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Seoul, May 13, 2022 (GLOBE NEWSWIRE) — 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, 2022, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

FIRST QUARTER 2022 HIGHLIGHTS

  • Total revenues were KRW 88,607 million (US$ 73,135 thousand), representing an 8.3% decrease from the fourth quarter ended December 31, 2021 (“QoQ”) and a 15.7% decrease from the first quarter ended March 31, 2021 (“YoY”).
  • Operating profit was KRW 22,316 million (US$ 18,419 thousand), representing a 138.2% increase QoQ and a 20.2% decrease YoY.
  • Profit before income tax expenses was KRW 23,220 million (US$ 19,166 thousand), representing a 135.5% increase QoQ and a 18.9% decrease YoY.
  • Net profit attributable to parent company was KRW 16,431 million (US$ 13,562 thousand), representing a 1,198.9% increase QoQ and a 30.3% decrease YoY.

REVIEW OF FIRST QUARTER 2022 FINANCIAL RESULTS

Revenues

Online game revenues for the first quarter of 2022 were KRW 21,447 million (US$ 17,702 thousand), representing a 40.7 % increase QoQ from KRW 15,238 million and a 10.2% increase YoY from KRW 19,458 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Taiwan, Japan, the Philippines, Singapore and Malaysia. The increase YoY was largely due to increased revenues from Ragnarok Online in Taiwan, the Philippines, Singapore and Malaysia.

Mobile game revenues were KRW 63,241 million (US$ 52,198 thousand) for the first quarter of 2022, representing a 17.2% decrease QoQ from KRW 76,367 million and a 23.3% decrease YoY from KRW 82,438 million. The decrease QoQ resulted primarily from decreased revenues from Ragnarok X: Next Generation in Southeast Asia, Ragnarok Origin in Japan and Ragnarok M: Eternal Love. Such decrease was partially offset by increased revenues from Ragnarok Origin in the United States and Canada that was launched on November 10, 2021. The decrease YoY was primarily due to revenues from and Ragnarok Origin in Korea, Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau, and Ragnarok M: Eternal Love. This decrease was partially offset by increased revenues from Ragnarok X: Next Generation in Southeast Asia and Ragnarok Origin in the United States, Canada and Japan.

Other revenues were KRW 3,919 million (US$ 3,235 thousand) for the first quarter of 2022, representing 21.5% decrease QoQ from KRW 4,993 million and a 23.9% increase YoY from KRW 3,163 million.

Cost of Revenue

Cost of revenue was KRW 45,254 million (US$ 37,352 thousand) for the first quarter of 2022, representing a 17.2% decrease QoQ from KRW 54,632 million and a 21.4% decrease YoY from KRW 57,553 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services related to Ragnarok X: Next Generation in Southeast Asia and Ragnarok Origin in Japan. The decrease YoY was mostly from decreased commission paid for mobile game services related to Ragnarok M: Eternal Love, Ragnarok Origin in Korea and Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau.

Operating Expenses

Operating expenses were KRW 21,037 million (US$ 17,364 thousand) for the first quarter of 2022, representing a 35.5% decrease QoQ from KRW 32,599 million and a 7.6% increase YoY from KRW 19,553 million. The decrease QoQ was mainly attributable to decreased advertising expenses for Ragnarok Origin in the United States and Canada, NBA RISE TO STARDOM in Japan and G-STAR 2021, and research and development expenses. The increase YoY was mostly resulted from increased commission paid and salaries.

Profit Before Income Tax Expenses

Profit before income tax expenses was KRW 23,220 million (US$ 19,166 thousand) for the first quarter of 2022 compared with profit before income tax expense of KRW 9,859 million for the fourth quarter of 2021 and profit before income tax expenses of KRW 28,620 million for the first quarter of 2021.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 16,431 million (US$ 13,562 thousand) for the first quarter of 2022 compared with net profit attributable to parent company of KRW 1,265 million for the fourth quarter of 2021 and a net profit attributable to parent company of KRW 23,565 million for the first quarter of 2021.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 266,369 million (US$ 219,858 thousand) as of March 31, 2022.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,211.55 to US$ 1.00, the noon buying rate in effect on March 31, 2022 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATE

Ragnarok Online

Ragnarok Online is going to celebrate its 20th anniversary in Korea in the second half of 2022 since the game was initially launched in Korea on August 1, 2002.

Ragnarok Online IP-based Games

  • Ragnarok X: Next Generation, a MMORPG mobile game

Ragnarok X: Next Generation is scheduled to be launched in Korea in the second half of 2022.

  • Ragnarok Origin, a MMORPG mobile game

Ragnarok Origin is scheduled to be launched in Taiwan, Hong Kong and Macau in the second half of 2022.

  • Ragnarok Labyrinth NFT, a blockchain mobile game

Ragnarok Labyrinth NFT was re-opened in Southeast Asia on April 27, 2022 since it was initially launched in Southeast Asia on April 13. The game ranked as the first in top grossing of Apple App Store in Thailand, and the third in top grossing of Apple App Store in the Philippines and Indonesia after its launching.

  • Ragnarok Poring Merge, a blockchain mobile game

Ragnarok Poring Merge was designed as a blockchain game combined with NFT items and P2E systems. The game will start the pre-registration in Southeast Asia and it is preparing to be launched in the second half of 2022.

  • Other Ragnarok Online IP-based games

Ragnarok: The Lost Memories, a Cinematic Newtro Story RPG mobile and PC game, was launched for mobile version in South America, Australia and New Zealand on March 29, 2022. The game started to provide PC game service on Steam from April 12, 2022, and has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.

Ragnarok Monster’s Arena, a Card SRPG mobile game, was launched in Taiwan, Hong Kong and Macau on May 11, 2022. The game is scheduled to be launched in Thailand and Korea in the second half of 2022.

Ragnarok V: Returns, a MMORPG mobile and PC game, is scheduled to be launched for mobile version and PC game service in Oceania in the second quarter of 2022. The game is preparing to provide PC game service on Steam in global in the second half of 2022, and has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.

Ragnarok Begins, a MMORPG Mobile and PC game, is scheduled to run the second CBT for mobile and PC game version in September, 2022 and to be launched in Korea in the second half of 2022. The game has been developed by Gravity.

Other IP games

PALADOG TACTICS, a SRPG mobile game, was launched in Korea on March 31, 2022. The game has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the first quarter in 2022 and Gravity’s business plan. The presentation can be found on the Company’s website under the IR Archives section at http://www.gravity.co.kr/en/ir/pds/list.asp. 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 markets and countries. 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, 2021 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: [email protected]

Ms. Jin Lee
Ms. Hye Ji An
IR Unit
Gravity Co., Ltd.
Email: [email protected]
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-21     31-Mar-22  
    KRW     US$     KRW     US$  
    (audited)     (unaudited)     (unaudited)     (unaudited)  
Assets                                
Current assets:                                
Cash and cash equivalents     99,105       81,800       101,369       83,669  
Short-term financial instruments     148,000       122,158       165,000       136,189  
Accounts receivable, net     52,615       43,428       51,622       42,608  
Other receivables, net     1,080       891       241       199  
Prepaid expenses     3,164       2,612       2,008       1,658  
Other current assets     2,171       1,792       2,489       2,054  
Total current assets     306,135       252,681       322,729       266,377  
Property and equipment, net     11,338       9,358       10,310       8,510  
Intangible assets, net     3,342       2,758       3,071       2,535  
Deferred tax assets     1,719       1,419       1,114       919  
Other non-current financial assets     3,019       2,492       3,036       2,506  
Other non-current assets     1,973       1,628       2,033       1,678  
Total assets     327,526       270,336       342,293       282,525  
Liabilities and Equity                                
Current liabilities:                                
Accounts payable     41,199       34,005       40,355       33,309  
Deferred revenue     13,481       11,127       13,787       11,380  
Withholdings     3,596       2,968       3,017       2,490  
Accrued expense     1,484       1,225       2,704       2,232  
Income tax payable     10,629       8,773       9,399       7,758  
Other current liabilities     3,608       2,978       3,553       2,932  
Total current liabilities     73,997       61,076       72,815       60,101  
Long-term deferred revenue     98       81       98       81  
Other non-current liabilities     6,590       5,440       5,818       4,802  
Total liabilities     80,685       66,597       78,731       64,984  
Share capital     3,474       2,867       3,474       2,867  
Capital surplus     27,098       22,366       27,098       22,366  
Other components of equity     2,180       1,799       2,559       2,111  
Retained earnings     213,318       176,070       229,749       189,632  
Equity attributable to owners of the Parent Company      

246,070

       

203,102

       

262,880

       

216,976

 
Non-controlling interest     771       637       682       565  
Total equity     246,841       203,739       263,562       217,541  
Total liabilities and equity     327,526       270,336       342,293       282,525  

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,211.55 to US$ 1.00, the noon buying rate in effect on March 31, 2022 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  
    31-Dec-21     31-Mar-21     31-Mar-22  
    (KRW)     (US$)     (KRW)     (US$)     (KRW)     (US$)  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Revenues:                                                
Online games      15,238        12,577        19,458       16,060        21,447        17,702  
Mobile games      76,367        63,032        82,438       68,043        63,241        52,198  
Other revenue      4,993        4,121        3,163       2,611        3,919        3,235  
Total net revenue      96,598        79,730        105,059       86,714        88,607        73,135  
Cost of revenue     54,632       45,093       57,553       47,504       45,254       37,352  
Gross profit     41,966       34,637       47,506       39,210       43,353       35,783  
Operating expenses:                                                
Selling, general and administrative expenses      28,018        23,126        15,508       12,800        17,642        14,562  
Research and development      4,271        3,525        4,009       3,309        3,232        2,668  
Others, net      310        256        36       30        163        134  
Total operating expenses      32,599        26,907        19,553       16,139        21,037        17,364  
Operating profit     9,367       7,730       27,953       23,071       22,316       18,419  
Finance income(costs):                                                
Finance income      943        779        1,600       1,321        1,608        1,327  
Finance costs     (451)       (372 )     (933)       (770)       (704)       (580)  
Profit before income tax     9,859       8,137       28,620       23,622       23,220       19,166  
Income tax expense     8,642       7,134       5,059       4,176       6,889       5,686  
Profit for the year     1,217       1,003       23,561       19,446       16,331       13,480  
Profit attributable to:                                                
Non-controlling interest     (48)       (40)       (4)       (3)       (100)       (82)  
Owners of Parent company     1,265       1,043       23,565       19,449       16,431        13,562  
Earning per share                                                
– Basic and diluted     182       0.15       3,391       2.80       2,365       1.95  
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  
Earning per ADS(1)                                                
– Basic and diluted     182       0.15       3,391       2.80       2,365       1.95  
                                                                           

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,211.55 to US$1.00, the noon buying rate in effect on March 31, 2022 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.

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