GRVY - Gravity Reports First Quarter of 2023 Results and Business Update
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.