Gamehaus Q4 Earnings Call Highlights

Gamehaus (NASDAQ:GMHS) reported fourth-quarter fiscal 2026 revenue of $24.3 million and net income of $0.9 million, while outlining a strategic shift toward generative AI initiatives and a more cash-flow-focused approach to its existing casual and social casino mobile-game portfolio.

Revenue for the quarter ended June 30 fell 20.8% from $30.7 million a year earlier, though it landed within the company’s prior outlook of $23 million to $26 million. Full-year revenue declined 11.4% to $104.7 million, while net income rose slightly to $3.9 million from $3.8 million in fiscal 2025.

Chairman of the Board Brian Feng Xie said fiscal 2026 was the company’s final full fiscal year under its previous business model. The company announced its strategic transformation in August and has begun reallocating resources toward opportunities in generative AI.

Legacy Portfolio Management Shifts Toward Cash Flow

Management said the economics of user acquisition in casual games have structurally changed as player populations in mature markets remain stagnant, attribution and targeting capabilities weaken, and competition intensifies for a relatively fixed pool of users.

Beginning in July, Gamehaus changed the way it manages its existing portfolio, placing greater emphasis on cash flow and profitability. User-acquisition spending will be allocated among titles based on expected returns. The company said the effects of that change were not reflected in the reported fourth-quarter results and expects revenue from the legacy portfolio to decline gradually.

For the first quarter of fiscal 2027, Gamehaus forecast revenue of approximately $20 million to $23 million, below the $24.3 million reported in the fourth quarter. CEO Carl Yimin Cai said the company expects some moderation in portfolio revenue over the next one to two quarters as it applies more disciplined controls to marketing spending.

Cai said the company aims to mitigate that decline by increasing direct-to-consumer revenue, refining operations for existing users to improve retention and monetization depth, concentrating marketing spending on campaigns with shorter payback periods and higher efficiency, and optimizing operating costs. He said management expects those actions to offset the revenue moderation and improve profitability.

Head of Capital Markets and Investor Relations Shawn Zhang said investors should view the legacy portfolio as “an actively managed curve, rather than a passively declining one.” He added that management had observed pressure on growth in the legacy business before altering its strategy.

Monetization Metrics and DTC Mix Improve

Although daily active users and monthly active users declined year over year in the fourth quarter, Gamehaus said monetization improved. Average revenue per daily active user rose 11.6% to $0.577 from $0.517, while average daily payer conversion increased to 2.5% from 2.3%.

In-app purchase revenue was $21.7 million in the fourth quarter, down 22.2% from $27.9 million a year earlier. Advertising revenue declined to $2.6 million from $2.8 million. For the full year, in-app purchase revenue was $94.5 million, down from $106.3 million, while advertising revenue fell to $10.2 million from $11.7 million.

The company continued to expand its direct-to-consumer channel mix, which reached 16.2% by the end of the fiscal quarter. Xie said DTC sales reduce platform commissions and contributed to the company’s year-over-year gross-margin improvement. Gamehaus is targeting DTC penetration of more than 20% by Dec. 31, 2026.

Profitability, Costs and Liquidity

Total operating costs and expenses in the fourth quarter decreased 14.4% to $25.1 million. Selling and marketing expenses declined to $10.2 million from $11.8 million, primarily due to lower advertising spending. Cost of revenue fell 17.4% to $12 million, reflecting lower platform commissions and reduced profit-sharing payments to developers for certain mature titles.

Fourth-quarter operating results shifted to a loss of $0.8 million, compared with operating income of $1.4 million a year earlier. Full-year operating income fell to $1.4 million from $3.4 million, while the operating margin declined to 1.3% from 2.9%.

For fiscal 2026, selling and marketing expense declined 15.2% to $41 million, including a $7.3 million reduction in player-acquisition and retention advertising. Research and development expense rose 11.4% to $6.3 million. General and administrative expense increased 36.5% to $6.4 million for the year, primarily due to personnel costs and investments in public-company and organizational infrastructure, though fourth-quarter G&A expense fell 6.6% year over year.

Gamehaus ended the fiscal year with $17.6 million in cash and cash equivalents, compared with $15.2 million a year earlier. Including short- and long-term investments, its combined cash and investment balance was about $25 million.

Zhang said the company intends to fund much of its transition through cash generation from mature games and deploy investment in stages as its AI direction is validated. He said Gamehaus has no financing arrangements to report, though it will continue evaluating capital-market tools.

AI Development and Capital Returns

During fiscal 2026, Gamehaus made a minority investment in an early-stage AI game-generation studio. The company said it has validated an end-to-end AI game-production process and can produce casual games with relatively simple mechanics in roughly one week.

Cai said the next phase will focus on improving player experience through elements such as level design and difficulty calibration, while identifying gameplay concepts that players will embrace. The company plans to test multiple genres in the second half of the year, including established gameplay formats and AI-native concepts. Management did not provide product targets or commercialization timelines.

The company also launched its Gamehaus AI Agent system at the end of June, a companywide AI access and governance platform hosted on its own servers. The system integrates more than 10 domestic and international models, and employee adoption reached 70% as of July 16, according to the company.

As of June 30, Gamehaus had repurchased about 518,000 Class A ordinary shares for approximately $600,000. On Aug. 27, its board extended the existing $5 million share-repurchase program by one year through Aug. 28, 2027.

About Gamehaus (NASDAQ:GMHS)

Gamehaus Holdings Inc is a mobile game developer and publisher. Gamehaus Holdings Inc is headquartered in Beijing, China.