Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Q2 revenue was KRW782.1 billion, up 33.6% quarter over quarter and up 29.6% year over year.
- EBITDA was KRW151.1 billion, up 253.9% quarter over quarter and up 1,299.1% year over year.
- Net income significantly improved to KRW162.3 billion, driven by liquidation of holding assets.
- Three new game launches in Q2 contributed significantly to the quarterly revenue.
- Cost restructuring efforts have led to a reduction in royalty expenses and personnel costs.
Negative Points
- Operating expenses increased by 15.3% quarter over quarter and 4.7% year over year.
- Royalty costs remain a significant portion of operating expenses, despite reductions.
- Personnel expenses saw a slight increase quarter over quarter due to base salary increases.
- Marketing expenses increased due to new game launches in Q2.
- The company still faces high interest expenses despite selling HYBE shares.
Q & A Highlights
Netmarble Corp (XKRX:251270, Financial) Q2 2024 Earnings Call Highlights
Q: Netmarble has achieved significant results with Solo Leveling:ARISE. What are the future plans for using IPs from other sources, and will you be using anime-based IPs? Also, what is the timeline for updates and new launches in the second half of the year?
A: (Yeong Sik Gwon, Co-CEO) Netmarble's IP strategy includes utilizing both self-owned and external IPs when necessary. For Solo Leveling:ARISE, major story updates are planned for September and December, with a Guild system update in August and other content updates in October and November. Additionally, five or six new projects are expected in 2025.
Q: Among the four new titles launching in the second half, which one is expected to generate the largest revenue, and what is the marketing budget for it?
A: (Yeong Sik Gwon, Co-CEO) It's challenging to predict which game will generate the most revenue due to industry trends. However, titles launching earlier are expected to contribute the most. The marketing budget is planned at 20% of revenue.
Q: Netmarble is still spending significantly on interest despite selling HYBE shares. What are the plans for repaying borrowings?
A: (Gi Wuk Doh, CFO) Repayment of short-term borrowings is a primary strategy for Netmarble. The company aims to be flexible and responsive to market conditions when scheduling repayments.
Q: When will The Seven Deadly Sins: Origin be launched, and what are the marketing plans for this project?
A: (Yeong Sik Gwon, Co-CEO) The Seven Deadly Sins: Origin is planned for launch in Q2 2025. Netmarble will handle PC and mobile marketing, while PlayStation marketing will be done in collaboration with Sony.
Q: Can you provide more details on the cost structure improvements and how they have impacted financial performance?
A: (Gi Wuk Doh, CFO) Netmarble has reduced royalty expenses to 35.9% of revenue due to the expansion of PC platforms. Personnel expenses have decreased due to workforce streamlining, and marketing costs have been reduced to 17.9% of total revenues through geo-targeted marketing and improved marketing competence.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
