Snail, Inc. Reports $14.1 Million Revenue and $1.8 Million Net Loss in Q1 2024

Snail, Inc. reported a net revenue of $14.1 million for the first quarter of 2024, reflecting a 4.9% increase from $13.5 million in the same period last year. The company experienced a net loss of $1.8 million, a significant improvement compared to the $3.0 million loss reported in the first quarter of 2023. This reduction in losses was attributed to a combination of increased revenues from the ARK franchise and a decrease in general and administrative expenses, which fell by 49.6% to $2.3 million.

The company's cost of revenues rose to $12.1 million, up 10.9% from $10.9 million in the prior year, primarily due to increased software license royalties and related party costs. Gross profit for the quarter was $2.0 million, down from $2.6 million in the previous year, indicating a decline in profitability despite higher revenues. The overall operating expenses decreased to $4.3 million from $6.1 million, driven by reduced legal and professional fees and a reversal of stock-based compensation expenses.

In terms of operational metrics, Snail, Inc. reported a decline in daily active users (DAUs) for its flagship ARK franchise, averaging 209,140 DAUs compared to 276,144 in the same quarter of 2023. The company sold 1.1 million units during the quarter, a decrease from 1.7 million units in the prior year, primarily due to lower sales of ARK: Survival Evolved. However, the release of ARK: Survival Ascended contributed positively to the revenue stream, with the company recognizing $1.2 million from a settlement related to a previous litigation.

Strategically, Snail, Inc. is focusing on expanding its gaming pipeline and enhancing its technology platform. The company has entered into a distribution agreement for ARK: Survival Ascended and is actively investing in new content and features to retain and grow its user base. As of March 31, 2024, Snail, Inc. had approximately $16.1 million in unrestricted cash, which is expected to support its operations and debt obligations in the near term. However, the company anticipates potential challenges in meeting its debt covenants in the upcoming quarters and is working with lenders to address these issues.

Looking ahead, Snail, Inc. remains committed to its growth strategy, which includes launching new games and expanding its market presence. The company is also focused on improving its internal controls and financial reporting processes, following the identification of material weaknesses in its internal control over financial reporting. The management is taking steps to remediate these weaknesses, which they believe will enhance the overall effectiveness of their financial operations.