Gravity Reports First Quarter of 2024 Results and Business Update
Gravity Co., reported its first quarter 2024 financial results with total revenues of KRW 119,779 million, operating profit of KRW 26,869 million, and net profit of KRW 26,866 million. Revenues saw a 17.7% QoQ decrease primarily due to lower online and mobile game revenues. Operating expenses decreased by 25.2% QoQ, but net profit decreased by 26.3% YoY. The company provided business updates on various IP-based games and expansion plans, including launches in China, North America, and new game developments.
Operating profit increased by 1.7% QoQ, reaching KRW 26,869 million.
Profit before income tax expenses saw a 24.2% increase QoQ, standing at KRW 32,498 million.
Net profit attributable to the parent company increased by 24.5% QoQ, reaching KRW 26,866 million.
Investor presentation provided detailed insights on recent business updates and plans for future growth.
Total revenues saw a 17.7% decrease QoQ, mainly due to lower online and mobile game revenues.
Net profit decreased by 26.3% YoY, despite some positive QoQ increases.
Operating expenses saw a 19.4% increase YoY, affecting the overall financial performance of the company.
Insights
The recent financial results of Gravity Co., Ltd. reveal a nuanced picture. On one hand, the company achieved an increase in operating profit by
Net profit has also moved in a similar pattern, showing resilience on a quarterly basis with a
However, the company's liquidity position, with over
Gravity's performance must be evaluated within the context of the gaming industry's dynamics. The YoY revenues decline from Ragnarok Online in Thailand and Taiwan, as well as Ragnarok Origin in Taiwan, Hong Kong and Macau, is concerning, potentially reflecting market saturation or competitive incursion. However, the company's strategic move to extend its popular Ragnarok IP through the launch of new titles like Ragnarok Origin in China and Americas and planned releases like Ragnarok X: Next Generation in China and Ragnarok: Rebirth in Southeast Asia, demonstrates an effort to diversify their revenue streams and capture new markets.
Moreover, Gravity's foray into blockchain gaming with titles such as Ragnarok Landverse and Ragnarok Monster World underscores an attempt to innovate and stay relevant in a rapidly-evolving gaming landscape. Yet, the longer-term success of these initiatives will depend on market reception and the ability to effectively monetize these games in a highly competitive environment.
Seoul, Korea, May 09, 2024 (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 first quarter ended March 31, 2024, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.
FIRST QUARTER 2024 HIGHLIGHTS
- Total revenues were KRW 119,779 million (US
$ 88,917 thousand ), representing a17.7% decrease from the fourth quarter ended December 31, 2023 (“QoQ”) and a27.4% decrease from the first quarter ended March 31, 2023 (“YoY”). - Operating profit was KRW 26,869 million (US
$ 19,946 thousand ), representing an1.7% increase QoQ and a38% decrease YoY. - Profit before income tax expenses was KRW 32,498 million (US
$ 24,125 thousand ), representing a24.2% increase QoQ and a29.7% decrease YoY. - Net profit attributable to parent company was KRW 26,866 million (US
$ 19,944 thousand ), representing a24.5% increase QoQ and a26.3% decrease YoY.
REVIEW OF FIRST QUARTER 2024 FINANCIAL RESULTS
Revenues
Online game revenues for the first quarter of 2024 were KRW 18,065 million (US
Mobile game revenues were KRW 98,548 million (US
Other revenues were KRW 3,166 million (US
Cost of Revenue
Cost of revenue was KRW 73,628 million (US
Operating Expenses
Operating expenses were KRW 19,282 million (US
Profit Before Income Tax Expenses
Profit before income tax expenses was KRW 32,498 million (US
Net Profit
As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 26,866 million (US
Liquidity
The balance of cash and cash equivalents and short-term financial instruments was KRW 484,526 million (US
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,347.08 to US
GRAVITY BUSINESS UPDATES
Ragnarok Online IP-based Games
- Ragnarok Online, an MMORPG PC game
Ragnarok Online aims to be officially launched in China in the first half of 2024 as it received an International Standard Book Number ("ISBN") code from the Chinese government in February 2024, followed by Ragnarok Origin and Ragnarok X: Next Generation in August 2023 and December 2023, respectively.
- Ragnarok Origin, an MMORPG mobile and PC game
Ragnarok Origin was launched in China on March 26, 2024 and North, Central, and South America in February 28, 2024.
- Ragnarok X: Next Generation, an MMORPG mobile game
Ragnarok X: Next Generation aims to be launched in China in the second half of 2024, with preparations underway for its launch in Japan.
- Ragnarok: Rebirth, an MMORPG mobile game
Ragnarok: Rebirth aims to be launched in Southeast Asia in June 2024.
- Ragnarok: Novice Hearts (tentative title), an MMORPG mobile game
Ragnarok: Novice Hearts (tentative title) aims to be launched in Taiwan, Hong Kong and Macau in June 2024.
- Other Ragnarok Online IP-based games
Ragnarok Monster's Marble, a 3D Casual Board Game, is scheduled to be launched in 2024.
Ragnarok in Wonderland, a Casual Healing Tycoon mobile game, is scheduled to be launched in Korea in the second half of 2024.
Ragnarok Landverse, an MMORPG Blockchain PC game based on P2E systems, is aiming to be launched in Thailand in June 2024.
Ragnarok Monster World, a Real-Time Strategy Blockchain PC (Window Client) and mobile game, is scheduled to be launched in Thailand in the second half of 2024.
Other IP-based games
- Generation Zombie, a Turn-based Survival Horror Card mobile game
Generation Zombie was launched in Global on March 13, 2024. The game is published by Gravity Interactive, Inc., Gravity's wholly-owned subsidiary in the US.
- TOKYO PSYCHODEMIC, a 2D Cinematic Profiling Adventure PC and console game
TOKYO PSYCHODEMIC will launch in Japan on May 30, 2024. The game is developed by Gravity Game Arise Co., Ltd. ("GGA"), Gravity's wholly-owned subsidiary in Japan, and will be published in Japan by GGA. And Gravity will publish the game in the rest of the global regions excluding Japan in the second half of 2024.
Expansion of Ragnarok IP-business
Ragnarok Golf Monsters is an indoor-screen golf brand based on the Ragnarok monster characters. Gravity Communications Co., Ltd. is aiming to launch the first facility of Ragnarok Golf Monsters in Taipei, Taiwan in 2024.
Investor Presentation
Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the first quarter in 2024 and Gravity’s business plan. The presentation can be found on the Company’s website under the IR Archives section at https://www.gravity.co.kr/en/ir/updates. 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, 2023 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
Ms. Shin Choi
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$)
As of | ||||||||||||||||
31-Dec-23 | 31-Mar-24 | |||||||||||||||
KRW | US$ | KRW | US$ | |||||||||||||
(audited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | 184,082 | 136,653 | 164,271 | 121,946 | ||||||||||||
Short-term financial instruments | 277,215 | 205,790 | 320,255 | 237,740 | ||||||||||||
Accounts receivable, net | 71,213 | 52,865 | 64,138 | 47,613 | ||||||||||||
Other receivables, net | 3,637 | 2,700 | 3,960 | 2,940 | ||||||||||||
Prepaid expenses | 2,994 | 2,223 | 3,085 | 2,290 | ||||||||||||
Other current financial assets | 4,439 | 3,295 | 5,440 | 4,038 | ||||||||||||
Other current assets | 3,319 | 2,464 | 4,569 | 3,392 | ||||||||||||
Total current assets | 546,899 | 405,990 | 565,718 | 419,959 | ||||||||||||
Property and equipment, net | 10,151 | 7,536 | 8,865 | 6,581 | ||||||||||||
Intangible assets, net | 6,370 | 4,729 | 6,164 | 4,576 | ||||||||||||
Deferred tax assets | 5,952 | 4,418 | 5,759 | 4,275 | ||||||||||||
Other non-current financial assets | 1,824 | 1,354 | 1,736 | 1,289 | ||||||||||||
Other non-current assets | 6,985 | 5,185 | 7,999 | 5,938 | ||||||||||||
Total assets | 578,181 | 429,212 | 596,241 | 442,618 | ||||||||||||
Liabilities and Equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | 61,778 | 45,861 | 53,904 | 40,015 | ||||||||||||
Deferred revenue | 18,093 | 13,431 | 16,665 | 12,371 | ||||||||||||
Withholdings | 3,072 | 2,280 | 2,849 | 2,115 | ||||||||||||
Accrued expense | 2,313 | 1,717 | 1,811 | 1,344 | ||||||||||||
Income tax payable | 16,927 | 12,566 | 16,897 | 12,543 | ||||||||||||
Other current liabilities | 4,251 | 3,156 | 3,783 | 2,810 | ||||||||||||
Total current liabilities | 106,434 | 79,011 | 95,909 | 71,198 | ||||||||||||
Long-term account payables | 677 | 503 | 678 | 503 | ||||||||||||
Long-term deferred revenue | 1,785 | 1,325 | 1,764 | 1,309 | ||||||||||||
Other non-current liabilities | 3,175 | 2,358 | 2,659 | 1,974 | ||||||||||||
Deferred tax liabilities | 2,382 | 1,768 | 2,382 | 1,769 | ||||||||||||
Total liabilities | 114,453 | 84,965 | 103,392 | 76,753 | ||||||||||||
Share capital | 3,474 | 2,579 | 3,474 | 2,579 | ||||||||||||
Capital surplus | 27,098 | 20,116 | 27,085 | 20,106 | ||||||||||||
Other components of equity | 4,016 | 2,981 | 6,261 | 4,647 | ||||||||||||
Retained earnings | 428,499 | 318,095 | 455,365 | 338,039 | ||||||||||||
Equity attributable to owners of the Parent Company | 463,087 | 343,771 | 492,185 | 365,371 | ||||||||||||
Non-controlling interest | 641 | 476 | 664 | 494 | ||||||||||||
Total equity | 463,728 | 344,247 | 492,849 | 365,865 | ||||||||||||
Total liabilities and equity | 578,181 | 429,212 | 596,241 | 442,618 |
* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,347.08 to US
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 | ||||||||||||||
31-Dec-23 | 31-Mar-23 | 31-Mar-24 | ||||||||||||
(KRW) | (US$) | (KRW) | (US$) | (KRW) | (US$) | |||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Revenues: | ||||||||||||||
Online games | 23,980 | 17,801 | 22,696 | 16,848 | 18,065 | 13,410 | ||||||||
Mobile games | 116,456 | 86,451 | 138,994 | 103,182 | 98,548 | 73,157 | ||||||||
Other revenue | 5,094 | 3,782 | 3,257 | 2,418 | 3,166 | 2,350 | ||||||||
Total net revenue | 145,530 | 108,034 | 164,947 | 122,448 | 119,779 | 88,917 | ||||||||
Cost of revenue | 93,330 | 69,283 | 105,485 | 78,306 | 73,628 | 54,657 | ||||||||
Gross profit | 52,200 | 38,751 | 59,462 | 44,142 | 46,151 | 34,260 | ||||||||
Operating expenses: | ||||||||||||||
Selling, general and administrative expenses | 20,576 | 15,275 | 13,271 | 9,852 | 15,747 | 11,690 | ||||||||
Research and development | 3,748 | 2,782 | 2,922 | 2,169 | 3,601 | 2,673 | ||||||||
Others, net | 1,445 | 1,073 | (49) | (36) | (66) | (49) | ||||||||
Total operating expenses | 25,769 | 19,130 | 16,144 | 11,985 | 19,282 | 14,314 | ||||||||
Operating profit | 26,431 | 19,621 | 43,318 | 32,157 | 26,869 | 19,946 | ||||||||
Finance income(costs): | ||||||||||||||
Finance income | 6,534 | 4,850 | 5,461 | 4,054 | 6,297 | 4,675 | ||||||||
Finance costs | (6,797) | (5,046) | (2,553) | (1,895) | (668) | (496) | ||||||||
Profit before income tax | 26,168 | 19,425 | 46,226 | 34,316 | 32,498 | 24,125 | ||||||||
Income tax expense | 4,625 | 3,433 | 9,799 | 7,274 | 5,615 | 4,168 | ||||||||
Profit for the year | 21,543 | 15,992 | 36,427 | 27,042 | 26,883 | 19,957 | ||||||||
Profit attributable to: | ||||||||||||||
Non-controlling interest | (33) | (24) | (39) | (29) | 17 | 13 | ||||||||
Owners of Parent company | 21,576 | 16,016 | 36,466 | 27,071 | 26,866 | 19,944 | ||||||||
Earning per share | ||||||||||||||
- Basic and diluted | 3,105 | 2.30 | 5,248 | 3.90 | 3,866 | 2.87 | ||||||||
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 | ||||||||
Earning per ADS | ||||||||||||||
- Basic and diluted | 3,105 | 2.30 | 5,248 | 3.90 | 3,866 | 2.87 |
* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,347.08 to US
(1) Each ADS represents one common share.
FAQ
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