Snail Inc - Class A (NASDAQ:SNAL) Reports Q3 2025 Earnings Miss Amid Significant Deferred Revenue Increase

Snail Inc - Class A (NASDAQ:SNAL) reported financial results for the third quarter of 2025 that fell significantly short of analyst expectations, leading to a negative reaction in after-hours trading. The company's performance was heavily impacted by a substantial increase in deferred revenue, which management emphasized masks stronger underlying demand for its core products.

Earnings and Revenue Versus Estimates

The company's top and bottom-line results for the quarter ended September 30, 2025, missed Wall Street forecasts by a considerable margin.

• Earnings Per Share (EPS): Reported a non-GAAP loss of $0.21 per share, which was substantially wider than the analyst estimate for a loss of $0.051 per share.
• Revenue: Posted net revenues of $13.8 million, a sharp decline from the $22.5 million reported in the same quarter last year and well below the analyst estimate of $22.44 million.

The primary driver behind the revenue decline was a $10.9 million increase in deferred revenue, primarily from pre-sales of content for ARK: Survival Ascended. This accounting treatment pushes revenue recognition into future periods as the related digital content is delivered.

Market Reaction and Financial Performance

The market's immediate response to the earnings miss was negative, with the stock trading lower in the after-hours session. This price action reflects investor disappointment with the reported figures, despite management's assurances regarding future revenue visibility.

The financial statements for the quarter reveal the impact of the revenue deferral and increased operating costs:

• Net Loss: The company reported a net loss of $7.9 million, a significant reversal from the net income of $0.2 million in the prior-year period.
• Bookings: In contrast to the GAAP revenue, the company's non-GAAP "Bookings" metric, which includes the value of deferred sales, increased 9.3% year-over-year to $17.6 million.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization was negative $9.7 million, compared to a positive $0.5 million in Q3 2024.
• Cash Position: Unrestricted cash improved to $12.3 million as of September 30, 2025, up from $7.3 million at the end of 2024.

Operational Highlights and Management Commentary

The earnings press release highlighted continued engagement with the company's flagship ARK franchise and progress on new initiatives. Key operational points included strong unit sales for ARK: Survival Evolved and ARK: Survival Ascended, the upcoming release of Echoes of Elysium, and advancements in the company's stablecoin development project.

CEO Hai Shi addressed the dichotomy between the reported results and the company's operational performance, stating, "Our reported top-line performance does not fully capture the underlying growth we are experiencing due to the revenue recognition timing." He pointed to the growing deferred revenue balance, which stood at $36.4 million, as creating "meaningful revenue visibility going forward." The company expects to recognize $5.8 million of this deferred revenue in the fourth quarter of 2025, aligning with the planned release of ARK: Lost Colony.

Outlook and Analyst Estimates

While the press release does not provide a specific quantitative financial outlook for the next quarter or full year, management's commentary suggests an anticipation of a stronger Q4. This will be measured against analyst expectations, which currently project the following for Snail Inc:

• Q4 2025 EPS Estimate: $0.0714
• Q4 2025 Revenue Estimate: $30.6 million
• Full-Year 2025 EPS Estimate: -$0.4896
• Full-Year 2025 Revenue Estimate: $96.18 million

The company's ability to meet these estimates in the coming quarter will be heavily dependent on the successful release of new game content and the subsequent recognition of its large deferred revenue balance.

For a detailed look at historical earnings and future analyst estimates for Snail Inc, visit the earnings estimates page.

Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any security.