Netmarble 2Q 2019 Earnings Results

Key insights

7 takeaways

01
Netmarble reported 2Q 2019 revenue of 526.2 billion KRW, marking a 5.1% year-over-year increase and a 10.2% quarter-over-quarter increase.See it on page 2
02
Operating profit fell 46.6% year-over-year to 33.2 billion KRW, driven by higher marketing costs and labor expenses related to new game launches and a North American studio acquisition.See it on page 8
03
Overseas revenue accounted for 64% of total earnings in 2Q 2019, with management targeting an increase to 70% by the end of the year.See it on page 6
04
North America is the company's primary international market at 31% of total revenue, followed by Japan at 13%.See it on page 6
05
The company's game portfolio is evenly distributed, with RPGs, MMORPGs, and casual games each contributing 24% to the total.See it on page 7
06
Key revenue drivers for the quarter included established titles such as Marvel Contest of Champions and Lineage 2 Revolution.See it on page 7
07
Management expects a rapid recovery in operating profit margins in the second half of 2019, supported by upcoming releases like Seven Knights 2 and A3: Still Alive.See it on page 5

Summary

Netmarble’s second-quarter 2019 earnings results demonstrate a period of top-line growth driven by new game releases, alongside a strategic focus on international market expansion. The company reported quarterly revenue of 526.2 billion KRW, representing a 5.1% increase year-over-year and a 10.2% increase quarter-over-quarter. Despite this revenue growth, operating profit reached 33.2 billion KRW, reflecting a 46.6% decline year-over-year, largely attributed to increased marketing expenditures and labor costs associated with the launch of new titles and the acquisition of a North American game studio.

The company’s geographic footprint continues to shift toward global markets, with overseas revenue accounting for 64% of total earnings in the second quarter. North America remains the largest international market at 31%, followed by Japan at 13%. Management anticipates this overseas revenue proportion will climb to 70% by the end of 2019. The current game portfolio is well-diversified across genres, with RPGs and MMORPGs each comprising 24% of the portfolio, while casual games account for another 24%. Key revenue drivers include established titles such as Marvel Contest of Champions and Lineage 2 Revolution.

Looking ahead, the company maintains a positive outlook for the second half of 2019, projecting a rapid recovery in operating profit margins to 2017 levels. This optimism is supported by a robust pipeline of new releases, including Seven Knights 2 and A3: Still Alive, as well as global expansions for existing titles like Blade & Soul Revolution and The King of Fighters: All Star. These financial results are based on consolidated K-IFRS standards and remain subject to final audit outcomes.