GungHo Online Entertainment FY2020 Q3 Financial Results Briefing

Key insights

6 takeaways

01
GungHo reported a quarter-over-quarter increase in consolidated revenue, driven by the sustained performance of flagship title Puzzle & Dragons and successful new releases from subsidiary Gravity.See it on page 27
02
The Nintendo Switch title Ninjala reached over 5 million worldwide downloads, supported by a cross-media strategy involving anime, manga, and e-sports.See it on page 5
03
Gravity’s expansion in Asia significantly bolstered financial health, with Ragnarok Origin and Ragnarok X: Next Generation achieving top-tier sales rankings in South Korea, Taiwan, Hong Kong, and Macau.See it on page 28
04
Operating income experienced a slight quarter-over-quarter decline due to increased marketing expenditures and amortization costs associated with new game launches.See it on page 27
05
Puzzle & Dragons maintained stable monthly active user counts through consistent seasonal events and high-profile intellectual property collaborations.See it on page 14
06
The company achieved year-over-year profit growth, validating its strategy of diversifying its portfolio and expanding international operations.See it on page 27

Summary

GungHo Online Entertainment’s fiscal year 2020 third-quarter financial results highlight a strategy centered on the creation of new intellectual property, the maximization of existing core titles, and the expansion of subsidiary operations. The company reported a quarter-over-quarter increase in consolidated revenue, driven primarily by the sustained performance of its flagship title, Puzzles & Dragons, and the successful launch of several new games under its subsidiary, Gravity.

The company’s growth in the third quarter was bolstered by the performance of Ninjala, which surpassed 5 million worldwide downloads on the Nintendo Switch. This title utilizes a cross-media strategy, including anime, manga, and e-sports events, to maintain user engagement. Simultaneously, Puzzles & Dragons maintained stable monthly active users through a consistent schedule of seasonal events and high-profile collaborations. These efforts were designed to retain existing players while reactivating dormant ones, a strategy further supported by planned fourth-quarter appreciation celebrations and major intellectual property partnerships.

Subsidiary performance was a significant contributor to the quarter's financial health. Gravity successfully launched Ragnarok Origin in South Korea and Ragnarok X: Next Generation in Taiwan, Hong Kong, and Macau, with both titles achieving top-tier sales rankings. Additionally, the direct service launch of Ragnarok Online in Thailand provided a stable revenue stream. While operating income saw a slight quarter-over-quarter decline due to increased amortization and marketing expenditures associated with these new releases, the year-over-year profit growth underscores the effectiveness of the company’s diversified portfolio and international expansion efforts. The company remains focused on a robust pipeline of upcoming titles across mobile and PC platforms to sustain this momentum into 2021.