SEOUL, South Korea, July 8, 2009 (GLOBE NEWSWIRE) -- GRAVITY Co., Ltd. (Nasdaq:GRVY), an online game developer and publisher based in South Korea, today announced its unaudited financial results for the first quarter ended March 31, 2009, prepared in accordance with generally accepted accounting principles in the United States.
Revenues for the first quarter ended March 31, 2009 was KRW 16,607 million (US$ 12,991 thousand), representing a 9.27% increase from KRW 15,198 million (US$ 11,889 thousand) for the fourth quarter ended December 31, 2008 ("QoQ") and a 32.55% increase from KRW 12,529 million (US$ 9,801 thousand) for the first quarter ended March 31, 2008 ("YoY").
REVIEW OF FINANCIAL RESULTS
Revenues
Royalty and licensing fee revenues for the first quarter ended March 31, 2009 were KRW 10,816 million (US$ 8,461 thousand), representing a 16.99% increase QoQ from KRW 9,245 million (US$ 7,232 thousand) and a 56.82% increase YoY from KRW 6,897 million (US$ 5,395 thousand). The increase was primarily driven by higher Japan revenues from Ragnarok Online resulting from the weakening of the Korean Won against the Japanese Yen, which contributed to increased revenues in Japan.
Subscription revenues for the first quarter of 2009 was KRW 3,475 million (US$ 2,718 thousand), representing a 12.28% increase QoQ and a 21.50% increase YoY compared to KRW 3,095 million (US$ 2,421 thousand) and KRW 2,860 million (US$ 2,237 thousand), respectively. The increased subscription revenues QoQ mostly came from increased revenues from Ragnarok Online in the U.S., Canada and Korea. The increase in revenues YoY were attributed to increased revenues from micro-transactions of Ragnarok Online in the U.S. and Canada and commercialization of Requiem in the U.S., Canada, Russia and CIS countries in June 2008. This increase was offset by decreased revenues from Ragnarok Online and Requiem in Korea.
Mobile game revenues was KRW 1,852 million (US$ 1,449 thousand) for the first quarter of 2009, representing a 4.57% increase QoQ from KRW 1,771 million (US$ 1,385 thousand) and a 30.33% increase YoY from KRW 1,421 million (US$ 1,112 thousand).
Character merchandising, animation and other revenue was KRW 464 million (US$ 363 thousand) for the first quarter of 2009, representing a 57.31% decrease QoQ from KRW 1,087 million (US$ 851 thousand) and a 65.66% decrease YoY from KRW 1,351 million (US$ 1,057 thousand). The decrease QoQ was mainly due to the decreased revenues from Ragnarok DS in Japan in the first quarter of 2009 compared with its higher revenues when it was released in December 2008 and partly resulted from the decreased sales of mobile phone accessories by NeoCyon, a subsidiary of the Company. The decrease YoY was primarily due to a decrease in sales of mobile phone accessories by NeoCyon.
Cost of Revenues and Operating Expenses
Cost of revenues were KRW 5,427 million (US$ 4,245 thousand) for the first quarter of 2009, representing a 10.10% decrease QoQ from KRW 6,037 million (US$ 4,722 thousand) and a 27.68% decrease YoY from KRW 7,504 million (US$ 5,870 thousand). The Company's decreased cost of revenues QoQ was attributed to completion of the amortization on intangible assets in December 2008, which occurred when the Company acquired NeoCyon in November and December 2005. The decrease in cost of revenues YoY was mainly due to decreased cost of revenues related to mobile phone accessories, reduced amortization on intangible assets.
Operating expenses were KRW 5,667 million (US$ 4,433 thousand) for the first quarter of 2009, representing a 21.57% decrease QoQ from KRW 7,226 million (US$ 5,653 thousand) and a 15.56% decrease YoY from KRW 6,711 million (US$ 5,250 thousand). The decrease in operating expenses QoQ was mostly due to the decrease in commission paid and advertising expenses. The YoY decrease in operating expenses was attributed to i) decreased rent expenses which were due to relocation of the headquarter office in Seoul on February 1, 2008; the rent expenses for both old and new offices occurred between February 1, 2008 and Mar 16, 2008 as the lease agreement of the old office expired on March 16, 2008, which did not recur in the first quarter of 2009; ii) decreased R&D expenses; and iii) decrease in advertising expenses.
Income before income tax expenses and others was KRW 6,997 million (US$ 5,474 thousand) for the first quarter of 2009, which represents a 76.03% increase QoQ compared with KRW 3,975 million (US$ 3,110 thousand) and a 2,616.91% increase YoY compared with a loss of KRW 278 million (US$ 217 thousand).
As a result of the foregoing factors, Gravity recorded a net income of KRW 5,253 million (US$ 4,109 thousand) for the first quarter of 2009 compared with a net income of KRW 1,654 million (US$ 1,294 thousand) for the fourth quarter of 2008 and a net loss of KRW 4,513 million (US$ 3,531 thousand) for the first quarter of 2008.
The balance of cash and cash equivalents and short-term financial instruments was KRW 67,233 million (US$ 52,596 thousand) as of March 31, 2009.
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the rate of KRW 1,278.3 to US$ 1.00, the noon buying rate in effect on June 26, 2009 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(tm), is a popular online game in many markets, including Japan, Taiwan and Thailand, and is currently commercially offered in 38 markets. 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 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 Sheet
(In millions of KRW and in thousands of US$)
As of
-------------------------------------
31-Dec-08 31-Mar-09
----------------- -----------------
KRW US$ KRW US$
(un-
(audited) audited) (unaudited)
Assets
Current assets
Cash and cash equivalents 53,168 41,593 57,766 45,190
Short-term financial
instruments 7,278 5,693 9,467 7,406
Accounts receivable, net 6,540 5,116 5,808 4,544
Other current assets 5,564 4,353 5,305 4,149
------- ------- ------- -------
72,550 56,755 78,346 61,289
------- ------- ------- -------
Property and equipment, net 5,226 4,088 4,638 3,628
Leasehold and other deposits 1,501 1,174 1,526 1,193
Intangible assets 11,154 8,725 11,111 8,692
Goodwill 1,451 1,135 1,451 1,135
Investment 2,440 1,909 2,176 1,702
Other non-current assets 1,613 1,263 1,960 1,535
------- ------- ------- -------
Total assets 95,935 75,049 101,208 79,174
======= ======= ======= =======
Liabilities and
shareholders' equity
Current liabilities
Accounts payable 3,093 2,420 3,000 2,347
Deferred income 3,286 2,571 3,388 2,650
Income tax payable 815 637 338 264
Other current liabilities 1,203 941 934 731
------- ------- ------- -------
Total current liabilities 8,397 6,569 7,660 5,992
------- ------- ------- -------
Long-term deferred income 9,839 7,697 9,926 7,765
Accrued severance benefits 926 724 1,111 869
Other non-current liabilities 165 129 156 122
------- ------- ------- -------
Total liabilities 19,327 15,119 18,853 14,748
------- ------- ------- -------
Minority interest 137 107 156 122
Common stock 3,474 2,718 3,474 2,718
Additional paid-in capital 75,247 58,865 75,265 58,879
Retained earnings (5,652) (4,421) (399) (312)
Accumulated other
comprehensive
income (loss) 3,402 2,661 3,859 3,019
------- ------- ------- -------
Total shareholders'
equity 76,471 59,823 82,199 64,304
------- ------- ------- -------
Total liabilities and
shareholders' equity 95,935 75,049 101,208 79,174
======= ======= ======= =======
* For convenience, the KRW amounts are expressed in U.S. dollars at
the rate of KRW1,278.3 to US$1.00, the noon buying rate in effect
on June 26, 2009 as quoted by the Federal Reserve Bank of New
York.
GRAVITY Co., Ltd.
Consolidated Statements of Operations
(In millions of KRW and in thousands of US$)
Three months ended
----------------------------------------------
31-Dec-08 31-Mar-08 31-Mar-09
-------------- -------------- --------------
(KRW) (US$) (KRW) (US$) (KRW) (US$)
(unaudited) (unaudited) (unaudited)
Revenues
Online
games-subscription
revenue 3,095 2,421 2,860 2,237 3,475 2,718
Online
games-royalties
and
license fees 9,245 7,232 6,897 5,395 10,816 8,461
Mobile games 1,771 1,385 1,421 1,112 1,852 1,449
Character
merchandising,
animation and
other revenue 1,087 851 1,351 1,057 464 363
------ ------ ------ ------ ------ ------
Total net
revenues 15,198 11,889 12,529 9,801 16,607 12,991
Cost of revenues 6,037 4,722 7,504 5,870 5,427 4,245
------ ------ ------ ------ ------ ------
Gross profit 9,161 7,167 5,025 3,931 11,180 8,746
Operating expenses
Selling, general
and administrative 6,888 5,388 5,928 4,637 5,316 4,159
Research and
development 338 265 783 613 351 274
------ ------ ------ ------ ------ ------
Operating
income (loss) 1,935 1,514 (1,686) (1,319) 5,513 4,313
Other income
(expenses)
Interest income 793 620 702 549 737 577
Interest expense (14) (11) (4) (3) (15) (12)
Foreign currency
gains (losses),
net 1,274 997 713 558 763 597
Others, net (13) (10) (3) (2) (1) (1)
------ ------ ------ ------ ------ ------
Income (losses)
before income
tax expense,
minority
interest and
equity in loss
of related
joint venture 3,975 3,110 (278) (217) 6,997 5,474
Income tax expenses 858 671 849 665 1,405 1,099
------ ------ ------ ------ ------ ------
Income (losses)
before minority
interest and
equity in loss
of related
joint venture 3,117 2,439 (1,127) (882) 5,592 4,375
------ ------ ------ ------ ------ ------
Minority interest 8 6 22 17 18 14
Equity in loss of
related joint
venture 1,455 1,139 3,364 2,632 321 252
------ ------ ------ ------ ------ ------
Net Income (Loss) 1,654 1,294 (4,513) (3,531) 5,253 4,109
====== ====== ====== ====== ====== ======
* For convenience, the KRW amounts are expressed in U.S. dollars at
the rate of KRW1,278.3 to US$1.00, the noon buying rate in effect
on June 26, 2009 as quoted by the Federal Reserve Bank of New
York.