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Gravity Reports Second Quarter of 2021 Results and Business


Seoul, South Korea, Aug. 13, 2021 (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, 2021, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

SECOND QUARTER 2021 HIGHLIGHTS

  • Total revenues were KRW 83,611 million (US$ 73,965 thousand), representing a 20.4% decrease from the first quarter ended March 31, 2021 (“QoQ”) and a 5.5% decrease from the second quarter ended June 30, 2020 (“YoY”).
  • Operating profit was KRW 19,157 million (US$ 16,947 thousand), representing a 31.5% decrease QoQ and a 17.4% increase YoY.
  • Profit before income tax expenses was KRW 19,387 million (US$ 17,150 thousand), representing a 32.3% decrease QoQ and a 18.7% increase YoY.
  • Net profit attributable to parent company was KRW 14,766 million (US$ 13,062 thousand), representing a 37.3% decrease QoQ and a 12.8% increase YoY.

REVIEW OF SECOND QUARTER 2021 FINANCIAL RESULTS

Revenues

Online game revenues for the second quarter of 2021 were KRW 22,380 million (US$ 19,798 thousand), representing a 15.0% increase QoQ from KRW 19,458 million and a 22.6% decrease YoY from KRW 28,907 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Thailand. The decrease YoY was largely due to decreased revenues from Ragnarok Online in Thailand and revenues from collaboration event with Garena’s Free Fire items based on Ragnarok Online IP.

Mobile game revenues were KRW 55,140 million (US$ 48,778 thousand) for the second quarter of 2021, representing a 33.1% decrease QoQ from KRW 82,438 million and a 1.6% increase YoY from KRW 54,249 million. The decrease QoQ resulted primarily from decreased revenues from Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau, Ragnarok Origin in Korea and Ragnarok M: Eternal Love in Southeast Asia. Such decrease was partially offset by increased revenues from Ragnarok X: Next Generation in Southeast Asia that was launched on June 18, 2021. The increase YoY was primarily due to revenues from Ragnarok X: Next Generation in Taiwan, Hong Kong, Macau and Southeast Asia and Ragnarok Origin in Korea. This increase was partially offset by decreased revenues from Ragnarok M: Eternal Love and Ragnarok Tactics.

Other revenues were KRW 6,091 million (US$ 5,389 thousand) for the second quarter of 2021, representing 92.6% increase QoQ from KRW 3,163 million and a 14.9% increase YoY from KRW 5,302 million.

Cost of Revenue

Cost of revenue was KRW 45,842 million (US$ 40,554 thousand) for the second quarter of 2021, representing a 20.3% decrease QoQ from KRW 57,553 million and a 10.3% decrease YoY from KRW 51,098 million. The decrease QoQ was mainly due to 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. The decrease YoY was mostly from decreased commission paid for mobile game services related to Ragnarok M: Eternal Love and Ragnarok Tactics.

Operating Expenses

Operating expenses were KRW 18,612 million (US$ 16,464 thousand) for the second quarter of 2021, representing a 4.8% decrease QoQ from KRW 19,553 million and a 11.6% decrease YoY from KRW 21,047 million. The decrease QoQ was mainly attributable to decreased advertising expenses for Tera Classic in Japan, The Lord in Thailand and The Labyrinth of Ragnarok in global. The decrease YoY was mostly resulted from decreased advertising expenses for Ragnarok Origin and Ragnarok Tactics in Korea, Sacred Blade in Japan, Ragnarok Online in Thailand and Ragnarok H5 in Indonesia.

Profit before income tax expenses

Profit before income tax expenses was KRW 19,387 million (US$ 17,150 thousand) for the second quarter of 2021 compared with profit before income tax expense of KRW 28,620 million for the first quarter of 2021 and profit before income tax expenses of KRW 16,335 million for the second quarter of 2020.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 14,766 million (US$ 13,062 thousand) for the second quarter of 2021 compared with net profit attributable to parent company of KRW 23,565 million for the first quarter of 2021 and a net profit attributable to parent company of KRW 13,095 million for the second quarter of 2020.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 202,631 million (US$ 179,253 thousand) as of June 30, 2021.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,130.42 to US$ 1.00, the noon buying rate in effect on June 30, 2021 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATE

Ragnarok Online

Gravity opened Ragnarok Online in Vietnam on July 8, 2021 with VTC Technology and Digital Content Company as a joint publisher.

Ragnarok Online IP-based Games

  • Ragnarok Origin, a MMORPG mobile game

Ragnarok Origin was launched in Japan on June 28, 2021 and ranked as the first in free download of Google Play games and Apple’s App Store games after its launching. The game is scheduled to be launched in the United States and Canada in October 2021 and in Taiwan, Hong Kong and Macau in the first half of 2022.

  • Ragnarok X: Next Generation, a MMORPG mobile game

Ragnarok X: Next Generation was launched in Southeast Asia on June 18, 2021 and ranked as the first in top grossing of Apple App Store in Thailand, Indonesia and the Philippines. The game is being prepared for launch in Vietnam in September 2021 and in Korea in the first half of 2022.

  • Other Ragnarok Online IP-based games

Ragnarok Project S (Tentative title), a MMORPG mobile game, is scheduled to be launched in Oceania in the fourth quarter of 2021 and has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.

Ragnarok The Lost Memories, a Cinematic Newtro Story RPG mobile game, is expected to be launched in Thailand in the third quarter of 2021 and in North America in the fourth quarter of 2021. Gravity NeoCyon, Inc., our subsidiary in Korea, has developed the game.

Ragnarok Begins, a MMORPG PC game, is expected to start the first closed beta test(“CBT”) in September 2021 and the launching schedule will be disclosed in G-STAR 2021. The game has been developed by Gravity.

Other IP games

NBA RISE TO STARDOM, a Sports mobile game, is scheduled to run the CBT in September 2021 and is expected to be launched in Japan in the fourth quarter of 2021. Both mobile platforms, iOS and Android, will be available for the game.

Sadako M, an Adventure mobile game, is expected to be launched in Japan in September 2021.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the second 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. —————————————————

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.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-20     30-June-21  
    KRW     US$     KRW     US$  
    (audited)     (unaudited)     (unaudited)     (unaudited)  
Assets                                
Current assets:                                
Cash and cash equivalents     110,632         97,868         101,631       89,906  
Short-term financial instruments     71,000         62,809         101,000       89,347  
Accounts receivable, net     59,761         52,866         58,874       52,082  
Other receivables, net     8         7         60       53  
Prepaid expenses     2,238         1,980         1,946       1,721  
Other current assets     2,946         2,606         2,301       2,035  
Total current assets     246,585         218,136         265,812       235,144  
Property and equipment, net     7,695         6,807         9,459       8,368  
Intangible assets, net     3,363         2,975         3,788       3,351  
Deferred tax assets     3,590         3,176         3,072       2,718  
Other non-current financial assets     1,324         1,171         2,071       1,832  
Other non-current assets     2,815         2,490         1,844       1,631  
Total assets     265,372         234,755         286,046       253,044  
Liabilities and Equity                                
Current liabilities:                                
Accounts payable     52,688         46,609         40,271       35,625  
Deferred revenue     13,692         12,112         12,030       10,642  
Withholdings     2,851         2,522         2,680       2,371  
Accrued expense     1,365         1,208         1,219       1,078  
Income tax payable     9,470         8,377         4,273       3,780  
Other current liabilities     2,654         2,348         2,567       2,271  
Total current liabilities     82,720         73,176         63,040       55,767  
Long-term deferred revenue     101         89         98       87  
Other non-current liabilities     5,203         4,604         5,782       5,114  
Total liabilities     88,024         77,869         68,920       60,968  
Share capital     3,474         3,073         3,474       3,073  
Capital surplus     27,110         23,982         27,110       23,982  
Other components of equity     (1,045 )       (924 )       11       10  
Retained earnings     147,371         130,368         185,702       164,277  
Equity attributable to owners of the Parent Company    

176,910

       

156,499

       

216,297

     

191,342

 
Non-controlling interest     438         387         829       734  
Total equity     177,348         156,886         217,126       192,076  
Total liabilities and equity     265,372         234,755         286,046       253,044  

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,130.42 to US$ 1.00, the noon buying rate in effect on June 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   Six months ended
    31-Mar-21     30-Jun-20     30-Jun-21   30-Jun-20   30-Jun-21
    (KRW)     (KRW)     (KRW)     (US$)     (KRW)     (KRW)     (US$)  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Revenues:                                                        
    Online games     19,458         28,907         22,380         19,798         42,343         41,838         37,011    
    Mobile games     82,438         54,249         55,140         48,778         110,231         137,578         121,705    
    Other revenue     3,163         5,302         6,091         5,389         9,144         9,254         8,187    
       Total net revenue     105,059         88,458         83,611         73,965         161,718         188,670         166,903    
Cost of revenue     57,553         51,098         45,842         40,554         99,972         103,395         91,467    
Gross profit     47,506         37,360         37,769         33,411         61,746         85,275         75,436    
Operating expenses:                                                        
    Selling, general and administrative expenses         15,508         17,643         14,014         12,397         28,650         29,522         26,116    
    Research and development     4,009         3,254         4,147         3,669         6,126         8,156         7,215    
    Others, net     36         150         451         398         301         487         430    
       Total operating expenses     19,553         21,047         18,612         16,464         35,077         38,165         33,761    
Operating profit     27,953         16,313         19,157         16,947         26,669         47,110         41,675    
Finance income(costs):                                                        
    Finance income     1,600         627         597         528         2,178         2,197         1,943    
    Finance costs     (933 )       (605 )       (367 )       (325 )       (1,262 )       (1,300 )       (1,150 )  
Profit before income tax     28,620         16,335         19,387         17,150         27,585         48,007         42,468    
Income tax expense     5,059         3,293         4,569         4,042         5,297         9,628         8,517    
    Profit for the year     23,561         13,042         14,818         13,108         22,288         38,379         33,951    
Profit attributable to:                                                        
    Non-controlling interest     (4 )       (53 )       52         46         (70 )       48         42    
    Owners of Parent company     23,565         13,095         14,766         13,062         22,358         38,331         33,909    
Earning per share                                                        
       – Basic and diluted     3,391         1,884         2,125         1.88         3,217         5,516         4.88    
Weighted average number of shares outstanding                                                        
       – Basic and diluted     6,498,000         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     3,391         1,884         2,125         1.88         3,217         5,516         4.88    

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,130.42 to US$1.00, the noon buying rate in effect on June 30, 2021 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.

GRAVITY Co Ltd



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