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, 2020, prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board and business updates.
SECOND QUARTER 2020 HIGHLIGHTS
- Total revenues were KRW 88,458 million (US$ 73,684 thousand),
representing a 20.7% increase from the first quarter ended March
31, 2020 (“QoQ”) and a 13.2% increase from the second quarter ended
June 30, 2019 (“YoY”).
- Operating profit was KRW 16,313 million (US$ 13,588 thousand),
representing a 57.5% increase QoQ and a 25.5% increase YoY.
- Profit before income tax expenses was KRW 16,335million (US$
13,606 thousand), representing a 45.2% increase QoQ and a 16.4%
increase YoY.
- Net profit attributable to parent company was KRW 13,095
million (US$ 10,907 thousand), representing a 41.4% increase QoQ
and a 20.6% increase YoY.
REVIEW OF SECOND QUARTER 2020 FINANCIAL
RESULTS
Revenues
Subscription revenues for the second quarter of
2020 were KRW 24,448 million (US$ 20,365 thousand), representing a
147.1% increase QoQ from KRW 9,893 million and a 262.4% increase
YoY from KRW 6,746 million. The increase QoQ was mainly
attributable to increased revenues from Ragnarok Online in Thailand
that was re-launched on May 28, 2020 and Ragnarok H5 in Indonesia
that was launched on March 31, 2020. The increase YoY was largely
due to increased revenues from Ragnarok Online in Thailand and
Taiwan and Ragnarok H5 in Indonesia.
Royalty and license fee revenues for the second
quarter of 2020 were KRW 4,459 million (US$ 3,714 thousand),
representing 25.9% increase QoQ from KRW 3,543 million and a 57.5%
increase YoY from KRW 2,832 million. The increase QoQ was primarily
due to increased revenue from collaboration event with Garena’s
Free Fire items based on Ragnarok Online IP. Such increase was
partially offset by decreased revenue from Ragnarok Online in
Japan. The increase YoY resulted mainly from increased revenue from
collaboration event with Garena’s Free Fire items based on Ragnarok
Online IP.
Mobile game revenues were KRW 54,249 million
(US$ 45,189 thousand) for the second quarter of 2020, representing
a 3.1% decrease QoQ from KRW 55,982 million and a 16.6% decrease
YoY from KRW 65,013 million. The decrease QoQ resulted primarily
from decreased revenues from Ragnarok M: Eternal Love in Taiwan and
Japan, and Ragnarok Tactics in Taiwan. Such decrease was partially
offset by increased revenues from Ragnarok M: Eternal Love in
Southeast Asia, Ragnarok H5 in Indonesia, and Ragnarok Tactics in
Korea. The decrease YoY was primarily due to revenues from Ragnarok
M: Eternal Love in Southeast Asia, North America, South America and
Oceania. This decrease was partially offset by increased revenues
from Ragnarok M: Eternal Love in Taiwan and Europe, Ragnarok
Tactics in Korea and Taiwan, and Ragnarok H5 in Indonesia.
Other revenues were KRW 5,302 million (US$ 4,416
thousand) for the second quarter of 2020, representing 38.0%
increase QoQ from KRW 3,842 million and a 49.9% increase YoY from
KRW 3,536 million
Cost of Revenues
Cost of revenue was KRW 51,098 million (US$
42,564 thousand) for the second quarter of 2020, representing a
4.6% increase QoQ from KRW 48,874 million and a 10.1% decrease YoY
from KRW 56,858 million. The increase QoQ was mainly due to
increased commission paid for mobile game services related to
Ragnarok M: Eternal love in Southeast Asia, North America, South
America and Oceania, Ragnarok H5 in Indonesia, and Ragnarok Tactics
in Korea. The decrease YoY was mostly from decreased commission
paid for mobile game services related to Ragnarok M: Eternal love
in Southeast Asia, North America, South America and Oceania.
Operating Expenses
Operating expenses were KRW 21,047 million (US$
17,532 thousand) for the second quarter of 2020, representing a
50.0% increase QoQ from KRW 14,030 million and a 154.5% increase
YoY from KRW 8,271 million. The increase QoQ was mainly
attributable to increased advertising expenses for Ragnarok Origin
in Korea, Ragnarok Online in Thailand, Sacred Blade in Japan,
Ragnarok H5 in Indonesia, and commission paid for payment gate way
fees related to Ragnarok Online in Thailand. The increase YoY was
mostly resulted from increased advertising expenses for Ragnarok
Origin and Ragnarok Tactics in Korea, Ragnarok Online in Thailand,
Sacred Blade in Japan, Ragnarok H5 in Indonesia, commission paid
for payment gate way fees related to Ragnarok Online in Thailand,
salaries and research and development expenses.
Profit before income tax expenses
Profit before income tax expenses was KRW 16,335
million (US$ 13,606 thousand) for the second quarter of 2020
compared with profit before income tax expense of KRW 11,250
million for the first quarter of 2020 and profit before income tax
expenses of KRW 14,037 million for the second quarter of 2019.
Net Profit
As a result of the foregoing factors, Gravity
recorded a net profit attributable to parent company of KRW 13,095
million (US$ 10,907 thousand) for the second quarter of 2020
compared with net profit attributable to parent company of KRW
9,263 million for the first quarter of 2020 and a net profit
attributable to parent company of KRW 10,861 million for the second
quarter of 2019.
Liquidity
The balance of cash and cash equivalents and
short-term financial instruments was KRW 131,566 million (US$
109,593 thousand) as of June 30, 2020.
Note: For convenience purposes only, the KRW
amounts have been expressed in U.S. dollars at the exchange rate of
KRW 1,200.50 to US$ 1.00, the noon buying rate in effect on June
30, 2020 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 was launched in Korea on July 7,
2020 and ranked as the fourth in top grossing of Google Play games
and the fourth in top grossing of Apple’s App Store games after its
launching. Gravity signed a publishing contract with GungHo Online
Entertainment, Inc. for Japan service. The game is being prepared
to launch in Japan.
- Ragnarok X: Next Generation, a MMORPG mobile game
Gravity signed a joint publishing contract with
ByteDance Ltd., a multinational content platform company, for
Ragnarok X: Next Generation in Taiwan, Hong Kong, Macau, and
Southeast Asia. The game is expected to be launched in Taiwan, Hong
Kong and Macau in the second half of 2020.
- Ragnarok Tactics, a SRPG mobile game
Ragnarok Tactics was launched in global market
on June 18, 2020.
- Other Ragnarok Online IP-based games
Action RO2: Spear of Odin, a 3D Action MORPG
mobile game, is expected to be launched in Indonesia, Malaysia,
Philippines, Singapore and Oceania in 2020. The game was developed
by NeoCyon, Inc., our subsidiary in Korea.
Other IP games
Tactical Warfare, a First-Person Shooter (FPS)
game, has started pre-registration and will be launched in North,
Central and South America in the third quarter of 2020. The game is
published by Gravity Interactive, Inc., a subsidiary in the United
States.
Investor Presentation
Gravity issued an investor presentation. The
presentation contains the Company’s recent business updates,
results of second quarter in 2020 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 93 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
#
# #
GRAVITY Co., Ltd.Consolidated
Statements of Financial Position
(In millions of KRW and thousands of US$)
|
|
As of |
|
|
|
31-Dec-19 |
|
|
30-Jun-20 |
|
|
|
KRW |
|
|
US$ |
|
|
KRW |
|
|
US$ |
|
|
|
(audited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
79,428 |
|
|
|
66,162 |
|
|
|
94,066 |
|
|
|
78,356 |
|
Short-term financial instruments |
|
|
39,500 |
|
|
|
32,903 |
|
|
|
37,500 |
|
|
|
31,237 |
|
Accounts receivable, net |
|
|
32,253 |
|
|
|
26,866 |
|
|
|
48,910 |
|
|
|
40,741 |
|
Other receivables, net |
|
|
56 |
|
|
|
47 |
|
|
|
265 |
|
|
|
221 |
|
Prepaid expenses |
|
|
1,962 |
|
|
|
1,634 |
|
|
|
2,892 |
|
|
|
2,409 |
|
Other current assets |
|
|
2,664 |
|
|
|
2,219 |
|
|
|
2,558 |
|
|
|
2,131 |
|
Total current assets |
|
|
155,863 |
|
|
|
129,831 |
|
|
|
186,191 |
|
|
|
155,095 |
|
Property and equipment, net |
|
|
6,663 |
|
|
|
5,550 |
|
|
|
7,893 |
|
|
|
6,575 |
|
Intangible assets |
|
|
1,717 |
|
|
|
1,430 |
|
|
|
1,899 |
|
|
|
1,582 |
|
Deferred tax assets |
|
|
7,667 |
|
|
|
6,387 |
|
|
|
10,246 |
|
|
|
8,535 |
|
Other non-current financial assets |
|
|
1,770 |
|
|
|
1,474 |
|
|
|
1,785 |
|
|
|
1,487 |
|
Other non-current assets |
|
|
1,745 |
|
|
|
1,454 |
|
|
|
2,050 |
|
|
|
1,707 |
|
Total assets |
|
|
175,425 |
|
|
|
146,126 |
|
|
|
210,064 |
|
|
|
174,981 |
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
37,496 |
|
|
|
31,234 |
|
|
|
43,914 |
|
|
|
36,580 |
|
Deferred revenue |
|
|
10,748 |
|
|
|
8,953 |
|
|
|
12,834 |
|
|
|
10,691 |
|
Withholdings |
|
|
1,764 |
|
|
|
1,469 |
|
|
|
2,366 |
|
|
|
1,971 |
|
Accrued expense |
|
|
1,175 |
|
|
|
979 |
|
|
|
1,185 |
|
|
|
987 |
|
Income tax payable |
|
|
2,618 |
|
|
|
2,181 |
|
|
|
2,577 |
|
|
|
2,147 |
|
Other current liabilities |
|
|
1,986 |
|
|
|
1,654 |
|
|
|
2,788 |
|
|
|
2,322 |
|
Total current liabilities |
|
|
55,787 |
|
|
|
46,470 |
|
|
|
65,664 |
|
|
|
54,698 |
|
Long-term deferred revenue |
|
|
98 |
|
|
|
82 |
|
|
|
343 |
|
|
|
286 |
|
Other non-current liabilities |
|
|
3,774 |
|
|
|
3,143 |
|
|
|
4,058 |
|
|
|
3,380 |
|
Total liabilities |
|
|
59,659 |
|
|
|
49,695 |
|
|
|
70,065 |
|
|
|
58,364 |
|
Share capital |
|
|
3,474 |
|
|
|
2,894 |
|
|
|
3,474 |
|
|
|
2,894 |
|
Capital surplus |
|
|
27,128 |
|
|
|
22,597 |
|
|
|
27,110 |
|
|
|
22,582 |
|
Other components of equity |
|
|
274 |
|
|
|
228 |
|
|
|
1,875 |
|
|
|
1,562 |
|
Retained earnings |
|
|
84,668 |
|
|
|
70,527 |
|
|
|
107,026 |
|
|
|
89,151 |
|
Equity attributable to owners of the Parent Company |
|
|
115,544 |
|
|
|
96,246 |
|
|
|
139,485 |
|
|
|
116,189 |
|
Non-controlling interest |
|
|
222 |
|
|
|
185 |
|
|
|
514 |
|
|
|
428 |
|
Total equity |
|
|
115,766 |
|
|
|
96,431 |
|
|
|
139,999 |
|
|
|
116,617 |
|
Total liabilities and equity |
|
|
175,425 |
|
|
|
146,126 |
|
|
|
210,064 |
|
|
|
174,981 |
|
* For convenience purposes only, the KRW amounts
are expressed in U.S. dollars at the rate of KRW 1,200.50 to US$
1.00, the noon buying rate in effect on June 30, 2020 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-20 |
|
|
30-Jun-19 |
|
|
30-Jun-20 |
|
|
30-Jun-19 |
|
|
30-Jun-20 |
|
|
|
|
(KRW) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games-subscription revenue |
|
|
9,893 |
|
|
|
6,746 |
|
|
|
24,448 |
|
|
|
20,365 |
|
|
|
13,002 |
|
|
|
34,341 |
|
|
|
28,606 |
|
Online games-royalties and license fees |
|
|
3,543 |
|
|
|
2,832 |
|
|
|
4,459 |
|
|
|
3,714 |
|
|
|
6,552 |
|
|
|
8,002 |
|
|
|
6,666 |
|
Mobile games |
|
|
55,982 |
|
|
|
65,013 |
|
|
|
54,249 |
|
|
|
45,189 |
|
|
|
185,103 |
|
|
|
110,231 |
|
|
|
91,821 |
|
Other revenue |
|
|
3,842 |
|
|
|
3,536 |
|
|
|
5,302 |
|
|
|
4,416 |
|
|
|
7,093 |
|
|
|
9,144 |
|
|
|
7,616 |
|
Total net revenue |
|
|
73,260 |
|
|
|
78,127 |
|
|
|
88,458 |
|
|
|
73,684 |
|
|
|
211,750 |
|
|
|
161,718 |
|
|
|
134,709 |
|
Cost of revenues |
|
|
48,874 |
|
|
|
56,858 |
|
|
|
51,098 |
|
|
|
42,564 |
|
|
|
158,095 |
|
|
|
99,972 |
|
|
|
83,275 |
|
Gross profit |
|
|
24,386 |
|
|
|
21,269 |
|
|
|
37,360 |
|
|
|
31,120 |
|
|
|
53,655 |
|
|
|
61,746 |
|
|
|
51,434 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
11,007 |
|
|
|
5,733 |
|
|
|
17,643 |
|
|
|
14,696 |
|
|
|
12,398 |
|
|
|
28,650 |
|
|
|
23,865 |
|
Research and development |
|
|
2,872 |
|
|
|
2,432 |
|
|
|
3,254 |
|
|
|
2,711 |
|
|
|
4,309 |
|
|
|
6,126 |
|
|
|
5,103 |
|
Others, net |
|
|
151 |
|
|
|
106 |
|
|
|
150 |
|
|
|
125 |
|
|
|
310 |
|
|
|
301 |
|
|
|
251 |
|
Total operating expenses |
|
|
14,030 |
|
|
|
8,271 |
|
|
|
21,047 |
|
|
|
17,532 |
|
|
|
17,017 |
|
|
|
35,077 |
|
|
|
29,219 |
|
Operating profit |
|
|
10,356 |
|
|
|
12,998 |
|
|
|
16,313 |
|
|
|
13,588 |
|
|
|
36,638 |
|
|
|
26,669 |
|
|
|
22,215 |
|
Finance income(costs): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
|
1,551 |
|
|
|
1,141 |
|
|
|
627 |
|
|
|
522 |
|
|
|
2,203 |
|
|
|
2,178 |
|
|
|
1,814 |
|
Finance costs |
|
|
(657 |
) |
|
|
(102 |
) |
|
|
(605 |
) |
|
|
(504 |
) |
|
|
(415 |
) |
|
|
(1,262 |
) |
|
|
(1,051 |
) |
Profit before income tax |
|
|
11,250 |
|
|
|
14,037 |
|
|
|
16,335 |
|
|
|
13,606 |
|
|
|
38,426 |
|
|
|
27,585 |
|
|
|
22,978 |
|
Income tax expenses |
|
|
2,004 |
|
|
|
3,208 |
|
|
|
3,293 |
|
|
|
2,743 |
|
|
|
7,835 |
|
|
|
5,297 |
|
|
|
4,412 |
|
Profit for the year |
|
|
9,246 |
|
|
|
10,829 |
|
|
|
13,042 |
|
|
|
10,863 |
|
|
|
30,591 |
|
|
|
22,288 |
|
|
|
18,566 |
|
Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
(17 |
) |
|
|
(32 |
) |
|
|
(53 |
) |
|
|
(44 |
) |
|
|
(30 |
) |
|
|
(70 |
) |
|
|
(58 |
) |
Owners of Parent company |
|
|
9,263 |
|
|
|
10,861 |
|
|
|
13,095 |
|
|
|
10,907 |
|
|
|
30,621 |
|
|
|
22,358 |
|
|
|
18,624 |
|
Earning per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
|
|
1,333 |
|
|
|
1,563 |
|
|
|
1,884 |
|
|
|
1.6 |
|
|
|
4,407 |
|
|
|
3,217 |
|
|
|
2.7 |
|
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 |
|
|
1,333 |
|
|
|
1,563 |
|
|
|
1,884 |
|
|
|
1.6 |
|
|
|
4,407 |
|
|
|
3,217 |
|
|
|
2.7 |
|
* For convenience, the KRW amounts are expressed
in U.S. dollars at the rate of KRW 1,200.50 to US$1.00, the noon
buying rate in effect on June 30, 2020 as quoted by the Federal
Reserve Bank of New York.(1) Each ADS represents one common
share.
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