GRAVITY Reports First Quarter of 2012 Results
SEOUL, South Korea, May 16, 2012 (GLOBE NEWSWIRE) -- GRAVITY Co., Ltd. (Nasdaq:GRVY) ("Gravity" or the "Company"), an online game developer and publisher based in South Korea, today announced its unaudited financial results for the first quarter ended March 31, 2012, prepared in accordance with generally accepted accounting principles in the United States.
Revenues for the first quarter ended March 31, 2012 were KRW 16,357 million (US$ 14,421 thousand), representing a 14.4% increase from KRW 14,298 million for the fourth quarter ended December 31, 2011 ("QoQ") and a 18.4% increase from KRW 13,810 million for the first quarter ended March 31, 2011 ("YoY").
Review of financial results
Royalty and licensing fee revenue for the first quarter ended March 31, 2012 was KRW 8,710 million (US$ 7,679 thousand), representing a 5.4% increase QoQ from KRW 8,265 million and a 0.1% decrease YoY from KRW 8,719 million. The increase in royalty and licensing fee revenues QoQ was primarily due to increased revenues in the Japanese market from Ragnarok Online and revenues from Ragnarok Online Guild Masters, a Web browser-based tactical role playing game based on Ragnarok Online, which was commercially launched in October 2011. The decrease in royalty and licensing fee revenues YoY was mainly attributable to decrease in the revenues from Ragnarok Online in Taiwan, Hong Kong and Macau and decreased revenues from Dragonica.
Subscription revenue for the first quarter 2012 was KRW 4,241 million (US$ 3,739 thousand), representing a 65.0% increase QoQ and a 28.1% increase YoY compared to KRW 2,571 million and KRW 3,310 million, respectively. The increase QoQ and YoY mainly resulted from revenues from Finding Neverland Online, which was commercially launched in Korea in January 2012.
Mobile game revenue was KRW 2,037 million (US$ 1,796 thousand) for the first quarter 2012, representing a 26.4% decrease QoQ from KRW 2,767 million and a 19.8% increase YoY from KRW 1,700 million.
Character merchandising and other revenue was KRW 1,369 million (US$ 1,207 thousand) for the first quarter 2012, representing a 97.0% increase QoQ from KRW 695 million and a 1,590.1% increase YoY from KRW 81 million. The increase QoQ and YoY is mostly driven by revenues from Ragnarok Odyssey, an action game on PS Vita platform, based on Ragnarok Online, which was commercially released in Japan in February 2012.
Cost of Revenues and Operating Expenses
Cost of revenues was KRW 6,827 million (US$ 6,019 thousand) for the first quarter 2012, representing a 10.2% increase QoQ from KRW 6,196 million and a 26.8% increase YoY from KRW 5,383 million. The Company's increased cost of revenues QoQ and YoY was primarily attributable to increase in commission paid mainly due to royalty payment for Finding Neverland Online as a result of its commercial launch in January 2012 and increase in amortization on intangible assets primarily for Ragnarok Online II resulting from its commercial launch in March 2012.
Operating expenses were KRW 8,179 million (US$ 7,211 thousand) for the first quarter 2012, representing a 34.7% decrease QoQ from KRW 12,521 million and a 41.5% increase YoY from KRW 5,779 million. The decrease in operating expenses QoQ was primarily due to impairment loss on intangible assets from Dragonica and goodwill of Gravity Games Corporation and bad debt expenses related to loans to a Korean online game developer in the fourth of 2011, both of which did not occur in the first quarter of 2012. The increase in operating expenses YoY was mainly attributable to increase in advertising expenses, mainly due to marketing expenses for open beta testing of Finding Neverland Online and Ragnarok Online II.
Income before income tax expenses and others was KRW 1,656 million (US$ 1,460 thousand) for the first quarter of 2012, which represents a 44.8% decrease YoY from KRW 3,002 million.
As a result of the foregoing factors, Gravity recorded a net income attributable to parent company of KRW 1,128 million (US$ 995 thousand) for the first quarter of 2012 compared to a net income attributable to parent company of KRW 7,382 million for the fourth quarter of 2011 and KRW 2,408 million for the first quarter of 2011.
The balance of cash and cash equivalents and short-term financial instruments was KRW 54,877 million (US$ 48,382 thousand) as of March 31, 2012.
Note: For convenience purposes only, the KRW amounts have been expressed in the U.S. dollars at the exchange rate of KRW 1,134.25 to US$ 1.00, the noon buying rate in effect on May 4, 2012, as quoted by the Federal Reserve Bank of New York.
About GRAVITY Co., Ltd.
Based in Korea, Gravity is a developer and publisher of online games. Gravity's principal product, Ragnarok Online™, is a popular online game in many markets, including Japan, Taiwan and Thailand, and is currently commercially offered in 79 markets. For more information about Gravity, please visit http://www.gravity.co.kr.
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 registration statement on Form F-1, as amended, and our annual reports on Form 20-F, together with such other documents and 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.
|GRAVITY Co., Ltd.|
|Consolidated Balance Sheets|
|(In millions of KRW and thousands of US$)|
|Cash and cash equivalents||42,430||37,408||38,877||34,276|
|Short-term financial instruments||15,000||13,225||16,000||14,106|
|Accounts receivable, net||6,436||5,674||7,850||6,921|
|Other current assets||7,967||7,024||7,714||6,801|
|Total current assets||71,833||63,331||70,441||62,104|
|Property and equipment, net||2,731||2,408||4,145||3,654|
|Leasehold and other deposits||5,924||5,223||5,922||5,221|
|Equity method investments||1,444||1,273||1,330||1,173|
|Other non-current assets||8,783||7,743||8,770||7,732|
|Liabilities and Equity|
|Other current liabilities||1,847||1,628||1,101||971|
|Total current liabilities||12,062||10,634||12,733||11,226|
|Long-term deferred revenue||7,457||6,574||7,726||6,812|
|Accrued severance benefits||916||808||919||810|
|Other non-current liabilities||1,784||1,573||1,530||1,349|
|Additional paid-in capital||75,395||66,471||75,395||66,471|
|Accumulated other comprehensive income||3,042||2,683||2,930||2,583|
|Total parent company shareholders' equity||101,834||89,782||102,850||90,676|
|Total liabilities and equity||132,878||117,151||134,210||118,325|
|* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW1,134.25 to US$1.00, the noon buying rate in effect on May 4, 2012 as quoted by the Federal Reserve Bank of New York.|
|GRAVITY Co., Ltd.|
|Consolidated Statements of Operations|
|(In millions of KRW and thousands of US$ except for share and ADS data)|
|Three months ended|
|Online games-subscription revenue||2,571||2,267||3,310||2,918||4,241||3,739|
|Online games-royalties and license fees||8,265||7,287||8,719||7,687||8,710||7,679|
|Character merchandising and other revenue||695||613||81||71||1,369||1,207|
|Total net revenue||14,298||12,606||13,810||12,175||16,357||14,421|
|Cost of revenue||6,196||5,463||5,383||4,746||6,827||6,019|
|Selling, general and administrative||7,770||6,850||4,749||4,187||6,792||5,988|
|Research and development||1,824||1,608||1,030||908||1,387||1,223|
|Impairment losses on intangible assets||2,898||2,555||--||--||--||--|
|Settlement cost of litigation||29||26||--||--||--||--|
|Other income (expenses):|
|Foreign currency loss, net||(303)||(267)||(58)||(51)||(160)||(141)|
|Income (loss) before income tax expenses|
|(benefit) and equity loss on investments||(4,253)||(3,749)||3,002||2,647||1,656||1,460|
|Income tax expenses (benefit)||(10,108)||(8,912)||802||707||818||721|
|Income before equity loss on investments||5,855||5,163||2,200||1,940||838||739|
|Equity loss on investments||(112)||(99)||(12)||(11)||(82)||(72)|
|LESS: Net loss attributable to the non-controlling interest||(1,639)||(1,445)||(220)||(194)||(372)||(328)|
|Net Income attributable to parent company||7,382||6,509||2,408||2,123||1,128||995|
|Earnings per share|
|- Basic and diluted||1,062||0.94||347||0.31||162||0.14|
|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|
|Earnings per ADS|
|- Basic and diluted||265||0.23||87||0.08||41||0.04|
|Weighted average number of ADSs outstanding|
|- Basic and diluted||27,795,600||27,795,600||27,795,600||27,795,600||27,795,600||27,795,600|
|* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW1,134.25 to US$1.00, the noon buying rate in effect on May 4, 2012 as quoted by the Federal Reserve Bank of New York.|
CONTACT: Mr. Heung Gon Kim Chief Financial Officer Gravity Co., Ltd. Email: email@example.com Ms. Yoon Joo Lee IR Manager Gravity Co., Ltd. Email: firstname.lastname@example.org Telephone: +82-2-2132-7800