• Gravity Reports First Quarter of 2023 Results and Business Update

    Source: Nasdaq GlobeNewswire / 11 May 2023 06:10:00   America/Chicago

    Seoul, Korea, May 11, 2023 (GLOBE NEWSWIRE) -- Seoul, South Korea – May 11, 2023 – 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, 2023, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

    FIRST QUARTER 2023 HIGHLIGHTS

    • Total revenues were KRW 164,947 million (US$ 126,513 thousand), representing an 6.3% decrease from the fourth quarter ended December 31, 2022 (“QoQ”) and an 86.2% increase from the first quarter ended March 31, 2022 (“YoY”).
    • Operating profit was KRW 43,318 million (US$ 33,225 thousand), representing a 11.1% increase QoQ and a 94.1% increase YoY.
    • Profit before income tax expenses was KRW 46,226 million (US$ 35,456 thousand), representing a 20.4% increase QoQ and a 99.1% increase YoY.
    • Net profit attributable to parent company was KRW 36,466 million (US$ 27,969 thousand), representing a 9.9% increase QoQ and a 121.9% increase YoY.

    REVIEW OF FIRST QUARTER 2023 FINANCIAL RESULTS

    Revenues

    Online game revenues for the first quarter of 2023 were KRW 22,696 million (US$ 17,408 thousand), representing a 4.3% decrease QoQ from KRW 23,711 million and a 5.8% increase YoY from KRW 21,447 million. The decrease QoQ was mainly attributable to decreased revenues from Ragnarok Online in Taiwan and 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 Korea.

    Mobile game revenues were KRW 138,994 million (US$ 106,607 thousand) for the first quarter of 2023, representing a 6.1% decrease QoQ from KRW 148,046 million and a 119.8% increase YoY from KRW 63,241 million. The decrease QoQ resulted primarily decreased revenues from Ragnarok Origin in Taiwan, Hong Kong and Macau. Such decrease was partially offset by increased revenues from Ragnarok X: Next Generation in Korea which was launched on January 5, 2023. The increase YoY was due to increased revenues from 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 Origin in the United States and Canada, and Ragnarok X: Next Generation in Southeast Asia.

    Other revenues were KRW 3,257 million (US$ 2,498 thousand) for the first quarter of 2023, representing a 25.3% decrease QoQ from KRW 4,358 million and a 16.9% decrease YoY from KRW 3,919 million.

    Cost of Revenue

    Cost of revenue was KRW 105,485 million (US$ 80,906 thousand) for the first quarter of 2023, representing a 5.6% decrease QoQ from KRW 111,707 million and a 133.1% increase YoY from KRW 45,254 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services related to Ragnarok Origin in Taiwan, Hong Kong and Macau and Ragnarok M: Eternal Love. The increase YoY was primarily due to increased commission paid for mobile game services related to Ragnarok Origin in Taiwan, Hong Kong, Macau and Ragnarok X: Next Generation in Korea.

    Operating Expenses

    Operating expenses were KRW 16,144 million (US$ 12,382 thousand) for the first quarter of 2023, representing a 36.4% decrease QoQ from KRW 25,402 million and a 23.3% decrease YoY from KRW 21,037 million. The decrease QoQ was mainly due to decreased advertising expenses for Ragnarok Origin in the United States and Canada and Ragnarok Monster’s Arena in Korea and Southeast Asia and salaries. The decrease YoY was mainly due to decreased advertising expenses for Ragnarok: The Lost Memories and Ragnarok Origin in the United States and Canada, and Ragnarok Online in Philippines, Singapore and Malaysia.

    Profit Before Income Tax Expenses

    Profit before income tax expenses was KRW 46,226 million (US$ 35,456 thousand) for the first quarter of 2023 compared with profit before income tax expense of KRW 38,378 million for the fourth quarter of 2022 and profit before income tax expenses of KRW 23,220 million for the first quarter of 2022.

    Net Profit

    As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 36,466 million (US$ 27,969 thousand) for the first quarter of 2023 compared with net profit attributable to parent company of KRW 33,190 million for the fourth quarter of 2022 and a net profit attributable to parent company of KRW 16,431 million for the first quarter of 2022.

    Liquidity

    The balance of cash and cash equivalents and short-term financial instruments was KRW 374,229 million (US$ 287,030 thousand) as of March 31, 2023.

    Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,303.80 to US$ 1.00, the noon buying rate in effect on March 31, 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 launched in Southeast Asia on April 6, 2023. The game is being prepared to be launched in global in the fourth quarter of 2023.

    • Ragnarok X: Next Generation, an MMORPG mobile game

    Ragnarok X: Next Generation was launched in Korea on January 5, 2023.

    • Ragnarok M: Eternal Love, an MMORPG mobile game

    Ragnarok M: Eternal Love aims to be launched in Vietnam in the fourth quarter of 2023.

    • Ragnarok Poring Merge NFT, a blockchain mobile game

    Ragnarok Poring Merge NFT was designed as a blockchain game based on P2E systems. The game is prepared to be launched in Global in the fourth quarter of 2023.

    • Other Ragnarok Online IP-based games

    Ragnarok: The Lost Memories, a Cinematic Newtro Story RPG mobile and PC game, is scheduled to be launched in Taiwan, Hong Kong and Macau in May 2023.

    Ragnarok V: Returns, an MMORPG mobile and PC game, will cease the service in Oceania on May 25, 2023 for service renewal. It is preparing to provide a renewal version of mobile, PC and Steam services. The game has been developed by Gravity NeoCyon, Inc., Gravity’s subsidiary in Korea.

    Ragnarok Landverse was designed as a blockchain game based on P2E systems. Ragnarok Landverse, an MMORPG PC game, is aiming to be launched in the second half of 2023.

    Other IP-based games

    WITH: Whale In The High, a Healing Idle mobile game, is scheduled to be released in global in the second quarter of 2023. The game is developed by SKYWALK, a mobile game developer, and will be published by Gravity. Gravity entered into a publishing agreement with SKYWALK on December 1, 2022.

    Expansion of Game Service

    Gravity NeoCyon, Inc. and ME2ON co-developed a blockchain RPG game called, X Heroes: NFT War. X Heroes: NFT War is published by ME2ON, and the game was released in global (except for Korea and China) on April 25, 2023. Gravity NeoCyon, Inc. Gravity’s subsidiary in Korea, entered into a business agreement with a mobile social casino game company, ME2ON on October 14, 2022.

    Investor Presentation

    Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the first quarter in 2023 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 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, 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: kheung@gravity.co.kr

    Ms. Jeesun Lim
    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-22     31-Mar-23  
        KRW     US$     KRW     US$  
        (audited)     (unaudited)     (unaudited)     (unaudited)  
    Assets                                
    Current assets:                                
    Cash and cash equivalents     169,877       130,294       177,924       136,466  
    Short-term financial instruments     167,000       128,087       196,305       150,564  
    Accounts receivable, net     77,257       59,255       68,981       52,908  
    Other receivables, net     140       107       624       479  
    Prepaid expenses     3,332       2,556       3,014       2,312  
    Other current financial assets     3,370       2,585       3,744       2,872  
    Other current assets     791       607       573       439  
    Total current assets     421,767       323,491       451,165       346,040  
    Property and equipment, net     8,140       6,243       7,464       5,725  
    Intangible assets, net     3,869       2,967       3,818       2,928  
    Deferred tax assets     5,660       4,341       5,226       4,008  
    Other non-current financial assets     2,176       1,669       2,708       2,077  
    Other non-current assets     2,482       1,904       3,918       3,005  
    Total assets     444,094       340,615       474,299       363,783  
    Liabilities and Equity                                
    Current liabilities:                                
    Accounts payable     73,549       56,411       60,515       46,414  
    Deferred revenue     18,543       14,222       17,261       13,239  
    Withholdings     3,201       2,455       3,541       2,716  
    Accrued expense     2,041       1,565       1,877       1,440  
    Income tax payable     5,469       4,195       10,976       8,418  
    Other current liabilities     2,907       2,230       2,833       2,173  
    Total current liabilities     105,710       81,078       97,003       74,400  
    Long-term account payables     374       287       376       288  
    Long-term deferred revenue     30       23       381       292  
    Other non-current liabilities     4,968       3,810       3,409       2,615  
    Deferred tax liabilities     2,832       2,172       2,833       2,173  
    Total liabilities     113,914       87,370       104,002       79,768  
    Share capital     3,474       2,665       3,474       2,665  
    Capital surplus     27,098       20,784       27,098       20,784  
    Other components of equity     2,475       1,898       6,121       4,695  
    Retained earnings     296,480       227,397       332,946       255,366  
    Equity attributable to owners
    of the Parent Company     		    329,527       252,744       369,639       283,510  
    Non-controlling interest     653       501       658       505  
    Total equity     330,180       253,245       370,297       284,015  
    Total liabilities and equity     444,094       340,615       474,299       363,783  

    * For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,303.80 to US$ 1.00, the noon buying rate in effect on March 31, 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  
        31-Dec-22     31-Mar-22     31-Mar-23  
        (KRW)     (US$)     (KRW)     (US$)     (KRW)     (US$)  
        (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)  
    Revenues:                                                
    Online games     23,711       18,186       21,447       16,450       22,696       17,408  
    Mobile games     148,046       113,550       63,241       48,505       138,994       106,607  
    Other revenue     4,358       3,342       3,919       3,006       3,257       2,498  
    Total net revenue     176,115       135,078       88,607       67,961       164,947       126,513  
    Cost of revenue     111,707       85,678       45,254       34,709       105,485       80,906  
    Gross profit     64,408       49,400       43,353       33,252       59,462       45,607  
    Operating expenses:                                                
    Selling, general and
    administrative expenses     		    21,141       16,215       17,642       13,531       13,271       10,179  
    Research and development     3,864       2,964       3,232       2,479       2,922       2,241  
    Others, net     397       304       163       125       (49)       (38)  
    Total operating expenses     25,402       19,483       21,037       16,135       16,144       12,382  
    Operating profit     39,006       29,917       22,316       17,117       43,318       33,225  
    Finance income(costs):                                                
    Finance income     4,902       3,760       1,608       1,233       5,461       4,189  
    Finance costs     (5,530)       (4,241) )     (704)       (540)       (2,553)       (1,958)  
    Profit before income tax     38,378       29,436       23,220       17,810       46,226       35,456  
    Income tax expense     5,161       3,959       6,889       5,284       9,799       7,517  
    Profit for the year     33,217       25,477       16,331       12,526       36,427       27,939  
    Profit attributable to:                                                
    Non-controlling interest     27       21       (100)       (77)       (39)       (30)  
    Owners of Parent company     33,190       25,456       16,431       12,603       36,466       27,969  
    Earning per share                                                
    - Basic and diluted     4,776       3.66       2,365       1.81       5,248       4.03  
    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     4,776       3.66       2,365       1.81       5,248       4.03  

    * For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,303.80 to US$1.00, the noon buying rate in effect on March 31, 2023 as quoted by the Federal Reserve Bank of New York.
    (1) Each ADS represents one common share.


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