GRAVITY Co., Ltd.

Foreign Filer Report • Nov 12, 2021

6-K 1 grvy-6k_20211112.htm 6-K HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd" grvy-6k_20211112.htm NG Converter v5.0.2.50

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 November 2021

Commission File Number 000-51138

GRAVITY CO., LTD.

(Translation of registrant’s name into English)

15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea

(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 ☑ 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): ☐

GRAVITY REPORTS THIRD QUARTER OF 2021 RESULTS AND BUSINESS UPDATES

Seoul, South Korea – November 12, 2021 – GRAVITY Co., Ltd. (Nasdaq GM: GRVY) (“Gravity” or “Company”), a developer and publisher of online and mobile games based in South Korea, today announced its unaudited financial results for the third quarter ended September 30, 2021, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and business updates.

SECOND QUARTER 2021 HIGHLIGHTS

• Total revenues were KRW 128,670 million (US$ 108,702 thousand), representing a 53.9% increase from the second quarter ended June 30, 2021 (“QoQ”) and a 2.4% decrease from the third quarter ended September 30, 2020 (“YoY”).

• Operating profit was KRW 40,242 million (US$ 33,997 thousand), representing a 110.1% increase QoQ and a 17.1% increase YoY.

• Profit before income tax expenses was KRW 41,435 million (US$ 35,005 thousand), representing a 113.7% increase QoQ and a 23.0% increase YoY.

• Net profit attributable to parent company was KRW 26,351 million (US$ 22,262 thousand), representing a 78.5% increase QoQ and a 4.2% increase YoY.

REVIEW OF THIRD QUARTER 2021 FINANCIAL RESULTS

Revenues

Online game revenues for the third quarter of 2021 were KRW 18,295 million (US$ 15,456 thousand), representing a 18.3% decrease QoQ from KRW 22,380 million and a 42.5% decrease YoY from KRW 31,833 million. The decrease QoQ was mainly attributable to decreased revenues from Ragnarok Online in Thailand and Japan. Such decrease was partially offset by increased revenues from Ragnarok Online in Taiwan. The decrease YoY was largely due to decreased revenues from Ragnarok Online in Thailand.

Mobile game revenues were KRW 106,218 million (US$ 89,734 thousand) for the third quarter of 2021, representing a 92.6% increase QoQ from KRW 55,140 million and a 11.2% increase YoY from KRW 95,531 million. The increase QoQ resulted primarily from increased revenues from Ragnarok X: Next Generation in Southeast Asia that was launched on June 18, 2021 and Ragnarok Origin in Japan that was launched on June 28, 2021. Such increase was partially offset by decreased revenues from Ragnarok Origin in Korea, Ragnarok X: Next Generation in Taiwan, Hong Kong and Macau and Ragnarok M: Eternal Love in Southeast Asia. The increase YoY was primarily due to revenues from Ragnarok X: Next Generation in Southeast Asia, Taiwan, Hong Kong and Macau, and Ragnarok Origin in Japan. This increase was partially offset by decreased revenues from Ragnarok Origin in Korea and Ragnarok M: Eternal Love.

Other revenues were KRW 4,157 million (US$ 3,512 thousand) for the third quarter of 2021, representing a 31.8% decrease QoQ from KRW 6,091 million and a 6.2% decrease YoY from KRW 4,431 million.

Cost of Revenue

Cost of revenue was KRW 66,146 million (US$ 55,881 thousand) for the third quarter of 2021, representing a 44.3% increase QoQ from KRW 45,842 million and a 10.7% decrease YoY from KRW 74,107 million. The increase QoQ was mainly due to increased commission paid for mobile game services related to Ragnarok X: Next Generation in Southeast Asia and Ragnarok Origin in Japan. The decrease YoY was mostly from decreased commission paid for mobile game services related to Ragnarok M: Eternal Love and Ragnarok Origin in Korea .

Operating Expenses

Operating expenses were KRW 22,282 million (US$ 18,824 thousand) for the third quarter of 2021, representing a 19.7% increase QoQ from KRW 18,612 million and a 4.5% decrease YoY from KRW 23,332 million. The increase QoQ was mainly attributable to increased advertising expenses for Ragnarok: The Lost Memories in Thailand and Ragnarok Origin in Korea, United States and Canada, and salaries. The decrease YoY was mostly resulted from decreased advertising expenses for Ragnarok Origin in Korea, commission paid for payment gate way fees related to Ragnarok Online in Thailand, and research and development expenses.

Profit before income tax expenses

Profit before income tax expenses was KRW 41,435 million (US$ 35,005 thousand) for the third quarter of 2021 compared with profit before income tax expense of KRW 19,387 million for the second quarter of 2021 and profit before income tax expenses of KRW 33,675 million for the third quarter of 2020.

Net Profit

As a result of the foregoing factors, Gravity recorded a net profit attributable to parent company of KRW 26,351 million (US$ 22,262 thousand) for the third quarter of 2021 compared with net profit attributable to parent company of KRW 14,766 million for the second quarter of 2021 and a net profit attributable to parent company of KRW 25,281 million for the third quarter of 2020.

Liquidity

The balance of cash and cash equivalents and short-term financial instruments was KRW 226,173 million (US$ 191,073 thousand) as of September 30, 2021.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,183.70 to US$ 1.00, the noon buying rate in effect on September 30, 2021 as quoted by the Federal Reserve Bank of New York.

GRAVITY BUSINESS UPDATE

Ragnarok Online

Gravity Game Tech, a subsidiary in Thailand, opened Ragnarok Classic , the new server of Ragnarok Online, in Thailand on October 28, 2021 and Gravity Game Link, a subsidiary in Indonesia, is also preparing to launch the new server, Ragnarok Retro, in Indonesia on December 15, 2021. Ragnarok Online is expected to be relaunched in the Philippines, Singapore and Malaysia in the first half of 2022, and Gravity Game Hub, a subsidiary in Singapore, will publish this game.

Ragnarok Online IP-based Games

• Ragnarok X: Next Generation, a MMORPG mobile game

Ragnarok X: Next Generation was launched in Vietnam on September 1, 2021.

• Ragnarok Origin , a MMORPG mobile game

Ragnarok Origin was launched in the United States and Canada on November 10, 2021 and ranked as the second in free download of Google Play in the United States on the launching day. The game is scheduled to be launched in Taiwan, Hong Kong and Macau in the first half of 2022, and in Southeast Asia in the second half of 2022.

• Other Ragnarok Online IP-based games

Ragnarok: The Lost Memories, a Cinematic Newtro Story RPG mobile game, was launched in Thailand in August 26, 2021. The game is scheduled to be launched in the Philippines, Singapore and Malaysia on December, 2021 and in North America in the first half of 2022. Gravity NeoCyon, Inc., our subsidiary in Korea, has developed the game.

Ragnarok V: Returns, a MMORPG mobile game, is expected to hold the closed beta test (“CBT”) in Oceania in December 2021 and is scheduled to be launched in the first quarter of 2022. The game has been developed by Gravity NeoCyon, Inc., our subsidiary in Korea.

Ragnarok Begins , a MMORPG PC game , has completed the CBT on September 7, 2021 with users’ positive feedbacks. The company is preparing to design the game as a cross-platform game across PC and mobile, and the game has been developed by Gravity.

Project T (Tentative title), a Card SRPG mobile game, is expected to be launched in Taiwan, Hong Kong and Macau in the first quarter of 2022.

Other IP games

NBA RISE TO STARDOM , a Sports mobile game, has started the open beta test (“OBT”) and pre-registration on September 28, 2021. The game is expected to be launched in Japan in November, 2021 and in Korea in the first half of 2022.

SADAKO M, a Mystery Solving Horror Escape Adventure mobile game, was launched in Japan on October 26, 2021.

Grandia HD Collection , a RPG console game, was released in Korea, Taiwan and Hong Kong on October 1, 2021. The game consists of a bundle of RPG classics Grandia and Grandia II and supports Korean and Chinese languages. Nintendo Switch is available for the game.

Investor Presentation

Gravity issued an investor presentation. The presentation contains the Company’s recent business updates, results of the third quarter in 2021 and Gravity’s business plan. The presentation can be found on the Company’s website under the IR Archives section at http://www.gravity.co.kr/en/ir/pds/list.asp. Korean and Japanese versions of the presentation are also provided on the website.

About GRAVITY Co., Ltd. ---------------------------------------------------

Based in Korea, Gravity is a developer and publisher of online and mobile games. Gravity’s principal product, Ragnarok Online, is a popular online game in many markets, including Japan and Taiwan, and is currently commercially offered in 91 markets and countries. 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 annual report for the fiscal year ended December 31, 2020 on Form 20-F, together with such other documents that 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.

Contact:

Mr. Heung Gon Kim Chief Financial Officer Gravity Co., Ltd. Email: kheung@gravity.co.kr

Ms. Jin Lee

Ms. Hyeji An IR Unit Gravity Co., Ltd. Email: ir@gravity.co.kr Telephone: +82-2-2132-7800

#

GRAVITY Co., Ltd.

Consolidated Statements of Financial Position

(In millions of KRW and thousands of US$)

31-Dec-20				30-Sep-21
KRW		US$		KRW	US$
(audited)		(unaudited)		(unaudited)	(unaudited)
Assets
Current assets:
Cash and cash equivalents	110,632		93,463		118,173	99,834
Short-term financial instruments	71,000		59,981		108,000	91,239
Accounts receivable, net	59,761		50,487		82,071	69,334
Other receivables, net	8		7		11	9
Prepaid expenses	2,238		1,891		2,061	1,741
Other current assets	2,946		2,489		3,958	3,344
Total current assets	246,585		208,318		314,274	265,501
Property and equipment, net	7,695		6,501		10,307	8,707
Intangible assets	3,363		2,841		3,400	2,872
Deferred tax assets	3,590		3,033		787	665
Other non-current financial assets	1,324		1,119		2,388	2,017
Other non-current assets	2,815		2,377		1,578	1,335
Total assets	265,372		224,189		332,734	281,097
Liabilities and Equity
Current liabilities:
Accounts payable	52,688		44,511		56,702	47,902
Deferred revenue	13,692		11,567		11,076	9,357
Withholdings	2,851		2,409		5,162	4,361
Accrued expense	1,365		1,153		1,354	1,144
Income tax payable	9,470		8,000		3,684	3,112
Other current liabilities	2,654		2,242		2,945	2,488
Total current liabilities	82,720		69,882		80,923	68,364
Long-term deferred revenue	101		85		98	83
Other non-current liabilities	5,203		4,397		6,279	5,305
Total liabilities	88,024		74,364		87,300	73,752
Share capital	3,474		2,935		3,474	2,935
Capital surplus	27,110		22,903		27,099	22,894
Other components of equity	(1,045	)	(883	)	2,037	1,721
Retained earnings	147,371		124,500		212,053	179,144
Equity attributable to owners of the Parent Company	176,910		149,455		244,663	206,694
Non-controlling interest	438		370		771	651
Total equity	177,348		149,825		245,434	207,345
Total liabilities and equity	265,372		224,189		332,734	281,097

• For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,183.70 to US$ 1.00, the noon buying rate in effect on September 30, 2021 as quoted by the Federal Reserve Bank of New York.

GRAVITY Co., Ltd.

Consolidated Statements of Comprehensive Income

(In millions of KRW and thousands of US$ except for share and ADS data)

30-Jun-21		30-Sep-20		30-Sep-21				30-Sep-20		30-Sep-21
(KRW)		(KRW)		(KRW)		(US$)		(KRW)		(KRW)		(US$)
(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues:
Online games	22,380		31,833		18,295		15,456		74,176		60,133		50,801
Mobile games	55,140		95,531		106,218		89,734		205,762		243,796		205,961
Other revenue	6,091		4,431		4,157		3,512		13,575		13,411		11,330
Total net revenue	83,611		131,795		128,670		108,702		293,513		317,340		268,092
Cost of revenue	45,842		74,107		66,146		55,881		174,079		169,541		143,230
Gross profit	37,769		57,688		62,524		52,821		119,434		147,799		124,862
Operating expenses:
Selling, general and administrative expenses	14,014		18,042		18,091		15,283		46,692		47,613		40,223
Research and development	4,147		4,550		4,143		3,500		10,676		12,299		10,390
Others, net	451		740		48		41		1,041		535		454
Total operating expenses	18,612		23,332		22,282		18,824		58,409		60,447		51,067
Operating profit	19,157		34,356		40,242		33,997		61,025		87,352		73,795
Finance income(costs):
Finance income	597		822		2,128		1,798		3,000		4,325		3,654
Finance costs	(367	)	(1,503	)	(935	)	(790	)	(2,765	)	(2,235	)	(1,888	)
Profit before income tax	19,387		33,675		41,435		35,005		61,260		89,442		75,561
Income tax expenses	4,569		8,390		15,151		12,800		13,687		24,779		20,933
Profit for the year	14,818		25,285		26,284		22,205		47,573		64,663		54,628
Profit attributable to:
Non-controlling interest	52		4		(67	)	(57	)	(66	)	(19	)	(16	)
Owners of Parent company	14,766		25,281		26,351		22,262		47,639		64,682		54,644
Earnings per share
- Basic and diluted	2,125		3,638		3,792		3.20		6,856		9,308		7.86
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		6,948,900
Earnings per ADS(1)
- Basic and diluted	2,125		3,638		3,792		3.20		6,856		9,308		7.86

• For convenience, the KRW amounts are expressed in U.S. dollars at the rate of KRW 1,183.70 to US$1.00, the noon buying rate in effect on September 30, 2021 as quoted by the Federal Reserve Bank of New York.

(1) Each ADS represents one common shares.

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.

GRAVITY CO., LTD.
By:	/s/ Heung Gon Kim
Name:	Heung Gon Kim
Title:	Chief Financial Officer

Date: November 12, 2021