Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PearlAbyss Corp (XKRX:263750, Financial) reported a 1.2% QoQ increase in Q1 operating revenue, reaching KRW85.4 billion.
- The company turned a profit with KRW600 million in operating profit and KRW12.8 billion in net profit.
- Black Desert IP saw an 11% QoQ increase in operating revenue, posting KRW66.8 billion.
- The company is preparing to enter new markets with the blockchain-based Project Awakening.
- PearlAbyss Corp (XKRX:263750) plans to hold large-scale user events to commemorate Black Desert's 10th anniversary, enhancing global user engagement.
Negative Points
- EVE IP operating revenue decreased by 9.5% QoQ, posting KRW18 billion.
- Labor costs increased by 13.2% QoQ due to an increase in the number of employees and salary hikes.
- Advertising expenses decreased by 30.3% QoQ, which may impact future marketing reach.
- The company is still awaiting the issuance of a license for Black Desert's China service, causing potential delays in market entry.
- Despite stable performance, there were no large-scale updates for EVE Online in Q1, which could affect user engagement.
Q & A Highlights
Q: Do you have any plans to release additional in-game footage for Crimson Desert and DokeV? Also, what are your expectations for the Black Desert PC China service timeline and financial results?
A: (Jin Yeong Huh, CEO) We are working hard to optimize and perfect Crimson Desert, with plans to showcase demos at Gamescom and other global events. We will release more detailed timelines and footage as part of our marketing strategy. For DokeV, we are focusing on Crimson Desert first but will consider releasing footage later. Regarding Black Desert China, we have submitted all relevant documents and are preparing for a quick service launch upon license approval, expecting positive results based on our mobile service experience.
Q: What is your marketing budget for Crimson Desert, and do you have plans for exclusive contracts with Sony or Xbox? Also, can you elaborate on the recent headcount increase?
A: (Jin Yeong Huh, CEO) The marketing budget for Crimson Desert is included in our business plan, and we expect efficient marketing due to our existing fan base and partnerships. We are considering various collaboration opportunities but have no confirmed exclusive contracts yet. The headcount increase is managed efficiently, with staff utilized for development and other roles as needed. Our development processes are highly automated and efficient, allowing us to handle multiple titles simultaneously.
Q: Can you provide more details on the financial performance of Black Desert and EVE IPs for Q1?
A: (Seok Woo Cho, CFO) Black Desert IP posted KRW66.8 billion in operating revenue, an 11% QoQ increase, while EVE IP posted KRW18 billion, a 9.5% QoQ decrease. Overall Q1 operating revenue was KRW85.4 billion, with operating profit and net profit at KRW600 million and KRW12.8 billion, respectively.
Q: What are your plans for Black Desert's 10th anniversary and other major updates?
A: (Seok Woo Cho, CFO) We plan to hold large-scale user events, including a ball in France, and release an upgraded version of War of the Roses based on user feedback. We will also disclose Land of Morning Light Part 2: Seoul and continue improving content for console and mobile platforms.
Q: What are your expectations for EVE Online and its upcoming expansions?
A: (Seok Woo Cho, CFO) EVE Online will launch the fourth expansion pack, EQUINOX, in June, and continue monthly tests for EVE Vanguard. We aim to improve game quality and user experience based on feedback, strengthening the EVE ecosystem.
Q: Can you provide more details on the development and marketing plans for Crimson Desert and other new titles?
A: (Seok Woo Cho, CFO) Crimson Desert is in its final development stages, with plans for full-fledged marketing, including participation in Gamescom. We are also preparing for large-scale tests for Project Awakening and expanding the soft launch of EVE Galaxy Conquest. Development for DokeV is accelerating, and we aim to communicate progress consecutively.
Q: How are you managing operating expenses, and what are the key factors affecting them?
A: (Seok Woo Cho, CFO) Q1 operating expenses were KRW84.9 billion, a 5.6% QoQ decrease. Labor costs increased by 13.2% QoQ due to headcount and salary increases. Commissions dropped by 2% QoQ, and advertising expenses decreased by 30.3% QoQ due to efficient marketing.
Q: What are your plans for entering new markets with Project Awakening and other blockchain-based projects?
A: (Seok Woo Cho, CFO) We officially disclosed Project Awakening at GDC 2024 and are preparing to enter new markets. We plan to have regular tests and polish the game until launch, aiming to secure new growth engines.
Q: How do you plan to maintain user engagement and satisfaction for Black Desert and EVE Online?
A: (Seok Woo Cho, CFO) We focus on consistent content updates and user feedback. For Black Desert, we are improving system convenience and adding new classes. For EVE Online, we maintain user expectations with development roadmaps and continuous play tests.
Q: What are your long-term growth strategies for Pearl Abyss?
A: (Seok Woo Cho, CFO) We aim to grow new titles like Crimson Desert and maintain strong IP management for Black Desert and EVE. We are confident in our ability to adapt to market changes and regulations, ensuring sustainable growth through consistent IP management and development capabilities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
