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Name | Symbol | Market | Type |
---|---|---|---|
Gravity Co Ltd | NASDAQ:GRVY | NASDAQ | Depository Receipt |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.37 | 2.07% | 67.50 | 66.00 | 85.00 | 68.00 | 65.97 | 66.10 | 29,626 | 05:00:06 |
SECOND QUARTER 2019 HIGHLIGHTS
REVIEW OF SECOND QUARTER 2019 FINANCIAL RESULTS
Revenues
Subscription revenues for the second quarter of 2019 were KRW 6,746 million (US$ 5,843 thousand), representing a 7.8 % increase QoQ from KRW 6,256 million and a 10.3% increase YoY from KRW 6,116 million. The increase QoQ was mainly attributable to increased revenue from Ragnarok Online in Taiwan. The increase YoY was largely due to increased revenues from Ragnarok online in Taiwan and Korea. Such increase was partially offset by decreased revenue from Ragnarok Prequel in Taiwan.
Royalty and license fee revenues for the second quarter of 2019 were KRW 2,832 million (US$ 2,452 thousand), representing a 23.9% decrease QoQ from KRW 3,720 million and a 11.7% decrease YoY from KRW 3,209 million. The decrease QoQ was primarily due to decreased revenue from Ragnarok Online in Japan. The decrease YoY resulted mainly from decreased revenues from Ragnarok Online in Thailand and Brazil.
Mobile game and application revenues were KRW 66,463 million (US$ 57,565 thousand) for the second quarter of 2019, representing a 45.1% decrease QoQ from KRW 121,147 million and a 28.3% increase YoY from KRW 51,789 million. The decrease QoQ resulted primarily from decreased revenues from Ragnarok M: Eternal Love in Southeast Asia, North America, South America, and Oceania, Taiwan, and Korea. Such decrease was partially offset by revenue from Ragnarok M: Eternal Love in Japan, which was launched on June 5, 2019. The increase YoY was primarily due to revenues from Ragnarok M: Eternal Love in Southeast Asia, North America, South America, Oceania, and Japan. This increase was partially offset by decreased revenues from Ragnarok M: Eternal Love in Korea and Taiwan. RO: Idle Poring in global markets except for China and Japan, and Ragnarok R in Taiwan and Korea.Character merchandising and other revenues were KRW 2,086 million (US$ 1,807 thousand) for the second quarter of 2019, representing 16.6% decrease QoQ from KRW 2,500 million and a 9.1% increase YoY from KRW 1,912 million.
Cost of Revenue
Cost of revenue was KRW 56,858 million (US$ 49,246 thousand) for the second quarter of 2019, representing a 43.8% decrease QoQ from KRW 101,237 million and a 31.8% increase YoY from KRW 43,150 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North America, South America and Oceania, Taiwan, and Korea. The increase YoY was mostly from increased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North America, South America and Oceania and salaries.
Operating Expenses
Operating expenses were KRW 8,271 million (US$ 7,164 thousand) for the second quarter of 2019, representing a 5.4% decrease QoQ from KRW 8,746 million and a 28.4% decrease YoY from KRW 11,553 million. The decrease QoQ was mainly attributable to decreased advertising expenses for Ragnarok M: Eternal Love in Korea. Such decrease was partially offset by increased commission paid and research and development expenses. The decrease YoY was mostly resulted from decreased advertising expenses for Ragnarok M: Eternal Love in Korea. Such decrease was partially offset by increased research and development expenses and salaries.
Profit before income tax expenses
Profit before income tax expenses was KRW 14,037 million (US$ 12,158 thousand) for the second quarter of 2019 compared with profit before income tax expense of KRW 24,389 million for the first quarter of 2019 and profit before income tax expenses of KRW 8,642 million for the second quarter of 2018.
Net Profit
As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 10,861 million (US$ 9,407 thousand) for the second quarter of 2019 compared with net profit attributable to parent company of KRW 19,760 million for the first quarter of 2019 and a net profit attributable to parent company of KRW 6,615 million for the second quarter of 2018.
Liquidity
The balance of cash and cash equivalents and short-term financial instruments was KRW 111,164 million (US$ 96,281 thousand) as of June 30, 2019.
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,154.58 to US$ 1.00, the noon buying rate in effect on June 28, 2019 as quoted by the Federal Reserve Bank of New York.
GRAVITY BUSINESS UPDATE
Ragnarok Online IP-based Games
Ragnarok M: Eternal Love (locally named Ragnarok Masters in Japan) has launched in Japan on June 5, 2019 by GungHo Online Entertainment Inc, (“GungHo”), the licensee of Ragnarok Online. Also, Gravity is preparing the service for Europe (except for some regions), Turkey and Russia in the third quarter of 2019.
Ragnarok web MMORPG has launched in Taiwan, Hong Kong and Macau on June 5, 2019.
Gravity is planning to launch RO Click H5, a HTML 5 version of idle game globally in September 2019.
A 3D Action MORPG mobile game, Ragnarok Spear of Odin, is expected to be launched in Taiwan, Hong Kong, and Macau in the second half of 2019. The game was developed by NeoCyon, our subsidiary in Korea.
Ragnarok Online
Other IP games
Investor Presentation
Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of second quarter in 2019 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 83 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, 2018 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. Minji Oh IR Unit Gravity Co., Ltd. Email: ir@gravity.co.kr Telephone: +82-2-2132-7800~1
# # #
GRAVITY Co., Ltd.Consolidated Statements of Financial Position
(In millions of KRW and thousands of US$)
As of | ||||||||||||||||
31-Dec-18 | 30-Jun-19 | |||||||||||||||
KRW | US$ | KRW | US$ | |||||||||||||
(audited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | 86,051 | 74,530 | 88,664 | 76,793 | ||||||||||||
Short-term financial instruments | 9,500 | 8,228 | 22,500 | 19,488 | ||||||||||||
Accounts receivable, net | 60,664 | 52,542 | 34,817 | 30,156 | ||||||||||||
Other receivables, net | 255 | 221 | 239 | 207 | ||||||||||||
Prepaid expenses | 2,516 | 2,179 | 2,096 | 1,815 | ||||||||||||
Other current assets | 1,182 | 1,024 | 2,390 | 2,070 | ||||||||||||
Total current assets | 160,168 | 138,724 | 150,706 | 130,529 | ||||||||||||
Property and equipment, net | 1,498 | 1,297 | 5,843 | 5,061 | ||||||||||||
Intangible assets | 1,163 | 1,007 | 1,687 | 1,461 | ||||||||||||
Deferred tax assets | 7,413 | 6,421 | 7,035 | 6,093 | ||||||||||||
Other non-current financial assets | 1,494 | 1,294 | 1,554 | 1,346 | ||||||||||||
Other non-current assets | 1,438 | 1,245 | 1,411 | 1,222 | ||||||||||||
Total assets | 173,174 | 149,988 | 168,236 | 145,712 | ||||||||||||
Liabilities and Equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | 71,928 | 62,298 | 38,350 | 33,215 | ||||||||||||
Deferred revenue | 16,476 | 14,270 | 12,421 | 10,758 | ||||||||||||
Withholdings | 2,019 | 1,749 | 1,456 | 1,261 | ||||||||||||
Accrued expense | 1,031 | 893 | 1,050 | 909 | ||||||||||||
Income tax payable | 1,944 | 1,684 | 2,005 | 1,737 | ||||||||||||
Other current liabilities | 123 | 106 | 2,135 | 1,849 | ||||||||||||
Total current liabilities | 93,521 | 81,000 | 57,417 | 49,729 | ||||||||||||
Long-term deferred revenue | 3,598 | 3,116 | 1,960 | 1,698 | ||||||||||||
Other non-current liabilities | 503 | 436 | 2,401 | 2,080 | ||||||||||||
Total liabilities | 97,622 | 84,552 | 61,778 | 53,507 | ||||||||||||
Share capital | 3,474 | 3,009 | 3,474 | 3,009 | ||||||||||||
Capital surplus | 27,141 | 23,506 | 27,140 | 23,506 | ||||||||||||
Other components of equity | 138 | 120 | 277 | 240 | ||||||||||||
Retained earnings (Accumulated deficit) | 45,405 | 39,326 | 76,026 | 65,847 | ||||||||||||
Equity attributable to owners of the Parent Company | 76,158 | 65,961 | 106,917 | 92,602 | ||||||||||||
Non-controlling interest | (606 | ) | (525 | ) | (459 | ) | (397 | ) | ||||||||
Total equity | 75,552 | 65,436 | 106,458 | 92,205 | ||||||||||||
Total liabilities and equity | 173,174 | 149,988 | 168,236 | 145,712 |
* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,154.58 to US$ 1.00, the noon buying rate in effect on June 28, 2019 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-19 | 30-Jun-18 | 30-Jun-19 | 30-Jun-18 | 30-Jun-19 | ||||||||||||||||||||||||
(KRW) | (KRW) | (KRW) | (US$) | (KRW) | (KRW) | (US$) | ||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Online games-subscription revenue | 6,256 | 6,116 | 6,746 | 5,843 | 15,012 | 13,002 | 11,261 | |||||||||||||||||||||
Online games-royalties and license fees | 3,720 | 3,209 | 2,832 | 2,452 | 7,828 | 6,552 | 5,675 | |||||||||||||||||||||
Mobile games and applications | 121,147 | 51,789 | 66,463 | 57,565 | 103,185 | 187,610 | 162,492 | |||||||||||||||||||||
Character merchandising and other revenue | 2,500 | 1,912 | 2,086 | 1,807 | 3,312 | 4,586 | 3,972 | |||||||||||||||||||||
Total net revenue | 133,623 | 63,026 | 78,127 | 67,667 | 129,337 | 211,750 | 183,400 | |||||||||||||||||||||
Cost of revenue | 101,237 | 43,150 | 56,858 | 49,246 | 88,934 | 158,095 | 136,929 | |||||||||||||||||||||
Gross profit | 32,386 | 19,876 | 21,269 | 18,421 | 40,403 | 53,655 | 46,471 | |||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Selling, general and administrative | 6,665 | 9,470 | 5,733 | 4,966 | 23,297 | 12,398 | 10,738 | |||||||||||||||||||||
Research and development | 1,877 | 1,742 | 2,432 | 2,106 | 3,616 | 4,309 | 3,732 | |||||||||||||||||||||
Others, net | 204 | 341 | 106 | 92 | 347 | 310 | 268 | |||||||||||||||||||||
Total operating expenses | 8,746 | 11,553 | 8,271 | 7,164 | 27,260 | 17,017 | 14,738 | |||||||||||||||||||||
Operating profit | 23,640 | 8,323 | 12,998 | 11,257 | 13,143 | 36,638 | 31,733 | |||||||||||||||||||||
Finance income(costs): | ||||||||||||||||||||||||||||
Finance income | 1,062 | 892 | 1,141 | 989 | 1,482 | 2,203 | 1,907 | |||||||||||||||||||||
Finance costs | (313 | ) | (573 | ) | (102 | ) | (88 | ) | (866 | ) | (415 | ) | (359 | ) | ||||||||||||||
Profit before income tax | 24,389 | 8,642 | 14,037 | 12,158 | 13,759 | 38,426 | 33,281 | |||||||||||||||||||||
Income tax expenses(profits) | 4,627 | 2,042 | 3,208 | 2,779 | 3,635 | 7,835 | 6,786 | |||||||||||||||||||||
Profit for the year | 19,762 | 6,600 | 10,829 | 9,379 | 10,124 | 30,591 | 26,495 | |||||||||||||||||||||
Profit attributable to: | ||||||||||||||||||||||||||||
Non-controlling interest | 2 | (15 | ) | (32 | ) | (28 | ) | (40 | ) | (30 | ) | (26 | ) | |||||||||||||||
Owners of Parent company | 19,760 | 6,615 | 10,861 | 9,407 | 10,164 | 30,621 | 26,521 | |||||||||||||||||||||
Earning per share | ||||||||||||||||||||||||||||
- Basic and diluted | 2,844 | 952 | 1,563 | 1.40 | 1,463 | 4,407 | 3.80 | |||||||||||||||||||||
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 | 2,844 | 952 | 1,563 | 1.40 | 1,463 | 4,407 | 3.80 |
* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,154.58 to US$1.00, the noon buying rate in effect on June 28, 2019 as quoted by the Federal Reserve Bank of New York.(1) Each ADS represents one common shares.
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