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 April 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 FIRST QUARTER OF 2018 RESULTS AND BUSINESS UPDATES

 

Seoul, South Korea – April 27, 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 first quarter ended March 31, 2018, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board.  

 

FIRST QUARTER 2018 HIGHLIGHTS

 

Total revenues were KRW 66,311 million (US$ 62,499 thousand), representing a 1.8% decrease from the fourth quarter ended December 31, 2017 (“QoQ”) and a 184.0% increase from the first quarter ended March 31, 2017 (“YoY”).

 

Operating profit was KRW 4,820 million (US$ 4,543 thousand), representing a 63.9% increase QoQ and a 46.1% increase YoY.

 

Profit before income tax expenses was KRW 5,117 million (US$ 4,823 thousand), representing a 76.8% increase QoQ and a 51.3% increase YoY.

 

Net profit attributable to parent company was KRW 3,549 million (US$ 3,345 thousand), representing a 27.5% decrease QoQ and a 63.5% increase YoY.

 

REVIEW OF FIRST QUARTER 2018 FINANCIAL RESULTS

 

Revenues

Subscription revenues for the first quarter of 2018 were KRW 8,896 million (US$ 8,385 thousand), representing a 16.1% increase QoQ from KRW 7,661 million and a 9.7% decrease YoY from KRW 9,855 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Korea and Ragnarok Prequel in the Philippines. Ragnarok Prequel was launched in the Philippines on December 12, 2017. The decrease YoY was largely due to decreased revenues from Ragnarok Prequel and Ragnarok Online in Taiwan, which was partially offset by increased revenues from Ragnarok Online in Korea..

Royalty and license fee revenues for the first quarter of 2018 were KRW 4,619 million (US$ 4,353 thousand), representing a 2.4% decrease QoQ from KRW 4,731 million and a 3.2% increase YoY from KRW 4,475 million. The decrease QoQ was primarily due to a revenue recognition related to Ragnarok Online II in china based on a game development and publishing agreement in the fourth quarter 2017, which did not incur in the first quarter of 2018. This decrease was partially offset by increased revenue from Ragnarok Online in Japan. The increase YoY resulted mainly from increased revenues from Ragnarok Online in Japan, Philippines, Singapore, Malaysia.

Mobile game and application revenues were KRW 51,396 million (US$ 48,441 thousand) for


the first quarter of 2018, representing a 2.3% decrease QoQ from KRW 52,592 million and a 537.4% increase YoY from KRW 8,063 million. The decrease QoQ resulted primarily from decreased revenues from global service of RO: Idle Poring, except for Japan and China; and Ragnarok M in Taiwan. Such decrease was partially offset by increased revenues from Ragnarok M, which was officially launched in Korea on March 14, 2018. The increase YoY was primarily due to revenues from Ragnarok M in Taiwan and Korea, which was launched on October 12, 2017 and on March 14, 2018, respectively.

 

Character merchandising and other revenues were KRW 1,400 million (US$ 1,320 thousand) for the first quarter of 2018, representing 44.8% decrease from KRW 2,537 million and a 46% increase YoY from KRW 959 million

Cost of Revenue

Cost of revenue was KRW 45,784 million (US$ 43,152 thousand) for the first quarter of 2018, representing a 11.1% decrease QoQ from KRW 51,521 million and a 234.8% increase YoY from KRW 13,675 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services and outsourcing fees. The increase YoY was mostly from increased commission paid for game services related to Ragnarok M in Taiwan and Korea; and RO: Idle Poring in global markets except for China and Japan.

Operating Expenses

Operating expenses were KRW 15,707 million (US$ 14,804 thousand) for the first quarter of 2018, representing a 20.3% increase QoQ from KRW 13,059 million and a 146.3% increase YoY from KRW 6,378 million. The increase QoQ was mainly attributable to increased advertising expenses related to pre-launch marketing for Ragnarok M and RO: Idle Poring in Korea. The increase YoY was mostly resulted from increased advertising expenses for Ragnarok M and RO: Idle Poring in Korea; and research and development expenses.

Profit before income tax expenses

Profit before income tax expenses was KRW 5,117 million (US$ 4,823 thousand) for the first quarter of 2018 compared with profit before income tax expense of KRW 2,895 million for the fourth quarter of 2017 and profit before income tax expenses of KRW 3,382 million for the first quarter of 2017.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 3,549 million (US$ 3,345 thousand) for the first quarter of 2018 compared with net profit attributable to parent company of KRW 4,898 million for the fourth quarter of 2017 and a net profit attributable to parent company of KRW 2,170 million for the first quarter of 2017.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 57,397 million (US$ 54,097 thousand) as of March 31, 2018.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,060.99 to US$ 1.00, the noon buying rate in effect on March 30, 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 Korea on March 14, 2018. Based on revenues, Ragnarok M ranked first in Apple’s App Store and third in Google Play Store in Korea, at its peak. Gravity plans to launch Ragnarok M in more markets during 2018.

RO: Idle Poring, a text RPG mobile game

The Company launched RO: Idle Poring in Korea on January 30, 2018.

Ragnarok R, a card RPG mobile game

The Company launched Ragnarok R in the United States and Canada on January 23, 2018.

Other Ragnarok Online IP-based games

A 3D MO Action RPG mobile game, Spear of Odin, is expected to be launched in South East Asia in 2018.

 

Ragnarok Online

 

The Company plans to launch new versions of Ragnarok Online in various markets during 2018. Ragnarok Online RE:START was launched in the United States and Canada on June 27, 2017; and in Taiwan on January 31, 2018. Ragnarok Zero was launched in Korea on December 29, 2017.

 

Investor Presentation

 

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of first 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. Ji Hee Kim
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

 

31-Mar-18

 

 

 

KRW

(audited)

 

US$

(unaudited)

 

KRW

(unaudited)

 

US$

(unaudited)

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

39,095

 

36,848

 

29,571

 

27,871

 

Short-term financial instruments

22,500

 

21,207

 

27,826

 

26,226

 

Accounts receivable, net

42,168

 

39,744

 

41,811

 

39,408

 

Other receivables, net

698

 

658

 

431

 

406

 

Prepaid expenses

3,027

 

2,853

 

2,532

 

2,386

 

Other current assets

1,383

 

1,303

 

2,577

 

2,430

 

 

Total current assets

108,871

 

102,613

 

104,748

 

98,727

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

946

 

892

 

972

 

916

Intangible assets

1,036

 

976

 

947

 

893

Deferred tax assets

3,036

 

2,861

 

3,037

 

2,862

Other non-current financial assets

1,394

 

1,314

 

1,384

 

1,304

Other non-current assets

600

 

566

 

704

 

664

 

 

Total assets

115,883

 

109,222

 

111,792

 

105,366

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

44,410

 

41,857

 

38,248

 

36,049

 

Deferred revenue

16,100

 

15,175

 

14,639

 

13,797

 

Withholdings

1,439

 

1,356

 

1,667

 

1,571

 

Accrued expense

1,037

 

977

 

970

 

914

 

Income tax payable

1,628

 

1,534

 

1,828

 

1,723

 

Other current liabilities

130

 

123

 

112

 

107

 

 

Total current liabilities

64,744

 

61,022

 

57,464

 

54,161

Long-term deferred revenue

6,581

 

6,203

 

5,997

 

5,652

Other non-current liabilities

560

 

528

 

549

 

517

 

 

Total liabilities

71,885

 

67,753

 

64,010

 

60,330

Share capital

3,474

 

3,274

 

3,474

 

3,274

Capital surplus

27,164

 

25,603

 

27,164

 

25,603

Other components of equity

(40)

 

(37)

 

220

 

208

Retained earnings (Accumulated deficit)

13,962

 

13,159

 

17,511

 

16,504

 

 

Equity attributable to owners of the Parent Company

44,560

 

41,999

 

48,369

 

45,589

 

 

Non-controlling interest

(562)

 

(530)

 

(587)

 

(553)

 

 

Total equity

43,998

 

41,469

 

47,782

 

45,036

 

 

Total liabilities and equity

115,883

 

109,222

 

111,792

 

105,366

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,060.99 to US$ 1.00, the noon buying rate in effect on March 30, 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

 

 

 

31-Dec-17

 

31-Mar-17

 

31-Mar-18

 

 

 

(KRW)

 

(US$)

 

(KRW)

 

(US$)

 

(KRW)

 

(US$)

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Online games-subscription revenue

7,661

 

7,221

 

9,855

 

9,288

 

8,896

 

8,385

 

Online games-royalties and license fees

4,731

 

4,459

 

4,475

 

4,218

 

4,619

 

4,353

 

Mobile games and applications

52,592

 

49,569

 

8,063

 

7,600

 

51,396

 

48,441

 

Character merchandising and other revenue

2,537

 

2,391

 

959

 

904

 

1,400

 

1,320

 

 

Total net revenue

67,521

 

63,640

 

23,352

 

22,010

 

66,311

 

62,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

51,521

 

48,558

 

13,675

 

12,889

 

45,784

 

43,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

16,000

 

15,082

 

9,677

 

9,121

 

20,527

 

19,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

10,964

 

10,334

 

5,528

 

5,210

 

13,827

 

13,032

 

Research and development

1,899

 

1,790

 

863

 

813

 

1,874

 

1,766

 

Others, net

196

 

185

 

(13)

 

(12)

 

6

 

6

 

 

Total operating expenses

13,059

 

12,309

 

6,378

 

6,011

 

15,707

 

14,804

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

2,941

 

2,773

 

3,299

 

3,110

 

4,820

 

4,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income(costs):

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

758

 

714

 

535

 

504

 

590

 

556

 

Finance costs

(804)

 

(758)

 

(452)

 

(426)

 

(293)

 

(276)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before income tax

2,895

 

2,729

 

3,382

 

3,188

 

5,117

 

4,823

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expenses(profits)

(2,015)

 

(1,899)

 

1,228

 

1,158

 

1,593

 

1,501

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

4,910

 

4,628

 

2,154

 

2,030

 

3,524

 

3,322

Profit (loss) attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

12

 

11

 

(16)

 

(15)

 

(25)

 

(23)

 

Owners of the parent company

4,898

 

4,617

 

2,170

 

2,045

 

3,549

 

3,345

Earnings per share

- Basic and diluted

705

 

0.66

 

312

 

0.29

 

511

 

0.48

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

Earnings per ADS(1)

- Basic and diluted

1,410

 

1.32

 

624

 

0.58

 

1,022

 

0.96

 

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,060.99 to US$1.00, the noon buying rate in effect on March 30, 2018 as quoted by the Federal Reserve Bank of New York.

(1) Each ADS represents two common shares.

 

 

 

 


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: April 27, 2018