Netmarble 1Q 2022 Earnings Results

Key insights

6 takeaways

01
Netmarble reported an operating loss of KRW 12 billion and a net loss of KRW 52 billion for 1Q 2022, driven by a lack of new game launches and declining performance of existing titles.See it on page 5
02
Quarterly revenue reached KRW 632 billion, reflecting a 10.7% year-over-year increase but a 16.1% decrease compared to the previous quarter.See it on page 4
03
International markets remain the primary revenue driver at 84% of total earnings, with North America alone accounting for 49% of the company's revenue.See it on page 6
04
The company's portfolio is heavily weighted toward casual games, which represent 48% of total revenue, largely due to the integration of SpinX titles like Cash Frenzy and Jackpot World.See it on page 7
05
Operating costs totaled KRW 643 billion, with labor expenses rising due to ongoing recruitment for the development pipeline despite a reduction in marketing spend.See it on page 9
06
Netmarble plans to return to growth in the remainder of 2022 by launching new titles, including the global release of Ni no Kuni: Cross Worlds, Seven Knights Revolution, and various blockchain-integrated games.See it on page 10

Summary

Netmarble’s first-quarter 2022 earnings results reflect a challenging period characterized by a decline in both revenue and profitability. The company reported revenue of KRW 632 billion, representing a 10.7% increase year-over-year but a 16.1% decrease quarter-over-quarter. Profitability metrics were significantly impacted, with the company recording an operating loss of KRW 12 billion and a net loss of KRW 52 billion. These results are primarily attributed to the absence of major game launches during the quarter, the natural performance decline of existing titles, and seasonal fluctuations in overseas markets.

The company’s revenue remains heavily reliant on international markets, which accounted for 84% of total revenue in the first quarter. North America serves as the largest regional contributor at 49%, followed by Korea at 16% and Europe at 12%. By genre, the portfolio is led by casual games at 48%, followed by RPGs at 21% and MMORPGs at 19%. The shift toward casual gaming is largely driven by the integration of SpinX titles into the company’s portfolio. Top-performing revenue generators include MARVEL Contest of Champions, Cash Frenzy, and Jackpot World.

Operating costs for the quarter reached KRW 643 billion. While marketing costs decreased quarter-over-quarter due to the lack of new releases, labor costs saw a slight increase as the company continued to recruit developers for its upcoming pipeline. Looking ahead, the company aims to revitalize growth through a robust release schedule, including titles such as Ni no Kuni: Cross Worlds (global), Seven Knights Revolution, and various blockchain-integrated games scheduled for the remainder of 2022. These financial results are based on consolidated K-IFRS standards and remain subject to final audit outcomes.