NCSOFT Q3 2024 Earnings Release

Key insights

7 takeaways

01
NCSOFT reported an operating loss of KRW 14.3 billion in Q3 2024, despite a 9% quarter-over-quarter revenue increase to KRW 401.9 billion.See it on page 2
02
Total operating expenses surged 16% quarter-over-quarter to KRW 416.2 billion, driven primarily by an 180% increase in marketing spend to KRW 48.7 billion.See it on page 7
03
Mobile gaming remains the company's core revenue driver, contributing KRW 253.4 billion or 63% of total sales, largely supported by the performance of Lineage M.See it on page 5
04
Domestic revenue in Korea rose 19% to KRW 286.2 billion, while overseas and royalty revenue fell 10% to KRW 115.7 billion.See it on page 6
05
Labor costs increased 7% to KRW 201.1 billion, and variable costs rose 10% due to higher mobile distribution fees.See it on page 7
06
The company recorded a net loss of KRW 26.5 billion for the quarter, though it maintains a stable balance sheet with KRW 4.0 trillion in total assets against KRW 887.9 billion in liabilities.See it on page 4
07
PC online game revenue declined 6% quarter-over-quarter, totaling KRW 80.7 billion.See it on page 5

Summary

NCSOFT’s third-quarter 2024 financial results reveal a challenging period characterized by a transition to an operating loss. The company reported total sales of KRW 401.9 billion, representing a 9% increase quarter-over-quarter but a 5% decline year-over-year. Despite the sequential revenue growth, the firm recorded an operating loss of KRW 14.3 billion, marking a significant downturn compared to previous quarters.

The revenue performance was heavily influenced by the mobile gaming segment, which generated KRW 253.4 billion—63% of total sales—driven primarily by the strong performance of Lineage M. Conversely, PC online game revenue fell 6% quarter-over-quarter to KRW 80.7 billion. Geographically, the domestic Korean market served as the primary growth engine, with sales rising 19% to KRW 286.2 billion. In contrast, overseas and royalty revenue declined by 10% to KRW 115.7 billion, reflecting ongoing difficulties in international markets.

The shift to an operating loss was driven by a 16% quarter-over-quarter increase in total operating expenses, which reached KRW 416.2 billion. This rise was largely attributed to a 180% surge in marketing expenditures, totaling KRW 48.7 billion, necessitated by large-scale game updates and promotional activities for a new title. Additionally, labor costs rose 7% to KRW 201.1 billion, while variable costs increased by 10% due to higher mobile distribution fees. As of the end of the third quarter, the company maintained total assets of KRW 4.0 trillion against total liabilities of KRW 887.9 billion, reflecting a stable balance sheet despite the quarterly net loss of KRW 26.5 billion.