Netmarble 3Q 2023 Earnings Results

Key insights

7 takeaways

01
Netmarble reported a Q3 2023 revenue of KRW 630.6 billion, a 4.5% increase quarter-over-quarter, though still reflecting a 9.2% year-over-year decline.See it on page 1
02
The company remains unprofitable, recording an operating loss of KRW 21.9 billion and a net loss of KRW 28.4 billion for the quarter.See it on page 4
03
EBITDA improved significantly by 126.9% quarter-over-quarter to reach KRW 24.5 billion, resulting in an EBITDA margin of 3.9%.See it on page 3
04
Revenue growth was driven by the launches of 'Seven Knights Idle Adventure' and 'Tower of God: New World,' which helped increase the RPG segment's revenue share to 35%.See it on page 6
05
International markets remain critical to the company's performance, accounting for 83% of total revenue, with North America alone contributing 47%.See it on page 5
06
Cost management efforts included a 6.5% reduction in labor costs, though this was offset by a 28.9% increase in marketing expenditures to support new title launches.See it on page 8
07
The company plans to maintain momentum in 2024 by releasing six new titles in the first half of the year and expanding existing games into the Chinese market.See it on page 9

Summary

Netmarble’s third-quarter 2023 earnings results reflect a period of operational recovery driven by new game launches, despite continued bottom-line losses. The company reported quarterly revenue of KRW 630.6 billion, representing a 4.5% increase from the previous quarter, though a 9.2% decline year-over-year. EBITDA reached KRW 24.5 billion, a significant 126.9% improvement quarter-over-quarter, yielding an EBITDA margin of 3.9%. Despite these gains, the company recorded an operating loss of KRW 21.9 billion and a net loss of KRW 28.4 billion.

The revenue growth was primarily attributed to the successful release of new titles, specifically Seven Knights Idle Adventure and Tower of God: New World. These launches contributed to a shift in the company’s genre portfolio, with the RPG segment increasing its revenue share by 5 percentage points to 35%. Geographically, the company maintains a strong international presence, with overseas markets accounting for 83% of total revenue. North America remains the largest regional contributor at 47%, followed by Korea at 17% and Europe at 12%.

Cost management efforts were mixed during the quarter. While labor costs decreased by 6.5% due to a reduction in workforce and commission expenses fell by 0.5% as a result of higher sales from in-house intellectual property, marketing expenditures rose by 28.9% to support the new product launches. Looking ahead, the company plans to sustain this momentum through a robust 2024 pipeline, including the release of six new titles in the first half of the year and the expansion of existing games into the Chinese market.