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, 2019, prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board and business updates.
SECOND QUARTER 2019
HIGHLIGHTS
- Total revenues were KRW 78,127 million (US$ 67,667 thousand),
representing a 41.5% decrease from the first quarter ended March
31, 2019 (“QoQ”) and a 24.0% increase from the second quarter ended
June 30, 2018 (“YoY”).
- Operating profit was KRW 12,998 million (US$ 11,257 thousand),
representing a 45.0% decrease QoQ and a 56.2% increase YoY.
- Profit before income tax expenses was KRW 14,037million (US$
12,158 thousand), representing a 42.4% decrease QoQ and a 62.4%
increase YoY.
- Net profit attributable to parent company was KRW 10,861
million (US$ 9,407 thousand), representing a 45.0% decrease QoQ and
a 64.2% increase YoY.
REVIEW OF SECOND QUARTER 2019 FINANCIAL
RESULTS
Revenues
Subscription revenues for the second quarter of
2019 were KRW 6,746 million (US$ 5,843 thousand), representing a
7.8 % increase QoQ from KRW 6,256 million and a 10.3% increase YoY
from KRW 6,116 million. The increase QoQ was mainly attributable to
increased revenue from Ragnarok Online in Taiwan. The increase YoY
was largely due to increased revenues from Ragnarok online in
Taiwan and Korea. Such increase was partially offset by decreased
revenue from Ragnarok Prequel in Taiwan.
Royalty and license fee revenues for the second
quarter of 2019 were KRW 2,832 million (US$ 2,452 thousand),
representing a 23.9% decrease QoQ from KRW 3,720 million and a
11.7% decrease YoY from KRW 3,209 million. The decrease QoQ was
primarily due to decreased revenue from Ragnarok Online in Japan.
The decrease YoY resulted mainly from decreased revenues from
Ragnarok Online in Thailand and Brazil.
Mobile game and application revenues were KRW
66,463 million (US$ 57,565 thousand) for the second quarter of
2019, representing a 45.1% decrease QoQ from KRW 121,147 million
and a 28.3% increase YoY from KRW 51,789 million. The decrease QoQ
resulted primarily from decreased revenues from Ragnarok M: Eternal
Love in Southeast Asia, North America, South America, and Oceania,
Taiwan, and Korea. Such decrease was partially offset by revenue
from Ragnarok M: Eternal Love in Japan, which was launched on June
5, 2019. The increase YoY was primarily due to revenues from
Ragnarok M: Eternal Love in Southeast Asia, North America, South
America, Oceania, and Japan. This increase was partially offset by
decreased revenues from Ragnarok M: Eternal Love in Korea and
Taiwan. RO: Idle Poring in global markets except for China and
Japan, and Ragnarok R in Taiwan and Korea.Character merchandising
and other revenues were KRW 2,086 million (US$ 1,807 thousand) for
the second quarter of 2019, representing 16.6% decrease QoQ from
KRW 2,500 million and a 9.1% increase YoY from KRW 1,912
million.
Cost of Revenue
Cost of revenue was KRW 56,858 million (US$
49,246 thousand) for the second quarter of 2019, representing a
43.8% decrease QoQ from KRW 101,237 million and a 31.8% increase
YoY from KRW 43,150 million. The decrease QoQ was mainly due to
decreased commission paid for mobile game services related to
Ragnarok M: Eternal love in Southeast Asia, North America, South
America and Oceania, Taiwan, and Korea. The increase YoY was mostly
from increased commission paid for mobile game services related to
Ragnarok M: Eternal love in Southeast Asia, North America, South
America and Oceania and salaries.
Operating Expenses
Operating expenses were KRW 8,271 million (US$
7,164 thousand) for the second quarter of 2019, representing a 5.4%
decrease QoQ from KRW 8,746 million and a 28.4% decrease YoY from
KRW 11,553 million. The decrease QoQ was mainly attributable to
decreased advertising expenses for Ragnarok M: Eternal Love in
Korea. Such decrease was partially offset by increased commission
paid and research and development expenses. The decrease YoY was
mostly resulted from decreased advertising expenses for Ragnarok M:
Eternal Love in Korea. Such decrease was partially offset by
increased research and development expenses and salaries.
Profit before income tax expenses
Profit before income tax expenses was KRW 14,037
million (US$ 12,158 thousand) for the second quarter of 2019
compared with profit before income tax expense of KRW 24,389
million for the first quarter of 2019 and profit before income tax
expenses of KRW 8,642 million for the second quarter of 2018.
Net Profit
As a result of the foregoing factors, Gravity
recorded a net profit attributable to parent company of KRW 10,861
million (US$ 9,407 thousand) for the second quarter of 2019
compared with net profit attributable to parent company of KRW
19,760 million for the first quarter of 2019 and a net profit
attributable to parent company of KRW 6,615 million for the second
quarter of 2018.
Liquidity
The balance of cash and cash equivalents and
short-term financial instruments was KRW 111,164 million (US$
96,281 thousand) as of June 30, 2019.
Note: For convenience purposes only, the KRW
amounts have been expressed in U.S. dollars at the exchange rate of
KRW 1,154.58 to US$ 1.00, the noon buying rate in effect on June
28, 2019 as quoted by the Federal Reserve Bank of New York.
GRAVITY BUSINESS UPDATE
Ragnarok Online
IP-based Games
- Ragnarok M: Eternal Love, a MMORPG mobile game
Ragnarok M: Eternal Love (locally named Ragnarok
Masters in Japan) has launched in Japan on June 5, 2019 by GungHo
Online Entertainment Inc, (“GungHo”), the licensee of Ragnarok
Online. Also, Gravity is preparing the service for Europe (except
for some regions), Turkey and Russia in the third quarter of
2019.
- Ragnarok Web MMORPG, a web browser-based 3D new version of
game
Ragnarok web MMORPG has launched in Taiwan, Hong
Kong and Macau on June 5, 2019.
- Other Ragnarok Online IP-based games
Gravity is planning to launch RO Click H5, a
HTML 5 version of idle game globally in September 2019.
A 3D Action MORPG mobile game, Ragnarok Spear of
Odin, is expected to be launched in Taiwan, Hong Kong, and Macau in
the second half of 2019. The game was developed by NeoCyon, our
subsidiary in Korea.
Ragnarok Online
- The company is scheduled to be re-launched Ragnarok Online in
Indonesia in September 2019. The publisher of the game has changed
from Gravindo to Gravity Game Link, a joint venture in
Indonesia.
Other
IP games
- The Color of Dream Fantasy Latele, a MMORPG mobile game,
is expected to be launched in Japan during the second half of
2019.
Investor Presentation
Gravity issued an investor presentation. The
presentation contains the Company’s recent business updates,
results of second quarter in 2019 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 83 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, 2018 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 LeeMs. Minji Oh IR Unit Gravity
Co., Ltd. Email: ir@gravity.co.kr Telephone: +82-2-2132-7800~1
#
# #
GRAVITY Co.,
Ltd.Consolidated Statements of Financial
Position
(In millions of KRW and thousands of US$)
|
|
As of |
|
|
|
31-Dec-18 |
|
|
30-Jun-19 |
|
|
|
KRW |
|
|
US$ |
|
|
KRW |
|
|
US$ |
|
|
|
(audited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
86,051 |
|
|
|
74,530 |
|
|
|
88,664 |
|
|
|
76,793 |
|
Short-term financial instruments |
|
|
9,500 |
|
|
|
8,228 |
|
|
|
22,500 |
|
|
|
19,488 |
|
Accounts receivable, net |
|
|
60,664 |
|
|
|
52,542 |
|
|
|
34,817 |
|
|
|
30,156 |
|
Other receivables, net |
|
|
255 |
|
|
|
221 |
|
|
|
239 |
|
|
|
207 |
|
Prepaid expenses |
|
|
2,516 |
|
|
|
2,179 |
|
|
|
2,096 |
|
|
|
1,815 |
|
Other current assets |
|
|
1,182 |
|
|
|
1,024 |
|
|
|
2,390 |
|
|
|
2,070 |
|
Total current assets |
|
|
160,168 |
|
|
|
138,724 |
|
|
|
150,706 |
|
|
|
130,529 |
|
Property and equipment, net |
|
|
1,498 |
|
|
|
1,297 |
|
|
|
5,843 |
|
|
|
5,061 |
|
Intangible assets |
|
|
1,163 |
|
|
|
1,007 |
|
|
|
1,687 |
|
|
|
1,461 |
|
Deferred tax assets |
|
|
7,413 |
|
|
|
6,421 |
|
|
|
7,035 |
|
|
|
6,093 |
|
Other non-current financial assets |
|
|
1,494 |
|
|
|
1,294 |
|
|
|
1,554 |
|
|
|
1,346 |
|
Other non-current assets |
|
|
1,438 |
|
|
|
1,245 |
|
|
|
1,411 |
|
|
|
1,222 |
|
Total assets |
|
|
173,174 |
|
|
|
149,988 |
|
|
|
168,236 |
|
|
|
145,712 |
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
71,928 |
|
|
|
62,298 |
|
|
|
38,350 |
|
|
|
33,215 |
|
Deferred revenue |
|
|
16,476 |
|
|
|
14,270 |
|
|
|
12,421 |
|
|
|
10,758 |
|
Withholdings |
|
|
2,019 |
|
|
|
1,749 |
|
|
|
1,456 |
|
|
|
1,261 |
|
Accrued expense |
|
|
1,031 |
|
|
|
893 |
|
|
|
1,050 |
|
|
|
909 |
|
Income tax payable |
|
|
1,944 |
|
|
|
1,684 |
|
|
|
2,005 |
|
|
|
1,737 |
|
Other current liabilities |
|
|
123 |
|
|
|
106 |
|
|
|
2,135 |
|
|
|
1,849 |
|
Total current liabilities |
|
|
93,521 |
|
|
|
81,000 |
|
|
|
57,417 |
|
|
|
49,729 |
|
Long-term deferred revenue |
|
|
3,598 |
|
|
|
3,116 |
|
|
|
1,960 |
|
|
|
1,698 |
|
Other non-current liabilities |
|
|
503 |
|
|
|
436 |
|
|
|
2,401 |
|
|
|
2,080 |
|
Total liabilities |
|
|
97,622 |
|
|
|
84,552 |
|
|
|
61,778 |
|
|
|
53,507 |
|
Share capital |
|
|
3,474 |
|
|
|
3,009 |
|
|
|
3,474 |
|
|
|
3,009 |
|
Capital surplus |
|
|
27,141 |
|
|
|
23,506 |
|
|
|
27,140 |
|
|
|
23,506 |
|
Other components of equity |
|
|
138 |
|
|
|
120 |
|
|
|
277 |
|
|
|
240 |
|
Retained earnings (Accumulated deficit) |
|
|
45,405 |
|
|
|
39,326 |
|
|
|
76,026 |
|
|
|
65,847 |
|
Equity attributable to owners of the Parent Company |
|
|
76,158 |
|
|
|
65,961 |
|
|
|
106,917 |
|
|
|
92,602 |
|
Non-controlling interest |
|
|
(606 |
) |
|
|
(525 |
) |
|
|
(459 |
) |
|
|
(397 |
) |
Total equity |
|
|
75,552 |
|
|
|
65,436 |
|
|
|
106,458 |
|
|
|
92,205 |
|
Total liabilities and equity |
|
|
173,174 |
|
|
|
149,988 |
|
|
|
168,236 |
|
|
|
145,712 |
|
* For convenience purposes only, the KRW amounts
are expressed in U.S. dollars at the rate of KRW 1,154.58 to US$
1.00, the noon buying rate in effect on June 28, 2019 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-19 |
|
|
30-Jun-18 |
|
|
30-Jun-19 |
|
|
30-Jun-18 |
|
|
30-Jun-19 |
|
|
|
(KRW) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games-subscription revenue |
|
|
6,256 |
|
|
|
6,116 |
|
|
|
6,746 |
|
|
|
5,843 |
|
|
|
15,012 |
|
|
|
13,002 |
|
|
|
11,261 |
|
Online games-royalties and license fees |
|
|
3,720 |
|
|
|
3,209 |
|
|
|
2,832 |
|
|
|
2,452 |
|
|
|
7,828 |
|
|
|
6,552 |
|
|
|
5,675 |
|
Mobile games and applications |
|
|
121,147 |
|
|
|
51,789 |
|
|
|
66,463 |
|
|
|
57,565 |
|
|
|
103,185 |
|
|
|
187,610 |
|
|
|
162,492 |
|
Character merchandising and other revenue |
|
|
2,500 |
|
|
|
1,912 |
|
|
|
2,086 |
|
|
|
1,807 |
|
|
|
3,312 |
|
|
|
4,586 |
|
|
|
3,972 |
|
Total net revenue |
|
|
133,623 |
|
|
|
63,026 |
|
|
|
78,127 |
|
|
|
67,667 |
|
|
|
129,337 |
|
|
|
211,750 |
|
|
|
183,400 |
|
Cost of revenue |
|
|
101,237 |
|
|
|
43,150 |
|
|
|
56,858 |
|
|
|
49,246 |
|
|
|
88,934 |
|
|
|
158,095 |
|
|
|
136,929 |
|
Gross profit |
|
|
32,386 |
|
|
|
19,876 |
|
|
|
21,269 |
|
|
|
18,421 |
|
|
|
40,403 |
|
|
|
53,655 |
|
|
|
46,471 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
6,665 |
|
|
|
9,470 |
|
|
|
5,733 |
|
|
|
4,966 |
|
|
|
23,297 |
|
|
|
12,398 |
|
|
|
10,738 |
|
Research and development |
|
|
1,877 |
|
|
|
1,742 |
|
|
|
2,432 |
|
|
|
2,106 |
|
|
|
3,616 |
|
|
|
4,309 |
|
|
|
3,732 |
|
Others, net |
|
|
204 |
|
|
|
341 |
|
|
|
106 |
|
|
|
92 |
|
|
|
347 |
|
|
|
310 |
|
|
|
268 |
|
Total operating expenses |
|
|
8,746 |
|
|
|
11,553 |
|
|
|
8,271 |
|
|
|
7,164 |
|
|
|
27,260 |
|
|
|
17,017 |
|
|
|
14,738 |
|
Operating profit |
|
|
23,640 |
|
|
|
8,323 |
|
|
|
12,998 |
|
|
|
11,257 |
|
|
|
13,143 |
|
|
|
36,638 |
|
|
|
31,733 |
|
Finance income(costs): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
|
1,062 |
|
|
|
892 |
|
|
|
1,141 |
|
|
|
989 |
|
|
|
1,482 |
|
|
|
2,203 |
|
|
|
1,907 |
|
Finance costs |
|
|
(313 |
) |
|
|
(573 |
) |
|
|
(102 |
) |
|
|
(88 |
) |
|
|
(866 |
) |
|
|
(415 |
) |
|
|
(359 |
) |
Profit before income tax |
|
|
24,389 |
|
|
|
8,642 |
|
|
|
14,037 |
|
|
|
12,158 |
|
|
|
13,759 |
|
|
|
38,426 |
|
|
|
33,281 |
|
Income tax expenses(profits) |
|
|
4,627 |
|
|
|
2,042 |
|
|
|
3,208 |
|
|
|
2,779 |
|
|
|
3,635 |
|
|
|
7,835 |
|
|
|
6,786 |
|
Profit for the year |
|
|
19,762 |
|
|
|
6,600 |
|
|
|
10,829 |
|
|
|
9,379 |
|
|
|
10,124 |
|
|
|
30,591 |
|
|
|
26,495 |
|
Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
2 |
|
|
|
(15 |
) |
|
|
(32 |
) |
|
|
(28 |
) |
|
|
(40 |
) |
|
|
(30 |
) |
|
|
(26 |
) |
Owners of Parent company |
|
|
19,760 |
|
|
|
6,615 |
|
|
|
10,861 |
|
|
|
9,407 |
|
|
|
10,164 |
|
|
|
30,621 |
|
|
|
26,521 |
|
Earning per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
|
|
2,844 |
|
|
|
952 |
|
|
|
1,563 |
|
|
|
1.40 |
|
|
|
1,463 |
|
|
|
4,407 |
|
|
|
3.80 |
|
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 |
|
|
2,844 |
|
|
|
952 |
|
|
|
1,563 |
|
|
|
1.40 |
|
|
|
1,463 |
|
|
|
4,407 |
|
|
|
3.80 |
|
* For convenience, the KRW amounts are expressed
in U.S. dollars at the rate of KRW 1,154.58 to US$1.00, the noon
buying rate in effect on June 28, 2019 as quoted by the Federal
Reserve Bank of New York.(1) Each ADS represents one common
shares.
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