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Gravity Reports Second Quarter of 2022 Results and Business Update

·12 min read

Seoul, Korea, Aug. 10, 2022 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2022, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

SECOND QUARTER 2022 HIGHLIGHTS

  • Total revenues were KRW 96,519 million (US$ 74,305 thousand), representing an 8.9% increase from the first quarter ended March 31, 2022 (“QoQ”) and a 15.4% increase from the second quarter ended June 30, 2021 (“YoY”).

  • Operating profit was KRW 22,115 million (US$ 17,025 thousand), representing a 0.9% decrease QoQ and a 15.4% increase YoY.

  • Profit before income tax expenses was KRW 23,874 million (US$ 18,379 thousand), representing a 2.8% increase QoQ and a 23.1% increase YoY.

  • Net profit attributable to parent company was KRW 17,465 million (US$ 13,445 thousand), representing a 6.3% increase QoQ and a 18.3% increase YoY.

REVIEW OF SECOND QUARTER 2022 FINANCIAL RESULTS

Revenues

Online game revenues for the second quarter of 2022 were KRW 24,827 million (US$ 19,113 thousand), representing a 15.8% increase QoQ from KRW 21,447 million and a 10.9% increase YoY from KRW 22,380 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Taiwan and Thailand. The increase YoY was largely due to increased revenue from Ragnarok Online in Taiwan, the Philippines, Singapore and Malaysia.

Mobile game revenues were KRW 68,042 million (US$ 52,382 thousand) for the second quarter of 2022, representing a 7.6% increase QoQ from KRW 63,241 million and a 23.4% increase YoY from KRW 55,140 million. The increase QoQ resulted primarily increased revenues from Ragnarok Labyrinth NFT, which was launched on April 27, 2022, in Southeast Asia and Ragnarok Monster's Arena launched on May 11, 2022, in Taiwan. Such increase was partially offset by decreased revenues from Ragnarok Origin in North America and Japan and Ragnarok X: Next Generation in Southeast Asia. The increase YoY was primarily due to revenues from Ragnarok X: Next Generation in Southeast Asia, Ragnarok Origin in North America and Ragnarok Monster's Arena launched on May 11, 2022, in Taiwan. Such increase was partially offset by decreased revenues from Ragnarok Origin in Korea, Ragnarok M: Eternal Love in Southeast Asia and Ragnarok X: Next Generation in Taiwan.

Other revenues were KRW 3,650 million (US$ 2,810 thousand) for the second quarter of 2022, representing a 6.9% decrease QoQ from KRW 3,919 million and a 40.1% decrease YoY from KRW 6,091 million.

Cost of Revenue

Cost of revenue was KRW 50,575 million (US$ 38,935 thousand) for the second quarter of 2022, representing a 11.8% increase QoQ from KRW 45,254 million and a 10.3% increase YoY from KRW 45,842 million. The increase QoQ was mainly due to increased commission paid for mobile game services related to Ragnarok Monster's Arena in Taiwan and Ragnarok Labyrinth NFT in Southeast Asia. The increase YoY was mostly from the increased commission paid for mobile game services related to Ragnarok X: Next Generation in Southeast Asia, Ragnarok Origin in North America and Ragnarok Monster's Arena in Taiwan.

Operating Expenses

Operating expenses were KRW 23,829 million (US$ 18,345 thousand) for the second quarter of 2022, representing a 13.3% increase QoQ from KRW 21,037 million and a 28.0% increase YoY from KRW 18,612 million. The increase QoQ was mainly due to increased advertising expenses for Ragnarok Monster's Arena in Taiwan and Ragnarok Labyrinth NFT in Southeast Asia. The increase YoY was mainly due to increase advertising expenses for Ragnarok Monster's Arena in Taiwan, Ragnarok Labyrinth NFT in Southeast Asia and Ragnarok Origin in North America.

Profit Before Income Tax Expenses

Profit before income tax expenses was KRW 23,874 million (US$ 18,379 thousand) for the second quarter of 2022 compared with profit before income tax expense of KRW 23,220 million for the first quarter of 2022 and profit before income tax expenses of KRW 19,387 million for the second quarter of 2021.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 17,465 million (US$ 13,445 thousand) for the second quarter of 2022 compared with net profit attributable to parent company of KRW 16,431 million for the first quarter of 2022 and a net profit attributable to parent company of KRW 14,766 million for the second quarter of 2021.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 282,748 million (US$ 217,674 thousand) as of June 30, 2022.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,298.95 to US$ 1.00, the noon buying rate in effect on June 30, 2022 as quoted by the Federal Reserve Bank of New York.


GRAVITY BUSINESS UPDATE

Ragnarok IP Partnership with The Sandbox

Gravity signed a Ragnarok IP partnership agreement with The Sandbox, a metaverse gaming platform, on April 1, 2022.

Ragnarok Online

Ragnarok Online has celebrated its 20th anniversary in Korea in the second half of 2022 since the game was initially launched in Korea on August 1, 2002. As celebrating its 20th anniversary, an offline event has placed in Seoul, Korea in July 31, 2022. Various kinds of programs were placed at the venue including developer showcase, K-pop concert, RO arcades, etc. More in-game events and promotions are going to be placed throughout the third quarter of 2022.

Ragnarok Online IP-based Games

  • Ragnarok X: Next Generation, a MMORPG mobile game

Ragnarok X: Next Generation is scheduled to be launched in Korea in the fourth quarter of 2022.

  • Ragnarok Origin, a MMORPG mobile and PC game

Ragnarok Origin is scheduled to be launched in multi-platform including mobile and PC in Taiwan, Hong Kong and Macau in September, 2022.

  • Ragnarok Labyrinth NFT, a blockchain mobile game

Ragnarok Labyrinth NFT is scheduled to be launched in global in the third quarter of 2022.

  • Ragnarok Poring Merge, a blockchain mobile game

Ragnarok Poring Merge was designed as a blockchain game based on P2E systems. The game is prepared to be launched in Southeast Asia in the fourth quarter of 2022.

  • Other Ragnarok Online IP-based games

Ragnarok: The Lost Memories, a Cinematic Newtro Story RPG mobile and PC game, has launched in Korea on August 10, 2022.

Ragnarok Monster’s Arena, a Card SRPG mobile game, was launched in Taiwan, Hong Kong and Macau on May 11, 2022. Ragnarok Monster’s Arena is scheduled to be launched in Thailand and Korea in September, 2022. Ragnarok Monster’s Arena is also scheduled to be launched in Southeast Asia (except for Thailand) in the fourth quarter of 2022.

Ragnarok V: Returns, a MMORPG mobile and PC game, was launched for mobile version and PC game service in Oceania in May 25, 2022. The game is preparing to provide PC game service on Steam in the fourth quarter of 2022, and has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.

Ragnarok Begins, a MMORPG mobile and PC game, is scheduled to run the second CBT for mobile and PC game version in October, 2022, and to be launched in North America in the fourth quarter of 2022. The game has been developed by Gravity.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the second quarter in 2022 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. ---------------------------------------------------

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 91 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, 2021 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. Jeesun Lim
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-21

 

 

30-Jun-22

 

 

 

KRW

 

 

US$

 

 

KRW

 

 

US$

 

 

 

(audited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

99,105

 

 

 

76,296

 

 

 

112,748

 

 

 

86,799

 

Short-term financial instruments

 

 

148,000

 

 

 

113,938

 

 

 

170,000

 

 

 

130,875

 

Accounts receivable, net

 

 

52,615

 

 

 

40,506

 

 

 

53,234

 

 

 

40,982

 

Other receivables, net

 

 

1,080

 

 

 

831

 

 

 

380

 

 

 

293

 

Prepaid expenses

 

 

3,164

 

 

 

2,436

 

 

 

2,302

 

 

 

1,772

 

Other current assets

 

 

2,171

 

 

 

1,671

 

 

 

2,644

 

 

 

2,035

 

Total current assets

 

 

306,135

 

 

 

235,678

 

 

 

341,308

 

 

 

262,756

 

Property and equipment, net

 

 

11,338

 

 

 

8,728

 

 

 

10,700

 

 

 

8,237

 

Intangible assets, net

 

 

3,342

 

 

 

2,573

 

 

 

3,849

 

 

 

2,963

 

Deferred tax assets

 

 

1,719

 

 

 

1,323

 

 

 

1,165

 

 

 

897

 

Other non-current financial assets

 

 

3,019

 

 

 

2,324

 

 

 

3,347

 

 

 

2,577

 

Other non-current assets

 

 

1,973

 

 

 

1,519

 

 

 

1,668

 

 

 

1,284

 

Total assets

 

 

327,526

 

 

 

252,145

 

 

 

362,037

 

 

 

278,714

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

41,199

 

 

 

31,717

 

 

 

44,116

 

 

 

33,963

 

Deferred revenue

 

 

13,481

 

 

 

10,378

 

 

 

13,424

 

 

 

10,335

 

Withholdings

 

 

3,596

 

 

 

2,768

 

 

 

3,317

 

 

 

2,554

 

Accrued expense

 

 

1,484

 

 

 

1,142

 

 

 

1,574

 

 

 

1,212

 

Income tax payable

 

 

10,629

 

 

 

8,183

 

 

 

6,877

 

 

 

5,294

 

Other current liabilities

 

 

3,608

 

 

 

2,778

 

 

 

3,900

 

 

 

3,001

 

Total current liabilities

 

 

73,997

 

 

 

56,966

 

 

 

73,208

 

 

 

56,359

 

Long-term deferred revenue

 

 

98

 

 

 

75

 

 

 

89

 

 

 

69

 

Other non-current liabilities

 

 

6,590

 

 

 

5,074

 

 

 

6,095

 

 

 

4,692

 

Total liabilities

 

 

80,685

 

 

 

62,115

 

 

 

79,392

 

 

 

61,120

 

Share capital

 

 

3,474

 

 

 

2,674

 

 

 

3,474

 

 

 

2,674

 

Capital surplus

 

 

27,098

 

 

 

20,861

 

 

 

27,098

 

 

 

20,861

 

Other components of equity

 

 

2,180

 

 

 

1,678

 

 

 

4,208

 

 

 

3,240

 

Retained earnings

 

 

213,318

 

 

 

164,223

 

 

 

247,214

 

 

 

190,318

 

Equity attributable to owners of the Parent Company

 

 

246,070

 

 

 

189,436

 

 

 

281,994

 

 

 

217,093

 

Non-controlling interest

 

 

771

 

 

 

594

 

 

 

651

 

 

 

501

 

Total equity

 

 

246,841

 

 

 

190,030

 

 

 

282,645

 

 

 

217,594

 

Total liabilities and equity

 

 

327,526

 

 

 

252,145

 

 

 

362,037

 

 

 

278,714

 

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,298.95 to US$ 1.00, the noon buying rate in effect on June 30, 2022 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

 

 

Six months ended

 

 

 

31-Mar-22

 

 

30-Jun-21

 

 

30-Jun-22

 

 

30-Jun-21

 

 

30-Jun-22

 

 

 

(KRW)

 

 

(KRW)

 

 

(KRW)

 

 

(US$)

 

 

(KRW)

 

 

(KRW)

 

 

(US$)

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Online games

 

 

21,447

 

 

 

22,380

 

 

 

24,827

 

 

 

19,113

 

 

 

41,838

 

 

 

46,274

 

 

 

35,624

 

Mobile games

 

 

63,241

 

 

 

55,140

 

 

 

68,042

 

 

 

52,382

 

 

 

137,578

 

 

 

131,283

 

 

 

101,069

 

Other revenue

 

 

3,919

 

 

 

6,091

 

 

 

3,650

 

 

 

2,810

 

 

 

9,254

 

 

 

7,569

 

 

 

5,827

 

Total net revenue

 

 

88,607

 

 

 

83,611

 

 

 

96,519

 

 

 

74,305

 

 

 

188,670

 

 

 

185,126

 

 

 

142,520

 

Cost of revenue

 

 

45,254

 

 

 

45,842

 

 

 

50,575

 

 

 

38,935

 

 

 

103,395

 

 

 

95,829

 

 

 

73,774

 

Gross profit

 

 

43,353

 

 

 

37,769

 

 

 

45,944

 

 

 

35,370

 

 

 

85,275

 

 

 

89,297

 

 

 

68,746

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

17,642

 

 

 

14,014

 

 

 

21,207

 

 

 

16,326

 

 

 

29,522

 

 

 

38,849

 

 

 

29,908

 

Research and development

 

 

3,232

 

 

 

4,147

 

 

 

2,956

 

 

 

2,276

 

 

 

8,156

 

 

 

6,188

 

 

 

4,764

 

Others, net

 

 

163

 

 

 

451

 

 

 

(334)

 

 

 

(257)

 

 

 

487

 

 

 

(171)

 

 

 

(132)

 

Total operating expenses

 

 

21,037

 

 

 

18,612

 

 

 

23,829

 

 

 

18,345

 

 

 

38,165

 

 

 

44,866

 

 

 

34,540

 

Operating profit

 

 

22,316

 

 

 

19,157

 

 

 

22,115

 

 

 

17,025

 

 

 

47,110

 

 

 

44,431

 

 

 

34,206

 

Finance income(costs):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

1,608

 

 

 

597

 

 

 

4,100

 

 

 

3,156

 

 

 

2,917

 

 

 

5,708

 

 

 

4,394

 

Finance costs

 

 

(704)

 

 

 

(367)

 

 

 

(2,341)

 

 

 

(1,802)

 

 

 

(1,300)

 

 

 

(3,045)

 

 

 

(2,344)

 

Profit before income tax

 

 

23,220

 

 

 

19,387

 

 

 

23,874

 

 

 

18,379

 

 

 

48,007

 

 

 

47,094

 

 

 

36,256

 

Income tax expense

 

 

6,889

 

 

 

4,569

 

 

 

6,462

 

 

 

4,975

 

 

 

9,628

 

 

 

13,351

 

 

 

10,278

 

Profit for the year

 

 

16,331

 

 

 

14,818

 

 

 

17,412

 

 

 

13,404

 

 

 

38,379

 

 

 

33,743

 

 

 

25,978

 

Profit attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

(100)

 

 

 

52

 

 

 

(53)

 

 

 

(41)

 

 

 

48

 

 

 

(153)

 

 

 

(117)

 

Owners of Parent company

 

 

16,431

 

 

 

14,766

 

 

 

17,465

 

 

 

13,445

 

 

 

38,331

 

 

 

33,896

 

 

 

26,095

 

Earning per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

 

2,365

 

 

 

2,125

 

 

 

2,513

 

 

 

1.93

 

 

 

5,516

 

 

 

4,878

 

 

 

3.76

 

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

 

 

2,365

 

 

 

2,125

 

 

 

2,513

 

 

 

1.93

 

 

 

5,516

 

 

 

4,878

 

 

 

3.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,298.95 to US$1.00, the noon buying rate in effect on June 30, 2022 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.