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Gravity Reports First Quarter of 2015 Results

Gravity
2015-05-27 18:10 1961

SEOUL, South Korea, May 27, 2015 /PRNewswire/ -- GRAVITY Co., Ltd. (NasdaqCM: GRVY) ("Gravity" or "Company"), an online and mobile game developer, operator and publisher based in South Korea, today announced its unaudited financial results for the first quarter ended March 31, 2015, prepared in accordance with generally accepted accounting principles in the United States.

FINANCIAL RESULTS FOR THE FIRST QUARTER OF 2015

Revenues for the first quarter ended March 31, 2015 was KRW 9,069 million (US$ 8,187 thousand), representing a 2.8% decrease from KRW 9,330 million for the fourth quarter ended December 31, 2014 ("QoQ") and a 15.8% decrease from KRW 10,767 million for the first quarter ended March 31, 2014 ("YoY").

Review of Financial Results

Revenues

Mobile game and application revenues were KRW 4,203 million (US$ 3,794 thousand) for the first quarter of 2015, representing a 26.5% increase QoQ from KRW 3,322 million and a 2.6% decrease YoY from KRW 4,317 million. The increase QoQ resulted primarily from increased revenues from mobile applications for a third party and Ragnarok Online————Uprising: Valkyrie. The decrease YoY was mainly driven by decreased revenues from mobile game operation service for a third party and decreased revenues from Road to Dragons.

Royalty and license fee revenues for the first quarter of 2015 were KRW 2,512 million (US$ 2,268 thousand), representing a 13.2% decrease QoQ from KRW 2,895 million and a 29.7% decrease YoY from KRW 3,575 million. The decrease QoQ was primarily due to decreased revenue from Ragnarok Online in Japan. The decrease YoY resulted mainly from decrease revenue from Ragnarok Online in Japan and the strengthening of the Korean Won against the Japanese Yen.

Subscription revenues for the first quarter of 2015 were KRW 1,698 million (US$ 1,533 thousand), representing a 26.9% decrease QoQ from KRW 2,322 million and a 10.2% decrease YoY from KRW 1,890 million. The decrease QoQ was mainly attributable to a decrease in revenues from Ragnarok Online in Korea and to decreased revenues from Ragnarok Online and Ragnarok Online II in the United States and Canada. The decrease YoY was largely due to decreased revenues from online games, including Ragnarok Online and Ragnarok Online II in the United States and Canada.

Character merchandising and other revenues were KRW 656 million (US$ 592 thousand) for the first quarter 2015, representing a 17.1% decrease QoQ from KRW 791 million and a 33.4% decrease YoY from KRW 985 million.

Cost of Revenue and Operating Expenses

Cost of revenue was KRW 7,676 million (US$ 6,930 thousand) for the first quarter of 2015, representing a 4.4% decrease QoQ from KRW 8,031 million and a 18.9% decrease YoY from KRW 9,467 million. The decrease QoQ was mostly from decreased outsourcing fee and depreciation expenses. The decrease YoY was mainly attributable to decreased salaries and severance benefits.

Operating expenses were KRW 3,952 million (US$ 3,567 thousand) for the first quarter of 2015, representing a 14.8% decrease QoQ from KRW 4,639 million and a 5.4% decrease YoY from KRW 4,178 million. The decrease QoQ was mainly due to decreased commission paid and R&D expense. The decrease YoY was mostly resulted from decreased salaries and advertising expense.

Loss before income tax expenses and others was KRW 2,355 million (US$ 2,126 thousand) for the first quarter of 2015 compared with loss before income tax expenses and others of KRW 3,007 million for the fourth quarter of 2014 and loss before income tax expenses and others of KRW 2,503 million for the first quarter of 2014.

As a result of the foregoing factors, Gravity recorded a net loss attributable to parent company of KRW 2,628 million (US$ 2,372 thousand) for the first quarter of 2015 compared with a net loss attributable to parent company of KRW 11,871 million for the fourth quarter of 2014 and a net loss attributable to parent company of KRW 2,969 million for the first quarter of 2014.

The balance of cash and cash equivalents and short-term financial instruments was KRW 42,694 million (US$ 38,543 thousand) as of March 31, 2015.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,107.71 to US$ 1.00, the noon buying rate in effect on March 31, 2015 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 and mobile 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 71 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, 2014 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. Ji Hee Kim
IR Manager
Gravity Co., Ltd.
Email: ircommunication@gravity.co.kr
Telephone: +82-2-2132-7800


GRAVITY Co., Ltd.

Consolidated Balance Sheet

(In millions of KRW and thousands of US$)







As of



31-Dec-14

31-Mar-15



KRW

US$

KRW

US$

Assets

(audited)

(unaudited)

(unaudited)

(unaudited)

Current assets:







Cash and cash equivalents

28,382

25,622

28,194

25,453

Short-term financial instruments

14,500

13,090

14,500

13,090

Accounts receivable, net

5,159

4,657

4,504

4,066

Other current assets

2,651

2,393

2,139

1,931


Total current assets

50,692

45,762

49,337

44,540










Property and equipment, net

1,213

1,095

1,021

922

Leasehold and other deposits

937

846

935

844

Intangible assets

9,973

9,003

8,974

8,101

Other non-current assets

281

254

310

280


Total assets

63,096

56,960

60,577

54,687










Liabilities and Equity






Current liabilities:







Accounts payable

2,713

2,449

2,364

2,134

Deferred revenue

5,727

5,170

5,235

4,726

Other current liabilities

1,211

1,093

913

824


Total current liabilities

9,651

8,712

8,512

7,684

Long-term deferred revenue

5,268

4,756

6,569

5,930

Accrued severance benefits

103

93

98

88

Other non-current liabilities

226

204

210

191


Total liabilities

15,248

13,765

15,389

13,893

Common shares

3,474

3,136

3,474

3,136

Additional paid-in capital

75,076

67,776

75,076

67,776

Retained earnings

(31,796)

(28,704)

(34,424)

(31,076)

Accumulated other comprehensive income

1,521

1,372

1,504

1,357


Total parent company shareholders' equity

48,275

43,580

45,630

41,193

Non-controlling interest

(427)

(385)

(442)

(399)


Total equity

47,848

43,195

45,188

40,794


Total liabilities and equity

63,096

56,960

60,577

54,687




* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,107.71 to US$ 1.00, the noon buying rate in effect on March 31, 2015 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



31-Dec-14

31-Mar-14

31-Mar-15



(KRW)

(US$)

(KRW)

(US$)

(KRW)

(US$)



(unaudited)

(unaudited)

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Revenues:











Online games-subscription revenue

2,322

2,096

1,890

1,706

1,698

1,533

Online games-royalties and license fees

2,895

2,613

3,575

3,227

2,512

2,268

Mobile games and applications

3,322

2,999

4,317

3,897

4,203

3,794

Character merchandising and other revenue

791

714

985

889

656

592


Total net revenue

9,330

8,422

10,767

9,719

9,069

8,187














Cost of revenue

8,031

7,250

9,467

8,546

7,676

6,930














Gross profit (loss)

1,299

1,172

1,300

1,173

1,393

1,257














Operating expenses:











Selling, general and administrative

2,859

2,581

3,366

3,039

2,494

2,251

Research and development

1,779

1,606

812

733

1,458

1,316

Impairment losses on intangible assets

1

1

-

-

-

-


Total operating expenses

4,639

4,188

4,178

3,772

3,952

3,567














Operating loss

(3,340)

(3,016)

(2,878)

(2,599)

(2,559)

(2,310)














Other income (expenses):











Interest income

321

288

282

255

202

182

Interest expense

(2)

(2)

(3)

(3)

(2)

(2)

Foreign currency income (loss), net

12

11

96

87

4

4

Others, net

2

3

-

-

-

-














Loss before income tax expenses











and equity loss on investments

(3,007)

(2,716)

(2,503)

(2,260)

(2,355)

(2,126)














Income tax expenses

9,007

8,131

410

370

287

259














Loss before equity loss on investments

(12,014)

(10,847)

(2,913)

(2,630)

(2,642)

(2,385)












Equity income (loss) on investments

-

-

-

-

-

-

Net loss

(12,014)

(10,847)

(2,913)

(2,630)

(2, 642)

(2,385)

Net income (loss) attributable to:











Non-controlling interest

(143)

(129)

56

51

(14)

(13)

Parent company

(11,871)

(10,718)

(2,969)

(2,681)

(2,628)

(2,372)

Loss per share

- Basic and diluted

(1,708)

(1.54)

(427)

(0.39)

(378)

(0.34)

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

Loss per ADS(1)

- Basic and diluted

(3,416)

(3.08)

(854)

(0.78)

(756)

(0.68)


* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,107.71 to US$1.00, the noon buying rate in effect on March 31, 2015 as quoted by the Federal Reserve Bank of New York.

(1) Each ADS represents two common shares

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gravity-reports-first-quarter-of-2015-results-300089285.html

Source: Gravity
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