The9 Ltd. Sponsored ADR Aktie

Ladies and gentlemen, thank you for standing by, and welcome to The9 Limited Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Jojo Su, Investor Relations Specialist. Please go ahead, ma'am.

Thank you, operator. Good evening, and good morning, everyone. Welcome to our second quarter 2022 (sic) [ 2026 ] earnings conference call. Joining me today are Mr. George Lai, CEO of The9 Limited; Mrs. Nora Lam, COO of the the9bit; and Mr. Gary 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 filings 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 2 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, this 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 3 mutually reinforcing elements. AI lowers the cost and technology barriers to game creation, UGC broadens the pool of potential creators. And 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 USD 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, amounted to USD 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 the9bit tokens on different crypto exchanges is around USD 10 million.

On the operating side, the9bit surpassed 8 million registered users. Currently, 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 1 to 2 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 USD 9 to USD 58 over the past week. Since the agreed exchange ratio is approximately 15x, if RFAI share price stays at the same level, NYB share cap is expected to be around USD 7.7 billion. The9 is expected to hold approximately 15% to 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 UGCs will disrupt the traditional online gaming industry. The next global blockbuster game will 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 to contribute to the ecosystem, paving the way for the9bit long-term success. With that, I will turn the call over to Nora, COO of the9bit, to discuss the platform and community in more detail. Nora?

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 a fundamental shift behind our business model. Rather than operating solely as the 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 (sic) [ compound ] 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 activities 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. Token also circulates through creator and participation rewards. In this way, the 9BIT token is intended to function as a consumable utility within the platform rather than solely as an asset held for trading. Since the 9BIT token initial listing in December 2025 and approximately USD 0.003, its quoted market price has increased to around USD 0.05 as of today, August 24, 2026.

Digital asset prices can be volatile. However, a 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. The 9BIT 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.

[Operator Instructions]

And our first question comes from the line of Yidan Fu of Piacente Financial Communications.

Congratulations on the strong second quarter results. My question is about The9's overall strategy as you have discussed about The9's repositioning around the9bit. What is the strategic rationale for this move? And how does it relate to the business The9 has historically operated?

Okay. Thanks for the question. The rationale starts with the capabilities we have built over time. After more than 2 decades of operating traditional online games, we have developed substantial experience in player engagement, retention, monetization and managing large user communities. Separately, our Bitcoin mining and digital asset treasury have given us practical experience in managing digital assets and participating in the broader crypto ecosystem. As generative AI began to reduce the time, cost, technical barriers involved in creating games, we saw an opportunity to bring these capabilities together through the9bit, an AI native creator platform supported by a token economy designed for day-to-day utility.

AI lowers the barriers to content creation, UGC broadens the potential creator base and 9BIT token is designed to align interests of creators, players and other contributors. Our historical businesses are, therefore, not separate from this strategy. They provide the operating foundation for it. We are scaling the9bit step by step rather than relying on large acquisition or significant increase in headcount. We evaluate progress based on the health of the community, creator activity, platform utility and commercial adoption rather than any single headline metric. Looking ahead, the9bit will continue to receive most of our attention and capital while we remain selective about opportunities beyond the platform that clearly complement our core strategy. Thank you.

And our next question comes from independent investor, Dylan Wang.

I have 2 questions on the9bit. First, how do players and the creators earn and use the9bit? And how does that activity support utility-driven token demand? And second, why has Southeast Asia been the initial focus? And how do you think about the potential expansion into markets such as the U.S. and Europe?

Thank you very much for your question. Let me just take those one at a time. So for the9bit token, the token is designed to be earned and used through actual participation in the9bit ecosystem. Creators and players can earn the9bit token by engaging in eligible platform activities, such as creating or playing games and reaching certain participation milestones. This allows tokens to flow into the community through platform usage rather than solely through external trading. On the spending side, the9bit token serve as the core utility token of the platform.

Creators use it to generate games through AIGD, access premium tools such as AI Pro, purchase Booster Cards and other promotional features and use additional platform functions. These use cases are designed to link token demand directly to creation, engagement and content promotion. As more creators join the platform, more games are generated and more users seek to promote their content. The 9BIT token is put to work and circulates within the ecosystem. This structure also supports recurring engagement.

Participants have opportunity to earn tokens by remaining active, while creators need token to continue developing, enhancing and promoting the game. As a result, the model is designed to give both creators and players an ongoing reason to participate rather than simply signing up once. Over time, we believe the combination of earned rewards and utility-based spending can help align the investors of creators, players and other contributors while supporting a more active and sustainable ecosystem for the9bit.

Turning to your second question on geography. Southeast Asia was a logical starting point for the9bit because the region has a young mobile-first population with a high level of familiarity with digital asset and play-to-earn models. These characteristics provided a favorable environment for us to introduce the platform, build our initial users and creator community and observe how participants engage with its AI game creation tools and token-based ecosystem. The region has also enabled us to test and refine our offline to online brand partnership model.

Through campaigns with partners such as Tealive and Highlands Coffee, we are exploring how offline consumers' activities can be connected with the9bit online creator and players community. This gives brand partners new ways to engage consumers while helping us increase platform participation, strengthen community engagement and developing additional commercial use case beyond the platform itself. As we expand our partnership network, the experience and operating knowledge gained from these campaigns should help us further refine the model.

Markets such as the United States and Europe also offer significant long-term potential, given their large gaming markets, established creator communities and broad adoption of AI and mobile products. At the same time, these markets are more competitive and customer acquisition costs can be higher. We, therefore, intend to evaluate any expansion deliberately rather than applying the Southeast Asia model without adjustment. Our approach will need to reflect local market conditions, consumer expectations and preferred partnership format.

In this sense, Southeast Asia is serving as an initial proof of concept for both community development and commercial partnerships. The objective is to validate the model, learn from actual users and partner activities and build a repeatable operating playbook that can be adapted to additional regions over time. Thank you.

And our next question comes from independent investor, Miles Chen.

This is Miles. Could you share us more about what AI models does the9bit use as foundation models become increasingly powerful and widely available to other companies, what differentiates the9bit technology and the platform? And what do you see as a sustainable competitive advantage over time?

Okay. This is Gary Gao, COO of The9 Limited. Thank you very much for the question. We actually use multiple foundation models, not relying on any single one. Different models have different strengths. So our platform intelligently orchestrate different capabilities across the production pipeline. From our perspective, the more important thing is not which individual model we use. It's how we turn rapidly evolving AI capabilities into scalable commercial production. That's really where we see the9bit's competitive advantage. Yes, we are building an AI native operating system for interactive entertainment, not simply another AI application.

A user can start with an idea in natural language or a picture. Our system turns it into a structured production blueprint. And our orchestration engine coordinates hundreds or thousands of specialized production tests across the broader R&D and production life cycle. We have also developed an intuitive AI native game editing layer. So once the game is generated, users can directly modify gaming parameters, gameplay elements or visual assets within the same environment.

We can also iterate using natural language. For example, just simply saying keep everything else unchanged, but change the visual style from Cyberpunk to Minecraft. The system can apply those changes while preserving the rest of the game. So we are not simply generating individual AI outputs. We are building an end-to-end production system that makes game creation, editing and integration much more natural. I think one of the most important advantage is that the system gets better through production itself. Every project creates structured production intelligence that continuously improves our orchestration, task routine, automation and workflows.

So as usage scales, we expect the platform to become more intelligent, more efficient and increasingly difficult to replicate. The foundation models will continue to become more powerful and accessible. We don't see that as a threat to our model agnostic approach. In fact, it allow us to benefit from innovation across the broader AI ecosystem while continuing to strengthen our production operating system. And we don't believe the long-term value will come from owning a particular model. We believe it will come from building the systems, workflows and intelligence layer that continuously transform evolving AI capabilities into commercial outcomes. So ultimately, we firmly believe the9bit will become the platform with the most games in the world. Thank you.

[Operator Instructions]

And the next question comes from independent investor, Vivian Lu.

This is Vivian. I have 2 questions. And the first one is that following RFAI shareholders' approval of the proposed business combination with NYB, can you give us an update on the expected time line for the NYB's NASDAQ listing? And the second question is that from the The9's perspective, what does this milestone mean for the company's investment in NYB? And how should investors think about its potential contribution to the shareholder value?

Thank you for your question. This is George. Let me answer your questions. So in terms of the time line, now we all lack is NASDAQ approval. So we believe that it should be pretty soon. And talking about the NYB. So this vote, what has happened is an encouraging step forward for NYB and an important procedural milestone on its path to NASDAQ. From The9's perspective, the approval is meaningful in 3 aspects. First, it reinforced the value of what we hold. As I said earlier, if our RFAI share price stays at the same level, NYB share cap is expected to be around USD 7.7 billion. And with The9's expected to hold approximately 15% to 16% of the combined NASDAQ listed company after closing. This progress just strengthened the underlying value of our equity stake and supports our expectation that NYB will be a significant contributor to The9's investment income going forward.

Second, it validates our investment thesis. Beyond the9bit, we have been selective about where we expand into AI-driven opportunities and NYB was one of the earliest of those investments. What we saw in NYB was an AI native drug discovery company built around its proprietary platform and a library of more than 1 million natural compounds, supported by a strong partner network that includes collaboration with NVIDIA, HP and Equinix. Those are characteristics that remain the basis of our confidence in business. What is bought as a clearer path and timetable to the NASDAQ listing.

Third, and looking further out, it adds to the broader AI ecosystem we are building around The9. Our intention is to be present in areas where AI is creating long-term potential and being involved early gives us both visibility into how those markets develop and the option to participate further over time.

[Operator Instructions]

We will now take our next question from the line of Anna Kong from eCart Services Sendirian Berhad.

I've been following The9 Limited for quite some time, and I'm particularly interested in the company's vision direction in AI and gaming. I also came across the9bit, and I think the concept of using AI to allow users to create and play games is quite interesting. So one question I have is around the leadership of the project. Because from what I understand, the CEO of the9bit has had his reputation questioned within the industry before and there doesn't seem to be a very clear public track record that investors can refer to. So as an investor in The9 Limited, how does the company view this concern around the CEO's reputation? And how can investors get comfortable with the leadership and execution of the9bit?

Thank you very much for your question. First of all, I would like to highlight that the9bit is just part -- I mean, it's part of one of many companies under The9. So for your questions, I would happily discuss with you. Since this is The9 Limited earnings call. So this is not -- this may not be the most appropriate place to discuss this matter. But as the Co-Founder and COO of the9bit, you can find my detail on my Twitter page. So I would hope that you can send me an e-mail or PM, and I will address your concern accordingly. Thank you.

All right. Thank you. And with that, we conclude the question-and-answer session. At this time, I will turn the conference back to Jojo for any additional or closing comments.

Thank you once again for joining us today. If you have any further questions, please contact our IR team directly. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.