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Gravity Reports Third Quarter of 2021 Results and Business Update
Source: Nasdaq GlobeNewswire / 12 Nov 2021 06:00:00 America/New_York
Seoul, South Korea, Nov. 12, 2021 (GLOBE NEWSWIRE) --
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, 2021, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.
THIRD QUARTER 2021 HIGHLIGHTS
- Total revenues were KRW 128,670 million (US$ 108,702 thousand), representing a 53.9% increase from the second quarter ended June 30, 2021 (“QoQ”) and a 2.4% decrease from the third quarter ended September 30, 2020 (“YoY”).
- Operating profit was KRW 40,242 million (US$ 33,997 thousand), representing a 110.1% increase QoQ and a 17.1% increase YoY.
- Profit before income tax expenses was KRW 41,435 million (US$ 35,005 thousand), representing a 113.7% increase QoQ and a 23.0% increase YoY.
- Net profit attributable to parent company was KRW 26,351 million (US$ 22,262 thousand), representing a 78.5% increase QoQ and a 4.2% increase YoY.
REVIEW OF THIRD QUARTER 2021 FINANCIAL RESULTS
Revenues
Online game revenues for the third quarter of 2021 were KRW 18,295 million (US$ 15,456 thousand), representing a 18.3% decrease QoQ from KRW 22,380 million and a 42.5% decrease YoY from KRW 31,833 million. The decrease QoQ was mainly attributable to decreased revenues from Ragnarok Online in Thailand and Japan. Such decrease was partially offset by increased revenues from Ragnarok Online in Taiwan. The decrease YoY was largely due to decreased revenues from Ragnarok Online in Thailand.
Mobile game revenues were KRW 106,218 million (US$ 89,734 thousand) for the third quarter of 2021, representing a 92.6% increase QoQ from KRW 55,140 million and a 11.2% increase YoY from KRW 95,531 million. The increase QoQ resulted primarily from increased revenues from Ragnarok X: Next Generation in Southeast Asia that was launched on June 18, 2021 and Ragnarok Origin in Japan that was launched on June 28, 2021. Such increase was partially offset by decreased revenues from Ragnarok Origin in Korea, Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau and Ragnarok M: Eternal Love in Southeast Asia. The increase YoY was primarily due to revenues from Ragnarok X: Next Generation in Southeast Asia, Taiwan, Hong Kong and Macau, and Ragnarok Origin in Japan. This increase was partially offset by decreased revenues from Ragnarok Origin in Korea and Ragnarok M: Eternal Love.
Other revenues were KRW 4,157 million (US$ 3,512 thousand) for the third quarter of 2021, representing a 31.8% decrease QoQ from KRW 6,091 million and a 6.2% decrease YoY from KRW 4,431 million.
Cost of Revenues
Cost of revenue was KRW 66,146 million (US$ 55,881 thousand) for the third quarter of 2021, representing a 44.3% increase QoQ from KRW 45,842 million and a 10.7% decrease YoY from KRW 74,107 million. The increase QoQ was mainly due to increased 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 and Ragnarok Origin in Korea.
Operating Expenses
Operating expenses were KRW 22,282 million (US$ 18,824 thousand) for the third quarter of 2021, representing a 19.7% increase QoQ from KRW 18,612 million and a 4.5% decrease YoY from KRW 23,332 million. The increase QoQ was mainly attributable to increased advertising expenses for Ragnarok: The Lost Memories in Thailand and Ragnarok Origin in Korea, United States and Canada, and salaries. The decrease YoY was mostly resulted from decreased advertising expenses for Ragnarok Origin in Korea, commission paid for payment gate way fees related to Ragnarok Online in Thailand, and research and development expenses.
Profit before income tax expenses
Profit before income tax expenses was KRW 41,435 million (US$ 35,005 thousand) for the third quarter of 2021 compared with profit before income tax expense of KRW 19,387 million for the second quarter of 2021 and profit before income tax expenses of KRW 33,675 million for the third quarter of 2020.
Net Profit
As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 26,351 million (US$ 22,262 thousand) for the third quarter of 2021 compared with net profit attributable to parent company of KRW 14,766 million for the second quarter of 2021 and a net profit attributable to parent company of KRW 25,281 million for the third quarter of 2020.
Liquidity
The balance of cash and cash equivalents and short-term financial instruments was KRW 226,173 million (US$ 191,073 thousand) as of September 30, 2021.
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,183.70 to US$ 1.00, the noon buying rate in effect on September 30, 2021 as quoted by the Federal Reserve Bank of New York.
GRAVITY BUSINESS UPDATE
Ragnarok Online
Gravity Game Tech, a subsidiary in Thailand, opened Ragnarok Classic, the new server of Ragnarok Online, in Thailand on October 28, 2021 and Gravity Game Link, a subsidiary in Indonesia, is also preparing to launch the new server, Ragnarok Retro, in Indonesia on December 15, 2021. Ragnarok Online is expected to be relaunched in the Philippines, Singapore and Malaysia in the first half of 2022, and Gravity Game Hub, a subsidiary in Singapore, will publish this game.
Ragnarok Online IP-based Games
- Ragnarok X: Next Generation, a MMORPG mobile game
Ragnarok X: Next Generation was launched in Vietnam on September 1, 2021.
- Ragnarok Origin, a MMORPG mobile game
Ragnarok Origin was launched in the United States and Canada on November 10, 2021 and ranked as the second in free download of Google Play in the United States on the launching day. The game is scheduled to be launched in Taiwan, Hong Kong and Macau in the first half of 2022, and in Southeast Asia in the second half of 2022.
- Other Ragnarok Online IP-based games
Ragnarok: The Lost Memories, a Cinematic Newtro Story RPG mobile game, was launched in Thailand in August 26, 2021. The game is scheduled to be launched in the Philippines, Singapore and Malaysia on December, 2021 and in North America in the first half of 2022. Gravity NeoCyon, Inc., our subsidiary in Korea, has developed the game.
Ragnarok V: Returns, a MMORPG mobile game, is expected to hold the closed beta test (“CBT”) in Oceania in December 2021 and is scheduled to be launched in the first quarter of 2022. The game has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.
Ragnarok Begins, a MMORPG PC game, has completed the CBT on September 7, 2021 with users’ positive feedbacks. The company is preparing to design the game as a cross-platform game across PC and mobile, and the game has been developed by Gravity.
Project T (Tentative title), a Card SRPG mobile game, is expected to be launched in Taiwan, Hong Kong and Macau in the first quarter of 2022.
Other IP games
NBA RISE TO STARDOM, a Sports mobile game, has started the open beta test (“OBT”) and pre-registration on September 28, 2021. The game is expected to be launched in Japan in November, 2021 and in Korea in the first half of 2022.
SADAKO M, a Mystery Solving Horror Escape Adventure mobile game, was launched in Japan on October 26, 2021.
Grandia HD Collection, a RPG console game, was released in Korea, Taiwan and Hong Kong on October 1, 2021. The game consists of a bundle of RPG classics Grandia and Grandia II and supports Korean and Chinese languages. Nintendo Switch is available for the game.
Investor Presentation
Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the third quarter in 2021 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 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, 2020 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.krMs. 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$)
As of 31-Dec-20 30-Sep-21 KRW US$ KRW US$ (audited) (unaudited) (unaudited) (unaudited) Assets Current assets: Cash and cash equivalents 110,632 93,463 118,173 99,834 Short-term financial instruments 71,000 59,981 108,000 91,239 Accounts receivable, net 59,761 50,487 82,071 69,334 Other receivables, net 8 7 11 9 Prepaid expenses 2,238 1,891 2,061 1,741 Other current assets 2,946 2,489 3,958 3,344 Total current assets 246,585 208,318 314,274 265,501 Property and equipment, net 7,695 6,501 10,307 8,707 Intangible assets 3,363 2,841 3,400 2,872 Deferred tax assets 3,590 3,033 787 665 Other non-current financial assets 1,324 1,119 2,388 2,017 Other non-current assets 2,815 2,377 1,578 1,335 Total assets 265,372 224,189 332,734 281,097 Liabilities and Equity Current liabilities: Accounts payable 52,688 44,511 56,702 47,902 Deferred revenue 13,692 11,567 11,076 9,357 Withholdings 2,851 2,409 5,162 4,361 Accrued expense 1,365 1,153 1,354 1,144 Income tax payable 9,470 8,000 3,684 3,112 Other current liabilities 2,654 2,242 2,945 2,488 Total current liabilities 82,720 69,882 80,923 68,364 Long-term deferred revenue 101 85 98 83 Other non-current liabilities 5,203 4,397 6,279 5,305 Total liabilities 88,024 74,364 87,300 73,752 Share capital 3,474 2,935 3,474 2,935 Capital surplus 27,110 22,903 27,099 22,894 Other components of equity (1,045 ) (883 ) 2,037 1,721 Retained earnings 147,371 124,500 212,053 179,144 Equity attributable to owners of the Parent Company
176,910
149,455244,663
206,694Non-controlling interest 438 370 771 651 Total equity 177,348 149,825 245,434 207,345 Total liabilities and equity 265,372 224,189 332,734 281,097 * For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,183.70 to US$ 1.00, the noon buying rate in effect on September 30, 2021 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-21 30-Sep-20 30-Sep-21 30-Sep-20 30-Sep-21 (KRW) (KRW) (KRW) (US$) (KRW) (KRW) (US$) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Online games 22,380 31,833 18,295 15,456 74,176 60,133 50,801 Mobile games 55,140 95,531 106,218 89,734 205,762 243,796 205,961 Other revenue 6,091 4,431 4,157 3,512 13,575 13,411 11,330 Total net revenue 83,611 131,795 128,670 108,702 293,513 317,340 268,092 Cost of revenue 45,842 74,107 66,146 55,881 174,079 169,541 143,230 Gross profit 37,769 57,688 62,524 52,821 119,434 147,799 124,862 Operating expenses: Selling, general and administrative expenses 14,014 18,042 18,091 15,283 46,692 47,613 40,223 Research and development 4,147 4,550 4,143 3,500 10,676 12,299 10,390 Others, net 451 740 48 41 1,041 535 454 Total operating expenses 18,612 23,332 22,282 18,824 58,409 60,447 51,067 Operating profit 19,157 34,356 40,242 33,997 61,025 87,352 73,795 Finance income(costs): Finance income 597 822 2,128 1,798 3,000 4,325 3,654 Finance costs (367 ) (1,503 ) (935 ) (790 ) (2,765 ) (2,235 ) (1,888 ) Profit before income tax 19,387 33,675 41,435 35,005 61,260 89,442 75,561 Income tax expenses 4,569 8,390 15,151 12,800 13,687 24,779 20,933 Profit for the year 14,818 25,285 26,284 22,205 47,573 64,663 54,628 Profit attributable to: Non-controlling interest 52 4 (67 ) (57 ) (66 ) (19 ) (16 ) Owners of Parent company 14,766 25,281 26,351 22,262 47,639 64,682 54,644 Earnings per share - Basic and diluted 2,125 3,638 3,792 3.20 6,856 9,308 7.86 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 Earnings per ADS(1) - Basic and diluted 2,125 3,638 3,792 3.20 6,856 9,308 7.86 * For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,183.70 to US$1.00, the noon buying rate in effect on September 30, 2021 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.