Gravity Reports Second Quarter of 2022 Results and Business Update

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Seoul, Korea, Aug. 10, 2022 (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, 2022, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

SECOND QUARTER 2022 HIGHLIGHTS

  • Total revenues were KRW 96,519 million (US$ 74,305 thousand), representing an 8.9% increase from the first quarter ended March 31, 2022 ("QoQ") and a 15.4% increase from the second quarter ended June 30, 2021 ("YoY").
  • Operating profit was KRW 22,115 million (US$ 17,025 thousand), representing a 0.9% decrease QoQ and a 15.4% increase YoY.
  • Profit before income tax expenses was KRW 23,874 million (US$ 18,379 thousand), representing a 2.8% increase QoQ and a 23.1% increase YoY.
  • Net profit attributable to parent company was KRW 17,465 million (US$ 13,445 thousand), representing a 6.3% increase QoQ and a 18.3% increase YoY.

REVIEW OF SECOND QUARTER 2022 FINANCIAL RESULTS

Revenues

Online game revenues for the second quarter of 2022 were KRW 24,827 million (US$ 19,113 thousand), representing a 15.8% increase QoQ from KRW 21,447 million and a 10.9% increase YoY from KRW 22,380 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Taiwan and Thailand. The increase YoY was largely due to increased revenue from Ragnarok Online in Taiwan, the Philippines, Singapore and Malaysia.

Mobile game revenues were KRW 68,042 million (US$ 52,382 thousand) for the second quarter of 2022, representing a 7.6% increase QoQ from KRW 63,241 million and a 23.4% increase YoY from KRW 55,140 million. The increase QoQ resulted primarily increased revenues from Ragnarok Labyrinth NFT, which was launched on April 27, 2022, in Southeast Asia and Ragnarok Monster's Arena launched on May 11, 2022, in Taiwan. Such increase was partially offset by decreased revenues from Ragnarok Origin in North America and Japan and Ragnarok X: Next Generation in Southeast Asia. The increase YoY was primarily due to revenues from Ragnarok X: Next Generation in Southeast Asia, Ragnarok Origin in North America and Ragnarok Monster's Arena launched on May 11, 2022, in Taiwan. Such increase was partially offset by decreased revenues from Ragnarok Origin in Korea, Ragnarok M: Eternal Love in Southeast Asia and Ragnarok X: Next Generation in Taiwan.

Other revenues were KRW 3,650 million (US$ 2,810 thousand) for the second quarter of 2022, representing a 6.9% decrease QoQ from KRW 3,919 million and a 40.1% decrease YoY from KRW 6,091 million.

Cost of Revenue

Cost of revenue was KRW 50,575 million (US$ 38,935 thousand) for the second quarter of 2022, representing a 11.8% increase QoQ from KRW 45,254 million and a 10.3% increase YoY from KRW 45,842 million. The increase QoQ was mainly due to increased commission paid for mobile game services related to Ragnarok Monster's Arena in Taiwan and Ragnarok Labyrinth NFT in Southeast Asia. The increase YoY was mostly from the increased commission paid for mobile game services related to Ragnarok X: Next Generation in Southeast Asia, Ragnarok Origin in North America and Ragnarok Monster's Arena in Taiwan.

Operating Expenses

Operating expenses were KRW 23,829 million (US$ 18,345 thousand) for the second quarter of 2022, representing a 13.3% increase QoQ from KRW 21,037 million and a 28.0% increase YoY from KRW 18,612 million. The increase QoQ was mainly due to increased advertising expenses for Ragnarok Monster's Arena in Taiwan and Ragnarok Labyrinth NFT in Southeast Asia. The increase YoY was mainly due to increase advertising expenses for Ragnarok Monster's Arena in Taiwan, Ragnarok Labyrinth NFT in Southeast Asia and Ragnarok Origin in North America.

Profit Before Income Tax Expenses

Profit before income tax expenses was KRW 23,874 million (US$ 18,379 thousand) for the second quarter of 2022 compared with profit before income tax expense of KRW 23,220 million for the first quarter of 2022 and profit before income tax expenses of KRW 19,387 million for the second quarter of 2021.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 17,465 million (US$ 13,445 thousand) for the second quarter of 2022 compared with net profit attributable to parent company of KRW 16,431 million for the first quarter of 2022 and a net profit attributable to parent company of KRW 14,766 million for the second quarter of 2021.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 282,748 million (US$ 217,674 thousand) as of June 30, 2022.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,298.95 to US$ 1.00, the noon buying rate in effect on June 30, 2022 as quoted by the Federal Reserve Bank of New York.


GRAVITY BUSINESS UPDATE

Ragnarok IP Partnership with The Sandbox

Gravity signed a Ragnarok IP partnership agreement with The Sandbox, a metaverse gaming platform, on April 1, 2022.

Ragnarok Online

Ragnarok Online has celebrated its 20th anniversary in Korea in the second half of 2022 since the game was initially launched in Korea on August 1, 2002. As celebrating its 20th anniversary, an offline event has placed in Seoul, Korea in July 31, 2022. Various kinds of programs were placed at the venue including developer showcase, K-pop concert, RO arcades, etc. More in-game events and promotions are going to be placed throughout the third quarter of 2022.

Ragnarok Online IP-based Games

  • Ragnarok X: Next Generation, a MMORPG mobile game

Ragnarok X: Next Generation is scheduled to be launched in Korea in the fourth quarter of 2022.

  • Ragnarok Origin, a MMORPG mobile and PC game

Ragnarok Origin is scheduled to be launched in multi-platform including mobile and PC in Taiwan, Hong Kong and Macau in September, 2022.

  • Ragnarok Labyrinth NFT, a blockchain mobile game

Ragnarok Labyrinth NFT is scheduled to be launched in global in the third quarter of 2022.

  • Ragnarok Poring Merge, a blockchain mobile game

Ragnarok Poring Merge was designed as a blockchain game based on P2E systems. The game is prepared to be launched in Southeast Asia in the fourth quarter of 2022.

  • Other Ragnarok Online IP-based games

Ragnarok: The Lost Memories, a Cinematic Newtro Story RPG mobile and PC game, has launched in Korea on August 10, 2022.

Ragnarok Monster's Arena, a Card SRPG mobile game, was launched in Taiwan, Hong Kong and Macau on May 11, 2022. Ragnarok Monster's Arena is scheduled to be launched in Thailand and Korea in September, 2022. Ragnarok Monster's Arena is also scheduled to be launched in Southeast Asia (except for Thailand) in the fourth quarter of 2022.

Ragnarok V: Returns, a MMORPG mobile and PC game, was launched for mobile version and PC game service in Oceania in May 25, 2022. The game is preparing to provide PC game service on Steam in the fourth quarter of 2022, and has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.

Ragnarok Begins, a MMORPG mobile and PC game, is scheduled to run the second CBT for mobile and PC game version in October, 2022, and to be launched in North America in the fourth quarter of 2022. The game has been developed by Gravity.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company's recent business updates, results of the second quarter in 2022 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, 2021 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: [email protected]

Ms. Jin Lee
Ms. Jeesun Lim
IR Unit
Gravity Co., Ltd.
Email: [email protected]
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-21 30-Jun-22
KRW US$ KRW US$
(audited) (unaudited) (unaudited) (unaudited)
Assets
Current assets:
Cash and cash equivalents 99,105 76,296 112,748 86,799
Short-term financial instruments 148,000 113,938 170,000 130,875
Accounts receivable, net 52,615 40,506 53,234 40,982
Other receivables, net 1,080 831 380 293
Prepaid expenses 3,164 2,436 2,302 1,772
Other current assets 2,171 1,671 2,644 2,035
Total current assets 306,135 235,678 341,308 262,756
Property and equipment, net 11,338 8,728 10,700 8,237
Intangible assets, net 3,342 2,573 3,849 2,963
Deferred tax assets 1,719 1,323 1,165 897
Other non-current financial assets 3,019 2,324 3,347 2,577
Other non-current assets 1,973 1,519 1,668 1,284
Total assets 327,526 252,145 362,037 278,714
Liabilities and Equity
Current liabilities:
Accounts payable 41,199 31,717 44,116 33,963
Deferred revenue 13,481 10,378 13,424 10,335
Withholdings 3,596 2,768 3,317 2,554
Accrued expense 1,484 1,142 1,574 1,212
Income tax payable 10,629 8,183 6,877 5,294
Other current liabilities 3,608 2,778 3,900 3,001
Total current liabilities 73,997 56,966 73,208 56,359
Long-term deferred revenue 98 75 89 69
Other non-current liabilities 6,590 5,074 6,095 4,692
Total liabilities 80,685 62,115 79,392 61,120
Share capital 3,474 2,674 3,474 2,674
Capital surplus 27,098 20,861 27,098 20,861
Other components of equity 2,180 1,678 4,208 3,240
Retained earnings 213,318 164,223 247,214 190,318
Equity attributable to owners of the Parent Company 246,070 189,436 281,994 217,093
Non-controlling interest 771 594 651 501
Total equity 246,841 190,030 282,645 217,594
Total liabilities and equity 327,526 252,145 362,037 278,714

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,298.95 to US$ 1.00, the noon buying rate in effect on June 30, 2022 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-22 30-Jun-21 30-Jun-22 30-Jun-21 30-Jun-22
(KRW) (KRW) (KRW) (US$) (KRW) (KRW) (US$)
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Online games 21,447 22,380 24,827 19,113 41,838 46,274 35,624
Mobile games 63,241 55,140 68,042 52,382 137,578 131,283 101,069
Other revenue 3,919 6,091 3,650 2,810 9,254 7,569 5,827
Total net revenue 88,607 83,611 96,519 74,305 188,670 185,126 142,520
Cost of revenue 45,254 45,842 50,575 38,935 103,395 95,829 73,774
Gross profit 43,353 37,769 45,944 35,370 85,275 89,297 68,746
Operating expenses:
Selling, general and administrative expenses 17,642 14,014 21,207 16,326 29,522 38,849 29,908
Research and development 3,232 4,147 2,956 2,276 8,156 6,188 4,764
Others, net 163 451 (334) (257) 487 (171) (132)
Total operating expenses 21,037 18,612 23,829 18,345 38,165 44,866 34,540
Operating profit 22,316 19,157 22,115 17,025 47,110 44,431 34,206
Finance income(costs):
Finance income 1,608 597 4,100 3,156 2,917 5,708 4,394
Finance costs (704) (367) (2,341) (1,802) (1,300) (3,045) (2,344)
Profit before income tax 23,220 19,387 23,874 18,379 48,007 47,094 36,256
Income tax expense 6,889 4,569 6,462 4,975 9,628 13,351 10,278
Profit for the year 16,331 14,818 17,412 13,404 38,379 33,743 25,978
Profit attributable to:
Non-controlling interest (100) 52 (53) (41) 48 (153) (117)
Owners of Parent company 16,431 14,766 17,465 13,445 38,331 33,896 26,095
Earning per share
- Basic and diluted 2,365 2,125 2,513 1.93 5,516 4,878 3.76
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 2,365 2,125 2,513 1.93 5,516 4,878 3.76

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,298.95 to US$1.00, the noon buying rate in effect on June 30, 2022 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.


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