– 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, 2018, prepared in accordance with
international Financial Reporting Standards as issued by the
International Accounting Standards Board.
THIRD QUARTER 2018 HIGHLIGHTS
- Total revenues were KRW 44,201 million (US$ 39,829 thousand),
representing a 29.9% decrease from the second quarter ended June
30, 2018 (“QoQ”) and an 86.3% increase from the third quarter ended
September 30, 2017 (“YoY”).
- Operating profit was KRW 7,084 million (US$ 6,383 thousand),
representing a 14.9% decrease QoQ and a 107% increase YoY.
- Profit before income tax expenses was KRW 7,329 million (US$
6,604 thousand), representing a 15.2% decrease QoQ and a 102.4%
increase YoY.
- Net profit attributable to parent company was KRW 6,312 million
(US$ 5,687 thousand), representing a 4.6% decrease QoQ and a 134.1%
increase YoY.
REVIEW OF THIRD QUARTER 2018 FINANCIAL
RESULTS
Revenues
Subscription revenues for the third quarter of
2018 were KRW 6,005 million (US$ 5,411 thousand), representing a
1.8% decrease QoQ from KRW 6,116 million and a 34.2% decrease YoY
from KRW 9,126 million. The decrease QoQ was mainly attributable to
decreased revenues from Ragnarok Online and Ragnarok Prequel in
Taiwan and Ragnarok Online in the United States and Canada, which
was partially offset by increased revenue from Ragnarok Online in
Korea. The decrease YoY was largely due to decreased revenues from
Ragnarok Online and Ragnarok Prequel in Taiwan, which partially
offset by increased revenue from Ragnarok Online in Korea.
Royalty and license fee revenues for the third
quarter of 2018 were KRW 2,961 million (US$ 2,668 thousand),
representing a 7.7% decrease QoQ from KRW 3,209 million and a 15.2%
decrease YoY from KRW 3,492 million. The decrease QoQ was primarily
due to decreased revenue of Ragnarok Online in Japan. This decrease
was partially offset by increased revenue from Ragnarok Online in
Russia, which was re-launched on August 15, 2018. The decrease YoY
resulted mainly from decreased revenues from Ragnarok Online in the
Philippines and Japan, which was partially offset by increased
revenue from Ragnarok Online in Russia.
Mobile game and application revenues were KRW
33,387 million (US$ 30,085 thousand) for the third quarter of 2018,
representing a 35.5% decrease QoQ from KRW 51,789 million and a
243.1% increase YoY from KRW 9,730 million. The QoQ decrease was
mainly due to decreased revenues from Ragnarok M in Korea and
Taiwan and RO: Idle Poring in global markets except for China and
Japan. The increase YoY was primarily due to revenue contribution
of Ragnarok M in Korea and Taiwan, which partially offset by
decreased revenues from Ragnarok R in Taiwan, Korea, and
Thailand.
Character merchandising and other revenues were
KRW 1,848 million (US$ 1,665 thousand) for the third quarter of
2018, representing 3.3% decrease from KRW 1,912 million and a 34.4%
increase YoY from KRW 1,375 million.
Cost of Revenue
Cost of revenue was KRW 29,806 million (US$
26,858 thousand) for the third quarter of 2018, representing a
30.9% decrease QoQ from KRW 43,150 million and a 114.1% increase
YoY from KRW 13,923 million. The decrease QoQ was mainly due to
decreased commission paid for mobile game services related to
Ragnarok M in Taiwan and Korea and outsourcing fees. The increase
YoY was mostly from increased commission paid for mobile game
services related to Ragnarok M in Taiwan and Korea and
salaries.
Operating Expenses
Operating expenses were KRW 7,311 million (US$
6,588 thousand) for the third quarter of 2018, representing a 36.7%
decrease QoQ from KRW 11,553 million and a 14.6% increase YoY from
KRW 6,378 million. The decrease QoQ was mainly attributable to
decreased advertising expenses for marketing for Ragnarok M in
Korea. The increase YoY was mostly increased research and
development expenses related to mobile games and salaries.
Profit before income tax expenses
Profit before income tax expenses was KRW 7,329
million (US$ 6,604 thousand) for the third quarter of 2018 compared
with profit before income tax expense of KRW 8,642 million for the
second quarter of 2018 and profit before income tax expenses of KRW
3,621 million for the third quarter of 2017.
Net Profit
As a result of the foregoing factors, Gravity
recorded a net profit attributable to parent company of KRW 6,312
million (US$ 5,687 thousand) for the third quarter of 2018 compared
with net profit attributable to parent company of KRW 6,615 million
for the second quarter of 2018 and a net profit attributable to
parent company of KRW 2,696 million for the third quarter of
2017.
Liquidity
The balance of cash and cash equivalents and
short-term financial instruments was KRW 65,779 million (US$ 59,273
thousand) as of September 30, 2018.
Note: For convenience purposes only, the KRW
amounts have been expressed in U.S. dollars at the exchange rate of
KRW 1,109.76 to US$ 1.00, the noon buying rate in effect on
September 28, 2018 as quoted by the Federal Reserve Bank of New
York.
GRAVITY BUSINESS UPDATE
Ragnarok Online
IP-based Games
- Ragnarok M, an MMORPG mobile game
Gravity launched Ragnarok M in Southeast Asia
(“SEA”) on October 31, 2018. Pre-registration of this Southeast
Asia version began on September 19, hit over 2,500,000 signups via
Official website/Google Play/Apple App store. The SEA version is
available in five languages including English, Simplified Chinese,
Thai, Indonesian and Vietnamese. The launch areas are 11 countries
including Thailand, Indonesia, the Philippines, Singapore, Malaysia
and Vietnam. Gravity plans to start pre-registration Ragnarok M in
North and South America and Oceania during 2018 and launch in the
first quarter of 2019. Also, Gravity is preparing for the service
in Japan.
- Ragnarok R, a card RPG mobile game
Ragnarok R locally named as Ragnarok Rush was
launched in Indonesia on September 12, 2018 by the local publisher,
Gravindo. Based on revenues, such game ranked the third in Google
Play Store after launching, at its peak.
- Ragnarok Prequel, a web browser-based MMORPG game
Ragnarok Prequel 2, the sequel Ragnarok Prequel
with 3D visual is scheduled to be launched in Taiwan in the first
half of 2019.
- Other Ragnarok Online IP-based games
A 3D MO Action RPG mobile game, Spear of Odin,
is expected to be launched in Taiwan in the first half of 2019.
Investor Presentation
Gravity issued an investor presentation. The
presentation contains the Company’s recent business updates,
results of the third quarter in 2018 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 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, 2017 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. Sang Eun Sung IR Manager 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$)
|
|
|
As of |
|
|
|
31-Dec-17 |
|
30-Sep-18 |
|
|
|
KRW |
|
US$ |
|
KRW |
|
US$ |
Assets |
(audited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
39,095 |
|
|
35,228 |
|
|
42,279 |
|
|
38,097 |
|
|
Short-term financial
instruments |
22,500 |
|
|
20,275 |
|
|
23,500 |
|
|
21,176 |
|
|
Accounts receivable, net |
42,168 |
|
|
37,997 |
|
|
20,751 |
|
|
18,699 |
|
|
Other receivables, net |
698 |
|
|
629 |
|
|
128 |
|
|
116 |
|
|
Prepaid expenses |
3,027 |
|
|
2,728 |
|
|
2,251 |
|
|
2,028 |
|
|
Other current assets |
1,383 |
|
|
1,246 |
|
|
2,047 |
|
|
1,845 |
|
|
|
Total current assets |
108,871 |
|
|
98,103 |
|
|
90,956 |
|
|
81,961 |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
946 |
|
|
852 |
|
|
1,615 |
|
|
1,455 |
|
Intangible assets |
1,036 |
|
|
934 |
|
|
526 |
|
|
474 |
|
Deferred tax assets |
3,036 |
|
|
2,736 |
|
|
3,036 |
|
|
2,736 |
|
Other non-current financial
assets |
1,394 |
|
|
1,256 |
|
|
1,492 |
|
|
1,344 |
|
Other non-current assets |
600 |
|
|
541 |
|
|
1,131 |
|
|
1,019 |
|
|
|
Total assets |
115,883 |
|
|
104,422 |
|
|
98,756 |
|
|
88,989 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
44,410 |
|
|
40,018 |
|
|
18,720 |
|
|
16,869 |
|
|
Deferred revenue |
16,100 |
|
|
14,508 |
|
|
12,361 |
|
|
11,139 |
|
|
Withholdings |
1,439 |
|
|
1,297 |
|
|
1,307 |
|
|
1,178 |
|
|
Accrued expense |
1,037 |
|
|
934 |
|
|
930 |
|
|
838 |
|
|
Income tax payable |
1,628 |
|
|
1,467 |
|
|
97 |
|
|
87 |
|
|
Other current liabilities |
130 |
|
|
117 |
|
|
117 |
|
|
105 |
|
|
|
Total current liabilities |
64,744 |
|
|
58,341 |
|
|
33,532 |
|
|
30,216 |
|
Long-term deferred revenue |
6,581 |
|
|
5,930 |
|
|
4,393 |
|
|
3,959 |
|
Other non-current
liabilities |
560 |
|
|
505 |
|
|
493 |
|
|
444 |
|
|
|
Total liabilities |
71,885 |
|
|
64,776 |
|
|
38,418 |
|
|
34,619 |
|
Share capital |
3,474 |
|
|
3,130 |
|
|
3,474 |
|
|
3,130 |
|
Capital surplus |
27,164 |
|
|
24,477 |
|
|
27,140 |
|
|
24,456 |
|
Other components of equity |
(40 |
) |
|
(36 |
) |
|
(118 |
) |
|
(106 |
) |
Retained earnings (Accumulated
deficit) |
13,962 |
|
|
12,581 |
|
|
30,438 |
|
|
27,427 |
|
|
|
Equity attributable to owners of the Parent
Company |
44,560 |
|
|
40,152 |
|
|
60,934 |
|
|
54,907 |
|
|
|
Non-controlling interest |
(562 |
) |
|
(506 |
) |
|
(596 |
) |
|
(537 |
) |
|
|
Total equity |
43,998 |
|
|
39,646 |
|
|
60,338 |
|
|
54,370 |
|
|
|
Total liabilities and equity |
115,883 |
|
|
104,422 |
|
|
98,756 |
|
|
88,989 |
|
* For convenience purposes only, the KRW amounts
are expressed in U.S. dollars at the rate of KRW 1,109.76 to US$
1.00, the noon buying rate in effect on September 28, 2018 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-18 |
|
30-Sep-17 |
|
30-Sep-18 |
|
30-Sep-17 |
|
30-Sep-18 |
|
|
|
(KRW) |
|
(KRW) |
|
(KRW) |
|
(US$) |
|
(KRW) |
|
(KRW) |
|
(US$) |
|
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games-subscription
revenue |
6,116 |
|
|
9,126 |
|
|
6,005 |
|
|
5,411 |
|
|
28,766 |
|
|
21,017 |
|
|
18,938 |
|
|
Online games-royalties and
license fees |
3,209 |
|
|
3,492 |
|
|
2,961 |
|
|
2,668 |
|
|
11,513 |
|
|
10,788 |
|
|
9,721 |
|
|
Mobile games and
applications |
51,789 |
|
|
9,730 |
|
|
33,387 |
|
|
30,085 |
|
|
30,033 |
|
|
136,573 |
|
|
123,065 |
|
|
Character merchandising and other
revenue |
1,912 |
|
|
1,375 |
|
|
1,848 |
|
|
1,665 |
|
|
3,791 |
|
|
5,160 |
|
|
4,650 |
|
|
|
Total net revenue |
63,026 |
|
|
23,723 |
|
|
44,201 |
|
|
39,829 |
|
|
74,103 |
|
|
173,538 |
|
|
156,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
43,150 |
|
|
13,923 |
|
|
29,806 |
|
|
26,858 |
|
|
42,714 |
|
|
118,740 |
|
|
106,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
19,876 |
|
|
9,800 |
|
|
14,395 |
|
|
12,971 |
|
|
31,389 |
|
|
54,798 |
|
|
49,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
9,470 |
|
|
4,943 |
|
|
5,602 |
|
|
5,048 |
|
|
17,048 |
|
|
28,899 |
|
|
26,041 |
|
|
Research and development |
1,742 |
|
|
1,436 |
|
|
1,760 |
|
|
1,586 |
|
|
3,340 |
|
|
5,376 |
|
|
4,844 |
|
|
Others, net |
341 |
|
|
(1 |
) |
|
(51 |
) |
|
(46 |
) |
|
(93 |
) |
|
296 |
|
|
267 |
|
|
|
Total operating expenses |
11,553 |
|
|
6,378 |
|
|
7,311 |
|
|
6,588 |
|
|
20,295 |
|
|
34,571 |
|
|
31,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
8,323 |
|
|
3,422 |
|
|
7,084 |
|
|
6,383 |
|
|
11,094 |
|
|
20,227 |
|
|
18,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income(costs): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
892 |
|
|
200 |
|
|
58 |
|
|
52 |
|
|
1,117 |
|
|
1,540 |
|
|
1,387 |
|
|
Finance costs |
(573 |
) |
|
(1 |
) |
|
187 |
|
|
169 |
|
|
(648 |
) |
|
(679 |
) |
|
(611 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income tax |
8,642 |
|
|
3,621 |
|
|
7,329 |
|
|
6,604 |
|
|
11,563 |
|
|
21,088 |
|
|
19,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses(profits) |
2,042 |
|
|
914 |
|
|
1,024 |
|
|
923 |
|
|
3,159 |
|
|
4,659 |
|
|
4,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
6,600 |
|
|
2,707 |
|
|
6,305 |
|
|
5,681 |
|
|
8,404 |
|
|
16,429 |
|
|
14,804 |
|
Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
(15 |
) |
|
11 |
|
|
(7 |
) |
|
(6 |
) |
|
(17 |
) |
|
(47 |
) |
|
(42 |
) |
|
Owners of Parent company |
6,615 |
|
|
2,696 |
|
|
6,312 |
|
|
5,687 |
|
|
8,421 |
|
|
16,476 |
|
|
14,846 |
|
Earning per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
952 |
|
|
388 |
|
|
908 |
|
|
0.82 |
|
|
1,212 |
|
|
2,371 |
|
|
2.14 |
|
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 |
952 |
|
|
388 |
|
|
908 |
|
|
0.82 |
|
|
1,212 |
|
|
2,371 |
|
|
2.14 |
|
* For convenience, the KRW amounts are expressed
in U.S. dollars at the rate of KRW 1,109.76 to US$ 1.00, the noon
buying rate in effect on September 28, 2018 as quoted by the
Federal Reserve Bank of New York.
(1) Each ADS represents one common
share.
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