NCSOFT (036570) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales reached ₩401.9 billion, up 9% quarter-over-quarter but down 5% year-over-year, with an operating loss of ₩14.3 billion and a net loss of ₩26.5 billion, reversing from prior profits.

• The company is undergoing significant restructuring, including project shutdowns, voluntary resignations, and a shift to a studio-based development system to address high fixed costs and improve operational efficiency.

• Management is focused on revitalizing sales through new title launches, leveraging existing IPs, and cost optimization initiatives.

Financial highlights

• Operating costs rose to ₩416.2 billion, up 16% quarter-over-quarter and 2% year-over-year; labor costs increased 7% quarter-over-quarter to ₩201.1 billion.

• Marketing costs surged 180% quarter-over-quarter and 76% year-over-year to ₩48.7 billion, mainly for new releases and live service games.

• Pre-tax loss of ₩32 billion, impacted by foreign currency losses due to a weak dollar.

• Cash and cash equivalents at ₩949.4 billion as of Q3 2024.

Segment performance

• Mobile game sales rose 16% quarter-over-quarter to ₩253.4 billion, 63% of total sales, driven by a 49% increase in Lineage M sales.

• Online PC game sales were ₩80.7 billion, down 6% quarter-over-quarter, affected by event update cycles.

• Royalty sales grew 1% quarter-over-quarter to ₩38.1 billion, with TL's early access packs exceeding projections but offset by a decline in Blade & Soul China royalties.

• Korea sales grew 19% quarter-over-quarter to ₩286.2 billion, while overseas and royalty sales declined 10% to ₩115.7 billion.

• Blade & Soul NEO achieved its best performance in six years.