15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea
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(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F þ Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
GRAVITY REPORTS FIRST QUARTER OF 2023 RESULTS AND BUSINESS UPDATES
Seoul, South Korea – May 11, 2023 – 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, 2023, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.
FIRST QUARTER 2023 HIGHLIGHTS
•Total revenues were KRW 164,947 million (US$ 126,513 thousand), representing an 6.3% decrease from the fourth quarter ended December 31, 2022 (“QoQ”) and a 86.2% increase from the first quarter ended March 31, 2022 (“YoY”).
•Operating profit was KRW 43,318 million (US$ 33,225 thousand), representing a 11.1% increase QoQ and a 94.1% increase YoY.
•Profit before income tax expenses was KRW 46,226 million (US$ 35,456 thousand), representing a 20.4% increase QoQ and a 99.1% increase YoY.
•Net profit attributable to parent company was KRW 36,466 million (US$ 27,969 thousand), representing a 9.9% increase QoQ and a 121.9% increase YoY.
REVIEW OF FIRST QUARTER 2023 FINANCIAL RESULTS
Revenues
Online game revenues for the first quarter of 2023 were KRW 22,696 million (US$ 17,408 thousand), representing a 4.3% decrease QoQ from KRW 23,711 million and a 5.8% increase YoY from KRW 21,447 million. The decrease QoQ was mainly attributable to decreased revenues from Ragnarok Online in Taiwan and Thailand. Such decrease was partially offset by increased revenue from Ragnarok Online in Japan. The increase YoY was largely due to increased revenues from Ragnarok Online in Thailand and Korea.
Mobile game revenues were KRW 138,994 million (US$ 106,607 thousand) for the first quarter of 2023, representing a 6.1% decrease QoQ from KRW 148,046 million and a 119.8% increase YoY from KRW 63,241 million. The decrease QoQ resulted primarily decreased revenues from Ragnarok Origin in Taiwan, Hong Kong and Macau. Such decrease was partially offset by increased revenues from Ragnarok X: Next Generation in Korea which was launched on January 5, 2023. The increase YoY was due to increased revenues from Ragnarok Origin in Taiwan, Hong Kong and Macau and Ragnarok X: Next Generation in Korea. This increase was partially offset by decreased revenues from Ragnarok Origin in the United States and Canada, and Ragnarok X: Next Generation in Southeast Asia.
Other revenues were KRW 3,257 million (US$ 2,498 thousand) for the first quarter of 2023, representing a 25.3% decrease QoQ from KRW 4,358 million and a 16.9% decrease YoY from KRW 3,919 million.
Cost of Revenue
Cost of revenue was KRW 105,485 million (US$ 80,906 thousand) for the first quarter of 2023, representing a 5.6% decrease QoQ from KRW 111,707 million and a 133.1% increase YoY from KRW 45,254 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services related to Ragnarok Origin in Taiwan, Hong Kong and Macau and Ragnarok M: Eternal Love. The increase YoY was primarily due to increased commission paid for mobile game services related to Ragnarok Origin in Taiwan, Hong Kong, Macau and Ragnarok X: Next Generation in Korea.
Operating Expenses
Operating expenses were KRW 16,144 million (US$ 12,382 thousand) for the first quarter of 2023, representing a 36.4% decrease QoQ from KRW 25,402 million and a 23.3% decrease YoY from KRW 21,037 million. The decrease QoQ was mainly due to decreased advertising expenses for Ragnarok Origin in the United States and Canada and Ragnarok Monster’s Arena in Korea and Southeast Asia and salaries. The decrease YoY was mainly due to decreased advertising expenses for Ragnarok: The Lost Memories and Ragnarok Origin in the United States and Canada, and Ragnarok Online in Philippines, Singapore and Malaysia.
Profit Before Income Tax Expenses
Profit before income tax expenses was KRW 46,226 million (US$ 35,456 thousand) for the first quarter of 2023 compared with profit before income tax expense of KRW 38,378 million for the fourth quarter of 2022 and profit before income tax expenses of KRW 23,220 million for the first quarter of 2022.
Net Profit
As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 36,466 million (US$ 27,969 thousand) for the first quarter of 2023 compared with net profit attributable to parent company of KRW 33,190 million for the fourth quarter of 2022 and a net profit attributable to parent company of KRW 16,431 million for the first quarter of 2022.
Liquidity
The balance of cash and cash equivalents and short-term financial instruments was KRW 374,229 million (US$ 287,030 thousand) as of March 31, 2023.
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,303.80 to US$ 1.00, the noon buying rate in effect on March 31, 2023 as quoted by the Federal Reserve Bank of New York.
GRAVITY BUSINESS UPDATES
Ragnarok Online IP-based Games
•Ragnarok Origin, an MMORPG mobile and PC game
Ragnarok Origin was launched in Southeast Asia on April 6, 2023. The game is being prepared to be launched in global in the fourth quarter of 2023.
•Ragnarok X: Next Generation, an MMORPG mobile game
Ragnarok X: Next Generation was launched in Korea on January 5, 2023.
•Ragnarok M: Eternal Love, an MMORPG mobile game
Ragnarok M: Eternal Love aims to be launched in Vietnam in the fourth quarter of 2023.
•Ragnarok Poring Merge NFT, a blockchain mobile game
Ragnarok Poring Merge NFT was designed as a blockchain game based on P2E systems. The game is prepared to be launched in Global in the fourth quarter of 2023.
•Other Ragnarok Online IP-based games
Ragnarok: The Lost Memories, a Cinematic Newtro Story RPG mobile and PC game, is scheduled to be launched in Taiwan, Hong Kong and Macau in May 2023.
Ragnarok V: Returns, an MMORPG mobile and PC game, will cease the service in Oceania on May 25, 2023 for service renewal. It is preparing to provide a renewal version of mobile, PC and Steam services. The game has been developed by Gravity NeoCyon, Inc., Gravity’s subsidiary in Korea.
Ragnarok Landverse was designed as a blockchain game based on P2E systems. Ragnarok Landverse, an MMORPG PC game, is aiming to be launched in the second half of 2023.
Other IP-based games
WITH: Whale In The High, a Healing Idle mobile game, is scheduled to be released in global in the second quarter of 2023. The game is developed by SKYWALK, a mobile game developer, and will be published by Gravity. Gravity entered into a publishing agreement with SKYWALK on December 1, 2022.
Expansion of Game Service
Gravity NeoCyon, Inc. and ME2ON co-developed a blockchain RPG game called, X Heroes: NFT War. X Heroes: NFT War is published by ME2ON, and the game was released in global (except for Korea and China) on April 25, 2023. Gravity NeoCyon, Inc. Gravity’s subsidiary in Korea, entered into a business agreement with a mobile social casino game company, ME2ON on October 14, 2022.
Investor Presentation
Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the first quarter in 2023 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. 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, 2022 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. Jeesun Lim IR Unit Gravity Co., Ltd. Email: ir@gravity.co.kr Telephone: +82-2-2132-7800
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GRAVITY Co., Ltd.
Consolidated Statements of Financial Position
(In millions of KRW and thousands of US$)
As of
31-Dec-22
31-Mar-23
KRW
US$
KRW
US$
(audited)
(unaudited)
(unaudited)
(unaudited)
Assets
Current assets:
Cash and cash equivalents
169,877
130,294
177,924
136,466
Short-term financial instruments
167,000
128,087
196,305
150,564
Accounts receivable, net
77,257
59,255
68,981
52,908
Other receivables, net
140
107
624
479
Prepaid expenses
3,332
2,556
3,014
2,312
Other current financial assets
3,370
2,585
3,744
2,872
Other current assets
791
607
573
439
Total current assets
421,767
323,491
451,165
346,040
Property and equipment, net
8,140
6,243
7,464
5,725
Intangible assets, net
3,869
2,967
3,818
2,928
Deferred tax assets
5,660
4,341
5,226
4,008
Other non-current financial assets
2,176
1,669
2,708
2,077
Other non-current assets
2,482
1,904
3,918
3,005
Total assets
444,094
340,615
474,299
363,783
Liabilities and Equity
Current liabilities:
Accounts payable
73,549
56,411
60,515
46,414
Deferred revenue
18,543
14,222
17,261
13,239
Withholdings
3,201
2,455
3,541
2,716
Accrued expense
2,041
1,565
1,877
1,440
Income tax payable
5,469
4,195
10,976
8,418
Other current liabilities
2,907
2,230
2,833
2,173
Total current liabilities
105,710
81,078
97,003
74,400
Long-term account payables
374
287
376
288
Long-term deferred revenue
30
23
381
292
Other non-current liabilities
4,968
3,810
3,409
2,615
Deferred tax liabilities
2,832
2,172
2,833
2,173
Total liabilities
113,914
87,370
104,002
79,768
Share capital
3,474
2,665
3,474
2,665
Capital surplus
27,098
20,784
27,098
20,784
Other components of equity
2,475
1,898
6,121
4,695
Retained earnings
296,480
227,397
332,946
255,366
Equity attributable to owners of the Parent Company
329,527
252,744
369,639
283,510
Non-controlling interest
653
501
658
505
Total equity
330,180
253,245
370,297
284,015
Total liabilities and equity
444,094
340,615
474,299
363,783
* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,303.80 to US$ 1.00, the noon buying rate in effect on March 31, 2023 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-22
31-Mar-22
31-Mar-23
(KRW)
(US$)
(KRW)
(US$)
(KRW)
(US$)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues:
Online games
23,711
18,186
21,447
16,450
22,696
17,408
Mobile games
148,046
113,550
63,241
48,505
138,994
106,607
Other revenue
4,358
3,342
3,919
3,006
3,257
2,498
Total net revenue
176,115
135,078
88,607
67,961
164,947
126,513
Cost of revenue
111,707
85,678
45,254
34,709
105,485
80,906
Gross profit
64,408
49,400
43,353
33,252
59,462
45,607
Operating expenses:
Selling, general and administrative expenses
21,141
16,215
17,642
13,531
13,271
10,179
Research and development
3,864
2,964
3,232
2,479
2,922
2,241
Others, net
397
304
163
125
(49)
(38)
Total operating expenses
25,402
19,483
21,037
16,135
16,144
12,382
Operating profit
39,006
29,917
22,316
17,117
43,318
33,225
Finance income(costs):
Finance income
4,902
3,760
1,608
1,233
5,461
4,189
Finance costs
(5,530)
(4,241)
(704)
(540)
(2,553)
(1,958)
Profit before income tax
38,378
29,436
23,220
17,810
46,226
35,456
Income tax expense
5,161
3,959
6,889
5,284
9,799
7,517
Profit for the year
33,217
25,477
16,331
12,526
36,427
27,939
Profit attributable to:
Non-controlling interest
27
21
(100)
(77)
(39)
(30)
Owners of Parent company
33,190
25,456
16,431
12,603
36,466
27,969
Earning per share
- Basic and diluted
4,776
3.66
2,365
1.81
5,248
4.03
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
- Basic and diluted
4,776
3.66
2,365
1.81
5,248
4.03
* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,303.80 to US$1.00, the noon buying rate in effect on March 31, 2023 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
