Gravity Reports First Quarter of 2024 Results and Business Update

Seoul, Korea, May 09, 2024 (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 first quarter ended March 31, 2024, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

FIRST QUARTER 2024 HIGHLIGHTS

• Total revenues were KRW 119,779 million (US$ 88,917 thousand), representing a 17.7% decrease from the fourth quarter ended December 31, 2023 (“QoQ”) and a 27.4% decrease from the first quarter ended March 31, 2023 (“YoY”).
• Operating profit was KRW 26,869 million (US$ 19,946 thousand), representing an 1.7% increase QoQ and a 38% decrease YoY.
• Profit before income tax expenses was KRW 32,498 million (US$ 24,125 thousand), representing a 24.2% increase QoQ and a 29.7% decrease YoY.
• Net profit attributable to parent company was KRW 26,866 million (US$ 19,944 thousand), representing a 24.5% increase QoQ and a 26.3% decrease YoY.

REVIEW OF FIRST QUARTER 2024 FINANCIAL RESULTS

Revenues

Online game revenues for the first quarter of 2024 were KRW 18,065 million (US$ 13,410 thousand), representing a 24.7% decrease QoQ from KRW 23,980 million and a 20.4% decrease YoY from KRW 22,696 million. The decrease QoQ was mainly attributable to decreased revenues from Ragnarok Online in Thailand and Taiwan. Such decrease was partially offset by increased revenue from Ragnarok Online in Japan. The decrease YoY was largely due to decreased revenues from Ragnarok Online in Thailand and Taiwan.

Mobile game revenues were KRW 98,548 million (US$ 73,157 thousand) for the first quarter of 2024, representing a 15.4% decrease QoQ from KRW 116,456 million and a 29.1% decrease YoY from KRW 138,994 million. The decrease QoQ resulted primarily decreased revenues from Ragnarok Origin in Southeast Asia. Such decrease was partially offset by increased revenues from Ragnarok Origin in North, Central and South America which was launched on February 28, 2024, and Ragnarok Idle Adventure in Thailand which was launched on January 18, 2024. The decrease YoY was due to decreased revenues from Ragnarok Origin in Taiwan, Hong Kong and Macau and Ragnarok X: Next Generation in Korea. This decrease was partially offset by increased revenues from Ragnarok Origin in Southeast Asia and North, Central and South America.

Other revenues were KRW 3,166 million (US$ 2,350 thousand) for the first quarter of 2024, representing a 37.8% decrease QoQ from KRW 5,094 million and a 2.8% decrease YoY from KRW 3,257 million.

Cost of Revenue

Cost of revenue was KRW 73,628 million (US$ 54,657 thousand) for the first quarter of 2024, representing a 21.1% decrease QoQ from KRW 93,330 million and a 30.2% decrease YoY from KRW 105,485 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services related to Ragnarok Origin in Southeast Asia. The decrease YoY was primarily due to decreased commission paid for mobile game services related to Ragnarok Origin in Taiwan, Hong Kong and Macau, and Ragnarok X: Next Generation in Korea.

Operating Expenses

Operating expenses were KRW 19,282 million (US$ 14,314 thousand) for the first quarter of 2024, representing a 25.2% decrease QoQ from KRW 25,769 million and a 19.4% increase YoY from KRW 16,144 million. The decrease QoQ was mainly due to decreased commission paid for payment gateway fees for Ragnarok Online in Thailand and Taiwan, impairment loss on intangible assets, and advertising expenses for Ragnarok Begins in Korea and G-STAR 2023. The increase YoY was mainly due to increased advertising expenses for Ragnarok Idle Adventure in Thailand.

Profit Before Income Tax Expenses

Profit before income tax expenses was KRW 32,498 million (US$ 24,125 thousand) for the first quarter of 2024 compared with profit before income tax expense of KRW 26,168 million for the fourth quarter of 2023 and profit before income tax expenses of KRW 46,226 million for the first quarter of 2023.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 26,866 million (US$ 19,944 thousand) for the first quarter of 2024 compared with net profit attributable to parent company of KRW 21,576 million for the fourth quarter of 2023 and a net profit attributable to parent company of KRW 36,466 million for the first quarter of 2023.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 484,526 million (US$ 359,686 thousand) as of March 31, 2024.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,347.08 to US$ 1.00, the noon buying rate in effect on March 29, 2024 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATES

Ragnarok Online IP-based Games

• Ragnarok Online, an MMORPG PC game

Ragnarok Online aims to be officially launched in China in the first half of 2024 as it received an International Standard Book Number ("ISBN") code from the Chinese government in February 2024, followed by Ragnarok Origin and Ragnarok X: Next Generation in August 2023 and December 2023, respectively.

• Ragnarok Origin, an MMORPG mobile and PC game

Ragnarok Origin was launched in China on March 26, 2024 and North, Central, and South America in February 28, 2024.

• Ragnarok X: Next Generation, an MMORPG mobile game

Ragnarok X: Next Generation aims to be launched in China in the second half of 2024, with preparations underway for its launch in Japan.

• Ragnarok: Rebirth, an MMORPG mobile game

Ragnarok: Rebirth aims to be launched in Southeast Asia in June 2024.

• Ragnarok: Novice Hearts (tentative title), an MMORPG mobile game

Ragnarok: Novice Hearts (tentative title) aims to be launched in Taiwan, Hong Kong and Macau in June 2024.

• Other Ragnarok Online IP-based games

Ragnarok Monster's Marble, a 3D Casual Board Game, is scheduled to be launched in 2024.

Ragnarok in Wonderland, a Casual Healing Tycoon mobile game, is scheduled to be launched in Korea in the second half of 2024.

Ragnarok Landverse, an MMORPG Blockchain PC game based on P2E systems, is aiming to be launched in Thailand in June 2024.

Ragnarok Monster World, a Real-Time Strategy Blockchain PC (Window Client) and mobile game, is scheduled to be launched in Thailand in the second half of 2024.

Other IP-based games

• Generation Zombie, a Turn-based Survival Horror Card mobile game

Generation Zombie was launched in Global on March 13, 2024. The game is published by Gravity Interactive, Inc., Gravity's wholly-owned subsidiary in the US.

• TOKYO PSYCHODEMIC, a 2D Cinematic Profiling Adventure PC and console game

TOKYO PSYCHODEMIC will launch in Japan on May 30, 2024. The game is developed by Gravity Game Arise Co., Ltd. ("GGA"), Gravity's wholly-owned subsidiary in Japan, and will be published in Japan by GGA. And Gravity will publish the game in the rest of the global regions excluding Japan in the second half of 2024.

Expansion of Ragnarok IP-business

Ragnarok Golf Monsters is an indoor-screen golf brand based on the Ragnarok monster characters. Gravity Communications Co., Ltd. is aiming to launch the first facility of Ragnarok Golf Monsters in Taipei, Taiwan in 2024.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the first quarter in 2024 and Gravity’s business plan. The presentation can be found on the Company’s website under the IR Archives section at https://www.gravity.co.kr/en/ir/updates. 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, 2023 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: [e-mail]

Ms. Jin Lee
Ms. Shin Choi
IR Unit
Gravity Co., Ltd.
Email: [e-mail]
Telephone: [phone]

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GRAVITY Co., Ltd.
Consolidated Statements of Financial Position

(In millions of KRW and thousands of US$)

		As of
		31-Dec-23								31-Mar-24
		KRW				US$				KRW				US$
		(audited)				(unaudited)				(unaudited)				(unaudited)
Assets
Current assets:
Cash and cash equivalents			184,082				136,653				164,271				121,946
Short-term financial instruments			277,215				205,790				320,255				237,740
Accounts receivable, net			71,213				52,865				64,138				47,613
Other receivables, net			3,637				2,700				3,960				2,940
Prepaid expenses			2,994				2,223				3,085				2,290
Other current financial assets			4,439				3,295				5,440				4,038
Other current assets			3,319				2,464				4,569				3,392
Total current assets			546,899				405,990				565,718				419,959
Property and equipment, net			10,151				7,536				8,865				6,581
Intangible assets, net			6,370				4,729				6,164				4,576
Deferred tax assets			5,952				4,418				5,759				4,275
Other non-current financial assets			1,824				1,354				1,736				1,289
Other non-current assets			6,985				5,185				7,999				5,938
Total assets			578,181				429,212				596,241				442,618
Liabilities and Equity
Current liabilities:
Accounts payable			61,778				45,861				53,904				40,015
Deferred revenue			18,093				13,431				16,665				12,371
Withholdings			3,072				2,280				2,849				2,115
Accrued expense			2,313				1,717				1,811				1,344
Income tax payable			16,927				12,566				16,897				12,543
Other current liabilities			4,251				3,156				3,783				2,810
Total current liabilities			106,434				79,011				95,909				71,198
Long-term account payables			677				503				678				503
Long-term deferred revenue			1,785				1,325				1,764				1,309
Other non-current liabilities			3,175				2,358				2,659				1,974
Deferred tax liabilities			2,382				1,768				2,382				1,769
Total liabilities			114,453				84,965				103,392				76,753
Share capital			3,474				2,579				3,474				2,579
Capital surplus			27,098				20,116				27,085				20,106
Other components of equity			4,016				2,981				6,261				4,647
Retained earnings			428,499				318,095				455,365				338,039
Equity attributable to owners of the Parent Company			463,087				343,771				492,185				365,371
Non-controlling interest			641				476				664				494
Total equity			463,728				344,247				492,849				365,865
Total liabilities and equity			578,181				429,212				596,241				442,618

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,347.08 to US$ 1.00, the noon buying rate in effect on March 29, 2024 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-23					31-Mar-23					31-Mar-24
		(KRW)		(US$)			(KRW)		(US$)			(KRW)		(US$)
		(unaudited)		(unaudited)			(unaudited)		(unaudited)			(unaudited)		(unaudited)
Revenues:
Online games		23,980		17,801			22,696		16,848			18,065		13,410
Mobile games		116,456		86,451			138,994		103,182			98,548		73,157
Other revenue		5,094		3,782			3,257		2,418			3,166		2,350
Total net revenue		145,530		108,034			164,947		122,448			119,779		88,917
Cost of revenue		93,330		69,283			105,485		78,306			73,628		54,657
Gross profit		52,200		38,751			59,462		44,142			46,151		34,260
Operating expenses:
Selling, general and administrative expenses		20,576		15,275			13,271		9,852			15,747		11,690
Research and development		3,748		2,782			2,922		2,169			3,601		2,673
Others, net		1,445		1,073			(49)		(36)			(66)		(49)
Total operating expenses		25,769		19,130			16,144		11,985			19,282		14,314
Operating profit		26,431		19,621			43,318		32,157			26,869		19,946
Finance income(costs):
Finance income		6,534		4,850			5,461		4,054			6,297		4,675
Finance costs		(6,797)		(5,046)			(2,553)		(1,895)			(668)		(496)
Profit before income tax		26,168		19,425			46,226		34,316			32,498		24,125
Income tax expense		4,625		3,433			9,799		7,274			5,615		4,168
Profit for the year		21,543		15,992			36,427		27,042			26,883		19,957
Profit attributable to:
Non-controlling interest		(33)		(24)			(39)		(29)			17		13
Owners of Parent company		21,576		16,016			36,466		27,071			26,866		19,944
Earning per share
- Basic and diluted		3,105		2.30			5,248		3.90			3,866		2.87
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		3,105		2.30			5,248		3.90			3,866		2.87

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,347.08 to US$1.00, the noon buying rate in effect on March 29, 2024 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.