Gravity Reports Third Quarter of 2021 Results and Business


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.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-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

       

149,455

        244,663      

206,694

 
Non-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.

GRAVITY Co Ltd



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