NC (036570) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales were KRW368.9 billion, down 7% quarter-on-quarter and 16% year-on-year, with operating profit at KRW8.8 billion, a 66% drop quarter-on-quarter and 75% year-on-year.

• Net income rose to KRW71.1 billion, up 24% quarter-on-quarter and 133% year-on-year, driven by foreign currency gains.

• Four key initiatives for growth: sustained sales growth, cost efficiency, resource distribution, and share price management, with progress reported on all fronts.

• Operates as a leading digital entertainment company focused on online and mobile game development and publishing, with a global presence and diversified portfolio of IPs and platforms.

• 2024 H1 consolidated revenue was ₩766.8 billion, with about 35% from overseas markets.

Financial highlights

• Mobile game sales were KRW282.2 billion, down 13% quarter-on-quarter; PC online games sales were KRW86.2 billion, down 6% quarter-on-quarter.

• Royalty sales increased 15% quarter-on-quarter to KRW37.7 billion, aided by Blade & Soul in China.

• Operating costs were KRW360 billion, down 3% quarter-on-quarter and 11% year-on-year; labor costs fell 7% quarter-on-quarter and 10% year-on-year.

• Marketing costs surged 152% quarter-on-quarter to KRW172.4 billion due to major updates and new releases.

• H1 2024 operating income: ₩34.6 billion; net income attributable to controlling interest: ₩128.2 billion.

Outlook and guidance

• Large-scale updates for Lineage2M and global launches for Throne and Liberty, Blade & Soul 2 (China), and Lineage2M (Southeast Asia) are planned for 2024.

• Three new legacy IP-based games in development, with one global launch in Q4 2024 and others in 2025; blockbuster titles Project G (TACTAN), AION 2, and LLL targeted for 2025.

• PURPLE platform to onboard four AAA games, with global releases scheduled within the year.

• Ongoing investment in R&D and AI to drive future growth and operational efficiency.

• Maintains a shareholder return policy targeting a payout ratio of at least 30% of consolidated net income.