Report of Foreign Issuer (6-k)

Date : 07/27/2018 @ 11:16AM
Source : Edgar (US Regulatory)
Stock : Gravity Co Ltd (GRVY)
Quote : 33.99  1.29 (3.94%) @ 8:59PM

Report of Foreign Issuer (6-k)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of July 2018

Commission File Number 000-51138

 

GRAVITY CO., LTD.

(Translation of registrant’s name into English)

 

15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea

 

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.  Form 20-F   Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): 



GRAVITY REPORTS SECOND QUARTER OF 201 8 RESULTS AND BUSINESS UPDATES

Seoul, South Korea – July 27, 2018 – GRAVITY Co., Ltd. (NasdaqCM: 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, 2018, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board .  

SECOND QUARTER 2018 HIGHLIGHTS

 

Total revenues were KRW 63,026 million (US$ 56,688 thousand), representing a 5.0% decrease from the first quarter ended March 31, 2018 (“QoQ”) and a 133.2% increase from the second quarter ended June 30, 2017 (“YoY”).

 

Operating profit was KRW 8,323 million (US$ 7,486 thousand), representing a 72.7% increase QoQ and a 90.3% increase YoY.

 

Profit before income tax expenses was KRW 8,642 million (US$ 7,773 thousand), representing a 68.9% increase QoQ and a 89.5% increase YoY.

 

Net profit attributable to parent company was KRW 6,615 million (US$ 5,949 thousand), representing a 86.4% increase QoQ and a 86.1% increase YoY.

REVIEW OF SECOND QUARTER 2018 FINANCIAL RESULTS

Revenues

Subscription revenues for the second quarter of 2018 were KRW 6,116 million (US$ 5,501 thousand), representing a 31.3% decrease QoQ from KRW 8,896 million and a 37.5% decrease YoY from KRW 9,786 million. The decrease QoQ was mainly attributable to decreased revenues from Ragnarok Online in Korea and Taiwan, and Ragnarok Prequel in Taiwan. The decrease YoY was largely due to decreased revenues from Ragnarok Prequel and Ragnarok Online in Taiwan and the United States and Canada and Dragonica in Taiwan.

Royalty and license fee revenues for the second quarter of 2018 were KRW 3,209 million (US$ 2,886 thousand), representing a 30.5% decrease QoQ from KRW 4,619 million and a 9.5% decrease YoY from KRW 3,546 million. The decrease QoQ was primarily due to the decreased revenue of Ragnarok Online in Japan. The decrease YoY resulted mainly from decreased revenues from Ragnarok Online in Indonesia, Japan and Thailand.

Mobile game and application revenues were KRW 51,789 million (US$ 46,581 thousand) for the second quarter of 2018, representing a 0.8% increase QoQ from KRW 51,396 million and a 323.1% increase YoY from KRW 12,239 million. The QoQ increase was mainly due to increased revenue from Ragnarok M in Korea, which was launched on March 14, 2018. This increase was partially offset by decreased revenues from Ragnarok M in Taiwan and RO: Idle Poring in global markets except for China and Japan and Ragnarok R in Taiwan and Korea. The increase YoY was primarily due to revenue contribution of Ragnarok M in Korea and Taiwan and RO: Idle Poring in global markets except for China and Japan, which partially offset by decreased revenues from Ragnarok R in Taiwan, Korea, and Thailand.

Character merchandising and other revenues were KRW 1,912 million (US$ 1,720 thousand) for the second quarter of 2018, representing 36.6% increase from KRW 1,400 million and a 31.2% increase YoY from KRW 1,457 million.


Cost of Revenue

Cost of revenue was KRW 43,150 million (US$ 38,811 thousand) for the second quarter of 2018, representing a 5.8% decrease QoQ from KRW 45,784 million and a 185.5% increase YoY from KRW 15,116 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services, which was partially offset increased outsourcing fees and salaries. The increase YoY was mostly from increased commission paid for mobile game services related to Ragnarok M in Taiwan and Korea and outsourcing fees.

Operating Expenses

Operating expenses were KRW 11,553 million (US$ 10,391 thousand) for the second quarter of 2018, representing a 26.4% decrease QoQ from KRW 15,707 million and a 53.2% increase YoY from KRW 7,539 million. The decrease QoQ was mainly attributable to decreased advertising expenses for marketing for Ragnarok M and RO: Idle Poring in Korea. The increase YoY was mostly increased advertising expenses for Ragnarok M in Korea and research and development expenses related to mobile games.

Profit before income tax expenses

Profit before income tax expenses was KRW 8,642 million (US$ 7,773 thousand) for the second quarter of 2018 compared with profit before income tax expense of KRW 5,117 million for the first quarter of 2018 and profit before income tax expenses of KRW 4,560 million for the second quarter of 2017.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 6,615 million (US$ 5,949 thousand) for the second quarter of 2018 compared with net profit attributable to parent company of KRW 3,549 million for the first quarter of 2018 and a net profit attributable to parent company of KRW 3,555 million for the second quarter of 2017.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 67, 906 million (US$ 61,078 thousand) as of June 30, 2018.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,111.79 to US$ 1.00, the noon buying rate in effect on June 29, 2018 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATE

Ragnarok Online IP-based Games

Ragnarok M, a MMORPG mobile game


During October 2018, Gravity plans to offer Ragnarok M globally except for Taiwan , Hong Kong, Macau, Korea, Japan and China. Ragnarok M has been one of the top mobile games in Taiwan si nce its launch on October 12, 2017; and in Korea since its launch on March 14, 2018. Gravity expects to launch Ragnarok M in Japan after t he global launch . The launch schedule is to be announced in the future.

Ragnarok R , a card RPG mobile game

The Company expects to launch Ragnarok R in Indonesia in 2018.

Other Ragnarok Online IP-based games

A 3D MO Action RPG mobile game, Spear of Odin , is expected to be launched in Philippines, Singapore, Malaysia, Indonesia, Thailand and Vietnam in 2018. Such game is locally named as Ragnarok Dungeon Survivor in Thailand and Vietnam. The company conducted a closed beta test(“CBT”) in Philippines, Singapore, Malaysia and Indonesia in July 2018.

Ragnarok Online

The Company plans to re-launch Ragnarok Online in Russia and CIS countries in 2018. A CBT is currently being conducted in Russia and CIS countries, which will be completed by August 7, 2018.

Ragnarok Zero , a new version of Ragnarok Online is scheduled to be launched in Vietnam. Gravity is currently offering such game in Korea.

DR management plan

Gravity Announces 2-for-1 American Depository Shares (“ADS”) Split

The Company announced today that its Board of Directors has approved a ratio change of its American Depositary Shares(“ADSs”) to common shares from one ADS to two common shares (1:2) to one ADS to one common share (1:1), effective as of August 27, 2018. The ratio change will have the same effect as a 2-for-1 split of its ADSs. The ADS split will have no effect on its common shares.

Gravity Announces Transferring to Global Market from Capital Market

The Company today announced that Gravity determined to transfer its listing to The NASDAQ Global Market® (“Global Market”) from The NASDAQ Capital Market®. The Company’s ADS will begin trading on Global Market effective at the start of trading on August 27, 2018.

The transfer of the Company’s listing to Global Market is not expected to have any impact on trading in the Company’s ADS, and the Company’s ADS will continue to trade on NASDAQ under the symbol ‘GRVY’.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the second quarter in 2018 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 81 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, 2017 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. Sang Eun Sung
IR Manager
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-17

 

 

30-Jun-18

 

 

 

KRW

 

 

US$

 

 

KRW

 

 

US$

 

 

 

(audited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

39,095

 

 

 

35,164

 

 

 

44,406

 

 

 

39,941

 

Short-term financial instruments

 

 

22,500

 

 

 

20,238

 

 

 

23,500

 

 

 

21,137

 

Accounts receivable, net

 

 

42,168

 

 

 

37,928

 

 

 

28,008

 

 

 

25,191

 

Other receivables, net

 

 

698

 

 

 

628

 

 

 

41

 

 

 

38

 

Prepaid expenses

 

 

3,027

 

 

 

2,723

 

 

 

3,352

 

 

 

3,015

 

Other current assets

 

 

1,383

 

 

 

1,243

 

 

 

1,830

 

 

 

1,646

 

Total current assets

 

 

108,871

 

 

 

97,924

 

 

 

101,137

 

 

 

90,968

 

Property and equipment, net

 

 

946

 

 

 

851

 

 

 

1,329

 

 

 

1,195

 

Intangible assets

 

 

1,036

 

 

 

932

 

 

 

520

 

 

 

468

 

Deferred tax assets

 

 

3,036

 

 

 

2,731

 

 

 

3,036

 

 

 

2,731

 

Other non-current financial assets

 

 

1,394

 

 

 

1,254

 

 

 

1,453

 

 

 

1,307

 

Other non-current assets

 

 

600

 

 

 

540

 

 

 

723

 

 

 

650

 

Total assets

 

 

115,883

 

 

 

104,232

 

 

 

108,198

 

 

 

97,319

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

44,410

 

 

 

39,945

 

 

 

29,028

 

 

 

26,109

 

Deferred revenue

 

 

16,100

 

 

 

14,481

 

 

 

15,177

 

 

 

13,651

 

Withholdings

 

 

1,439

 

 

 

1,294

 

 

 

2,156

 

 

 

1,939

 

Accrued expense

 

 

1,037

 

 

 

933

 

 

 

930

 

 

 

837

 

Income tax payable

 

 

1,628

 

 

 

1,464

 

 

 

634

 

 

 

570

 

Other current liabilities

 

 

130

 

 

 

117

 

 

 

118

 

 

 

106

 

Total current liabilities

 

 

64,744

 

 

 

58,234

 

 

 

48,043

 

 

 

43,212

 

Long-term deferred revenue

 

 

6,581

 

 

 

5,919

 

 

 

5,509

 

 

 

4,955

 

Other non-current liabilities

 

 

560

 

 

 

504

 

 

 

567

 

 

 

510

 

Total liabilities

 

 

71,885

 

 

 

64,657

 

 

 

54,119

 

 

 

48,677

 

Share capital

 

 

3,474

 

 

 

3,125

 

 

 

3,474

 

 

 

3,125

 

Capital surplus

 

 

27,164

 

 

 

24,433

 

 

 

27,164

 

 

 

24,433

 

Other components of equity

 

 

(40

)

 

 

(36

)

 

 

(83

)

 

 

(75

)

Retained earnings (Accumulated deficit)

 

 

13,962

 

 

 

12,558

 

 

 

24,126

 

 

 

21,700

 

Equity attributable to owners of the Parent Company

 

 

44,560

 

 

 

40,080

 

 

 

54,681

 

 

 

49,183

 

Non-controlling interest

 

 

(562

)

 

 

(505

)

 

 

(602

)

 

 

(541

)

Total equity

 

 

43,998

 

 

 

39,575

 

 

 

54,079

 

 

 

48,642

 

Total liabilities and equity

 

 

115,883

 

 

 

104,232

 

 

 

108,198

 

 

 

97,319

 

 

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,111.79 to US$ 1.00, the noon buying rate in effect on June 29, 2018 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-18

 

 

30-Jun-17

 

 

30-Jun-18

 

 

30-Jun-17

 

 

30-Jun-18

 

 

 

(KRW)

 

 

(KRW)

 

 

(KRW)

 

 

(US$)

 

 

(KRW)

 

 

(KRW)

 

 

(US$)

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Online games-subscription revenue

 

 

8,896

 

 

 

9,786

 

 

 

6,116

 

 

 

5,501

 

 

 

19,641

 

 

 

15,012

 

 

 

13,503

 

Online games-royalties and license fees

 

 

4,619

 

 

 

3,546

 

 

 

3,209

 

 

 

2,886

 

 

 

8,021

 

 

 

7,828

 

 

 

7,040

 

Mobile games and applications

 

 

51,396

 

 

 

12,239

 

 

 

51,789

 

 

 

46,581

 

 

 

20,302

 

 

 

103,185

 

 

 

92,810

 

Character merchandising and other revenue

 

 

1,400

 

 

 

1,457

 

 

 

1,912

 

 

 

1,720

 

 

 

2,416

 

 

 

3,312

 

 

 

2,979

 

Total net revenue

 

 

66,311

 

 

 

27,028

 

 

 

63,026

 

 

 

56,688

 

 

 

50,380

 

 

 

129,337

 

 

 

116,332

 

Cost of revenue

 

 

45,784

 

 

 

15,116

 

 

 

43,150

 

 

 

38,811

 

 

 

28,791

 

 

 

88,934

 

 

 

79,992

 

Gross profit

 

 

20,527

 

 

 

11,912

 

 

 

19,876

 

 

 

17,877

 

 

 

21,589

 

 

 

40,403

 

 

 

36,340

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

13,827

 

 

 

6,577

 

 

 

9,470

 

 

 

8,518

 

 

 

12,105

 

 

 

23,297

 

 

 

20,954

 

Research and development

 

 

1,874

 

 

 

1,041

 

 

 

1,742

 

 

 

1,567

 

 

 

1,904

 

 

 

3,616

 

 

 

3,252

 

Others, net

 

 

6

 

 

 

(79

)

 

 

341

 

 

 

306

 

 

 

(92

)

 

 

347

 

 

 

313

 

Total operating expenses

 

 

15,707

 

 

 

7,539

 

 

 

11,553

 

 

 

10,391

 

 

 

13,917

 

 

 

27,260

 

 

 

24,519

 

Operating profit

 

 

4,820

 

 

 

4,373

 

 

 

8,323

 

 

 

7,486

 

 

 

7,672

 

 

 

13,143

 

 

 

11,821

 

Finance income(costs):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

590

 

 

 

382

 

 

 

892

 

 

 

802

 

 

 

917

 

 

 

1,482

 

 

 

1,333

 

Finance costs

 

 

(293

)

 

 

(195

)

 

 

(573

)

 

 

(515

)

 

 

(647

)

 

 

(866

)

 

 

(779

)

Profit before income tax

 

 

5,117

 

 

 

4,560

 

 

 

8,642

 

 

 

7,773

 

 

 

7,942

 

 

 

13,759

 

 

 

12,375

 

Income tax expenses(profits)

 

 

1,593

 

 

 

1,017

 

 

 

2,042

 

 

 

1,837

 

 

 

2,245

 

 

 

3,635

 

 

 

3,269

 

Profit for the year

 

 

3,524

 

 

 

3,543

 

 

 

6,600

 

 

 

5,936

 

 

 

5,697

 

 

 

10,124

 

 

 

9,106

 

Profit attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

(25

)

 

 

(12

)

 

 

(15

)

 

 

(13

)

 

 

(28

)

 

 

(40

)

 

 

(36

)

Owners of Parent company

 

 

3,549

 

 

 

3,555

 

 

 

6,615

 

 

 

5,949

 

 

 

5,725

 

 

 

10,164

 

 

 

9,142

 

Earning per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

 

511

 

 

 

512

 

 

 

952

 

 

 

0.86

 

 

 

824

 

 

 

1,463

 

 

 

1.32

 

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

 

 

1,022

 

 

 

1,024

 

 

 

1,904

 

 

 

1.72

 

 

 

1,648

 

 

 

2,926

 

 

 

2.64

 

 

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,111.79 to US$1.00, the noon buying rate in effect on June 29, 2018 as quoted by the Federal Reserve Bank of New York.

(1) Each ADS represents two common shares.

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

GRAVITY CO., LTD.

 

 

By:

/s/ Heung Gon Kim

Name:

Heung Gon Kim

Title:

Chief Financial Officer

Date: July 27, 2018

 

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