Questions? +1 (202) 335-3939 Login
Trusted News Since 1995
A service for global professionals · Thursday, March 28, 2024 · 699,437,056 Articles · 3+ Million Readers

GRAVITY Announces Third Quarter 2019 Financial Results and Business Updates

/EIN News/ -- Seoul, Nov. 14, 2019 (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 third quarter ended September 30, 2019, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

THIRD QUARTER 2019 HIGHLIGHTS

  • Total revenues were KRW 77,566 million (US$ 64,863 thousand), representing a 0.7% decrease from the second quarter ended June 30, 2019 (“QoQ”) and a 75.5% increase from the third quarter ended September 30, 2018 (“YoY”).
  • Operating profit was KRW 10,226 million (US$ 8,551 thousand), representing a 21.3% decrease QoQ and a 44.4% increase YoY.
  • Profit before income tax expenses was KRW 11,213 million (US$ 9,376 thousand), representing a 20.1% decrease QoQ and a 53.0% increase YoY.
  • Net profit attributable to parent company was KRW 8,952 million (US$ 7,485 thousand), representing a 17.6% decrease QoQ and a 41.8% increase YoY.

REVIEW OF THIRD QUARTER 2019 FINANCIAL RESULTS

Revenues

Subscription revenues for the third quarter of 2019 were KRW 10,564 million (US$ 8,834 thousand), representing a 56.6 % increase QoQ from KRW 6,746 million and a 75.9% increase YoY from KRW 6,005 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Taiwan, Brazil, and Ragnarok Prequel 2 in Taiwan. The increase YoY was largely due to increased revenues from Ragnarok Online in Taiwan, Brazil and Ragnarok Prequel 2 in Taiwan. Such increase was partially offset by decreased revenue from Ragnarok Prequel in Taiwan.

Royalty and license fee revenues for the third quarter of 2019 were KRW 2,583 million (US$ 2,160 thousand), representing an 8.8% decrease QoQ from KRW 2,832 million and a 12.8% decrease YoY from KRW 2,961 million. The decrease QoQ was primarily due to decreased revenue from Ragnarok Online in Japan. The decrease YoY resulted mainly from decreased revenues from Ragnarok Online in Brazil and Thailand.

Mobile game and application revenues were KRW 61,238 million (US$ 51,209 thousand) for the third quarter of 2019, representing a 7.9% decrease QoQ from KRW 66,463 million and a 83.4% increase YoY from KRW 33,387 million. The decrease QoQ resulted primarily from decreased revenues from Ragnarok M: Eternal Love in Southeast Asia, North America, South America, Oceania, and Taiwan. Such decrease was partially offset by increased revenues from Ragnarok M: Eternal Love in Japan, Korea and Ragnarok H5 that has launched on September 19, 2019 in Korea. The increase YoY was primarily due to revenues from Ragnarok M: Eternal Love in Southeast Asia, Japan, North America, South America, Oceania, and Ragnarok H5 launched in September in Korea. This increase was partially offset by decreased revenues from Ragnarok M: Eternal Love in Taiwan and Korea.

Character merchandising and other revenues were KRW 3,181 million (US$ 2,660 thousand) for the third quarter of 2019, representing 52.5% increase QoQ from KRW 2,086 million and a 72.1% increase YoY from KRW 1,848 million

Cost of Revenue

Cost of revenue was KRW 56,058 million (US$ 46,877 thousand) for the third quarter of 2019, representing a 1.4% decrease QoQ from KRW 56,858 million and a 88.1% increase YoY from KRW 29,806 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North America, South America, and Oceania. The increase YoY was mostly from increased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North America, South America, Oceania, and Japan.

Operating Expenses

Operating expenses were KRW 11,282 million (US$ 9,435 thousand) for the third quarter of 2019, representing a 36.4% increase QoQ from KRW 8,271 million and a 54.3% increase YoY from KRW 7,311 million. The increase QoQ was mainly attributable to increased advertising expenses for Ragnarok M: Eternal Love in Korea, Ragnarok H5 launched in September in Korea, and re-launched Ragnarok Online in Indonesia. The increase YoY was mostly resulted from increased advertising expenses for Ragnarok M: Eternal Love in Korea, Ragnarok H5 launched in September in Korea, re-launched Ragnarok Online in Indonesia, research and development expenses and salaries. 

Profit before income tax expenses

Profit before income tax expenses was KRW 11,213 million (US$ 9,376 thousand) for the third quarter of 2019 compared with profit before income tax expense of KRW 14,037 million for the second quarter of 2019 and profit before income tax expenses of KRW 7,329 million for the third quarter of 2018.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 8,952 million (US$ 7,485 thousand) for the third quarter of 2019 compared with net profit attributable to parent company of KRW 10,861 million for the second quarter of 2019 and a net profit attributable to parent company of KRW 6,312 million for the third quarter of 2018.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 120,259 million (US$ 100,564 thousand) as of September 30, 2019.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,195.85 to US$ 1.00, the noon buying rate in effect on September 30, 2019 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATE

Ragnarok Online IP-based Games

  • Ragnarok Origin, a MMORPG mobile game

Ragnarok Origin is scheduled to be launched in Korea in 2020. The game embodies Ragnarok’s game elements to the highest level of graphics on the mobile device.

  • Ragnarok M: Eternal Love, a MMORPG mobile game

Ragnarok M: Eternal Love has launched in Europe (except for some regions) and Russia on October 16, 2019.

  • Ragnarok Tactics, a SRPG mobile game

Ragnarok Tactics has launched in Thailand on November 8, 2019. On the launching day, the game ranked as the first in free download rankings and the second in gross rankings of Apple App Store. The game is scheduled to be launched in Korea in the first half of 2020.

  • Other Ragnarok Online IP-based games

Gravity has launched Ragnarok Click H5, a Click Action RPG game, globally on November 13, 2019.

The company has been preparing to launch Ragnarok H5, an idle RPG game, in Indonesia in the first quarter of 2020.

Other IP games

  •  The Color of Dream Fantasy Latele, a MMORPG mobile game, has launched in Japan on October 16, 2019.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the third quarter in 2019 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 83 markets and countries. 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, 2019 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. Minji Oh
IR Unit
Gravity Co., Ltd.
Email: ir@gravity.co.kr
Telephone: +82-2-2132-7800~1

#     #     #

GRAVITY Co., Ltd.
Consolidated Statements of Financial Position

(In millions of KRW and thousands of US$)

    As of  
    31-Dec-18     30-Sep-19  
    KRW     US$     KRW     US$  
    (audited)     (unaudited)     (unaudited)     (unaudited)  
Assets                                
Current assets:                                
Cash and cash equivalents     86,051       71,958       88,759       74,223  
Short-term financial instruments     9,500       7,944       31,500       26,341  
Accounts receivable, net     60,664       50,729       39,409       32,955  
Other receivables, net     255       213       199       166  
Prepaid expenses     2,516       2,104       1,929       1,613  
Other current assets     1,182       988       3,749       3,135  
Total current assets     160,168       133,936       165,545       138,433  
Property and equipment, net     1,498       1,253       6,833       5,714  
Intangible assets     1,163       973       1,568       1,311  
Deferred tax assets     7,413       6,199       8,866       7,414  
Other non-current financial assets     1,494       1,249       1,662       1,390  
Other non-current assets     1,438       1,202       1,727       1,444  
Total assets     173,174       144,812       186,201       155,706  
Liabilities and Equity                                
Current liabilities:                                
Accounts payable     71,928       60,148       44,258       37,010  
Deferred revenue     16,476       13,778       12,795       10,700  
Withholdings     2,019       1,688       2,119       1,772  
Accrued expense     1,031       862       1,049       878  
Income tax payable     1,944       1,626       3,204       2,679  
Other current liabilities     123       102       1,889       1,580  
Total current liabilities     93,521       78,204       65,314       54,619  
Long-term deferred revenue     3,598       3,009       1,294       1,082  
Other non-current liabilities     503       421       3,564       2,980  
Total liabilities     97,622       81,634       70,172       58,681  
Share capital     3,474       2,905       3,474       2,905  
Capital surplus     27,141       22,695       27,128       22,685  
Other components of equity     138       115       814       680  
Retained earnings (Accumulated deficit)     45,405       37,970       84,978       71,061  
Equity attributable to owners of the Parent Company     76,158       63,685       116,394       97,331  
Non-controlling interest     (606 )     (507 )     (365 )     (306 )
Total equity     75,552       63,178       116,029       97,025  
Total liabilities and equity     173,174       144,812       186,201       155,706  

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,195.85 to US$ 1.00, the noon buying rate in effect on September 30, 2019 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     Nine months ended
    30-Jun-19     30-Sep-18     30-Sep-19     30-Sep-18     30-Sep-19
    (KRW)     (KRW)     (KRW)     (US$)     (KRW)     (KRW)     (US$)
    (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)
Revenues:                                                      
Online games-subscription revenue     6,746       6,005       10,564       8,834       21,017       23,566       19,706
Online games-royalties and license fees     2,832       2,961       2,583       2,160       10,788       9,135       7,639
Mobile games and applications     66,463       33,387       61,238       51,209       136,573       248,848       208,093
Character merchandising and other revenue     2,086       1,848       3,181       2,660       5,160       7,767       6,495
Total net revenue     78,127       44,201       77,566       64,863       173,538       289,316       241,933
Cost of revenue     56,858       29,806       56,058       46,877       118,740       214,153       179,080
Gross profit     21,269       14,395       21,508       17,986       54,798       75,163       62,853
Operating expenses:                                                      
Selling, general and administrative     5,733       5,602       8,984       7,513       28,899       21,382       17,880
Research and development     2,432       1,760       2,349       1,965       5,376       6,658       5,568
Others, net     106       (51 )     (51 )     (43 )     296       259       217
Total operating expenses     8,271       7,311       11,282       9,435       34,571       28,299       23,665
Operating profit     12,998       7,084       10,226       8,551       20,227       46,864       39,188
Finance income(costs):                                                      
Finance income     1,141       58       1,353       1,131       1,540       3,556       2,974
Finance costs     (102 )     187       (366)       (306)       (679 )     (781 )     (653)
Profit before income tax     14,037       7,329       11,213       9,376       21,088       49,639       41,509
Income tax expenses(profits)     3,208       1,024       2,357       1,971       4,659       10,192       8,523
Profit for the period     10,829       6,305       8,856       7,405       16,429       39,447       32,986
Profit attributable to:                                                      
Non-controlling interest     (32 )     (7)       (96 )     (80 )     (47 )     (126 )     (105)
Owners of Parent company     10,861       6,312       8,952       7,485       16,476       39,573       33,091
Earning per share                                                      
- Basic and diluted     1,563       908       1,288       1.08       2,371       5,695       4.76
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(1)                                                      
- Basic and diluted     1,563       908       1,288       1.08       2,371       5,695       4.76

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,195.85 to US$1.00, the noon buying rate in effect on September 30, 2019 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.

Powered by EIN News
Distribution channels: IT Industry


EIN Presswire does not exercise editorial control over third-party content provided, uploaded, published, or distributed by users of EIN Presswire. We are a distributor, not a publisher, of 3rd party content. Such content may contain the views, opinions, statements, offers, and other material of the respective users, suppliers, participants, or authors.

Submit your press release