Netmarble 2Q 2022 Earnings Results

Key insights

6 takeaways

01
Netmarble reported a Q2 2022 revenue of KRW 660.6 billion, a 14.4% year-over-year increase, but suffered an operating loss of KRW 34.7 billion and a net loss of KRW 120.5 billion.See it on page 5
02
The company's profitability was negatively impacted by an 8.1% quarter-over-quarter rise in operating expenses, driven by a 28% surge in marketing costs and increased labor and commission fees.See it on page 9
03
International markets remain the primary revenue driver, accounting for 85% of total revenue, with North America alone contributing 49%.See it on page 6
04
The revenue portfolio is heavily weighted toward casual games at 47%, followed by MMORPGs and RPGs at 22% each, supported by key titles like Ni no Kuni: Cross Worlds and the SpinX portfolio.See it on page 7
05
Net losses were further exacerbated by non-operating losses resulting from unfavorable foreign exchange rate fluctuations.See it on page 5
06
For the second half of 2022, Netmarble plans to launch five new titles across PC and mobile, including Let's Get Rich: Meta World, Monster Arena Ultimate Battle, King of Fighters ARENA, Overprime, and Charlotte's Table.See it on page 10

Summary

Netmarble’s second-quarter 2022 earnings results reflect a period of revenue growth tempered by significant profitability challenges. The company reported revenue of KRW 660.6 billion, representing a 14.4% increase year-over-year and a 4.6% increase quarter-over-quarter, largely driven by the launch of new titles such as Ni no Kuni: Cross Worlds. However, this top-line growth was offset by rising operating costs, particularly in marketing, which surged 28% quarter-over-quarter to support new releases. Consequently, the company recorded an operating loss of KRW 34.7 billion and a net loss of KRW 120.5 billion, the latter exacerbated by non-operating losses linked to unfavorable foreign exchange rate fluctuations.

The company maintains a strong international presence, with overseas markets accounting for 85% of total revenue. North America remains the largest regional contributor at 49%, followed by Korea at 15%, Europe at 12%, and Southeast Asia at 11%. The revenue portfolio is diversified across genres, with casual games comprising 47% of the total, followed by MMORPGs and RPGs at 22% each. Key revenue-generating titles include Ni no Kuni: Cross Worlds, MARVEL Contest of Champions, and various titles from the SpinX portfolio, such as Cash Frenzy and Jackpot World.

Operating expenses reached KRW 695.3 billion, an 8.1% increase from the previous quarter. This rise was primarily attributed to higher commission fees, increased labor costs associated with developer recruitment, and the aforementioned expansion in marketing expenditures. Looking ahead to the second half of 2022, the company plans to bolster its portfolio with five new titles, including Let's Get Rich: Meta World, Monster Arena Ultimate Battle, King of Fighters ARENA, Overprime, and Charlotte's Table, focusing on a mix of casual, fighting, and MOBA genres across PC and mobile platforms.