Gamehaus Holdings reports Q4 revenue decline while launching dual growth strategy and setting conservative guidance for fiscal 2026

OPERATOR - (00:01:38)

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Gamehaus Holdings' fourth quarter and full year of fiscal 2025 earnings conference call. Currently, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be followed at that time. As a reminder, we are 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 Wang. Jack, please proceed.

Jack Wang - Moderator - (00:02:13)

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 Holdings for the fourth quarter and full year of fiscal 2025. We released our earnings results earlier today. The press release is now available on the company's Investor Relations 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 Imin, Chief Executive Officer, and Mr. Shang Zhang, Head of Capital Markets and Investor Relations. Brian will review business operations and company highlights, followed by Sean, who will discuss detailed financial results. They will all be available to answer your questions during the Q and A session. And before we proceed, I would like to remind you that this call may contain forward looking statements which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, please refer to our filings with the SEC. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in US dollars and with that, I would like to introduce our Chairman Brian. Brian will deliver his remarks in Chinese and I will follow up with corresponding English translations. Please go ahead, Brian. Hello everyone. Thank you for joining Gamehaus Holdings's conference call for the fourth quarter and full year of fiscal 2025.

Brian Xie Feng - Chairman of the Board - (00:04:49)

Looking back on the final quarter of fiscal year 2025 and the full year as a whole, we achieved our objectives through disciplined execution. This quarter, we formally introduced a dual engine growth strategy that combines organic growth with strategic expansion. On the organic side, we continue to operate and enhance our mature titles that generate stable cash flows. At the same time, we're extending our game architect model across our developer network to drive higher quality outcomes. In parallel, we are actively evaluating high quality casual mobile game assets worldwide. By leveraging our long standing Data resources and AI capabilities. Together with China's deep pool of development and LiveOps talent, we are confident in our ability to help promising casual titles become more profitable and achieve longer life cycles. Our efforts to diversify into new game genres achieved a significant milestone this quarter. In April, we launched our first RPG title, Adventure of the White Chord, which enabled us to fully test and extend our end to end publishing capabilities in this genre, from team selection and theme evaluation to publishing support and art assets management. Building on that foundation, we plan to launch our second RPG in late September. Beyond that, our pipeline remains very strong with a healthy slate of titles in testing or preparing for launch, many of which are scheduled for release in 2026. As these new games come online, we expect our portfolio mix to become more balanced and resilient, with a greater likelihood of generating breakout hits. In short, our organic growth strategy is not about betting on a single title or even a single genre. Instead, we are investing in a proven methodology that lays the foundation for a more sustainable growth trajectory in 2026 and beyond. Maori Suping as we expand our pipeline and strengthen our portfolio, we are also enhancing our operating capabilities where AI has become a core part of our operations. We're applying it extensively in areas such as our asset generation, multilingual localization and customer support, while encouraging broader adoption of AI tools to drive meaningful transformation across the company. In customer support, AI currently resolves about 30 to 50% of tickets and our goal is to push that figure above 50% over the next few quarters. On the monetization front, early results from AI driven content generation, personalized recommendations and multi round alpha and beta testing have collectively increased player spending by 5 to 10%. On the other hand, we continue to focus on direct to consumer or DTC payments as a key driver of margin improvement, and increasing our DTC mix has become an important strategic objective. Regulatory and platform developments vary across markets. In the United States or where progress has been most advanced, our Tidal grant cash slots generated over 10% of its iOS revenue through DTC channels in August. In other regions where regulations and platform policies are evolving more gradually, we are closely tracking developments and then ready to roll out DTC as soon as conditions permit if regulatory and platform timelines unfold as we expect, our near term goal is to increase the DTC mix of our key titles to 15 to 20% by the end of fiscal 2026, which we believe will meaningfully enhance our gross margin. But beyond expanding our scale and improving profitability, we also remain committed to delivering returns to our long term shareholders. Since completing our de-SPAC transaction, we believe our stock has for an extended period failed to fully reflect our fundamentals or the long term growth potential of both our business and the broader gaming industry. As such, in late August our Board approved a share repurchase program authorizing the buyback of up to US$5 million of our Class A ordinary shares over a one year period. We see this as an important first step as we intend to continue pursuing various shareholder return initiatives to strengthen investor confidence. Finally, based on our current product portfolio and the anticipated launch schedule of our upcoming pipeline titles, we are setting our revenue guidance for the first quarter of fiscal 2026 ending September 30, 2025, in the range of $27 million to $30 million. And now I will turn the call over to Sean to walk you through our financial performance.

Sean - (00:14:36)

Thank you Brian and hello everyone. I will now provide a detailed overview of our financial performance for the fourth quarter and full fiscal year 2025 which ended June 30, 2025. Please note that all figures are in US dollars and all comparisons are made on a year over unless otherwise stated. In the fourth quarter of fiscal year 2025, our revenue exceeded the high end of our previous guidance range to reach 30.7 million, compared with 31.6 million in the same period last year. The decline primarily reflects our strategic pullback in user acquisition spending and our deliberate adjustments to our marketing in response to involving platform dynamics and heightened industry competition. Lower marketing expenditures resulted in reduced traffic and user acquisition, which in turn weighted on revenue. Breaking down our revenue by segment, our In App purchase revenue was 27.9 million, a modest decrease of 2.4% from 28.6 million a year ago. Advertising revenue was 2.8 million, down from 3 million in the same period last year. It's important to note that despite these headwinds, our ongoing enhancement to in game content is and features help sustain engagement and retention among our existing players. For the full fiscal year 2025, revenue totaled US$118 million compared to 145.2 million in the previous fiscal year. The decline mirrors the same trends we observed in the quarter, primarily driven by a reduction in user acquisition spending and the strategic adjustments to our marketing efforts. In App purchase revenue was 106.3 million, down 19% from 1 31.6 million a year ago. Advertising revenue was 11.7 million, compared to 13.6 million last year. Turning to expenses in the fourth quarter, total operating cost and expenses were 29.3 million, remaining relatively stable compared with the same period last year. More specifically, cost of revenue declined nearly 6% to 14.5 million, primarily driven by lower platform fees, reduced profit sharing payments to game developers and a decline in customized design fees. R and D expenses increased 37.3% to 1.4 million as we advance early stage collaborations with multiple developers to build out our future content pipeline. Selling and marketing expenses were 11.8 million, slightly lower than 12.1 million in the same period last year, consistent with our strategy to scope back advertising spending for mature titles. GNA expenses were 1.5 million compared to 0.8 million a year ago, mainly due to a higher salary expenses and professional service fees tied to our public listing and associated governance enhancements. For the full fiscal year 2025, total operating costs and expenses were 114.7 million, representing a 16.2 reduction from 1.36.9 in the previous fiscal year. This reflects our disciplined cost management in a challenging environment. Cost of revenue declined 20.9% to 55.9 million, driven by similar factors as in the quarter, including lower platform fees, reduced profit sharing payments to game developers and a decline in customized design fees. R and D expenses were 5.7 million, up 18.9% from 4.8 million in the prior fiscal year, underscoring our commitment to content innovation through investment in early stage partnerships with gig developers. Selling and marketing expenses were 48.4 million, down 16.1% from 57.7 million in the previous fiscal year, in line with our strategy of scaling back at advertising spending for mature titles. G and A expenses were 4.7 million, up 25.4% from 3.8 million in the prior fiscal year, primarily due to the same factors that led to the quarterly increase shifting to profitability in the fourth quarter. Operating income was 1.4 million, down from 2.3 million a year ago. Operating margin was 4.6% versus 7.1% in the same period last year. For the full fiscal year 2025, operating income was $3.4 million, down from $8.3 million in the prior fiscal year. Operating margin was 2.9% compared with 5.7% last year. Net income for the fourth quarter was $1.5 million, down from $2.5 million in the same period last year, and earnings per ordinary share was 3 cents compared with 5 cents a year ago. Net income for the full fiscal year 2025 was 3.8 million, down from 8.6 million in the per fiscal year. This translated into earnings per ordinary shares of $0.08 compared with $0.16 last year. We ended fiscal year 2025 with 15.2 million in cash and cash equivalents compared to 18.8 million as of June 30, 2024. We believe this is sufficient to meet our liquidity and working capital needs for the next 12 months. In addition, I want to highlight an important capital market development. On August 29, 2025, our board authorized a share repurchase program of up to US$5 million over the next 12 months through August 28, 2026. This underscores both our confidence in the company's long term growth trajectory and our commitment to delivering shareholder value. Looking ahead to the first quarter of fiscal year 2026, we expect total revenue to be in the range of approximately 27 million to 30 million based on current progress and market demand. Overall, we see fiscal 2025 as a year of strategic recalibration, one where we strategically balance short term headwinds against the need to invest in our future. While the external environment remains challenging, we believe the actions we have taken, including tightening marketing spending, refining cost structure, investing in innovative game content, and deepening partnership with developers, are laying the foundation for sustainable growth. As we enter fiscal year 2026, we will remain focused on disciplined execution and unlocking growth from our strengthened content pipeline and enhanced operating efficiency. We are confident in our ability to capture new opportunities and deliver sustainable value for our shareholders. With that, we can now open our call for questions. Our CEO, Mr. Carl Tsai and I will answer your questions. Operator, Please proceed.

OPERATOR - (00:24:13)

We will now begin the question and answer session. To ask a question, you may press Star then one on your touchtone phone. If you are 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. Additionally, when asking a question, please state your question in Chinese first, then immediately translate them into English for the convenience of everyone on the call. At this time, we will pause momentarily to assemble our roster. The first question today comes from Tina Wang with Citics International. Please go ahead.

Tina Wang - Analyst - (00:25:45)

I'll translate myself. Thank management for taking my question. I have two questions. The first one is during fiscal year 2025 that the profit declined much more than revenue change. Could management share more color with us regarding reasons behind and how should we think about the further margin trend? And my second question is regarding DTC payments. To my understanding, both Apple and Google have historically taken a hard line on DTC payments and there also have been several restriction cases. So my question is if Apple and Google take further restrictive action, what is the impact to us and how do we mitigate this impact. Thanks.

Brian Xie Feng - Chairman of the Board - (00:29:25)

I will give English translation for myself. So for fiscal year 2025 our overall net margin was roughly 3.2%. So taken in isolation this is not a very high level. But I think net margin is not an ideal yardstick for for a industry standard comparison there's gonna be two reasons. So firstly, the bottom line of our P and L is very sensitive to certain one offs and also the scale of the company from the top line to the bottom line there are many items that could move the outcome. So some of them are non recurring and could meaningfully skew our net income. Especially for the companies that are not yet at a very large scale. So as we noted last quarter, our net income in the early nine months of the fiscal year still reflected some one time items related to our listing preparation. So if you could take a Look at our Q4 on a standalone basis, the net income was about 1.5 million on a 30.7 million of our revenue. That is roughly already, I mean 5%, which shows a very clear improvement. But we also want to mention that apples to apples is very hard to make the comparison across our, you know, mobile gaming sector. So our industry actually includes both public companies just like us and also probably private companies operating under, you know, different environments and accounting practices. So I think a simple comparison of net margins often fails to capture operational progress. So internally we therefore track a more operation focused metrics. We take the revenue subtract cost of revenue and sales and marketing expense then use the result to divide that result by revenue. So on this basis the rate for the whole fiscal year of 2025 was about 11.7% and for the fourth quarter it was about 14.3%. So personally speaking, I would say a level around 15% is relatively satisfying for us. But also I would like to mention that it is a non GAAP measurement so we only use it as supplemental context. For your information, the CEO, I will give the second question to our CEO Mr. Kao Tsai. Please proceed. So.

Carl Tsai - (00:35:25)

Okay, I will translate myself. Your question is crucial as it touches the of our dtc. So on the current strategy share we are in strong growth phase, albeit from a starting point. As you noted, the overall proportion of DTC revenue company wide is currently relatively low. This is primarily because our full fledged DTC strategy was officially launched only after Apple's policy changed allow third party payments in the US around mid year. This makes strategic starting point with a clear timeline. Despite the recent start, the growth trend is highly positive. To date in our product with the most advanced DTC implementation, DTC payments share has exceeded 10% in the United States Apple Store and is contributing significantly higher margins. Our other product lines are actively following suit and we expect the overall share to show rapid step like growth in the coming quarters and on Platform Policy risks Our model is compliant and aligned with our e risk reversible regulatory trend. We are fully aware of Apple's and Google's firm stance on protecting their ecosystems. However, we believe the global wave of anti monopoly legislation and court rulings, particularly in the United States, Europe and Korea is creating an irreversible trend forcing app stores to open up to third party payment systems. The Epic versus Apple case is a key indicator. Thus, while platform policies are striped, we must operate within an involving legal framework which provides sustainable space for compliant operation. More importantly, our DTC solution was designed from the ground up with paramount focus on compliance. We are not trying to circumvent rules but operating within the allowed framework. We use compliant methods like user communication, official website guidance and community management to intelligently inform users about and guide them towards our direct payment options. We are building a direct trust and service relationship with our users, not a technical workaround which fundamentally avoid the risk of violation and punitive measures. Regarding our Plan B, we have a multi layered and flexible contingency structure. Management has clear understanding and preparation for this. So firstly, compliance is our top priority. Even if policy tighten, our foremost principle remains strict adhere to the current rules. We would immediately adapt our tactics to ensure all operations stay within the platform's guideline safeguarding our core business and we have. Secondly, we have already technically integrated and evaluated several mature third party payment solution providers. Should platform policies change, we could swiftly switch to or integrate these alternative channels to ensure DTC revenue continuity, the ultimate value of user assets. The core asset of the DTC strategy is not the saved commission, but the direct user community and private traffic we build. Even in the most extreme scenario where DTC payment functionality is temporarily restricted, we retain direct communication channels with our core users. This means we can still conduct marketing, releasing updates and organize events the moment the policy allows. We can reactive payment instantly once established user relations and reach are permanently assets. In summary, our DTC strategy is riding the wave. Compliant first and backed by a robust risk mitigation framework. It is a key investment in the company's long term competitiveness and profitability. Not a fragile or nothing Gamble. Thank you.

Tina Wang - Analyst - (00:41:25)

This is Tina. Thank you, Tina. That will be the answer of us.

OPERATOR - (00:41:30)

The next question comes from Hua Rong with Jinyu Asset. Please go ahead.

Hua Rong - Analyst - (00:42:37)

Thanks. Management, I have two questions. The first one, I noticed that you have set the revenue guidance of Q1 as $27 million to $30 million, which appears relatively flat versus the prior quarter's guidance. I also noticed that last quarter's actual revenue ultimately slightly exceeded the prior guidance range. Should I view the new outlook as deliberately conservative at this stage? And could you share how you are thinking about potential updates to guidance as the quarter progress? Thank you. And the second question is. It appears 2025 profitability was driven largely by cost and expense reductions. We have seen reductions in R and D, user acquisition and marketing. How will management ensure this choice would not undermine the company's long term product competitiveness? Thank you.

Brian Xie Feng - Chairman of the Board - (00:44:26)

. The guidance. I will give the English translation for myself. So you're right. Our fourth quarter revenue ultimately came slightly above the high end of our previous guidance. That outperformance was largely driven by some one time factors and overall the quarter was still consistent with our former expectations. When we set the revenue guidance, we anchored with the in quarter gross revenue generated by our mobile game portfolio. So, as Brian just mentioned before, we are executing on several fronts. Firstly, operating and nurturing our mature titles that generate stable cash flow. Secondly, broadening into new genres. So in April, we just launched, our first RPG game which is a small controlled experiment that give us valuable publishing experience. So at the end of September, we will roll out our second RPG game and into the next year we expect a number of our pipeline projects to come to market in stages. So in parallel, we are closely monitoring high quality mobile gaming assets globally. If attractive opportunities arise, you would say the progress on any of these fronts could influence our future guidance. Also, of course, we will as always, refine our quarterly guidance when appropriate to reflect the underlying business so that we will let the market and also our investors to have a timely and accurate view of our progress. I will give the second question to our CEO. Please proceed.

Carl Tsai - (00:48:26)

Okay. okay, I will translate myself. Thank you for your question. It's a very good one. While we have improved profitability through efficiency measures, please rest assured that our cost saving is strategic and selective operational refinement, not simply across the board cut. We ensure our long term product strength is not compromised through two core strategies. Firstly, for existing live games, we focus on precision and efficiency, not blind reduction. Our strategy for mature and live games has shifted from extensive scaling to deep operation and efficiency enhancement. We optimized user acquisition, spending and team structures to eliminate broad non targeted investment. Instead, we focused our resources on direct to consumer and VIP user management. This approach has not shorteneded the product life cycle but has strengthened and extended it by boosting user loyalty and payment conversion rates. This secures a stable profit foundation and provides reliable cash flow for funding new game projects. Secondly, for future projects we maintain revenue opening alongside cost saving, investing wisely in the future. Cost optimization has not reduced our investment in cost strategic initiatives. In fact, we continue to attract top tier game design and production talent from the industry to bolster our innovative capabilities. Our core game architect mode is actively underway. The reason is not fully reflected in the current cost structure is due to our phased success-oriented development path. Each new project undergoes rigorous internal testing and validation at the concept and prototype stages. Only projects that hit key performance metrics proceed to receive full scale development. This approach ensures controllable upfront investment and significantly mitigates the R and D risk. It's a smarter and more responsible way to invest. As these validated projects progress into full development, you will see a continued and healthy increase in our product side investments in the near future. In summary, our cost saving optimizes existing engines while our revenue opening cultivates new ones. Together they safeguard both our short term profitability and long term product competitiveness.

Hua Rong - Analyst - (00:53:37)

Thank you. Thank you. That will be answer of us.

OPERATOR - (00:53:46)

There are no additional questions at this time. I will now hand the call back to management for any closing remarks.

Jack Wang - Moderator - (00:53:55)

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 - (00:54:13)

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