GRAVITY Co., Ltd. Q1 2023 Financial Summary
Business Context and Reporting Period
This Form 6-K reports the unaudited financial results for GRAVITY Co., Ltd. (Nasdaq: GRVY), a South Korean developer and publisher of online and mobile games, for the first quarter ended March 31, 2023. The results are prepared in accordance with International Financial Reporting Standards (IFRS).
Key Financial Metrics
| Metric | Q1 2023 (KRW) | Q1 2023 (USD) | QoQ Change | YoY Change |
|---|---|---|---|---|
| Total Revenue | 164,947 million | $126,513 thousand | -6.3% | +86.2% |
| Operating Profit | 43,318 million | $33,225 thousand | +11.1% | +94.1% |
| Profit Before Tax | 46,226 million | $35,456 thousand | +20.4% | +99.1% |
| Net Profit (Parent) | 36,466 million | $27,969 thousand | +9.9% | +121.9% |
| Cost of Revenue | 105,485 million | $80,906 thousand | -5.6% | +133.1% |
| Operating Expenses | 16,144 million | $12,382 thousand | -36.4% | -23.3% |
| Cash & Short-term Instruments | 374,229 million | $287,030 thousand | N/A | N/A |
Revenue Breakdown: Mobile game revenues were KRW 138,994 million (84% of total), while online game revenues were KRW 22,696 million (14% of total). Other revenues totaled KRW 3,257 million.
Material Changes vs. Prior Periods
- Revenue Growth: Year-over-year revenue surged 86.2%, driven primarily by mobile titles Ragnarok Origin and the January 2023 launch of Ragnarok X: Next Generation in Korea. Quarter-over-quarter revenue declined 6.3% due to lower performance in Taiwan and Thailand for Ragnarok Online and Ragnarok Origin.
- Profitability Expansion: Operating profit increased 11.1% QoQ and 94.1% YoY. This was achieved despite revenue declines in some regions, largely due to a 36.4% QoQ reduction in operating expenses, specifically advertising costs for titles in the US, Canada, and Southeast Asia.
- Cost Structure: Cost of revenue decreased 5.6% QoQ due to lower commission payments for mobile services in specific regions, though it rose 133.1% YoY reflecting the scale of mobile game operations.
Outlook, Business Updates, and Risks
Business Updates and Pipeline:
- Ragnarok Origin launched in Southeast Asia in April 2023, with a global launch planned for Q4 2023.
- Ragnarok M: Eternal Love and Ragnarok Poring Merge NFT are targeted for Q4 2023 launches.
- Ragnarok: The Lost Memories is scheduled for release in Taiwan, Hong Kong, and Macau in May 2023.
- Ragnarok V: Returns will cease service in Oceania on May 25, 2023, for a renewal version.
- WITH: Whale In The High is scheduled for a global release in Q2 2023.
- Gravity NeoCyon co-developed X Heroes: NFT War, released globally (excluding Korea/China) in April 2023.
Risks and Contingencies: The filing includes standard forward-looking statements regarding future launches and financial performance. Investors are cautioned that actual results may differ due to market conditions, regulatory changes, and the competitive nature of the gaming industry. No specific material contingencies or legal proceedings were detailed in this summary text.
Investor Verification Checklist
- Verify the sustainability of the 86.2% YoY revenue growth given the 6.3% QoQ decline.
- Monitor the performance of Ragnarok X: Next Generation in Korea and the upcoming global launch of Ragnarok Origin.
- Assess the impact of the 36.4% reduction in operating expenses on future marketing capabilities for new titles.
- Review the exchange rate sensitivity, as USD figures are converted at KRW 1,303.80 to US$ 1.00.
- Confirm the timeline and success of the blockchain-based game launches scheduled for the second half of 2023.