Snail, Inc. Reports 52% Revenue Decline and $3M Net Loss in Q1 2023

Snail, Inc. reported a significant decline in financial performance for the first quarter of 2023, with net revenues of $13.5 million, down 52% from $28.1 million in the same period last year. The company also recorded a net loss of $3.0 million, a stark contrast to the net income of $5.8 million reported in the first quarter of 2022. This downturn is attributed primarily to decreased sales from its flagship title, ARK: Survival Evolved, which accounted for 90% of total revenues. The average selling price of ARK products fell, and the company did not benefit from one-time contract payments that had bolstered revenues in the previous year.

In terms of operational metrics, Snail, Inc. experienced a slight increase in daily active users for ARK, averaging 276,144 in the first quarter of 2023 compared to 257,168 in the same period last year. However, the overall engagement and revenue generation from the title were insufficient to offset the declines in sales. The company sold 1.7 million units during the quarter, up from 1.3 million in the prior year, indicating a potential for growth in user acquisition despite the revenue drop.

Strategically, Snail, Inc. is focusing on expanding its gaming pipeline and enhancing its content offerings. The company is investing in new game development and exploring media and eSports content related to its gaming intellectual property. Additionally, Snail, Inc. has initiated a share repurchase program, authorizing the buyback of up to $5 million in Class A common stock, with approximately $1.3 million remaining for future repurchases as of March 31, 2023.

The company’s financial health is under scrutiny, as it faces significant debt obligations, including a $9.0 million revolving loan due in December 2023 and a $4.2 million short-term note due in January 2024. Management is working to renegotiate these terms but acknowledges the uncertainty surrounding their ability to do so. As of March 31, 2023, Snail, Inc. had cash and cash equivalents of $4.1 million, down from $12.9 million at the end of 2022, raising concerns about its liquidity and ability to sustain operations without additional capital.

Looking ahead, Snail, Inc. aims to re-establish profitable operations and improve its financial condition by increasing revenues through existing and new game titles, as well as controlling expenses. However, the company has expressed substantial doubt about its ability to continue as a going concern if it cannot successfully navigate its financial challenges and improve its operational performance in the coming months.