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 third quarter ended September 30, 2024, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

THIRD QUARTER 2024 HIGHLIGHTS

  • Total revenues were KRW 128,376 million (US$ 97,629 thousand), representing a 4.4% increase from the second quarter ended June 30, 2024 (“QoQ”) and a 27.1% decrease from the third quarter ended September 30, 2023 (“YoY”).
  • Operating profit was KRW 27,576 million (US$ 20,971 thousand), representing an 84.0% increase QoQ and a 27.3% decrease YoY.
  • Profit before income tax expenses was KRW 28,415 million (US$ 21,609 thousand), representing a 41.7% increase QoQ and a 31.0% decrease YoY.
  • Net profit attributable to parent company was KRW 22,385 million (US$ 17,023 thousand), representing a 78.1% increase QoQ and a 22.7% decrease YoY.

REVIEW OF THIRD QUARTER 2024 FINANCIAL RESULTS

Revenues

Online game revenues for the third quarter of 2024 were KRW 19,657 million (US$ 14,949 thousand), representing a 1.1% increase QoQ from KRW 19,445 million and a 13.5% increase YoY from KRW 17,316 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Landverse in Thailand and Ragnarok Online in China. The increase YoY was also mainly due to increased revenues from Ragnarok Landverse in Thailand and Ragnarok Online in China. Such increase QoQ and YoY was partially offset by decreased revenue from Ragnarok Online in Thailand.

Mobile game revenues were KRW 102,524 million (US$ 77,969 thousand) for the third quarter of 2024, representing a 3.5% increase QoQ from KRW 99,019 million and a 34.1% decrease YoY from KRW 155,467 million. The increase QoQ was resulted increase revenue from Ragnarok: Rebirth in Southeast Asia and THE RAGNAROK which was launched in Korea on September 9, 2024. Such increase was partially offset by decreased revenues from Ragnarok Origin in North, Central and South America and Southeast Asia. The decrease YoY was mainly due to decreased revenues from Ragnarok Origin in Southeast Asia, Taiwan, Hong Kong and Macau. This decrease was partially offset by increased revenues from Ragnarok Origin in North, Central and South America and THE RAGNAROK (Ragnarok: Novice Hearts) in Taiwan, Hong Kong and Macau.

Other revenues were KRW 6,195 million (US$ 4,711 thousand) for the third quarter of 2024, representing a 37.6% increase QoQ from KRW 4,503 million and an 84.3% increase YoY from KRW 3,362 million.

Cost of Revenue

Cost of revenue was KRW 76,261 million (US$ 57,996 thousand) for the third quarter of 2024, representing a 0.3% increase QoQ from KRW 76,006 million and a 35.3% decrease YoY from KRW 117,834 million. The increase QoQ was mainly due to increase of salaries and amortization expense on intangible asset. The decrease YoY was primarily due to decreased commission paid for mobile game services related to Ragnarok Origin in Southeast Asia, Taiwan, Hong Kong and Macau.

Operating Expenses

Operating expenses were KRW 24,539 million (US$ 18,662 thousand) for the third quarter of 2024, representing a 23.2% decrease QoQ from KRW 31,972 million and a 20.3% increase YoY from KRW 20,394 million. The decrease QoQ was mainly due to decreased advertising expenses for mobile game services related to THE RAGNAROK (Ragnarok: Novice Hearts) in Taiwan, Hong Kong and Macau, and commission paid. The increase YoY was mainly due to increased advertising expenses for mobile game services related to the launch of THE RAGNAROK in Korea on September 9, 2024 and the launch of Mirren: Millennium Tour in Korea on August 20, 2024.

Profit Before Income Tax Expenses

Profit before income tax expenses was KRW 28,415 million (US$ 21,609 thousand) for the third quarter of 2024 compared with profit before income tax expense of KRW 20,057 million for the second quarter of 2024 and profit before income tax expenses of KRW 41,208 million for the third quarter of 2023.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 22,385 million (US$ 17,023 thousand) for the third quarter of 2024 compared with net profit attributable to parent company of KRW 12,569 million for the second quarter of 2024 and a net profit attributable to parent company of KRW 28,961 million for the third quarter of 2023.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 513,993 million (US$ 390,887 thousand) as of September 30, 2024.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,314.94 to US$ 1.00, the noon buying rate in effect on September 30, 2024 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATES

Ragnarok Online IP-based Games

  • THE RAGNAROK, an MMORPG Mobile and PC game

THE RAGNAROK was officially launched in Korea on September 9, 2024 and in Southeast Asia on October 31, 2024.

  • Ragnarok X: Next Generation, an MMORPG Mobile and PC game

Ragnarok X: Next Generation was officially launched in China on September 13, 2024 with preparations underway for its launch in Japan on November 20, 2024, and North, Central and South America and Europe within 2025.

  • Ragnarok: Rebirth an MMORPG Mobile game

Ragnarok: Rebirth was officially launched in Taiwan, Hong Kong and Macau on October 31, 2024.

  • Ragnarok V: Returns, a 3D MMORPG Mobile and PC game

Ragnarok V: Returns will be launched in Singapore and Malaysia in the fourth quarter of 2024.

  • Ragnarok M: Classic, an MMORPG Mobile and PC game

Ragnarok M: Classic, the new sequel game of Ragnarok M: Eternal Love, is underway for its launch in Southeast Asia in the first half of 2025.

  • Ragnarok Origin, an MMORPG Mobile and PC game

Ragnarok Origin is on the way to be launched in Europe in the first half of 2025.

  • Ragnarok Crush, a Puzzle and Tower Defense Mobile game

Ragnarok Crush will be launched in Global in the first half of 2025.

  • Ragnarok 3, an MMORPG Mobile and PC game

Ragnarok 3, the new sequel game of Ragnarok Online, is being prepared to be launched in Global within 2025.

  • PROJECT ABYSS, an MMOARPG Mobile game

PROJECT ABYSS is underway of its development.

Other IP-based games

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

TOKYO PSYCHODEMIC will be launched in Global on November 28, 2024.

  • KAMiBAKO, a World Craft RPG PC and Console game

KAMiBAKO aims to be launched in Global in the first half of 2025.

  • Gunbound an MMO Turn-Based Artillery PC game

Gunbound will be launched in Southeast Asia and Latin America in the first half of 2025.

  • Snow Brothers 2 Special, an Action and Platformer PC and Console game

Snow Brothers 2 Special will be launched in Global in the first half of 2025.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the third 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 regions. 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: kheung@gravity.co.kr

Ms. Jin LeeMs. Yujin Oh 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-23     30-Sep-24
    KRW     US$     KRW     US$
    (audited)     (unaudited)     (unaudited)     (unaudited)
Assets                              
Current assets:                              
Cash and cash equivalents              184,082            139,993            200,677            152,613
Short-term financial instruments              277,215            210,820            313,316            238,274
Accounts receivable, net                71,213              54,157              66,385              50,485
Other receivables, net                  3,637                2,766                   473                   360
Prepaid expenses                  2,994                2,277                4,894                3,722
Other current financial assets                  4,439                3,376                5,884                4,475
Other current assets                  3,319                2,524                3,921                2,982
Total current assets              546,899            415,913            595,550            452,911
Property and equipment, net                10,151                7,720                7,230                5,498
Intangible assets, net                  6,370                4,844                5,827                4,431
Deferred tax assets                  5,952                4,526                5,542                4,215
Other non-current financial assets                  1,824                1,387                1,624                1,235
Other non-current assets                  6,985                5,312                8,562                6,510
Total assets              578,181            439,702            624,335            474,800
Liabilities and Equity                              
Current liabilities:                              
Accounts payable                61,778              46,982              49,951              37,987
Deferred revenue                18,093              13,760              17,902              13,614
Withholdings                  3,072                2,336                3,595                2,734
Accrued expense                  2,313                1,759                2,945                2,240
Income tax payable                16,927              12,873                5,873                4,466
Other current liabilities                  4,251                3,233                2,777                2,112
Total current liabilities              106,434              80,943              83,043              63,153
Long-term account payables                     677                   515                   898                   683
Long-term deferred revenue                  1,785                1,357                2,652                2,017
Other non-current liabilities                  3,175                2,415                2,332                1,774
Deferred tax liabilities                  2,382                1,811                2,383                1,812
Total liabilities              114,453              87,041              91,308              69,439
Share capital                  3,474                2,642                3,474                2,642
Capital surplus                27,098              20,608              26,979              20,517
Other components of equity                  4,016                3,054              11,606                8,826
Retained earnings              428,499            325,870            490,318            372,882
Equity attributable to owners of the Parent Company              463,087            352,174            532,377            404,867
Non-controlling interest                     641                   487                   650                   494
Total equity              463,728            352,661            533,027            405,361
Total liabilities and equity              578,181            439,702            624,335            474,800

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,314.94 to US$ 1.00, the noon buying rate in effect on September 30, 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   Nine months ended
    30-Jun-24 30-Sep-23 30-Sep-24   30-Sep-23   30-Sep-24
    (KRW)   (KRW)   (KRW)   (US$)   (KRW)   (KRW)   (US$)
    (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Revenues:                                          
Online games     19,445     17,316     19,657     14,949     57,037     57,167     43,475
Mobile games     99,019     155,467     102,524     77,969     513,148     300,090     228,216
Other revenue     4,503     3,362     6,195     4,711     9,801     13,865     10,544
Total net revenue     122,967     176,145     128,376     97,629     579,986     371,122     282,235
Cost of revenue     76,006     117,834     76,261     57,996     391,628     225,895     171,791
Gross profit     46,961     58,311     52,115     39,633     188,358     145,227     110,444
Operating expenses:                                          
Selling, general and administrative expenses     28,108     17,190     20,325     15,457     45,490     64,181     48,809
Research and     4,286     3,964     3,706     2,818     9,738     11,594     8,817
Others, net                    (422)                    (760)     508     387                      (806)     18     14
Total operating     31,972     20,394     24,539     18,662     54,422     75,793     57,640
Operating profit     14,989     37,917     27,576     20,971     133,936     69,434     52,804
Finance income(costs):                                          
Finance income     8,867     7,059     5,924     4,505     16,733     21,088     16,037
Finance costs                (3,799)                (3,768)                (5,085)                (3,867)                  (8,138)                (9,552)               (7,264)
Profit before income tax     20,057     41,208     28,415     21,609     142,531     80,970     61,577
Income tax expense     7,476     12,223     6,080     4,624     32,092     19,172     14,580
Profit for the year     12,581     28,985     22,335     16,985     110,439     61,798     46,997
Profit attributable to:                                          
Non-controlling interest                        12                        24                      (50)                      (38)                          (4)                     (21)                    (15)
Owners of Parent     12,569     28,961     22,385     17,023     110,443     61,819     47,012
Earnings per share                                          
- Basic and diluted     1,809     4,168     3,221     2.45     15,894     8,896     6.77
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
Earnings per ADS                                          
- Basic and diluted     1,809     4,168     3,221     2.45     15,894     8,896     6.77
                                           

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,314.94 to US$1.00, the noon buying rate in effect on September 30, 2024 as quoted by the Federal Reserve Bank of New York.(1) Each ADS represents one common share.

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