Aug 19, 2010 (PRN): GRAVITY Co., Ltd. (NasdaqGM: GRVY) (“Gravity” or “Company”), an online game developer and publisher based in South Korea, today announced its unaudited financial results for the second quarter ended June 30, 2010, prepared in accordance with generally accepted accounting principles in the United States.

Revenues for the second quarter ended June 30, 2010 was KRW 11,326 million (US$ 9,756 thousand), representing a 1.9% increase from KRW 11,119 million for the first quarter ended March 31, 2010 (“QoQ”) and a 19.2% decrease from KRW 14,018 million for the second quarter ended June 30, 2009 (“YoY”).

REVIEW OF FINANCIAL RESULTS

Revenues

Royalty and licensing fee revenues for the second quarter of 2010 were KRW 6,572 million (US$ 5,661 thousand), representing a 1.4% increase QoQ from KRW 6,484 million but a 21.3% decrease YoY from KRW 8,350 million. The decrease YoY was primarily due to the decreased revenues in the Japanese market.

Subscription revenues for the second quarter of 2010 were KRW 2,691 million (US$ 2,317 thousand), representing a 10.5% increase QoQ from KRW 2,435 million but a 9.7% decrease YoY from KRW 2,980 million. The increase QoQ was driven by the increased revenues in the United States and Canada. The decrease YoY was primarily driven by the decreased revenues in Korea.

Mobile game revenues were KRW 1,840 million (US$ 1,585 thousand) for the second quarter of 2010, representing a modest increase QoQ from KRW 1,839 million and a 5.0% increase YoY from KRW 1,752 million.

Character merchandising, animation and other revenues were KRW 223 million (US$ 193 thousand) for the second quarter of 2010, representing a 38.2% decrease QoQ from KRW 361 million and a 76.2% decrease YoY from KRW 936 million. The decreases QoQ and YoY were primarily due to decreased revenues from sales of Ragnarok DS and decreased royalty revenues from Ragnarok character merchandising.

Cost of Revenue and Operating Expenses

Cost of revenues was KRW 4,942 million (US$ 4,257 thousand) for the second quarter of 2010, representing a 1.7% increase QoQ from KRW 4,861 million and a 9.2% decrease YoY from KRW 5,441 million. The decrease YoY was mainly attributable to the decrease in cost of goods sold by NeoCyon and decrease in rent expenses of the subsidiary in the U.S. due to its relocation in October 2009.

Operating expenses were KRW 6,112 million (US$ 5,265 thousand) for the second quarter of 2010, representing a 22.3% increase QoQ from KRW 4,996 million and a 13.4% increase YoY from KRW 5,389 million. The increases in operating expenses QoQ and YOY were mainly as a result of increased advertising expenses and increase in employee separation costs. The increases in operating expenses QoQ and YoY were partially offset by decreases in salaries and commission paid, respectively.

Income before income tax expenses and others was KRW 1,384 million (US$ 1,192 thousand) for the second quarter of 2010, which represents a 8.5% decrease QoQ from KRW 1,512 million and a 58.4% decrease YoY from KRW 3,327 million.

As a result of the foregoing factors, Gravity recorded a net income attributable to parent company of KRW 465 million (US$ 401 thousand) for the second quarter of 2010 compared to KRW 381 million for the first quarter of 2010 and KRW 1,938 million for the second quarter of 2009.

The balance of cash and cash equivalents and short-term financial instruments was KRW 66,534 million (US$ 57,308 thousand) as of June 30, 2010.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,161.0 to US$ 1.00, the noon buying rate in effect on August 6, 2010 as quoted by the Federal Reserve Bank of New York.

About GRAVITY Co., Ltd.

Based in Korea, Gravity is a developer and publisher of online games. Gravity's principal product, Ragnarok Online™, is a popular online game in many markets, including Japan, Taiwan and Thailand, and is currently commercially offered in 59 markets. For more information about Gravity, please visit http://www.gravity.co.kr.

Forward-Looking Statements:

Certain statements in this press release may include, in addition to historical information, "forward-looking statements" within the meaning of the "safe-harbor" provisions of the U.S. Private Securities Litigation Reform Act 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" "project," or "continue" or the negative thereof or other similar words, although not all forward-looking statements contain these words. Investors should consider the information contained in our submissions and filings with the United States Securities and Exchange Commission (the "SEC"), including our registration statement on Form F-1, as amended, and our annual reports on Form 20-F, together with such other documents and we may submit to or file with the SEC from time to time, on Form 6-K. The forward-looking statements speak only as of this press release and we assume no duty to update them to reflect new, changing or unanticipated events or circumstances. [Wired by: PressReleaseNetwork.com]

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.