Seoul, May 29, 2020 (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, 2020, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.
FIRST QUARTER 2020 HIGHLIGHTS
- Total revenues were KRW 73,260 million (US$ 60,102 thousand), representing a 2.2% increase from the fourth quarter ended December 31, 2019 (“QoQ”) and a 45.2% decrease from the first quarter ended March 31, 2019 (“YoY”).
- Operating profit was KRW 10,356 million (US$ 8,496 thousand), representing a 475.7% increase QoQ and a 56.2% decrease YoY.
- Profit before income tax expenses was KRW 11,250 million (US$ 9,229 thousand), representing a 595.7% increase QoQ and a 53.9 decrease YoY.
- Net profit attributable to parent company was KRW 9,263 million (US$ 7,599 thousand), representing a 2,957.1% increase QoQ and a 53.1% decrease YoY.
REVIEW OF FIRST QUARTER 2020 FINANCIAL RESULTS
Subscription revenues for the first quarter of 2020 were KRW 9,893 million (US$ 8,116 thousand), representing a 37.7 % increase QoQ from KRW 7,185 million and a 58.1% increase YoY from KRW 6,256 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Onlineand Ragnarok Prequel in Taiwan. The increase YoY was largely due to increased revenues from Ragnarok Online and Ragnarok Prequel II in Taiwan.
Royalty and license fee revenues for the first quarter of 2020 were KRW 3,543 million (US$ 2,907 thousand), representing a 45.4% increase QoQ from KRW 2,436 million and a 4.8% decrease YoY from KRW 3,720 million. The increase QoQ was primarily due to increased revenue from Ragnarok Online in Japan. The decrease YoY resulted mainly from decreased revenue from Ragnarok Online in Japan.
Mobile game revenues were KRW 55,982 million (US$ 45,928 thousand) for the first quarter of 2020, representing a 1.3% decrease QoQ from KRW 56,714 million and a 53.4% decrease YoY from KRW 120,090 million. The decrease QoQ resulted primarily from decreased revenues from Ragnarok M: Eternal Love in Southeast Asia and Europe, and Ragnarok H5 in Korea. Such decrease was partially offset by increased revenues from Ragnarok M: Eternal Love in Taiwan and Ragnarok Tactics in Taiwan and Southeast Asia that was launched on February 25, 2020 and January 2, 2020, respectively. The decrease YoY was primarily due to revenues from Ragnarok M: Eternal Love in Southeast Asia, North America, South America and Oceania and Korea. This decrease was partially offset by increased revenues from Ragnarok M: Eternal Love in Japan, Taiwan and Europe, Ragnarok Tactics in Taiwan, Southeast Asia and Thailand.
Other revenues were KRW 3,842 million (US$ 3,151 thousand) for the first quarter of 2020, representing 27.7% decrease QoQ from KRW 5,316 million and an 8.0% increase YoY from KRW 3,557 million
Cost of Revenue
Cost of revenue was KRW 48,874 million (US$ 40,096 thousand) for the first quarter of 2020, representing a 5.3% decrease QoQ from KRW 51,635 million and a 51.7% decrease YoY from KRW 101,237 million. The decrease QoQ was mainly due to decreased outsourcing fee, commission paid for mobile game services related to Ragnarok M: Eternal lovein Southeast Asia and salaries. The decrease YoY was mostly from decreased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North America, South America and Oceania.
Operating expenses were KRW 14,030 million (US$ 11,510 thousand) for the first quarter of 2020, representing a 23.0% decrease QoQ from KRW 18,217 million and a 60.4% increase YoY from KRW 8,746 million. The decrease QoQ was mainly attributable to decreased advertising expenses related to G-star 2019, The Color of Dream Fantasy Latale, Ragnarok M: Eternal Love, Ragnarok H5and Ragnarok Click H5. The increase YoY was mostly resulted from increased advertising expenses for Ragnarok Tacticsin Taiwan, Southeast Asia and Korea, commission paid, and research and development expenses.
Profit before income tax expenses
Profit before income tax expenses was KRW 11,250 million (US$ 9,229 thousand) for the first quarter of 2020 compared with profit before income tax expense of KRW 1,617 million for the fourth quarter of 2019 and profit before income tax expenses of KRW 24,389 million for the first quarter of 2019.
As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 9,263 million (US$ 7,599 thousand) for the first quarter of 2020 compared with net profit attributable to parent company of KRW 303 million for the fourth quarter of 2019 and a net profit attributable to parent company of KRW 19,760 million for the first quarter of 2019.
The balance of cash and cash equivalents and short-term financial instruments was KRW 123,002 million (US$ 100,911 thousand) as of March 31, 2020.
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,218.92 to US$ 1.00, the noon buying rate in effect on March 31, 2020 as quoted by the Federal Reserve Bank of New York.
GRAVITY BUSINESS UPDATE
Gravity Game Tech, a subsidiary in Thailand, opened Ragnarok onlinein Thailand on May 28, 2020 and the company announced 4th job change for Ragnarok online in Korea on May 27, 2020.
Ragnarok OnlineIP-based Games
- Ragnarok Origin, a MMORPG mobile game
Ragnarok Origin is scheduled to be launched in Korea in July 2020. The first closed beta test (CBT) has completed on May 13 with users’ positive feedbacks. The company is preparing its second CBT before the official launch.
- Ragnarok X: Next Generation, a MMORPG mobile game
Ragnarok X: Next Generationis being prepared for the service in Taiwan, Hong Kong, and Macau in the second half of 2020.
- Ragnarok Tactics, a SRPG mobile game
Ragnarok Tactics was launched in Korea on March 31, 2020. The game is scheduled to be launched in global market for June 2020 target.
- Other Ragnarok OnlineIP-based games
Ragnarok H5(locally named Ragnarok Frontier), an idle RPG game,was launched in Indonesia on March 31, 2020.
Other IP games
A First-Person Shooter (FPS) game, Tactical Warfare, has started pre-registration and will be launched in North, Central and South America in June 2020. The game is published by Gravity Interactive, a subsidiary in the United States.
Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of first quarter in 2020 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. ---------------------------------------------------
Based in Korea, 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 93 markets and countries. For more information about Gravity, please visit http://www.gravity.co.kr.
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, 2020 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.
Mr. Heung Gon Kim
Chief Financial Officer
Gravity Co., Ltd.
Ms. Jin Lee
Ms. Minji Oh
Gravity Co., Ltd.
# # #
GRAVITY Co., Ltd.
Consolidated Statements of Financial Position
(In millions of KRW and thousands of US$)
|Cash and cash equivalents||79,428||65,163||82,502||67,685|
|Short-term financial instruments||39,500||32,406||40,500||33,226|
|Accounts receivable, net||32,253||26,460||40,748||33,430|
|Other receivables, net||56||46||413||339|
|Other current assets||2,664||2,186||3,869||3,173|
|Total current assets||155,863||127,871||170,182||139,617|
|Property and equipment, net||6,663||5,466||8,576||7,036|
|Deferred tax assets||7,667||6,290||9,042||7,418|
|Other non-current financial assets||1,770||1,452||1,771||1,453|
|Other non-current assets||1,745||1,430||1,788||1,466|
|Liabilities and Equity|
|Income tax payable||2,618||2,148||3,100||2,543|
|Other current liabilities||1,986||1,629||2,781||2,282|
|Total current liabilities||55,787||45,768||61,800||50,701|
|Long-term deferred revenue||98||80||98||80|
|Other non-current liabilities||3,774||3,096||4,430||3,634|
|Other components of equity||274||225||1,577||1,294|
|Equity attributable to owners of the Parent Company||115,544||94,792||126,110||103,460|
|Total liabilities and equity||175,425||143,918||192,930||158,279|
* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,218.92 to US$ 1.00, the noon buying rate in effect on March 31, 2020 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|
|Online games-subscription revenue||7,185||5,895||6,256||5,132||9,893||8,116|
|Online games-royalties and license fees||2,436||1,998||3,720||3,052||3,543||2,907|
|Total net revenue||71,651||58,782||133,623||109,624||73,260||60,102|
|Cost of revenue||51,635||42,361||101,237||83,055||48,874||40,096|
|Selling, general and administrative||15,491||12,709||6,665||5,468||11,007||9,030|
|Research and development||2,845||2,334||1,877||1,540||2,872||2,356|
|Total operating expenses||18,217||14,945||8,746||7,175||14,030||11,510|
|Profit before income tax||1,617||1,327||24,389||20,009||11,250||9,229|
|Income tax expenses||1,334||1,095||4,627||3,796||2,004||1,644|
|Profit for the period||283||232||19,762||16,213||9,246||7,585|
|Profit attributable to:|
|Owners of Parent company||303||249||19,760||16,211||9,263||7,599|
|Earning per share|
|- Basic and diluted||44||0.04||2,844||2.33||1,333||1.09|
|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(1)|
|- Basic and diluted||44||0.04||2,844||2.33||1,333||1.09|
* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,218.92 to US$1.00, the noon buying rate in effect on March 31, 2020 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.
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