GungHo Online Entertainment FY2018 Q1 Financial Results

Key insights

6 takeaways

01
GungHo Online Entertainment experienced a significant financial contraction in Q1 2018, with net sales falling 14.9% year-over-year to 21.899 billion yen.See it on page 1
02
Operating profit declined by 36.2% to 6.461 billion yen, while ordinary profit and net income attributable to owners of the parent dropped by 37.4% and 33.3%, respectively.See it on page 4
03
The primary cause of the revenue downturn was a decline in performance from the company's flagship title, Puzzle & Dragons.See it on page 4
04
The company maintains a stable financial foundation with total assets of 76.607 billion yen and an equity ratio of 80.0%.See it on page 6
05
GungHo has declined to provide full-year consolidated earnings projections, citing the inherent volatility of the content-driven industry.See it on page 1
06
Growth initiatives during the quarter included the launch of Calcio Fantasista in Japan and Chrono Ma-Gia internationally, alongside strong performance from the subsidiary GRAVITY Co., Ltd.’s Ragnarok M in Asian markets.See it on page 4

Summary

GungHo Online Entertainment’s financial results for the first quarter of the fiscal year ending December 31, 2018, reflect a period of contraction in both revenue and profit. The company reported consolidated net sales of 21.899 billion yen, representing a 14.9% decrease compared to the same period in the previous year. Operating profit fell by 36.2% to 6.461 billion yen, while ordinary profit and net income attributable to owners of the parent declined by 37.4% and 33.3%, respectively.

The primary driver for this downturn was a decline in revenue from the company’s flagship title, Puzzle & Dragons. Despite this, the company continued to focus on maintaining and expanding the monthly active user base for existing titles through regular updates, collaborations, and a strategic push into e-Sports. During this period, the company also pursued growth through new releases, including the launch of the soccer simulation game Calcio Fantasista in Japan and the card game Chrono Ma-Gia across several international markets. Additionally, the subsidiary GRAVITY Co., Ltd. saw positive performance from the mobile game Ragnarok M in Asian markets.

The company maintains a strong financial position with total assets of 76.607 billion yen and an equity ratio of 80.0%. Due to the volatile nature of the content-driven industry and the difficulty in providing accurate, rational forecasts, the company has opted not to disclose full-year consolidated earnings projections. Instead, it remains committed to the timely disclosure of quarterly financial results and business conditions. The report covers the period from January 1, 2018, to March 31, 2018, and adheres to Japanese accounting standards.