Gamehaus Q3 FY2026 Earnings Call - DTC Penetration and AI-Driven Efficiency Drive Margin Expansion

Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to Gamehaus’ third quarter of fiscal year 2026 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 are recording today’s call. If you have any objection, you may disconnect at this time. I will now turn the call over to today’s speaker host, Miss Ally Wang. Allie, please proceed.

Ally Wang, Moderator/Translator, Gamehaus: 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 third quarter of fiscal year 2026. We released our earnings results earlier today. The press release is 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 Sean, who will discuss detailed financial results. They will all be available to answer your questions during the Q&A session. 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. 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 translation. Please go ahead, Brian.

Brian Xie Feng, Chairman of the Board, Gamehaus: 各位投资人、分析师以及长期关注公司的朋友们，大家好，感谢大家参加Gamehaus 2026财年第三季度业绩电话会。

Ally Wang, Moderator/Translator, Gamehaus: Hello, everyone. Thank you for joining us for Gamehaus third quarter fiscal year 2026 earnings call.

Brian Xie Feng, Chairman of the Board, Gamehaus: 本季度公司继续按照既定的效率优先、利润为本的发展路径稳健运行。在主要市场季节性相对偏淡的季度环境下，我们的营收达到了约2,620万美元，超出了上季度业绩指引区间的上限，展现了公司核心业务的运营韧性。更值得关注的是，从九个月累计的视角来看，公司盈利能力在实质性跃迁得到了进一步验证。2026财年前九个月，我们累计实现净利润约380万美元，同比增长约40%，这不是单一季度的偶然成果，而是我们在过去几个季度在产品组合、投放节奏、成本结构和支付渠道等多个维度上持续优化所累积的阶段性回报。

Ally Wang, Moderator/Translator, Gamehaus: This quarter, we continue to deliver on the efficiency-first profitability focus strategy we laid out over the past year. Despite a seasonally softer quarter across our key markets, revenue came in at approximately $26.2 million, above the upper end of the guidance range we set last quarter, underscoring the resilience of our core business. More importantly, the profitability improvement we have been building toward is now clearly visible on a trailing basis. Over the first nine months of fiscal 2026, we generated approximately $3.2 million in cumulative net income, up roughly 40% year-over-year. This is not the result of any single quarter. It reflects the compounding effect of the work we have done across our product mix, marketing discipline, cost structure, and payment channels over the past several quarters.

Brian Xie Feng, Chairman of the Board, Gamehaus: 在用户和变现层面，我们看到了精细化运营所带来的持续价值释放。本季度ARPDAU达到$0.5，同比增长约13%，每日付费用户转化率也从去年同期的2.2%进一步提升至2.4%。这背后是我们持续推进的用户分层运营体系正在发挥作用。通过算法不断总结用户行为特征，对不同分层的用户精准推送匹配的活动与内容，并在内容呈现形式上不断丰富与迭代，让玩家从每一次互动中获得更强的体验感与价值感。

Ally Wang, Moderator/Translator, Gamehaus: On the user and monetization side, our investment and more targeted live ops continues to pay off. ARPDAU reached $0.55, up approximately 13% year-over-year, and the daily payer conversion improved from 2.2% to 2.4%. These gains are driven by the player segmentation system we have built out over recent quarters. We use behavioral data to tailor in-game events and content for different player segments, and we are constantly iterating on the format and presentation of that content to drive stronger engagement and higher willingness to spend.

Brian Xie Feng, Chairman of the Board, Gamehaus: 我们也清醒地认识到，本季度MAU和DAU相较去年同期有所回落，这是我们主动收缩低效买量、聚焦高净值玩家运营策略的直接体现，是我们追求高质量收入结构所付出的合理代价。随着2027财年内多款新产品陆续上线，用户基本盘预计将重新进入扩张通道，届时我们更成熟的运营体系和精细化能力将进一步释放这些新增用户的长期价值。

Ally Wang, Moderator/Translator, Gamehaus: We recognize that MAU and DAU declined year-over-year this quarter. That is a direct result of our decision to pull back some low return user acquisition and focus on higher value players. We see this as a deliberate and acceptable trade-off as we shift toward a higher quality revenue mix. As multiple new titles launch through fiscal 2027, we expect our user base to return to growth, and the operational infrastructure and segmentation capabilities we have built will allow us to monetize those new users more effectively from day one.

Brian Xie Feng, Chairman of the Board, Gamehaus: 成本端，本季度运营成本与费用同比下降约为10.1%，其中销售与市场费用同比下降约为15.5%，广告投放支出减少约200万美元。我们的营业销售成本同比下降约为12.7%。这其中很重要的一个驱动因素就是DTC渠道带来的平台分成节约，正在持续兑现为利润。

Ally Wang, Moderator/Translator, Gamehaus: On cost, total operating expenses declined approximately 10.1% year-over-year. Selling and marketing expenses were down roughly 15.5%, including a $2 million reduction in advertising spend. Cost of revenue also decreased approximately 12.7%, with DTC-driven savings on platform commissions now contributing meaningfully to profitability.

Brian Xie Feng, Chairman of the Board, Gamehaus: DTC渠道的进展在本季度迎来了又一个重要节点。截至2026年3月底，公司整体DTC收入占比已经达到了约13.9%，相较上季度末的约10%继续稳健提升。我们头部产品GCS的DTC占比更是进一步突破至约36.7%。同时，本季度我们已经完成了Social Casino类别全部产品的DTC的接入，进一步巩固了这一类别的利润释放空间。展望本财年末，我们预计公司整体DTC占比有望达到15%至20%的水平。

Ally Wang, Moderator/Translator, Gamehaus: Notably, DTC hit another milestone this quarter. As of the end of March, company-wide DTC revenue mix reached approximately 13.9%, up from roughly 10% last quarter. Our flagship title GCS advanced to approximately 36.7%. We also completed the DTC rollout across our entire Social Casino portfolio during the quarter, opening up additional margin opportunity in that category. By fiscal year-end, we expect company-wide DTC penetration to reach 15%-20%.

Brian Xie Feng, Chairman of the Board, Gamehaus: 我们始终认为DTC不仅是一个支付渠道的切换，更是发行公司与玩家建立直接连接，构建长期价值的战略基础设施。随着这一趋势在行业层面的持续扩散，我们将继续保持快速跟进与坚定投入。

Ally Wang, Moderator/Translator, Gamehaus: We continue to view DTC as much more than a payment optimization. It is a way to build direct player relationships that create lasting value. As DTC adoption accelerates across the industry, we intend to remain a fast mover and invest aggressively behind it.

Brian Xie Feng, Chairman of the Board, Gamehaus: 在产品pipeline方面，本季度我们在RPG和Puzzle两条主线上都取得了清晰的进展。在RPG品类，上季度签约的一个产品正在处于商业化测试阶段，按目前的节奏，预计将在2026自然年第二季度末左右正式上线。发行路径将从港澳台启动，依次推进至日韩，并最终覆盖欧美以及其他地区。除此之外，我们另一款定制开发的RPG将按计划预计将在9月份左右上线。本季度我们又签约了一款将面向全球发行的RPG产品，也预计同样落在8到9月份的上线窗口。

Ally Wang, Moderator/Translator, Gamehaus: On our product pipeline, we made clear progress across both RPG and Puzzle this quarter. In RPG, the title we signed last quarter is now in commercial testing. Based on current pace, we expect it to go live around the end of Q2 calendar 2026, launching first in Hong Kong, Macau, and Taiwan, then extending into Japan and Korea, and ultimately into North America, Europe, and other regions. A second custom-developed RPG is on track to launch around September. This quarter, we signed an additional RPG title for global distribution, currently targeting an August to September launch window.

Brian Xie Feng, Chairman of the Board, Gamehaus: 在Puzzle品类，本季度我们累计完成了7至8款原型产品的测试，其中已有两款产品展现出值得长期投入的潜力，正在更长线的版本开发阶段。同时，此前已上线运营的一款规模适中的Puzzle产品，也为我们持续提供宝贵的运营数据和变现经验，帮助我们不断优化Puzzle品类的整体变现能力。Puzzle作为生命周期较长的混合变现产品，将继续是我们产品矩阵中的重要组成部分。

Ally Wang, Moderator/Translator, Gamehaus: In Puzzle, we tested 7-8 prototypes this quarter. Two of those showed strong enough results to move into extended development. A moderately scaled Puzzle title that is already live, continues to serve as a valuable source of real world operational and monetization data, helping us refine our approach across the category. With their longer life cycles and hybrid monetization model, Puzzle titles remain an important part of our portfolio strategy.

Brian Xie Feng, Chairman of the Board, Gamehaus: 技术人类建设方面，本季度AI已经从单点工具应用迈入了与公司核心业务流程、技术研发体系以及GBS中台深度融合的新阶段。我们清晰地看到了三个方向的进化正在发生。

Ally Wang, Moderator/Translator, Gamehaus: On technology, AI at Gamehaus has moved past the standalone tool phase, and is now being integrated directly into our core business workflows, our R&D systems, and our GBS platform. We see this playing out across three areas.

Brian Xie Feng, Chairman of the Board, Gamehaus: 第一，AI人类从工具走向组织及普及。Vibe coding已经在产品和技术团队的日常研发工作流中实现了系统性渗透，正在推动整个研发组织从传统的人力驱动模式向AI助手加人类工程师的协同模式持续演进。

Ally Wang, Moderator/Translator, Gamehaus: First, AI is moving from individual adoption to company-wide standard practice. Vibe coding is now embedded in the day-to-day workflows of our product and engineering teams, shifting the way our R&D organization works from a traditional, fully manual model towards one where AI copilots work alongside human engineers as a matter of course.

Brian Xie Feng, Chairman of the Board, Gamehaus: 第二，AI人类从效率提升走向业务决策支持。本季度我们重点推进了基于AI的预算优化项目和基于AI agent的市场数据洞察工具，让AI开始参与到投放优化、市场判断、竞品跟踪等更具决策属性的业务场景之中。

Ally Wang, Moderator/Translator, Gamehaus: Second, AI is expanding from a productivity tool into a decision support capability. This quarter, we rolled out AI-driven budget optimization tools and AI agent-powered market intelligence, bringing AI into higher stakes functions like ad spend allocation, competitive monitoring, and market analysis.

Brian Xie Feng, Chairman of the Board, Gamehaus: 第三，AI人类从单点应用走向平台化建设。本季度我们在内部Code Service内部系统MCP、OpenCloud业务流程创新等多个方向同步推进，正在搭建一套可复用、可扩展、可治理的企业级AI基础设施。

Ally Wang, Moderator/Translator, Gamehaus: Third, we are building enterprise-grade AI infrastructure. This quarter, we advanced work in parallel on our internal Code Service, system-level MCP integration, and OpenCloud process automation, laying the groundwork for a reusable, scalable, and well-governed AI platform across the company.

Brian Xie Feng, Chairman of the Board, Gamehaus: 这些能力的建设正在转化为可被衡量的实际成果。本季度，我们的浩瀚AI创作平台延续了强劲使用势头，单季度调用次数达到了近7万次，超过了我们之前给出的6万次目标。与此同时，公司内部统一的AI网关本季度共处理了约24万次大模型调用，覆盖的范围从早期的素材生成大幅扩展至客服自动化、市场扫描工作流、运营智能问答，以及其他多个早期agent的工作流场景。这意味着AI已经深度渗透进公司各业务线的日常工作之中，正在让我们的生产效率、决策速度以及组织能力发生本质性的变化。虽然AI能力的建设在短期对财务表现直接贡献仍然有限，但对公司中长期的差异化竞争优势的塑造作用已经清晰可见。

Ally Wang, Moderator/Translator, Gamehaus: These efforts are producing tangible, measurable results. Our HaoHan AI creative platform processed nearly 70,000 requests this quarter, exceeding the 60,000 target we set last quarter. Beyond creative production, our centralized AI gateway handled approximately 240,000 large language model calls during the quarter, with use cases extending well beyond the original asset generation to include customer service automation, market scanning, operational Q&A, and several early-stage AI agent workflows. AI is no longer a side project. It is now part of how we run the business across functions, and it is having a real impact on our speed, our productivity, and how our teams make decisions. The near-term financial impact remains modest, but the competitive advantage these capabilities are creating over the medium to long term is becoming increasingly clear.

Brian Xie Feng, Chairman of the Board, Gamehaus: 更长期来看，本季度AI能力的快速积累也正在加速我们对Gamehaus未来战略定位的思考与升级。Gamehaus自成立以来一直专注于成为全球玩家与开发者之间最具价值的连接者，而随着AI在游戏的研发、内容生成、运营投放、用户洞察等各个环节的能力日益成熟，我们正在从一家纯粹的全球手游发行商逐步进化为一家AI驱动的内容生成与分发一体化平台。本季度我们在AI生成游戏内容方面的能力构建也取得了实质性的进展。未来我们将进一步打通AI内容生成到全球分发的完整业务链条。我们相信下一阶段内容发行产业的核心竞争力，将不再仅仅取决于运营能力和数据资源的规模，而是取决于AI能力与分发体系深度融合所形成的系统性壁垒。这一战略主线将是Gamehaus下一阶段最重要的方向之一，也是我们为长期股东价值所创造所做出的最重要的底层投资。

Ally Wang, Moderator/Translator, Gamehaus: Stepping back, the pace at which our AI capabilities are compounding is also shaping how we think about Gamehaus’s long-term identity. Since the beginning, we have been focused on connecting global players with great game developers. As AI matures across development, content creation, marketing, and user intelligence, we see ourselves evolving from a pure-play mobile game publisher into an AI-native platform that integrates content creation and global distribution. This quarter, we made real progress on AI-generated in-game content, and over time we intend to build out the full chain from AI content creation through to worldwide publishing. We believe the next era of competitive advantage in content publishing will not be determined by operational scale or data volume alone, but by how deeply a company integrates AI into its publishing stack.

This is one of the most important strategic directions for Gamehaus going forward, and it is the most significant long-term investment we’re making on behalf of our shareholders.

Brian Xie Feng, Chairman of the Board, Gamehaus: 股东回报方面，截至2026年3月31日，我们已经累计回购了约39.2万股A类普通股，使用回购资金约为48.2万美元。回购计划仍将根据市场环境、股价水平及公司整体资本配置优先级持续审慎推进。管理层对公司中长期的发展前景始终保持坚定的信心，我们将继续在业务投入、利润释放与股东回报之间寻求平衡，把长期的股东价值的创造作为持续不变的核心命题。

Ally Wang, Moderator/Translator, Gamehaus: Regarding capital return, as of March 31st, 2026, we have repurchased approximately 392,000 Class A ordinary shares for a total of approximately $482,000. We will continue to execute the buyback program opportunistically based on the market condition, share price, and our overall capital allocation framework. Management remains confident in the company’s medium- and long-term prospects, and we are committed to balancing reinvestment in the business, profitability, and returns to shareholders with long-term value creation as our guiding priority.

Brian Xie Feng, Chairman of the Board, Gamehaus: 展望下一个季度，综合考虑当前产品上线节奏，为新品所做的市场准备投入，以及部分进入生命周期后期的成熟产品运营资源向新品的战略性倾斜，我们将截至2026年6月30日的2026财年的第四季度营业收入指引定在2,300万美元到2,600万美元之间。

Ally Wang, Moderator/Translator, Gamehaus: For the fourth quarter of fiscal 2026, ending June 30th, 2026, we expect total revenues to be in the range of $23 million-$26 million. This reflects the current pace of product launches, pre-launch marketing investment for upcoming titles, and the reallocation of operating resources from certain later lifecycle titles for new products.

Brian Xie Feng, Chairman of the Board, Gamehaus: 展望2027财年，随着新一代产品线的陆续登场，配合我们更健康的利润结构，更充沛的现金储备，以及在AI与DTC等关键能力上所形成的体系化优势，公司将进入一个全新的高质量增长阶段。

Ally Wang, Moderator/Translator, Gamehaus: Looking ahead to fiscal 2027, as our next generation of titles reaches the market, backed by a healthier margin structure, a stronger balance sheet, and the durable advantages we have established in AI and DTC, we believe the company is well positioned to enter its next chapter of profitable growth.

Brian Xie Feng, Chairman of the Board, Gamehaus: 接下来请Sean继续详细介绍我们的财务表现。

Ally Wang, Moderator/Translator, Gamehaus: With that, let me turn the call over to Shawn for a closer look at our financials.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: Thank you, Brian. Hello everyone. I will now walk through our financial results in more detail for the third quarter of fiscal year 2026, which ended March 31st, 2026. Please note that all figures are in US dollars, and all comparisons are made on a year-over-year basis unless otherwise stated. Starting from the top line. Top revenue for the quarter was $26.2 million, a decrease of 9.1% from $28.8 million in the year-ago period. Advertising costs declined 17.2% year-over-year, which dropped the lower traffic and user acquisition Brian discussed earlier. That said, revenue exceeded the upper end of our forecast for the third quarter. The trajectory remained in line with our long-term growth strategies, underscoring the resilience of our operating model. Breaking down our revenue.

In-app purchase revenue was $23.4 million, a 9.9% decline from $26 million a year ago. Advertising revenue was $2.8 million, slightly down from $2.9 million in the same period last year. As we highlighted before, the monetization improvements we are seeing in ARPDAU and payer conversion helped partially offset the impact of lower user acquisition volumes. Turning to expenses, total operating costs and expenses were $25.7 million, down 10.1% from $28.5 million a year ago, reflecting continued progress in our cost discipline efforts and efficiency optimization. More specifically, cost of revenue decreased 12.7% to $12 million, mainly due to lower platform commission expenses as DTC adoption continued to increase and reduce profit-sharing payments to game developers as some mature titles moved further along in their life cycle.

Research and development expenses increased 24.1% to $1.6 million, reflecting our ongoing collaborations with multiple developers across the development and testing phases as we expand our future game pipeline. Selling and marketing expenses decreased 15.5% to $10.3 million. The $2 million reduction in advertising spend was the primary driver, consistent with the efficiency-focused approach Brian discussed earlier. General and administrative expenses were $1.8 million, up 33.1% from $1.4 million a year ago. This is primarily due to higher salary expenses associated with our efforts to improve corporate governance, financial reporting, and investor relation capabilities, as well as strategic hiring to support business expansion. Turning to profitability, operating income improved significantly to $0.5 million from $0.3 million in the year-ago period. Operating margin expanded to 2.1% from 1%, which we believe further validates the operational adjustment we have been making.

Other income net was approximately $0.02 million, compared with the $0.13 million in the year-ago period. Net income for the quarter was $0.5 million, up from $0.4 million a year ago. Looking at the first nine months of fiscal year 2026, cumulative net income increased approximately 40% year-over-year, reflecting the continued improvement in our profitability profile. We ended the quarter with eight-

Operator: Pardon me, please stand by while we reconnect the speaker line.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: Thank you.

Operator: Hello, this is the operator. We have reconnected the speaker line and we can proceed.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: Thank you, David. We ended the quarter with $18.3 million in cash and cash equivalents, compared with $15.3 million as of June 30th, 2025. We believe this provides sufficient liquidity to meet our working capital needs for the next 12 months. On capital allocation, as a reminder, our board authorized a $5 million share repurchase program in August 2025, with a one-year authorization period through August 18th, 2026. As of March 31st, 2026, we have repurchased approximately 392,000 Class A ordinary shares for approximately $482,000. Going forward, we will continue evaluating repurchase activity based on market conditions, share price performance, and our broader capital allocation priorities. Looking ahead, as Brian mentioned earlier, for the fourth quarter of fiscal year 2026, ending June 30th, 2026, we expect total revenue to be in the range of approximately $23 million to $26 million.

Overall, we are encouraged by the progress we continue to make this quarter, revenue at the upper end of our guidance range, margin continue to improve, and both our DTC initiatives and AI-driven operational capabilities continue to gain traction. Looking ahead, we remain focused on disciplined execution, strengthening our publishing and platform infrastructure, enhancing our product, and delivering sustainable long-term value for shareholders. With that, we are now happy to take your questions. Operator, please proceed.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. 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 and then two. When asking a question in Chinese, please repeat your question in English as well for everyone’s convenience. Our first question comes from Zhenhui with Sanhye Capital. Please go ahead.

Zhenhui, Analyst, Sanhye Capital: You have three RPG titles targeting an August to September launch window. That’s a lot of titles in a narrow timeframe. Is there a risk of cannibalization of resource strain? How are you struggling the marketing spend across them? In Brian’s earlier remarks, he mentioned that Gamehaus’ longer-term goal is to evolve into an AI-driven, integrated platform, both content generated and distribution. Could you give us some more specific color on this? Beyond the games you are currently working on, what does this actually mean, and where are you today along this path? That’s all. Thank you.

Operator: Please pause momentarily while we reconnect the speaker lines. I have reconnected the speaker line. Can you please repeat your question?

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: I think we know the question. I will just let Carl, our CEO, to answer the first question.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: Okay. This is Carl. I will answer the first question. Regarding the three RPG titles planned for launch during the August to September window, we are paying close attention to launch pacing to avoid resource conflicts or potential cannibalization.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: First, in terms of launch schedule, we plan to stagger the releases as much as possible with roughly three to four weeks between each title. This should help reduce internal resource pressure and give our marketing operations and data teams enough time to shift focus, analyze early performance, and optimize each launch properly.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 其次，我们目前已经开始提前为这些产品的准备上线所需的素材和投放物料做准备，包括广告创意、本地化内容以及测试版本所需的运营资源。我们的目标是在产品完成关键测试之前，就基本完成主要上线物料的准备工作，从而避免临近上线时出现资源紧张。

Ally Wang, Moderator/Translator, Gamehaus: Second, we have already started preparing the required launch materials in event, including creative assets, localized content and operational resources for testing and launch. Our goal is to have the key launch materials largely ready before the products complete their final testing stages, so that we can avoid last-minute resource constraints.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 从营销支出的角度看，我们也会根据每款产品的测试表现、回收周期和ROI数据来动态分配预算，而不是三款产品同时大规模地投放。RPG产品的特点是早期付费反馈相对较快，回收周期相对可控。因此我们会在推广策略上严格控制回本周期，确保营销支出保持在健康的水平。

Ally Wang, Moderator/Translator, Gamehaus: From a marketing spend perspective, we will allocate budgets dynamically based on each title’s testing results, payback period, and ROI performance, rather than launching all three titles with heavy spending at the same time. RPG titles typically provide relatively fast early monetization feedback, and the payback period is generally more manageable. Therefore, we will manage user acquisition with a disciplined payback target and keep marketing investment within a healthy range.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 短期来看，如果多款产品陆续上线，利润率可能会出现一定阶段性的波动，这是新品推广期比较正常的现象。但由于我们会控制投放的节奏和回收周期，预计这种影响是短期的。随着产品进入稳定运营的阶段，我们预期整体利润水平会在后面一个季度逐步恢复到正常水平。

Ally Wang, Moderator/Translator, Gamehaus: In the short term, there may be some temporary fluctuation in profitability as multiple new titles enter the launch phase. That is normal during a new product ramp-up period. Because we will stagger the launches and carefully control the payback cycle, we expect the impact to be temporary. As these products move into a more stable operating phase, we expect profitability to return to a more normalized level in the following quarter.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 好的。政辉你好，我是Sean，我来回答你的第二个问题。I will answer your second question in Chinese first and I will let Ellie to translate it into English。首先，政辉谢谢这个问题。这个定位目前在我们公司内部确实是已经推到一个比较重要的战略层面上。我理解来看，这个定位的核心是把我们已经构建起来的两端能力打通。一端是分发，这是我们的老本行，10年以来积累的全球的发行体系、用户增长运营，还有变现的能力。另外一端是内容的生成。随着我们知道AI的成熟，现在内容的生产方式也是正在被重构。我们的目标就是用AI把这两端连成一个闭环。AI驱动的内容的生成，叠加上我们已经比较成熟的全球分发，形成一个别人可能比较难以复制的一个一体的能力。

Ally Wang, Moderator/Translator, Gamehaus: Thank you for the question. Internally, this positioning has become an increasingly important strategic focus for us. As I see it, the core of this positioning is to connect the two ends of the capability chain we have already built. On one end is distribution. This is our core business, built on a decade of expertise in global publishing, user growth, live operations, and monetization capabilities. On the other end is content generation. As AI matures, the way content is produced is being fundamentally reshaped. Our goal is to use AI to connect these two ends into a closed loop. AI-driven content generation layered on top of our mature global distribution, forming an integrated capability that is difficult for others to replicate.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 在你谈到落地的层面，我觉得最直接的一步就是用AI生成游戏。那么刚刚Brian有提到过，本季度我们已经在AI生成游戏内容这个方面已经完成了最关键的能力的构建。这个意味着我们已经把生成式AI真正已经嵌入到游戏内容的整个生产流程里面去了，而不是仅仅用在之前素材或者是运营的一些环节。这是我们把内容生成这一端给它做实的第一个支点。

Ally Wang, Moderator/Translator, Gamehaus: In terms of execution, the most direct step is AI-generated games. Brian mentioned earlier, this quarter we completed key capabilities building in AI-generated game content. This means we are embedding generative AI directly into the production process of game content itself, not just applying it to creative assets or live operations. This is our first concrete step toward making the content generation tangible.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: OK。不过我们对于这个内容的理解，绝对是不仅限于游戏的。我们认为，AI驱动的内容生成和全球分发这套能力，它本质上是可以延展到游戏之外的其他互动内容形态的。那么在确保聚焦主业的前提之下，我们也正在前瞻性地探索，把这套平台能力在更广义的内容领域去应用。这部分目前还处于探索当中。未来如果条件成熟了之后，我们也会及时地去市场报告进展。我们相信这个方向将定义下一个阶段的游戏，乃至更广义的内容行业核心竞争的一个壁垒。我们正在为占据这个位置去做非常扎实的准备。

Ally Wang, Moderator/Translator, Gamehaus: That said, our understanding of content is not limited to games. We believe this set of capabilities, AI-driven content generation combined with global distribution, can in essence be extended to other forms of interactive content beyond games. While staying focused on our core business, we are also proactively exploring the potential applications of this platform capability in the broader content domain. This part is still in the exploratory stage. As conditions mature, we will update the market on our progress in a timely manner. We believe this direction will define the core competitive mode of the next phase for games and for the broader content industry, and we are laying solid groundwork to position ourselves for that opportunity.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: Thank you, Zhenhui. That’s our answer.

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

Hua Rong, Analyst, Jinyu Asset: 管理层好，我这边有两个问题想请问一下。第一个问题就是关注到我们DTC显然是短期内最具体的利润的改善抓手，但公司层面的DTC占比为13.9%，意味着86%的收入仍然是通过平台支付佣金。那是什么因素在阻碍更快的采用速度呢？是用户的习惯、平台限制还是其他的原因？I have two questions for management. The first one is DTC is clearly the most accountable margin lever in the near term.

13.9% company wide means 86% of your revenue still flows through platforms paying commission. What’s preventing faster adoption? Is it player behaviors, platform restrictions, or something else?

我第二个问题是公司这个季度的营业利润率从1%提升到了2.1%，九个月累计的净利润同比增长了约40%。但坦率来讲，这个改善里面很大一部分是来自营销费用的削减，而不是收入的增长。那当你们进入到二七财年，为了支撑新产品管线重新加大买量投入时，这部分利润率的改善有多少是结构性的，能留得住的？我们是不是应该预期买量回来之后，利润率又会被压回去？Your operating margin improved to 2.1% this quarter from 1% a year ago, and the cumulative net income for the first nine months grew approximately 40% year over year.

Candidly, much of that improvement has come from reduced marketing spend rather than revenue growth. As you move into fiscal 2027 and ramp up user acquisition again to support your new product pipeline, how much of this margin improvement is structural and sustainable? Should we expect margins to compress again once marketing spend comes back? Thank you.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: OK，谢谢您的提问。我是Carl，我会先来回答第一个问题。关于DTC，我们确实认为它是公司短期内改善利润率的重要抓手，但是在推进的过程中，我们是需要在合规、用户体验、转化效率以及平台生态之间去做平衡的。

Ally Wang, Moderator/Translator, Gamehaus: Thank you for your question. This is Carl. I’ll answer your first question. On DTC, we do see it as one of the important near-term levers to improve margins. That said, we need to balance several factors as we scale it, including compliance, user experience, payment conversion, and the broader platform ecosystem.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 首先从合规的角度去看的话，目前并不是所有的地区都可以在游戏内直接引导用户使用第三方支付的。现阶段，美国市场是我们可以较为明确地在游戏内弹出第三方支付选项的主要地区，因此公司会在确保完全合规的前提下逐步推进DTC的覆盖范围。

Ally Wang, Moderator/Translator, Gamehaus: First, from a compliance perspective, not every market currently allows us to directly promote or trigger third-party payment options inside the game. At this stage, the U.S. is the primary market where we have relatively broad latitude to present third-party payment options in-game. We will continue to expand DTC only under a fully compliant framework.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 其次，从用户的行为角度看，应用商店内购仍然是对大多数用户来说最简单、最顺畅的支付方式，跳转的步骤最少，支付的信任度也比较高。如果我们过于激进地去推动第三方支付，可能会影响整体的付费转化率。因此我们更关注的是综合收益的最大化，而不是单纯地追求DTC占比的提升。换句话说，我们需要在节省平台佣金和保持支付转化之间找到一个最优平衡。

Ally Wang, Moderator/Translator, Gamehaus: Second, from a player behavior perspective, in-app purchases through app stores remain the simplest and most seamless payment method for many users. They require the fewest steps and benefit from strong user trust. If we push third-party payment too aggressively, it may negatively affect overall payment conversion. Therefore, our focus is not simply to maximize the DTC ratio, but to maximize total net revenue. In other words, we need to find the right balance between commission savings and payment conversion.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 另外的话，应用商店内购表现本身也是平台评估产品质量和自然流量分发的重要指标之一。因此，公司在推进DTC的时候，也会综合考虑平台的自然流量、用户体验和产品整体的收益，而不是采取一刀切的方式。

Ally Wang, Moderator/Translator, Gamehaus: In addition, in-app purchase performance is also an important signal for platforms when they evaluate product quality and allocate organic traffic. When we increase DTC penetration, we also need to consider its potential impact on organic traffic, user experience, and the overall economics of each product.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 所以总体来看的话，我们还是会继续稳步地提升DTC的占比，尤其是在合规条件明确、用户接受度比较高的市场当中优先推行。我们的原则是有节奏可持续的提升，而不是牺牲转化率或者平台生态为代价来快速拉高比例。

Ally Wang, Moderator/Translator, Gamehaus: Overall, we will continue to steadily increase our DTC share, especially in markets where compliance is clear and user acceptance is strong. We will do it in a disciplined and sustainable way, rather than forcing a rapid increase at the expense of conversion or platform relationships.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: Okay. This is Shawn, and I will answer your second question in Chinese first, and I will also let Ellie to translate my answer into English.

感谢黄老师这个提问。你说的这个非常准确。我们当中的净利润率当中，确实有一部分是受益于我们主动收缩了低效的买量。那这部分随着我们这个27财年，如果说我们重新再去投入的话，会有一定程度的回吐。这个是客观的。不过，如果我们去看我们这个季度毛利率的话，那大概是54%，是吧？同比提升了大概两个百分点。这个改善我觉得它是跟买量多少没有关系的。主要我觉得是来自两个结构性的因素，是吧？第一，是刚才Carl有提到DTC渗透率的提升，直接降低了我们平台分成的成本。第二部分，我觉得是一部分成熟产品的生命周期推进带来的分发，我们的开发者分成结构有一定的优化。那我觉得这部分都是留得住的。而且随着我们DTC占比朝着刚才讲15%到20%继续去提升，我觉得这个结构性的毛利的红利还会进一步地扩大。大概是这样。好吧，谢谢。Thank you for the question.

Ally Wang, Moderator/Translator, Gamehaus: It’s true that part of our current margin does benefit from our deliberate pullback in low efficiency user acquisition. As we potentially scale that spending back up in fiscal 2027, there will be some give back on that portion. That’s a fair point. At the same time, if you look at gross margin, it reached approximately 54% this quarter, up about two percentage points year-over-year. That improvement is unrelated to the level of our user acquisition spend. It is driven by two structural factors. First, the increase in DTC penetration directly reduces our platform commission costs. Second, the optimization of developer profit sharing arrangements as certain mature titles progress through their lifecycle. The portion is sustainable, and as DTC penetration continues to climb toward the 15%-20% range, this structural growth margin benefit will expand further. That is broadly how we see it. Thank you.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: Thank you, Hua Rong. That will be the answer of us.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Shawn Zhang for any closing remarks.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: Okay. Thank you, operator. Thank you all for participating on today’s call, sorry for disconnecting for several times, thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.