• Gravity Reports Second Quarter of 2023 Results and Business Updates

    Source: Nasdaq GlobeNewswire / 09 Aug 2023 05:10:00   America/Chicago

    Seoul, Korea, Aug. 09, 2023 (GLOBE NEWSWIRE) -- GRAVITY Co., Ltd. (NasdaqGM: GRVY) (“Gravity” or “Company”), a developer and publisher of online and mobile games based in South Korea, today announced its unaudited financial results for the second quarter ended June 30, 2023, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

    SECOND QUARTER 2023 HIGHLIGHTS

    • Total revenues were KRW 238,894 million (US$ 181,282 thousand), representing an 44.8% increase from the first quarter ended March 31, 2023 (“QoQ”) and a 147.5% increase from the second quarter ended June 30, 2022 (“YoY”).
    • Operating profit was KRW 52,701 million (US$ 39,991 thousand), representing a 21.7% increase QoQ and a 138.3% increase YoY.
    • Profit before income tax expenses was KRW 55,097 million (US$ 41,809 thousand), representing a 19.2% increase QoQ and a 130.8% increase YoY.
    • Net profit attributable to parent company was KRW 45,016 million (US$ 34,160 thousand), representing a 23.4% increase QoQ and a 157.7% increase YoY.

    REVIEW OF SECOND QUARTER 2023 FINANCIAL RESULTS

    Revenues

    Online game revenues for the second quarter of 2023 were KRW 17,025 million (US$ 12,919 thousand), representing a 25.0% decrease QoQ from KRW 22,696 million and a 31.4% decrease YoY from KRW 24,827 million. The decrease QoQ was mainly attributable to decreased revenues from Ragnarok Online in Taiwan, Thailand and Japan. Such decrease was partially offset by increased revenue from Ragnarok Online in United States. The decrease YoY was largely due to decreased revenues from Ragnarok Online in Taiwan, Thailand, Philippines, Singapore and Malaysia.

    Mobile game revenues were KRW 218,687 million (US$ 165,949 thousand) for the second quarter of 2023, representing a 57.3% increase QoQ from KRW 138,994 million and a 221.4% increase YoY from KRW 68,042 million. The increase QoQ was resulted by initial revenues from Ragnarok Origin, which was launched in Southeast Asia on April 6, 2023. Such increase was partially offset by decreased revenues from Ragnarok Origin in Taiwan, Hong Kong and Macau and Ragnarok X: Next Generation in Korea and Southeast Asia. The increase YoY was mainly due to initial revenues from Ragnarok Origin, which was launched in Southeast Asia on April 6, 2023, Ragnarok Origin in Taiwan, Hong Kong and Macau and Ragnarok X: Next Generation in Korea. This increase was partially offset by decreased revenues from Ragnarok X: Next Generation in Southeast Asia, Ragnarok Origin in the United States and Canada and Ragnarok Labyrinth NFT in Southeast Asia.

    Other revenues were KRW 3,182 million (US$ 2,414 thousand) for the second quarter of 2023, representing a 2.3% decrease QoQ from KRW 3,257 million and a 12.8% decrease YoY from KRW 3,650 million.


    Cost of Revenue

    Cost of revenue was KRW 168,309 million (US$ 127,720 thousand) for the second quarter of 2023, representing a 59.6% increase QoQ from KRW 105,485 million and a 232.8% increase YoY from KRW 50,575 million. The increase QoQ was mainly due to increased commission paid for mobile game services related to Ragnarok Origin, which was launched in Southeast Asia on April 6, 2023. The increase YoY was primarily due to increased commission paid for mobile game services related to Ragnarok Origin in Southeast Asia, Taiwan, Hong Kong and Macau, and Ragnarok X: Next Generation in Korea.

    Operating Expenses

    Operating expenses were KRW 17,884 million (US$ 13,571 thousand) for the second quarter of 2023, representing a 10.8% increase QoQ from KRW 16,144 million and a 24.9% decrease YoY from KRW 23,829 million. The increase QoQ was mainly due to increased salaries, and advertising expenses for WITH: Whale In The High, launched in global on June 29, 2023, Ragnarok: The Lost Memories launched in Taiwan, Hong Kong and Macau on May 18, 2023 and Ragnarok Landverse, which aims to be launched in the second half of 2023. The decrease YoY was mainly due to decreased advertising expenses for Ragnarok Monster's Arena in Taiwan, Ragnarok Labyrinth NFT in Southeast Asia and Ragnarok Origin in North America, and decreased commission paid for payment gateway fees related to Ragnarok Online in Taiwan, Thailand, Philippines, Singapore and Malaysia.

    Profit Before Income Tax Expenses

    Profit before income tax expenses was KRW 55,097 million (US$ 41,809 thousand) for the second quarter of 2023 compared with profit before income tax expense of KRW 46,226 million for the first quarter of 2023 and profit before income tax expenses of KRW 23,874 million for the second quarter of 2022.

    Net Profit

    As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 45,016 million (US$ 34,160 thousand) for the second quarter of 2023 compared with net profit attributable to parent company of KRW 36,466 million for the first quarter of 2023 and a net profit attributable to parent company of KRW 17,465 million for the second quarter of 2022.

    Liquidity

    The balance of cash and cash equivalents and short-term financial instruments was KRW 415,602 million (US$ 315,375 thousand) as of June 30, 2023.

    Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,317.80 to US$ 1.00, the noon buying rate in effect on June 30, 2023 as quoted by the Federal Reserve Bank of New York.

    GRAVITY BUSINESS UPDATES

    Ragnarok Online IP-based Games

    • Ragnarok Origin, an MMORPG mobile and PC game

    Ragnarok Origin was successfully launched in Southeast Asia on April 6, 2023. Since its launching day, the game ranked as the first in top grossing of Apple App Store in Thailand, Philippines, Indonesia, Malaysia and Singapore, and as the first in top grossing of Google Play Store in Philippines and as the second in Thailand and Singapore. The global version of this game is being prepared to be launched in Central, South America, etc. in the fourth quarter of 2023.

    • Ragnarok Begins, an MMORPG mobile and PC game

    Ragnarok Begins will open the Closed Beta Service (“CBT”) in the fourth quarter of 2023, and the game is preparing to be launched in South Korea in the fourth quarter of 2023.

    • Ragnarok V: Returns, an MMORPG mobile and PC game

    Ragnarok V: Returns will open its CBT in South Korea on August 17, 2023. The game was ceased the service in Oceania on May 25, 2023 for its renewal version of mobile and PC.

    • Ragnarok M: Eternal Love, an MMORPG mobile game

    Ragnarok M: Eternal Love aims to be launched in Vietnam in 2024

    • Ragnarok: The Lost Memories, a Cinematic Newtro Story RPG mobile and PC game

    Ragnarok: The Lost Memories was launched in Taiwan, Hong Kong and Macau on May 18, 2023.

    • Ragnarok 20 Heroes, an Action RPG mobile

    Ragnarok 20 Heroes will open its CBT on August 24, 2023, and the game aims to be launched in Korea in September 2023.

    Ragnarok Online IP-based Blockchain Games

    • Ragnarok Landverse, an MMORPG blockchain PC game

    Ragnarok Landverse will open its second CBT in the third quarter of 2023, and aims to be launched in Southeast Asia (Thailand and Indonesia excluded), Middle East, India, Africa and Oceania in the second half of 2023.

    • Ragnarok Monster World, an RPG blockchain mobile and PC game

    Ragnarok Monster World has started to be developed by Zero X And, Pte. Ltd., a developer company specializing in blockchain games and solutions. The game will be based on blockchain NFT technology, and aims to be launched in 2024.


    • Ragnarok Poring Merge NFT, a Time Effective RPG blockchain mobile game

    Ragnarok Poring Merge NFT is being prepared to be launched in Global in the fourth quarter of 2023.

    Other IP-based games

    • WITH: Whale In The High, a Healing Idle mobile game

    WITH: Whale In The High was released in global on June 29, 2023. The game is developed by SKYWALK, a mobile game developer, and published by Gravity.

    • White Chord, a Character Collecting RPG mobile game

    White Chord will be released in Japan on August 29, 2023. The game is developed by Yulong Games, a Chinese mobile game developer, and published by Gravity Game Arise, the subsidiary of Gravity in Japan.

    Investor Presentation

    Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the second quarter in 2023 and Gravity’s business plan. The presentation can be found on the Company’s website under the IR Archives section at http://www.gravity.co.kr/en/ir/pds/list.asp. Korean and Japanese versions of the presentation are also provided on the website.

    About GRAVITY Co., Ltd. ---------------------------------------------------

    Gravity is a developer and publisher of online and mobile games. Gravity's principal product, Ragnarok Online, is a popular online game in many markets, including Japan and Taiwan, and is currently commercially offered in 91 markets. For more information about Gravity, please visit http://www.gravity.co.kr.

    Forward-Looking Statements:

    Certain statements in this press release may include, in addition to historical information, “forward-looking statements” within the meaning of the “safe-harbor” provisions of the U.S. Private Securities Litigation Reform Act 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe”, “project,” or “continue” or the negative thereof or other similar words, although not all forward-looking statements contain these words. Investors should consider the information contained in our submissions and filings with the United States Securities and Exchange Commission (the “SEC”), including our annual report for the fiscal year ended December 31, 2022 on Form 20-F, together with such other documents that we may submit to or file with the SEC from time to time, on Form 6-K. The forward-looking statements speak only as of this press release and we assume no duty to update them to reflect new, changing or unanticipated events or circumstances.

    Contact:

    Mr. Heung Gon Kim
    Chief Financial Officer
    Gravity Co., Ltd.
    Email: kheung@gravity.co.kr

    Ms. Jin Lee
    IR Unit
    Gravity Co., Ltd.
    Email: ir@gravity.co.kr
    Telephone: +82-2-2132-7800

    GRAVITY Co., Ltd.
    Consolidated Statements of Financial Position

    (In millions of KRW and thousands of US$)

        As of
        31-Dec-22     30-Jun-23
        KRW     US$     KRW     US$
        (audited)     (unaudited)     (unaudited)     (unaudited)
    Assets                              
    Current assets:                              
    Cash and cash equivalents              169,877            128,910            187,228            142,076
    Short-term financial instruments              167,000            126,726            228,374            173,299
    Accounts receivable, net                77,257              58,626            112,407              85,299
    Other receivables, net                     140                   106                       8                       6
    Prepaid expenses                  3,332                2,528                3,703                2,810
    Other current financial assets                  3,370                2,557                3,401                2,581
    Other current assets                     791                   601                2,014                1,528
    Total current assets              421,767            320,054            537,135            407,599
    Property and equipment, net                  8,140                6,177                9,124                6,924
    Intangible assets, net                  3,869                2,936                4,726                3,586
    Deferred tax assets                  5,660                4,295                5,184                3,934
    Other non-current financial assets                  2,176                1,651                1,939                1,471
    Other non-current assets                  2,482                1,883                5,180                3,931
    Total assets              444,094            336,996            563,288            427,445
    Liabilities and Equity                              
    Current liabilities:                              
    Accounts payable                73,549              55,812            101,206              76,799
    Deferred revenue                18,543              14,071              18,947              14,378
    Withholdings                  3,201                2,429                3,978                3,019
    Accrued expense                  2,041                1,549                1,579                1,198
    Income tax payable                  5,469                4,150              13,195              10,013
    Other current liabilities                  2,907                2,206                3,734                2,834
    Total current liabilities              105,710              80,217            142,639            108,241
    Long-term account payables                     374                   284                     72                     55
    Long-term deferred revenue                       30                     23                   381                   289
    Other non-current liabilities                  4,968                3,770                3,886                2,948
    Deferred tax liabilities                  2,832                2,149                2,832                2,149
    Total liabilities              113,914              86,443            149,810            113,682
    Share capital                  3,474                2,636                3,474                2,636
    Capital surplus                27,098              20,563              27,098              20,563
    Other components of equity                  2,475                1,877                4,267                3,237
    Retained earnings              296,480            224,981            377,962            286,813
    Equity attributable to owners of the Parent Company              329,527            250,057            412,801            313,249
    Non-controlling interest                     653                   496                   677                   514
    Total equity              330,180            250,553            413,478            313,763
    Total liabilities and equity              444,094            336,996            563,288            427,445

    * For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,317.80 to US$ 1.00, the noon buying rate in effect on June 30, 2023 as quoted by the Federal Reserve Bank of New York.

    GRAVITY Co., Ltd.
    Consolidated Statements of Comprehensive Income

    (In millions of KRW and thousands of US$ except for share and ADS data)

        Three months ended   Six months ended
        31-Mar-23 30-Jun-22 30-Jun-23   30-Jun-22   30-Jun-23
        (KRW)   (KRW)   (KRW)   (US$)   (KRW)   (KRW)   (US$)  
        (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)  
    Revenues:                                            
    Online games     22,696     24,827     17,025     12,919     46,274     39,721     30,142  
    Mobile games     138,994     68,042     218,687     165,949     131,283     357,681     271,423  
    Other revenue     3,257     3,650     3,182     2,414     7,569     6,439     4,886  
    Total net revenue     164,947     96,519     238,894     181,282     185,126     403,841     306,451  
    Cost of revenue     105,485     50,575     168,309     127,720     95,829     273,794     207,766  
    Gross profit     59,462     45,944     70,585     53,562     89,297     130,047     98,685  
    Operating expenses:                                            
    Selling, general and administrative expenses     13,271     21,207     15,029     11,405     38,849     28,300     21,476  
    Research and development     2,922     2,956     2,852     2,164     6,188     5,774     4,381  
    Others, net                      (49)                    (334)     3     2                      (171)                     (46)                    (35)  
    Total operating expenses     16,144     23,829     17,884     13,571     44,866     34,028     25,822  
    Operating profit     43,318     22,115     52,701     39,991     44,431     96,019     72,863  
    Finance income(costs):                                            
    Finance income                  5,461     4,100     4,213     3,197     5,708     9,674     7,341  
    Finance costs                (2,553)                (2,341)                (1,817)                (1,379)                  (3,045)                (4,370)               (3,316)  
    Profit before income tax     46,226     23,874     55,097     41,809     47,094     101,323     76,888  
    Income tax expense     9,799     6,462     10,070     7,641     13,351     19,869     15,078  
    Profit for the year     36,427     17,412     45,027     34,168     33,743     81,454     61,810  
    Profit attributable to:                                            
    Non-controlling interest                      (39)                      (53)                        11                          8                      (153)                     (28)                    (22)  
    Owners of Parent company     36,466     17,465     45,016     34,160     33,896     81,482     61,832  
    Earning per share                                            
    - Basic and diluted                  5,248     2,513     6,478     4.92     4,878     11,726     8.90  
    Weighted average number of shares outstanding                                            
    - Basic and diluted     6,948,900     6,948,900     6,948,900     6,948,900     6,948,900     6,948,900     6,948,900  
    Earning per ADS                                            
    - Basic and diluted                  5,248     2,513     6,478     4.92     4,878     11,726     8.90  
                                                 

    * For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,317.80 to US$1.00, the noon buying rate in effect on June 30, 2023 as quoted by the Federal Reserve Bank of New York.
    (1) Each ADS represents one common share.



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