NC (036570) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was KRW 360.3 billion, down 12% quarter-over-quarter and 9% year-over-year, with 37% from overseas markets including royalties.

• Operating profit turned positive sequentially to KRW 5.2 billion as severance costs normalized, but fell sharply year-over-year.

• Net income attributable to owners was KRW 37.8 billion, up from a loss last quarter but down from KRW 57.2 billion in Q1 2024.

• Cost reduction initiatives, including a 15% workforce reduction and spinoffs, have been implemented.

• The company completed a physical spin-off of several business units, creating new subsidiaries as of February 2025.

Financial highlights

• Mobile game sales in Q1 were KRW 206.3 billion, down 4% quarter-over-quarter; Lineage W sales rose 8%, while Lineage M and 2M fell 7% and 8% respectively.

• PC online game sales dropped 11% quarter-over-quarter to KRW 83.3 billion; royalty sales fell 39% sequentially but increased 38% year-over-year to KRW 45 billion.

• Operating expenses decreased 34% quarter-over-quarter to KRW 355.1 billion, with labor costs down 40% and marketing expenses down 76%.

• Cash and cash equivalents at quarter-end were KRW 464.2 billion, down from KRW 1,260.5 billion at the end of 2024.

• Basic EPS for Q1 2025 was KRW 1,947, compared to KRW 2,816 in Q1 2024.

Outlook and guidance

• FY 2026 sales are projected at KRW 2.0–2.5 trillion, driven by legacy IP expansion and new titles.

• Legacy IPs are expected to generate KRW 1.4–1.5 trillion annually, with new IPs targeted to contribute KRW 600 billion to KRW 1 trillion.

• Four new IPs and a spinoff game are planned for release from H2 2024 to early 2025, with additional unannounced titles to follow.

• Major new titles including 'AION 2', 'LLL', and other IP-based games are scheduled for global release in 2025.

• M&A activities are ongoing to drive further growth, with results expected soon.