Netmarble 3Q 2018 Earnings Results

Key insights

7 takeaways

01
Netmarble reported 3Q 2018 revenue of 526 billion KRW, reflecting a 5.0% increase quarter-over-quarter but a 9.6% decline year-over-year.See it on page 2
02
Operating profit for the quarter reached 67.3 billion KRW, resulting in an operating margin of 12.8%.See it on page 4
03
International markets remain the primary revenue driver, accounting for 73% of total earnings, with North America leading at 32% of the total.See it on page 6
04
Net profit fell to 55.1 billion KRW, primarily due to the absence of foreign exchange gains that benefited the previous quarter.See it on page 5
05
Operating costs totaled 458.7 billion KRW, with marketing expenses rising to 78.6 billion KRW to support new title launches in Japan.See it on page 8
06
The company’s portfolio is anchored by seven major titles, including Lineage 2 Revolution, MARVEL Contest of Champions, and Harry Potter: Hogwarts Mystery.See it on page 7
07
Future growth strategy centers on the upcoming releases of Blade & Soul Revolution and A3: Still Alive, both featured at G-Star 2018.See it on page 9

Summary

Netmarble’s third-quarter 2018 earnings results reflect a period of moderate sequential growth despite year-over-year declines. The company reported revenue of 526 billion KRW, representing a 5.0% increase quarter-over-quarter but a 9.6% decrease year-over-year. Operating profit reached 67.3 billion KRW, yielding an operating margin of 12.8%. Net profit for the period was 55.1 billion KRW, a decline attributed primarily to the absence of significant foreign exchange gains that had bolstered the previous quarter’s performance.

The company maintains a strong international presence, with overseas revenue accounting for 73% of total earnings, a 2 percentage point increase from the previous quarter. Geographically, revenue is well-distributed, led by North America at 32%, followed by Korea at 27%, Japan at 15%, and Southeast Asia and Europe at 11% each. This geographic diversification is supported by a balanced game portfolio across RPG, casual, and MMORPG genres, anchored by seven major titles including Lineage 2 Revolution, MARVEL Contest of Champions, and Harry Potter: Hogwarts Mystery.

Operating costs for the quarter totaled 458.7 billion KRW. Commission fees remained the largest expenditure, while labor costs stabilized at 101.8 billion KRW. Marketing expenditures saw a slight uptick to 78.6 billion KRW, driven by the launch of new titles in the Japanese market. Looking ahead, the company is focused on the upcoming release of Blade & Soul Revolution and the introduction of A3: Still Alive, both of which were slated for promotion at the G-Star 2018 exhibition. These financial results are based on consolidated K-IFRS standards and remain subject to final audit adjustments.