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 August 2020

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 SECOND QUARTER OF 2020 RESULTS AND BUSINESS UPDATES

Seoul, South Korea – August 7, 2020 – 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 second quarter ended June 30, 2020, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

SECOND QUARTER 2020 HIGHLIGHTS

 

 

Total revenues were KRW 88,458 million (US$ 73,684 thousand), representing a 20.7% increase from the first quarter ended March 31, 2020 (“QoQ”) and a 13.2% increase from the second quarter ended June 30, 2019 (“YoY”).

 

Operating profit was KRW 16,313 million (US$ 13,588 thousand), representing a 57.5% increase QoQ and a 25.5% increase YoY.

 

Profit before income tax expenses was KRW 16,335million (US$ 13,606 thousand), representing a 45.2% increase QoQ and a 16.4% increase YoY.

 

Net profit attributable to parent company was KRW 13,095 million (US$ 10,907 thousand), representing a 41.4% increase QoQ and a 20.6% increase YoY.

 

REVIEW OF SECOND QUARTER 2020 FINANCIAL RESULTS

 

Revenues

 

Subscription revenues for the second quarter of 2020 were KRW 24,448 million (US$ 20,365 thousand), representing a 147.1% increase QoQ from KRW 9,893 million and a 262.4% increase YoY from KRW 6,746 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Thailand that was re-launched on May 28, 2020 and Ragnarok H5 in Indonesia that was launched on March 31, 2020. The increase YoY was largely due to increased revenues from Ragnarok Online in Thailand and Taiwan and Ragnarok H5 in Indonesia.

 

Royalty and license fee revenues for the second quarter of 2020 were KRW 4,459 million (US$ 3,714 thousand), representing 25.9% increase QoQ from KRW 3,543 million and a 57.5% increase YoY from KRW 2,832 million. The increase QoQ was primarily due to increased revenue from collaboration event with Garena’s Free Fire items based on Ragnarok Online IP. Such increase was partially offset by decreased revenue from Ragnarok Online in Japan. The increase YoY resulted mainly from increased revenue from collaboration event with Garena’s Free Fire items based on Ragnarok Online IP.

 

Mobile game revenues were KRW 54,249 million (US$ 45,189 thousand) for the second quarter of 2020, representing a 3.1% decrease QoQ from KRW 55,982 million and a 16.6% decrease YoY from KRW 65,013 million. The decrease QoQ resulted primarily from decreased revenues from Ragnarok M: Eternal Love in Taiwan and Japan, and Ragnarok Tactics in Taiwan. Such decrease was partially offset by increased revenues from Ragnarok M: Eternal Love in Southeast Asia, Ragnarok H5 in Indonesia, and Ragnarok Tactics in Korea.


The decrease YoY was primarily due to revenues from Ragnarok M: Eternal Love in Southeast Asia, North America, South America and Oceania. This decrease was partially offset by increased revenues from Ragnarok M: Eternal Love in Taiwan and Europe, Ragnarok Tactics in Korea and Taiwan, and Ragnarok H5 in Indonesia.

 

Other revenues were KRW 5,302 million (US$ 4,416 thousand) for the second quarter of 2020, representing 38.0% increase QoQ from KRW 3,842 million and a 49.9% increase YoY from KRW 3,536 million

 

Cost of Revenue

 

Cost of revenue was KRW 51,098 million (US$ 42,564 thousand) for the second quarter of 2020, representing a 4.6% increase QoQ from KRW 48,874 million and a 10.1% decrease YoY from KRW 56,858 million. The increase QoQ was mainly due to increased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North America, South America and Oceania, Ragnarok H5 in Indonesia, and Ragnarok Tactics in Korea. The decrease YoY was mostly from decreased commission paid for mobile game services related to Ragnarok M: Eternal love in Southeast Asia, North America, South America and Oceania.

 

Operating Expenses

 

Operating expenses were KRW 21,047 million (US$ 17,532 thousand) for the second quarter of 2020, representing a 50.0% increase QoQ from KRW 14,030 million and a 154.5% increase YoY from KRW 8,271 million. The increase QoQ was mainly attributable to increased advertising expenses for Ragnarok Origin in Korea, Ragnarok Online in Thailand, Sacred Blade in Japan, Ragnarok H5 in Indonesia, and commission paid for payment gate way fees related to Ragnarok Online in Thailand. The increase YoY was mostly resulted from increased advertising expenses for Ragnarok Origin and Ragnarok Tactics in Korea, Ragnarok Online in Thailand, Sacred Blade in Japan, Ragnarok H5 in Indonesia, commission paid for payment gate way fees related to Ragnarok Online in Thailand, salaries and research and development expenses.

 

Profit before income tax expenses

 

Profit before income tax expenses was KRW 16,335 million (US$ 13,606 thousand) for the second quarter of 2020 compared with profit before income tax expense of KRW 11,250 million for the first quarter of 2020 and profit before income tax expenses of KRW 14,037 million for the second quarter of 2019.

 

Net Profit

 

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 13,095 million (US$ 10,907 thousand) for the second quarter of 2020 compared with net profit attributable to parent company of KRW 9,263 million for the first quarter of 2020 and a net profit attributable to parent company of KRW 10,861 million for the second quarter of 2019.

 

Liquidity


The balance of cash and cash equivalents and short-term financial instruments was KRW 131,566 million (US$ 109,593 thousand) as of June 30, 2020.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,200.50 to US$ 1.00, the noon buying rate in effect on June 30, 2020 as quoted by the Federal Reserve Bank of New York.

 

GRAVITY BUSINESS UPDATE

 

Ragnarok Origin, a MMORPG mobile game

 

Ragnarok Origin was launched in Korea on July 7, 2020 and ranked as the fourth in top grossing of Google Play games and the fourth in top grossing of Apple’s App Store games after its launching. Gravity signed a publishing contract with GungHo Online Entertainment, Inc. for Japan service. The game is being prepared to launch in Japan.

 

Ragnarok X: Next Generation, a MMORPG mobile game

 

Gravity signed a joint publishing contract with ByteDance Ltd., a multinational content platform company, for Ragnarok X: Next Generation in Taiwan, Hong Kong, Macau, and Southeast Asia. The game is expected to be launched in Taiwan, Hong Kong and Macau in the second half of 2020.

 

Ragnarok Tactics, a SRPG mobile game

 

Ragnarok Tactics was launched in global market on June 18, 2020.

 

Other Ragnarok Online IP-based games

Action RO2: Spear of Odin, a 3D Action MORPG mobile game, is expected to be launched in Indonesia, Malaysia, Philippines, Singapore and Oceania in 2020. The game was developed by NeoCyon, Inc., our subsidiary in Korea.

 

Other IP games

 

Tactical Warfare, a First-Person Shooter (FPS) game, has started pre-registration and will be launched in North, Central and South America in the third quarter of 2020. The game is published by Gravity Interactive, Inc., a subsidiary in the United States.

 

Investor Presentation

 

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of second quarter in 2020 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 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, 2018 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. Minji Oh
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-19

 

 

30-Jun-20

 

 

 

KRW

 

 

US$

 

 

KRW

 

 

US$

 

 

 

(audited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

79,428

 

 

 

66,162

 

 

 

94,066

 

 

 

78,356

 

Short-term financial instruments

 

 

39,500

 

 

 

32,903

 

 

 

37,500

 

 

 

31,237

 

Accounts receivable, net

 

 

32,253

 

 

 

26,866

 

 

 

48,910

 

 

 

40,741

 

Other receivables, net

 

 

56

 

 

 

47

 

 

 

265

 

 

 

221

 

Prepaid expenses

 

 

1,962

 

 

 

1,634

 

 

 

2,892

 

 

 

2,409

 

Other current assets

 

 

2,664

 

 

 

2,219

 

 

 

2,558

 

 

 

2,131

 

Total current assets

 

 

155,863

 

 

 

129,831

 

 

 

186,191

 

 

 

155,095

 

Property and equipment, net

 

 

6,663

 

 

 

5,550

 

 

 

7,893

 

 

 

6,575

 

Intangible assets

 

 

1,717

 

 

 

1,430

 

 

 

1,899

 

 

 

1,582

 

Deferred tax assets

 

 

7,667

 

 

 

6,387

 

 

 

10,246

 

 

 

8,535

 

Other non-current financial assets

 

 

1,770

 

 

 

1,474

 

 

 

1,785

 

 

 

1,487

 

Other non-current assets

 

 

1,745

 

 

 

1,454

 

 

 

2,050

 

 

 

1,707

 

Total assets

 

 

175,425

 

 

 

146,126

 

 

 

210,064

 

 

 

174,981

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

37,496

 

 

 

31,234

 

 

 

43,914

 

 

 

36,580

 

Deferred revenue

 

 

10,748

 

 

 

8,953

 

 

 

12,834

 

 

 

10,691

 

Withholdings

 

 

1,764

 

 

 

1,469

 

 

 

2,366

 

 

 

1,971

 

Accrued expense

 

 

1,175

 

 

 

979

 

 

 

1,185

 

 

 

987

 

Income tax payable

 

 

2,618

 

 

 

2,181

 

 

 

2,577

 

 

 

2,147

 

Other current liabilities

 

 

1,986

 

 

 

1,654

 

 

 

2,788

 

 

 

2,322

 

Total current liabilities

 

 

55,787

 

 

 

46,470

 

 

 

65,664

 

 

 

54,698

 

Long-term deferred revenue

 

 

98

 

 

 

82

 

 

 

343

 

 

 

286

 

Other non-current liabilities

 

 

3,774

 

 

 

3,143

 

 

 

4,058

 

 

 

3,380

 

Total liabilities

 

 

59,659

 

 

 

49,695

 

 

 

70,065

 

 

 

58,364

 

Share capital

 

 

3,474

 

 

 

2,894

 

 

 

3,474

 

 

 

2,894

 

Capital surplus

 

 

27,128

 

 

 

22,597

 

 

 

27,110

 

 

 

22,582

 

Other components of equity

 

 

274

 

 

 

228

 

 

 

1,875

 

 

 

1,562

 

Retained earnings (Accumulated deficit)

 

 

84,668

 

 

 

70,527

 

 

 

107,026

 

 

 

89,151

 

Equity attributable to owners of the Parent Company

 

 

115,544

 

 

 

96,246

 

 

 

139,485

 

 

 

116,189

 

Non-controlling interest

 

 

222

 

 

 

185

 

 

 

514

 

 

 

428

 

Total equity

 

 

115,766

 

 

 

96,431

 

 

 

139,999

 

 

 

116,617

 

Total liabilities and equity

 

 

175,425

 

 

 

146,126

 

 

 

210,064

 

 

 

174,981

 

 

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,200.50 to US$ 1.00, the noon buying rate in effect on June 30, 2020 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

 

 

Six months ended

 

 

 

31-Mar-20

 

 

30-Jun-19

 

 

30-Jun-20

 

 

30-Jun-19

 

 

30-Jun-20

 

 

 

(KRW)

 

 

(KRW)

 

 

(KRW)

 

 

(US$)

 

 

(KRW)

 

 

(KRW)

 

 

(US$)

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Online games-subscription revenue

 

 

9,893

 

 

 

6,746

 

 

 

24,448

 

 

 

20,365

 

 

 

13,002

 

 

 

34,341

 

 

 

28,606

 

Online games-royalties and license fees

 

 

3,543

 

 

 

2,832

 

 

 

4,459

 

 

 

3,714

 

 

 

6,552

 

 

 

8,002

 

 

 

6,666

 

Mobile games

 

 

55,982

 

 

 

65,013

 

 

 

54,249

 

 

 

45,189

 

 

 

185,103

 

 

 

110,231

 

 

 

91,821

 

Other revenue

 

 

3,842

 

 

 

3,536

 

 

 

5,302

 

 

 

4,416

 

 

 

7,093

 

 

 

9,144

 

 

 

7,616

 

Total net revenue

 

 

73,260

 

 

 

78,127

 

 

 

88,458

 

 

 

73,684

 

 

 

211,750

 

 

 

161,718

 

 

 

134,709

 

Cost of revenues

 

 

48,874

 

 

 

56,858

 

 

 

51,098

 

 

 

42,564

 

 

 

158,095

 

 

 

99,972

 

 

 

83,275

 

Gross profit

 

 

24,386

 

 

 

21,269

 

 

 

37,360

 

 

 

31,120

 

 

 

53,655

 

 

 

61,746

 

 

 

51,434

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

11,007

 

 

 

5,733

 

 

 

17,643

 

 

 

14,696

 

 

 

12,398

 

 

 

28,650

 

 

 

23,865

 

Research and development

 

 

2,872

 

 

 

2,432

 

 

 

3,254

 

 

 

2,711

 

 

 

4,309

 

 

 

6,126

 

 

 

5,103

 

Others, net

 

 

151

 

 

 

106

 

 

 

150

 

 

 

125

 

 

 

310

 

 

 

301

 

 

 

251

 

Total operating expenses

 

 

14,030

 

 

 

8,271

 

 

 

21,047

 

 

 

17,532

 

 

 

17,017

 

 

 

35,077

 

 

 

29,219

 

Operating profit

 

 

10,356

 

 

 

12,998

 

 

 

16,313

 

 

 

13,588

 

 

 

36,638

 

 

 

26,669

 

 

 

22,215

 

Finance income(costs):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

1,551

 

 

 

1,141

 

 

 

627

 

 

 

522

 

 

 

2,203

 

 

 

2,178

 

 

 

1,814

 

Finance costs

 

 

(657

)

 

 

(102

)

 

 

(605

)

 

 

(504

)

 

 

(415

)

 

 

(1,262

)

 

 

(1,051

)

Profit before income tax

 

 

11,250

 

 

 

14,037

 

 

 

16,335

 

 

 

13,606

 

 

 

38,426

 

 

 

27,585

 

 

 

22,978

 

Income tax expenses(profits)

 

 

2,004

 

 

 

3,208

 

 

 

3,293

 

 

 

2,743

 

 

 

7,835

 

 

 

5,297

 

 

 

4,412

 

Profit for the year

 

 

9,246

 

 

 

10,829

 

 

 

13,042

 

 

 

10,863

 

 

 

30,591

 

 

 

22,288

 

 

 

18,566

 

Profit attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

(17

)

 

 

(32

)

 

 

(53

)

 

 

(44

)

 

 

(30

)

 

 

(70

)

 

 

(58

)

Owners of Parent company

 

 

9,263

 

 

 

10,861

 

 

 

13,095

 

 

 

10,907

 

 

 

30,621

 

 

 

22,358

 

 

 

18,624

 

Earning per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

 

1,333

 

 

 

1,563

 

 

 

1,884

 

 

 

1.60

 

 

 

4,407

 

 

 

3,217

 

 

 

2.70

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

 

1,333

 

 

 

1,563

 

 

 

1,884

 

 

 

1.60

 

 

 

4,407

 

 

 

3,217

 

 

 

2.70

 

 

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,200.50 to US$1.00, the noon buying rate in effect on June 30, 2020 as quoted by the Federal Reserve Bank of New York.

(1) Each ADS represents one 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: August 7, 2020