Gravity Reports Second Quarter of 2022 Results and Business Update

Seoul, KOREA, REPUBLIC OF


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

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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.