KRAFTON FY2023 Earnings Release

Feb, 2024 4Q23 & FY2023 Earnings Results
FEBRUARY 8, 2024

Financial statements included in this document are consolidated results of KRAFTON, Inc. (the “Company”) and its subsidiariesand have been prepared in
accordance with K -IFRS.
Financial results and operational performance included herein have been prepared for investors’ convenience only and have not been audited by an
independent auditor; as such, certain part (s) of this presentation are subject to change, upon completion of the audit revie w.
Company makes no representations as to the accuracy or completeness of the information herein, nor does the Company assume any d uty to update any
information, given that this presentation has been prepared based on currently available data.
Company shall not have any liability for any loss arising from any use of this presentation or its contents or otherwise arising in connection with this
presentation, as this should not be construed to be related to any investment decision making and shall not be used for any l egal proceedings.
Disclaimer

KRAFTON in 2024
CEO CH Kim

4
Looking Back on 2023
Key Performance of PUBG in 2023 2023 Message Recap: PUBG IP
• Strengthened F2P transition momentum
– Overall enhancements of In & Out-game content
– Solid growth in traffic and revenue
• Continued global long-term service,
sustaining growth to become a ‘beloved game’
– Fresh experience to returned and new generations
– Focus on enhanced Anti -Cheat capabilities to increase
user trust and satisfaction
Confidence in Long-term Growth and Sustainability of PUBG IP
• Solid growth of PUBG PC/Console
– Revenue growth for three consecutive years, 37% increase YoY
– Highest PCU 1) for the year in Dec, a 70% increase from the lowest
– Improved monetization driven by In & Out -game content
• Swift Recovery of BGMI after relaunch,
confirming growth potential in the Indian market
– Record high traffic and revenue after relaunch
– Localized content and marketing for revenue growth
– Established dominant position in Indian Esports market
4 1) Peak Concurrent User

5
KRAFTON’s 2024 Strategic Focus
From “Original Creative” to “Scale-up the Creative”
2024 Strategic Focus: Scale -up the Creative 2023 Message Recap: Key Direction
Strengthen Production
Management Capabilities
HQ control
based on gameplay & quality standards
Maximize Performance of Creative Studios
Strengthen
Publishing Capabilities
Expand our IP portfolio
through investments + 2PP
1)
Maximize synergy by utilizing
KRAFTON’s global experiences &
publishing process / infrastructure
Discover original creatives to scale-up as “1B IP”s
• “Original Creative” DNA + a shift in perspective
• Scale -up discovered creatives , production, service
• Creatives are discovered vs. Creatives can be scaled -up
• Amateur mod by PlayerUnknown called Battle Royale
• Implanted to a standalone game by skilled developers
• Global success as a mainstream genre
• Further success on mobile platform
5 1) 2 ndparty publishing

6
Scale-up Direction
Popularize Core Gameplay
IP Franchise
Expanding platforms
Transition to GaaS model
Reaching new markets
Expanding audience
Direction of Restructuring
• Multi-Publishing Line to efficiently
launch multiple new titles
• A single command line established
to achieve effective alignment
• Centralize organizations to HQ
Exploring Possibilities and Restructuring throughScale-up the Creative
6

7
Strategic Titles for 2024
Explore an oceanic world in
stunning stylized graphics
powered by Unreal Engine 5
Single-player or optional 2 -4
player co -op to uncover the
mysteries on an entirely new
alien planet
Early Access is expected
post -2024
Sequel to the original IP
pursuing community-first game development
2
Popularizing the
Extraction Shooter genre inheriting PUBG gunplay
Essential genre specific
experience of gambling
A world demanding strategic
choices during every session
Player progression varied by
Risk -Reward decisions
Inheriting and enhancing
PUBG’s powerful gunplay
Deep and challenging
gameplay experience
Expanding a solo
developer’s creativity to the mobile market
Challenging new gameplay
in a genre familiar to other
platforms but rare to mobile
Adopting the proven core
mechanics of the original
game for mobile gameplay
Introducing monetization and
seasonal updates for
continuous live service
Mobile
Securing the
unique position of a
life simulation game
Highly anticipated title based
on global gamer reaction
Ironically an opportunistic
market being dominated by
a single franchise for so long
Unique hyper -realistic life
simulation game by quickly
adapting latest technologies
Developed as a creative game
through AI technologies
Bringing the pioneering
original Extraction RPG
to the mobile platform
Realistic medieval low fantasy
Battle Royale with survival,
exploration and RPG elements
Differentiated physics based
non -target action combat
A dungeon -crawler including
various objects and terrains
Mobile -friendly gameplay
experience and communities
7

8
Venturing into Broader DiscoveriesThrough 2PP
Scale-up Potentials Through 2 nd Party Publishing
Is there potential to be Scaled -up through 2PP?
Is there an
Original Creative ?
Playgig Studio Sai
Far From Home
DinkumFunny Storm
…
Nirvanana
Boundary People Can Fly
Gardens Interactive
Fuzzy Bot
8

9
Revenue
Time
2024, theTipping Pointfor Stepwise Growth
Seeking Solid Growth for PUBG IP and
Stepwise Growth Through New IPs under‘Scale-up the Creative’
Solid Growth in
Existing Live Service
Discover/ nurture new IPs
Return on investment In every 3 to 5 years
User –oriented service/ Update
Operational excellence
Scale -up the Creative
for Stepwise growth
9

10
Key Initiatives for Future Growth

11
PUBG IP Franchise
Enhance
PUBG PC
Gameplay Platform
Venture
Console
Reboot & Single -play
Mobile Audience
Expansion
Hardcore & Hybrid Casual
Strengthen Core & Community
Diversify Gameplay Experience
Implement Game Experience
Optimized for Console
Mobile Adaptation of Hardcore Gaming
Casual Genre for Player Expansion
Explore changes in platform/genre player experiences reflecting core values of PUBG
Priority on strengthening and expanding IP through games
Gradual expansion of brandingand products beyond games to create cultural trends
Expand as a PUBG IP Multi-product and Ultimately Scale-up to a 10B IP
11

12
India
Steady Growth of BGMI
Expand Publishing Titles Leveraging Strong Presence
Continuous Development of BGMI Esports
Increase Investment and Explore New Opportunities
BGMI Solid Growth, Publishing/Esports/New Business Opportunities
12

13
AI
2023 Key Activities
DEEP
Learning (AI) New Gameplay
Reinvent gameplay,
Provide personalized
gaming experience
New Way to Create
Innovate the process of
Creative production
Production Cost Down
Dramatic reduction in costs,
Significant increase in game
production efficiency
LLM enhancements, Data generation /
Programming / Application to learn game lores
Korean/Multi -language/Personalized TTS
High Quality 2D Art generation,
2D→3D Avatar generation
Reinforcement Learning /LLM -based
Game AI Bot
LLM
Voice
Art
Game AI
AI Technology Development
Most AI research papers in domestic game industry
– Five regular track papers publishedat NeurIPS 2023
(#1 among Korean game companies, #3 among global)
2024 Strategic Focus (AI Application and Acceleration )
Advancements in Deep LearningTechnology to Lead the Future
13

14
Wrapping Up
Scale-up the Creative: Long -term Perspective
Focusing on Core Values ofOriginal Creative
More and Faster Attempts (2PP, Multi-Publishing Line)
SecuringM&A Opportunities
Tipping Point for Stepwise Growth
14

15
4Q23 & FY2023
Financial Performance
CFO Dongkeun Bae

2023
Results at
a Glance
Revenue KRW 1.9 tn
PC/CONSOLE
Original
creative
FY2023 PC/Console Revenue vs. FY2020
FY2023 Revenue
Incubating Pipelines (As of December 2023)
2X Growth
30 Projects Achieved all
-time high revenue
driven by our core IP, PUBG
Robust growth of PC/Console revenue
driven by F2P transition of PUBG PC/Console,
enhanced live service, and stable traffic
Discovered 30 original creatives,
Multi -Publishing Line for
continuous release of new titles
16

Operating profit grew 30.3% YoY on back of solid PUBG IP
revenue, yet decreased 13.2% QoQdue to increased costs
related to major games services
4Q Earnings Summary
( KRW bn) 4Q 20223Q 20234Q 2023 QoQYoYFY2022FY2023 YoY
Revenue 473.8 450.3 534.6 18.7% 12.8% 1,854.0 1,910.6 3.1%
PC 139.1 121.3 167.1 37.8% 20.1% 465.0 583.9 25.6%
Mobile 254.7 309.1 342.7 10.9% 34.5% 1,252.8 1,244.8 -0.6%
Console 67.7 12.0 17.4 44.5% -74.3% 104.1 55.7 -46.5%
Others 12.2 7.9 7.4 -6.6% -39.3% 32.2 26.2 -18.6%
Operating Expenses 347.6 261.0 370.2 41.8% 6.5%1,102.4 1,142.5 3.6%
Operating Profit 126.2 189.3 164.3 -13.2% 30.3% 751.6 768.0 2.2%
% Margin
26.6% 42.0% 30.7% -11.3%p 4.1%p 40.5% 40.2% -0.3%p
Adj.EBITDA 1) 160.3 197.3 219.7 11.4% 37.0% 792.7 903.7 14.0%
% Margin
33.8% 43.8% 41.1% -2.7%p 7.3%p 42.8% 47.3% 4.5%p
Net Profit (165.4)211.6 (13.2) T/D 2) C/D 2) 500.2 594.1 18.8%
% Margin
-34.9% 47.0% -2.5% -49.5%p 32.4%p 27.0% 31.1% 4.1%p
1) Adj. EBITDA = EBITDA + Share -based payment expenses
2) T/D: Turned to Deficit, C/D: Continued in Deficit
Operating Profit Revenue Net Profit
Revenue KRW 534.6bn
Revenue grew QoQ18.7% and YoY 12.8% driven by growth
in PC, Mobile, and Console despite low -seasonality
Operating Profit KRW 164.3bn
473.8 538.7
387.1 450.3 534.6
4Q22
1Q232Q233Q234Q23
126.2 283.0
131.5 189.3 164.3
4Q22
1Q232Q233Q234Q23 (165.4)267.2
128.5 211.6 (13.2)
4Q22
1Q232Q233Q234Q23
17

139.1 178.5
117.0 121.3 167.1
254.7
348.2
244.9 309.1 342.7
67.7
7.2
19.0 12.0 17.4
12.2 4.8
6.1 7.9 7.4
4Q22
1Q232Q233Q234Q23
PC Mobile Console Others
Revenue Breakdown
(KRW bn) 4Q 20223Q 20234Q 2023 QoQYoYFY2022FY2023 YoY
Revenue 473.8 450.3 534.6 18.7% 12.8% 1,854.0 1,910.6 3.1%
PC 139.1 121.3 167.1 37.8% 20.1% 465.0 583.9 25.6%
Mobile 254.7 309.1 342.7 10.9% 34.5% 1,252.8 1,244.8 -0.6%
Console 67.7 12.0 17.4 44.5% -74.3% 104.1 55.7 -46.5%
Others 12.2 7.9 7.4 -6.6% -39.3% 32.2 26.2 -18.6% Revenue
Revenue Breakdown (Quarterly)
473.8 538.7
387.1
534.6
450.3
2023 KRW 1,910.6bn (YoY 3.1% ↑)
4Q23 KRW 534.6bn ( QoQ 18.7% ↑, YoY 12.8% ↑)
1,087.5 1,670.4
1,885.4
1,854.0
1,910.6
2019 2020202120222023
Revenue (Annual)
48.8%
17.6%22.2%
30.7%
33.5%
2019
2020202120222023
PC/Console Revenue Proportion (Annual)
48.8%
17.6%22.2%
30.7%
33.5%
18

396.9 818.0
716.1 792.7
876.1
59.3 36.8
167.0 (63.6) 27.6
2019
2020202120222023
Adj. EBITDA Share-based payment expense
160.3308.9
158.7 197.3
191.4
(9.7) 10.0
9.1 (19.8)
28.3
4Q22
1Q232Q233Q234Q23
Adj. EBITDA Share-based payment expenses
Operating Expenses & Profit
Operating Profit
Operating Profit (Quarterly)
2023 KRW 768.0bn (YoY 2.2% ↑)
4Q23 KRW 164.3bn ( QoQ 13.2% ↓, YoY 30.3% ↑)
(KRW bn) 4Q 20223Q 20234Q 2023 QoQYoYFY2022FY2023 YoY
Operating Costs 347.6 261.0 370.2 41.8% 6.5%1,102.4 1,142.5 3.6%
Personnel 63.4
1) 102.3 120.9 18.2% 90.8% 364.8 1) 427.3 17.1%
Platform fees/Cost of Revenue
2) 57.7 59.9 87.9 46.7% 52.4% 207.1 226.8 9.5%
Paid Commissions 102.7 64.9 61.9 -4.5% -39.7% 325.3 258.9 -20.4%
Marketing 81.2 18.1 34.2 89.7% -57.8% 129.7 66.1 -49.1%
Share -based Payment Expenses
(9.7)(19.8) 28.3 n/mn/m (63.6) 27.6 n/m
Others 52.4 35.6 36.9 3.6%-29.6% 139.1 135.9 -2.3%
Operating Profit 126.2 189.3 164.3 -13.2% 30.3% 751.6 768.0 2.2%
% Margin 26.6% 42.0% 30.7% -11.3%p 4.1%p 40.5%40.2%-0.3%p
Adj. EBITDA 3) 160.3 197.3 219.7 11.4% 37.0% 792.7 903.7 14.0%
% Margin 33.8% 43.8% 41.1% -2.7%p 7.3%p 42.8% 47.3%4.5%p
Adj. EBITDA (Quarterly) Adj. EBITDA (Annual)
1) 4Q 2022 reversal of provision (KRW 38bn)
2) Platform fees / Cost of Revenue consist of Steam, market commissions, etc
Adj. EBITDA
2023 KRW 903.7bn (YoY 14.0% ↑)
4Q23 KRW 219.7bn ( QoQ 11.4% ↑, YoY 37.0% ↑)
126.2 283.0
131.5 189.3 164.3
4Q22
1Q232Q233Q234Q23
170.0319.0
167.7 219.7 217.0
4) 4) 4)
456.2
854.8
883.1
903.7 856.2
19 3) Adj.
EBITDA = EBITDA + Share -based payment expenses
4) Reversal of share -based payment expenses

Net Profit
Net Profit
Profit Before Tax (Quarterly)
2023 KRW 594.1bn (YoY 18.8% ↑)
4Q23 KRW -13.2bn ( QoQ T/D 2), YoY C/D 2 ))
(KRW bn) 4Q 20223Q 20234Q 2023 QoQYoYFY2022FY2023 YoY
Non -Operating Profit
(349.1)91.2 (138.0) T/D
2) C/D 2) (67.7) 60.6 T/P 2)
Non -Operating Income
(40.2)103.3 190.6 84.6% n/m318.5 521.0 63.6%
Other Income (49.8)94.7 182.8 93.1% n/m284.8 483.5 69.8%
Finance Income 9.6 8.6 7.8 -9.5% -19.0% 33.7 37.5 11.3%
Non -Operating Expense
308.9 12.1 328.6 2,619.8% 6.4%386.2 460.4 19.2%
Other Expenses 306.0 9.8 326.3 3,239.5% 6.6%378.6 451.5 19.2%
Finance Expenses 2.8 2.3 2.4 1.7% -17.3% 7.6 8.9 17.5%
Profit Before Income Tax (222.9)280.4 26.3 -90.6% T/P
2) 683.9 828.6 21.2%
Income Tax (61.9)68.9 39.5
-42.6% n/m 168.7 234.6 39.0%
Net Profit
(165.4) 1) 211.6 (13.2) T/D 2) C/D 2) 500.2 1) 594.1 18.8%
% Margin -34.9% 47.0% -2.5% -49.5%p 32.4%p 27.0% 31.1%4.1%p
Net Profit (Quarterly) Net Profit (Annual)
1) Including loss from Discontinued Operations (4Q 2022 KRW 4.4bn, FY2022 KRW 15bn)
2) T/D: Turned to Deficit, C/D: Continued in Deficit, T/P: Turned to Profit
(222.9) 362.4
159.5 280.4
26.3
4Q22
1Q232Q233Q234Q23
(165.4)267.2
128.5 211.6 (13.2)
4Q22
1Q232Q233Q234Q23
278.9 556.3
519.9 500.2
594.1
2019 2020202120222023
20

21
CEO
CH Kim
CFO
Dongkeun Bae

22
Appendix

(KRW bn)2022
2023
1Q 2Q3Q4Q 1Q2Q3Q4Q
Revenue 523.0 423.6 433.7 473.8 538.7 387.1 450.3 534.6
Operating Costs 208.0 257.7 289.1 347.6 255.7 255.6 261.0 370.2
Operating Profits 315.0 165.8 144.6 126.2 283.0 131.5 189.3 164.3
EBITDA 333.7 185.8 166.7 170.0 309.0 158.7 217.0 191.4
Adj. EBITDA
1) 280.5 177.4 174.5 160.3 319.0 167.7 197.3 219.7
Non -Operating Profit
17.8 94.5 169.1 (349.1) 79.4 28.0 91.2 (138.0)
Other Income 37.0 101.3 196.2 (49.8) 131.9 74.0 94.7 182.8
Other Expenses 24.3 12.8 35.5 306.0 60.5 54.9 9.8 326.3
Finance Income 6.7 7.5 9.9 9.6 9.9 11.3 8.6 7.8
Finance Expenses 1.6 1.6 1.5 2.8 1.9 2.3 2.3 2.4
Profit Before Income Tax 332.7 260.3 313.7 (222.9) 362.4 159.5 280.4 26.3
Income Tax 84.5 63.0 83.1 (61.9) 95.2 31.0 68.9 39.5
Profit from Discontinued Operations
(3.0)(3.4)(4.2)(4.4) —-
Net Profit 245.2 194.0 226.4
(165.4) 267.2 128.5 211.6 (13.2)
20222023
1,854.0 1,910.6
1,102.4 1,142.5
751.6 768.0
856.2 876.1
792.7 903.7
(67.7) 60.6
284.8 483.5
378.6 451.5
33.7 37.5
7.6 8.9
683.9 828.6
168.7 234.6
(15.0) –
500.2 594.1
23 1) Adj. EBITDA = EBITDA + Share -based Payment Expenses
Summary of Financial Statements
Consolidated Income Statement

Summary of Financial Statements
(KRW bn)FY 2022FY 2023
Assets
Current Assets 3,892.6 3,964.4
Cash and Cash Equivalents
1) 3,125.3 3,061.4
Other Current Assets 49.2 49.0
Non -current Assets
2,145.2 2,476.0
Property and equipment 223.4 257.0
Intangibles 867.7 607.8
Investment in Associates 425.3 571.3
Other Non -current Assets
28.5 30.1
Total Assets 6,037.8 6,440.5
(KRW bn) FY 2022FY 2023
Liabilities
Current Liabilities 411.5 520.7
Non -current Liabilities
509.9 360.9
Total Liabilities 921.4 881.6
Equity
Shareholders’ equity 5,111.2 5,554.4
Paid -in Capital
4.9 4.9
Capital Surplus 1,448.6 1,472.0
Other Components of Equity 190.1 182.5
Retained Earnings 3,467.6 3,895.0
Non -controlling Interests
5.2 4.4
Total Equity 5,116.4 5,558.8
1) Including FVPL (Fair Value through Profit or Loss) 24
Consolidated Statement of Financial Position

WHY
HOW
Wh at
Our Vision