Kakao Games Q3 2021 Earnings Results

Key insights

6 takeaways

01
Kakao Games reported record Q3 2021 revenue of 466.2 billion KRW, a 209.7% year-over-year increase, and an operating profit of 42.7 billion KRW, up 101.3% year-over-year.See it on page 7
02
The mobile title Odin: Valhalla Rising was the primary growth driver, generating over 400 billion KRW in cumulative revenue within its first 110 days of release.See it on page 8
03
Mobile gaming revenue surged 358.7% year-over-year to 410.5 billion KRW, while PC game revenue declined by 59.1% compared to the same period in 2020.See it on page 5
04
Operating expenses rose to 423.4 billion KRW, driven by increased personnel costs and higher commission fees linked to the rapid expansion of mobile sales.See it on page 6
05
The company plans to expand Odin: Valhalla Rising into Taiwan in the first half of 2022, with subsequent launches planned for Japan, Europe, and North America.See it on page 8
06
Kakao Games maintains a development pipeline of over ten new titles across genres including MMORPGs, action RPGs, and survival shooters scheduled for release through 2022.See it on page 10

Summary

Kakao Games achieved record-breaking financial performance in the third quarter of 2021, driven primarily by the significant success of its mobile gaming segment. The company reported quarterly revenue of 466.2 billion KRW, representing a 209.7% increase year-over-year and a 260.1% increase quarter-over-quarter. Operating profit reached 42.7 billion KRW, marking a 101.3% year-over-year growth and a 427.6% increase from the previous quarter. Net income also saw a substantial rise to 44.3 billion KRW.

The primary catalyst for this growth was the mobile game Odin: Valhalla Rising, which launched in late June 2021 and maintained top-tier rankings in major app markets, surpassing 400 billion KRW in cumulative revenue within its first 110 days. While mobile revenue surged by 358.7% year-over-year to 410.5 billion KRW, PC game revenue experienced a decline of 59.1% compared to the same period in the previous year. Operating expenses rose to 423.4 billion KRW, largely due to increased personnel costs and higher commission fees associated with the rapid expansion of mobile game sales.

The company’s strategy focuses on leveraging its intellectual property through multi-platform releases and global expansion. Plans include introducing Odin: Valhalla Rising to the Taiwanese market in the first half of 2022, followed by subsequent launches in Japan, Europe, and North America. Furthermore, the company maintains a robust pipeline with over ten new titles scheduled for release through 2022, spanning various genres such as MMORPGs, action RPGs, and survival shooters, aimed at both domestic and international audiences. These results are presented on a consolidated basis under the Korean International Financial Reporting Standards.