The9 Limited American Depository Shares representing three class A ordinary shares 2026 Q2 Earnings Call

Good evening and good morning, everyone. Welcome to our second quarter 2022 earnings conference call. Joining me today are Mr. George Lai, CEO of The9 Limited, Mrs. Nora Lam, COO of The9bit, and Mr. Yan Gao, COO of The9 Limited. During today's call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent filing with the SEC. In addition, a webcast replay of this conference call will be available on our website. With that, I will now turn the call over to Mr. George Lai.

Thank you, Jojo, and good evening, everyone. Thank you for joining us today. I want to spend a few minutes on where The9 is heading. This quarter marks an important step in our repositioning, and I would like to explain the strategic logic behind it. For more than two decades, The9 has operated traditional online games at scale with deep experience in player engagement and monetization. Separately, over the past several years, we have developed operating experience in crypto space, including Bitcoin mining and digital asset treasury management. We believe this combination of gaming and digital asset capabilities provides a differentiated foundation for building a functional currency, a functional token economy around AI-generated content or AIGC, and user-generated content or UGC in gaming. We are now repositioning The9 to bring these capabilities together through our proprietary AI-powered gaming creation platform, The9bit.

AI is significantly reducing the time, cost, and technical expertise required to create games, enabling individual creators and small teams to turn ideas into playable content much more efficiently. Rather than building a large in-house studio, The9bit provides the tools and infrastructure that allow creators and players to build the ecosystem themselves with AI supporting the development process. The9bit brings together three mutually reinforcing elements. AI lowers the cost and technology barriers to game creation. UGC broadens the pool of potential creators. The9bit token is designed to align incentives among players, creators, and contributors by enabling them to participate in the value they help create. Turning to our results, we reported net income of $32 million this quarter, an increase of more than 39% from the previous quarter.

We are delivering the strongest half-year net income in our history since the 2004 IPO, amounting to $55 million. The increase was driven primarily by the fair value recognition of 9BIT tokens received under our cooperation with 9BIT Foundation, an independent crypto foundation established in Panama. Currently, the daily trading volume of 9BIT tokens on different crypto exchanges is around $10 million. On the operating side, The9bit surpassed 8 million registered users. Currently, the majority of our games on our platform are casual games relying on advertising revenue, so our revenue scale is still small. The good news is within one to two months, The9bit will start to support in-game purchase mid-core games. We expect game creators to utilize our AI-native operating system to create in-game purchase games on The9bit.

We will help game creators to resolve the payment channel issues, including fiat and crypto. Therefore, we expect a strong revenue growth of The9bit platform in the second half of this year. I would also like to address our direction beyond The9bit. Stabilizing and scaling the ecosystem remains our priority, and that is where we expect to direct most of our attention and capital. At the same time, where we can see a clear strategic fit, we will selectively pursue other AI-driven opportunities. Our investee, NYB, an AI-driven drug discovery company, is pursuing its own listing by combining with a SPAC company, RFAI. At an extraordinary general meeting held on August 19, 2026, shareholders of RFAI voted to approve NYB's proposed business combination. The share price of RFAI increased from around $9 to $58 over the past week.

Since the agreed exchange ratio is approximately 15 times, if our RFAI share price stays at the same level, NYB share cap is expected to be around $7.7 billion. The9 is expected to hold approximately 15%-16% of the combined company after closing. We expect this will contribute significant investment income on our P&L. We recognize that both the AI technology and the market will continue to evolve. Nevertheless, we believe AI is reshaping how games are made. AI-assisted UGC will disrupt the traditional online game industry. The next global blockbuster game may be created by several teenagers in several months using AI, rather than developed by traditional big game development companies. We have well-designed token economy that aligns all participants who contribute to the ecosystem, paving the way for The9bit's long-term success.

With that, I will turn the call over to Laura, COO of The9bit, to discuss the platform and community in more detail.

Laura? Thank you, George. The core idea behind The9bit is straightforward.

Our users create the games through our AI game development tools, which we call it AIGD. A user can begin with a simple prompt and turn an idea into a working, playable game without traditional coding expertise. This is the fundamental shift behind our business model. Rather than operating solely as a studio that publishes its own titles, we are building a platform that puts game creation tools directly in the hands of our community. This strategy is aligned with a rapidly developing market. Third-party estimates vary, but they generally project strong growth in the global UGC platform market. The global user-generated content platform market was valued at $12.3 billion in 2026 and is projected to reach $55 billion by 2033, a combined annual growth rate of 23.9%.

UGC gaming is an important part of that opportunity, particularly on platforms that enable creators to participate in the value they generate. What differentiates The9bit is its AI-native approach. AIGD is designed to reduce the technical barriers that have historically limited participation in UGC platforms, which we believe can help us broaden and deepen the creator community over time. We are beginning to see evidence of that potential. The platform has more than 8 million registered users, and since its launch in August 2025, our community has created more than 110,000 games. These figures reflect the scale of initial adoption and the level of creator activity on the platform. The community is also beginning to generate commercial value beyond the platform. We have signed 41 brand partners with another 127 potential partners in the pipeline as we develop an offline-to-online partnership model designed to connect brand activities with The9bit community.

The9bit token is the core utility token of The9bit ecosystem. Creators use The9bit to generate games through AIGD, access premium tools such as AI Pro, purchase booster cards and other promotional tools, and use additional platform features. Tokens also circulate through creator and participation rewards. In this way, The9bit token is intended to function as a consumable utility within the platform rather than solely as an asset held for trading. Since The9bit token initial listing in December 2025 at approximately $0.003, its quoted market price has increased to around $0.05 as of today, August 24, 2026. Digital asset prices can't be foretold, however, and token price is not how we measure the operating performance of The9bit. We focus instead on the development of utility-driven demand and on operating indicators such as users, games created, creator activities, engagement, and commercial adoption.

In short, our community is not only using The9bit, it is helping to build it. The9bit token is designed to enable participants to share in its value they create and to support continued activities across the ecosystem. We believe this alignment can contribute to a more durable platform, and it remains a key area of investment for us. With that, I will turn the call over to the operator for the Q&A section.