Gravity Reports Results and Business Updates for First Quarter of 2024

Seoul, Korea, May 09, 2024 — 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.
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