UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of May, 2012

Commission File Number 000-51138

 

 

GRAVITY Co., Ltd.

(Translation of registrant’s name into English)

 

 

Nuritkum Square Business Tower 15F, 1605 Sangam-Dong, Mapo-Gu, Seoul, Korea 121-795

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

 

 

 

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GRAVITY REPORTS FIRST QUARTER OF 2012 RESULTS

Seoul, South Korea – May 16, 2012 – GRAVITY Co., Ltd. (NasdaqGM: GRVY) (“Gravity” or the “Company”), an online game developer and publisher based in South Korea, today announced its unaudited financial results for the first quarter ended March 31, 2012, prepared in accordance with generally accepted accounting principles in the United States.

Revenues for the first quarter ended March 31, 2012 were KRW 16,357 million (US$ 14,421 thousand), representing a 14.4% increase from KRW 14,298 million for the fourth quarter ended December 31, 2011 (“QoQ”) and a 18.4% increase from KRW 13,810 million for the first quarter ended March 31, 2011 (“YoY”).

Review of financial results

Revenues

Royalty and licensing fee revenue for the first quarter ended March 31, 2012 was KRW 8,710 million (US$ 7,679 thousand), representing a 5.4% increase QoQ from KRW 8,265 million and a 0.1% decrease YoY from KRW 8,719 million. The increase in royalty and licensing fee revenues QoQ was primarily due to increased revenues in the Japanese market from Ragnarok Online and revenues from Ragnarok Online Guild Masters, a Web browser-based tactical role playing game based on Ragnarok Online, which was commercially launched in October 2011. The decrease in royalty and licensing fee revenues YoY was mainly attributable to decrease in the revenues from Ragnarok Online in Taiwan, Hong Kong and Macau and decreased revenues from Dragonica.

Subscription revenue for the first quarter 2012 was KRW 4,241 million (US$ 3,739 thousand), representing a 65.0% increase QoQ and a 28.1% increase YoY compared to KRW 2,571 million and KRW 3,310 million, respectively. The increase QoQ and YoY mainly resulted from revenues from Finding Neverland Online, which was commercially launched in Korea in January 2012.

Mobile game revenue was KRW 2,037 million (US$ 1,796 thousand) for the first quarter 2012, representing a 26.4% decrease QoQ from KRW 2,767 million and a 19.8% increase YoY from KRW 1,700 million.

Character merchandising and other revenue was KRW 1,369 million (US$ 1,207 thousand) for the first quarter 2012, representing a 97.0% increase QoQ from KRW 695 million and a 1,590.1% increase YoY from KRW 81 million. The increase QoQ and YoY is mostly driven by revenues from Ragnarok Odyssey, an action game on PS Vita platform, based on Ragnarok Online, which was commercially released in Japan in February 2012.

Cost of Revenues and Operating Expenses

Cost of revenues was KRW 6,827 million (US$ 6,019 thousand) for the first quarter 2012, representing a 10.2% increase QoQ from KRW 6,196 million and a 26.8% increase YoY from KRW 5,383 million. The Company’s increased cost of revenues QoQ and YoY was primarily attributable to increase in commission paid mainly due to royalty payment for Finding Neverland Online as a result of its commercial launch in January 2012 and increase in amortization on intangible assets primarily for Ragnarok Online II resulting from its commercial launch in March 2012.

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Operating expenses were KRW 8,179 million (US$ 7,211 thousand) for the first quarter 2012, representing a 34.7% decrease QoQ from KRW 12,521 million and a 41.5% increase YoY from KRW 5,779 million. The decrease in operating expenses QoQ was primarily due to impairment loss on intangible assets from Dragonica and goodwill of Gravity Games Corporation and bad debt expenses related to loans to a Korean online game developer in the fourth of 2011, both of which did not occur in the first quarter of 2012. The increase in operating expenses YoY was mainly attributable to increase in advertising expenses, mainly due to marketing expenses for open beta testing of Finding Neverland Online and Ragnarok Online II.

Income before income tax expenses and others was KRW 1,656 million (US$ 1,460 thousand) for the first quarter of 2012, which represents a 44.8% decrease YoY from KRW 3,002 million.

As a result of the foregoing factors, Gravity recorded a net income attributable to parent company of KRW 1,128 million (US$ 995 thousand) for the first quarter of 2012 compared to a net income attributable to parent company of KRW 7,382 million for the fourth quarter of 2011 and KRW 2,408 million for the first quarter of 2011.

The balance of cash and cash equivalents and short-term financial instruments was KRW 54,877 million (US$ 48,382 thousand) as of March 31, 2012.

Note: For convenience purposes only, the KRW amounts have been expressed in the U.S. dollars at the exchange rate of KRW 1,134.25 to US$ 1.00, the noon buying rate in effect on May 4, 2012, as quoted by the Federal Reserve Bank of New York.

About GRAVITY Co., Ltd.

Based in Korea, Gravity is a developer and publisher of online games. Gravity’s principal product, Ragnarok Online^™, is a popular online game in many markets, including Japan, Taiwan and Thailand, and is currently commercially offered in 79 markets. For more information about Gravity, please visit http://www.gravity.co.kr.

Forward-Looking Statements:

Certain statements in this press release may include, in addition to historical information, “forward-looking statements” within the meaning of the “safe-harbor” provisions of the U.S. Private Securities Litigation Reform Act 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” “project,” or “continue” or the negative thereof or other similar words, although not all forward-looking statements contain these words. Investors should consider the information contained in our submissions and filings with the United States Securities and Exchange Commission (the “SEC”), including our registration statement on Form F-1, as amended, and our annual reports on Form 20-F, together with such other documents and we may submit to or file with the SEC from time to time, on Form 6-K. The forward-looking statements speak only as of this press release and we assume no duty to update them to reflect new, changing or unanticipated events or circumstances.

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Contact:

Mr. Heung Gon Kim

Chief Financial Officer

Gravity Co., Ltd.

Email: kheung@gravity.co.kr

Ms. Yoon Joo Lee

IR Manager

Gravity Co., Ltd.

Email: yoonjoo.lee@gravity.co.kr

Telephone: +82-2-2132-7800

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GRAVITY Co., Ltd.

Consolidated Balance Sheets

 

 

		As of
		31-Dec-11								31-Mar-12
		KRW				US$				KRW				US$
(In millions of KRW and thousands of US$)		(audited)				(unaudited)				(unaudited)				(unaudited)
Assets
Current assets:
Cash and cash equivalents			42,430				37,408				38,877				34,276
Short-term financial instruments			15,000				13,225				16,000				14,106
Accounts receivable, net			6,436				5,674				7,850				6,921
Other current assets			7,967				7,024				7,714				6,801
Total current assets			71,833				63,331				70,441				62,104
Property and equipment, net			2,731				2,408				4,145				3,654
Leasehold and other deposits			5,924				5,223				5,922				5,221
Intangible assets			42,163				37,173				43,602				38,441
Equity method investments			1,444				1,273				1,330				1,173
Other non-current assets			8,783				7,743				8,770				7,732
Total assets			132,878				117,151				134,210				118,325
Liabilities and Equity
Current liabilities:
Accounts payable			5,552				4,895				7,593				6,694
Deferred revenue			4,663				4,111				4,039				3,561
Other current liabilities			1,847				1,628				1,101				971
Total current liabilities			12,062				10,634				12,733				11,226
Long-term deferred revenue			7,457				6,574				7,726				6,812
Accrued severance benefits			916				808				919				810
Other non-current liabilities			1,784				1,573				1,530				1,349
Total liabilities			22,219				19,589				22,908				20,197
Common shares			3,474				3,063				3,474				3,063
Additional paid-in capital			75,395				66,471				75,395				66,471
Retained earnings			19,923				17,565				21,051				18,559
Accumulated other comprehensive income			3,042				2,683				2,930				2,583
Total parent company shareholders’ equity			101,834				89,782				102,850				90,676
Non-controlling interest			8,825				7,780				8,452				7,452
Total equity			110,659				97,562				111,302				98,128
Total liabilities and equity			132,878				117,151				134,210				118,325

 

*	For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW1,134.25 to US$1.00, the noon buying rate in effect on May 4, 2012 as quoted by the Federal Reserve Bank of New York.

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GRAVITY Co., Ltd.

Consolidated Statements of Operations

 

 

		Three months ended
		31-Dec-11								31-Mar-11								31-Mar-12
(In millions of KRW and thousands of US$ except for share and ADS data)		(KRW) (unaudited)				(US$) (unaudited)				(KRW) (unaudited)				(US$) (unaudited)				(KRW) (unaudited)				(US$) (unaudited)
Revenues:
Online games-subscription revenue			2,571				2,267				3,310				2,918				4,241				3,739
Online games-royalties and license fees			8,265				7,287				8,719				7,687				8,710				7,679
Mobile games			2,767				2,439				1,700				1,499				2,037				1,796
Character merchandising and other revenue			695				613				81				71				1,369				1,207
Total net revenue			14,298				12,606				13,810				12,175				16,357				14,421
Cost of revenue			6,196				5,463				5,383				4,746				6,827				6,019
Gross profit			8,102				7,143				8,427				7,429				9,530				8,402
Operating expenses:
Selling, general and administrative			7,770				6,850				4,749				4,187				6,792				5,988
Research and development			1,824				1,608				1,030				908				1,387				1,223
Impairment losses on intangible assets			2,898				2,555				—				—				—				—
Settlement cost of litigation			29				26				—				—				—				—
Operating income			(4,419	)			(3,896	)			2,648				2,334				1,351				1,191
Other income (expenses):
Interest income			479				422				416				367				476				420
Interest expense			(13	)			(11	)			(17	)			(15	)			(11	)			(10	)
Foreign currency loss, net			(303	)			(267	)			(58	)			(51	)			(160	)			(141	)
Others, net			3				3				13				12				—				—
Income (loss) before income tax expenses (benefit) and equity loss on investments			(4,253	)			(3,749	)			3,002				2,647				1,656				1,460
Income tax expenses (benefit)			(10,108	)			(8,912	)			802				707				818				721
Income before equity loss on investments			5,855				5,163				2,200				1,940				838				739
Equity loss on investments			(112	)			(99	)			(12	)			(11	)			(82	)			(72	)
Net income			5,743				5,064				2,188				1,929				756				667
LESS: Net loss attributable to the non-controlling interest			(1,639	)			(1,445	)			(220	)			(194	)			(372	)			(328	)
Net Income attributable to parent company			7,382				6,509				2,408				2,123				1,128				995
Earnings per share - Basic and diluted			1,062				0.94				347				0.31				162				0.14
Weighted average number of shares outstanding - Basic and diluted			6,948,900				6,948,900				6,948,900				6,948,900				6,948,900				6,948,900
Earnings per ADS - Basic and diluted			265				0.23				87				0.08				41				0.04
Weighted average number of ADSs outstanding - Basic and diluted			27,795,600				27,795,600				27,795,600				27,795,600				27,795,600				27,795,600

 

*	For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW1,134.25 to US$1.00, the noon buying rate in effect on May 4, 2012 as quoted by the Federal Reserve Bank of New York.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 16, 2012