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Gravity Reports First Quarter of 2021 Results and Business Update

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Seoul, Korea, May 14, 2021 (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, 2021, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

FIRST QUARTER 2021 HIGHLIGHTS

  • Total revenues were KRW 105,059 million (US$ 93,243 thousand), representing a 6.6% decrease from the fourth quarter ended December 31, 2020 (“QoQ”) and a 43.4% increase from the first quarter ended March 31, 2020 (“YoY”).

  • Operating profit was KRW 27,953 million (US$ 24,809 thousand), representing a 2.2% increase QoQ and a 169.9% increase YoY.

  • Profit before income tax expenses was KRW 28,620 million (US$ 25,401 thousand), representing a 7.0% increase QoQ and a 154.4% increase YoY.

  • Net profit attributable to parent company was KRW 23,565 million (US$ 20,915 thousand), representing a 56.4% increase QoQ and a 154.4% increase YoY.

REVIEW OF FIRST QUARTER 2021 FINANCIAL RESULTS

Revenues

Online game revenues for the first quarter of 2021 were KRW 19,458 million (US$ 17,270 thousand), representing a 26.6 % increase QoQ from KRW 15,370 million and a 44.8% increase YoY from KRW 13,436 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Taiwan and Japan. The increase YoY was largely due to increased revenues from Ragnarok Online in Thailand and Japan.

Mobile game revenues were KRW 82,438 million (US$ 73,166 thousand) for the first quarter of 2021, representing a 10.9% decrease QoQ from KRW 92,562 million and a 47.3% increase YoY from KRW 55,982 million. The decrease QoQ resulted primarily from decreased revenues from Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau and Ragnarok Origin in Korea. Such decrease was partially offset by increased revenues from Tera Classic in Japan that was launched on January 29, 2021 and Ragnarok M: Eternal Love in Southeast Asia. The increase YoY was primarily due to revenues from Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau and Ragnarok Origin in Korea. This increase was partially offset by decreased revenues from Ragnarok M: Eternal Love in Taiwan, Southeast Asia, North America, Japan, Korea and Europe and Ragnarok Tactics.

Other revenues were KRW 3,163 million (US$ 2,807 thousand) for the first quarter of 2021, representing 29.8% decrease QoQ from KRW 4,508 million and an 17.7% decrease YoY from KRW 3,842 million.

Cost of Revenue

Cost of revenue was KRW 57,553 million (US$ 51,080 thousand) for the first quarter of 2021, representing a 11.4% decrease QoQ from KRW 64,966 million and a 17.8% increase YoY from KRW 48,874 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services related to Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau and Ragnarok Origin in Korea. The increase YoY was mostly from increased commission paid for mobile game services related to Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau and Ragnarok Origin in Korea.

Operating Expenses

Operating expenses were KRW 19,553 million (US$ 17,354 thousand) for the first quarter of 2021, representing a 2.9% decrease QoQ from KRW 20,131 million and a 39.4% increase YoY from KRW 14,030 million. The decrease QoQ was mainly attributable to decreased advertising expenses for Ragnarok Origin in Korea and The Labyrinth of Ragnarok in Southeast Asia, and research and development expenses. The increase YoY was mostly resulted from increased advertising expenses for Tera Classic in Japan, The Labyrinth of Ragnarok in global and The Lord in Thailand, research and development expenses and commission paid.

Profit Before Income Tax Expenses

Profit before income tax expenses was KRW 28,620 million (US$ 25,401 thousand) for the first quarter of 2021 compared with profit before income tax expense of KRW 26,751 million for the fourth quarter of 2020 and profit before income tax expenses of KRW 11,250 million for the first quarter of 2020.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 23,565 million (US$ 20,915 thousand) for the first quarter of 2021 compared with net profit attributable to parent company of KRW 15,064 million for the fourth quarter of 2020 and a net profit attributable to parent company of KRW 9,263 million for the first quarter of 2020.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 194,754 million (US$ 172,850 thousand) as of March 31, 2021.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,126.72 to US$ 1.00, the noon buying rate in effect on March 31, 2021 as quoted by the Federal Reserve Bank of New York.


GRAVITY BUSINESS UPDATE

Ragnarok Online IP-based Games

  • Ragnarok Origin, a MMORPG mobile game

Ragnarok Origin is being prepared for launch in Japan in the second quarter of 2021. The closed beta test (“CBT”) has completed on April 22 with users’ positive feedbacks.

  • Ragnarok X: Next Generation, a MMORPG mobile game

Ragnarok X: Next Generation has started the CBT and pre-registration on April 23, 2021. The game is being prepared for launch in Southeast Asia in June 2021.

  • The Labyrinth of Ragnarok, a Time Effective MMORPG mobile game

The Labyrinth of Ragnarok was launched in global including Korea (except Taiwan, Hong Kong, Macau, China and Japan) on March 23, 2021.

  • Ragnarok: Poring Merge, a Time Effective RPG

Ragnarok: Poring Merge was launched in global on April 12, 2021.

  • Other Ragnarok Online IP-based games

The Lost Memories: a Song of Valkyrie, a Story RPG mobile game, is expected to be launched in Thailand, North America and global in the second half of 2021. The game was developed by Gravity NeoCyon, Inc., our subsidiary in Korea.

Project S (Tentative title), a MMORPG mobile game, is scheduled to start the CBT in the second half of 2021.


Other IP games

The Lord, a SRPG mobile game, is expected to be launched in Indonesia, Vietnam, Taiwan, Hong Kong and Macau in the second half of 2021.

CPBL Pro-baseball 2021, a Sports mobile game, will be launched in Taiwan, Hong Kong and Macau on June 17, 2021.


Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the first quarter in 2021 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 93 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, 2020 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: kheung@gravity.co.kr

Ms. Jin Lee
Ms. Hye Ji An
IR Unit
Gravity Co., Ltd.
Email: ir@gravity.co.kr
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-20

31-Mar-21

KRW

US$

KRW

US$

(audited)

(unaudited)

(unaudited)

(unaudited)

Assets

Current assets:

Cash and cash equivalents

110,632

98,189

116,754

103,623

Short-term financial instruments

71,000

63,015

78,000

69,227

Accounts receivable, net

59,761

53,040

62,994

55,909

Other receivables, net

8

7

183

162

Prepaid expenses

2,238

1,986

1,989

1,765

Other current assets

2,946

2,615

3,220

2,859

Total current assets

246,585

218,852

263,140

233,545

Property and equipment, net

7,695

6,830

8,286

7,354

Intangible assets, net

3,363

2,985

3,746

3,325

Deferred tax assets

3,590

3,186

2,810

2,494

Other non-current financial assets

1,324

1,175

2,070

1,837

Other non-current assets

2,815

2,498

1,916

1,701

Total assets

265,372

235,526

281,968

250,256

Liabilities and Equity

Current liabilities:

Accounts payable

52,688

46,762

47,651

42,292

Deferred revenue

13,692

12,152

11,902

10,563

Withholdings

2,851

2,530

2,991

2,655

Accrued expense

1,365

1,211

1,261

1,119

Income tax payable

9,470

8,405

8,575

7,611

Other current liabilities

2,654

2,356

2,745

2,436

Total current liabilities

82,720

73,416

75,125

66,676

Long-term deferred revenue

101

90

185

164

Other non-current liabilities

5,203

4,618

4,593

4,077

Total liabilities

88,024

78,124

79,903

70,917

Share capital

3,474

3,083

3,474

3,083

Capital surplus

27,110

24,061

27,110

24,061

Other components of equity

(1,045

)

(927

)

112

99

Retained earnings

147,371

130,796

170,936

151,711

Equity attributable to owners of the Parent Company



176,910



157,013



201,632



178,954

Non-controlling interest

438

389

433

385

Total equity

177,348

157,402

202,065

179,339

Total liabilities and equity

265,372

235,526

281,968

250,256

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,126.72 to US$ 1.00, the noon buying rate in effect on March 31, 2021 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-20

31-Mar-20

31-Mar-21

(KRW)

(US$)

(KRW)

(US$)

(KRW)

(US$)

(unaudited)

(unaudited)

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Revenues:

Online games

15,370

13,641

13,436

11,925

19,458

17,270

Mobile games

92,562

82,152

55,982

49,686

82,438

73,166

Other revenue

4,508

4,001

3,842

3,410

3,163

2,807

Total net revenue

112,440

99,794

73,260

65,021

105,059

93,243

Cost of revenue

64,966

57,659

48,874

43,377

57,553

51,080

Gross profit

47,474

42,135

24,386

21,644

47,506

42,163

Operating expenses:

Selling, general and administrative expenses

15,708

13,941

11,007

9,769

15,508

13,764

Research and development

4,358

3,868

2,872

2,549

4,009

3,558

Others, net

65

58

151

134

36

32

Total operating expenses

20,131

17,867

14,030

12,452

19,553

17,354

Operating profit

27,343

24,268

10,356

9,192

27,953

24,809

Finance income(costs):

Finance income

476

422

1,551

1,377

1,600

1,420

Finance costs

(1,068

)

(947

)

(657

)

(583

)

(933

)

(828

)

Profit before income tax

26,751

23,743

11,250

9,986

28,620

25,401

Income tax expense

11,768

10,444

2,004

1,779

5,059

4,490

Profit for the year

14,983

13,299

9,246

8,207

23,561

20,911

Profit attributable to:

Non-controlling interest

(81

)

(71

)

(17

)

(15

)

(4

)

(4

)

Owners of Parent company

15,064

13,370

9,263

8,222

23,565

20,915

Earning per share

- Basic and diluted

2,168

1.92

1,333

1.18

3,391

3.01

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

2,168

1.92

1,333

1.18

3,391

3.01

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,126.72 to US$1.00, the noon buying rate in effect on March 31, 2021 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents one common share.