GRAVITY REPORTS SECOND QUARTER OF 2016
RESULTS
Seoul, South Korea – August 24, 2016 – 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, 2016, prepared in accordance with
generally accepted accounting principles in the United States.
FINAICIAL RESULTS FOR THE SECOND QUARTER OF
2016
Revenues for the second quarter ended June 30,
2016 was KRW 9,057 million (US$ 7,848 thousand), representing a
0.4% decrease from KRW 9,094 million for the first quarter ended
March 31, 2016 (“QoQ”) and a 1.7% decrease from KRW 9,217 million
for the second quarter ended June 30, 2015 (“YoY”).
Review of Financial Results
Revenues
Royalty and license fee revenues for the second
quarter of 2016 were KRW 2,738 million (US$ 2,372 thousand),
representing a 18.7% decrease QoQ from KRW 3,368 million and a 1.4%
decrease YoY from KRW 2,777 million. The decrease QoQ was primarily
due to i) decreased revenue from Ragnarok Online in Taiwan
resulting from a service suspension on May 31, 2016, as the Company
terminated a distribution agreement with a local licensee for its
direct service of Ragnarok Online in such market and ii) decreased
revenue from Ragnarok Online in Japan. The decrease YoY was
resulted mainly from decreased revenue from Ragnarok Online II in
Thailand, which was partially offset by increased revenues from
Ragnarok Online in Japan and the strengthening of the Japanese Yen
against the Korean Won.
Mobile game and application revenues were KRW
2,495 million (US$ 2,162 thousand) for the second quarter of 2016,
representing a 4.6% decrease QoQ from KRW 2,616 million and a 32.6%
decrease YoY from KRW 3,703 million. The decrease QoQ and YoY was
resulted primarily from decreased revenues from mobile applications
for a 3rd party and Ragnarok: Path of Heroes.
Subscription revenues for the second quarter of
2016 were KRW 2,323 million (US$ 2,013 thousand), representing a
8.7% increase QoQ from KRW 2,137 million and a 20.9% increase YoY
from KRW 1,922 million. The increase QoQ and YoY was mainly
attributable to revenues from Ragnarok Online in Taiwan. The
Company has commenced its direct service for Ragnarok Online in
such market since June 15, 2016.
Character merchandising and other revenues were
KRW 1,501 million (US$ 1,301 thousand) for the second quarter of
2016, representing a 54.3% increase QoQ from KRW 973 million and a
84.2% increase YoY from KRW 815 million. The increase QoQ and YoY
was mainly due to recognition of deferred revenues occurred from a
game development and publishing agreement with a third party, which
was executed on March 25, 2016.
Cost of Revenue and Operating Expenses
Cost of revenue was KRW 6,846 million (US$ 5,932
thousand) for the second quarter of 2016, representing a 3.4%
increase QoQ from KRW 6,619 million but a 7.5% decrease YoY from
KRW 7,401 million. The increase QoQ was mostly from an increase in
commission paid. The decrease YoY was mostly from decreased
amortization of capitalized research and development cost of
Ragnarok Online II, which had been amortized and fully impaired in
December 2015.
Operating expenses were KRW 3,717 million (US$
3,221 thousand) for the second quarter of 2016, representing a
22.4% increase QoQ from KRW 3,036 million but a 17.0% decrease YoY
from KRW 4,481 million. The increase QoQ was mainly due to an
increase in advertising expenses in Taiwan and commission paid. The
decrease YoY was mostly resulted from a decrease in research and
development expenses.
Loss before income tax expenses and others was
KRW 1,212 million (US$ 1,050 thousand) for the second quarter of
2016 compared with loss before income tax expenses and others of
KRW 1,287 million for the first quarter of 2016 and loss before
income tax expenses and others of KRW 2,434 million for the second
quarter of 2015.
As a result of the foregoing factors, Gravity
recorded a net loss attributable to parent company of KRW 1,605
million (US$ 1,390 thousand) for the second quarter of 2016
compared with a net loss attributable to parent company of KRW
1,701 million for the first quarter of 2016 and a net loss
attributable to parent company of KRW 2,763 million for the second
quarter of 2015.
The balance of cash and cash equivalents and
short-term financial instruments was KRW 37,445 million (US$ 32,443
thousand) as of June 30, 2016.
Note: For convenience purposes only, the KRW
amounts have been expressed in U.S. dollars at the exchange rate of
KRW 1,154.15 to US$ 1.00, the noon buying rate in effect on June
30, 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 80 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 in thousands of US$)
|
|
|
As of |
|
|
|
31-Dec-15 |
|
30-Jun-16 |
|
|
|
KRW |
|
US$ |
|
KRW |
|
US$ |
Assets |
(audited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
24,909 |
|
|
|
21,582 |
|
|
|
13,945 |
|
|
|
12,082 |
|
|
Short-term financial
instruments |
|
11,500 |
|
|
|
9,964 |
|
|
|
23,500 |
|
|
|
20,361 |
|
|
Accounts receivable,
net |
|
5,289 |
|
|
|
4,583 |
|
|
|
4,631 |
|
|
|
4,012 |
|
|
Other current
assets |
|
1,978 |
|
|
|
1,714 |
|
|
|
2,706 |
|
|
|
2,345 |
|
|
|
Total current assets |
|
43,676 |
|
|
|
37,843 |
|
|
|
44,782 |
|
|
|
38,800 |
|
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net |
|
882 |
|
|
|
764 |
|
|
|
673 |
|
|
|
583 |
|
Leasehold and other
deposits |
|
954 |
|
|
|
827 |
|
|
|
953 |
|
|
|
826 |
|
Intangible assets |
|
132 |
|
|
|
114 |
|
|
|
112 |
|
|
|
97 |
|
Other non-current
assets |
|
85 |
|
|
|
74 |
|
|
|
366 |
|
|
|
317 |
|
|
|
Total assets |
|
45,729 |
|
|
|
39,622 |
|
|
|
46,886 |
|
|
|
40,623 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Equity |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
2,971 |
|
|
|
2,574 |
|
|
|
7,072 |
|
|
|
6,127 |
|
|
Deferred revenue |
|
4,997 |
|
|
|
4,330 |
|
|
|
7,493 |
|
|
|
6,492 |
|
|
Other current
liabilities |
|
836 |
|
|
|
724 |
|
|
|
590 |
|
|
|
511 |
|
|
|
Total current liabilities |
|
8,804 |
|
|
|
7,628 |
|
|
|
15,155 |
|
|
|
13,130 |
|
Long-term deferred
revenue |
|
6,600 |
|
|
|
5,718 |
|
|
|
4,654 |
|
|
|
4,032 |
|
Accrued severance
benefits |
|
123 |
|
|
|
107 |
|
|
|
130 |
|
|
|
113 |
|
Other non-current
liabilities |
|
210 |
|
|
|
182 |
|
|
|
209 |
|
|
|
181 |
|
|
|
Total liabilities |
|
15,737 |
|
|
|
13,635 |
|
|
|
20,148 |
|
|
|
17,456 |
|
Common shares |
|
3,474 |
|
|
|
3,010 |
|
|
|
3,474 |
|
|
|
3,010 |
|
Additional paid-in
capital |
|
75,076 |
|
|
|
65,049 |
|
|
|
75,076 |
|
|
|
65,049 |
|
Accumulated
deficit |
|
(48,761 |
) |
|
|
(42,248 |
) |
|
|
(52,067 |
) |
|
|
(45,113 |
) |
Accumulated other
comprehensive income |
|
694 |
|
|
|
601 |
|
|
|
782 |
|
|
|
678 |
|
|
|
Total parent company shareholders’
equity |
|
30,483 |
|
|
|
26,412 |
|
|
|
27,265 |
|
|
|
23,624 |
|
Non-controlling
interest |
|
(491 |
) |
|
|
(425 |
) |
|
|
(527 |
) |
|
|
(457 |
) |
|
|
Total equity |
|
29,992 |
|
|
|
25,987 |
|
|
|
26,738 |
|
|
|
23,167 |
|
|
|
Total liabilities and equity |
|
45,729 |
|
|
|
39,622 |
|
|
|
46,886 |
|
|
|
40,623 |
|
* For convenience, the KRW amounts are expressed
in U.S. dollars at the rate of KRW 1,154.15 to US$1.00, the noon
buying rate in effect on June 30, 2016 as quoted by the Federal
Reserve Bank of New York.
GRAVITY CO.,
LTD.Consolidated Statements of
Operations
(In millions of KRW and in thousands of US$,
except for shares and ADS data)
|
|
|
Three months ended |
|
Six months ended |
|
|
|
31-Mar-16 |
|
30-Jun-15 |
|
30-Jun-16 |
|
30-Jun-15 |
|
30-Jun-16 |
|
|
|
(KRW) |
|
(KRW) |
|
(KRW) |
|
(US$) |
|
(KRW) |
|
(KRW) |
|
(US$) |
|
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games-subscription revenue |
|
2,137 |
|
|
|
1,922 |
|
|
|
2,323 |
|
|
|
2,013 |
|
|
|
3,620 |
|
|
|
4,460 |
|
|
|
3,864 |
|
|
Online games-royalties and license fees |
|
3,368 |
|
|
|
2,777 |
|
|
|
2,738 |
|
|
|
2,372 |
|
|
|
5,289 |
|
|
|
6,106 |
|
|
|
5,290 |
|
|
Mobile games and applications |
|
2,616 |
|
|
|
3,703 |
|
|
|
2,495 |
|
|
|
2,162 |
|
|
|
7,906 |
|
|
|
5,111 |
|
|
|
4,428 |
|
|
Character merchandising and other revenue |
|
973 |
|
|
|
815 |
|
|
|
1,501 |
|
|
|
1,301 |
|
|
|
1,471 |
|
|
|
2,474 |
|
|
|
2,144 |
|
|
|
Total
net revenue |
|
9,094 |
|
|
|
9,217 |
|
|
|
9,057 |
|
|
|
7,848 |
|
|
|
18,286 |
|
|
|
18,151 |
|
|
|
15,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
6,619 |
|
|
|
7,401 |
|
|
|
6,846 |
|
|
|
5,932 |
|
|
|
15,077 |
|
|
|
13,465 |
|
|
|
11,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
2,475 |
|
|
|
1,816 |
|
|
|
2,211 |
|
|
|
1,916 |
|
|
|
3,209 |
|
|
|
4,686 |
|
|
|
4,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
2,688 |
|
|
|
3,014 |
|
|
|
3,205 |
|
|
|
2,777 |
|
|
|
5,508 |
|
|
|
5,893 |
|
|
|
5,106 |
|
|
Research and development |
|
343 |
|
|
|
1,465 |
|
|
|
512 |
|
|
|
444 |
|
|
|
2,923 |
|
|
|
855 |
|
|
|
741 |
|
|
Impairment losses on intangible assets |
|
5 |
|
|
|
2 |
|
|
ㅡ |
|
ㅡ |
|
|
2 |
|
|
|
5 |
|
|
|
4 |
|
|
|
Total
operating expenses |
|
3,036 |
|
|
|
4,481 |
|
|
|
3,717 |
|
|
|
3,221 |
|
|
|
8,433 |
|
|
|
6,753 |
|
|
|
5,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
(561 |
) |
|
|
(2,665 |
) |
|
|
(1,506 |
) |
|
|
(1,305 |
) |
|
|
(5,224 |
) |
|
|
(2,067 |
) |
|
|
(1,792 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
132 |
|
|
|
181 |
|
|
|
131 |
|
|
|
114 |
|
|
|
383 |
|
|
|
263 |
|
|
|
228 |
|
|
Interest expense |
ㅡ |
|
|
(1 |
) |
|
ㅡ |
|
ㅡ |
|
|
(3 |
) |
|
ㅡ |
|
ㅡ |
|
Foreign currency income (loss), net |
|
(858 |
) |
|
|
51 |
|
|
|
163 |
|
|
|
141 |
|
|
|
55 |
|
|
|
(695 |
) |
|
|
(602 |
) |
|
Others, net |
ㅡ |
|
ㅡ |
|
ㅡ |
|
ㅡ |
|
ㅡ |
|
ㅡ |
|
ㅡ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
expenses and equity loss on investments |
|
(1,287 |
) |
|
|
(2,434 |
) |
|
|
(1,212 |
) |
|
|
(1,050 |
) |
|
|
(4,789 |
) |
|
|
(2,499 |
) |
|
|
(2,166 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses |
|
433 |
|
|
|
351 |
|
|
|
410 |
|
|
|
355 |
|
|
|
638 |
|
|
|
843 |
|
|
|
730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
(1,720 |
) |
|
|
(2,785 |
) |
|
|
(1,622 |
) |
|
|
(1,405 |
) |
|
|
(5,427 |
) |
|
|
(3,342 |
) |
|
|
(2,896 |
) |
Net income (loss)
attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest |
|
(19 |
) |
|
|
(22 |
) |
|
|
(17 |
) |
|
|
(15 |
) |
|
|
(36 |
) |
|
|
(36 |
) |
|
|
(31 |
) |
|
Parent company |
|
(1,701 |
) |
|
|
(2,763 |
) |
|
|
(1,605 |
) |
|
|
(1,390 |
) |
|
|
(5,391 |
) |
|
|
(3,306 |
) |
|
|
(2,865 |
) |
Loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic and diluted |
|
(245 |
) |
|
|
(398 |
) |
|
|
(231 |
) |
|
|
(0.20 |
) |
|
|
(776 |
) |
|
|
(476 |
) |
|
|
(0.41 |
) |
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 |
|
Loss per ADS(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Basic and diluted |
|
(490 |
) |
|
|
(795 |
) |
|
|
(462 |
) |
|
|
(0.40 |
) |
|
|
(1,552 |
) |
|
|
(952 |
) |
|
|
(0.82 |
) |
* For convenience, the KRW amounts are expressed
in U.S. dollars at the rate of KRW 1,154.15 to US$1.00, the noon
buying rate in effect on June 30, 2016 as quoted by the Federal
Reserve Bank of New York.
(1) Each ADS represents two common shares.
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