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 July 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 SECOND QUARTER OF 2018 RESULTS AND BUSINESS UPDATES
Seoul, South Korea – July 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 second quarter ended June 30, 2018, prepared in accordance with international Financial Reporting Standards as issued by the International Accounting Standards Board.
SECOND QUARTER 2018 HIGHLIGHTS
|
|
• |
Total revenues were KRW 63,026 million (US$ 56,688 thousand), representing a 5.0% decrease from the first quarter ended March 31, 2018 (“QoQ”) and a 133.2% increase from the second quarter ended June 30, 2017 (“YoY”). |
|
|
• |
Operating profit was KRW 8,323 million (US$ 7,486 thousand), representing a 72.7% increase QoQ and a 90.3% increase YoY. |
|
|
• |
Profit before income tax expenses was KRW 8,642 million (US$ 7,773 thousand), representing a 68.9% increase QoQ and a 89.5% increase YoY. |
|
|
• |
Net profit attributable to parent company was KRW 6,615 million (US$ 5,949 thousand), representing a 86.4% increase QoQ and a 86.1% increase YoY. |
REVIEW OF SECOND QUARTER 2018 FINANCIAL RESULTS
Revenues
Subscription revenues for the second quarter of 2018 were KRW 6,116 million (US$ 5,501 thousand), representing a 31.3% decrease QoQ from KRW 8,896 million and a 37.5% decrease YoY from KRW 9,786 million. The decrease QoQ was mainly attributable to decreased revenues from Ragnarok Online in Korea and Taiwan, and Ragnarok Prequel in Taiwan. The decrease YoY was largely due to decreased revenues from Ragnarok Prequel and Ragnarok Online in Taiwan and the United States and Canada and Dragonica in Taiwan.
Royalty and license fee revenues for the second quarter of 2018 were KRW 3,209 million (US$ 2,886 thousand), representing a 30.5% decrease QoQ from KRW 4,619 million and a 9.5% decrease YoY from KRW 3,546 million. The decrease QoQ was primarily due to the decreased revenue of Ragnarok Online in Japan. The decrease YoY resulted mainly from decreased revenues from Ragnarok Online in Indonesia, Japan and Thailand.
Mobile game and application revenues were KRW 51,789 million (US$ 46,581 thousand) for the second quarter of 2018, representing a 0.8% increase QoQ from KRW 51,396 million and a 323.1% increase YoY from KRW 12,239 million. The QoQ increase was mainly due to increased revenue from Ragnarok M in Korea, which was launched on March 14, 2018. This increase was partially offset by decreased revenues from Ragnarok M in Taiwan and RO: Idle Poring in global markets except for China and Japan and Ragnarok R in Taiwan and Korea. The increase YoY was primarily due to revenue contribution of Ragnarok M in Korea and Taiwan and RO: Idle Poring in global markets except for China and Japan, which partially offset by decreased revenues from Ragnarok R in Taiwan, Korea, and Thailand.
Character merchandising and other revenues were KRW 1,912 million (US$ 1,720 thousand) for the second quarter of 2018, representing 36.6% increase from KRW 1,400 million and a 31.2% increase YoY from KRW 1,457 million.
Cost of revenue was KRW 43,150 million (US$ 38,811 thousand) for the second quarter of 2018, representing a 5.8% decrease QoQ from KRW 45,784 million and a 185.5% increase YoY from KRW 15,116 million. The decrease QoQ was mainly due to decreased commission paid for mobile game services, which was partially offset increased outsourcing fees and salaries. The increase YoY was mostly from increased commission paid for mobile game services related to Ragnarok M in Taiwan and Korea and outsourcing fees.
Operating Expenses
Operating expenses were KRW 11,553 million (US$ 10,391 thousand) for the second quarter of 2018, representing a 26.4% decrease QoQ from KRW 15,707 million and a 53.2% increase YoY from KRW 7,539 million. The decrease QoQ was mainly attributable to decreased advertising expenses for marketing for Ragnarok M and RO: Idle Poring in Korea. The increase YoY was mostly increased advertising expenses for Ragnarok M in Korea and research and development expenses related to mobile games.
Profit before income tax expenses
Profit before income tax expenses was KRW 8,642 million (US$ 7,773 thousand) for the second quarter of 2018 compared with profit before income tax expense of KRW 5,117 million for the first quarter of 2018 and profit before income tax expenses of KRW 4,560 million for the second quarter of 2017.
Net Profit
As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 6,615 million (US$ 5,949 thousand) for the second quarter of 2018 compared with net profit attributable to parent company of KRW 3,549 million for the first quarter of 2018 and a net profit attributable to parent company of KRW 3,555 million for the second quarter of 2017.
Liquidity
The balance of cash and cash equivalents and short-term financial instruments was KRW 67, 906 million (US$ 61,078 thousand) as of June 30, 2018.
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,111.79 to US$ 1.00, the noon buying rate in effect on June 29, 2018 as quoted by the Federal Reserve Bank of New York.
GRAVITY BUSINESS UPDATE
Ragnarok Online IP-based Games
|
• |
Ragnarok M, a MMORPG mobile game |
During October 2018, Gravity plans to offer Ragnarok M globally except for Taiwan, Hong Kong, Macau, Korea, Japan and China. Ragnarok M has been one of the top mobile games in Taiwan since its launch on October 12, 2017; and in Korea since its launch on March 14, 2018. Gravity expects to launch Ragnarok M in Japan after the global launch. The launch schedule is to be announced in the future.
|
• |
Ragnarok R, a card RPG mobile game |
The Company expects to launch Ragnarok R in Indonesia in 2018.
|
• |
Other Ragnarok Online IP-based games |
A 3D MO Action RPG mobile game, Spear of Odin, is expected to be launched in Philippines, Singapore, Malaysia, Indonesia, Thailand and Vietnam in 2018. Such game is locally named as Ragnarok Dungeon Survivor in Thailand and Vietnam. The company conducted a closed beta test(“CBT”) in Philippines, Singapore, Malaysia and Indonesia in July 2018.
Ragnarok Online
The Company plans to re-launch Ragnarok Online in Russia and CIS countries in 2018. A CBT is currently being conducted in Russia and CIS countries, which will be completed by August 7, 2018.
Ragnarok Zero, a new version of Ragnarok Online is scheduled to be launched in Vietnam. Gravity is currently offering such game in Korea.
DR management plan
|
• |
Gravity Announces 2-for-1 American Depository Shares (“ADS”) Split |
The Company announced today that its Board of Directors has approved a ratio change of its American Depositary Shares(“ADSs”) to common shares from one ADS to two common shares (1:2) to one ADS to one common share (1:1), effective as of August 27, 2018. The ratio change will have the same effect as a 2-for-1 split of its ADSs. The ADS split will have no effect on its common shares.
|
• |
Gravity Announces Transferring to Global Market from Capital Market |
The Company today announced that Gravity determined to transfer its listing to The NASDAQ Global Market® (“Global Market”) from The NASDAQ Capital Market®. The Company’s ADS will begin trading on Global Market effective at the start of trading on August 27, 2018.
The transfer of the Company’s listing to Global Market is not expected to have any impact on trading in the Company’s ADS, and the Company’s ADS will continue to trade on NASDAQ under the symbol ‘GRVY’.
Investor Presentation
Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the second 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$)
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|
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As of |
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|||||||||||||
|
|
|
31-Dec-17 |
|
|
30-Jun-18 |
|
||||||||||
|
|
|
KRW |
|
|
US$ |
|
|
KRW |
|
|
US$ |
|
||||
|
|
|
(audited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
39,095 |
|
|
|
35,164 |
|
|
|
44,406 |
|
|
|
39,941 |
|
|
Short-term financial instruments |
|
|
22,500 |
|
|
|
20,238 |
|
|
|
23,500 |
|
|
|
21,137 |
|
|
Accounts receivable, net |
|
|
42,168 |
|
|
|
37,928 |
|
|
|
28,008 |
|
|
|
25,191 |
|
|
Other receivables, net |
|
|
698 |
|
|
|
628 |
|
|
|
41 |
|
|
|
38 |
|
|
Prepaid expenses |
|
|
3,027 |
|
|
|
2,723 |
|
|
|
3,352 |
|
|
|
3,015 |
|
|
Other current assets |
|
|
1,383 |
|
|
|
1,243 |
|
|
|
1,830 |
|
|
|
1,646 |
|
|
Total current assets |
|
|
108,871 |
|
|
|
97,924 |
|
|
|
101,137 |
|
|
|
90,968 |
|
|
Property and equipment, net |
|
|
946 |
|
|
|
851 |
|
|
|
1,329 |
|
|
|
1,195 |
|
|
Intangible assets |
|
|
1,036 |
|
|
|
932 |
|
|
|
520 |
|
|
|
468 |
|
|
Deferred tax assets |
|
|
3,036 |
|
|
|
2,731 |
|
|
|
3,036 |
|
|
|
2,731 |
|
|
Other non-current financial assets |
|
|
1,394 |
|
|
|
1,254 |
|
|
|
1,453 |
|
|
|
1,307 |
|
|
Other non-current assets |
|
|
600 |
|
|
|
540 |
|
|
|
723 |
|
|
|
650 |
|
|
Total assets |
|
|
115,883 |
|
|
|
104,232 |
|
|
|
108,198 |
|
|
|
97,319 |
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
44,410 |
|
|
|
39,945 |
|
|
|
29,028 |
|
|
|
26,109 |
|
|
Deferred revenue |
|
|
16,100 |
|
|
|
14,481 |
|
|
|
15,177 |
|
|
|
13,651 |
|
|
Withholdings |
|
|
1,439 |
|
|
|
1,294 |
|
|
|
2,156 |
|
|
|
1,939 |
|
|
Accrued expense |
|
|
1,037 |
|
|
|
933 |
|
|
|
930 |
|
|
|
837 |
|
|
Income tax payable |
|
|
1,628 |
|
|
|
1,464 |
|
|
|
634 |
|
|
|
570 |
|
|
Other current liabilities |
|
|
130 |
|
|
|
117 |
|
|
|
118 |
|
|
|
106 |
|
|
Total current liabilities |
|
|
64,744 |
|
|
|
58,234 |
|
|
|
48,043 |
|
|
|
43,212 |
|
|
Long-term deferred revenue |
|
|
6,581 |
|
|
|
5,919 |
|
|
|
5,509 |
|
|
|
4,955 |
|
|
Other non-current liabilities |
|
|
560 |
|
|
|
504 |
|
|
|
567 |
|
|
|
510 |
|
|
Total liabilities |
|
|
71,885 |
|
|
|
64,657 |
|
|
|
54,119 |
|
|
|
48,677 |
|
|
Share capital |
|
|
3,474 |
|
|
|
3,125 |
|
|
|
3,474 |
|
|
|
3,125 |
|
|
Capital surplus |
|
|
27,164 |
|
|
|
24,433 |
|
|
|
27,164 |
|
|
|
24,433 |
|
|
Other components of equity |
|
|
(40 |
) |
|
|
(36 |
) |
|
|
(83 |
) |
|
|
(75 |
) |
|
Retained earnings (Accumulated deficit) |
|
|
13,962 |
|
|
|
12,558 |
|
|
|
24,126 |
|
|
|
21,700 |
|
|
Equity attributable to owners of the Parent Company |
|
|
44,560 |
|
|
|
40,080 |
|
|
|
54,681 |
|
|
|
49,183 |
|
|
Non-controlling interest |
|
|
(562 |
) |
|
|
(505 |
) |
|
|
(602 |
) |
|
|
(541 |
) |
|
Total equity |
|
|
43,998 |
|
|
|
39,575 |
|
|
|
54,079 |
|
|
|
48,642 |
|
|
Total liabilities and equity |
|
|
115,883 |
|
|
|
104,232 |
|
|
|
108,198 |
|
|
|
97,319 |
|
* For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,111.79 to US$ 1.00, the noon buying rate in effect on June 29, 2018 as quoted by the Federal Reserve Bank of New York.
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-18 |
|
|
30-Jun-17 |
|
|
30-Jun-18 |
|
|
30-Jun-17 |
|
|
30-Jun-18 |
|
|||||||||||||
|
|
|
(KRW) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|||||||
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|||||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games-subscription revenue |
|
|
8,896 |
|
|
|
9,786 |
|
|
|
6,116 |
|
|
|
5,501 |
|
|
|
19,641 |
|
|
|
15,012 |
|
|
|
13,503 |
|
|
Online games-royalties and license fees |
|
|
4,619 |
|
|
|
3,546 |
|
|
|
3,209 |
|
|
|
2,886 |
|
|
|
8,021 |
|
|
|
7,828 |
|
|
|
7,040 |
|
|
Mobile games and applications |
|
|
51,396 |
|
|
|
12,239 |
|
|
|
51,789 |
|
|
|
46,581 |
|
|
|
20,302 |
|
|
|
103,185 |
|
|
|
92,810 |
|
|
Character merchandising and other revenue |
|
|
1,400 |
|
|
|
1,457 |
|
|
|
1,912 |
|
|
|
1,720 |
|
|
|
2,416 |
|
|
|
3,312 |
|
|
|
2,979 |
|
|
Total net revenue |
|
|
66,311 |
|
|
|
27,028 |
|
|
|
63,026 |
|
|
|
56,688 |
|
|
|
50,380 |
|
|
|
129,337 |
|
|
|
116,332 |
|
|
Cost of revenue |
|
|
45,784 |
|
|
|
15,116 |
|
|
|
43,150 |
|
|
|
38,811 |
|
|
|
28,791 |
|
|
|
88,934 |
|
|
|
79,992 |
|
|
Gross profit |
|
|
20,527 |
|
|
|
11,912 |
|
|
|
19,876 |
|
|
|
17,877 |
|
|
|
21,589 |
|
|
|
40,403 |
|
|
|
36,340 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
13,827 |
|
|
|
6,577 |
|
|
|
9,470 |
|
|
|
8,518 |
|
|
|
12,105 |
|
|
|
23,297 |
|
|
|
20,954 |
|
|
Research and development |
|
|
1,874 |
|
|
|
1,041 |
|
|
|
1,742 |
|
|
|
1,567 |
|
|
|
1,904 |
|
|
|
3,616 |
|
|
|
3,252 |
|
|
Others, net |
|
|
6 |
|
|
|
(79 |
) |
|
|
341 |
|
|
|
306 |
|
|
|
(92 |
) |
|
|
347 |
|
|
|
313 |
|
|
Total operating expenses |
|
|
15,707 |
|
|
|
7,539 |
|
|
|
11,553 |
|
|
|
10,391 |
|
|
|
13,917 |
|
|
|
27,260 |
|
|
|
24,519 |
|
|
Operating profit |
|
|
4,820 |
|
|
|
4,373 |
|
|
|
8,323 |
|
|
|
7,486 |
|
|
|
7,672 |
|
|
|
13,143 |
|
|
|
11,821 |
|
|
Finance income(costs): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
|
590 |
|
|
|
382 |
|
|
|
892 |
|
|
|
802 |
|
|
|
917 |
|
|
|
1,482 |
|
|
|
1,333 |
|
|
Finance costs |
|
|
(293 |
) |
|
|
(195 |
) |
|
|
(573 |
) |
|
|
(515 |
) |
|
|
(647 |
) |
|
|
(866 |
) |
|
|
(779 |
) |
|
Profit before income tax |
|
|
5,117 |
|
|
|
4,560 |
|
|
|
8,642 |
|
|
|
7,773 |
|
|
|
7,942 |
|
|
|
13,759 |
|
|
|
12,375 |
|
|
Income tax expenses(profits) |
|
|
1,593 |
|
|
|
1,017 |
|
|
|
2,042 |
|
|
|
1,837 |
|
|
|
2,245 |
|
|
|
3,635 |
|
|
|
3,269 |
|
|
Profit for the year |
|
|
3,524 |
|
|
|
3,543 |
|
|
|
6,600 |
|
|
|
5,936 |
|
|
|
5,697 |
|
|
|
10,124 |
|
|
|
9,106 |
|
|
Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
(25 |
) |
|
|
(12 |
) |
|
|
(15 |
) |
|
|
(13 |
) |
|
|
(28 |
) |
|
|
(40 |
) |
|
|
(36 |
) |
|
Owners of Parent company |
|
|
3,549 |
|
|
|
3,555 |
|
|
|
6,615 |
|
|
|
5,949 |
|
|
|
5,725 |
|
|
|
10,164 |
|
|
|
9,142 |
|
|
Earning per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted |
|
|
511 |
|
|
|
512 |
|
|
|
952 |
|
|
|
0.86 |
|
|
|
824 |
|
|
|
1,463 |
|
|
|
1.32 |
|
|
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 |
|
|
1,022 |
|
|
|
1,024 |
|
|
|
1,904 |
|
|
|
1.72 |
|
|
|
1,648 |
|
|
|
2,926 |
|
|
|
2.64 |
|
* For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,111.79 to US$1.00, the noon buying rate in effect on June 29, 2018 as quoted by the Federal Reserve Bank of New York.
(1) Each ADS represents two common shares.
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: July 27, 2018