Netmarble 3Q 2020 Earnings Results

Key insights

7 takeaways

01
Netmarble generated KRW 642.3 billion in revenue for 3Q 2020, a 3.6% year-over-year increase, with an operating profit of KRW 87.4 billion.See it on page 4
02
International markets accounted for 75% of total revenue, with North America serving as the primary contributor at 38%, followed by Korea (25%) and Europe (12%).See it on page 6
03
Operating profit margins improved by 1.7 percentage points quarter-over-quarter, primarily due to the normalization of marketing expenditures in North America and Europe.See it on page 4
04
The company’s revenue is driven by a diversified portfolio led by 'The Seven Deadly Sins: Grand Cross' (17%) and 'MARVEL Contest of Champions' (15%).See it on page 7
05
Portfolio distribution remains balanced across RPG (40%), casual (25%), and MMORPG (23%) genres.See it on page 7
06
Labor costs rose 5% quarter-over-quarter due to increased headcount and one-off incentives for overseas studios.See it on page 8
07
The upcoming release pipeline through 1H 2021 includes major titles such as 'Seven Knights 2', 'MARVEL Realm of Champions', and 'Ni no Kuni'.See it on page 9

Summary

Netmarble’s third-quarter 2020 earnings report highlights a period of stable financial performance characterized by normalized marketing expenditures and a strong reliance on international markets. The company reported revenue of KRW 642.3 billion, representing a 3.6% year-over-year increase, alongside an operating profit of KRW 87.4 billion. The operating profit margin improved by 1.7 percentage points quarter-over-quarter, largely driven by the normalization of marketing costs in North America and Europe following higher spending levels in the second quarter.

The company maintains a significant global footprint, with overseas revenue accounting for 75% of total earnings. North America remains the largest regional contributor at 38%, followed by Korea at 25% and Europe at 12%. This revenue is supported by a diversified portfolio across RPG (40%), casual (25%), and MMORPG (23%) genres. Key revenue drivers include The Seven Deadly Sins: Grand Cross, which accounted for 17% of revenue, and MARVEL Contest of Champions at 15%.

Operational costs for the quarter totaled KRW 554.9 billion. While commission expenses declined in line with revenue fluctuations, labor costs saw a slight increase of 5% quarter-over-quarter, attributed to headcount growth and one-off incentives provided to overseas studios. Looking ahead, the company outlined a robust pipeline for the remainder of 2020 and the first half of 2021, featuring major titles such as Seven Knights 2, MARVEL Realm of Champions, and Ni no Kuni. These results reflect a strategic focus on global market penetration and a balanced genre distribution to sustain long-term growth.