GRAVITY Co., Ltd. Q3 2021 Financial Summary
Business Context and Reporting Period
This Form 6-K filing reports the unaudited financial results for GRAVITY Co., Ltd. (Nasdaq: GRVY) for the third quarter ended September 30, 2021. The company is a South Korean developer and publisher of online and mobile games, primarily known for the Ragnarok Online franchise. Results are prepared in accordance with International Financial Reporting Standards (IFRS).
Key Financial Metrics
| Metric | Q3 2021 (KRW) | Q3 2021 (USD) | Q2 2021 (KRW) | Q3 2020 (KRW) |
|---|---|---|---|---|
| Total Revenue | 128,670 million | 108,702 thousand | 83,611 million | 131,795 million |
| Operating Profit | 40,242 million | 33,997 thousand | 19,157 million | 34,356 million |
| Profit Before Tax | 41,435 million | 35,005 thousand | 19,387 million | 33,675 million |
| Net Profit (Parent) | 26,351 million | 22,262 thousand | 14,766 million | 25,281 million |
| Cash & Short-term Instruments | 226,173 million | 191,073 thousand | N/A | N/A |
Revenue Breakdown (Q3 2021):
- Online Games: KRW 18,295 million (18.3% decrease QoQ, 42.5% decrease YoY).
- Mobile Games: KRW 106,218 million (92.6% increase QoQ, 11.2% increase YoY).
- Other Revenue: KRW 4,157 million (31.8% decrease QoQ, 6.2% decrease YoY).
Margins: Gross profit for Q3 2021 was KRW 62,524 million. Operating expenses were KRW 22,282 million.
Material Changes vs. Prior Periods
- Revenue: Total revenue increased 53.9% quarter-over-quarter (QoQ) but decreased 2.4% year-over-year (YoY). The QoQ surge was driven by mobile game launches, while the YoY decline was due to lower online game revenues.
- Profitability: Operating profit surged 110.1% QoQ and 17.1% YoY. Net profit attributable to the parent company rose 78.5% QoQ and 4.2% YoY.
- Cost Structure: Cost of revenue increased 44.3% QoQ due to higher commissions for new mobile titles (Ragnarok X and Ragnarok Origin) but decreased 10.7% YoY. Operating expenses rose 19.7% QoQ due to advertising and salaries but fell 4.5% YoY.
- Liquidity: Cash and cash equivalents plus short-term financial instruments totaled KRW 226,173 million as of September 30, 2021.
Guidance, Outlook, and Business Updates
Management highlighted several strategic launches and upcoming releases:
- Ragnarok Online: New servers launched in Thailand (Ragnarok Classic) and scheduled for Indonesia (Ragnarok Retro). Relaunches in Philippines, Singapore, and Malaysia are expected in H1 2022.
- Ragnarok Origin: Launched in the US and Canada on November 10, 2021, ranking #2 in free downloads on Google Play on launch day. Expansions to Taiwan/HK/Macau (H1 2022) and Southeast Asia (H2 2022) are planned.
- Ragnarok X: Next Generation: Launched in Vietnam in September 2021.
- New Titles: Ragnarok: The Lost Memories launched in Thailand with expansions planned for SE Asia and North America. Ragnarok V: Returns is scheduled for launch in Q1 2022. Project T (Card SRPG) is expected in Q1 2022.
- Other IPs: NBA RISE TO STARDOM began open beta in September 2021 with a Japan launch expected in November 2021. SADAKO M launched in Japan in October 2021.
Risks and Contingencies: The filing includes standard forward-looking statements regarding future launches and market performance. No specific material contingencies or unusual items were detailed beyond standard operational variances.
Key Facts for Investor Verification
- Verify the sustainability of the 92.6% QoQ mobile revenue growth following the launch of Ragnarok X and Ragnarok Origin.
- Monitor the decline in Online Game revenue (42.5% YoY) and the impact of new server launches in Thailand and Indonesia on reversing this trend.
- Confirm the performance of Ragnarok Origin in the US/Canada market post-launch (November 2021).
- Review the company's cash position of KRW 226.2 billion against upcoming development and marketing costs for 2022 titles.
- Check for any updates on the cross-platform development of Ragnarok Begins and the launch timeline for Project T.