6-K 1 grvy-6k_20201113.htm 6-K grvy-6k_20201113.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 November 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 THIRD QUARTER OF 2019 RESULTS AND BUSINESS UPDATES

 

Seoul, South Korea – November 13, 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 third quarter ended September 30, 2020, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

 

THIRD QUARTER 2020 HIGHLIGHTS

 

Total revenues were KRW 131,795 million (US$ 113,034 thousand), representing a 49.0% increase from the second quarter ended June 30, 2020 (“QoQ”) and a 69.9% increase from the third quarter ended September 30, 2019 (“YoY”).

 

Operating profit was KRW 34,356 million (US$ 29,465 thousand), representing a 110.6% increase QoQ and a 236.0% increase YoY.

 

Profit before income tax expenses was KRW 33,675 million (US$ 28,881 thousand), representing a 106.2% increase QoQ and a 200.3% increase YoY.

 

Net profit attributable to parent company was KRW 25,281 million (US$ 21,682 thousand), representing a 93.1% increase QoQ and a 182.4% increase YoY.

 

REVIEW OF THIRD QUARTER 2020 FINANCIAL RESULTS

 

Revenues

 

Subscription revenues for the third quarter of 2020 were KRW 29,159 million (US$ 25,008 thousand), representing a 19.3% increase QoQ from KRW 24,448 million and a 176.0% increase YoY from KRW 10,564 million. The increase QoQ was mainly attributable to increased revenues from Ragnarok Online in Thailand that was re-launched on May 28, 2020 and Brazil. Such increase was partially offset by decreased revenues from Ragnarok H5 in Indonesia and Ragnarok Online in Taiwan. The increase YoY was largely due to increased revenues from Ragnarok Online in Thailand and United States.

 

Royalty and license fee revenues for the third quarter of 2020 were KRW 2,674 million (US$ 2,293 thousand), representing a 40.0% decrease QoQ from KRW 4,459 million and a 3.5% increase YoY from KRW 2,583 million. The decrease QoQ was primarily due to temporarily generated revenue from collaboration event with Garena’s Free Fire items based on Ragnarok Online IP in previous quarter. The increase YoY resulted mainly from increased revenue from Ragnarok Online in Japan. Such increase was partially offset by decreased revenue from Ragnarok Online in Thailand.

 

Mobile game revenues were KRW 95,531 million (US$ 81,933 thousand) for the third quarter of 2020, representing a 76.1% increase QoQ from KRW 54,249 million and a 59.0% increase YoY from KRW 60,086 million. The increase QoQ resulted primarily from increased revenues from Ragnarok Origin in Korea that was launched on July 7, 2020 and Ragnarok M: Eternal Love in Southeast Asia. Such increase was partially offset by decreased revenues


from Ragnarok Tactics in Korea and Taiwan, Ragnarok H5 in Indonesia, and Ragnarok M: Eternal Love in Korea and Taiwan. The increase YoY was primarily due to revenues from Ragnarok Origin in Korea that was launched on July 7, 2020, Ragnarok M: Eternal Love in Taiwan. This increase was partially offset by decreased revenues from Ragnarok M: Eternal Love in Japan, Southeast Asia, North America, South America and Oceania, and Korea.

 

Other revenues were KRW 4,431 million (US$ 3,800 thousand) for the third quarter of 2020, representing a 16.4% decrease QoQ from KRW 5,302 million and a 2.3% increase YoY from KRW 4,333 million.

 

Cost of Revenue

Cost of revenue was KRW 74,107 million (US$ 63,558 thousand) for the third quarter of 2020, representing a 45.0% increase QoQ from KRW 51,098 million and a 32.2% increase YoY from KRW 56,058 million. The increase QoQ was mainly due to increased commission paid for mobile game services related to Ragnarok Origin in Korea that was launched on July 7, 2020. The increase YoY was mostly from increased commission paid for mobile game services related to Ragnarok Origin in Korea that was launched on July 7, 2020.

 

Operating Expenses

Operating expenses were KRW 23,332 million (US$ 20,011 thousand) for the third quarter of 2020, representing a 10.9% increase QoQ from KRW 21,047 million and a 106.8% increase YoY from KRW 11,282 million. The increase QoQ was mainly attributable to increased research and development expenses 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 in Korea, commission paid for payment gate way fees related to Ragnarok Online in Thailand, research and development expenses, and salaries.

 

Profit before income tax expenses

Profit before income tax expenses was KRW 33,675 million (US$ 28,881 thousand) for the third quarter of 2020 compared with profit before income tax expense of KRW 16,335 million for the second quarter of 2020 and profit before income tax expenses of KRW 11,213 million for the third quarter of 2019.

 

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 25,281 million (US$ 21,682 thousand) for the third quarter of 2020 compared with net profit attributable to parent company of KRW 13,095 million for the second quarter of 2020 and a net profit attributable to parent company of KRW 8,952 million for the third quarter of 2019.

 

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 171,800 million (US$ 147,345 thousand) as of September 30, 2020.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars


at the exchange rate of KRW 1,165.97 to US$ 1.00, the noon buying rate in effect on September 30, 2020 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 was launched in Korea on July 7, 2020 and is being prepared for launch in Japan in 1st half of 2021.

 

Ragnarok X: Next Generation, a MMORPG mobile game

 

Ragnarok X: Next Generation was launched in Taiwan, Hong Kong and Macau on October 15, 2020 and is being prepared for launch in Southeast Asia in 1st half of 2021.

 

The Labyrinth of Ragnarok, an Idle MMORPG mobile game

 

The Labyrinth of Ragnarok was launched in Philippines, Singapore and Malaysia on October 14, 2020. This game is being prepared for launch in Thailand and Indonesia in December 2020.

 

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 in 1st half of 2021. The game was developed by NeoCyon, Inc., our subsidiary in Korea.

 

Action RO2: Spear of Odin, a 3D Action MORPG mobile game, is expected to be launched in Indonesia, Malaysia, Philippines, Singapore and Australia in 1st half of 2021. 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 fourth quarter of 2020. The game is published by Gravity Interactive, Inc., a subsidiary in the United States.

 

Tera Classic, a MMORPG mobile game, has started pre-registration and will be launched in Japan in January 2021. The game is published by Gravity Game Arise, Inc., a subsidiary in Japan.

 

Investor Presentation


 

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of third 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, 2019 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-19

 

 

30-Sep-20

 

 

 

KRW

 

 

US$

 

 

KRW

 

 

US$

 

 

 

(audited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

79,428

 

 

 

68,122

 

 

 

116,800

 

 

 

100,174

 

Short-term financial instruments

 

 

39,500

 

 

 

33,877

 

 

 

55,000

 

 

 

47,171

 

Accounts receivable, net

 

 

32,253

 

 

 

27,662

 

 

 

55,570

 

 

 

47,660

 

Other receivables, net

 

 

56

 

 

 

48

 

 

 

0

 

 

 

0

 

Prepaid expenses

 

 

1,962

 

 

 

1,683

 

 

 

2,782

 

 

 

2,386

 

Other current assets

 

 

2,664

 

 

 

2,285

 

 

 

1,137

 

 

 

975

 

Total current assets

 

 

155,863

 

 

 

133,677

 

 

 

231,289

 

 

 

198,366

 

Property and equipment, net

 

 

6,663

 

 

 

5,715

 

 

 

7,201

 

 

 

6,176

 

Intangible assets

 

 

1,717

 

 

 

1,473

 

 

 

1,733

 

 

 

1,486

 

Deferred tax assets

 

 

7,667

 

 

 

6,576

 

 

 

7,885

 

 

 

6,763

 

Other non-current financial assets

 

 

1,770

 

 

 

1,518

 

 

 

1,777

 

 

 

1,524

 

Other non-current assets

 

 

1,745

 

 

 

1,494

 

 

 

5,255

 

 

 

4,508

 

Total assets

 

 

175,425

 

 

 

150,453

 

 

 

255,140

 

 

 

218,823

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

37,496

 

 

 

32,159

 

 

 

56,668

 

 

 

48,602

 

Deferred revenue

 

 

10,748

 

 

 

9,218

 

 

 

15,194

 

 

 

13,031

 

Withholdings

 

 

1,764

 

 

 

1,513

 

 

 

3,463

 

 

 

2,970

 

Accrued expense

 

 

1,175

 

 

 

1,008

 

 

 

1,182

 

 

 

1,014

 

Income tax payable

 

 

2,618

 

 

 

2,245

 

 

 

3,325

 

 

 

2,852

 

Other current liabilities

 

 

1,986

 

 

 

1,703

 

 

 

2,629

 

 

 

2,255

 

Total current liabilities

 

 

55,787

 

 

 

47,846

 

 

 

82,461

 

 

 

70,724

 

Long-term deferred revenue

 

 

98

 

 

 

84

 

 

 

5,037

 

 

 

4,320

 

Other non-current liabilities

 

 

3,774

 

 

 

3,237

 

 

 

3,368

 

 

 

2,889

 

Total liabilities

 

 

59,659

 

 

 

51,167

 

 

 

90,866

 

 

 

77,933

 

Share capital

 

 

3,474

 

 

 

2,979

 

 

 

3,474

 

 

 

2,979

 

Capital surplus

 

 

27,128

 

 

 

23,266

 

 

 

27,110

 

 

 

23,251

 

Other components of equity

 

 

274

 

 

 

235

 

 

 

896

 

 

 

768

 

Retained earnings (Accumulated deficit)

 

 

84,668

 

 

 

72,616

 

 

 

132,307

 

 

 

113,474

 

Equity attributable to owners of the Parent Company

 

 

115,544

 

 

 

99,096

 

 

 

163,787

 

 

 

140,472

 

Non-controlling interest

 

 

222

 

 

 

190

 

 

 

487

 

 

 

418

 

Total equity

 

 

115,766

 

 

 

99,286

 

 

 

164,274

 

 

 

140,890

 

Total liabilities and equity

 

 

175,425

 

 

 

150,453

 

 

 

255,140

 

 

 

218,823

 

 

* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,165.97 to US$ 1.00, the noon buying rate in effect on September 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

 

 

Nine months ended

 

 

 

30-Jun-20

 

 

30-Sep-19

 

 

30-Sep-20

 

 

30-Sep-19

 

 

30-Sep-20

 

 

 

(KRW)

 

 

(KRW)

 

 

(KRW)

 

 

(US$)

 

 

(KRW)

 

 

(KRW)

 

 

(US$)

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Online games-subscription revenue

 

 

24,448

 

 

 

10,564

 

 

 

29,159

 

 

 

25,008

 

 

 

23,566

 

 

 

63,500

 

 

 

54,461

 

Online games-royalties and license fees

 

 

4,459

 

 

 

2,583

 

 

 

2,674

 

 

 

2,293

 

 

 

9,135

 

 

 

10,676

 

 

 

9,156

 

Mobile games

 

 

54,249

 

 

 

60,086

 

 

 

95,531

 

 

 

81,933

 

 

 

245,189

 

 

 

205,762

 

 

 

176,473

 

Other revenue

 

 

5,302

 

 

 

4,333

 

 

 

4,431

 

 

 

3,800

 

 

 

11,426

 

 

 

13,575

 

 

 

11,643

 

Total net revenue

 

 

88,458

 

 

 

77,566

 

 

 

131,795

 

 

 

113,034

 

 

 

289,316

 

 

 

293,513

 

 

 

251,733

 

Cost of revenue

 

 

51,098

 

 

 

56,058

 

 

 

74,107

 

 

 

63,558

 

 

 

214,153

 

 

 

174,079

 

 

 

149,300

 

Gross profit

 

 

37,360

 

 

 

21,508

 

 

 

57,688

 

 

 

49,476

 

 

 

75,163

 

 

 

119,434

 

 

 

102,433

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

17,643

 

 

 

8,984

 

 

 

18,042

 

 

 

15,474

 

 

 

21,382

 

 

 

46,692

 

 

 

40,046

 

Research and development

 

 

3,254

 

 

 

2,349

 

 

 

4,550

 

 

 

3,902

 

 

 

6,658

 

 

 

10,676

 

 

 

9,156

 

Others, net

 

 

150

 

 

 

(51

)

 

 

740

 

 

 

635

 

 

 

259

 

 

 

1,041

 

 

 

893

 

Total operating expenses

 

 

21,047

 

 

 

11,282

 

 

 

23,332

 

 

 

20,011

 

 

 

28,299

 

 

 

58,409

 

 

 

50,095

 

Operating profit

 

 

16,313

 

 

 

10,226

 

 

 

34,356

 

 

 

29,465

 

 

 

46,864

 

 

 

61,025

 

 

 

52,338

 

Finance income(costs):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

627

 

 

 

1,353

 

 

 

822

 

 

 

705

 

 

 

3,556

 

 

 

3,000

 

 

 

2,573

 

Finance costs

 

 

(605

)

 

 

(366

)

 

 

(1,503

)

 

 

(1,289

)

 

 

(781

)

 

 

(2,765

)

 

 

(2,371

)

Profit before income tax

 

 

16,335

 

 

 

11,213

 

 

 

33,675

 

 

 

28,881

 

 

 

49,639

 

 

 

61,260

 

 

 

52,540

 

Income tax expenses

 

 

3,293

 

 

 

2,357

 

 

 

8,390

 

 

 

7,196

 

 

 

10,192

 

 

 

13,687

 

 

 

11,739

 

Profit for the year

 

 

13,042

 

 

 

8,856

 

 

 

25,285

 

 

 

21,685

 

 

 

39,447

 

 

 

47,573

 

 

 

40,801

 

Profit attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

(53

)

 

 

(96

)

 

 

4

 

 

 

3

 

 

 

(126

)

 

 

(66

)

 

 

(57

)

Owners of Parent company

 

 

13,095

 

 

 

8,952

 

 

 

25,281

 

 

 

21,682

 

 

 

39,573

 

 

 

47,639

 

 

 

40,858

 

Earning per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and diluted

 

 

1,884

 

 

 

1,288

 

 

 

3,638

 

 

 

3.10

 

 

 

5,695

 

 

 

6,856

 

 

 

5.90

 

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

 

 

1,884

 

 

 

1,288

 

 

 

3,638

 

 

 

3.10

 

 

 

5,695

 

 

 

6,856

 

 

 

5.90

 

 

* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,165.97 to US$1.00, the noon buying rate in effect on September 30, 2020 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: November 13, 2020