Gravity Reports Second Quarter of 2023 Results and Business Updates

August 09, 2023 at 06:10 AM EDT

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.