GlobeNewswire

Gravity Reports First Quarter of 2022 Results and Business Update

2022-05-13T10:10:00Z

Seoul, May 13, 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 first quarter ended March 31, 2022, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

FIRST QUARTER 2022 HIGHLIGHTS

  • Total revenues were KRW 88,607 million (US$ 73,135 thousand), representing an 8.3% decrease from the fourth quarter ended December 31, 2021 (“QoQ”) and a 15.7% decrease from the first quarter ended March 31, 2021 (“YoY”).
  • Operating profit was KRW 22,316 million (US$ 18,419 thousand), representing a 138.2% increase QoQ and a 20.2% decrease YoY.
  • Profit before income tax expenses was KRW 23,220 million (US$ 19,166 thousand), representing a 135.5% increase QoQ and a 18.9% decrease YoY.
  • Net profit attributable to parent company was KRW 16,431 million (US$ 13,562 thousand), representing a 1,198.9% increase QoQ and a 30.3% decrease YoY.

REVIEW OF FIRST QUARTER 2022 FINANCIAL RESULTS

Revenues

Online game revenues for the first quarter of 2022 were KRW 21,447 million (US$ 17,702 thousand), representing a 40.7 % increase QoQ from KRW 15,238 million and a 10.2% increase YoY from KRW 19,458 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Taiwan, Japan, the Philippines, Singapore and Malaysia. The increase YoY was largely due to increased revenues from Ragnarok Online in Taiwan, the Philippines, Singapore and Malaysia.

Mobile game revenues were KRW 63,241 million (US$ 52,198 thousand) for the first quarter of 2022, representing a 17.2% decrease QoQ from KRW 76,367 million and a 23.3% decrease YoY from KRW 82,438 million. The decrease QoQ resulted primarily from decreased revenues from Ragnarok X: Next Generation in Southeast Asia, Ragnarok Origin in Japan and Ragnarok M: Eternal Love. Such decrease was partially offset by increased revenues from Ragnarok Origin in the United States and Canada that was launched on November 10, 2021. The decrease YoY was primarily due to revenues from and Ragnarok Origin in Korea, Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau, and Ragnarok M: Eternal Love. This decrease was partially offset by increased revenues from Ragnarok X: Next Generation in Southeast Asia and Ragnarok Origin in the United States, Canada and Japan.

Other revenues were KRW 3,919 million (US$ 3,235 thousand) for the first quarter of 2022, representing 21.5% decrease QoQ from KRW 4,993 million and a 23.9% increase YoY from KRW 3,163 million.

Cost of Revenue

Cost of revenue was KRW 45,254 million (US$ 37,352 thousand) for the first quarter of 2022, representing a 17.2% decrease QoQ from KRW 54,632 million and a 21.4% decrease YoY from KRW 57,553 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services related to Ragnarok X: Next Generation in Southeast Asia and Ragnarok Origin in Japan. The decrease YoY was mostly from decreased commission paid for mobile game services related to Ragnarok M: Eternal Love, Ragnarok Origin in Korea and Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau.

Operating Expenses

Operating expenses were KRW 21,037 million (US$ 17,364 thousand) for the first quarter of 2022, representing a 35.5% decrease QoQ from KRW 32,599 million and a 7.6% increase YoY from KRW 19,553 million. The decrease QoQ was mainly attributable to decreased advertising expenses for Ragnarok Origin in the United States and Canada, NBA RISE TO STARDOM in Japan and G-STAR 2021, and research and development expenses. The increase YoY was mostly resulted from increased commission paid and salaries.

Profit Before Income Tax Expenses

Profit before income tax expenses was KRW 23,220 million (US$ 19,166 thousand) for the first quarter of 2022 compared with profit before income tax expense of KRW 9,859 million for the fourth quarter of 2021 and profit before income tax expenses of KRW 28,620 million for the first quarter of 2021.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 16,431 million (US$ 13,562 thousand) for the first quarter of 2022 compared with net profit attributable to parent company of KRW 1,265 million for the fourth quarter of 2021 and a net profit attributable to parent company of KRW 23,565 million for the first quarter of 2021.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 266,369 million (US$ 219,858 thousand) as of March 31, 2022.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,211.55 to US$ 1.00, the noon buying rate in effect on March 31, 2022 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATE

Ragnarok Online

Ragnarok Online is going to celebrate its 20th anniversary in Korea in the second half of 2022 since the game was initially launched in Korea on August 1, 2002.

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 second half of 2022.

  • Ragnarok Origin, a MMORPG mobile game

Ragnarok Origin is scheduled to be launched in Taiwan, Hong Kong and Macau in the second half of 2022.

  • Ragnarok Labyrinth NFT, a blockchain mobile game

Ragnarok Labyrinth NFT was re-opened in Southeast Asia on April 27, 2022 since it was initially launched in Southeast Asia on April 13. The game ranked as the first in top grossing of Apple App Store in Thailand, and the third in top grossing of Apple App Store in the Philippines and Indonesia after its launching.

  • Ragnarok Poring Merge, a blockchain mobile game

Ragnarok Poring Merge was designed as a blockchain game combined with NFT items and P2E systems. The game will start the pre-registration in Southeast Asia and it is preparing to be launched in the second half of 2022.

  • Other Ragnarok Online IP-based games

Ragnarok: The Lost Memories, a Cinematic Newtro Story RPG mobile and PC game, was launched for mobile version in South America, Australia and New Zealand on March 29, 2022. The game started to provide PC game service on Steam from April 12, 2022, and has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.

Ragnarok Monster’s Arena, a Card SRPG mobile game, was launched in Taiwan, Hong Kong and Macau on May 11, 2022. The game is scheduled to be launched in Thailand and Korea in the second half of 2022.

Ragnarok V: Returns, a MMORPG mobile and PC game, is scheduled to be launched for mobile version and PC game service in Oceania in the second quarter of 2022. The game is preparing to provide PC game service on Steam in global in the second half 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 September, 2022 and to be launched in Korea in the second half of 2022. The game has been developed by Gravity.

Other IP games

PALADOG TACTICS, a SRPG mobile game, was launched in Korea on March 31, 2022. The game has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the first 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. 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-21  31-Mar-22 
  KRW  US$  KRW  US$ 
  (audited)  (unaudited)  (unaudited)  (unaudited) 
Assets                
Current assets:                
Cash and cash equivalents  99,105   81,800   101,369   83,669 
Short-term financial instruments  148,000   122,158   165,000   136,189 
Accounts receivable, net  52,615   43,428   51,622   42,608 
Other receivables, net  1,080   891   241   199 
Prepaid expenses  3,164   2,612   2,008   1,658 
Other current assets  2,171   1,792   2,489   2,054 
Total current assets  306,135   252,681   322,729   266,377 
Property and equipment, net  11,338   9,358   10,310   8,510 
Intangible assets, net  3,342   2,758   3,071   2,535 
Deferred tax assets  1,719   1,419   1,114   919 
Other non-current financial assets  3,019   2,492   3,036   2,506 
Other non-current assets  1,973   1,628   2,033   1,678 
Total assets  327,526   270,336   342,293   282,525 
Liabilities and Equity                
Current liabilities:                
Accounts payable  41,199   34,005   40,355   33,309 
Deferred revenue  13,481   11,127   13,787   11,380 
Withholdings  3,596   2,968   3,017   2,490 
Accrued expense  1,484   1,225   2,704   2,232 
Income tax payable  10,629   8,773   9,399   7,758 
Other current liabilities  3,608   2,978   3,553   2,932 
Total current liabilities  73,997   61,076   72,815   60,101 
Long-term deferred revenue  98   81   98   81 
Other non-current liabilities  6,590   5,440   5,818   4,802 
Total liabilities  80,685   66,597   78,731   64,984 
Share capital  3,474   2,867   3,474   2,867 
Capital surplus  27,098   22,366   27,098   22,366 
Other components of equity  2,180   1,799   2,559   2,111 
Retained earnings  213,318   176,070   229,749   189,632 
Equity attributable to owners of the Parent Company   

246,070
    

203,102
    

262,880
    

216,976
 
Non-controlling interest  771   637   682   565 
Total equity  246,841   203,739   263,562   217,541 
Total liabilities and equity  327,526   270,336   342,293   282,525 

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,211.55 to US$ 1.00, the noon buying rate in effect on March 31, 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 
  31-Dec-21  31-Mar-21  31-Mar-22 
  (KRW)  (US$)  (KRW)  (US$)  (KRW)  (US$) 
  (unaudited)  (unaudited)  (unaudited)  (unaudited)  (unaudited)  (unaudited) 
Revenues:                        
Online games   15,238    12,577    19,458   16,060    21,447    17,702 
Mobile games   76,367    63,032    82,438   68,043    63,241    52,198 
Other revenue   4,993    4,121    3,163   2,611    3,919    3,235 
Total net revenue   96,598    79,730    105,059   86,714    88,607    73,135 
Cost of revenue  54,632   45,093   57,553   47,504   45,254   37,352 
Gross profit  41,966   34,637   47,506   39,210   43,353   35,783 
Operating expenses:                        
Selling, general and administrative expenses   28,018    23,126    15,508   12,800    17,642    14,562 
Research and development   4,271    3,525    4,009   3,309    3,232    2,668 
Others, net   310    256    36   30    163    134 
Total operating expenses   32,599    26,907    19,553   16,139    21,037    17,364 
Operating profit  9,367   7,730   27,953   23,071   22,316   18,419 
Finance income(costs):                        
Finance income   943    779    1,600   1,321    1,608    1,327 
Finance costs  (451)   (372)  (933)   (770)   (704)   (580) 
Profit before income tax  9,859   8,137   28,620   23,622   23,220   19,166 
Income tax expense  8,642   7,134   5,059   4,176   6,889   5,686 
Profit for the year  1,217   1,003   23,561   19,446   16,331   13,480 
Profit attributable to:                        
Non-controlling interest  (48)   (40)   (4)   (3)   (100)   (82) 
Owners of Parent company  1,265   1,043   23,565   19,449   16,431    13,562 
Earning per share                        
- Basic and diluted  182   0.15   3,391   2.80   2,365   1.95 
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  182   0.15   3,391   2.80   2,365   1.95 
                                      

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,211.55 to US$1.00, the noon buying rate in effect on March 31, 2022 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.