Gravity Co., Ltd. Annual Report 2019

Gravity Co., Ltd. reported a 25.9 % increase in revenue to KRW 360,967 million (US$312 m) for the fiscal year ended December 31, 2019, driven almost entirely by its flagship mobile title Ragnarok M: Eternal Love, which accounted for 83.6 % of total sales and 80 % of gross profit. Operating profit rose to KRW 48,663 million (US$42 m), yielding a 13.5 % operating margin, while the gross profit margin slipped to 26.4 % due to higher revenue‑sharing with app stores and lower margins on mobile titles compared with online games. Net income reached KRW 39,876 million (US$34 m), supported by a 26.1 % jump in mobile revenue and an 18.7 % rise in subscription income, although royalty income fell by 14.6 %.

The company’s financial position remained solid, with cash and short‑term instruments totaling KRW 79.4 bn (US$68 k) and a debt‑to‑equity ratio falling from 129 % to 52 %. However, significant foreign‑currency exposure persisted—87.5 % of revenue was foreign‑denominated—and a hypothetical 10 % depreciation could have reduced revenue by KRW 25.1 bn. Internal control weaknesses were identified, particularly in IT general controls and revenue recognition, prompting a remediation plan that includes enhanced access controls and ongoing monitoring.

Geographically, the firm’s largest markets were Thailand (17.2 % of revenue), the United States/Canada, Taiwan, Korea, the Philippines, Japan and Indonesia. The company continued to expand its portfolio through in‑house development, third‑party publishing, and strategic licensing, while maintaining a core support team of 108 employees for game masters and customer service. Regulatory compliance remained complex, with data‑protection, child‑protection, and game‑rating laws varying across Korea, Thailand, the Philippines, Japan, and the United States. The firm’s governance structure includes an eight‑member board with half independent directors, audit and compensation committees, and a shareholder rights framework governed by Korean law.