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
third quarter ended September 30, 2019, prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board and business updates.
THIRD QUARTER 2019
HIGHLIGHTS
- Total revenues were KRW 77,566 million (US$ 64,863 thousand),
representing a 0.7% decrease from the second quarter ended June 30,
2019 (“QoQ”) and a 75.5% increase from the third quarter ended
September 30, 2018 (“YoY”).
- Operating profit was KRW 10,226 million (US$ 8,551 thousand),
representing a 21.3% decrease QoQ and a 44.4% increase YoY.
- Profit before income tax expenses was KRW 11,213 million (US$
9,376 thousand), representing a 20.1% decrease QoQ and a 53.0%
increase YoY.
- Net profit attributable to parent company was KRW 8,952 million
(US$ 7,485 thousand), representing a 17.6% decrease QoQ and a 41.8%
increase YoY.
REVIEW OF THIRD QUARTER 2019 FINANCIAL
RESULTS
Revenues
Subscription revenues for the third quarter of
2019 were KRW 10,564 million (US$ 8,834 thousand), representing a
56.6 % increase QoQ from KRW 6,746 million and a 75.9% increase YoY
from KRW 6,005 million. The increase QoQ was mainly attributable to
increased revenues from Ragnarok Online in Taiwan, Brazil, and
Ragnarok Prequel 2 in Taiwan. The increase YoY was largely due to
increased revenues from Ragnarok Online in Taiwan, Brazil and
Ragnarok Prequel 2 in Taiwan. Such increase was partially offset by
decreased revenue from Ragnarok Prequel in Taiwan.
Royalty and license fee revenues for the third
quarter of 2019 were KRW 2,583 million (US$ 2,160 thousand),
representing an 8.8% decrease QoQ from KRW 2,832 million and a
12.8% decrease YoY from KRW 2,961 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 Brazil and Thailand.
Mobile game and application revenues were KRW
61,238 million (US$ 51,209 thousand) for the third quarter of 2019,
representing a 7.9% decrease QoQ from KRW 66,463 million and a
83.4% increase YoY from KRW 33,387 million. The decrease QoQ
resulted primarily from decreased revenues from Ragnarok M: Eternal
Love in Southeast Asia, North America, South America, Oceania, and
Taiwan. Such decrease was partially offset by increased revenues
from Ragnarok M: Eternal Love in Japan, Korea and Ragnarok H5 that
has launched on September 19, 2019 in Korea. The increase YoY was
primarily due to revenues from Ragnarok M: Eternal Love in
Southeast Asia, Japan, North America, South America, Oceania, and
Ragnarok H5 launched in September in Korea. This increase was
partially offset by decreased revenues from Ragnarok M: Eternal
Love in Taiwan and Korea.
Character merchandising and other revenues were
KRW 3,181 million (US$ 2,660 thousand) for the third quarter of
2019, representing 52.5% increase QoQ from KRW 2,086 million and a
72.1% increase YoY from KRW 1,848 million
Cost of Revenue
Cost of revenue was KRW 56,058 million (US$
46,877 thousand) for the third quarter of 2019, representing a 1.4%
decrease QoQ from KRW 56,858 million and a 88.1% increase YoY from
KRW 29,806 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. 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, Oceania, and
Japan.
Operating Expenses
Operating expenses were KRW 11,282 million (US$
9,435 thousand) for the third quarter of 2019, representing a 36.4%
increase QoQ from KRW 8,271 million and a 54.3% increase YoY from
KRW 7,311 million. The increase QoQ was mainly attributable to
increased advertising expenses for Ragnarok M: Eternal Love in
Korea, Ragnarok H5 launched in September in Korea, and re-launched
Ragnarok Online in Indonesia. The increase YoY was mostly resulted
from increased advertising expenses for Ragnarok M: Eternal Love in
Korea, Ragnarok H5 launched in September in Korea, re-launched
Ragnarok Online in Indonesia, research and development expenses and
salaries.
Profit before income tax expenses
Profit before income tax expenses was KRW 11,213
million (US$ 9,376 thousand) for the third quarter of 2019 compared
with profit before income tax expense of KRW 14,037 million for the
second quarter of 2019 and profit before income tax expenses of KRW
7,329 million for the third quarter of 2018.
Net Profit
As a result of the foregoing factors, Gravity
recorded a net profit attributable to parent company of KRW 8,952
million (US$ 7,485 thousand) for the third quarter of 2019 compared
with net profit attributable to parent company of KRW 10,861
million for the second quarter of 2019 and a net profit
attributable to parent company of KRW 6,312 million for the third
quarter of 2018.
Liquidity
The balance of cash and cash equivalents and
short-term financial instruments was KRW 120,259 million (US$
100,564 thousand) as of September 30, 2019.
Note: For convenience purposes only, the KRW
amounts have been expressed in U.S. dollars at the exchange rate of
KRW 1,195.85 to US$ 1.00, the noon buying rate in effect on
September 30, 2019 as quoted by the Federal Reserve Bank of New
York. GRAVITY BUSINESS UPDATE
Ragnarok Online
IP-based Games
- Ragnarok Origin, a MMORPG mobile game
Ragnarok Origin is scheduled to be launched in
Korea in 2020. The game embodies Ragnarok’s game elements to the
highest level of graphics on the mobile device.
- Ragnarok M: Eternal Love, a MMORPG mobile game
Ragnarok M: Eternal Love has launched in Europe
(except for some regions) and Russia on October 16, 2019.
- Ragnarok Tactics, a SRPG mobile game
Ragnarok Tactics has launched in Thailand on
November 8, 2019. On the launching day, the game ranked as the
first in free download rankings and the second in gross rankings of
Apple App Store. The game is scheduled to be launched in Korea in
the first half of 2020.
- Other Ragnarok Online IP-based games
Gravity has launched Ragnarok Click H5, a Click
Action RPG game, globally on November 13, 2019.
The company has been preparing to launch
Ragnarok H5, an idle RPG game, in Indonesia in the first quarter of
2020.
Other IP games
- The Color of Dream Fantasy Latele, a MMORPG mobile game,
has launched in Japan on October 16, 2019.
Investor Presentation
Gravity issued an investor presentation. The
presentation contains the Company’s recent business updates,
results of the third 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.
---------------------------------------------------
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, 2019 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$)
|
|
As of |
|
|
|
31-Dec-18 |
|
|
30-Sep-19 |
|
|
|
KRW |
|
|
US$ |
|
|
KRW |
|
|
US$ |
|
|
|
(audited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
86,051 |
|
|
|
71,958 |
|
|
|
88,759 |
|
|
|
74,223 |
|
Short-term financial instruments |
|
|
9,500 |
|
|
|
7,944 |
|
|
|
31,500 |
|
|
|
26,341 |
|
Accounts receivable, net |
|
|
60,664 |
|
|
|
50,729 |
|
|
|
39,409 |
|
|
|
32,955 |
|
Other receivables, net |
|
|
255 |
|
|
|
213 |
|
|
|
199 |
|
|
|
166 |
|
Prepaid expenses |
|
|
2,516 |
|
|
|
2,104 |
|
|
|
1,929 |
|
|
|
1,613 |
|
Other current assets |
|
|
1,182 |
|
|
|
988 |
|
|
|
3,749 |
|
|
|
3,135 |
|
Total current assets |
|
|
160,168 |
|
|
|
133,936 |
|
|
|
165,545 |
|
|
|
138,433 |
|
Property and equipment, net |
|
|
1,498 |
|
|
|
1,253 |
|
|
|
6,833 |
|
|
|
5,714 |
|
Intangible assets |
|
|
1,163 |
|
|
|
973 |
|
|
|
1,568 |
|
|
|
1,311 |
|
Deferred tax assets |
|
|
7,413 |
|
|
|
6,199 |
|
|
|
8,866 |
|
|
|
7,414 |
|
Other non-current financial assets |
|
|
1,494 |
|
|
|
1,249 |
|
|
|
1,662 |
|
|
|
1,390 |
|
Other non-current assets |
|
|
1,438 |
|
|
|
1,202 |
|
|
|
1,727 |
|
|
|
1,444 |
|
Total assets |
|
|
173,174 |
|
|
|
144,812 |
|
|
|
186,201 |
|
|
|
155,706 |
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
71,928 |
|
|
|
60,148 |
|
|
|
44,258 |
|
|
|
37,010 |
|
Deferred revenue |
|
|
16,476 |
|
|
|
13,778 |
|
|
|
12,795 |
|
|
|
10,700 |
|
Withholdings |
|
|
2,019 |
|
|
|
1,688 |
|
|
|
2,119 |
|
|
|
1,772 |
|
Accrued expense |
|
|
1,031 |
|
|
|
862 |
|
|
|
1,049 |
|
|
|
878 |
|
Income tax payable |
|
|
1,944 |
|
|
|
1,626 |
|
|
|
3,204 |
|
|
|
2,679 |
|
Other current liabilities |
|
|
123 |
|
|
|
102 |
|
|
|
1,889 |
|
|
|
1,580 |
|
Total current liabilities |
|
|
93,521 |
|
|
|
78,204 |
|
|
|
65,314 |
|
|
|
54,619 |
|
Long-term deferred revenue |
|
|
3,598 |
|
|
|
3,009 |
|
|
|
1,294 |
|
|
|
1,082 |
|
Other non-current liabilities |
|
|
503 |
|
|
|
421 |
|
|
|
3,564 |
|
|
|
2,980 |
|
Total liabilities |
|
|
97,622 |
|
|
|
81,634 |
|
|
|
70,172 |
|
|
|
58,681 |
|
Share capital |
|
|
3,474 |
|
|
|
2,905 |
|
|
|
3,474 |
|
|
|
2,905 |
|
Capital surplus |
|
|
27,141 |
|
|
|
22,695 |
|
|
|
27,128 |
|
|
|
22,685 |
|
Other components of equity |
|
|
138 |
|
|
|
115 |
|
|
|
814 |
|
|
|
680 |
|
Retained earnings (Accumulated deficit) |
|
|
45,405 |
|
|
|
37,970 |
|
|
|
84,978 |
|
|
|
71,061 |
|
Equity attributable to owners of the Parent Company |
|
|
76,158 |
|
|
|
63,685 |
|
|
|
116,394 |
|
|
|
97,331 |
|
Non-controlling interest |
|
|
(606 |
) |
|
|
(507 |
) |
|
|
(365 |
) |
|
|
(306 |
) |
Total equity |
|
|
75,552 |
|
|
|
63,178 |
|
|
|
116,029 |
|
|
|
97,025 |
|
Total liabilities and equity |
|
|
173,174 |
|
|
|
144,812 |
|
|
|
186,201 |
|
|
|
155,706 |
|
* For convenience purposes only, the KRW amounts
are expressed in U.S. dollars at the rate of KRW 1,195.85 to US$
1.00, the noon buying rate in effect on September 30, 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 |
|
|
Nine months ended |
|
|
30-Jun-19 |
|
|
30-Sep-18 |
|
|
30-Sep-19 |
|
|
30-Sep-18 |
|
|
30-Sep-19 |
|
|
(KRW) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games-subscription revenue |
|
|
6,746 |
|
|
|
6,005 |
|
|
|
10,564 |
|
|
|
8,834 |
|
|
|
21,017 |
|
|
|
23,566 |
|
|
|
19,706 |
Online games-royalties and license fees |
|
|
2,832 |
|
|
|
2,961 |
|
|
|
2,583 |
|
|
|
2,160 |
|
|
|
10,788 |
|
|
|
9,135 |
|
|
|
7,639 |
Mobile games and applications |
|
|
66,463 |
|
|
|
33,387 |
|
|
|
61,238 |
|
|
|
51,209 |
|
|
|
136,573 |
|
|
|
248,848 |
|
|
|
208,093 |
Character merchandising and other revenue |
|
|
2,086 |
|
|
|
1,848 |
|
|
|
3,181 |
|
|
|
2,660 |
|
|
|
5,160 |
|
|
|
7,767 |
|
|
|
6,495 |
Total net revenue |
|
|
78,127 |
|
|
|
44,201 |
|
|
|
77,566 |
|
|
|
64,863 |
|
|
|
173,538 |
|
|
|
289,316 |
|
|
|
241,933 |
Cost of revenue |
|
|
56,858 |
|
|
|
29,806 |
|
|
|
56,058 |
|
|
|
46,877 |
|
|
|
118,740 |
|
|
|
214,153 |
|
|
|
179,080 |
Gross profit |
|
|
21,269 |
|
|
|
14,395 |
|
|
|
21,508 |
|
|
|
17,986 |
|
|
|
54,798 |
|
|
|
75,163 |
|
|
|
62,853 |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
5,733 |
|
|
|
5,602 |
|
|
|
8,984 |
|
|
|
7,513 |
|
|
|
28,899 |
|
|
|
21,382 |
|
|
|
17,880 |
Research and development |
|
|
2,432 |
|
|
|
1,760 |
|
|
|
2,349 |
|
|
|
1,965 |
|
|
|
5,376 |
|
|
|
6,658 |
|
|
|
5,568 |
Others, net |
|
|
106 |
|
|
|
(51 |
) |
|
|
(51 |
) |
|
|
(43 |
) |
|
|
296 |
|
|
|
259 |
|
|
|
217 |
Total operating expenses |
|
|
8,271 |
|
|
|
7,311 |
|
|
|
11,282 |
|
|
|
9,435 |
|
|
|
34,571 |
|
|
|
28,299 |
|
|
|
23,665 |
Operating profit |
|
|
12,998 |
|
|
|
7,084 |
|
|
|
10,226 |
|
|
|
8,551 |
|
|
|
20,227 |
|
|
|
46,864 |
|
|
|
39,188 |
Finance income(costs): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
|
1,141 |
|
|
|
58 |
|
|
|
1,353 |
|
|
|
1,131 |
|
|
|
1,540 |
|
|
|
3,556 |
|
|
|
2,974 |
Finance costs |
|
|
(102 |
) |
|
|
187 |
|
|
|
(366) |
|
|
|
(306) |
|
|
|
(679 |
) |
|
|
(781 |
) |
|
|
(653) |
Profit before income tax |
|
|
14,037 |
|
|
|
7,329 |
|
|
|
11,213 |
|
|
|
9,376 |
|
|
|
21,088 |
|
|
|
49,639 |
|
|
|
41,509 |
Income tax expenses(profits) |
|
|
3,208 |
|
|
|
1,024 |
|
|
|
2,357 |
|
|
|
1,971 |
|
|
|
4,659 |
|
|
|
10,192 |
|
|
|
8,523 |
Profit for the period |
|
|
10,829 |
|
|
|
6,305 |
|
|
|
8,856 |
|
|
|
7,405 |
|
|
|
16,429 |
|
|
|
39,447 |
|
|
|
32,986 |
Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
(32 |
) |
|
|
(7) |
|
|
|
(96 |
) |
|
|
(80 |
) |
|
|
(47 |
) |
|
|
(126 |
) |
|
|
(105) |
Owners of Parent company |
|
|
10,861 |
|
|
|
6,312 |
|
|
|
8,952 |
|
|
|
7,485 |
|
|
|
16,476 |
|
|
|
39,573 |
|
|
|
33,091 |
Earning per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
|
|
1,563 |
|
|
|
908 |
|
|
|
1,288 |
|
|
|
1.08 |
|
|
|
2,371 |
|
|
|
5,695 |
|
|
|
4.76 |
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 |
|
|
1,563 |
|
|
|
908 |
|
|
|
1,288 |
|
|
|
1.08 |
|
|
|
2,371 |
|
|
|
5,695 |
|
|
|
4.76 |
* For convenience, the KRW amounts are expressed
in U.S. dollars at the rate of KRW 1,195.85 to US$1.00, the noon
buying rate in effect on September 30, 2019 as quoted by the
Federal Reserve Bank of New York.(1) Each ADS represents one common
share.
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