6-K 1 grvy-6k_20181031.htm 6-K grvy-6k_20181031.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of October 2018

Commission File Number 000-51138

 

GRAVITY CO., LTD.

(Translation of registrant’s name into English)

 

15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea

 

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.  Form 20-F  Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): 



GRAVITY REPORTS THIRD QUARTER OF 2018 RESULTS AND BUSINESS UPDATES

 

Seoul, South Korea – October 31, 2018 – GRAVITY Co., Ltd. (NasdaqCM: 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 third quarter ended September 30, 2018, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board.

 

 

THIRD QUARTER 2018 HIGHLIGHTS

 

Total revenues were KRW 44,201 million (US$ 39,829 thousand), representing a 29.9% decrease from the second quarter ended June 30, 2018 (“QoQ”) and an 86.3% increase from the third quarter ended September 30, 2017 (“YoY”).

 

Operating profit was KRW 7,084 million (US$ 6,383 thousand), representing a 14.9% decrease QoQ and a 107% increase YoY.

 

Profit before income tax expenses was KRW 7,329 million (US$ 6,604 thousand), representing a 15.2% decrease QoQ and a 102.4% increase YoY.

 

Net profit attributable to parent company was KRW 6,312 million (US$ 5,687 thousand), representing a 4.6% decrease QoQ and a 134.1% increase YoY.

 

REVIEW OF THIRD QUARTER 2018 FINANCIAL RESULTS

 

Revenues

Subscription revenues for the third quarter of 2018 were KRW 6,005 million (US$ 5,411 thousand), representing a 1.8% decrease QoQ from KRW 6,116 million and a 34.2% decrease YoY from KRW 9,126 million. The decrease QoQ was mainly attributable to decreased revenues from Ragnarok Online and Ragnarok Prequel in Taiwan and Ragnarok Online in the United States and Canada, which was partially offset by increased revenue from Ragnarok Online in Korea. The decrease YoY was largely due to decreased revenues from Ragnarok Online and Ragnarok Prequel in Taiwan, which partially offset by increased revenue from Ragnarok Online in Korea.  

Royalty and license fee revenues for the third quarter of 2018 were KRW 2,961 million (US$ 2,668 thousand), representing a 7.7% decrease QoQ from KRW 3,209 million and a 15.2% decrease YoY from KRW 3,492 million. The decrease QoQ was primarily due to decreased revenue of Ragnarok Online in Japan. This decrease was partially offset by increased revenue from Ragnarok Online in Russia, which was re-launched on August 15, 2018. The decrease YoY resulted mainly from decreased revenues from Ragnarok Online in the Philippines and Japan, which was partially offset by increased revenue from Ragnarok Online in Russia.

Mobile game and application revenues were KRW 33,387 million (US$ 30,085 thousand) for the third quarter of 2018, representing a 35.5% decrease QoQ from KRW 51,789 million and


a 243.1% increase YoY from KRW 9,730 million. The QoQ decrease was mainly due to decreased revenues from Ragnarok M in Korea and Taiwan and RO: Idle Poring in global markets except for China and Japan. The increase YoY was primarily due to revenue contribution of Ragnarok M in Korea and Taiwan, which partially offset by decreased revenues from Ragnarok R in Taiwan, Korea, and Thailand.

 

Character merchandising and other revenues were KRW 1,848 million (US$ 1,665 thousand) for the third quarter of 2018, representing 3.3% decrease from KRW 1,912 million and a 34.4% increase YoY from KRW 1,375 million.

Cost of Revenue

Cost of revenue was KRW 29,806 million (US$ 26,858 thousand) for the third quarter of 2018, representing a 30.9% decrease QoQ from KRW 43,150 million and a 114.1% increase YoY from KRW 13,923 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services related to Ragnarok M in Taiwan and Korea and outsourcing fees. The increase YoY was mostly from increased commission paid for mobile game services related to Ragnarok M in Taiwan and Korea and salaries.

Operating Expenses

Operating expenses were KRW 7,311 million (US$ 6,588 thousand) for the third quarter of 2018, representing a 36.7% decrease QoQ from KRW 11,553 million and a 14.6% increase YoY from KRW 6,378 million. The decrease QoQ was mainly attributable to decreased advertising expenses for marketing for Ragnarok M in Korea. The increase YoY was mostly increased research and development expenses related to mobile games and salaries.

Profit before income tax expenses

Profit before income tax expenses was KRW 7,329 million (US$ 6,604 thousand) for the third quarter of 2018 compared with profit before income tax expense of KRW 8,642 million for the second quarter of 2018 and profit before income tax expenses of KRW 3,621 million for the third quarter of 2017.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 6,312 million (US$ 5,687 thousand) for the third quarter of 2018 compared with net profit attributable to parent company of KRW 6,615 million for the second quarter of 2018 and a net profit attributable to parent company of KRW 2,696 million for the third quarter of 2017.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 65,779 million (US$ 59,273 thousand) as of September 30, 2018.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,109.76 to US$ 1.00, the noon buying rate in effect on September 28, 2018 as quoted by the Federal Reserve Bank of New York.

 

 


 

GRAVITY BUSINESS UPDATE

 

Ragnarok Online IP-based Games

 

Ragnarok M, an MMORPG mobile game

Gravity launched Ragnarok M in Southeast Asia (“SEA”) on October 31, 2018. Pre-registration of this Southeast Asia version began on September 19, hit over 2,500,000 signups via Official website/Google Play/Apple App store. The SEA version is available in five languages including English, Simplified Chinese, Thai, Indonesian and Vietnamese. The launch areas are 11 countries including Thailand, Indonesia, the Philippines, Singapore, Malaysia and Vietnam. Gravity plans to start pre-registration Ragnarok M in North and South America and Oceania during 2018 and launch in the first quarter of 2019. Also, Gravity is preparing for the service in Japan.

 

Ragnarok R, a card RPG mobile game

Ragnarok R locally named as Ragnarok Rush was launched in Indonesia on September 12, 2018 by the local publisher, Gravindo. Based on revenues, such game ranked the third in Google Play Store after launching, at its peak.

 

Ragnarok Prequel, a web browser-based MMORPG game

Ragnarok Prequel 2, the sequel Ragnarok Prequel with 3D visual is scheduled to be launched in Taiwan in the first half of 2019.

 

Other Ragnarok Online IP-based games

A 3D MO Action RPG mobile game, Spear of Odin, is expected to be launched in Taiwan in the first half of 2019.

 

Investor Presentation

 

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the third quarter in 2018 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. ---------------------------------------------------

Based in Korea, 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 81 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, 2017 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. Sang Eun Sung
IR Manager
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-17

 

 

30-Sep-18

 

 

 

KRW

 

 

US$

 

 

KRW

 

 

US$

 

 

 

(audited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

39,095

 

 

 

35,228

 

 

 

42,279

 

 

 

38,097

 

Short-term financial instruments

 

 

22,500

 

 

 

20,275

 

 

 

23,500

 

 

 

21,176

 

Accounts receivable, net

 

 

42,168

 

 

 

37,997

 

 

 

20,751

 

 

 

18,699

 

Other receivables, net

 

 

698

 

 

 

629

 

 

 

128

 

 

 

116

 

Prepaid expenses

 

 

3,027

 

 

 

2,728

 

 

 

2,251

 

 

 

2,028

 

Other current assets

 

 

1,383

 

 

 

1,246

 

 

 

2,047

 

 

 

1,845

 

Total current assets

 

 

108,871

 

 

 

98,103

 

 

 

90,956

 

 

 

81,961

 

Property and equipment, net

 

 

946

 

 

 

852

 

 

 

1,615

 

 

 

1,455

 

Intangible assets

 

 

1,036

 

 

 

934

 

 

 

526

 

 

 

474

 

Deferred tax assets

 

 

3,036

 

 

 

2,736

 

 

 

3,036

 

 

 

2,736

 

Other non-current financial assets

 

 

1,394

 

 

 

1,256

 

 

 

1,492

 

 

 

1,344

 

Other non-current assets

 

 

600

 

 

 

541

 

 

 

1,131

 

 

 

1,019

 

Total assets

 

 

115,883

 

 

 

104,422

 

 

 

98,756

 

 

 

88,989

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

44,410

 

 

 

40,018

 

 

 

18,720

 

 

 

16,869

 

Deferred revenue

 

 

16,100

 

 

 

14,508

 

 

 

12,361

 

 

 

11,139

 

Withholdings

 

 

1,439

 

 

 

1,297

 

 

 

1,307

 

 

 

1,178

 

Accrued expense

 

 

1,037

 

 

 

934

 

 

 

930

 

 

 

838

 

Income tax payable

 

 

1,628

 

 

 

1,467

 

 

 

97

 

 

 

87

 

Other current liabilities

 

 

130

 

 

 

117

 

 

 

117

 

 

 

105

 

Total current liabilities

 

 

64,744

 

 

 

58,341

 

 

 

33,532

 

 

 

30,216

 

Long-term deferred revenue

 

 

6,581

 

 

 

5,930

 

 

 

4,393

 

 

 

3,959

 

Other non-current liabilities

 

 

560

 

 

 

505

 

 

 

493

 

 

 

444

 

Total liabilities

 

 

71,885

 

 

 

64,776

 

 

 

38,418

 

 

 

34,619

 

Share capital

 

 

3,474

 

 

 

3,130

 

 

 

3,474

 

 

 

3,130

 

Capital surplus

 

 

27,164

 

 

 

24,477

 

 

 

27,140

 

 

 

24,456

 

Other components of equity

 

 

(40

)

 

 

(36

)

 

 

(118

)

 

 

(106

)

Retained earnings (Accumulated deficit)

 

 

13,962

 

 

 

12,581

 

 

 

30,438

 

 

 

27,427

 

Equity attributable to owners of the Parent Company

 

 

44,560

 

 

 

40,152

 

 

 

60,934

 

 

 

54,907

 

Non-controlling interest

 

 

(562

)

 

 

(506

)

 

 

(596

)

 

 

(537

)

Total equity

 

 

43,998

 

 

 

39,646

 

 

 

60,338

 

 

 

54,370

 

Total liabilities and equity

 

 

115,883

 

 

 

104,422

 

 

 

98,756

 

 

 

88,989

 

 

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,109.76 to US$ 1.00, the noon buying rate in effect on September 28, 2018 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

 

 

Nine months ended

 

 

 

30-Jun-18

 

 

30-Sep-17

 

 

30-Sep-18

 

 

30-Sep-17

 

 

30-Sep-18

 

 

 

(KRW)

 

 

(KRW)

 

 

(KRW)

 

 

(US$)

 

 

(KRW)

 

 

(KRW)

 

 

(US$)

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Online games-subscription revenue

 

 

6,116

 

 

 

9,126

 

 

 

6,005

 

 

 

5,411

 

 

 

28,766

 

 

 

21,017

 

 

 

18,938

 

Online games-royalties and license fees

 

 

3,209

 

 

 

3,492

 

 

 

2,961

 

 

 

2,668

 

 

 

11,513

 

 

 

10,788

 

 

 

9,721

 

Mobile games and applications

 

 

51,789

 

 

 

9,730

 

 

 

33,387

 

 

 

30,085

 

 

 

30,033

 

 

 

136,573

 

 

 

123,065

 

Character merchandising and other revenue

 

 

1,912

 

 

 

1,375

 

 

 

1,848

 

 

 

1,665

 

 

 

3,791

 

 

 

5,160

 

 

 

4,650

 

Total net revenue

 

 

63,026

 

 

 

23,723

 

 

 

44,201

 

 

 

39,829

 

 

 

74,103

 

 

 

173,538

 

 

 

156,374

 

Cost of revenue

 

 

43,150

 

 

 

13,923

 

 

 

29,806

 

 

 

26,858

 

 

 

42,714

 

 

 

118,740

 

 

 

106,996

 

Gross profit

 

 

19,876

 

 

 

9,800

 

 

 

14,395

 

 

 

12,971

 

 

 

31,389

 

 

 

54,798

 

 

 

49,378

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

9,470

 

 

 

4,943

 

 

 

5,602

 

 

 

5,048

 

 

 

17,048

 

 

 

28,899

 

 

 

26,041

 

Research and development

 

 

1,742

 

 

 

1,436

 

 

 

1,760

 

 

 

1,586

 

 

 

3,340

 

 

 

5,376

 

 

 

4,844

 

Others, net

 

 

341

 

 

 

(1

)

 

 

(51

)

 

 

(46

)

 

 

(93

)

 

 

296

 

 

 

267

 

Total operating expenses

 

 

11,553

 

 

 

6,378

 

 

 

7,311

 

 

 

6,588

 

 

 

20,295

 

 

 

34,571

 

 

 

31,152

 

Operating profit

 

 

8,323

 

 

 

3,422

 

 

 

7,084

 

 

 

6,383

 

 

 

11,094

 

 

 

20,227

 

 

 

18,226

 

Finance income(costs):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

892

 

 

 

200

 

 

 

58

 

 

 

52

 

 

 

1,117

 

 

 

1,540

 

 

 

1,387

 

Finance costs

 

 

(573

)

 

 

(1

)

 

 

187

 

 

 

169

 

 

 

(648

)

 

 

(679

)

 

 

(611

)

Profit before income tax

 

 

8,642

 

 

 

3,621

 

 

 

7,329

 

 

 

6,604

 

 

 

11,563

 

 

 

21,088

 

 

 

19,002

 

Income tax expenses(profits)

 

 

2,042

 

 

 

914

 

 

 

1,024

 

 

 

923

 

 

 

3,159

 

 

 

4,659

 

 

 

4,198

 

Profit for the period

 

 

6,600

 

 

 

2,707

 

 

 

6,305

 

 

 

5,681

 

 

 

8,404

 

 

 

16,429

 

 

 

14,804

 

Profit attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

(15

)

 

 

11

 

 

 

(7

)

 

 

(6

)

 

 

(17

)

 

 

(47

)

 

 

(42

)

Owners of Parent company

 

 

6,615

 

 

 

2,696

 

 

 

6,312

 

 

 

5,687

 

 

 

8,421

 

 

 

16,476

 

 

 

14,846

 

Earning per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

 

952

 

 

 

388

 

 

 

908

 

 

 

0.82

 

 

 

1,212

 

 

 

2,371

 

 

 

2.14

 

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

 

 

 

6,948,900

 

Earning per ADS(1)

 

 

 

 

 

 

388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

 

952

 

 

 

1,024

 

 

 

908

 

 

 

0.82

 

 

 

1,212

 

 

 

2,371

 

 

 

2.14

 

 

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,109.76 to US$1.00, the noon buying rate in effect on September 28, 2018 as quoted by the Federal Reserve Bank of New York.

(1) Each ADS represents one common share.

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

GRAVITY CO., LTD.

 

 

By:

/s/ Heung Gon Kim

Name:

Heung Gon Kim

Title:

Chief Financial Officer

Date: October 31, 2018