Thursday, August 15, 2024
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.
Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.
Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Q2 results. The company reported Q2 revenue of $21.6 million, and adj. EBITDA of $3.1 million, both of which were lower than our forecasts of $27.8 million and $7.4 million, respectively. In our view, there were multiple factors contributing to the shortfall, such as deferred revenue in the quarter, as well as lower than expected revenue from ARK: Survival Ascended (ASA) on Microsoft Game Pass.
Deferred revenue. Notably, deferred revenue is largely related to the five DLC packages included in the sale of ASA, of which four have not been released yet. Furthermore, as DLC packages included in ASA are released, the company will defer less revenue from future ASA sales. In our view, reducing deferred revenue will provide investors with a clearer picture of company operating results.
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