GRAVITY Co., Ltd. Q3 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 third quarter ended September 30, 2023. The results are prepared in accordance with International Financial Reporting Standards (IFRS).
Key Financial Metrics
| Metric | Q3 2023 (KRW) | Q3 2023 (USD) | QoQ Change | YoY Change |
|---|---|---|---|---|
| Total Revenue | 176,145 million | $130,685 thousand | -26.3% | +72.1% |
| Operating Profit | 37,917 million | $28,131 thousand | -28.1% | +78.3% |
| Profit Before Tax | 41,208 million | $30,572 thousand | -25.2% | +68.8% |
| Net Profit (Parent) | 28,961 million | $21,486 thousand | -35.7% | +80.2% |
| Cash & Short-term Instruments | 443,835 million | $329,289 thousand | N/A | N/A |
Revenue Breakdown: Mobile game revenues were KRW 155,467 million (88% of total), while online game revenues were KRW 17,316 million. Cost of revenue was KRW 117,834 million, and operating expenses were KRW 20,394 million.
Material Changes vs. Prior Periods
- Quarter-over-Quarter (QoQ): Revenue and profit declined significantly compared to Q2 2023. The QoQ revenue drop was driven by decreased mobile revenues from Ragnarok Origin in Southeast Asia and Ragnarok X: Next Generation in Korea. Operating expenses increased 14.0% QoQ due to higher R&D and advertising for new titles like White Chord and Ragnarok Landverse.
- Year-over-Year (YoY): Revenue and profit increased substantially compared to Q3 2022. The YoY revenue growth was primarily due to the initial revenue contributions from Ragnarok Origin (launched April 2023) and Ragnarok X: Next Generation (launched January 2023).
- Liquidity: Cash and short-term financial instruments increased to KRW 443,835 million as of September 30, 2023, up from KRW 336,877 million at year-end 2022.
Outlook, Management Commentary, and Risks
Business Updates and Pipeline:
- Ragnarok Origin received a foreign version number in China and is preparing for a Q1 2024 launch there, alongside a global version for Central/South America.
- Ragnarok X: Next Generation is preparing for a China launch via affiliate Beihai Leyou Technology Co. Ltd.
- Ragnarok Begins started its second Closed Beta Test (CBT) in November 2023, targeting a December 2023 Korea launch.
- Ragnarok V: Returns is scheduled for CBT in Korea and Thailand in the first half of 2024.
- Ragnarok Landverse (blockchain) launched in September 2023 in select regions.
- Wetory, a 3D Action Adventure game, was released globally on October 26, 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 approvals (e.g., in China), and the success of new game launches. The filing does not provide specific quantitative risk factors beyond standard disclosures.
Key Facts for Investor Verification
- Verify the timing and regulatory approval status for the China launch of Ragnarok Origin and Ragnarok X: Next Generation in Q1 2024.
- Monitor the revenue performance of newly launched titles (White Chord, Ragnarok Landverse, Ragnarok 20 Heroes) to assess if they can offset the QoQ decline in legacy mobile titles.
- Confirm the exchange rate impact on USD reporting, as the filing uses a fixed rate of KRW 1,347.86 to US$ 1.00.
- Review the full investor presentation linked in the filing for detailed segment data and long-term business plans.