Gamehaus Q2 Earnings Call Highlights

Posted by James Conley on Mar 23rd, 2026

Gamehaus (NASDAQ:GMHS) reported second-quarter FY26 results that management described as a milestone in its transition toward a more efficient and profitable operating model, citing disciplined cost controls, improved monetization metrics, and progress expanding direct-to-consumer (DTC) payments.

Quarterly results show margin expansion despite revenue decline

Total revenue for the quarter ended December 31, 2025 was $26.3 million, down 7.8% from $28.5 million in the year-ago period, with management attributing the decline largely to intentionally reduced advertising and user acquisition spending during a competitive year-end promotion season.

Profitability improved materially. Net income rose to about $0.9 million versus $0.4 million a year earlier. Operating income improved to $0.9 million from $0.2 million, and operating margin expanded to 3.3% from 0.8%.

Monetization improvements and DTC mix shift highlighted

Chairman Brian Xie Feng said the company avoided aggressively pursuing user volume and instead focused resources on activating and retaining higher-value players. He highlighted improved monetization efficiency even as the overall user base declined in line with lower acquisition spending.

ARPDAU increased year-over-year to $0.566.
Daily payer conversion rate rose to 2.5% from 2.1%.

Management also emphasized progress in DTC. As of the end of December, DTC accounted for approximately 10% of total revenue, and the company’s flagship title GCS exceeded 30% DTC contribution. Feng said these gains reduced reliance on a single platform and created platform commission savings that flow through to profitability. Management added that broader third-party payment access in additional markets could further support margin improvement.

Revenue breakdown and expense controls

Head of Capital Markets and Investor Relations Shawn Zhang detailed revenue composition:

In-app purchase revenue: $23.9 million versus $25.5 million a year ago (down 6.4%).
Advertising revenue: $2.4 million versus $3.0 million a year ago.

Total operating costs and expenses were $25.4 million, down 10.1% from $28.3 million. Cost of revenue fell 10.2% to $12.2 million, driven primarily by lower platform fees and reduced profit-sharing payments to game developers.

Spending trends were mixed across operating lines:

Research and development: increased 7.5% to $2.1 million, reflecting collaborations with multiple developers across development and testing as the company builds its pipeline.
Selling and marketing: decreased 18.4% to $9.7 million, including a $2.1 million reduction in advertising spending.
General and administrative: increased 65.5% to $1.4 million, which the company attributed primarily to higher salary expenses tied to strengthening corporate governance, financial reporting, and investor relations, as well as strategic hiring to support expansion.

Pipeline priorities: RPG and puzzle; AI platform deployment

Management said it is building future growth through a dual-track pipeline in RPG and puzzle genres. In RPG, Feng said the company signed a new title with a project scope of approximately $10 million and an expected life cycle of one to two years, initially launching in Hong Kong, Macau, Taiwan, and other parts of Asia. He also cited two sizable custom development projects and another title in the optimization phase, expected to come online in coming quarters. Management added it completed a post-launch review of challenges experienced with RPG titles released last year and is applying those learnings to upcoming projects.

In puzzle, the company described a rapid prototyping and agile iteration model with four core external partners supplying three to four prototypes per month for testing. Management’s stated goal is to launch four to five high-quality new puzzle titles by the end of calendar 2026.

Feng also discussed the company’s internal AI creative platform, Haohan, saying it was fully deployed during the quarter and processed nearly 30,000 requests in three months, reducing production cycle times for art and video assets. Management expects usage to exceed 60,000 requests by the end of the quarter ending March 31. The company said the initiative has limited near-term financial impact but is reshaping workflows and supporting future scale.

Guidance, capital return, and balance sheet

For the third quarter of FY26 ending March 31, 2026, the company guided revenue to a range of $24 million to $26 million, describing the outlook as based on a prudent assessment of product timing and market conditions.

In Q&A, management said recent revenue declines were a result of “proactive structural adjustment,” including reduced selling and marketing spend during the holiday season’s higher acquisition costs, alongside efforts to optimize operations for mature titles. On margins, CEO Carl Cai Yimin said the company does not expect operating margin to expand in a straight line, noting that margins can come under short-term pressure when new titles enter launch and scaled marketing phases. He framed such pressure as deliberate investment and said the company monitors metrics including CPI, retention, LTV, and payback period to dynamically adjust marketing budgets.

Gamehaus ended the quarter with $17.4 million in cash and cash equivalents, compared with $15.2 million as of June 30, 2025, and said liquidity should be sufficient to meet working capital needs for the next 12 months.

On shareholder returns, the company reiterated its $5 million share repurchase authorization (approved in August 2025 with a one-year term through August 18, 2026). As of December 31, it had repurchased about 370,000 Class A ordinary shares for approximately $459,000. In response to questions about the pace of buybacks, management said the low utilization was primarily due to compliance and market liquidity constraints, including limits tied to Rule 10b-18 daily volume restrictions, rather than a lack of capital. The company said it would continue to evaluate repurchases based on market conditions, share price, and broader capital priorities.

Management also provided an updated DTC expectation during Q&A, stating it expects DTC to account for more than 15% of total revenue by the end of the fiscal year, while emphasizing a gradual, compliance-focused approach that varies by title, region, and user cohort.