GungHo Online Entertainment Consolidated Financial Results for the 1st Quarter of FY 2018

Key insights

6 takeaways

01
GungHo reported stable Q1 2018 results with net sales of 21,899 million yen, a minor decrease of 410 million yen from the previous quarter.See it on page 1
02
Operating income increased to 6,461 million yen, up 252 million yen due to lower salary and allowance expenses following the end of a bonus cycle.See it on page 5
03
Flagship title Puzzle & Dragons remains the primary revenue driver, reaching over 48 million downloads in Japan by March 2018.See it on page 6
04
The company is countering a gradual decline in monthly active users for Puzzle & Dragons through e-Sports initiatives, cross-media content, and strategic updates.See it on page 1
05
Advertising expenditures rose to 2,593 million yen to support the global launch of titles like CHRONO MA:GIA and the expansion of Calcio Fantasista.See it on page 2
06
Subsidiary GRAVITY Co., Ltd. expanded the mobile game Ragnarok M into South Korea in March 2018, building on its existing presence in Taiwan, Hong Kong, and Macau.See it on page 2

Summary

GungHo Online Entertainment’s consolidated financial results for the first quarter of the fiscal year ending December 31, 2018, indicate a period of stable, flat performance. Net sales for the quarter reached 21,899 million yen, representing a slight decrease of 410 million yen compared to the previous quarter. Despite this minor decline in revenue, operating income saw a modest increase of 252 million yen to reach 6,461 million yen, supported by a reduction in salary and allowance expenses following the conclusion of the previous quarter’s performance bonus cycle.

The company’s primary revenue driver remains its flagship title, Puzzle & Dragons, which surpassed 48 million downloads in Japan as of March 2018. To sustain long-term engagement, GungHo has focused on brand expansion through e-Sports initiatives, including battle mode updates for Puzzle & Dragons Radar, alongside cross-media efforts such as a dedicated cartoon series and manga. While monthly active user figures have experienced a gradual decline, the company reports that strategic events and content updates have successfully stabilized user retention.

Geographically, the company continues to pursue a global distribution strategy. Recent portfolio activity includes the launch of the partner publishing title Calcio Fantasista in Japan and the competitive card game CHRONO MA:GIA across Japan, the US, Canada, and Australia. Additionally, the subsidiary GRAVITY Co., Ltd. has seen positive momentum with the mobile game Ragnarok M, which expanded into South Korea in March 2018 following its earlier release in Taiwan, Hong Kong, and Macau. Advertising expenditures rose to 2,593 million yen during the quarter, largely driven by promotional campaigns for these international releases.