Netmarble 3Q 2019 Earnings Results

Key insights

7 takeaways

01
Netmarble reported 3Q 2019 revenue of 619.9 billion KRW, an increase of 17.9% year-over-year and 17.8% quarter-over-quarter.See it on page 2
02
Operating profit reached 84.4 billion KRW, reflecting a 154.2% increase from the previous quarter due to optimized marketing spend and new title revenue.See it on page 4
03
International markets generated 68% of total revenue, with North America leading at 28%, followed by Japan at 15%, Europe at 8%, and Southeast Asia at 7%.See it on page 6
04
Revenue is diversified across genres, led by RPGs at 38%, followed by MMORPGs at 27% and casual games at 26%.See it on page 7
05
Marketing expenses decreased 13.5% quarter-over-quarter following a strategic decision to front-load promotional spending into the second quarter.See it on page 8
06
Key revenue drivers for the quarter included Marvel Contest of Champions, Lineage 2 Revolution, and Seven Deadly Sins.See it on page 7
07
Future growth strategy focuses on upcoming releases like A3 and Magic: ManaStrike, alongside new IP reveals at G-STAR 2019 including Seven Knights Revolution and Ni no Kuni.See it on page 10

Summary

Netmarble’s third-quarter 2019 earnings results demonstrate significant financial growth, driven primarily by the successful integration of new game titles and effective cost management. The company reported quarterly revenue of 619.9 billion KRW, representing a 17.9% increase year-over-year and a 17.8% increase quarter-over-quarter. Operating profit reached 84.4 billion KRW, marking a substantial 154.2% improvement from the previous quarter, while net profit rose to 84.7 billion KRW. These gains are attributed to the full recognition of revenue from recent launches and the strategic pre-execution of marketing expenditures during the second quarter, which helped optimize margins.

The company maintains a strong international presence, with overseas revenue accounting for 68% of total earnings. North America remains the largest international market at 28%, followed by Japan at 15%, Europe at 8%, and Southeast Asia at 7%. The revenue portfolio is well-diversified across genres, with RPGs leading at 38%, followed by MMORPGs at 27% and casual games at 26%. Key revenue-generating titles include Marvel Contest of Champions, Lineage 2 Revolution, and Seven Deadly Sins.

Operational costs for the quarter totaled 535.5 billion KRW. While labor costs remained relatively stable at 120.3 billion KRW, marketing expenses decreased by 13.5% quarter-over-quarter due to the aforementioned front-loading of promotional budgets. Looking ahead, the company is focused on expanding its lineup with upcoming releases such as A3 and Magic: ManaStrike. Furthermore, the company plans to showcase new proprietary intellectual properties, including Seven Knights Revolution and Ni no Kuni, at G-STAR 2019 to sustain long-term growth momentum.