SEOUL, South Korea, Aug. 27, 2009 (GLOBE NEWSWIRE) -- GRAVITY Co., Ltd. (Nasdaq:GRVY) ("Gravity" or "Company"), an online game developer and publisher based in South Korea, today announced its unaudited financial results for the second quarter ended June 30, 2009, prepared in accordance with generally accepted accounting principles in the United States.
Revenues for the second quarter ended June 30, 2009 were KRW 14,018 million (US$11,453 thousand), representing a 15.6% decrease from KRW 16,607 million for the first quarter ended March 31, 2009 ("QoQ") and a 10.7% increase from KRW 12,662 million for the second quarter ended June 30, 2008 ("YoY").
REVIEW OF FINANCIAL RESULTS
Revenues
Royalty and licensing fee revenues for the second quarter ended June 30, 2009 were KRW 8,350 million (US$6,822 thousand), representing a 22.8% decrease QoQ from KRW 10,816 million but a 23.9% increase YoY from KRW 6,742 million. The decrease QoQ was primarily due to the decreased revenues in Japan and the strengthening of the Korean Won against the Japanese Yen. The increase YoY mainly resulted from the higher revenues in Japan due to the weakening of the Korean Won against the Japanese Yen and increased revenues in Japan.
Subscription revenues for the second quarter of 2009 were KRW 2,980 million (US$2,435 thousand), representing a 14.2% decrease QoQ and a 3.3% decrease YoY compared to KRW 3,475 million and KRW 3,082 million, respectively. The decrease QoQ and YoY primarily resulted from the decreased revenues in Korea. The decrease YoY was partially offset by the growth in revenues from the U.S., Canada, Russia and CIS countries.
Mobile game revenues were KRW 1,752 million (US$1,431 thousand) for the second quarter of 2009, representing a 5.4% decrease QoQ from KRW 1,852 million and a 15.6% decrease YoY from KRW 2,076 million.
Character merchandising, animation and other revenue was KRW 936 million (US$765 thousand) for the second quarter of 2009, representing a 101.7% increase QoQ from KRW 464 million and a 22.8 % increase YoY from KRW 762 million. The QoQ and YoY revenue growth was primarily driven by revenues from sales of Ragnarok DS and the increased royalty revenues from Ragnarok character merchandising for the second quarter of 2009.
Cost of Revenue and Operating Expenses
Cost of revenue was KRW 5,441 million (US$4,446 thousand) for the second quarter of 2009, representing a modest increase for QoQ from KRW 5,427 million and a 27.5% decrease YoY from KRW 7,505 million. Such a decrease in YoY result was mainly attributed to i) a decrease in salaries of the Company's subsidiaries in the U.S. mainly resulting from the salaries of L5 Games Inc. for the second quarter of 2008 which did not occur in the second quarter of 2009 due to the liquidation proceedings taken place in August 2008; and a decrease in salaries at the headquarters; ii) decline in commission paid; and iii) fully completed amortization of intangible assets in December 2008, which occurred when the Company acquired NeoCyon in November and December 2005.
Operating expenses were KRW 5,389 million (US$4,402 thousand) for the second quarter of 2009, representing a 4.9% decrease QoQ from KRW 5,667 million and a 8.4% decrease YoY from KRW 5,881 million. The decrease in operating expenses QoQ was mostly resulting from a decrease in fringe benefits as expenses for social insurance are incurred only in the first quarter of each year, as well as from decrease in severance benefits. The decrease in operating expenses YoY was attributed to a decrease in advertising and R&D expenses.
Income before income tax expenses and others was KRW 3,327 million (US$2,718 thousand) for the second quarter of 2009. The Company recorded income before income tax expenses and others in the first quarter of 2009 and the second quarter of 2008, which were KRW 6,997 million and KRW 220 million, respectively.
As a result of the foregoing factors, Gravity recorded net income of KRW 1,938 million (US$1,583 thousand) for the second quarter of 2009 compared to net income of KRW 5,253 million for the first quarter of 2009 and net loss of KRW 782 million for the second quarter of 2008.
The balance of cash and cash equivalents and short-term financial instruments was KRW 69,952 million (US$57,151 thousand) as of June 30, 2009.
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the rate of KRW 1,224.0 to US$1.00, the noon buying rate in effect on August 7, 2009 as quoted by the Federal Reserve Bank of New York.
About GRAVITY Co., Ltd.
Based in Korea, Gravity is a developer and publisher of online games. Gravity's principal product, Ragnarok Online(tm), is a popular online game in many markets, including Japan, Taiwan and Thailand, and is currently commercially offered in 38 markets. For more information about Gravity, please visit http://www.gravity.co.kr.
Forward-Looking Statements:
Certain statements in this press release may include, in addition to historical information, "forward-looking statements" within the meaning of the "safe-harbor" provisions of the U.S. Private Securities Litigation Reform Act 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" "project," or "continue" or the negative thereof or other similar words, although not all forward-looking statements contain these words. Investors should consider the information contained in our submissions and filings with the United States Securities and Exchange Commission (the "SEC"), including our registration statement on Form F-1, as amended, and our annual reports on Form 20-F, together with such other documents and we may submit to or file with the SEC from time to time, on Form 6-K. The forward-looking statements speak only as of this press release and we assume no duty to update them to reflect new, changing or unanticipated events or circumstances.
GRAVITY Co., Ltd.
Consolidated Balance Sheet
(In millions of KRW and
in thousands of US$)
As of
-------------------------------------
31-Dec-08 30-Jun-09
------------------ ------------------
KRW US$ KRW US$
(un-
Assets (Audited) audited) (unaudited)
Current assets
Cash and cash equivalents 53,168 43,438 60,934 49,783
Short-term financial
instruments 7,278 5,946 9,018 7,368
Accounts receivable, net 6,540 5,343 6,310 5,155
Other current assets 5,564 4,546 4,652 3,800
------- ------- ------- -------
Total current assets 72,550 59,273 80,914 66,106
------- ------- ------- -------
Property and equipment, net 5,226 4,270 3,909 3,194
Leasehold and other deposits 1,501 1,226 1,513 1,236
Intangible assets 11,154 9,113 11,101 9,070
Goodwill 1,451 1,185 1,451 1,185
Investments 2,440 1,993 2,144 1,751
Other non-current assets 1,613 1,318 1,860 1,520
------- ------- ------- -------
Total assets 95,935 78,378 102,892 84,062
======= ======= ======= =======
Liabilities and shareholders'
equity
Current liabilities
Accounts payable 3,093 2,527 2,549 2,083
Deferred income 3,286 2,685 3,710 3,031
Income tax payable 815 666 294 240
Other current liabilities 1,203 982 1,067 872
------- ------- ------- -------
Total current liabilities 8,397 6,860 7,620 6,226
------- ------- ------- -------
Long-term deferred income 9,839 8,038 9,844 8,042
Accrued severance benefits 926 757 1,225 1,001
Other non-current liabilities 165 135 120 98
------- ------- ------- -------
Total liabilities 19,327 15,790 18,809 15,367
------- ------- ------- -------
Minority interest 137 112 175 143
Common stock 3,474 2,838 3,474 2,838
Additional paid-in capital 75,247 61,476 75,283 61,506
Retained earnings (Accumulated
deficit) (5,652) (4,618) 1,539 1,257
Accumulated other comprehensive
income 3,402 2,780 3,612 2,951
------- ------- ------- -------
Total shareholders' equity 76,471 62,476 83,908 68,552
------- ------- ------- -------
Total liabilities and
shareholders' equity 95,935 78,378 102,892 84,062
======= ======= ======= =======
* For convenience, the KRW amounts are expressed in U.S. dollars at
the rate of KRW1,224.0 to US$1.00, the noon buying rate in effect
on August 7, 2009 as quoted by the Federal Reserve Bank of New
York.
GRAVITY Co., Ltd.
Consolidated Statements of Operations
(In millions of KRW and in thousands of US$, except for share
and ADS data)
Three months ended
-----------------------------------------------
31-Mar-09 30-Jun-08 30-Jun-09
(KRW) (KRW) (KRW) (US$)
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues
Online games-
subscription
revenue 3,475 3,082 2,980 2,435
Online games-
royalties and
license fees 10,816 6,742 8,350 6,822
Mobile games 1,852 2,076 1,752 1,431
Character
merchandising,
animation and other
revenue 464 762 936 765
----------- ----------- ----------- -----------
Total net revenues 16,607 12,662 14,018 11,453
Cost of revenues 5,427 7,505 5,441 4,446
----------- ----------- ----------- -----------
Gross profit 11,180 5,157 8,577 7,007
Operating expenses
Selling, general and
administrative 5,316 5,272 4,953 4,047
Research and
development 351 609 436 355
----------- ----------- ----------- -----------
Operating income
(loss) 5,513 (724) 3,188 2,605
Other income
(expenses)
Interest income 737 702 537 439
Interest expense (15) (6) (11) (9)
Foreign currency
gains (losses),
net 763 248 (430) (351)
Others, net (1) -- 43 34
----------- ----------- ----------- -----------
Income (loss)
before income tax
expense, minority
interest and
equity in loss of
related joint
venture 6,997 220 3,327 2,718
Income tax expense 1,405 808 1,103 901
----------- ----------- ----------- -----------
Income (loss)
before minority
interest and
equity in loss of
related joint
venture 5,592 (588) 2,224 1,817
----------- ----------- ----------- -----------
Minority interest 18 17 19 16
Equity in loss of
related joint
venture 321 177 267 218
----------- ----------- ----------- -----------
Net Income (loss) 5,253 (782) 1,938 1,583
=========== =========== =========== ===========
Earnings (loss) per
share
- Basic and diluted 756 (113) 279 0.23
=========== =========== =========== ===========
Weighted average
number of shares
outstanding
- Basic and diluted 6,948,900 6,948,900 6,948,900 6,948,900
----------- ----------- ----------- -----------
Earnings (loss) per
ADS(1)
- Basic and diluted 189 (28) 70 0.06
Weighted average
number of ADSs
outstanding
- Basic and diluted 27,795,600 27,795,600 27,795,600 27,795,600
=========== =========== =========== ===========
Six months ended
-----------------------------------
30-Jun-08 30-Jun-09
(KRW) (KRW) (US$)
(unaudited) (unaudited) (unaudited)
Revenues
Online games- subscription
revenue 5,942 6,455 5,274
Online games-royalties and
license fees 13,639 19,165 15,658
Mobile games 3,497 3,604 2,944
Character merchandising,
animation and other revenue 2,113 1,401 1,144
----------- ----------- -----------
Total net revenues 25,191 30,625 25,020
Cost of revenues 15,009 10,869 8,879
----------- ----------- -----------
Gross profit 10,182 19,756 16,141
Operating expenses
Selling, general and
administrative 11,200 10,270 8,391
Research and development 1,392 785 641
----------- ----------- -----------
Operating income (loss) (2,410) 8,701 7,109
Other income (expenses)
Interest income 1,403 1,274 1,041
Interest expense (10) (26) (21)
Foreign currency gains
(losses), net 961 333 272
Others, net (3) 42 34
----------- ----------- -----------
Income (loss) before income
tax expense, minority interest
and equity in loss of related
joint venture (59) 10,324 8,435
Income tax expense 1,657 2,508 2,049
----------- ----------- -----------
Income (loss) before minority
interest and equity in loss of
related joint venture (1,716) 7,816 6,386
----------- ----------- -----------
Minority interest 39 38 31
Equity in loss of related joint
venture 3,541 587 480
----------- ----------- -----------
Net Income (loss) (5,296) 7,191 5,875
=========== =========== ===========
Earnings (loss) per share
- Basic and diluted (762) 1,035 0.85
=========== =========== ===========
Weighted average number of shares
outstanding
- Basic and diluted 6,948,900 6,948,900 6,948,900
----------- ----------- -----------
Earnings (loss) per ADS(1)
- Basic and diluted (191) 259 0.21
Weighted average number of ADSs
outstanding
- Basic and diluted 27,795,600 27,795,600 27,795,600
=========== =========== ===========
* For convenience, the KRW amounts are expressed in U.S. dollars at
the rate of KRW1,224.0 to US$1.00, the noon buying rate in effect
on August 7, 2009 as quoted by the Federal Reserve Bank of New
York.
(1) Each ADS represents one-fourth of a common share.