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OFFON

GRAVITY CO., LTD.

(GRVY)
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GRAVITY REPORTS THIRD QUARTER OF 2020 RESULTS AND BUSINESS UPDATES

11/13/2020 | 06:10am EDT

Seoul, South Korea, Nov. 13, 2020 (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, 2020, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

THIRD QUARTER 2020 HIGHLIGHTS

  • Total revenues were KRW 131,795 million (US$ 113,034 thousand), representing a 49.0% increase from the second quarter ended June 30, 2020 (“QoQ”) and a 69.9% increase from the third quarter ended September 30, 2019 (“YoY”).
  • Operating profit was KRW 34,356 million (US$ 29,465 thousand), representing a 110.6% increase QoQ and a 236.0% increase YoY.
  • Profit before income tax expenses was KRW 33,675 million (US$ 28,881 thousand), representing a 106.2% increase QoQ and a 200.3% increase YoY.
  • Net profit attributable to parent company was KRW 25,281 million (US$ 21,682 thousand), representing a 93.1% increase QoQ and a 182.4% increase YoY.

REVIEW OF THIRD QUARTER 2020 FINANCIAL RESULTS

Revenues

Subscription revenues for the third quarter of 2020 were KRW 29,159 million (US$ 25,008 thousand), representing a 19.3% increase QoQ from KRW 24,448 million and a 176.0% increase YoY from KRW 10,564 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Thailand that was re-launched on May 28, 2020 and Brazil. Such increase was partially offset by decreased revenues from Ragnarok H5 in Indonesia and Ragnarok Online in Taiwan. The increase YoY was largely due to increased revenues from Ragnarok Online in Thailand and United States.

Royalty and license fee revenues for the third quarter of 2020 were KRW 2,674 million (US$ 2,293 thousand), representing a 40.0% decrease QoQ from KRW 4,459 million and a 3.5% increase YoY from KRW 2,583 million. The decrease QoQ was primarily due to temporarily generated revenue from collaboration event with Garena’s Free Fire items based on Ragnarok Online IP in previous quarter. The increase YoY resulted mainly from increased revenue from Ragnarok Online in Japan. Such increase was partially offset by decreased revenue from Ragnarok Online in Thailand.

Mobile game revenues were KRW 95,531 million (US$ 81,933 thousand) for the third quarter of 2020, representing a 76.1% increase QoQ from KRW 54,249 million and a 59.0% increase YoY from KRW 60,086 million. The increase QoQ resulted primarily from increased revenues from Ragnarok Origin in Korea that was launched on July 7, 2020 and Ragnarok M: Eternal Love in Southeast Asia. Such increase was partially offset by decreased revenues from Ragnarok Tactics in Korea and Taiwan, Ragnarok H5 in Indonesia, and Ragnarok M: Eternal Love in Korea and Taiwan. The increase YoY was primarily due to revenues from Ragnarok Origin in Korea that was launched on July 7, 2020, Ragnarok M: Eternal Love in Taiwan. This increase was partially offset by decreased revenues from Ragnarok M: Eternal Love in Japan, Southeast Asia, North America, South America and Oceania, and Korea.

Other revenues were KRW 4,431 million (US$ 3,800 thousand) for the third quarter of 2020, representing a 16.4% decrease QoQ from KRW 5,302 million and a 2.3% increase YoY from KRW 4,333 million

Cost of Revenues

Cost of revenue was KRW 74,107 million (US$ 63,558 thousand) for the third quarter of 2020, representing a 45.0% increase QoQ from KRW 51,098 million and a 32.2% increase YoY from KRW 56,058 million. The increase QoQ was mainly due to increased commission paid for mobile game services related to Ragnarok Origin in Korea that was launched on July 7, 2020. The increase YoY was mostly from increased commission paid for mobile game services related to Ragnarok Origin in Korea that was launched on July 7, 2020.

Operating Expenses

Operating expenses were KRW 23,332 million (US$ 20,011 thousand) for the third quarter of 2020, representing a 10.9% increase QoQ from KRW 21,047 million and a 106.8% increase YoY from KRW 11,282 million. The increase QoQ was mainly attributable to increased research and development expenses and commission paid for payment gate way fees related to Ragnarok Online in Thailand. The increase YoY was mostly resulted from increased advertising expenses for Ragnarok Origin in Korea, commission paid for payment gate way fees related to Ragnarok Online in Thailand, research and development expenses, and salaries.

Profit before income tax expenses

Profit before income tax expenses was KRW 33,675 million (US$ 28,881 thousand) for the third quarter of 2020 compared with profit before income tax expense of KRW 16,335 million for the second quarter of 2020 and profit before income tax expenses of KRW 11,213 million for the third quarter of 2019.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 25,281 million (US$ 21,682 thousand) for the third quarter of 2020 compared with net profit attributable to parent company of KRW 13,095 million for the second quarter of 2020 and a net profit attributable to parent company of KRW 8,952 million for the third quarter of 2019.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 171,800 million (US$ 147,345 thousand) as of September 30, 2020.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,165.97 to US$ 1.00, the noon buying rate in effect on September 30, 2020 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATE

Ragnarok Online IP-based Games

  • Ragnarok Origin, a MMORPG mobile game

Ragnarok Origin was launched in Korea on July 7, 2020 and is being prepared for launch in Japan in 1st half of 2021.

  • Ragnarok X: Next Generation, a MMORPG mobile game

Ragnarok X: Next Generation was launched in Taiwan, Hong Kong and Macau on October 15, 2020 and is being prepared for launch in Southeast Asia in 1st half of 2021.

  • The Labyrinth of Ragnarok, an Idle MMORPG mobile game

The Labyrinth of Ragnarok was launched in Philippines, Singapore and Malaysia on October 14, 2020. This game is being prepared for launch in Thailand and Indonesia in December 2020.

  • Other Ragnarok Online IP-based games

The Lost Memories: a Song of Valkyrie, a Story RPG mobile game, is expected to be launched in Thailand in 1st half of 2021. The game was developed by NeoCyon, Inc., our subsidiary in Korea.

Action RO2: Spear of Odin, a 3D Action MORPG mobile game, is expected to be launched in Indonesia, Malaysia, Philippines, Singapore and Australia in 1st half of 2021. The game was developed by NeoCyon, Inc., our subsidiary in Korea.

Other IP games

Tactical Warfare, a First-Person Shooter (FPS) game, has started pre-registration and will be launched in North, Central and South America in the fourth quarter of 2020. The game is published by Gravity Interactive, Inc., a subsidiary in the United States.

Tera Classic, a MMORPG mobile game, has started pre-registration and will be launched in Japan in January 2021. The game is published by Gravity Game Arise, Inc., a subsidiary in Japan.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of third quarter in 2020 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 93 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, 2019 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-19  30-Sep-20 
  KRW  US$  KRW  US$ 
  (audited)  (unaudited)  (unaudited)  (unaudited) 
Assets                
Current assets:                
Cash and cash equivalents  79,428   68,122   116,800   100,174 
Short-term financial instruments  39,500   33,877   55,000   47,171 
Accounts receivable, net  32,253   27,662   55,570   47,660 
Other receivables, net  56   48   0   0 
Prepaid expenses  1,962   1,683   2,782   2,386 
Other current assets  2,664   2,285   1,137   975 
Total current assets  155,863   133,677   231,289   198,366 
Property and equipment, net  6,663   5,715   7,201   6,176 
Intangible assets  1,717   1,473   1,733   1,486 
Deferred tax assets  7,667   6,576   7,885   6,763 
Other non-current financial assets  1,770   1,518   1,777   1,524 
Other non-current assets  1,745   1,494   5,255   4,508 
Total assets  175,425   150,453   255,140   218,823 
Liabilities and Equity                
Current liabilities:                
Accounts payable  37,496   32,159   56,668   48,602 
Deferred revenue  10,748   9,218   15,194   13,031 
Withholdings  1,764   1,513   3,463   2,970 
Accrued expense  1,175   1,008   1,182   1,014 
Income tax payable  2,618   2,245   3,325   2,852 
Other current liabilities  1,986   1,703   2,629   2,255 
Total current liabilities  55,787   47,846   82,461   70,724 
Long-term deferred revenue  98   84   5,037   4,320 
Other non-current liabilities  3,774   3,237   3,368   2,889 
Total liabilities  59,659   51,167   90,866   77,933 
Share capital  3,474   2,979   3,474   2,979 
Capital surplus  27,128   23,266   27,110   23,251 
Other components of equity  274   235   896   768 
Retained earnings  84,668   72,616   132,307   113,474 
Equity attributable to owners of the Parent Company  115,544   99,096   163,787   140,472 
Non-controlling interest  222   190   487   418 
Total equity  115,766   99,286   164,274   140,890 
Total liabilities and equity  175,425   150,453   255,140   218,823 

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,165.97 to US$ 1.00, the noon buying rate in effect on September 30, 2020 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-20  30-Sep-19  30-Sep-20  30-Sep-19  30-Sep-20  
  (KRW)  (KRW)  (KRW)  (US$)  (KRW)  (KRW)  (US$) 
  (unaudited)  (unaudited)  (unaudited)  (unaudited)  (unaudited)  (unaudited)  (unaudited) 
Revenues:                            
Online games-subscription revenue  24,448   10,564   29,159   25,008   23,566   63,500   54,461 
Online games-royalties and license fees  4,459   2,583   2,674   2,293   9,135   10,676   9,156 
Mobile games   54,249   60,086   95,531   81,933   245,189   205,762   176,473 
Other revenue  5,302   4,333   4,431   3,800   11,426   13,575   11,643 
Total net revenue  88,458   77,566   131,795   113,034   289,316   293,513   251,733 
Cost of revenues  51,098   56,058   74,107   63,558   214,153   174,079   149,300 
Gross profit  37,360   21,508   57,688   49,476   75,163   119,434   102,433 
Operating expenses:                            
Selling, general and administrative expenses  17,643   8,984   18,042   15,474   21,382   46,692   40,046 
Research and development  3,254   2,349   4,550   3,902   6,658   10,676   9,156 
Others, net  150   (51)  740   635   259   1,041   893 
Total operating expenses  21,047   11,282   23,332   20,011   28,299   58,409   50,095 
Operating profit  16,313   10,226   34,356   29,465   46,864   61,025   52,338 
Finance income(costs):                            
Finance income  627   1,353   822   705   3,556   3,000   2,573 
Finance costs  (605)  (366)  (1,503)  (1,289)  (781)  (2,765)  (2,371)
Profit before income tax  16,335   11,213   33,675   28,881   49,639   61,260   52,540 
Income tax expenses  3,293   2,357   8,390   7,196   10,192   13,687   11,739 
Profit for the year  13,042   8,856   25,285   21,685   39,447   47,573   40,801 
Profit attributable to:                            
Non-controlling interest  (53)  (96)  4   3   (126)  (66)  (57)
Owners of Parent company  13,095   8,952   25,281   21,682   39,573   47,639   40,858 
Earning per share                            
- Basic and diluted  1,884   1,288   3,638   3.10   5,695   6,856   5.9 
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  1,884   1,288   3,638   3.10   5,695   6,856   5.9 
                                     

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,165.97 to US$1.00, the noon buying rate in effect on September 30, 2020 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.


© GlobeNewswire 2020
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Financials
Sales 2020 406 B 358 M 358 M
Net income 2020 62 703 M 55,4 M 55,4 M
Net cash 2020 177 B 156 M 156 M
P/E ratio 2020 0,02x
Yield 2020 -
Capitalization 1 018 B 898 M 899 M
EV / Sales 2019 0,51x
EV / Sales 2020 2,92x
Nbr of Employees -
Free-Float -
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Number of Analysts 1
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Last Close Price 129,18 
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Managers and Directors
NameTitle
Hyun-Chul Park Chief Executive Officer & Executive Director
Heung-Gon Kim Chief Financial Officer
Yoshinori Kitamura Chairman
Doo-Hyun Ryu Independent Director
Jung Yoo Independent Director
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