GRAVITY REPORTS THIRD QUARTER OF 2016
RESULTS
Seoul, South Korea – October 28, 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
third quarter ended September 30, 2016, prepared in accordance with
generally accepted accounting principles in the United States.
FINAICIAL RESULTS FOR THE THIRD QUARTER OF
2016
Revenues
Revenues for the third quarter ended September
30, 2016 was KRW 15,746 million (US$ 13,143 thousand), representing
a 73.9% increase from KRW 9,057 million for the second quarter
ended June 30, 2016 (“QoQ”) and a 81.6% increase from KRW 8,671
million for the third quarter ended September 30, 2015 (“YoY”).
Subscription revenues for the third quarter of
2016 were KRW 8,497 million (US$ 7,093 thousand), representing a
265.8% increase QoQ from KRW 2,323 million and a 332.4% increase
YoY from KRW 1,965 million. The increase QoQ and YoY was mainly
attributable to increased revenues from Ragnarok Online and
Xianjing RO Chuanshuo WEB in Taiwan. The Company commenced its
direct game service of Ragnarok Online on June 15, 2016 and
launched Xianjing RO Chuanshuo WEB on July 13, 2016 in such
area.
Royalty and license fee revenues for the third
quarter of 2016 were KRW 3,736 million (US$ 3,119 thousand),
representing a 36.4% increase QoQ from KRW 2,738 million and a
35.1% increase YoY from KRW 2,765 million. The increase QoQ was
primarily due to increased revenue from Ragnarok Online in
Thailand, which was partially offset by decreased revenue from
Ragnarok Online in Japan. The increase YoY was resulted
mainly from increased revenues from Ragnarok Online in Thailand and
Japan. Ragnarok Online was relaunched in Thailand by a local
licensee on July 13, 2016.
Mobile game and application revenues were KRW
2,170 million (US$ 1,811 thousand) for the third quarter of 2016,
representing a 13.0% decrease QoQ from KRW 2,495 million and a
31.3% decrease YoY from KRW 3,160 million. The decrease QoQ was
primarily from decreased revenue from Ragnarok: Path of Heroes and
the decrease YoY was resulted primarily from decreased revenues
from Ragnarok: Path of Heroes and Battle Ship.
Character merchandising and other revenues were
KRW 1,343 million (US$ 1,120 thousand) for the third quarter of
2016, representing a 10.5% decrease QoQ from KRW 1,501 million and
a 72.0% increase YoY from KRW 781 million. The decrease QoQ was
primarily due to decreased revenues from web site development and
operation service provided for third parties and the increase 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
Cost of revenue was KRW 6,734 million (US$ 5,621
thousand) for the third quarter of 2016, representing a 1.6%
decrease QoQ from KRW 6,846 million and a 6.3% decrease YoY from
KRW 7,185 million. The decrease QoQ was mostly attributable to the
decreased salaries, which was partially offset by increased
commission paid for game service in Taiwan. 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. The decrease YoY, however, was
partially offset by increased commission paid for game service in
Taiwan.
Operating Expenses
Operating expenses were KRW 5,466 million (US$
4,562 thousand) for the third quarter of 2016, representing a 47.1%
increase QoQ from KRW 3,717 million and a 32.2% increase YoY from
KRW 4,135 million. The increase QoQ and YoY was mainly due to an
increase in commission paid and advertising expenses in Taiwan. The
increase YoY, however, was partially offset by decreased research
and development expenses.
Income before income tax expenses and others
Income before income tax expenses and others was
KRW 3,524 million (US$ 2,942 thousand) for the third quarter of
2016 compared with loss before income tax expenses and others of
KRW 1,212 million for the second quarter of 2016 and loss before
income tax expenses and others of KRW 2,148 million for the third
quarter of 2015.
Net Income
As a result of the foregoing factors, Gravity
recorded a net income attributable to parent company of KRW 3,087
million (US$ 2,577 thousand) for the third quarter of 2016 compared
with a net loss attributable to parent company of KRW 1,605 million
for the second quarter of 2016 and a net loss attributable to
parent company of KRW 2,460 million for the third quarter of
2015.
Liquidity
The balance of cash and cash equivalents and
short-term financial instruments was KRW 35,792 million (US$ 29,877
thousand) as of September 30, 2016.
Note: For convenience purposes only, the KRW
amounts are expressed in U.S. dollars at the rate of KRW 1,197.98
to US$ 1.00, the noon buying rate in effect on September 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$)
|
|
|
As of |
|
|
|
31-Dec-15 |
|
30-Sep-16 |
|
|
|
KRW |
|
US$ |
|
KRW |
|
US$ |
Assets |
(audited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
24,909 |
|
|
|
20,793 |
|
|
|
9,292 |
|
|
|
7,756 |
|
|
Short-term financial instruments |
|
11,500 |
|
|
|
9,599 |
|
|
|
26,500 |
|
|
|
22,121 |
|
|
Accounts receivable, net |
|
5,289 |
|
|
|
4,415 |
|
|
|
11,846 |
|
|
|
9,888 |
|
|
Other current assets |
|
1,978 |
|
|
|
1,651 |
|
|
|
2,642 |
|
|
|
2,205 |
|
|
|
Total
current assets |
|
43,676 |
|
|
|
36,458 |
|
|
|
50,280 |
|
|
|
41,970 |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
882 |
|
|
|
736 |
|
|
|
587 |
|
|
|
490 |
|
Leasehold and other deposits |
|
954 |
|
|
|
796 |
|
|
|
954 |
|
|
|
796 |
|
Intangible assets |
|
132 |
|
|
|
110 |
|
|
|
101 |
|
|
|
84 |
|
Other non-current assets |
|
85 |
|
|
|
71 |
|
|
|
338 |
|
|
|
284 |
|
|
|
Total
assets |
|
45,729 |
|
|
|
38,171 |
|
|
|
52,260 |
|
|
|
43,624 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
2,971 |
|
|
|
2,480 |
|
|
|
8,468 |
|
|
|
7,069 |
|
|
Deferred revenue |
|
4,997 |
|
|
|
4,171 |
|
|
|
8,884 |
|
|
|
7,415 |
|
|
Other current liabilities |
|
836 |
|
|
|
698 |
|
|
|
631 |
|
|
|
527 |
|
|
|
Total
current liabilities |
|
8,804 |
|
|
|
7,349 |
|
|
|
17,983 |
|
|
|
15,011 |
|
Long-term deferred revenue |
|
6,600 |
|
|
|
5,509 |
|
|
|
3,914 |
|
|
|
3,267 |
|
Accrued severance benefits |
|
123 |
|
|
|
103 |
|
|
|
111 |
|
|
|
93 |
|
Other non-current liabilities |
|
210 |
|
|
|
175 |
|
|
|
210 |
|
|
|
175 |
|
|
|
Total
liabilities |
|
15,737 |
|
|
|
13,136 |
|
|
|
22,218 |
|
|
|
18,546 |
|
Common shares |
|
3,474 |
|
|
|
2,900 |
|
|
|
3,474 |
|
|
|
2,900 |
|
Additional paid-in capital |
|
75,076 |
|
|
|
62,669 |
|
|
|
75,076 |
|
|
|
62,669 |
|
Accumulated deficit |
|
(48,761 |
) |
|
|
(40,703 |
) |
|
|
(48,980 |
) |
|
|
(40,885 |
) |
Accumulated other comprehensive income |
|
694 |
|
|
|
579 |
|
|
|
1,027 |
|
|
|
857 |
|
|
|
Total
parent company shareholders' equity |
|
30,483 |
|
|
|
25,445 |
|
|
|
30,597 |
|
|
|
25,541 |
|
Non-controlling interest |
|
(491 |
) |
|
|
(410 |
) |
|
|
(555 |
) |
|
|
(463 |
) |
|
|
Total
equity |
|
29,992 |
|
|
|
25,035 |
|
|
|
30,042 |
|
|
|
25,078 |
|
|
|
Total
liabilities and equity |
|
45,729 |
|
|
|
38,171 |
|
|
|
52,260 |
|
|
|
43,624 |
|
* For convenience purposes only, the KRW amounts
are expressed in U.S. dollars at the rate of KRW 1,197.98 to US$
1.00, the noon buying rate in effect on September 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$,
except for share and ADS data)
|
|
|
Three months ended |
|
Nine months ended |
|
|
|
30-Jun-16 |
|
30-Sep-15 |
|
30-Sep-16 |
|
30-Sep-15 |
|
30-Sep-16 |
|
|
|
(KRW) |
|
(KRW) |
|
(KRW) |
|
(US$) |
|
(KRW) |
|
(KRW) |
|
(US$) |
|
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games-subscription revenue |
|
2,323 |
|
|
|
1,965 |
|
|
|
8,497 |
|
|
|
7,093 |
|
|
|
5,585 |
|
|
|
12,957 |
|
|
|
10,816 |
|
|
Online games-royalties and license fees |
|
2,738 |
|
|
|
2,765 |
|
|
|
3,736 |
|
|
|
3,119 |
|
|
|
8,054 |
|
|
|
9,842 |
|
|
|
8,215 |
|
|
Mobile games and applications |
|
2,495 |
|
|
|
3,160 |
|
|
|
2,170 |
|
|
|
1,811 |
|
|
|
11,066 |
|
|
|
7,281 |
|
|
|
6,078 |
|
|
Character merchandising and other revenue |
|
1,501 |
|
|
|
781 |
|
|
|
1,343 |
|
|
|
1,120 |
|
|
|
2,252 |
|
|
|
3,817 |
|
|
|
3,185 |
|
|
|
Total net revenue |
|
9,057 |
|
|
|
8,671 |
|
|
|
15,746 |
|
|
|
13,143 |
|
|
|
26,957 |
|
|
|
33,897 |
|
|
|
28,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
6,846 |
|
|
|
7,185 |
|
|
|
6,734 |
|
|
|
5,621 |
|
|
|
22,262 |
|
|
|
20,199 |
|
|
|
16,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
2,211 |
|
|
|
1,486 |
|
|
|
9,012 |
|
|
|
7,522 |
|
|
|
4,695 |
|
|
|
13,698 |
|
|
|
11,433 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
3,205 |
|
|
|
2,898 |
|
|
|
4,982 |
|
|
|
4,158 |
|
|
|
8,406 |
|
|
|
10,875 |
|
|
|
9,077 |
|
|
Research and development |
|
512 |
|
|
|
1,237 |
|
|
|
484 |
|
|
|
404 |
|
|
|
4,160 |
|
|
|
1,339 |
|
|
|
1,118 |
|
|
Impairment loss on intangible assets |
ㅡ |
|
ㅡ |
|
ㅡ |
|
ㅡ |
|
|
2 |
|
|
|
5 |
|
|
|
4 |
|
|
|
Total operating expenses |
|
3,717 |
|
|
|
4,135 |
|
|
|
5,466 |
|
|
|
4,562 |
|
|
|
12,568 |
|
|
|
12,219 |
|
|
|
10,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income(loss) |
|
(1,506 |
) |
|
|
(2,649 |
) |
|
|
3,546 |
|
|
|
2,960 |
|
|
|
(7,873 |
) |
|
|
1,479 |
|
|
|
1,234 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
131 |
|
|
|
154 |
|
|
|
128 |
|
|
|
107 |
|
|
|
537 |
|
|
|
391 |
|
|
|
326 |
|
|
Interest expense |
ㅡ |
|
ㅡ |
|
ㅡ |
|
ㅡ |
|
|
(3 |
) |
|
ㅡ |
|
ㅡ |
|
Foreign currency income (loss), net |
|
163 |
|
|
|
347 |
|
|
|
(153 |
) |
|
|
(128 |
) |
|
|
402 |
|
|
|
(848 |
) |
|
|
(707 |
) |
|
Others, net |
ㅡ |
|
ㅡ |
|
|
3 |
|
|
|
3 |
|
|
ㅡ |
|
|
3 |
|
|
|
3 |
|
Income(loss) before income tax expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
and equity income(loss) on investments |
|
(1,212 |
) |
|
|
(2,148 |
) |
|
|
3,524 |
|
|
|
2,942 |
|
|
|
(6,937 |
) |
|
|
1,025 |
|
|
|
856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses |
|
410 |
|
|
|
338 |
|
|
|
465 |
|
|
|
388 |
|
|
|
976 |
|
|
|
1,308 |
|
|
|
1,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income(loss) |
|
(1,622 |
) |
|
|
(2,486 |
) |
|
|
3,059 |
|
|
|
2,554 |
|
|
|
(7,913 |
) |
|
|
(283 |
) |
|
|
(236 |
) |
Net income(loss) attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
(17 |
) |
|
|
(26 |
) |
|
|
(28 |
) |
|
|
(23 |
) |
|
|
(62 |
) |
|
|
(64 |
) |
|
|
(54 |
) |
|
|
Parent company |
|
(1,605 |
) |
|
|
(2,460 |
) |
|
|
3,087 |
|
|
|
2,577 |
|
|
|
(7,851 |
) |
|
|
(219 |
) |
|
|
(182 |
) |
Income(loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
|
(231 |
) |
|
|
(354 |
) |
|
|
444 |
|
|
|
0.37 |
|
|
|
(1,130 |
) |
|
|
(32 |
) |
|
|
(0.03 |
) |
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 |
|
Income(loss) per ADS(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
|
(462 |
) |
|
|
(708 |
) |
|
|
888 |
|
|
|
0.74 |
|
|
|
(2,260 |
) |
|
|
(64 |
) |
|
|
(0.06 |
) |
* For convenience purposes only, the KRW amounts
are expressed in U.S. dollars at the rate of KRW 1,197.98 to US$
1.00, the noon buying rate in effect on September 30, 2016 as
quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents two common
shares.
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