Gravity Reports First Quarter of 2025 Results and Business Update

Rhea-AI Summary

Gravity (GRVY) reported strong Q1 2025 financial results with total revenues of KRW 137.4B (US$93.2M), up 6% QoQ and 14.8% YoY. Operating profit reached KRW 24.7B (US$16.7M), increasing 55% QoQ but declining 8% YoY. Mobile game revenues, the company's largest segment, grew 9.4% QoQ to KRW 115.4B (US$78.3M), driven by new launches including Ragnarok M: Classic and Ragnarok Idle Adventure Plus. The company expanded its portfolio with multiple game launches across regions, including THE RAGNAROK and Ragnarok: Rebirth. Notably, Gravity established a new subsidiary in Malaysia (Gravity Game Unite) and opened its first Ragnarok Golf Monsters facility in Taipei, demonstrating geographic and business diversification.

Positive

• Total revenue increased 14.8% YoY to KRW 137.4B
• Operating profit grew 55% QoQ to KRW 24.7B
• Mobile game revenue rose 17.2% YoY to KRW 115.4B
• Strong cash position with KRW 577.1B in cash and equivalents
• Multiple successful game launches across regions
• Geographic expansion with new Malaysian subsidiary

Negative

• Net profit declined 18% YoY to KRW 22B
• Operating expenses increased 31.1% YoY
• Online game revenues decreased 5.1% QoQ
• Cost of revenue rose 18.8% YoY

Insights

Financial Analyst

Gravity's Q1 shows 14.8% revenue growth YoY despite 18% profit decline, driven by new game launches while expanding its Ragnarok IP ecosystem.

Gravity's Q1 2025 results present a mixed financial picture with notable revenue growth amid profitability challenges. The company achieved KRW 137,464 million (US$93.2 million) in total revenue, marking a healthy 14.8% year-over-year increase and 6% quarter-over-quarter growth. This revenue expansion was primarily fueled by the mobile gaming segment, which grew 17.2% YoY to KRW 115,486 million, representing over 84% of total revenue.

The revenue growth stems largely from Gravity's successful expansion of its Ragnarok IP through multiple new game launches, particularly Ragnarok M: Classic in Southeast Asia and Ragnarok Idle Adventure Plus globally. However, these gains were partially offset by declining performance from existing titles like Ragnarok Origin in several regions.

Despite the revenue gains, profitability metrics present a concerning trend. Net profit attributable to the parent company fell 18% YoY to KRW 22,038 million (US$14.9 million), with operating profit declining 8% YoY. The profit margin compression stems from two main factors: a 18.8% YoY increase in cost of revenue (outpacing revenue growth) and a substantial 31.1% rise in operating expenses year-over-year, primarily due to increased advertising for new game launches.

Gravity's balance sheet remains exceptionally strong with KRW 577,163 million (US$391.4 million) in cash and cash equivalents, providing substantial financial flexibility for continued expansion. This liquidity position represents multiple years of operating expenses at current run rates.

The company's business strategy clearly focuses on maximizing its Ragnarok IP across multiple gaming formats (MMORPG, idle games, blockchain games) and geographic regions, with at least 10 new Ragnarok-related game launches planned for 2025. Notably, Gravity is also diversifying beyond gaming through initiatives like the Ragnarok Golf Monsters indoor golf brand and expanding its geographic footprint with a new Malaysian subsidiary.

The central financial tension lies in balancing growth investments (reflected in higher marketing costs and commissioned game development) against maintaining profitability margins. While current margin compression appears tied to investment in future revenue streams, investors should monitor whether upcoming game launches generate sufficient returns to justify these increased expenditures.

Gaming Industry Expert

Gravity demonstrates strong product pipeline execution with 10+ new games while strategically expanding Ragnarok IP beyond traditional gaming markets.

Gravity's Q1 report reveals an impressive product release cadence that showcases the company's ability to simultaneously develop and launch multiple titles across diverse gaming segments. The company has already launched five new games in Q1 and early Q2, with another eight titles scheduled throughout 2025. This aggressive release strategy demonstrates strong execution capabilities that few mid-sized gaming companies can match.

The strategic diversification across gaming formats is particularly noteworthy. Gravity is leveraging its core Ragnarok IP across virtually every major gaming category: traditional MMORPGs (Ragnarok V: Returns), idle games (Ragnarok Idle Adventure Plus), mobile titles, PC games, and even emerging blockchain gaming (Ragnarok Landverse). This multi-format approach maximizes monetization potential from a single IP while reaching different player demographics.

Geographic expansion represents another key strength, with carefully sequenced regional launches tailored to specific markets. The company is pushing particularly hard into Latin America (with dedicated services like Ragnarok Online America Latina), while maintaining its strong presence across Southeast Asia and expanding in China through strategic platforms like WeChat Mini Programs with titles such as THE RAGNAROK and Ragnarok: Dawn.

Gravity's experimental moves beyond traditional gaming boundaries demonstrate forward-thinking innovation. The Ragnarok Libre launch on Telegram represents an interesting push into messaging platform gaming, while Ragnarok Golf Monsters shows creative IP extension into physical entertainment venues. The establishment of Gravity Game Unite in Malaysia further suggests the company sees significant untapped potential in Southeast Asian markets.

The company faces two key challenges: potential IP fatigue and monetization sustainability. With over a dozen Ragnarok-branded titles active or launching in 2025, market saturation risks cannibalization between titles. Additionally, the report doesn't address user acquisition costs or player retention metrics, which will ultimately determine whether this aggressive launch strategy translates to sustainable growth or merely redistributes the existing player base across more titles.

Seoul, South Korea, May 09, 2025 (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, 2025, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

FIRST QUARTER 2025 HIGHLIGHTS

• Total revenues were KRW 137,464 million (US$ 93,231 thousand), representing a 6% increase from the fourth quarter ended December 31, 2024 (“QoQ”) and a 14.8% increase from the first quarter ended March 31, 2024 (“YoY”).

• Operating profit was KRW 24,730 million (US$ 16,772 thousand), representing a 55% increase QoQ and an 8% decrease YoY.

• Profit before income tax expenses was KRW 28,450 million (US$ 19,295 thousand), representing a 12.1% increase QoQ and a 12.5% decrease YoY.

• Net profit attributable to parent company was KRW 22,038 million (US$ 14,947 thousand), representing a 4.6% decrease QoQ and an 18% decrease YoY.

REVIEW OF FIRST QUARTER 2025 FINANCIAL RESULTS

Revenues

Online game revenues for the first quarter of 2025 were KRW 18,806 million (US$ 12,755 thousand), representing a 5.1% decrease QoQ from KRW 19,822 million and a 4.1% increase YoY from KRW 18,065 million. The decrease QoQ was mainly attributable to decreased revenues from Ragnarok Online in Thailand. Such decrease was partially offset by increased revenue from Ragnarok Online in Japan. The increase YoY was largely due to increased revenues from Ragnarok Online in Thailand and China.

Mobile game revenues were KRW 115,486 million (US$ 78,325 thousand) for the first quarter of 2025, representing a 9.4% increase QoQ from KRW 105,586 million and a 17.2% increase YoY from KRW 98,548 million. The increase QoQ attributed to initial revenues from Ragnarok M: Classic which was launched in Southeast Asia on February 14, 2025 and Ragnarok Idle Adventure Plus launched in Global except Taiwan, Hong Kong, Macau, China, Korea and Japan on February 20, 2025. Such increase was partially offset by decreased revenues from Ragnarok Origin in Southeast Asia and THE RAGNAROK in Southeast Asia. The increase YoY was due to initial revenue from Ragnarok M: Classic in Southeast Asia, THE RAGNAROK in Southeast Asia launched on October 31, 2024 and Ragnarok: Rebirth in Taiwan, Hong Kong and Macau launched on October 31, 2024. This increase was partially offset by decreased revenues from Ragnarok Origin in Southeast Asia, Taiwan, Hong Kong and Macau and North, Central and South America.

Other revenues were KRW 3,172 million (US$ 2,151 thousand) for the first quarter of 2025, representing a 26.5% decrease QoQ from KRW 4,315 million and a 0.2% increase YoY from KRW 3,166 million.

Cost of Revenue

Cost of revenue was KRW 87,458 million (US$ 59,316 thousand) for the first quarter of 2025, representing a 8% increase QoQ from KRW 81,008 million and a 18.8% increase YoY from KRW 73,628 million. The increase QoQ was mainly due to increased commission paid for mobile game services related to Ragnarok M: Classic in Southeast Asia. The increase YoY was primarily due to increased commission paid for mobile game services related to Ragnarok M: Classic in Southeast Asia, THE RAGNAROK in Southeast Asia and Ragnarok: Rebirth in Taiwan, Hong Kong and Macau.

Operating Expenses

Operating expenses were KRW 25,276 million (US$ 17,143 thousand) for the first quarter of 2025, representing a 22.9% decrease QoQ from KRW 32,765 million and a 31.1% increase YoY from KRW 19,282 million. The decrease QoQ was mainly due to decreased advertising expenses for THE RAGNAROK in Southeast Asia and salaries. The increase YoY was mainly due to increased advertising expenses for Ragnarok Idle Adventure Plus in Global, Ragnarok V: Returns in Thailand, Indonesia and Philippines and Ragnarok Begins in Taiwan, Hong Kong and Macau.

Profit Before Income Tax Expenses

Profit before income tax expenses was KRW 28,450 million (US$ 19,295 thousand) for the first quarter of 2025 compared with profit before income tax expense of KRW 25,377 million for the fourth quarter of 2024 and profit before income tax expenses of KRW 32,498 million for the first quarter of 2024.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 22,038 million (US$ 14,947 thousand) for the first quarter of 2025 compared with net profit attributable to parent company of KRW 23,099 million for the fourth quarter of 2024 and a net profit attributable to parent company of KRW 26,866 million for the first quarter of 2024.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 577,163 million (US$ 391,446 thousand) as of March 31, 2025.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,474.44 to US$ 1.00, the noon buying rate in effect on March 31, 2025 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATES

Ragnarok Online IP-based Games

• Ragnarok M: Classic, an MMORPG Mobile game

Ragnarok M: Classic was officially launched in Southeast Asia on February 14, 2025 and Taiwan, Hong Kong and Macau on April 16, 2025.

• Ragnarok Idle Adventure Plus, a Vertical Idle MMORPG Mobile game

Ragnarok Idle Adventure Plus was launched in Global except for Taiwan, Hong Kong, Macau, China, Korea and Japan on February 20, 2025 and is underway for its launch in Taiwan, Hong Kong and Macau in the second quarter of 2025 and Korea in the second half of 2025.

• Ragnarok X: Next Generation, an MMORPG Mobile and PC game

Ragnarok X: Next Generation was officially launched in North, Central and South America, Oceania, England, Portugal, Spain and Ireland on May 8, 2025 and will be launching in Europe (except England, Portugal, Spain and Ireland) in the second quarter of 2025.

• THE RAGNAROK, an MMORPG game

THE RAGNAROK (Chinese title: 巴風特之怒) will be launched on WeChat (H5) Mini Programs in China in the second quarter of 2025.

• Ragnarok: Dawn (tentative English title), an Idle MMORPG game

Ragnarok: Dawn (tentative English title) was officially launched on WeChat Mini Programs in China on February 20, 2025, and mobile app version will be launched in Taiwan, Hong Kong and Macau in the second half of 2025.

• Ragnarok V: Returns, a 3D MMORPG Mobile and PC game

Ragnarok V: Returns was officially launched in Thailand, Indonesia and Philippines on March 27, 2025.

• Ragnarok: Back to Glory, a 3D MMORPG Mobile game

Ragnarok: Back to Glory was officially launched in Korea and re-launched in Southeast Asia on April 17, 2025 and will be launched in China in the third quarter of 2025.

• Ragnarok Crush, a Puzzle and Tower Defense Mobile game

Ragnarok Crush will be launched in Global in July 2025.

• Ragnarok Online America Latina, an MMORPG PC game

Ragnarok Online America Latina is scheduled to be direct-serviced in Latin America on May 28, 2025.

• Ragnarok Zero, an RPG PC game

Ragnarok Zero is being prepared to be launched in Taiwan in July 2025.

• Ragnarok Libre, a Time Effective MMORPG Telegram game

Ragnarok Libre is underway for its launch in Global in the second quarter of 2025.

Ragnarok Online IP-based Blockchain Game

• Ragnarok Landverse, an MMORPG Blockchain and PC game

Ragnarok Landverse will be launched in Latin America in the second half of 2025.
Ragnarok Landverse Genesis, a global new server integrated with RONIN platform, ranked first in trading volume after its official release in Global on March 29, 2025.

Other IP-based games

• JLPGA Heroine Collection, a Sports Mobile game

JLPGA was officially launched in Japan on March 25, 2025.

• Shambles: Sons of Apocalypse, a Deck-building Roguelike Mobile game

Shambles: Sons of Apocalypse, was officially launched in Global except for China, Vietnam and Taiwan on March 27, 2025

• Twilight Monk, a 2.5D Action RPG Console game

Twilight Monk, was officially launched in Global on March 27, 2025

• Snow Brothers 2 Special, an Action and Platformer Console game

Snow Brothers 2 Special, was officially launched in Global on April 10, 2025

• Meow Star Acers 2, a Farm Simulation Mobile game

Meow Star Acers 2, is scheduled to be launched in Global in the second half of 2025.

• Dragonica Origin, an MO Action RPG PC game

Dragonica Origin will be launched in Southeast Asia in June 2025.

• Gunbound, an MMO Turned-based Artillery PC game

Gunbound is underway for its launch in Southeast Asia and Latin America in the second quarter of 2025.

Expansion of Ragnarok IP-business

Ragnarok Golf Monsters is an indoor-screen golf brand based on the Ragnarok monster characters. Gravity Communications Co., Ltd. opened the first facility of Ragnarok Golf Monsters in Taipei, Taiwan on February 27, 2025.

Our New Subsidiary

Gravity established Gravity Game Unite Sdn. Bhd. ("Gravity Game Unite"), a subsidiary in Malaysia, on March 12, 2025. Gravity will expand various game services including Ragnarok Online IP based games throughout Gravity Game Unite in Malaysian regions.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the first quarter in 2025 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 regions. 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, 2024 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. Yujin Oh
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-24								31-Mar-25
		KRW				US$				KRW				US$
		(audited)				(unaudited)				(unaudited)				(unaudited)
Assets
Current assets:
Cash and cash equivalents			228,898				155,244				201,367				136,572
Short-term financial instruments			324,304				219,951				375,796				254,874
Accounts receivable, net			81,152				55,039				74,469				50,507
Other receivables, net			1,572				1,066				2,162				1,466
Prepaid expenses			8,115				5,504				6,669				4,523
Other current financial assets			6,602				4,478				6,033				4,092
Other current assets			2,967				2,012				3,091				2,096
Total current assets			653,610				443,294				669,587				454,130
Property and equipment, net			9,957				6,753				10,576				7,173
Intangible assets, net			7,057				4,786				6,414				4,350
Deferred tax assets			5,617				3,810				6,294				4,269
Other non-current financial assets			1,767				1,198				670				454
Other non-current assets			8,451				5,732				9,366				6,352
Total assets			686,459				465,573				702,907				476,728
Liabilities and Equity
Current liabilities:
Accounts payable			67,930				46,072				63,048				42,761
Deferred revenue			26,761				18,150				24,015				16,288
Withholdings			1,588				1,077				1,635				1,109
Accrued expense			2,651				1,798				2,168				1,470
Income tax payable			6,507				4,413				8,782				5,956
Other current liabilities			3,212				2,178				3,390				2,299
Total current liabilities			108,649				73,688				103,038				69,883
Long-term account payables			220				149				220				149
Long-term deferred revenue			2,572				1,744				1,322				897
Other non-current liabilities			5,361				3,636				5,904				4,003
Deferred tax liabilities			1,294				878				1,294				878
Total liabilities			118,096				80,095				111,778				75,810
Share capital			3,474				2,356				3,474				2,356
Capital surplus			26,979				18,298				26,979				18,298
Other components of equity			23,801				16,143				24,507				16,621
Retained earnings			513,418				348,212				535,456				363,159
Equity attributable to owners of the Parent Company			567,672				385,009				590,416				400,434
Non-controlling interest			691				469				713				484
Total equity			568,363				385,478				591,129				400,918
Total liabilities and equity			686,459				465,573				702,907				476,728

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,474.44 to US$ 1.00, the noon buying rate in effect on March 31, 2025 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
		31-Dec-24					31-Mar-24					31-Mar-25
		(KRW)		(US$)			(KRW)		(US$)			(KRW)		(US$)
		(unaudited)		(unaudited)			(unaudited)		(unaudited)			(unaudited)		(unaudited)
Revenues:
Online games		19,822		13,444			18,065		12,252			18,806		12,755
Mobile games		105,586		71,611			98,548		66,838			115,486		78,325
Other revenue		4,315		2,927			3,166		2,147			3,172		2,151
Total net revenue		129,723		87,982			119,779		81,237			137,464		93,231
Cost of revenue		81,008		54,942			73,628		49,936			87,458		59,316
Gross profit		48,715		33,040			46,151		31,301			50,006		33,915
Operating expenses:
Selling, general and administrative expenses		28,311		19,201			15,747		10,680			21,859		14,825
Research and development		3,669		2,488			3,601		2,442			3,431		2,327
Others, net		785		534			(66)		(45)			(14)		(9)
Total operating expenses		32,765		22,223			19,282		13,077			25,276		17,143
Operating profit		15,950		10,817			26,869		18,224			24,730		16,772
Finance income(costs):
Finance income		9,801		6,647			6,297		4,271			10,717		7,269
Finance costs		(374)		(254)			(668)		(453)			(6,997)		(4,746)
Profit before income tax		25,377		17,210			32,498		22,042			28,450		19,295
Income tax expense		2,274		1,542			5,615		3,808			6,372		4,322
Profit for the year		23,103		15,668			26,883		18,234			22,078		14,973
Profit attributable to:
Non-controlling interest		4		3			17		12			40		26
Owners of Parent company		23,099		15,665			26,866		18,222			22,038		14,947
Earning per share
- Basic and diluted		3,324		2.25			3,866		2.62			3,171		2.15
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		3,324		2.25			3,866		2.62			3,171		2.15

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,474.44 to US$1.00, the noon buying rate in effect on March 31, 2025 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.

FAQ

What were Gravity's (GRVY) key financial results for Q1 2025?

In Q1 2025, Gravity reported total revenues of KRW 137.4B (US$93.2M), up 14.8% YoY, with operating profit of KRW 24.7B (US$16.7M). Mobile game revenues grew 9.4% QoQ to KRW 115.4B, while net profit was KRW 22B.

How did Gravity's (GRVY) mobile gaming segment perform in Q1 2025?

Gravity's mobile gaming revenue increased 9.4% QoQ to KRW 115.4B (US$78.3M), driven by new launches including Ragnarok M: Classic in Southeast Asia and Ragnarok Idle Adventure Plus in Global markets.

What new games did Gravity (GRVY) launch in Q1 2025?

Gravity launched several games including Ragnarok M: Classic in Southeast Asia, Ragnarok Idle Adventure Plus globally, Ragnarok V: Returns in Thailand, Indonesia and Philippines, and Ragnarok: Dawn on WeChat Mini Programs in China.

How much cash does Gravity (GRVY) have as of Q1 2025?

As of March 31, 2025, Gravity had KRW 577.1B (US$391.4M) in cash, cash equivalents, and short-term financial instruments.

What new business initiatives did Gravity (GRVY) announce in Q1 2025?

Gravity established a new subsidiary in Malaysia (Gravity Game Unite) and opened its first Ragnarok Golf Monsters indoor-screen golf facility in Taipei, Taiwan.