Netmarble 2Q 2023 Earnings Results

Key insights

6 takeaways

01
Netmarble reported a Q2 2023 revenue of KRW 603.3 billion, representing an 8.7% year-over-year decline and an operating loss of KRW 37.2 billion.See it on page 2
02
The company’s EBITDA fell 46.3% quarter-over-quarter to KRW 10.8 billion, resulting in a thin EBITDA margin of 1.8%.See it on page 3
03
Marketing expenditures rose 12.8% quarter-over-quarter to KRW 113.1 billion to support new title launches, while labor costs increased 3.0% due to one-off severance payments.See it on page 8
04
International markets remain critical, accounting for 86% of total revenue, with North America serving as the primary region at 52% of total revenue.See it on page 5
05
Revenue is concentrated in established franchises, with the top ten titles generating 62% of total revenue and the portfolio split between casual games (48%) and RPGs (30%).See it on page 7
06
The company plans to launch seven new global titles and three games for the Chinese market in the second half of 2023 to drive growth.See it on page 9

Summary

Netmarble’s second quarter 2023 earnings results reflect a period of revenue stability coupled with increased operational costs. The company reported quarterly revenue of KRW 603.3 billion, remaining nearly flat compared to the previous quarter but representing an 8.7% decline year-over-year. Profitability metrics faced downward pressure, with an operating loss of KRW 37.2 billion and a net loss of KRW 44.1 billion. EBITDA reached KRW 10.8 billion, marking a 46.3% decrease from the first quarter, resulting in an EBITDA margin of 1.8%.

The financial performance was influenced by a strategic increase in marketing expenditures, which rose 12.8% quarter-over-quarter to KRW 113.1 billion to support the launch of new titles. Additionally, labor costs saw a 3.0% increase due to one-off severance payments associated with organizational adjustments. Conversely, commission costs improved through enhanced operational efficiency, decreasing by 2.8% compared to the previous quarter.

Geographically, the company maintains a strong international presence, with overseas markets accounting for 86% of total revenue. North America remains the primary market, contributing 52% of revenue, bolstered by the performance of MARVEL Contest of Champions. The genre portfolio remains diversified, led by casual games at 48% and RPGs at 30%. The top ten revenue-generating titles account for 62% of total revenue, indicating a reliance on established franchises. Looking ahead to the second half of 2023, the company plans to expand its portfolio with seven new global releases and three titles specifically targeted for the Chinese market, alongside continued participation in industry events like G-STAR 2023.