Netmarble 2Q 2021 Earnings Results

Key insights

7 takeaways

01
Netmarble acquired social casino developer SpinX Games for KRW 2.5 trillion to diversify its portfolio and stabilize long-term cash flow.See it on page 11
02
Operating profit plummeted 80.2% year-over-year to KRW 16.2 billion, primarily due to high marketing costs for 'Ni no Kuni: Cross World' and increased labor expenses.See it on page 4
03
Total revenue reached KRW 577.2 billion, marking a 1.2% quarter-over-quarter increase but a 15.8% decline compared to the same period in 2020.See it on page 4
04
International markets remain the company's primary revenue source, accounting for 74% of total earnings, with North America leading at 36%.See it on page 6
05
Revenue is balanced across genres, with RPG and MMORPG titles each contributing 32% and casual games accounting for 25% of total earnings.See it on page 7
06
Key revenue drivers for the quarter included 'MARVEL Contest of Champions', 'The Seven Deadly Sins: Grand Cross', and the launch of 'Ni no Kuni: Cross World'.See it on page 8
07
Future growth strategy centers on a new title pipeline featuring 'MARVEL Future Revolution' and the 'Seven Knights' franchise.See it on page 10

Summary

Netmarble’s second-quarter 2021 earnings results reflect a period of strategic investment and operational transition. The company reported revenue of KRW 577.2 billion, representing a 1.2% increase quarter-over-quarter but a 15.8% decline year-over-year. Profitability metrics faced significant downward pressure, with operating profit falling to KRW 16.2 billion—an 80.2% year-over-year decrease—and EBITDA dropping to KRW 41.8 billion. These results were primarily driven by elevated marketing expenditures associated with the launch of Ni no Kuni: Cross World and increased labor costs resulting from company-wide salary adjustments.

The company maintains a strong international presence, with overseas revenue accounting for 74% of total earnings. North America remains the largest regional market at 36%, followed by Korea at 26% and Southeast Asia at 12%. The genre portfolio is well-diversified, led by RPG and MMORPG titles, which each comprise 32% of revenue, while casual games account for 25%. Key revenue drivers during this period included MARVEL Contest of Champions, The Seven Deadly Sins: Grand Cross, and the newly released Ni no Kuni: Cross World.

Looking ahead, Netmarble is focused on expanding its global footprint through a robust pipeline of new titles, including MARVEL Future Revolution and various entries in the Seven Knights franchise. Furthermore, the company finalized the acquisition of SpinX Games for KRW 2.5 trillion. This strategic move is intended to bolster Netmarble’s competitiveness in the social casino sector, diversify its game portfolio, and establish a more stable, long-term cash flow profile. These financial and operational updates provide a comprehensive view of the company’s efforts to balance immediate development costs with long-term growth initiatives.