Gamehaus Q4 FY2026 Earnings Call - Legacy Revenue Decline Accelerates as Company Pivots to AI

Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to Gamehaus’ fourth quarter and full year of fiscal 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 objections, you may disconnect at this time. I will now turn the call over to today’s speaker host, Ms. Ally Wang. Ally, please proceed.

Ally Wang, Investor Relations, 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 fourth quarter and full year of fiscal 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 Shawn, 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 U.S. 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 translations. Please go ahead, Brian. Good day everyone, and thank you for joining Gamehaus conference call for the fourth quarter and full year of fiscal 2026. Fiscal year 2026 was Gamehaus’ last full fiscal year under its previous business model. Earlier in August, we announced a strategic transformation for the company.

This quarter marks the beginning of the execution phase of that transformation. As a result, today’s discussion covers both our operating performance before the decision was made and the initial financial implications of the transformation. For the full fiscal year 2026, total revenue was $104.7 million, and net income was $3.9 million. In the fourth quarter, total revenue was $24.3 million, within our previously announced outlook range of $23 million-$26 million, and net income was $0.9 million. Against the current industry backdrop, we have seen a structural shift in the economics of user acquisition for casual games. The player base in mature markets has remained stagnant for an extended period, while platform attribution and targeting capabilities have continued to weaken. At the same time, competition for user acquisition has increasingly become a zero-sum game within a largely fixed pool of users.

Together, these factors have continued to compress margins in game publishing. We do not view this as an issue with any single title or any particular quarter. Rather, we believe it reflects a longer-term change in the environment surrounding this business model. Based on this assessment, we decided to proactively adjust our resource allocation and redirect more resources toward new opportunities opened up by generative AI.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 买量投入则按回报水平在产品之间重新分配。这项调整自7月开始执行，因此本次财报所覆盖的期间尚未体现其影响。我们预计存量业务的流水规模将逐步收窄，这一点会反映在我们稍后给出的下一季度的指引中。

Ally Wang, Investor Relations, Gamehaus: In terms of execution, beginning this quarter, we have changed the way we manage our existing portfolio of casual and social casino mobile games, with a greater focus on cash flow and profitability. User acquisition spending will also be reallocated across titles based on expected returns. We began implementing these changes in July, so their impact is not yet reflected in the period we are reporting today. We expect revenue from our existing portfolio to gradually decline, and this is reflected in the outlook we will provide later for the next quarter.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 本季度的运营数据已经体现出这一管理方式的方向。第四季度DAUs与MAUs较上年同期有所下降，但单日活跃用户平均收入由$0.517提升至$0.577，同比增长11.6%。日均付费转化率由2.3%提升至2.5%。在战略调整的背景下，我们将持续提升运营质量，并充分挖掘现有用户群体的价值，维护好使用体验。

Ally Wang, Investor Relations, Gamehaus: Our operating metrics this quarter already reflect this shift in focus. While both DAUs and MAUs declined year-over-year in the fourth quarter, ARPDAU increased 11.6% to $0.577 from $0.517. Average daily payer conversion improved to 2.5% from 2.3%. As we execute this strategic transformation, we will remain focused on improving the quality of our operations, maximizing the value of our existing player base, and maintaining a strong player experience.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 与此同时，公司的财务状况和现金储备保持稳健。截至2026年6月30日，公司持有现金及现金等价物1,760万美元，较上一财年的1,520万美元有所增加。公司在本财年内持续实现盈利，增加现金储备，并同时执行了股份回购计划。我们认为公司目前的财务状况为我们完成本次战略转型提供了坚实的基础。

Ally Wang, Investor Relations, Gamehaus: At the same time, our financial position and cash reserves remain solid. As of June 30, 2026, we had $17.6 million in cash and cash equivalents, up from $15.2 million at the end of the prior fiscal year. During the fiscal year, we remained profitable, increased our cash reserves, and continued executing our share repurchase program. We believe our current financial position provides a solid foundation for executing this strategic transformation.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 在以新方式管理现有业务的同时，公司仍继续推进DTC占比的提升。截至本财季末，公司整体DTC渠道占比已提升至16.2%，较上一季度进一步提升。DTC降低了平台分成成本，直接改善产品的毛利水平。本财季毛利率的同比提升主要来自这一原因。这项改善与买量投入水平无关，属于结构性改善，会随着DTC占比继续提升而扩大。DTC是我们在存量组合中持续投入的少数方向之一。公司的目标是在2026年12月31日前将整体DTC渠道的占比提升至20%以上。

Ally Wang, Investor Relations, Gamehaus: As we manage our existing business under this new approach, we are also continuing to increase our DTC penetration. By the end of the fiscal quarter, our company-wide DTC revenue mix had reached 16.2%, up further from the previous quarter. DTC reduces platform commissions and directly improves gross margin for our gains, driving the year-over-year improvement in gross margin this quarter. Importantly, this improvement does not depend on the level of our user acquisition spending. It is structural in nature and should become more meaningful as DTC penetration continues to increase. DTC remains one of the few areas where we continue to invest across our existing portfolio. Our goal is to increase overall DTC penetration to more than 20% by December 31, 2026.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 关于前面提到的新方向，我也向大家简要说明目前的进展。本财年内，公司完成了一笔对早期AI游戏生成工作室的少数股权投资。自6月起，我们与该团队共同完成了完整生产流程的验证，并识别出当前生产能力尚不能覆盖的环节。目前的工作重点是确定切入市场的产品形态。这项工作仍处在早期阶段，我们不会在此时给出具体的产品数量或时间表。当有实质进展时，我们会及时向市场说明。与此同时，我们也在密切关注AI生成内容在其他业务领域的机会，以全球尽快形成新的增长曲线，并在未来成为一个由AI驱动的全球内容生产及分发平台。

Ally Wang, Investor Relations, Gamehaus: Let me also briefly update you on the new direction I mentioned earlier. During the fiscal year, we made a minority investment in an early-stage AI game generation studio. Since June, we have worked with the team to validate the end-to-end production process and identified areas that current generative capabilities cannot yet handle. Our current focus is on determining the right product format to bring to market. This work is still at an early stage, and we are not providing specific product targets or timelines at this point. We will share an update when we have meaningful progress. At the same time, we are closely evaluating opportunities for AI-generated content in other areas of our business, with the goal of developing new growth drivers as quickly as possible and over time becoming an AI-driven global content production and distribution platform.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 与此同时，支撑转型的内部AI能力建设也在同步推进。2026年6月底，公司正式上线了Gamehaus AI Agent系统，这是一套公司级的AI统一入口与治理平台。部署在公司自有的服务器上，为全体的员工提供统一的高质量模型接入、分层额度管理和全链路监控。目前已经接入10余款国内外模型。截至7月16日，该系统对全公司员工使用覆盖率提升至70%。本季度管理费用同比下降6.6%，其中一部分正是来自AI工具在行政职能的应用所带来的效率提升。在自研工具方面，本财年内公司持续建设内部数据与中台基础设施，包括实时投放数据体系、内部数据接口服务和数据仓库建能力。同时迭代了AI广告视频生成工具，并为其增加了视频评估校验机制，用于提升素材生产效率与质量。展望未来，结合转型方向，我们的重点将会是把使用覆盖转化为使用深度，把AI能力从个人工具沉淀为可复用的组织基础设施，并向更多具体的业务环节延伸。

Ally Wang, Investor Relations, Gamehaus: In parallel, we are building the internal AI capabilities needed to support this transformation. At the end of June 2026, we officially launched the Gamehaus AI Agent system. This is a company-wide AI access and governance platform deployed on our own servers. It provides employees with centralized access to high-quality AI models, tiered usage limits, and end-to-end monitoring, and currently integrates more than 10 domestic and international models. As of July 16, adoption of the new system had reached 70% of employees across the company. G&A expenses declined 6.6% year-over-year this quarter, partly reflecting efficiency gains from the use of AI tools across our administrative functions. For our self-developed tools, throughout the fiscal year, we continued to build out our internal data and shared technology infrastructure, including real-time advertising data systems, internal data interface services, and data warehouse capabilities.

We also continued to enhance our AI-powered ad video generation tool and added video evaluation and validation capabilities to improve both the efficiency and quality of creative production. Looking ahead, in line with our strategic transformation, our focus will be on moving from broad AI adoption to deeper usage, turning AI from a collection of individual productivity tools into reusable organizational infrastructure, and extending these capabilities into more specific areas of our operations.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 在股东回报方面，截至2026年6月30日，公司已累计回购约518,000股A类普通股，累计金额约为60万美元。8月27日，董事会批准将现行的500万美元股份回购计划延长一年，至2027年8月28日，其余条款保持不变。在公司进入转型执行期的同时延续这一计划，反映的是我们对公司财务基础和长期价值的判断。

Ally Wang, Investor Relations, Gamehaus: Turning to shareholder return. As of June 30, 2026, we had repurchased approximately 518,000 Class A ordinary shares for approximately $600,000. On August 27, our board approved a one-year extension of the existing $5 million share repurchase program through August 28, 2027, with all other terms remaining unchanged. Our decision to continue the program as we enter the execution phase of our strategic transformation reflects our confidence in the company’s financial foundation and long-term value.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 结合转型后的存量业务管理方式考虑，公司决定将2027财年第一季度的营业收入指引设定在2,000万美元至2,300万美元之间。

Ally Wang, Investor Relations, Gamehaus: Taking into account our new approach to managing the existing business as part of our strategic transformation, we expect total revenue for the first quarter of fiscal year 2027 to be in the range of approximately $20 million-$23 million.

Carl Cai Yimin, Chief Executive Officer, Gamehaus: 接下来请Sean继续介绍我们的财务表现。

Ally Wang, Investor Relations, Gamehaus: Now, I will turn the call over to Shawn to walk you through our financial performance.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: Thank you, Brian, and hello everyone. I will now walk through our financial results in more detail for the fourth quarter and full fiscal year 2026, which ended June 30, 2026. Please know that all figures are in USD, and all comparisons are made on a year-over-year basis unless otherwise stated. Let me start with our fourth quarter revenue performance. Total revenue for the quarter was $24.3 million, a decrease of 20.8% from $30.7 million in the same period last year. As Brian mentioned, during the quarter, we continued to take a disciplined approach to user acquisition spending and adjusted our marketing strategy in response to changes in the market environment. At the same time, we continued to improve monetization efficiency through ongoing content optimization and targeted live ops initiatives. Revenue remained broadly in line with our expectations.

Looking at the revenue breakdown, in-app purchases revenue was $21.7 million, down 22.2% from $27.9 million a year ago. Advertising revenue was $2.6 million, compared with $2.8 million in the prior year period. Improvements in ARPDAU and payer conversion reflected our continued progress in monetization efficiency and helped partially mitigate the impact of lower user volumes. For the full fiscal year 2026, revenue totaled $104.7 million, a decrease of 11.4% from $118 million in the prior fiscal year. The full-year decline was mainly driven by the same factors we discussed for the quarter as we became more selective in user acquisition spending and continued to refine our marketing approach across our portfolio. In-app purchase revenue was $94.5 million, down 11.2% from $106.3 million in the prior fiscal year, while advertising revenue was $10.2 million, compared with $11.7 million last year. Moving on, expenses.

Total operating costs and expenses were $25.1 million, a decrease of 14.4% from $29.3 million in the same period last year, reflecting our continued focus on operating efficiency and disciplined resource allocation. Cost of revenue decreased 17.4% to $12.0 million, mainly due to lower platform commission expenses and reduced profit-sharing payments to game developers as certain mature titles moved further along in their life cycle. R&D expenses were $1.5 million, compared with $1.4 million a year ago. The modest increase reflected our continuing investment in game development projects already underway and related R&D initiatives. Selling and marketing expenses were $10.2 million, compared with $11.8 million in the prior year period. The decrease was mainly driven by lower advertising spend, reflecting our continued efforts to improve marketing efficiency. G&A expenses were $1.4 million, a decrease of 6.6% from $1.5 million a year ago.

The improvement reflected lower personnel costs and efficiency gains from the increasing adoption of AI-enabled tools across our administrative functions. For the full fiscal year 2026, total operating costs and expenses were $103.3 million, a decrease of 9.9% from $114.7 million in the prior fiscal year. This reflects our disciplined cost management in the challenging environment. Cost of revenue declined 11.4% to $49.5 million, reflecting lower platform commission expenses and reduced profit-sharing payments to game developers as certain mature titles moved further along in their life cycle. R&D expenses were $6.3 million, up 11.4% from $5.7 million, reflecting our continued investment in game development and related R&D initiatives. Selling and marketing expenses were $41.0 million, down 15.2% from $48.4 million, mainly due to a $7.3 million reduction in advertising spend on player acquisition and retention as we maintained a disciplined approach to marketing investment.

G&A expenses were $6.4 million, up 36.5% from $4.7 million in the prior fiscal year. The increase primarily reflected higher personnel costs and continued investment in our public company infrastructure and our organizational capabilities. This increase was partially offset by headcount reductions and efficiency improvements during the fourth quarter. Moving down the income statement, operating loss for the quarter was $0.8 million, compared with operating income of $1.4 million in the same period last year. Operating margin was -3.1% compared with positive 4.6% a year ago. For the full fiscal year 2026, operating income was $1.4 million, compared with $3.4 million in the prior fiscal year. Operating margin was 1.3% compared with 2.9% last year. Other income net was $1.6 million, compared with $0.1 million in the prior year period.

For the full fiscal year 2026, other income net was $2.5 million, compared with $0.6 million in the prior fiscal year. Net income was $0.9 million, compared with $1.5 million a year ago. Net income attributed to Gamehaus shareholder per ordinary share was 0.02, compared with 0.03 in the prior year period. For the full fiscal year 2026, net income was $3.9 million, compared with $3.8 million in the prior fiscal year. Net income attributed to Gamehaus shareholders per ordinary shares was 0.08 in both fiscal years. We ended fiscal year 2026 with $17.6 million in cash and cash equivalents, compared with $15.2 million as of June 30, 2025. Including short-term and long-term investments, our combined cash and investment balance was approximately $25 million. We believe this provides a solid foundation to support our operation and future initiatives. Turning to capital allocation.

As a reminder, our board approved a one-year extension of the existing $5 million share repurchase program, extending it through August 28, 2027. As of June 30, 2026, we have repurchased approximately 518,000 Class A ordinary shares for approximately $600,000. Going forward, we will continue to evaluate repurchase activity based on market conditions, share price performance, and our broader capital allocation priorities. Looking ahead, as Brian mentioned earlier, for the first quarter of fiscal year 2027 ending September 30, 2026, we expect total revenue to be in the range of approximately $20 million to $23 million. To wrap up, fiscal year 2026 was a year of disciplined execution and continued investment in our long-term capabilities. While we made deliberate adjustments to our investment approach, we continue to improve monetization efficiency, maintain cost discipline, and strengthen our financial foundation.

As we enter fiscal year 2027, we remain focused on executing our strategic transformation, managing our existing portfolio with greater emphasis on cash flow and profitability, advancing our AI-related initiatives, and maintaining a balanced approach to profitability, capital allocation, and long-term growth. With that, we are happy to take your questions. Operator, proceed.

Operator: 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 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 questions in Chinese first, then immediately translate them into English for the convenience of everyone on the call. 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 Rong Hua with Jinyu Investment Management. Please go ahead.

Rong Hua, Analyst, Jinyu Investment Management: Hello, management. I have two questions.

Ally Wang, Investor Relations, Gamehaus: Management just noted that the company has completed validation of its end-to-end AI game generation process. What are the key steps that still need to be completed before these products can move into commercialization? My next question is, we note that full-year operating income was $1.4 million, while the net income was $3.9 million, with the difference coming largely from other income. At the same time, the company is directing resources toward a new area that does not yet generate revenue. How long does the company believe its current cash reserves can support this transition? Will the company need to raise external financing? That’s my question. Thank you.

Brian Xie Feng, Chairman of the Board, Gamehaus: 好，谢谢您的提问。我先来回答第一个问题。目前，公司AI游戏生成已经完整跑通了整个端到端的生产流程。对于玩法相对简单的休闲品类，我们基本上可以在一周之内完成一款游戏的制作，在生产效率上已经得到了充分的验证。下一阶段，我们的工作重心会主要放在玩家体验层面的打磨上，包括了关卡的设计、难度曲线的控制等关键环节，确保产品不仅要做得快，更要做得好。与此同时，找到市场真正能够接受的玩法原型其实是至关重要的。因为游戏不管什么样的方式生产，最终是要面向玩家的，好玩是一切商业化的前提。因此发掘出真正有趣的玩法也是我们当前最核心的课题之一。所以下半年公司还是会持续开展多个游戏品类的测试与验证。一方面，在传统成熟的玩法层面，会借助AI以更高的效率实现产品的落地，以更低的成本进行运营。另一方面，我们也在积极探索AI原生的玩法，希望未来能够打造出属于AI时代的全新的游戏体验。

Ally Wang, Investor Relations, Gamehaus: Thank you for your question. Let me take your first question. We have now fully validated the end-to-end production pipeline for AI-generated games. For casual titles with relatively simple mechanics, a complete game can essentially be produced within one week, which fully demonstrates the efficiency of the pipeline. In the next phase, our focus will shift primarily to refining the player experience, including level design, difficulty curve calibration, and other key elements to ensure that our products are not only produced quickly but produced well. At the same time, identifying gameplay prototypes that the market genuinely embraces is critical. Games ultimately have to win over players, and being fun is the prerequisite for any commercialization. Discovering gameplay that is truly engaging is therefore one of our most important priorities at this stage.

In the second half of the year, the company will continue to test and validate across a range of game genres. On one hand, for established traditional gameplay, we will use AI to bring products to market with greater efficiency and to operate them at lower cost. On the other hand, we will also actively explore AI-native gameplay with the ambition of creating an entirely new game experience for the AI era.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: 谢谢华荣老师，我是Sean。我来回答一下您第二个问题。首先从我们现金的绝对的水平上来说，截止2026年6月30号，公司现在是有现金及现金等价物大概1,760万美元，是高于上一财年末的1,520万美元。其实可以看到，在我们营收可能下降了有11.4%的这一年当中，公司的现金其实是不降反增的，而且总体保持在了一个比较充裕的位置上。我觉得这个是说明我们在过去一年当中，在持续观察固有业务的市场变化的同时，也是一直保持了相对比较谨慎的一个运营的态度。第二个方面来讲，我觉得我们存量的休闲以及社交博弈类的游戏是一组成熟产品，它的用户基础稳定，收入也是可预测的。我们从本季度起，以现金流和回报为目标来管理这些产品，也正是为了让它们持续稳定地产生现金的回报。转型期的投入很多，我觉得将由这部分现金去支持。公司计划将现金储备重点投入到AI生成内容的新方向的发展上，这个也是我们改变存量组合管理方式的原因。把这组成熟的产品运营成稳定的现金来源，是为了让这些现金能够去支持我们新方向的一个建设。在节奏上，我觉得我们会按照方向验证的进度分阶段去投入，而不是说我们一次性铺开。随着验证的推进，投入的规模会相应地提升。我们到时候会在有进展的时候向市场去做说明。

Brian Xie Feng, Chairman of the Board, Gamehaus: 关于您提到融资的这个方面，我觉得公司目前会持续去评估各种资本市场的工具，并且在符合股东利益以及公司整体发展需要的前提之下，综合去做判断。我们目前为止暂时也没有需要和大家汇报的跟融资相关的安排。这个是我的回答，谢谢。

Ally Wang, Investor Relations, Gamehaus: Thank you. This is Shawn. Let me take your second question. Starting with the absolute level of cash. As of June 30, 2026, the company held cash and cash equivalents of $17.6 million, up from $15.2 million at the end of the prior fiscal year. As you can see, in a year in which revenue declined 11.4%, our cash position increased rather than decreased, and remains at a fairly ample level overall. This reflects the fact that over the past year, while we continued to monitor the changing market conditions facing our legacy business, we maintained a relatively prudent approach to running the company. Second, our legacy casual and social casino games are a set of mature products with a stable user base and predictable revenue.

Managing this portfolio for cash flow and return, which we began this quarter, is precisely intended to make it generate cash on a consistent and stable basis. Much of the investment required during this transition will be funded from that cash, and the company plans to direct its cash reserves primarily toward developing this new direction in AI-generated content. That is also the reason we changed how we manage the legacy portfolio. Operating these mature products as a stable source of cash is what enables that cash to support the build-out of the new direction. In terms of pacing, we will deploy capital in stages as the direction is validated, rather than committing everything at once. As validation progresses, the scale of investment will increase accordingly, and we will update the market as substantive progress is made.

As for financing, the company will continue to evaluate the range of capital market tools available to it and make financing decisions based on the interests of shareholders and the company’s broader development needs. We have no financing arrangements to report at this time. This is my answer.

Operator: Thank you. The next question comes from Jie Li with Zheshang Securities. Please go ahead.

Jie Li, Analyst, Zheshang Securities: 好的，感谢管理层接受我的提问，我是智昌证券的李杰。我有两个问题想请教管理层。第一个是公司有提到从7月开始将按照新的方式去管理现有的产品组合，那么请问这个变化预计将在未来几个季度如何地去影响公司整体的收入和盈利表现？第二个问题是公司给出的27年财年第一季度的收入指引大概在$2,000万到$2,300万，这个中值会比本季度的$2,430万的收入还是继续下降。在整个存量业务还在持续地收缩，但是新方向还没有产生收入的这个情况下，投资人该如何地去预估公司未来整个收入水平呢？Now I’m translating myself.

I have two questions. The first one is the management mentioned that the company began managing its existing product profile under a new approach starting July. How is this change expected to affect revenue and profitability over the next several quarters? The second one is the company’s first quarter fiscal 2027 revenue guidance is $20 million-$23 million, which implies a further decline at the midpoint from $24.3 million this quarter. With the legacy business continuing to contract and the new direction not yet generating revenue, how should investors think about the company’s further revenue level? Thank you.

Brian Xie Feng, Chairman of the Board, Gamehaus: OK，谢谢您的提问。我会从两个方面来回答这个问题。首先是在收入端，随着公司7月份对现有的产品组合去实施更为审慎严格的一个推广投放的控制，我们预计现有的产品组合的收入在未来一至两个季度仍将呈现一定程度的衰减。那对此呢，其实公司也会从两方面着手去改善净收入的表现。一个是持续提升DTC渠道的收入的占比，去优化整个渠道的一个成本结构。二是围绕存量的老用户，我们会开展更加贴合其需求的精细化的运营，从而提升长线用户的留存以及付费的深度。那从成本端来看，公司也会持续地严格控制推广投入的规模，聚焦于回本周期更短、效率更高的这样的一些产品，同时的话会稳步去推进运营成本的优化。我们预计上述措施将会有效地对冲收入端衰减带来的影响，从而推动整个盈利水平的提升。

Ally Wang, Investor Relations, Gamehaus: Thank you for your questions. On the revenue side, with a more prudent and disciplined control over marketing spend that we have applied to the existing portfolio since July, we expect revenue from this portfolio to see some degree of moderation over the next one to two quarters. To improve our revenue performance, we are working on two fronts. First, continuing to increase the share of revenue coming from our direct-to-consumer channels in order to optimize our channel cost structure. Second, carrying out more refined operations tailored to the needs of our existing user base, so as to improve retention and monetization depth. On the cost side, we will continue to exercise strict discipline over the scale of our marketing spend, concentrating on campaigns with shorter payback periods and higher efficiency while steadily advancing the optimization of operating costs.

We expect these measures to effectively offset the impact of the revenue moderation, and to drive an overall improvement in profitability.

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: 好，谢谢李杰老师。我是Shawn。我来回答您第二个问题。我理解您第二个问题的本质，其实是想问我们目前一个是原有业务下行的曲线的底子在哪里，以及我们上行的动能从哪里来。那这个的话我想分三个层面去回答。第一个是我们这次guidance的一个收缩，我觉得它跟我们对存量业务战略调整的方向是完全一致的，是吧？刚刚Carl在之前第一个问题当中回答也是非常清楚了，那我就这个地方不进一步展开了。那所以我们是希望市场在评估我们未来收入的时候，把我们存量的组合去理解成为一条我们主动去管理的一个曲线，而不是一个被动下滑的这么一个曲线。那第二个方面，我想说明一点背景。回望之前的几个季度，如果感兴趣的话也可以看一下。即使在我们业务策略还没有调整的时期，其实公司的管理层也已经观察到了进一步增长的压力，对吧？我们看到成熟市场的受众规模正在收缩，平台侧的归因和定向的能力在持续弱化，买量的环节也是进入了一个存量竞争的一个环节。那也就是说，我们认为固有业务它不是策略调整造成了收缩，而是说客观条件上来看，继续沿原有的路径去投入，去带来可持续的增长，可以说是难度比较大的。那所以说在这样的判断下，本着对投资人、市场负责的立场，公司的工作重点一定是寻找一个重新返回增长的一个路线。那么第三个方向，关于这个增长的来源，我觉得反正可以非常肯定地去说，公司未来的增长一定是将来自于AI生成内容业务所带来的新动能。那么我们目前正处于新旧动能转换的节点上，我们不回避存量的业务会继续收缩这个事实。目前的话，公司的精力会主要放在第二增长曲线尽快形成的准备工作上。这一部分工作也是正在推进当中。我们也期待能够尽快向市场去汇报有关的进展。好，这个是我对您第二个问题的回答。谢谢。

Ally Wang, Investor Relations, Gamehaus: This is Shawn. I will take your second question. I take the essence of the question to be where this declining curve bottoms out and where the upward momentum comes from. Let me address it in three parts. First, this guidance is fully consistent with the strategic adjustment we are making to legacy business. Carl covered this fairly clearly in his answer to an earlier question. I will not go into further detail here. What we would ask is that the market read the legacy portfolio as an actively managed curve, rather than a passively declining one when assessing our future revenue. Second, I would like to provide some context. Looking back over the past several quarters, management had already observed mounting pressure on future growth even before any change in business strategy. The player base in mature markets has been contracting.

Platform side attribution and targeting capabilities have continued to weaken, and user acquisition has become a zero-sum contest. In other words, it is not that a change in strategy caused the legacy business to contract. Rather, given the objective conditions, it would be quite difficult to deliver sustainable growth by continuing to invest along the prior path. Based on that assessment and out of a sense of responsibility to our investors, the company’s priority must be to find the route back to growth. Third, on where that growth will come from. We can say with confidence that the company’s future growth will come from the new momentum of the AI-generated content business. We are currently at the transition point between old and new sources of momentum. We do not shy away from the fact that the legacy business will continue to contract.

At present, our primary focus is on laying the groundwork to establish our second growth curve as quickly as possible. That work is underway, and we look forward to reporting related progress to the market in the near future. That’s my answer to your second question. Thank you.

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

Shawn Zhang, Head of Capital Markets and Investor Relations, Gamehaus: 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: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.