Gravity Reports Second Quarter Of 2023 Results And Business Updates

(MENAFN- GlobeNewsWire - Nasdaq) 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 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

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:

Ms. Jin Lee
IR Unit
Gravity Co., Ltd.
Email:
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.

Tags business updates financial results

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