On the evening of August 12, 2026, ARCHOSAUR GAMES issued a profit warning, projecting an adjusted net loss between RMB 60 million and RMB 70 million for the six months ending June 30, 2026, compared to a mere RMB 7.7 million adjusted net loss in the same period of 2025. The company also expects a loss attributable to shareholders in the range of RMB 65 million to RMB 75 million, up from approximately RMB 11.7 million a year earlier. This comes just one year after the gaming firm posted its strongest annual revenue in eight years, with RMB 1.304 billion generated in 2025, making the rapid reversal of its narrowing losses a stark setback within just six months.
The company attributed the expanded losses to three primary factors: increased expenditures related to two in-development titles, Code: Silent God and Lord of Mysteries: The Fool, alongside a surge in sales and marketing expenses tied to the multi-region launch of Dragon Raja: Cassell Gate. Code: Silent God, the first UE5-powered female-oriented game developed by the company's VVANNA business unit, was officially unveiled on April 28, 2026, complete with a three-minute promotional video and a two-minute gameplay demonstration. The title has already surpassed 4.8 million global pre-registrations, with the debut PV and gameplay footage amassing over ten million views combined. As a large-scale production built on the UE5 engine, development costs far exceed those of traditional engine titles, and until the game reaches a commercial monetization phase, all R&D investments must be fully expensed in the current period.
Lord of Mysteries: The Fool, an IP adaptation based on the hit web novel by China Literature platinum author "Cuttlefish That Loves Diving," released its first official PV on June 17, 2026, and simultaneously opened pre-registrations. As a high-budget production based on a licensed IP, the upfront investment spans IP licensing fees, art asset production, and technical development, all of which carry substantial costs. Beyond R&D spending on upcoming projects, promotional outlays for existing titles have also been climbing. Following the launch of Dragon Raja: Cassell Gate in multiple regions, sales and marketing expenses rose significantly, and during the early stage before commercial returns are fully realized, these heavy marketing costs are directly eroding the income statement.
Amid the shadow of widening losses, ARCHOSAUR GAMES still holds some bright spots. Shining Nikki remains the company's core revenue pillar. According to an internal memo from the VVANNA business unit dated July 30, 2026, the game's summer update drove daily active users, monthly active users, monthly new paying users, new user retention rates, and returning user rates to simultaneous peaks not seen in nearly a year. First-half gross billings remained roughly flat compared to the second half of 2025. Since its launch in March 2023, the title has accumulated global gross billings exceeding RMB 2 billion. In February and March 2026, domestic monthly average DAU hit new all-time highs, reaching record levels since its initial May 2023 debut. For a product that has been live for over three years, achieving counter-trend growth in core metrics underscores the company's strength in long-term operations. However, the challenge lies in the fact that a steadily performing legacy title is insufficient to offset the hefty upfront investments in multiple new games under development.
In 2025, ARCHOSAUR GAMES generated RMB 1.176 billion in combined game publishing and operations revenue, accounting for 90.19% of total revenue, with Shining Nikki serving as the primary income source. When the company's in-development projects enter a phase of concentrated investment while new products have yet to reach commercialization, revenue growth cannot keep pace with expense expansion, making a widened loss an inevitable outcome. Around the time of the profit warning, the company's stock price continued to face pressure. As of August 19, 2026, shares were trading at HKD 1.835, down 5.90% for the day and roughly 30% below their year-to-date high. From a strategic standpoint, the company's bet on high-end UE5 female-oriented productions and top-tier IP adaptations is not inherently misguided. In a mobile gaming industry defined by intensifying competition for a finite player base, only high-quality, large-scale titles can break through. But the cost of this strategic direction is short-term financial strain — increased R&D investment translates to wider losses, and the time lag between development and commercialization lies at the heart of this earnings "pain period."
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