NCSOFT Q1 2025 Earnings Release

Key insights

7 takeaways

01
NCSOFT returned to profitability in Q1 2025 with an operating profit of KRW 5.2 billion, reversing losses from late 2024 through a 34% reduction in total operating expenses.See it on page 2
02
Total sales reached KRW 360.3 billion, reflecting a 12% quarter-over-quarter and 9% year-over-year decline.See it on page 6
03
Operating expense reductions were primarily driven by a 40% decrease in labor costs following the conclusion of one-time severance payments from the previous quarter.See it on page 7
04
Mobile gaming remains the company's primary revenue pillar, contributing KRW 206.3 billion or 57% of total sales, while legacy PC titles accounted for 23% at KRW 83.3 billion.See it on page 5
05
While the domestic Korean market declined 8% quarter-over-quarter, the Asian market grew by 8%, bolstered by the performance of Lineage W.See it on page 6
06
NCSOFT has set a fiscal year 2026 sales guidance target of KRW 2.0 trillion to KRW 2.5 trillion, focusing on legacy IP expansion and new publishing partnerships.See it on page 10
07
The company maintains a stable financial position with total assets valued at KRW 3.88 trillion as of the end of Q1 2025.See it on page 8

Summary

NCSOFT’s first-quarter 2025 financial results reflect a period of operational stabilization following a significant restructuring of expenses in the previous quarter. The company reported total sales of KRW 360.3 billion, representing a 12% decline quarter-over-quarter and a 9% decrease year-over-year. Despite the contraction in top-line revenue, the company achieved an operating profit of KRW 5.2 billion, marking a turnaround from the losses recorded in the latter half of 2024. This improvement is primarily attributed to a 34% reduction in total operating expenses, driven largely by a 40% decrease in labor costs as one-time severance payments from the prior quarter subsided.

Revenue performance remains heavily reliant on the company’s core mobile and PC gaming segments. Mobile games generated KRW 206.3 billion, accounting for 57% of total sales, while legacy PC online titles contributed KRW 83.3 billion, or 23% of the total. Geographically, the domestic Korean market remains the primary revenue driver at KRW 228.3 billion, though it experienced an 8% quarter-over-quarter decline. Conversely, the Asian market saw an 8% growth in sales, supported by the performance of Lineage W. Royalty income, while down 39% from the previous quarter due to the waning impact of global releases, still posted a 38% year-over-year increase to KRW 45.0 billion.

Looking toward the future, the company has established a sales guidance target of KRW 2.0 trillion to KRW 2.5 trillion for fiscal year 2026. This growth strategy centers on a dual-track approach: maximizing the longevity of legacy intellectual properties through regional expansion and spin-off titles, and aggressively pursuing new revenue streams through in-house development and external publishing partnerships. The company maintains a solid financial position with total assets of KRW 3.88 trillion as of the end of the first quarter.