | (2.3 | ) | $ | (9.1 | ) | $ | 1.0 | ||||
| Interest income and interest income - related parties | - | (0.2 | ) | (0.1 | ) | (0.8 | ) | |||||||
| Interest expense and interest expense - related parties | 0.5 | 0.3 | 1.5 | 0.9 | ||||||||||
| (Benefit from) provision for income taxes | 0.6 | (3.2 | ) | (2.4 | ) | (2.4 | ) | |||||||
| Depreciation and amortization expense, property and equipment | 0.1 | 0.2 | 0.4 | 0.6 | ||||||||||
| EBITDA | $ | 3.6 | $ | (5.2 | ) | $ | (9.7 | ) | $ | (0.7 | ) | |||
Webcast Details
The Company will host a webcast at 4:30 PM ET today to discuss the fourth quarter and full year 2023 financial results. Participants may access the live webcast and replay on the Company’s investor relations website at https://investor.snail.com/.
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,” “could,” “expect,” “should,” “plan,” “intend,” “may,” “predict,” “continue,” “estimate” and “potential,” or the negative of these terms or other similar expressions. Forward-looking statements appear in a number of places in this press release and include, but are not limited to, statements regarding Snail’s intent, belief or current expectations. These forward-looking statements include information about possible or assumed future results of Snail’s business, financial condition, results of operations, liquidity, plans and objectives. The statements Snail makes regarding the following matters are forward-looking by their nature: growth prospects and strategies; launching new games and additional functionality to games that are commercially successful; expectations regarding significant drivers of future growth; its ability to retain and increase its player base and develop new video games and enhance existing games; competition from companies in a number of industries, including other casual game developers and publishers and both large and small, public and private Internet companies; its ability to attract and retain a qualified management team and other team members while controlling its labor costs; its relationships with third-party platforms such as Xbox Live and Game Pass, PlayStation Network, Steam, Epic Games Store, My Nintendo Store, the Apple App Store, the Google Play Store and the Amazon Appstore; the size of addressable markets, market share and market trends; its ability to successfully enter new markets and manage international expansion; protecting and developing 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 ongoing conflicts involving Russia and Ukraine, and Israel and Hamas, on its business and the global economy generally; rulings by courts or other governmental authorities; the Share Repurchase Program, including expectations regarding the timing and manner of repurchases made under the program; its plans to pursue and successfully integrate strategic acquisitions; assumptions underlying any of the foregoing.
Further information on risks, uncertainties and other factors that could affect Snail’s financial results are included in its filings with the Securities and Exchange Commission (the “SEC”) from time to time, annual reports on Forms 10-K and quarterly reports on 10-Q filed, or to be filed, with the SEC. You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those expressed or implied in the forward-looking statements as a result of such risks and uncertainties. All forward-looking statements in this press release are based on management’s beliefs and assumptions and on information currently available to Snail, and Snail does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
About Snail, Inc.
Snail is a leading, global independent developer and publisher of interactive digital entertainment for consumers around the world, with a premier portfolio of premium games designed for use on a variety of platforms, including consoles, PCs and mobile devices.
For additional information, please contact: investors@snail.com
| Snail, Inc. and Subsidiaries Consolidated Balance Sheets | |||||||||
| December 31, 2023 | December 31, 2022 | ||||||||
| ASSETS | |||||||||
| Current Assets: | |||||||||
| Cash and cash equivalents | $ | 15,198,123 | $ | 12,863,817 | |||||
| Restricted escrow deposit | - | 1,003,804 | |||||||
| Accounts receivable, net of allowances for credit losses of | 25,134,808 | 6,758,024 | |||||||
| Accounts receivable - related party | - | 11,344,184 | |||||||
| Loan and interest receivable - related party | 103,753 | 101,753 | |||||||
| Prepaid expenses - related party | 6,044,404 | - | |||||||
| Prepaid expenses and other current assets | 10,169,448 | 10,565,141 | |||||||
| Total current assets | 56,650,536 | 42,636,723 | |||||||
| Restricted cash and cash equivalents | 1,116,196 | 6,374,368 | |||||||
| Accounts receivable - related party, net of current portion | 7,500,592 | - | |||||||
| Prepaid expenses - related party | 7,784,062 | 5,582,500 | |||||||
| Property, plant and equipment, net | 4,682,066 | 5,114,799 | |||||||
| Intangible assets, net - license - related parties | - | 1,384,058 | |||||||
| Intangible assets, net - other | 271,717 | 272,521 | |||||||
| Deferred income taxes | 10,247,500 | 7,602,536 | |||||||
| Other noncurrent assets | 164,170 | 198,668 | |||||||
| Operating lease right-of-use assets, net | 2,440,690 | 3,606,398 | |||||||
| Total assets | $ | 90,857,529 | $ | 72,772,571 | |||||
| LIABILITIES, NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY | |||||||||
| Current Liabilities: | |||||||||
| Accounts payable | $ | 12,102,929 | $ | 9,452,391 | |||||
FAQ
How many units did ARK: Survival Ascended sell within the first two weeks of launch?
What was the net income for the three months ended December 31, 2023?
What was the net loss for the year ended December 31, 2023?
What were the bookings for the year ended December 31, 2023?
What is EBITDA and how does it relate to net income?
