Report of Foreign Issuer (6-k)

Date : 05/13/2019 @ 10:11AM
Source : Edgar (US Regulatory)
Stock : Gravity Co Ltd (GRVY)
Quote : 40.36  0.0 (0.00%) @ 12:00AM

Report of Foreign Issuer (6-k)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May 2019

Commission File Number 000-51138

 

GRAVITY CO., LTD.

(Translation of registrant’s name into English)

 

15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea

 

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.  Form 20-F   Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): 



GRAVITY REPORTS FIRST QUARTER OF 201 9 RESULTS AND BUSINESS UPDATES

Seoul, South Korea – May 13, 2019 – 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 first quarter ended March 31, 2019, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

FIRST QUARTER 2019 HIGHLIGHTS

 

 

Total revenues were KRW 133,623 million (US$ 117,595 thousand), representing a 18.0% increase from the fourth quarter ended December 31, 2018 (“QoQ”) and a 101.5% increase from the first quarter ended March 31, 2018 (“YoY”).

 

Operating profit was KRW 23,640 million (US$ 20,804 thousand), representing a 79.9% increase QoQ and a 390.5% increase YoY.

 

Profit before income tax expenses was KRW 24,389million (US$ 21,463 thousand), representing an 82.7% increase QoQ and a 376.6% increase YoY.

 

Net profit attributable to parent company was KRW 19,760 million (US$ 17,390 thousand), representing a 32.0% increase QoQ and a 456.8% increase YoY.

 

REVIEW OF FIRST QUARTER 2019 FINANCIAL RESULTS

 

Revenues

 

Subscription revenues for the first quarter of 2019 were KRW 6,256 million (US$ 5,506 thousand), representing a 28.2 % increase QoQ from KRW 4,880 million and a 29.7% decrease YoY from KRW 8,896 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Korea and Taiwan, and Ragnarok Prequel in Taiwan. The decrease YoY was largely due to decreased revenues from Ragnarok Prequel in Taiwan and Ragnarok Online in Korea and Taiwan.

 

Royalty and license fee revenues for the first quarter of 2019 were KRW 3,720 million (US$ 3,274 thousand), representing a 34.4% increase QoQ from KRW 2,768 million and a 19.5% decrease YoY from KRW 4,619 million. The increase QoQ was primarily due to increased revenue from Ragnarok Online in Japan. The decrease YoY resulted mainly from decreased revenues from Ragnarok Online in Japan, Thailand, and Brazil.

 

Mobile game and application revenues were KRW 121,147 million (US$ 106,615 thousand) for the first quarter of 2019, representing a 17.7% increase QoQ from KRW 102,916 million and a 135.7% increase YoY from KRW 51,396 million. The increase QoQ resulted primarily from increased revenues from Ragnarok M: Eternal Love in Southeast Asia, North America, South America, and Oceania, which was launched on October 31, 2018 and on January 9, 2019, respectively. Such increase was partially offset by decreased revenues from Ragnarok M: Eternal Love in Taiwan and Korea. The increase YoY was primarily due to revenues from Ragnarok M: Eternal Love in Southeast Asia, North America, South America, and Oceania. This increase was partially offset by decreased revenue from Ragnarok M: Eternal Love in


Taiwan and Korea, RO: Idle Poring in global markets except for China and Japan, and Ragnarok R in Taiwan and Korea.

 

Character merchandising and other revenues were KRW 2,500 million (US$ 2,200 thousand) for the first quarter of 2019, representing 6.3% decrease QoQ from KRW 2,668 million and a 78.6% increase YoY from KRW 1,400 million

 

Cost of Revenue

 

Cost of revenue was KRW 101,237 million (US$ 89,094 thousand) for the first quarter of 2019, representing a 10.9% increase QoQ from KRW 91,304 million and a 121.1% increase YoY from KRW 45,784 million. The increase QoQ was mainly due to increased commission paid for mobile game services related to Ragnarok M: Eternal love in North, South America and Oceania. The increase YoY was mostly from increased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North, South America and Oceania.

 

Operating Expenses

 

Operating expenses were KRW 8,746 million (US$ 7,697 thousand) for the first quarter of 2019, representing a 0.5% decrease QoQ from KRW 8,787 million and a 44.3% decrease YoY from KRW 15,707 million. The decrease QoQ was mainly attributable to decreased salaries and research and development expenses. Such decrease was partially offset by increased advertising expenses. The decrease YoY was mostly resulted from decreased advertising expenses for Ragnarok M: Eternal Love and RO: Idle Poring in Korea.

 

Profit before income tax expenses

 

Profit before income tax expenses was KRW 24,389 million (US$ 21,463 thousand) for the first quarter of 2019 compared with profit before income tax expense of KRW 13,351 million for the fourth quarter of 2018 and profit before income tax expenses of KRW 5,117 million for the first quarter of 2018.

 

Net Profit

 

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 19,760 million (US$ 17,390 thousand) for the first quarter of 2019 compared with net profit attributable to parent company of KRW 14,967 million for the fourth quarter of 2018 and a net profit attributable to parent company of KRW 3,549 million for the first quarter of 2018.

 

Liquidity

 

The balance of cash and cash equivalents and short-term financial instruments was KRW 127,330 million (US$ 112,057 thousand) as of March 31, 2019.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,136.30 to US$ 1.00, the noon buying rate in effect on March 29, 2019 as quoted by the Federal Reserve Bank of New York.


GRAVITY BUSINESS UPDATE

 

Ragnarok Online IP-based Games

 

Ragnarok M: Eternal Love, a MMORPG mobile game

Gravity is preparing for the service in Japan during 2019 after the launch of Ragnarok M: Eternal Love in North America, South America, and Oceania on January 9, 2019. The game will be published by GungHo Online Entertainment Inc, (“Gungho”) the licensee of Ragnarok Online in Japan and Gungho will make an official announcement of the game release in May.

Ragnarok Web MMORPG, a web browser-based 3D new version of game

Ragnarok web MMORPG is scheduled to be launched in Taiwan, Hong Kong, and Macau in the second quarter of 2019. Gravity will start pre-registration for Ragnarok Web 3D on May 23, 2019.

Other Ragnarok Online IP-based games

 

RO Click H5, a HTML 5 version of idle game, has launched in Korea on April 9, 2019. Gravity is collaborating with KT Corporation for co-marketing of 5G game. Gravity is also planning to launch this game globally in 2019.

 

A 3D Action MORPG mobile game, Ragnarok Spear of Odin , is expected to be launched in Taiwan, Hong Kong, and Macau in 2019. The game was developed by NeoCyon, our Korean based subsidiary and Gravity also is preparing the other games based on Ragnarok Online IP.

 

Other IP games

A MORPG mobile game , RO X Dawn Break , will be launched in Indonesia on May 14, 2019. The game is published by Gravity Game Link, a joint venture in Indonesia.

 

Investor Presentation

 

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of first quarter in 2019 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 83 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, 2018 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-18

 

 

31-Jun-19

 

 

 

KRW

 

 

US$

 

 

KRW

 

 

US$

 

 

 

(audited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

86,051

 

 

 

75,729

 

 

 

111,830

 

 

 

98,416

 

Short-term financial instruments

 

 

9,500

 

 

 

8,361

 

 

 

15,500

 

 

 

13,641

 

Accounts receivable, net

 

 

60,664

 

 

 

53,387

 

 

 

50,691

 

 

 

44,610

 

Other receivables, net

 

 

255

 

 

 

224

 

 

 

250

 

 

 

220

 

Prepaid expenses

 

 

2,516

 

 

 

2,214

 

 

 

1,846

 

 

 

1,625

 

Other current assets

 

 

1,182

 

 

 

1,040

 

 

 

1,672

 

 

 

1,471

 

Total current assets

 

 

160,168

 

 

 

140,955

 

 

 

181,789

 

 

 

159,983

 

Property and equipment, net

 

 

1,498

 

 

 

1,319

 

 

 

5,148

 

 

 

4,531

 

Intangible assets

 

 

1,163

 

 

 

1,024

 

 

 

1,022

 

 

 

899

 

Deferred tax assets

 

 

7,413

 

 

 

6,524

 

 

 

6,978

 

 

 

6,141

 

Other non-current financial assets

 

 

1,494

 

 

 

1,315

 

 

 

1,497

 

 

 

1,317

 

Other non-current assets

 

 

1,438

 

 

 

1,265

 

 

 

1,597

 

 

 

1,406

 

Total assets

 

 

173,174

 

 

 

152,402

 

 

 

198,031

 

 

 

174,277

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

71,928

 

 

 

63,300

 

 

 

75,127

 

 

 

66,115

 

Deferred revenue

 

 

16,476

 

 

 

14,500

 

 

 

14,395

 

 

 

12,668

 

Withholdings

 

 

2,019

 

 

 

1,777

 

 

 

2,178

 

 

 

1,917

 

Accrued expense

 

 

1,031

 

 

 

907

 

 

 

1,037

 

 

 

913

 

Income tax payable

 

 

1,944

 

 

 

1,711

 

 

 

2,640

 

 

 

2,324

 

Other current liabilities

 

 

123

 

 

 

108

 

 

 

1,926

 

 

 

1,694

 

Total current liabilities

 

 

93,521

 

 

 

82,303

 

 

 

97,303

 

 

 

85,631

 

Long-term deferred revenue

 

 

3,598

 

 

 

3,167

 

 

 

2,647

 

 

 

2,330

 

Other non-current liabilities

 

 

503

 

 

 

443

 

 

 

2,490

 

 

 

2,191

 

Total liabilities

 

 

97,622

 

 

 

85,913

 

 

 

102,440

 

 

 

90,152

 

Share capital

 

 

3,474

 

 

 

3,057

 

 

 

3,474

 

 

 

3,058

 

Capital surplus

 

 

27,141

 

 

 

23,885

 

 

 

27,140

 

 

 

23,885

 

Other components of equity

 

 

138

 

 

 

122

 

 

 

244

 

 

 

214

 

Retained earnings (Accumulated deficit)

 

 

45,405

 

 

 

39,958

 

 

 

65,165

 

 

 

57,348

 

Equity attributable to owners of the Parent Company

 

 

76,158

 

 

 

67,022

 

 

 

96,023

 

 

 

84,505

 

Non-controlling interest

 

 

(606

)

 

 

(533

)

 

 

(432

)

 

 

(380

)

Total equity

 

 

75,552

 

 

 

66,489

 

 

 

95,591

 

 

 

84,125

 

Total liabilities and equity

 

 

173,174

 

 

 

152,402

 

 

 

198,031

 

 

 

174,277

 

 

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,136.30 to US$ 1.00, the noon buying rate in effect on March 29, 2019 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

 

 

 

31-Dec-18

 

 

31-Mar-18

 

 

31-Mar-19

 

 

 

(KRW)

 

 

(US$)

 

 

(KRW)

 

 

(US$)

 

 

(KRW)

 

 

(US$)

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Online games-subscription revenue

 

 

4,880

 

 

 

4,295

 

 

 

8,896

 

 

 

7,829

 

 

 

6,256

 

 

 

5,506

 

Online games-royalties and license fees

 

 

2,768

 

 

 

2,436

 

 

 

4,619

 

 

 

4,065

 

 

 

3,720

 

 

 

3,274

 

Mobile games and applications

 

 

102,916

 

 

 

90,571

 

 

 

51,396

 

 

 

45,231

 

 

 

121,147

 

 

 

106,615

 

Character merchandising and other revenue

 

 

2,668

 

 

 

2,348

 

 

 

1,400

 

 

 

1,232

 

 

 

2,500

 

 

 

2,200

 

Total net revenue

 

 

113,232

 

 

 

99,650

 

 

 

66,311

 

 

 

58,357

 

 

 

133,623

 

 

 

117,595

 

Cost of revenue

 

 

91,304

 

 

 

80,352

 

 

 

45,784

 

 

 

40,292

 

 

 

101,237

 

 

 

89,094

 

Gross profit

 

 

21,928

 

 

 

19,298

 

 

 

20,527

 

 

 

18,065

 

 

 

32,386

 

 

 

28,501

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

5,921

 

 

 

5,211

 

 

 

13,827

 

 

 

12,169

 

 

 

6,665

 

 

 

5,865

 

Research and development

 

 

2,642

 

 

 

2,325

 

 

 

1,874

 

 

 

1,649

 

 

 

1,877

 

 

 

1,652

 

Others, net

 

 

224

 

 

 

197

 

 

 

6

 

 

 

5

 

 

 

204

 

 

 

180

 

Total operating expenses

 

 

8,787

 

 

 

7,733

 

 

 

15,707

 

 

 

13,823

 

 

 

8,746

 

 

 

7,697

 

Operating profit

 

 

13,141

 

 

 

11,565

 

 

 

4,820

 

 

 

4,242

 

 

 

23,640

 

 

 

20,804

 

Finance income(costs):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

533

 

 

 

469

 

 

 

590

 

 

 

519

 

 

 

1,062

 

 

 

934

 

Finance costs

 

 

(323

)

 

 

(284

)

 

 

(293

)

 

 

(258

)

 

 

(313

)

 

 

(275

)

Profit before income tax

 

 

13,351

 

 

 

11,750

 

 

 

5,117

 

 

 

4,503

 

 

 

24,389

 

 

 

21,463

 

Income tax expenses(profits)

 

 

(1,606

)

 

 

(1,413

)

 

 

1,593

 

 

 

1,402

 

 

 

4,627

 

 

 

4,072

 

Profit for the period

 

 

14,957

 

 

 

13,163

 

 

 

3,524

 

 

 

3,101

 

 

 

19,762

 

 

 

17,391

 

Profit attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

(10

)

 

 

(9

)

 

 

(25

)

 

 

(22

)

 

 

2

 

 

 

1

 

Owners of Parent company

 

 

14,967

 

 

 

13,172

 

 

 

3,549

 

 

 

3,123

 

 

 

19,760

 

 

 

17,390

 

Earning per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

 

2,154

 

 

 

1.90

 

 

 

511

 

 

 

0.45

 

 

 

2,844

 

 

 

2.50

 

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

 

Earning per ADS (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

 

2,154

 

 

 

1.90

 

 

 

511

 

 

 

0.45

 

 

 

2,844

 

 

 

2.50

 

 

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,136.30 to US$1.00, the noon buying rate in effect on March 29, 2019 as quoted by the Federal Reserve Bank of New York.

(1) Each ADS represents one common share.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

GRAVITY CO., LTD.

 

 

By:

/s/ Heung Gon Kim

Name:

Heung Gon Kim

Title:

Chief Financial Officer

 

Date: May 13, 2019

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