NCSOFT (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.

• Net income was also reported as KRW57.1 billion, up 8% sequentially and 117% year-over-year.

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

Financial highlights

• 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.

• 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.

Segment performance

• Mobile games generated KRW218.2 billion in sales (59% of total), down 13% sequentially.

• Legacy PC online games contributed KRW86.2 billion (23% of total), down 6% sequentially.

• Korea sales were KRW240.3 billion, down 7% sequentially; overseas and royalty sales also fell 7% to KRW128.5 billion.

• Lineage M update led to 1.5x more active users, 2.5x higher daily sales, and 2.5x more paying users month-over-month.

• Other mobile and PC games saw sales declines, but Lineage and Blade & Soul (China) showed positive trends.