Gamehaus Holdings - Earnings Call - Q3 2025

Transcript

Operator (participant)

Good day, ladies and gentlemen. Thank you for standing by, and welcome to Gamehaus' first nine months of fiscal 2025 earnings conference call. Currently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we're recording today's call. If you have any objections, you may disconnect at this time. I will now turn the call over to today's speaker-host, Mr. Jack Wong. Jack, please proceed.

Moderator (participant)

All right. Thank you, Operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss the financial results of Gamehaus for the first nine months of fiscal 2025. We released our earnings results earlier today. The press release is now available on the company's website, as well as from Newswire Services. On the call with me today are Mr. Brian Xie Feng, Chairman of the Board; Mr. Carl Cai Yimin, Chief Executive Officer; and Mr. Shawn Zhang, Head of Capital Markets and Investor Relations. Brian will review business operations and company highlights, followed by Shawn, who will discuss detailed financial results. They will all be available to answer your questions during the Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Also, please note that, unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. And with that, let me now turn the call over to our Chairman, Brian. Brian will deliver his remarks in Chinese, and I will follow up with corresponding English translations. Please go ahead, Brian.

Brian Xie Feng (Chairman)

大家好，感谢大家参加 Gamehaus 2025 财年前九个月的业绩报告电话会。这是 Gamehaus 今年取得上市地位后的首次季报业绩披露。我们希望借此机会向长期支持公司发展的投资人朋友们表示衷心的感谢。

Moderator (participant)

Hello, everyone. Thank you for joining our earnings conference call. This is our first earnings results announcement since becoming a publicly listed company in January. And I want to take this opportunity to thank all of our investors for their continued support throughout our growth journey.

Brian Xie Feng (Chairman)

在截至 2025 年 3 月 31 日的九个月期间，我们面对复杂的宏观经济环境及日益激烈竞争的行业竞争，公司采取了更为审慎的发展策略，主动减少对成熟游戏的市场推广投入，并将资源重新分配至具备长期价值的重点领域，尤其是增加了对游戏内容端研发和合作方向的投入。尽管该调整在短期内对公司的收入和利润确实会造成一定影响，但我们相信这是实现可持续增长所必须迈出的关键一步。在此期间，我们着重提升游戏品质，深化与开发者合作，优化玩家体验，并不断强化公司的 AI 能力。这些投入将有助于我们打造更具竞争力的游戏组合，并为公司长期的价值增长奠定坚实基础。

Moderator (participant)

During the nine months ended March 31st, 2025, we navigated a challenging macro environment and intensified industry competition. In response, we took a disciplined approach by strategically reducing marketing spend, especially for mature titles, allowing us to relocate resources towards initiatives with higher long-term impact. In particular, we have increased investment in the development and cooperation of game content. While this shift resulted in a short-term impact on our top and bottom line, we believe it was a necessary step to position the business for sustainable growth. During this period, we focused on elevating game quality, deepening developer partnerships, enhancing player experience, and strengthening our AI capabilities. These investments are fundamental to building a more competitive product portfolio and laying the groundwork for long-term value creation.

Brian Xie Feng (Chairman)

本期内核心业务板块整体运转良好，公司旗下的多款核心游戏产品在全球主要市场持续表现稳健，支撑公司整体业务稳定运行。旗舰产品如 Bingo Party、Double Win Slots 在美国等成熟市场的排行榜位置稳定，并持续贡献亿元级年收入，显示出极强的用户粘性和长期运营能力。新兴产品方向纯白大作战作为公司首个在轻度 RPG 品类以及在亚洲市场的定制产品，在预注册和上线期间获得了 Google Play 等多个地区的推荐，成为我们在新品类和新地区突破的亮点。从中度休闲游戏的类型来看，我们目前的游戏产品组合已经覆盖 Social Casino、Bingo、叙事、RPG 等多个细分赛道。

Moderator (participant)

Despite all the macro challenges, our core business segments performed well during the period. Flagship titles such as Bingo Party and Double Win Slots continued to rank strongly in key mature markets like the U.S., contributing substantial revenues in the hundreds of millions of dollars and demonstrating both high user stickiness and long-term monetization potential. On the innovation front, Adventure of White Chord, as our first customized product in the casual RPG category and the Asian market, was recommended by Google Play in multiple regions during the pre-registration and launch period, becoming a highlight of our breakthrough in new categories and new regions. Our current portfolio spans a broad range of mid-core casual genres, including Social Casino, Bingo, narrative, and RPG games.

Brian Xie Feng (Chairman)

从业务类型细分来看，我们传统的代理发行业务提供稳定收益，合作研发团队的多个管线项目正在兑现成果，而定制业务的发展也十分迅速，前景广阔。现金流、新产品、孵化成长的组合达到了规模与创新并重的发展态势。在稳固传统优势的同时，不断培育新的增长点，以期为公司未来持续增长奠定坚实基础。

Moderator (participant)

From a business model perspective, our traditional publishing partnerships continue to generate stable revenue, while multiple pipeline projects of the collaborative R&D team are delivering results. Our custom publishing services are also scaling rapidly and represent an exciting area of future opportunity. With a balanced strategy that combines the stability of mature titles and the growth potential of new games, we are achieving both scale and innovation, laying a solid foundation for long-term development.

Brian Xie Feng (Chairman)

在核心业务运营指标方面，由于我们在这几个季度战略性地调整了市场，部分指标受到一定影响，其中平均月活用户数、平均日活用户数、平均日付费用户数等指标同比变化水平基本与收入的变化一致，而付费用户相关的其他指标则基本持平，比如日均付费转化率维持在了 2% 以上，而且 ARPDAU 则维持在 $0.337 的水平。这些关键的付费指标的变化幅度较小，一定程度能说明内部在新业务阶段不断追求精细化运营的结果。

Moderator (participant)

Turning to operating metrics, some of which have been affected to a certain extent as we strategically adjusted our marketing budget in the past few quarters. The year-over-year changes in metrics, such as the average number of monthly active users, the average number of daily active users, and the average number of daily paying users, are basically consistent with the changes in revenue. Other indicators related to paying users remain basically on the same level. For example, the average daily paid conversion rate has remained above 2%, and the average revenue due to daily active user has remained at $0.337. The changes in these key payment indicators are relatively small, which to a certain extent reflect the results of our internal pursuit of refined operations and high-quality development in the new business stage.

Brian Xie Feng (Chairman)

在业务地域方面，本期内我们在具备传统优势的北美及欧洲地区持续获得了超过 70% 的收入规模。同时，我们也将目光投向新的市场，尤其是亚洲区域中的日韩以及港澳台地区。这些市场的特点鲜明，速度更快，预计将对原有传统欧美市场的基本盘形成有效的增长点的补充。

Moderator (participant)

In terms of geographic performance, North America and Europe continued to account for over 70% of our total revenue, reaffirming our strength in mature markets. At the same time, we're actively expanding into high-potential markets, particularly in Asia, including Japan, South Korea, and the Greater China region. These markets exhibit faster user response times and stronger monetization potential, and we expect them to become important complements to our established Western markets.

Looking ahead, we remain committed to balancing disciplined execution with sustainable growth. Our vision is to build Gamehaus into a globally recognized publishing platform for Mid-Core casual mobile games. Based on the current trends and market dynamics, we maintain a cautiously optimistic outlook and expect our total revenue for the fourth quarter of fiscal year 2025 to be in the range of $27.5 million-$30 million.

Brian Xie Feng (Chairman)

接下来请向下继续详细介绍我们的财务表现。

Moderator (participant)

Now I will turn the call over to Shawn to walk you through our financial performance.

Shawn Zhiyuan Zhang (Head of Capital Markets and Investor Relations)

Thank you, Brian, and hello everyone. I will now provide a detailed overview of our financial performance for the first nine months of fiscal year 2025, ended March 31st, 2025. Please note that all figures here are in U.S. dollars, and all comparisons are made on a year-over-year basis, unless otherwise stated. Starting with revenue performance, our total revenue was $87.4 million compared to $113.6 million in the same period last year. This decline was primarily driven by low in-app purchase revenue, which fell 23.8% year-over-year to $78.5 million. As Brian mentioned earlier, the decrease reflects our strategic decisions to scale back user acquisition spending for several mature titles as we shifted our focus towards enhancing long-term monetization capabilities and allocating resources more efficiently. Advertising revenue was $8.9 million compared to $10.6 million a year ago.

The reduction in market investment led to decreased traffic and exposure, which impacted our AD monetization performance. That said, we were able to partially offset these pressures by rolling out new in-game content and features that helped maintain player engagement and monetization activity across our existing portfolio. Moving to expenses, our total operating cost and expenses were $85.4 million, reflecting our disciplined approach to cost control during this transition period. Specifically, cost of revenue declined 25.1% to $41.4 million, in line with our revenue trend. This was per lower platform fees, reduced developer profit sharing, and a decrease in customized design fees. Research and development expenses rose 13.8% to $4.3 million, reflecting continued investment in early-stage collaborations with developers and new product pipelines.

Selling and marketing expenses declined 19.7% to $36.6 million, largely driven by an $8.6 million reduction in advertising spending, as we temporarily pull back large-scale promotional efforts for mature games in favor of efficiency and future-oriented reallocation. General and administrative expenses increased 7% to $3.1 million, primarily due to higher personnel and professional service fees associated with our public company readiness efforts, including enhancements to financial reporting, corporate governance, and investor relations infrastructure. As a result, we recorded an operating income of $2 million compared to $6.1 million in the same period last year. Operating margin was 2.3% versus 5.4% a year ago. Net income was $2.3 million, down from $6 million in the previous period. Earnings per ordinary share were $0.04 compared to $0.11 in the same period last year.

We ended the quarter with $15.7 million in cash and cash equivalents compared to $18.8 million as of June 30th, 2024. We believe this level of liquidity is sufficient to meet our current business and operational needs. Looking ahead, we remain focused on balancing operational discipline with long-term growth. While we continue to navigate a challenging external environment, we are confident that our strategic resource allocation, ongoing investment in content innovation, and deepened partnerships with developers will help us unlock future value. With that, we can open for call for questions. Our CEO, Carl, and I will answer your question. Operator, please proceed.

Operator (participant)

We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. Once again, it is star, then one to ask a question. At this time, we will pause momentarily to assemble our roster. The first question comes from Hua Rong with Jin Yu Asset. Please go ahead.

Hua Rong (Analyst)

管理层你好，我是来自上海锦御资产的分析师霍荣。我这边有两个问题想请教管理层。第一个问题就是了解到你们本期的销售费用降低主要是从公司战略的角度的安排。不过我也看到了研发及管理的费用相对去年的同期都有一定程度的上涨。请问管理层公司是否预计未来随着业务规模的扩张，整体团队的人员的规模将会同步的扩大？我第二个问题是在前面管理层的电话中提到了合作研发团队的一些短线项目正在兑现成果。我想请问管理层能否详细介绍一下你们目前在游戏产品研发上面流程的策略，特别你们是如何与外部合作研发团队协作的？ Hi, Management. This is Hua Rong from Jin Yu Asset. I have two questions. The first one is I understand that reduction in sales and marketing expenses in this period is mainly due to the company's strategic arrangements. However, I also noticed that R&D and administrative expense have increased to a certain extent compared with the same period last year. I wonder if the management expects that the size of the overall team will expand in line with the expansion of the business scale in the future? My next question is the management mentioned that some of the pipeline projects with development partners are about to deliver results. Could you please elaborate on your current approach to the game development process, particularly how you collaborate with external development teams, please? Thank you.

Shawn Zhiyuan Zhang (Head of Capital Markets and Investor Relations)

Zhang。您的第一个问题是关于我们利润表的一些费用的相关问题，这个我来回答。我们觉得首先就是说游戏行业，我们觉得主要是由人才来推动的，尤其是我想是一流的人才来推动。那么在我们上市完成之后，根据公司战略路径的一些需求，我们也是对团队进行了比较大的升级。我们引进了很多行业内的高端人才。您刚才提到的研发和管理费用的增长，我想实际上就是说跟基本情况是相符合的。而且引进的过程目前还在持续。所以说后面从绝对值上来看的话，这两块费用可能还会再往上走一点。但是因为其实他们占我们收入的比例来说都比较小，我现在看目前两个部分加起来也不到10%。所以我觉得我认为这个变化的影响不会太大。那么从团队规模来说的话，我们比较确定的是我们不会主动去追求整体人员规模上的一个扩张，主要还是去做整体人才质量的一个提档升级。 I will give the English translation for myself. So we believe that the gaming industry is mainly driven by talent, especially first-tier talent. So after the listing was completed, according to the actual needs of our strategic path, we upgraded the team significantly and recruited many excellent talents in the industry. The growth of R&D and administration expenses is actually consistent with this background, and the recruiting process is still ongoing. So in absolute values, these two categories of expenses may keep going up a little bit later, but in fact, they are relatively small in terms of the proportion of our revenue. So right now, the two parts add up to even less than 10% of our revenue. So I think the impact of the change is not that significant.

When talking about our team size, I'm very certain that we will not actively pursue expansion in the amount of employees, but mainly focus on upgrading the overall capacity of our team. 您的第二个问题我想就请那个我们CEO Carl来回答。 I will give your second question to our CEO, Carl. Carl, please.

Carl Cai Yimin (CEO)

好的。 您刚刚在问题中提到，其实我们一些研发管线的兑现成果，以及我们在游戏产品研发是如何在模式上合作的。由我来回答一下这个问题。我们在2024财年的时候启动了一个叫做游戏建筑师模式这样的一个新的对于产品的模式。我们可以把自己比作游戏的建筑师，会在最前端完成整套游戏设计的图纸。这个图纸就包括了游戏的核心玩法、题材设定、商业化结构等等。然后我们会把这些设计交给我们合作的研发商去做施工落地，以完成他们去负责具体的这样的开发的实现。这样的一个模式的核心优势在于我们能够把公司的资源和精力集中在最为关键、最能决定一款游戏能否成功的地方，而把执行效率高、成本更低的研发工作交给了外部团队来去进行。中国国内的游戏开发资源其实是相当的丰富的。我们目前也已经和几个经验丰富的中国开发团队建立了这种合作关系。接下来的话，我们也计划把这种模式推广到海外，寻求和全球开发者共同合作的这样的机会。 All right, I will translate my answer. In Fiscal Year 2024, we officially launched a new framework that we call the Game Architecture Model. Think of us as the architects of a game who create comprehensive design blueprints at the forefront, encompassing core gameplay mechanics, thematic settings, art style, and monetization frameworks. These blueprints are then entrusted to our partner development studios who work as construction firms for technical execution and implementation. The core strength of this model lies in focusing our internal resources and expertise on the most critical and value-driven aspects of game creation, while leveraging the cost efficiency and technical expertise of external developer studios. China's domestic game development ecosystem offers particularly abundant resources in this regard, with established partnerships already formed with several experienced Chinese studios.

Looking ahead, we are planning to expand this collaborative model globally to engage with international developers, creating a truly borderless game development network.

Shawn Zhiyuan Zhang (Head of Capital Markets and Investor Relations)

Thank you, Hua Rong. That will be our answer for your questions.

Hua Rong (Analyst)

谢谢管理层，没有其他问题。

Operator (participant)

The next question comes from Tina Wang with SDICSI. Please go ahead.

Tina Wang (Analyst)

好的，谢谢管理层。这是我的提问。我有两个问题。第一个问题是关于营收和经营数据的同比下降，管理层能否再帮我们详细解读一下背后的原因，以及对于未来的业务发展和财务表现是否有可以分享的展望。我的第二个问题是管理层刚才也提到我们在更加激烈的竞争中是采取了更加审慎的市场投放策略，也想请问管理层能否分享我们怎么看未来的行业竞争趋势，以及我们的应对策略。 I'll translate myself. Thanks, Management, for taking my question. I have two questions. The first one is, can management share more color on the revenue decline and weaker operating metrics this year? How do we think about future business trend, revenue, and profit forecast if possible? My second question is, management mentioned before that you have adopted a prudent marketing strategy among intense competition. Can management share more insights on industry trend, including competition, and what is our specific solution to deal with it? Thank you very much.

Shawn Zhiyuan Zhang (Head of Capital Markets and Investor Relations)

嗨，Tina，你好。我是Shawn。还是因为您第一个问题是关于我们营收还有经营数据，这个我先回答一下，然后后面一个问题也是请我们CEO Carl来回答。所以其实我们公司上市流程完成之后，就像刚刚前面Brian已经提到的，我们是主动地对我们的业务端进行了比较全面而细致的一个改革。这个改革的目的就是为了提高公司中长期的盈利能力和实现可持续的健康发展。我们之前有一些老游戏都很优秀，然后也是在为公司持续地产生收入。但是同样的也是逃不过行业的客观规律。因为Tina，您关注游戏行业时间比较久，所以我想对这个也是比较熟悉。它每年必然地会产生一定程度的用户流失和收入下滑，是个非常正常现象。如果说您目前跟踪我们同业公司的一些产品的生命周期，应该也是可以得出类似的结果的。那么未来整体的业务的发展，我想肯定一个是要靠新的产品，还有新的业务的模式来推动。综合地来看，就是说我们用老产品来持续地贡献收入，同时用开发和定制业务模式逐渐地去形成一个新的增长点。在这个过程当中，营收和经营数据会有一些波动。但是公司的管理层目前对于未来的增长路径还是比较充满信心的。 I will give the translation for myself, so since the company completed the listing process, as Brian just mentioned, we have taken the initiative to carry out a comprehensive and detailed reform on our business. The main purpose of the reform is to improve our mid and long-term profitability and achieve sustainable and healthy development. Some of our existing games are excellent and continuing to generate revenue for Gamehaus. But they also cannot escape from the objective laws of the industry. Every year, there will be a certain degree of user loss and revenue decline. This is very normal, and I believe that if you track the life cycle of some games of our peer companies, you can also get similar results, then I think the development of the overall business in the future will definitely be driven by new game products and new business models.

So in general, existing games will continue to contribute revenue for us, while development and customization business gradually will form the new growth points. So during this process, the revenue and operating data will fluctuate a little bit, but the management is confident upon the future growth path. 您的第二个问题我还是交给我们CEO Carl来回答。 I will give your second question to our CEO, Carl. Please proceed.

Carl Cai Yimin (CEO)

哎，Hello, Tina，你好。谢谢你的问题。我们对移动游戏整个营收大盘的一个趋势的判断其实是，我们觉得接下来的话，整个的大盘总体会处于一个比较稳定的状态，每年可能会有一个比较小的这样的一个增幅。但是在用户获取方面来说的话，竞争还是会非常非常的激烈。基本上我们可以做的判断是游戏行业已经处于在一个存量上。在这样的一个大背景下的话，我们的老产品由于先前累积了比较多的老用户，而且是长生命周期的品类，仍然能够在相当长的时间内，我们预期是可以维持住规模。在一定的推广，控制一定的推广投入的条件下的话，可以稳定地产出利润。而我们在未来新产品的选择上则肯定会向更加轻量化的方向去发展，以降低获客成本，并去更好地适应日趋碎片化的用户游玩场景。同时在品类的选择上来说的话，我们还是会尽量去做长生命周期的品类。这样的话能让我们在更长的时间内为用户创造价值，也从中获得价值。总体来说，我们当前的老产品运营和新产品立项的策略都是适应了前面所提到的行业的总体趋势的。我们也是希望通过执行这样的策略，使得我们能在未来的市场中更具竞争力。Okay, I will answer the question in English. After two years' decline in 2022 and 2023, the global mobile gaming market's revenue has generally stabilized and is projected to see modest annual growth. In terms of user acquisition, the competition remains highly fierce as the market has largely transitioned into a saturation stage. Against this backdrop, our established games, having accumulated a substantial user base, can maintain their scale over an extended period and generate steady profits with controlled marketing investments. Looking ahead, our future new games must adopt more casual designs to reduce user acquisition costs and better accommodate increasingly fragmented gaming scenarios. Regarding genre selection, we aim to develop games with long life cycles that enables users to consistently contribute value over an extended period. Overall, our current strategies for legacy game operations and new game development align with the industry trends mentioned earlier.

We believe executing this dual approach will enhance our competitiveness in the market. Thank you.

Shawn Zhiyuan Zhang (Head of Capital Markets and Investor Relations)

Okay, thank you, Tina. That will be our answers to your questions.

Tina Wang (Analyst)

Thanks, Carl and Shawn. That helps a lot.

Operator (participant)

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Shawn Zhiyuan Zhang (Head of Capital Markets and Investor Relations)

Thank you, Operator, and thank you all for participating on today's call, and thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

Operator (participant)

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.