GRVY - Gravity Reports Second Quarter of 2022 Results and Business Update
Seoul, Korea, Aug. 10, 2022 (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, 2022, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.
SECOND QUARTER 2022 HIGHLIGHTS
- Total revenues were KRW 96,519 million (US$ 74,305 thousand), representing an 8.9% increase from the first quarter ended March 31, 2022 (“QoQ”) and a 15.4% increase from the second quarter ended June 30, 2021 (“YoY”).
- Operating profit was KRW 22,115 million (US$ 17,025 thousand), representing a 0.9% decrease QoQ and a 15.4% increase YoY.
- Profit before income tax expenses was KRW 23,874 million (US$ 18,379 thousand), representing a 2.8% increase QoQ and a 23.1% increase YoY.
- Net profit attributable to parent company was KRW 17,465 million (US$ 13,445 thousand), representing a 6.3% increase QoQ and a 18.3% increase YoY.
REVIEW OF SECOND QUARTER 2022 FINANCIAL RESULTS
Revenues
Online game revenues for the second quarter of 2022 were KRW 24,827 million (US$ 19,113 thousand), representing a 15.8% increase QoQ from KRW 21,447 million and a 10.9% increase YoY from KRW 22,380 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Taiwan and Thailand. The increase YoY was largely due to increased revenue from Ragnarok Online in Taiwan, the Philippines, Singapore and Malaysia.
Mobile game revenues were KRW 68,042 million (US$ 52,382 thousand) for the second quarter of 2022, representing a 7.6% increase QoQ from KRW 63,241 million and a 23.4% increase YoY from KRW 55,140 million. The increase QoQ resulted primarily increased revenues from Ragnarok Labyrinth NFT , which was launched on April 27, 2022, in Southeast Asia and Ragnarok Monster's Arena launched on May 11, 2022, in Taiwan. Such increase was partially offset by decreased revenues from Ragnarok Origin in North America and Japan and Ragnarok X: Next Generation in Southeast Asia. The increase YoY was primarily due to revenues from Ragnarok X: Next Generation in Southeast Asia, Ragnarok Origin in North America and Ragnarok Monster's Arena launched on May 11, 2022, in Taiwan. Such increase was partially offset by decreased revenues from Ragnarok Origin in Korea, Ragnarok M: Eternal Love in Southeast Asia and Ragnarok X: Next Generation in Taiwan.
Other revenues were KRW 3,650 million (US$ 2,810 thousand) for the second quarter of 2022, representing a 6.9% decrease QoQ from KRW 3,919 million and a 40.1% decrease YoY from KRW 6,091 million.
Cost of Revenue
Cost of revenue was KRW 50,575 million (US$ 38,935 thousand) for the second quarter of 2022, representing a 11.8% increase QoQ from KRW 45,254 million and a 10.3% increase YoY from KRW 45,842 million. The increase QoQ was mainly due to increased commission paid for mobile game services related to Ragnarok Monster's Arena in Taiwan and Ragnarok Labyrinth NFT in Southeast Asia. The increase YoY was mostly from the increased commission paid for mobile game services related to Ragnarok X: Next Generation in Southeast Asia, Ragnarok Origin in North America and Ragnarok Monster's Arena in Taiwan.
Operating Expenses
Operating expenses were KRW 23,829 million (US$ 18,345 thousand) for the second quarter of 2022, representing a 13.3% increase QoQ from KRW 21,037 million and a 28.0% increase YoY from KRW 18,612 million. The increase QoQ was mainly due to increased advertising expenses for Ragnarok Monster's Arena in Taiwan and Ragnarok Labyrinth NFT in Southeast Asia. The increase YoY was mainly due to increase advertising expenses for Ragnarok Monster's Arena in Taiwan, Ragnarok Labyrinth NFT in Southeast Asia and Ragnarok Origin in North America.
Profit Before Income Tax Expenses
Profit before income tax expenses was KRW 23,874 million (US$ 18,379 thousand) for the second quarter of 2022 compared with profit before income tax expense of KRW 23,220 million for the first quarter of 2022 and profit before income tax expenses of KRW 19,387 million for the second quarter of 2021.
Net Profit
As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 17,465 million (US$ 13,445 thousand) for the second quarter of 2022 compared with net profit attributable to parent company of KRW 16,431 million for the first quarter of 2022 and a net profit attributable to parent company of KRW 14,766 million for the second quarter of 2021.
Liquidity
The balance of cash and cash equivalents and short-term financial instruments was KRW 282,748 million (US$ 217,674 thousand) as of June 30, 2022.
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,298.95 to US$ 1.00, the noon buying rate in effect on June 30, 2022 as quoted by the Federal Reserve Bank of New York.
GRAVITY BUSINESS UPDATE
Ragnarok IP Partnership with The Sandbox
Gravity signed a Ragnarok IP partnership agreement with The Sandbox, a metaverse gaming platform, on April 1, 2022.
Ragnarok Online
Ragnarok Online has celebrated its 20th anniversary in Korea in the second half of 2022 since the game was initially launched in Korea on August 1, 2002. As celebrating its 20th anniversary, an offline event has placed in Seoul, Korea in July 31, 2022. Various kinds of programs were placed at the venue including developer showcase, K-pop concert, RO arcades, etc. More in-game events and promotions are going to be placed throughout the third quarter of 2022.
Ragnarok Online IP-based Games
- Ragnarok X: Next Generation, a MMORPG mobile game
Ragnarok X: Next Generation is scheduled to be launched in Korea in the fourth quarter of 2022.
- Ragnarok Origin, a MMORPG mobile and PC game
Ragnarok Origin is scheduled to be launched in multi-platform including mobile and PC in Taiwan, Hong Kong and Macau in September, 2022.
- Ragnarok Labyrinth NFT, a blockchain mobile game
Ragnarok Labyrinth NFT is scheduled to be launched in global in the third quarter of 2022.
- Ragnarok Poring Merge, a blockchain mobile game
Ragnarok Poring Merge was designed as a blockchain game based on P2E systems. The game is prepared to be launched in Southeast Asia in the fourth quarter of 2022.
- Other Ragnarok Online IP-based games
Ragnarok: The Lost Memories, a Cinematic Newtro Story RPG mobile and PC game, has launched in Korea on August 10, 2022.
Ragnarok Monster’s Arena , a Card SRPG mobile game, was launched in Taiwan, Hong Kong and Macau on May 11, 2022. Ragnarok Monster’s Arena is scheduled to be launched in Thailand and Korea in September, 2022. Ragnarok Monster’s Arena is also scheduled to be launched in Southeast Asia (except for Thailand) in the fourth quarter of 2022.
Ragnarok V: Returns, a MMORPG mobile and PC game, was launched for mobile version and PC game service in Oceania in May 25, 2022. The game is preparing to provide PC game service on Steam in the fourth quarter of 2022, and has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.
Ragnarok Begins , a MMORPG mobile and PC game, is scheduled to run the second CBT for mobile and PC game version in October, 2022, and to be launched in North America in the fourth quarter of 2022. The game has been developed by Gravity.
Investor Presentation
Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the second quarter in 2022 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 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, 2021 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. 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$)
| As of |
| 31-Dec-21 |
| 30-Jun-22 |
| KRW |
| US$ |
| KRW |
| US$ |
| (audited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| Assets |
| Current assets: |
| Cash and cash equivalents |
| 99,105 |
| 76,296 |
| 112,748 |
| 86,799 |
| Short-term financial instruments |
| 148,000 |
| 113,938 |
| 170,000 |
| 130,875 |
| Accounts receivable, net |
| 52,615 |
| 40,506 |
| 53,234 |
| 40,982 |
| Other receivables, net |
| 1,080 |
| 831 |
| 380 |
| 293 |
| Prepaid expenses |
| 3,164 |
| 2,436 |
| 2,302 |
| 1,772 |
| Other current assets |
| 2,171 |
| 1,671 |
| 2,644 |
| 2,035 |
| Total current assets |
| 306,135 |
| 235,678 |
| 341,308 |
| 262,756 |
| Property and equipment, net |
| 11,338 |
| 8,728 |
| 10,700 |
| 8,237 |
| Intangible assets, net |
| 3,342 |
| 2,573 |
| 3,849 |
| 2,963 |
| Deferred tax assets |
| 1,719 |
| 1,323 |
| 1,165 |
| 897 |
| Other non-current financial assets |
| 3,019 |
| 2,324 |
| 3,347 |
| 2,577 |
| Other non-current assets |
| 1,973 |
| 1,519 |
| 1,668 |
| 1,284 |
| Total assets |
| 327,526 |
| 252,145 |
| 362,037 |
| 278,714 |
| Liabilities and Equity |
| Current liabilities: |
| Accounts payable |
| 41,199 |
| 31,717 |
| 44,116 |
| 33,963 |
| Deferred revenue |
| 13,481 |
| 10,378 |
| 13,424 |
| 10,335 |
| Withholdings |
| 3,596 |
| 2,768 |
| 3,317 |
| 2,554 |
| Accrued expense |
| 1,484 |
| 1,142 |
| 1,574 |
| 1,212 |
| Income tax payable |
| 10,629 |
| 8,183 |
| 6,877 |
| 5,294 |
| Other current liabilities |
| 3,608 |
| 2,778 |
| 3,900 |
| 3,001 |
| Total current liabilities |
| 73,997 |
| 56,966 |
| 73,208 |
| 56,359 |
| Long-term deferred revenue |
| 98 |
| 75 |
| 89 |
| 69 |
| Other non-current liabilities |
| 6,590 |
| 5,074 |
| 6,095 |
| 4,692 |
| Total liabilities |
| 80,685 |
| 62,115 |
| 79,392 |
| 61,120 |
| Share capital |
| 3,474 |
| 2,674 |
| 3,474 |
| 2,674 |
| Capital surplus |
| 27,098 |
| 20,861 |
| 27,098 |
| 20,861 |
| Other components of equity |
| 2,180 |
| 1,678 |
| 4,208 |
| 3,240 |
| Retained earnings |
| 213,318 |
| 164,223 |
| 247,214 |
| 190,318 |
| Equity attributable to owners of the Parent Company |
| 246,070 |
| 189,436 |
| 281,994 |
| 217,093 |
| Non-controlling interest |
| 771 |
| 594 |
| 651 |
| 501 |
| Total equity |
| 246,841 |
| 190,030 |
| 282,645 |
| 217,594 |
| Total liabilities and equity |
| 327,526 |
| 252,145 |
| 362,037 |
| 278,714 |
* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,298.95 to US$ 1.00, the noon buying rate in effect on June 30, 2022 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-22 |
| 30-Jun-21 |
| 30-Jun-22 |
| 30-Jun-21 |
| 30-Jun-22 |
| (KRW) |
| (KRW) |
| (KRW) |
| (US$) |
| (KRW) |
| (KRW) |
| (US$) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| Revenues: |
| Online games |
| 21,447 |
| 22,380 |
| 24,827 |
| 19,113 |
| 41,838 |
| 46,274 |
| 35,624 |
| Mobile games |
| 63,241 |
| 55,140 |
| 68,042 |
| 52,382 |
| 137,578 |
| 131,283 |
| 101,069 |
| Other revenue |
| 3,919 |
| 6,091 |
| 3,650 |
| 2,810 |
| 9,254 |
| 7,569 |
| 5,827 |
| Total net revenue |
| 88,607 |
| 83,611 |
| 96,519 |
| 74,305 |
| 188,670 |
| 185,126 |
| 142,520 |
| Cost of revenue |
| 45,254 |
| 45,842 |
| 50,575 |
| 38,935 |
| 103,395 |
| 95,829 |
| 73,774 |
| Gross profit |
| 43,353 |
| 37,769 |
| 45,944 |
| 35,370 |
| 85,275 |
| 89,297 |
| 68,746 |
| Operating expenses: |
| Selling, general and administrative expenses |
| 17,642 |
| 14,014 |
| 21,207 |
| 16,326 |
| 29,522 |
| 38,849 |
| 29,908 |
| Research and development |
| 3,232 |
| 4,147 |
| 2,956 |
| 2,276 |
| 8,156 |
| 6,188 |
| 4,764 |
| Others, net |
| 163 |
| 451 |
| (334) |
| (257) |
| 487 |
| (171) |
| (132) |
| Total operating expenses |
| 21,037 |
| 18,612 |
| 23,829 |
| 18,345 |
| 38,165 |
| 44,866 |
| 34,540 |
| Operating profit |
| 22,316 |
| 19,157 |
| 22,115 |
| 17,025 |
| 47,110 |
| 44,431 |
| 34,206 |
| Finance income(costs): |
| Finance income |
| 1,608 |
| 597 |
| 4,100 |
| 3,156 |
| 2,917 |
| 5,708 |
| 4,394 |
| Finance costs |
| (704) |
| (367) |
| (2,341) |
| (1,802) |
| (1,300) |
| (3,045) |
| (2,344) |
| Profit before income tax |
| 23,220 |
| 19,387 |
| 23,874 |
| 18,379 |
| 48,007 |
| 47,094 |
| 36,256 |
| Income tax expense |
| 6,889 |
| 4,569 |
| 6,462 |
| 4,975 |
| 9,628 |
| 13,351 |
| 10,278 |
| Profit for the year |
| 16,331 |
| 14,818 |
| 17,412 |
| 13,404 |
| 38,379 |
| 33,743 |
| 25,978 |
| Profit attributable to: |
| Non-controlling interest |
| (100) |
| 52 |
| (53) |
| (41) |
| 48 |
| (153) |
| (117) |
| Owners of Parent company |
| 16,431 |
| 14,766 |
| 17,465 |
| 13,445 |
| 38,331 |
| 33,896 |
| 26,095 |
| Earning per share |
| - Basic and diluted |
| 2,365 |
| 2,125 |
| 2,513 |
| 1.93 |
| 5,516 |
| 4,878 |
| 3.76 |
| 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 |
| 2,365 |
| 2,125 |
| 2,513 |
| 1.93 |
| 5,516 |
| 4,878 |
| 3.76 |
* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,298.95 to US$1.00, the noon buying rate in effect on June 30, 2022 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.