GRAVITY Co., Ltd. (Nasdaq GM: 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, 2020, prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board and business updates.
THIRD QUARTER 2020
HIGHLIGHTS
- Total revenues were KRW 131,795 million (US$ 113,034 thousand),
representing a 49.0% increase from the second quarter ended June
30, 2020 (“QoQ”) and a 69.9% increase from the third quarter ended
September 30, 2019 (“YoY”).
- Operating profit was KRW 34,356 million (US$ 29,465 thousand),
representing a 110.6% increase QoQ and a 236.0% increase YoY.
- Profit before income tax expenses was KRW 33,675 million (US$
28,881 thousand), representing a 106.2% increase QoQ and a 200.3%
increase YoY.
- Net profit attributable to parent company was KRW 25,281
million (US$ 21,682 thousand), representing a 93.1% increase QoQ
and a 182.4% increase YoY.
REVIEW OF THIRD QUARTER 2020 FINANCIAL
RESULTS
Revenues
Subscription revenues for the third quarter of
2020 were KRW 29,159 million (US$ 25,008 thousand), representing a
19.3% increase QoQ from KRW 24,448 million and a 176.0% increase
YoY from KRW 10,564 million. The increase QoQ was mainly
attributable to increased revenues from Ragnarok Online in Thailand
that was re-launched on May 28, 2020 and Brazil. Such increase was
partially offset by decreased revenues from Ragnarok H5 in
Indonesia and Ragnarok Online in Taiwan. The increase YoY was
largely due to increased revenues from Ragnarok Online in Thailand
and United States.
Royalty and license fee revenues for the third
quarter of 2020 were KRW 2,674 million (US$ 2,293 thousand),
representing a 40.0% decrease QoQ from KRW 4,459 million and a 3.5%
increase YoY from KRW 2,583 million. The decrease QoQ was primarily
due to temporarily generated revenue from collaboration event with
Garena’s Free Fire items based on Ragnarok Online IP in previous
quarter. The increase YoY resulted mainly from increased revenue
from Ragnarok Online in Japan. Such increase was partially offset
by decreased revenue from Ragnarok Online in Thailand.
Mobile game revenues were KRW 95,531 million
(US$ 81,933 thousand) for the third quarter of 2020, representing a
76.1% increase QoQ from KRW 54,249 million and a 59.0% increase YoY
from KRW 60,086 million. The increase QoQ resulted primarily from
increased revenues from Ragnarok Origin in Korea that was launched
on July 7, 2020 and Ragnarok M: Eternal Love in Southeast Asia.
Such increase was partially offset by decreased revenues from
Ragnarok Tactics in Korea and Taiwan, Ragnarok H5 in Indonesia, and
Ragnarok M: Eternal Love in Korea and Taiwan. The increase YoY was
primarily due to revenues from Ragnarok Origin in Korea that was
launched on July 7, 2020, Ragnarok M: Eternal Love in Taiwan. This
increase was partially offset by decreased revenues from Ragnarok
M: Eternal Love in Japan, Southeast Asia, North America, South
America and Oceania, and Korea.
Other revenues were KRW 4,431 million (US$ 3,800
thousand) for the third quarter of 2020, representing a 16.4%
decrease QoQ from KRW 5,302 million and a 2.3% increase YoY from
KRW 4,333 million
Cost of Revenues
Cost of revenue was KRW 74,107 million (US$
63,558 thousand) for the third quarter of 2020, representing a
45.0% increase QoQ from KRW 51,098 million and a 32.2% increase YoY
from KRW 56,058 million. The increase QoQ was mainly due to
increased commission paid for mobile game services related to
Ragnarok Origin in Korea that was launched on July 7, 2020. The
increase YoY was mostly from increased commission paid for mobile
game services related to Ragnarok Origin in Korea that was launched
on July 7, 2020.
Operating Expenses
Operating expenses were KRW 23,332 million (US$
20,011 thousand) for the third quarter of 2020, representing a
10.9% increase QoQ from KRW 21,047 million and a 106.8% increase
YoY from KRW 11,282 million. The increase QoQ was mainly
attributable to increased research and development expenses and
commission paid for payment gate way fees related to Ragnarok
Online in Thailand. The increase YoY was mostly resulted from
increased advertising expenses for Ragnarok Origin in Korea,
commission paid for payment gate way fees related to Ragnarok
Online in Thailand, research and development expenses, and
salaries.
Profit before income tax expenses
Profit before income tax expenses was KRW 33,675
million (US$ 28,881 thousand) for the third quarter of 2020
compared with profit before income tax expense of KRW 16,335
million for the second quarter of 2020 and profit before income tax
expenses of KRW 11,213 million for the third quarter of 2019.
Net Profit
As a result of the foregoing factors, Gravity
recorded a net profit attributable to parent company of KRW 25,281
million (US$ 21,682 thousand) for the third quarter of 2020
compared with net profit attributable to parent company of KRW
13,095 million for the second quarter of 2020 and a net profit
attributable to parent company of KRW 8,952 million for the third
quarter of 2019.
Liquidity
The balance of cash and cash equivalents and
short-term financial instruments was KRW 171,800 million (US$
147,345 thousand) as of September 30, 2020.
Note: For convenience purposes only, the KRW
amounts have been expressed in U.S. dollars at the exchange rate of
KRW 1,165.97 to US$ 1.00, the noon buying rate in effect on
September 30, 2020 as quoted by the Federal Reserve Bank of New
York.
GRAVITY BUSINESS UPDATE
Ragnarok Online
IP-based Games
- Ragnarok Origin, a MMORPG mobile game
Ragnarok Origin was launched in Korea on July 7,
2020 and is being prepared for launch in Japan in 1st half of
2021.
- Ragnarok X: Next Generation, a MMORPG mobile game
Ragnarok X: Next Generation was launched in
Taiwan, Hong Kong and Macau on October 15, 2020 and is being
prepared for launch in Southeast Asia in 1st half of 2021.
- The Labyrinth of Ragnarok, an Idle MMORPG mobile game
The Labyrinth of Ragnarok was launched in
Philippines, Singapore and Malaysia on October 14, 2020. This game
is being prepared for launch in Thailand and Indonesia in December
2020.
- Other Ragnarok Online IP-based games
The Lost Memories: a Song of Valkyrie, a Story
RPG mobile game, is expected to be launched in Thailand in 1st half
of 2021. The game was developed by NeoCyon, Inc., our subsidiary in
Korea.
Action RO2: Spear of Odin, a 3D Action MORPG
mobile game, is expected to be launched in Indonesia, Malaysia,
Philippines, Singapore and Australia in 1st half of 2021. The game
was developed by NeoCyon, Inc., our subsidiary in Korea.
Other IP games
Tactical Warfare, a First-Person Shooter (FPS)
game, has started pre-registration and will be launched in North,
Central and South America in the fourth quarter of 2020. The game
is published by Gravity Interactive, Inc., a subsidiary in the
United States.
Tera Classic, a MMORPG mobile game, has started
pre-registration and will be launched in Japan in January 2021. The
game is published by Gravity Game Arise, Inc., a subsidiary in
Japan.
Investor Presentation
Gravity issued an investor presentation. The
presentation contains the Company’s recent business updates,
results of third 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, 2019 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 LeeMs. Hye Ji An 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$)
|
|
As of |
|
|
|
31-Dec-19 |
|
|
30-Sep-20 |
|
|
|
KRW |
|
|
US$ |
|
|
KRW |
|
|
US$ |
|
|
|
(audited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
79,428 |
|
|
|
68,122 |
|
|
|
116,800 |
|
|
|
100,174 |
|
Short-term financial instruments |
|
|
39,500 |
|
|
|
33,877 |
|
|
|
55,000 |
|
|
|
47,171 |
|
Accounts receivable, net |
|
|
32,253 |
|
|
|
27,662 |
|
|
|
55,570 |
|
|
|
47,660 |
|
Other receivables, net |
|
|
56 |
|
|
|
48 |
|
|
|
0 |
|
|
|
0 |
|
Prepaid expenses |
|
|
1,962 |
|
|
|
1,683 |
|
|
|
2,782 |
|
|
|
2,386 |
|
Other current assets |
|
|
2,664 |
|
|
|
2,285 |
|
|
|
1,137 |
|
|
|
975 |
|
Total current assets |
|
|
155,863 |
|
|
|
133,677 |
|
|
|
231,289 |
|
|
|
198,366 |
|
Property and equipment, net |
|
|
6,663 |
|
|
|
5,715 |
|
|
|
7,201 |
|
|
|
6,176 |
|
Intangible assets |
|
|
1,717 |
|
|
|
1,473 |
|
|
|
1,733 |
|
|
|
1,486 |
|
Deferred tax assets |
|
|
7,667 |
|
|
|
6,576 |
|
|
|
7,885 |
|
|
|
6,763 |
|
Other non-current financial assets |
|
|
1,770 |
|
|
|
1,518 |
|
|
|
1,777 |
|
|
|
1,524 |
|
Other non-current assets |
|
|
1,745 |
|
|
|
1,494 |
|
|
|
5,255 |
|
|
|
4,508 |
|
Total assets |
|
|
175,425 |
|
|
|
150,453 |
|
|
|
255,140 |
|
|
|
218,823 |
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
37,496 |
|
|
|
32,159 |
|
|
|
56,668 |
|
|
|
48,602 |
|
Deferred revenue |
|
|
10,748 |
|
|
|
9,218 |
|
|
|
15,194 |
|
|
|
13,031 |
|
Withholdings |
|
|
1,764 |
|
|
|
1,513 |
|
|
|
3,463 |
|
|
|
2,970 |
|
Accrued expense |
|
|
1,175 |
|
|
|
1,008 |
|
|
|
1,182 |
|
|
|
1,014 |
|
Income tax payable |
|
|
2,618 |
|
|
|
2,245 |
|
|
|
3,325 |
|
|
|
2,852 |
|
Other current liabilities |
|
|
1,986 |
|
|
|
1,703 |
|
|
|
2,629 |
|
|
|
2,255 |
|
Total current liabilities |
|
|
55,787 |
|
|
|
47,846 |
|
|
|
82,461 |
|
|
|
70,724 |
|
Long-term deferred revenue |
|
|
98 |
|
|
|
84 |
|
|
|
5,037 |
|
|
|
4,320 |
|
Other non-current liabilities |
|
|
3,774 |
|
|
|
3,237 |
|
|
|
3,368 |
|
|
|
2,889 |
|
Total liabilities |
|
|
59,659 |
|
|
|
51,167 |
|
|
|
90,866 |
|
|
|
77,933 |
|
Share capital |
|
|
3,474 |
|
|
|
2,979 |
|
|
|
3,474 |
|
|
|
2,979 |
|
Capital surplus |
|
|
27,128 |
|
|
|
23,266 |
|
|
|
27,110 |
|
|
|
23,251 |
|
Other components of equity |
|
|
274 |
|
|
|
235 |
|
|
|
896 |
|
|
|
768 |
|
Retained earnings |
|
|
84,668 |
|
|
|
72,616 |
|
|
|
132,307 |
|
|
|
113,474 |
|
Equity attributable to owners of the Parent Company |
|
|
115,544 |
|
|
|
99,096 |
|
|
|
163,787 |
|
|
|
140,472 |
|
Non-controlling interest |
|
|
222 |
|
|
|
190 |
|
|
|
487 |
|
|
|
418 |
|
Total equity |
|
|
115,766 |
|
|
|
99,286 |
|
|
|
164,274 |
|
|
|
140,890 |
|
Total liabilities and equity |
|
|
175,425 |
|
|
|
150,453 |
|
|
|
255,140 |
|
|
|
218,823 |
|
* For convenience purposes only, the KRW amounts
are expressed in U.S. dollars at the rate of KRW 1,165.97 to US$
1.00, the noon buying rate in effect on September 30, 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 |
|
|
Nine months ended |
|
|
|
|
30-Jun-20 |
|
|
30-Sep-19 |
|
|
30-Sep-20 |
|
|
30-Sep-19 |
|
|
30-Sep-20 |
|
|
|
|
(KRW) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games-subscription revenue |
|
|
24,448 |
|
|
|
10,564 |
|
|
|
29,159 |
|
|
|
25,008 |
|
|
|
23,566 |
|
|
|
63,500 |
|
|
|
54,461 |
|
Online games-royalties and license fees |
|
|
4,459 |
|
|
|
2,583 |
|
|
|
2,674 |
|
|
|
2,293 |
|
|
|
9,135 |
|
|
|
10,676 |
|
|
|
9,156 |
|
Mobile games |
|
|
54,249 |
|
|
|
60,086 |
|
|
|
95,531 |
|
|
|
81,933 |
|
|
|
245,189 |
|
|
|
205,762 |
|
|
|
176,473 |
|
Other revenue |
|
|
5,302 |
|
|
|
4,333 |
|
|
|
4,431 |
|
|
|
3,800 |
|
|
|
11,426 |
|
|
|
13,575 |
|
|
|
11,643 |
|
Total net revenue |
|
|
88,458 |
|
|
|
77,566 |
|
|
|
131,795 |
|
|
|
113,034 |
|
|
|
289,316 |
|
|
|
293,513 |
|
|
|
251,733 |
|
Cost of revenues |
|
|
51,098 |
|
|
|
56,058 |
|
|
|
74,107 |
|
|
|
63,558 |
|
|
|
214,153 |
|
|
|
174,079 |
|
|
|
149,300 |
|
Gross profit |
|
|
37,360 |
|
|
|
21,508 |
|
|
|
57,688 |
|
|
|
49,476 |
|
|
|
75,163 |
|
|
|
119,434 |
|
|
|
102,433 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
17,643 |
|
|
|
8,984 |
|
|
|
18,042 |
|
|
|
15,474 |
|
|
|
21,382 |
|
|
|
46,692 |
|
|
|
40,046 |
|
Research and development |
|
|
3,254 |
|
|
|
2,349 |
|
|
|
4,550 |
|
|
|
3,902 |
|
|
|
6,658 |
|
|
|
10,676 |
|
|
|
9,156 |
|
Others, net |
|
|
150 |
|
|
|
(51 |
) |
|
|
740 |
|
|
|
635 |
|
|
|
259 |
|
|
|
1,041 |
|
|
|
893 |
|
Total operating expenses |
|
|
21,047 |
|
|
|
11,282 |
|
|
|
23,332 |
|
|
|
20,011 |
|
|
|
28,299 |
|
|
|
58,409 |
|
|
|
50,095 |
|
Operating profit |
|
|
16,313 |
|
|
|
10,226 |
|
|
|
34,356 |
|
|
|
29,465 |
|
|
|
46,864 |
|
|
|
61,025 |
|
|
|
52,338 |
|
Finance income(costs): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
|
627 |
|
|
|
1,353 |
|
|
|
822 |
|
|
|
705 |
|
|
|
3,556 |
|
|
|
3,000 |
|
|
|
2,573 |
|
Finance costs |
|
|
(605 |
) |
|
|
(366 |
) |
|
|
(1,503 |
) |
|
|
(1,289 |
) |
|
|
(781 |
) |
|
|
(2,765 |
) |
|
|
(2,371 |
) |
Profit before income tax |
|
|
16,335 |
|
|
|
11,213 |
|
|
|
33,675 |
|
|
|
28,881 |
|
|
|
49,639 |
|
|
|
61,260 |
|
|
|
52,540 |
|
Income tax expenses |
|
|
3,293 |
|
|
|
2,357 |
|
|
|
8,390 |
|
|
|
7,196 |
|
|
|
10,192 |
|
|
|
13,687 |
|
|
|
11,739 |
|
Profit for the year |
|
|
13,042 |
|
|
|
8,856 |
|
|
|
25,285 |
|
|
|
21,685 |
|
|
|
39,447 |
|
|
|
47,573 |
|
|
|
40,801 |
|
Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
(53 |
) |
|
|
(96 |
) |
|
|
4 |
|
|
|
3 |
|
|
|
(126 |
) |
|
|
(66 |
) |
|
|
(57 |
) |
Owners of Parent company |
|
|
13,095 |
|
|
|
8,952 |
|
|
|
25,281 |
|
|
|
21,682 |
|
|
|
39,573 |
|
|
|
47,639 |
|
|
|
40,858 |
|
Earning per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
|
|
1,884 |
|
|
|
1,288 |
|
|
|
3,638 |
|
|
|
3.10 |
|
|
|
5,695 |
|
|
|
6,856 |
|
|
|
5.9 |
|
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 |
|
|
1,884 |
|
|
|
1,288 |
|
|
|
3,638 |
|
|
|
3.10 |
|
|
|
5,695 |
|
|
|
6,856 |
|
|
|
5.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* For convenience, the KRW amounts are expressed
in U.S. dollars at the rate of KRW 1,165.97 to US$1.00, the noon
buying rate in effect on September 30, 2020 as quoted by the
Federal Reserve Bank of New York.(1) Each ADS represents one common
share.
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