NCSoft FY2023 Q2 Earnings Release

Aug, 2023 Q2 2023 Earnings Release
NCSOFT IR
Aug 9, 2023

The financial results for Q2 2023 have been prepared on an unaudited basis and may be
subject to change during an independent auditing process.
Please note that NCSOFT will not be responsible for individual investment decisions based on
this material.
※ Key Consolidated Subsidiaries (based on K -IFRS):
NCSOFT Corporation(HQ, KOR), NC West Holdings(100%, USA),
NC America(100%, USA), NC Europe(100%, GBR), NC Japan(100%, JPN),
NC Taiwan(100%, TWN), NCSOFT Service(100%, KOR), NC Dinos(100%, KOR),
NC ITS(100%, KOR), Ntreev Soft(98%, KOR), This Game Studio(40%, CAN),
NC Vietnam Visual Studio(100%, VNM)

Disclaimer

Contents
I. Consolidated Earnings
1. Financial Highlights
2. Sales Breakdown
3. Cost Breakdown
II. Appendix
4. Consolidated Financial Statements

Sales totaled KRW 440.2 billion, down 8 % qoq and 30% yoy
Operating profit posted KRW 35.3 billion, down 57 % qoq and 71% yoy
1. Financial Highlights
122,966 144,422
47,432 81,628
35,275
2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Operating Profit
↓ 57% QoQ
↓ 71% YoY
↓ 8% QoQ
↓ 30% YoY
Q2 Performance
(Unit: KRW MN)
629,278 604,232 547,948 478,770 440,246
2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Sales
↓ 73% QoQ
↓ 74% YoY
↓ 72% QoQ
↓ 76% YoY
163,082
250,365
-37,555
141,299
39,102
2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Pre -tax Income
118,728
182,077
-33,097
114,178
30,542
2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Net Income

Mobile game sales posted KRW 296.9 billion, down 10 % qoq due to weaker Lineage W and Lineage 2M sales
Legacy PC online games came in at KRW 88.2 billion, declined 4 % qoq as the level of business activity was adjusted
2. Sales Breakdown (by Game)
25,712 25,467 29,317 24,506 24,314
22,630 23,355 24,620
21,476 22,965
14,216 17,511 20,474
17,618 15,816
6,141 5,926
7,239
7,342 5,815
27,175 24,822
22,704
20,442 19,248
95,875 97,081 104,353
91,384 88,158
2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Lineage Lineage 2 AION Blade & Soul Guild Wars 2
* Not including other mobile games * Not including other PC online games
Mobile Games
(Unit: KRW MN)
PC Online Games
(Unit: KRW MN)
141,235 146,533 112,824 130,148 127,753
96,221 85,578
82,299 73,059 62,008
14,167 8,087
9,057 5,022 4,274
223,597 197,145
176,855 122,557 102,825
475,220
437,343
381,036
330,786
296,860
2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Lineage M Lineage 2M Blade & Soul 2 Lineage W

1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Total 790,334 629,278 604,232 547,948 478,770 440,246
Royalty 38,843 35,985 43,287 38,894 42,314 36,276
NA/EU 37,362 39,865 44,799 42,924 33,344 31,414
Asia 210,735 144,615 140,787 129,081 99,396 87,444
Korea 503,395 408,813 375,359 337,049 303,716 285,112
790,334
629,278 604,232 547,948
478,770 440,246
2. Sales Breakdown (by Region)
Korea sales declined 6% qoq due to weaker mobile game sales
Royalty and overseas sales generated 35% of total sales
Sales by Region
(Unit: KRW MN)

2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Total 506,312 459,810 500,516 397,142 404,971
Variables & Others 212,966 204,546 193,844 152,499 156,363
D&A 26,787 26,711 25,953 27,907 27,871
Marketing 59,919 38,872 48,096 4,856 12,226
Labor 206,639 189,681 232,623 211,879 208,512
506,312
459,810 500,516
397,142 404,971
Total operating expenses totaled KRW 405.0 billion, an increase of 2% qoq , but a decrease of 20% yoy
Labor cost was KRW 208.5 billion, a decline of 2% qoq
Marketing expense was KRW 12.2 billion, which was an increase of 152% qoq driven by game updates, but represented
a decline of 80% yoy , which was the result of enhanced marketing efficiency
3. Cost Breakdown
Cost Breakdown
(Unit: KRW MN)

FY 2022 2Q 23
Liabilities
I. Current Liabilities 515,349 523,545
Borrowings – 109,959
Account payables 86,555 135,911
Lease liabilities 35,287 38,060
Current tax liabilities 85,537 1,301
Other current liabilities 307,190 238,313
Other provisions 779 –
II. Non -current Liabilities 723,735 678,315
Debentures and borrowings 409,384 299,531
Defined benefit obligations 5,728 5,143
Long -term employee benefits 19,444 20,824
Lease liabilities 176,522 206,985
Others 112,657 145,833
Total Liabilities 1,239,084 1,201,860
Shareholders Equity
I. Capital Stock 10,977 10,977
II. Other Paid -in Capital (189,424) (189,424)
III. Other Components ofEquity (34,751) (83,191)
IV. Retained Earnings 3,409,409 3,405,222
V. Non -controlling Interest 2,338 3,063
Total Stockholders Equity 3,198,549 3,146,648
Total Liabilities and Shareholders Equity 4,437,632 4,348,508
Statement of Financial Position
4. Consolidated Financial Statements
(Unit : KRW MN)
FY 2022 2Q 23
Assets
I. Current Assets 2,691,080 2,402,587
Cash and cash equivalents 285,574 419,265
Short -term financial instruments 1,088,608 1,008,871
Account receivables 175,463 139,490
Other receivables 43,894 49,014
Short -term investment assets 1,054,472 746,315
Others 43,068 39,631
II. Non -current Assets 1,746,552 1,945,921
Long -term loans 7,437 7,664
Other receivables 23,262 24,595
Long -term investment assets 504,265 540,967
Investment stock in associated companies 26,240 24,356
Investment property 90,227 89,638
Tangible assets 930,207 1,029,442
Intangible assets 43,399 120,943
Others 121,517 108,316
Total Assets 4,437,632 4,348,508

2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Sales 629,278 604,232 547,948 478,770 440,246
Operating Expenses 506,312 459,810 500,516 397,142 404,971
Operating Income 122,966 144,422 47,432 81,628 35,275
Non -operating Income 40,116 105,942 (84,987) 59,671 3,827
Pre -tax Income 163,082 250,365 (37,555) 141,299 39,102
Income Tax 44,354 68,288 (4,458) 27,121 8,561
Net Income 118,728 182,077 (33,097) 114,178 30,542
Equity Attribution to the
Owners of the Parent Company 118,614 181,815 (33,615) 113,697 29,878
Non -controlling Interest 114 262 518 481 664
4. Consolidated Financial Statements
Income Statement (Unit: KRW MN)