GRAVITY Co., Ltd. (Nasdaq: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
first quarter ended March 31, 2016, prepared in accordance with
generally accepted accounting principles in the United States.
FINANCIAL RESULTS FOR THE FIRST QUARTER OF
2016
Revenues for the first quarter ended March 31,
2016 was KRW 9,094 million (US$ 7,984 thousand), representing a
4.5% increase from KRW 8,703 million for the fourth quarter ended
December 31, 2015 (“QoQ”) and a 0.3% increase from KRW 9,069
million for the first quarter ended March 31, 2015 (“YoY”).
Review of Financial Results
Revenues
Royalty and license fee revenues for the first
quarter of 2016 were KRW 3,368 million (US$ 2,957 thousand),
representing a 13.9% increase QoQ from KRW 2,956 million and a
34.1% increase YoY from KRW 2,512 million. The increase QoQ was
primarily due to increased revenue from Ragnarok Online in Japan
and the strengthening of the Japanese Yen against the Korean Won.
The increase YoY resulted mainly from increased revenue from
Ragnarok Online in Japan and Taiwan and the strengthening of the
Japanese Yen against the Korean Won.
Mobile game and application revenues were KRW
2,616 million (US$ 2,297 thousand) for the first quarter of 2016,
representing a 34.8% decrease QoQ from KRW 4,012 million and a
37.8% decrease YoY from KRW 4,203 million. The decrease QoQ and YoY
resulted primarily from decreased revenues from Ragnarok: Path of
Heroes and mobile applications for a third party.
Subscription revenues for the first quarter of
2016 were KRW 2,137 million (US$ 1,876 thousand), representing a
128.3% increase QoQ from KRW 936 million and a 25.9% increase YoY
from KRW 1,698 million. The increase QoQ was mainly attributable to
increased revenues from Ragnarok Online and Ragnarok Online II in
the United States and Canada. The increase YoY was largely due to
increased revenues from Ragnarok Online in the United States,
Canada and Korea.
Character merchandising and other revenues were
KRW 973 million (US$ 854 thousand) for the first quarter of 2016,
representing a 21.8% increase QoQ from KRW 799 million and a 48.3%
increase YoY from KRW 656 million.
Cost of Revenue and Operating Expenses
Cost of revenue was KRW 6,619 million (US$ 5,812
thousand) for the first quarter of 2016, representing a 17.5%
decrease QoQ from KRW 8,020 million and a 13.8% decrease YoY from
KRW 7,676 million. The decrease QoQ and YoY was mostly from i)
decreased amortization of capitalized research and development cost
of Ragnarok Online II, which was amortized and fully impaired in
December 2015, and ii) a decrease in commission paid. The decrease
YoY was partially offset by an increase in salaries resulting from
the commercial launch of some of our mobile games.
Operating expenses were KRW 3,036 million (US$
2,665 thousand) for the first quarter of 2016, representing a 69.8%
decrease QoQ from KRW 10,038 million and a 23.2% decrease YoY from
KRW 3,952 million. The decrease QoQ was mainly attributable to i)
decreased impairment loss on intangible assets primarily due to the
impairment of capitalized research and development cost of Ragnarok
Online II and goodwill of NeoCyon in the fourth quarter of 2015,
which did not occur in the first quarter of 2016 and ii) decreased
research and development expenses. The decrease YoY mostly resulted
from decreased research and development expenses.
Loss before income tax expenses and others was
KRW 1,287 million (US$ 1,130 thousand) for the first quarter of
2016 compared with loss before income tax expenses and others of
KRW 8,740 million for the fourth quarter of 2015 and loss before
income tax expenses and others of KRW 2,355 million for the first
quarter of 2015.
As a result of the foregoing factors, Gravity
recorded a net loss attributable to parent company of KRW 1,701
million (US$ 1,493 thousand) for the first quarter of 2016 compared
with a net loss attributable to parent company of KRW 9,113 million
for the fourth quarter of 2015 and a net loss attributable to
parent company of KRW 2,628 million for the first quarter of
2015.
The balance of cash and cash equivalents and
short-term financial instruments was KRW 35,881 million (US$ 31,506
thousand) as of March 31, 2016.
Note: For convenience purposes only, the KRW
amounts have been expressed in U.S. dollars at the exchange rate of
KRW1,138.86 to US$ 1.00, the noon buying rate in effect on March
31, 2016 as quoted by the Federal Reserve Bank of New York.
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, 2015 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. Ji Hee Kim IR Manager Gravity Co., Ltd.
Email: ircommunication@gravity.co.kr Telephone: +82-2-2132-7800
|
GRAVITY Co.,
Ltd. |
Consolidated
Balance Sheet |
|
(In millions of KRW and thousands of US$) |
|
|
|
|
As of |
|
|
|
31-Dec-15 |
|
31-Mar-16 |
|
|
|
KRW |
|
US$ |
|
KRW |
|
US$ |
Assets |
(audited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
24,909 |
|
|
|
21,872 |
|
|
|
17,381 |
|
|
|
15,262 |
|
|
Short-term financial instruments |
|
11,500 |
|
|
|
10,098 |
|
|
|
18,500 |
|
|
|
16,244 |
|
|
Accounts receivable, net |
|
5,289 |
|
|
|
4,644 |
|
|
|
9,494 |
|
|
|
8,336 |
|
|
Other current assets |
|
1,978 |
|
|
|
1,737 |
|
|
|
2,339 |
|
|
|
2,054 |
|
|
|
Total
current assets |
|
43,676 |
|
|
|
38,351 |
|
|
|
47,714 |
|
|
|
41,896 |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
882 |
|
|
|
774 |
|
|
|
779 |
|
|
|
684 |
|
Leasehold and other deposits |
|
954 |
|
|
|
838 |
|
|
|
948 |
|
|
|
832 |
|
Intangible assets |
|
132 |
|
|
|
116 |
|
|
|
123 |
|
|
|
108 |
|
Other non-current assets |
|
85 |
|
|
|
74 |
|
|
|
78 |
|
|
|
68 |
|
|
|
Total
assets |
|
45,729 |
|
|
|
40,153 |
|
|
|
49,642 |
|
|
|
43,588 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
2,971 |
|
|
|
2,609 |
|
|
|
8,269 |
|
|
|
7,261 |
|
|
Deferred revenue |
|
4,997 |
|
|
|
4,388 |
|
|
|
6,950 |
|
|
|
6,103 |
|
|
Other current liabilities |
|
836 |
|
|
|
734 |
|
|
|
517 |
|
|
|
454 |
|
|
|
Total
current liabilities |
|
8,804 |
|
|
|
7,731 |
|
|
|
15,736 |
|
|
|
13,818 |
|
Long-term deferred revenue |
|
6,600 |
|
|
|
5,795 |
|
|
|
5,221 |
|
|
|
4,584 |
|
Accrued severance benefits |
|
123 |
|
|
|
108 |
|
|
|
121 |
|
|
|
106 |
|
Other non-current liabilities |
|
210 |
|
|
|
185 |
|
|
|
210 |
|
|
|
184 |
|
|
|
Total
liabilities |
|
15,737 |
|
|
|
13,819 |
|
|
|
21,288 |
|
|
|
18,692 |
|
Common shares |
|
3,474 |
|
|
|
3,050 |
|
|
|
3,474 |
|
|
|
3,050 |
|
Additional paid-in capital |
|
75,076 |
|
|
|
65,922 |
|
|
|
75,076 |
|
|
|
65,922 |
|
Accumulated deficit |
|
(48,761 |
) |
|
|
(42,816 |
) |
|
|
(50,462 |
) |
|
|
(44,309 |
) |
Accumulated other comprehensive income |
|
694 |
|
|
|
609 |
|
|
|
776 |
|
|
|
681 |
|
|
|
Total
parent company shareholders' equity |
|
30,483 |
|
|
|
26,765 |
|
|
|
28,864 |
|
|
|
25,344 |
|
Non-controlling interest |
|
(491 |
) |
|
|
(431 |
) |
|
|
(510 |
) |
|
|
(448 |
) |
|
|
Total
equity |
|
29,992 |
|
|
|
26,334 |
|
|
|
28,354 |
|
|
|
24,896 |
|
|
|
Total
liabilities and equity |
|
45,729 |
|
|
|
40,153 |
|
|
|
49,642 |
|
|
|
43,588 |
|
|
* For convenience purposes only, the KRW amounts
are expressed in U.S. dollars at the rate of KRW 1,138.86 to US$
1.00, the noon buying rate in effect on March 31, 2016 as quoted by
the Federal Reserve Bank of New York.
|
GRAVITY Co.,
Ltd. |
Consolidated
Statements of Operations |
|
(In millions of KRW
and thousands of US$ except for share and ADS data) |
|
|
|
|
Three months ended |
|
|
|
31-Dec-15 |
|
31-Mar-15 |
|
31-Mar-16 |
|
|
|
(KRW) |
|
(US$) |
|
(KRW) |
|
(US$) |
|
(KRW) |
|
(US$) |
|
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Online
games-subscription revenue |
|
936 |
|
|
|
822 |
|
|
|
1,698 |
|
|
|
1,491 |
|
|
|
2,137 |
|
|
|
1,876 |
|
|
Online games-royalties
and license fees |
|
2,956 |
|
|
|
2,596 |
|
|
|
2,512 |
|
|
|
2,206 |
|
|
|
3,368 |
|
|
|
2,957 |
|
|
Mobile games and
applications |
|
4,012 |
|
|
|
3,523 |
|
|
|
4,203 |
|
|
|
3,691 |
|
|
|
2,616 |
|
|
|
2,297 |
|
|
Character
merchandising and other revenue |
|
799 |
|
|
|
701 |
|
|
|
656 |
|
|
|
576 |
|
|
|
973 |
|
|
|
854 |
|
|
|
Total net revenue |
|
8,703 |
|
|
|
7,642 |
|
|
|
9,069 |
|
|
|
7,964 |
|
|
|
9,094 |
|
|
|
7,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
8,020 |
|
|
|
7,042 |
|
|
|
7,676 |
|
|
|
6,740 |
|
|
|
6,619 |
|
|
|
5,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
683 |
|
|
|
600 |
|
|
|
1,393 |
|
|
|
1,224 |
|
|
|
2,475 |
|
|
|
2,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
3,075 |
|
|
|
2,700 |
|
|
|
2,494 |
|
|
|
2,190 |
|
|
|
2,688 |
|
|
|
2,360 |
|
|
Research and
development |
|
1,117 |
|
|
|
981 |
|
|
|
1,458 |
|
|
|
1,280 |
|
|
|
343 |
|
|
|
301 |
|
|
Impairment losses on
intangible assets |
|
5,846 |
|
|
|
5,133 |
|
|
|
ㅡ |
|
|
|
ㅡ |
|
|
|
5 |
|
|
|
4 |
|
|
|
Total operating expenses |
|
10,038 |
|
|
|
8,814 |
|
|
|
3,952 |
|
|
|
3,470 |
|
|
|
3,036 |
|
|
|
2,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
(9,355 |
) |
|
|
(8,214 |
) |
|
|
(2,559 |
) |
|
|
(2,246 |
) |
|
|
(561 |
) |
|
|
(493 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
138 |
|
|
|
121 |
|
|
|
202 |
|
|
|
177 |
|
|
|
132 |
|
|
|
116 |
|
|
Interest expense |
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
ㅡ |
|
|
|
ㅡ |
|
|
Foreign currency
income (loss), net |
|
(146 |
) |
|
|
(128 |
) |
|
|
4 |
|
|
|
4 |
|
|
|
(858 |
) |
|
|
(753 |
) |
|
Others, net |
|
624 |
|
|
|
548 |
|
|
|
ㅡ |
|
|
|
ㅡ |
|
|
|
ㅡ |
|
|
|
ㅡ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
and equity loss on
investments |
|
(8,740 |
) |
|
|
(7,674 |
) |
|
|
(2,355 |
) |
|
|
(2,067 |
) |
|
|
(1,287 |
) |
|
|
(1,130 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expenses |
|
375 |
|
|
|
329 |
|
|
|
287 |
|
|
|
252 |
|
|
|
433 |
|
|
|
380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
(9,115 |
) |
|
|
(8,003 |
) |
|
|
(2, 642 |
) |
|
|
(2,319 |
) |
|
|
(1,720 |
) |
|
|
(1,510 |
) |
Net income (loss)
attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest |
|
(2 |
) |
|
|
(2 |
) |
|
|
(14 |
) |
|
|
(12 |
) |
|
|
(19 |
) |
|
|
(17 |
) |
|
Parent company |
|
(9,113 |
) |
|
|
(8,001 |
) |
|
|
(2,628 |
) |
|
|
(2,307 |
) |
|
|
(1,701 |
) |
|
|
(1,493 |
) |
Loss per share |
|
|
|
|
|
|
|
|
|
|
|
- Basic and
diluted |
|
(1,311 |
) |
|
|
(1.15 |
) |
|
|
(378 |
) |
|
|
(0.33 |
) |
|
|
(245 |
) |
|
|
(0.21 |
) |
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 |
|
Loss per ADS(1) |
|
|
|
|
|
|
|
|
|
|
|
- Basic and
diluted |
|
(2,622 |
) |
|
|
(2.30 |
) |
|
|
(756 |
) |
|
|
(0.66 |
) |
|
|
(490 |
) |
|
|
(0.42 |
) |
|
* For convenience, the KRW amounts are expressed
in U.S. dollars at the rate of KRW 1,138.86 to US$1.00, the noon
buying rate in effect on March 31, 2016 as quoted by the Federal
Reserve Bank of New York.
(1) Each ADS represents two common shares.
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