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 2020

Commission File Number 000-51138

 

GRAVITY CO., LTD.

(Translation of registrant’s name into English)

 

15F, 396 World Cup buk-ro, Mapo-gu, Seoul 03925, 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 2020 RESULTS AND BUSINESS UPDATES

Seoul, South Korea – May 29, 2020 – 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, 2020, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

FIRST QUARTER 2020 HIGHLIGHTS

 

 

•

Total revenues were KRW 73,260 million (US$ 60,102 thousand), representing a 2.2% increase from the fourth quarter ended December 31, 2019 (“QoQ”) and a 45.2% decrease from the first quarter ended March 31, 2019 (“YoY”).

 

•

Operating profit was KRW 10,356 million (US$ 8,496 thousand), representing a 475.7% increase QoQ and a 56.2% decrease YoY.

 

•

Profit before income tax expenses was KRW 11,250 million (US$ 9,229 thousand), representing a 595.7% increase QoQ and a 53.9 decrease YoY.

 

•

Net profit attributable to parent company was KRW 9,263 million (US$ 7,599 thousand), representing a 2,957.1% increase QoQ and a 53.1% decrease YoY.

 

REVIEW OF FIRST QUARTER 2020 FINANCIAL RESULTS

 

Revenues

 

Subscription revenues for the first quarter of 2020 were KRW 9,893 million (US$ 8,116 thousand), representing a 37.7 % increase QoQ from KRW 7,185 million and a 58.1% increase YoY from KRW 6,256 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online and Ragnarok Prequel in Taiwan. The increase YoY was largely due to increased revenues from Ragnarok Online and Ragnarok Prequel II in Taiwan.

 

Royalty and license fee revenues for the first quarter of 2020 were KRW 3,543 million (US$ 2,907 thousand), representing a 45.4% increase QoQ from KRW 2,436 million and a 4.8% decrease YoY from KRW 3,720 million. The increase QoQ was primarily due to increased revenue from Ragnarok Online in Japan. The decrease YoY resulted mainly from decreased revenue from Ragnarok Online in Japan.

 

Mobile game revenues were KRW 55,982 million (US$ 45,928 thousand) for the first quarter of 2020, representing a 1.3% decrease QoQ from KRW 56,714 million and a 53.4% decrease YoY from KRW 120,090 million. The decrease QoQ resulted primarily from decreased revenues from Ragnarok M: Eternal Love in Southeast Asia and Europe, and Ragnarok H5 in Korea. Such decrease was partially offset by increased revenues from Ragnarok M: Eternal Love in Taiwan and Ragnarok Tactics in Taiwan and Southeast Asia that was launched on February 25, 2020 and January 2, 2020, respectively. The decrease YoY was primarily due to revenues from Ragnarok M: Eternal Love in Southeast Asia, North America, South America and Oceania and Korea. This decrease was partially offset by increased revenues from

Ragnarok M: Eternal Love in Japan, Taiwan and Europe, Ragnarok Tactics in Taiwan, Southeast Asia and Thailand.

 

Other revenues were KRW 3,842 million (US$ 3,151 thousand) for the first quarter of 2020, representing 27.7% decrease QoQ from KRW 5,316 million and a 8.0% increase YoY from KRW 3,557 million

 

Cost of Revenue

 

Cost of revenue was KRW 48,874 million (US$ 40,096 thousand) for the first quarter of 2020, representing a 5.3% decrease QoQ from KRW 51,635 million and a 51.7% decrease YoY from KRW 101,237 million. The decrease QoQ was mainly due to decreased outsourcing fee, commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia and salaries. The decrease YoY was mostly from decreased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North America, South America and Oceania.

 

Operating Expenses

 

Operating expenses were KRW 14,030 million (US$ 11,510 thousand) for the first quarter of 2020, representing a 23.0% decrease QoQ from KRW 18,217 million and a 60.4% increase YoY from KRW 8,746 million. The decrease QoQ was mainly attributable to decreased advertising expenses related to G-star 2019, The Color of Dream Fantasy Latale, Ragnarok M: Eternal Love, Ragnarok H5 and Ragnarok Click H5. The increase YoY was mostly resulted from increased advertising expenses for Ragnarok Tactics in Taiwan, Southeast Asia and Korea, commission paid, and research and development expenses.

 

Profit before income tax expenses

 

Profit before income tax expenses was KRW 11,250 million (US$ 9,229 thousand) for the first quarter of 2020 compared with profit before income tax expense of KRW 1,617 million for the fourth quarter of 2019 and profit before income tax expenses of KRW 24,389 million for the first quarter of 2019.

 

Net Profit

 

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 9,263 million (US$ 7,599 thousand) for the first quarter of 2020 compared with net profit attributable to parent company of KRW 303 million for the fourth quarter of 2019 and a net profit attributable to parent company of KRW 19,760 million for the first quarter of 2019.

 

Liquidity

 

The balance of cash and cash equivalents and short-term financial instruments was KRW 123,002 million (US$ 100,911 thousand) as of March 31, 2020.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,218.92 to US$ 1.00, the noon buying rate in effect on March 31, 2020 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATE

 

Ragnarok Online

 

Gravity Game Tech, a subsidiary in Thailand, opened Ragnarok online in Thailand on May 28, 2020 and the company announced 4th job change for Ragnarok online in Korea on May 27, 2020.

 

Ragnarok Online IP-based Games

 

•

Ragnarok Origin, a MMORPG mobile game

 

Ragnarok Origin is scheduled to be launched in Korea in July 2020. The first closed beta test (CBT) has completed on May 13 with users’ positive feedbacks. The company is preparing its second CBT before the official launch.

 

•

Ragnarok X: Next Generation, a MMORPG mobile game

 

Ragnarok X: Next Generation is being prepared for the service in Taiwan, Hong Kong, and Macau in the second half of 2020.

 

•

Ragnarok Tactics, a SRPG mobile game

 

Ragnarok Tactics was launched in Korea on March 31, 2020. The game is scheduled to be launched in global market for June 2020 target.

 

•

Other Ragnarok Online IP-based games

 

Ragnarok H5 (locally named Ragnarok Frontier), an idle RPG game, was launched in Indonesia on March 31, 2020.

 

Other IP games

 

A First-Person Shooter (FPS) game, Tactical Warfare, has started pre-registration and will be launched in North, Central and South America in June 2020. The game is published by Gravity Interactive, a subsidiary in the United States.

 

 

Investor Presentation

 

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of first quarter in 2020 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 93 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, 2020 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. Jin Lee

Ms. Minji Oh
IR Unit
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-19

 

 

31-Mar-20

 

 

 

KRW

 

 

US$

 

 

KRW

 

 

US$

 

 

 

(audited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

79,428

 

 

 

65,163

 

 

 

82,502

 

 

 

67,685

 

Short-term financial instruments

 

 

39,500

 

 

 

32,406

 

 

 

40,500

 

 

 

33,226

 

Accounts receivable, net

 

 

32,253

 

 

 

26,460

 

 

 

40,748

 

 

 

33,430

 

Other receivables, net

 

 

56

 

 

 

46

 

 

 

413

 

 

 

339

 

Prepaid expenses

 

 

1,962

 

 

 

1,610

 

 

 

2,150

 

 

 

1,764

 

Other current assets

 

 

2,664

 

 

 

2,186

 

 

 

3,869

 

 

 

3,173

 

Total current assets

 

 

155,863

 

 

 

127,871

 

 

 

170,182

 

 

 

139,617

 

Property and equipment, net

 

 

6,663

 

 

 

5,466

 

 

 

8,576

 

 

 

7,036

 

Intangible assets

 

 

1,717

 

 

 

1,409

 

 

 

1,571

 

 

 

1,289

 

Deferred tax assets

 

 

7,667

 

 

 

6,290

 

 

 

9,042

 

 

 

7,418

 

Other non-current financial assets

 

 

1,770

 

 

 

1,452

 

 

 

1,771

 

 

 

1,453

 

Other non-current assets

 

 

1,745

 

 

 

1,430

 

 

 

1,788

 

 

 

1,466

 

Total assets

 

 

175,425

 

 

 

143,918

 

 

 

192,930

 

 

 

158,279

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

37,496

 

 

 

30,762

 

 

 

42,029

 

 

 

34,481

 

Deferred revenue

 

 

10,748

 

 

 

8,818

 

 

 

10,389

 

 

 

8,523

 

Withholdings

 

 

1,764

 

 

 

1,447

 

 

 

2,315

 

 

 

1,899

 

Accrued expense

 

 

1,175

 

 

 

964

 

 

 

1,186

 

 

 

973

 

Income tax payable

 

 

2,618

 

 

 

2,148

 

 

 

3,100

 

 

 

2,543

 

Other current liabilities

 

 

1,986

 

 

 

1,629

 

 

 

2,781

 

 

 

2,282

 

Total current liabilities

 

 

55,787

 

 

 

45,768

 

 

 

61,800

 

 

 

50,701

 

Long-term deferred revenue

 

 

98

 

 

 

80

 

 

 

98

 

 

 

80

 

Other non-current liabilities

 

 

3,774

 

 

 

3,096

 

 

 

4,430

 

 

 

3,634

 

Total liabilities

 

 

59,659

 

 

 

48,944

 

 

 

66,328

 

 

 

54,415

 

Share capital

 

 

3,474

 

 

 

2,850

 

 

 

3,474

 

 

 

2,850

 

Capital surplus

 

 

27,128

 

 

 

22,256

 

 

 

27,128

 

 

 

22,256

 

Other components of equity

 

 

274

 

 

 

225

 

 

 

1,577

 

 

 

1,294

 

Retained earnings

 

 

84,668

 

 

 

69,461

 

 

 

93,931

 

 

 

77,060

 

Equity attributable to owners of the Parent Company

 

 

115,544

 

 

 

94,792

 

 

 

126,110

 

 

 

103,460

 

Non-controlling interest

 

 

222

 

 

 

182

 

 

 

492

 

 

 

404

 

Total equity

 

 

115,766

 

 

 

94,974

 

 

 

126,602

 

 

 

103,864

 

Total liabilities and equity

 

 

175,425

 

 

 

143,918

 

 

 

192,930

 

 

 

158,279

 

 

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,218.92 to US$ 1.00, the noon buying rate in effect on March 31, 2020 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-19

 

 

31-Mar-19

 

 

31-Mar-20

 

 

 

(KRW)

 

 

(US$)

 

 

(KRW)

 

 

(US$)

 

 

(KRW)

 

 

(US$)

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Online games-subscription revenue

 

 

7,185

 

 

 

5,895

 

 

 

6,256

 

 

 

5,132

 

 

 

9,893

 

 

 

8,116

 

Online games-royalties and license fees

 

 

2,436

 

 

 

1,998

 

 

 

3,720

 

 

 

3,052

 

 

 

3,543

 

 

 

2,907

 

Mobile games

 

 

56,714

 

 

 

46,528

 

 

 

120,090

 

 

 

98,522

 

 

 

55,982

 

 

 

45,928

 

Other revenue

 

 

5,316

 

 

 

4,361

 

 

 

3,557

 

 

 

2,918

 

 

 

3,842

 

 

 

3,151

 

Total net revenue

 

 

71,651

 

 

 

58,782

 

 

 

133,623

 

 

 

109,624

 

 

 

73,260

 

 

 

60,102

 

Cost of revenue

 

 

51,635

 

 

 

42,361

 

 

 

101,237

 

 

 

83,055

 

 

 

48,874

 

 

 

40,096

 

Gross profit

 

 

20,016

 

 

 

16,421

 

 

 

32,386

 

 

 

26,569

 

 

 

24,386

 

 

 

20,006

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

15,491

 

 

 

12,709

 

 

 

6,665

 

 

 

5,468

 

 

 

11,007

 

 

 

9,030

 

Research and development

 

 

2,845

 

 

 

2,334

 

 

 

1,877

 

 

 

1,540

 

 

 

2,872

 

 

 

2,356

 

Others, net

 

 

(119

)

 

 

(98

)

 

 

204

 

 

 

167

 

 

 

151

 

 

 

124

 

Total operating expenses

 

 

18,217

 

 

 

14,945

 

 

 

8,746

 

 

 

7,175

 

 

 

14,030

 

 

 

11,510

 

Operating profit

 

 

1,799

 

 

 

1,476

 

 

 

23,640

 

 

 

19,394

 

 

 

10,356

 

 

 

8,496

 

Finance income(costs):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

631

 

 

 

518

 

 

 

1,062

 

 

 

871

 

 

 

1,551

 

 

 

1,272

 

Finance costs

 

 

(813

)

 

 

(667

)

 

 

(313

)

 

 

(256

)

 

 

(657

)

 

 

(539

)

Profit before income tax

 

 

1,617

 

 

 

1,327

 

 

 

24,389

 

 

 

20,009

 

 

 

11,250

 

 

 

9,229

 

Income tax expenses

 

 

1,334

 

 

 

1,095

 

 

 

4,627

 

 

 

3,796

 

 

 

2,004

 

 

 

1,644

 

Profit for the period

 

 

283

 

 

 

232

 

 

 

19,762

 

 

 

16,213

 

 

 

9,246

 

 

 

7,585

 

Profit attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

(20

)

 

 

(17

)

 

 

2

 

 

 

2

 

 

 

(17

)

 

 

(14

)

Owners of Parent company

 

 

303

 

 

 

249

 

 

 

19,760

 

 

 

16,211

 

 

 

9,263

 

 

 

7,599

 

Earning per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

 

44

 

 

 

0.04

 

 

 

2,844

 

 

 

2.33

 

 

 

1,333

 

 

 

1.09

 

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

 

 

44

 

 

 

0.04

 

 

 

2,844

 

 

 

2.33

 

 

 

1,333

 

 

 

1.09

 

 

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,218.92 to US$1.00, the noon buying rate in effect on March 31, 2020 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 29, 2020