Slide 1: NCSOFT IR Presentation August 2024
NCSOFT IR PRESENTATION August 2024
Slide 2: Agenda
I. Overview 1. Industry Overview 2. Company Overview II. Financials 3. Financial Highlights 4. Sales Breakdown 5. Cost Breakdown III. Investment Points 6. Strength 7. Strategy Appendix 8. Game Pipeline 9. Consolidated Financial Statements 10. NCSOFT ESG Performances 2
Slide 3: Industry Overview: Global Games Market Growth
1. Industry Overview : Global Games Market Growth • The global games market is projected to continue growing steadily, reaching a market size of USD 236 billion in 2025 • Mobile platform is expected to account for 46% of the global games market in 2025 Global Games Market Size (2020 ~ 2025) (Unit :
Slide 4: Industry Overview: Global Games Market (MMO Market)
1. Industry Overview : Global Games Market (MMO Market) • The global MMO games market is anticipated to be worth USD 75 billion in 2028 with increased demand across all regions • It is anticipated to grow through various sub-genres such as MMORPG, MMORTS, and MMOFPS Global MMO Games Market Outlook (
Slide 5: Industry Overview: South Korea Games Market
1. Industry Overview : South Korea Games Market • Mobile games remain as the largest segment in 2022, accounting for 59% of South Korea’s games market • South Korean mobile games market has presented over 19% of growth throughout the past 3 years South Korean Games Market Per Platform (2022) South K
Slide 6: Industry Overview: Next Growth Opportunity in the Western Market
1. Industry Overview : Next Growth Opportunity in the Western Market • The value of South Korea’s games exports has grown 9% per annum for the past 4 years • Given the size of the gaming markets in NA and EU, expansion into the western region represents an opportunity for South Korean games to grow
Slide 7: Company Overview: Corporate Governance
2. Company Overview : Corporate Governance • NCSOFT’s board of directors comprises 7 members, each contributing to the board’s independence, diversity, and expertise Board Composition & Skills Matrix Ownership Structure (As of Jun 2024) Composition Gender Tenure NCSOFT Retail 12% Management Investor
Slide 8: Company Overview: Yearly Revenues Trend (1998 ~ 2023)
2. Company Overview : Yearly Revenues Trend (1998 ~ 2023) • Since 1998, launching quality MMORPGs regularly has driven persistent growth over the past 25 years • Expecting another quantum jump with successful launch of new titles and overseas expansion Growth with PC MMO Conversion of PC IP to Mobil
Slide 9: Company Overview: Development & Publishing Network
2. Company Overview : Development & Publishing Network • Development studios in Korea and North America • Well-organized publishing arms in major markets such as US, Taiwan, Japan and Europe Globalized Development & Publishing Network Europe APAC North America NC Europe (100%) Korea Japan NC West Ho
Slide 10: Financial Highlights (Quarterly)
3. Financial Highlights (Quarterly) • Sales totaled KRW 368.9 billion, down 7% qoq and 16% yoy • Operating profit was KRW 8.8 billion, a decrease of 66% qoq and 75% yoy Quarterly Performance (Unit: KRW MN) Sales Operating Profit 440,246 423,108 437,709 397,911 368,869 35,275 25,723 16,527 ↓ 7% QoQ 8
Slide 11: Financial Highlights (Yearly)
3. Financial Highlights (Yearly) • Full year 2023 sales recorded KRW 1,779.8 billion (YoY -31%), and operating profit was KRW 137.3 billion (YoY -75%) Performance of Past 3 Years (Unit: KRW MN) 2021 2022 2023 ↓ 31% YoY 2,571,792 2,308,817 1,779,833 ↓ 75% YoY ↓ 66% YoY ↓ 51% YoY 559,006 609,051 491,3
Slide 12: Sales Breakdown (Quarterly by Game)
4. Sales Breakdown (Quarterly by Game) • Mobile games sales amounted to KRW 218.2 billion, down 13% qoq, due to adjustments in business activities. Mobile games generated 59% of total sales • Legacy PC online games posted KRW 86.2 billion in sales, down 6% qoq. PC online games accounted for 23% of t
Slide 13: Sales Breakdown (Yearly by Game)
4. Sales Breakdown (Yearly by Game) • Mobile game sales accounted for 67% of total sales at KRW 1,200.4 billion, a decrease of 38% yoy • The 5 PC online games in total recorded KRW 360.5 billion, a decrease of 8% yoy 1,934 (Unit: KRW BN) 1,611 1,200 134 107 100 95 97 94 87 85 75 68 68 74 44 26 24 20
Slide 14: Sales Breakdown (by Region)
4. Sales Breakdown (by Region) • Korea sales posted KRW 240.3 billion, representing a 7% qoq decline • Overseas and royalty sales dropped 7% qoq to KRW 128.5 billion, accounting for 35% of total sales Quarterly Yearly (Unit: KRW MN) (Unit: KRW MN) 2,571,792 2,308,817 440,246 423,108 437,709 397,911
Slide 15: Cost Breakdown (Quarterly)
5. Cost Breakdown (Quarterly) • 2Q total operating expenses reported KRW 360 billion, down 3% qoq and 11% yoy • 2Q labor cost was KRW 188 billion, declining 7% qoq and 10% yoy on the reduction of long-term incentive reserves • 2Q marketing expenses increased 152% qoq to KRW 17.4 billion, due to larg
Slide 16: Cost Breakdown (Yearly)
5. Cost Breakdown (Yearly) • FY 2023 operating expenses totaled KRW 1,642.5 billion, down by 18% yoy • Labor cost dropped by 3% yoy to KRW 822.9 billion, while marketing expenses fell by 55% yoy to KRW 85 billion, due to company-wide efforts to drive cost efficiency Yearly Operating Cost Breakdown Y
Slide 17: Strength: Multiple Successful IPs
6. Strength : Multiple Successful IPs Lineage Lineage 2 ✓ Launched in 1998 (remastered in 2019) ✓ Launched in 2003 ✓ Set the standard for Korean MMORPGs by pioneering RvR content, ✓ Full 3D graphics MMORPG with ‘seamless open world’ specifically castle siege wars ✓ Ranked first in PC cafés in Japan
Slide 18: Strength: Multiple Successful IPs
6. Strength : Multiple Successful IPs AION Blade & Soul Guild Wars 2 Massively Multi-player Experience on Mobile ✓ Launched in 2008 ✓ Launched in 2012 ✓ Launched in 2012 ✓ The first Korean game to introduce aerial PvP ✓ An action MMORPG featuring oriental martial ✓ Released 5 expansion packs ✓ Retai
Slide 19: Strength: Expertise in Live Services
6. Strength : Expertise in Live Services • Expanding life cycle of liver service games by providing timely and continuous content update • Achieving sustainable growth through portfolio diversification Live services for life cycle extension (# of years after its launch, by title) 3 years Lineage W (
Slide 20: Strength: Our Technology
6. Strength : Our Technology Massive scale live service AI-powered development Data-driven approach Massively Multi-player Experience on Mobile ✓ NCSOFT strives to develop technologies for ✓ NCSOFT established AI research department ✓ A data-driven approach, which includes data better stability and
Slide 21: Strategy: Strengthen Legacy IPs
7. Strategy : Strengthen Legacy IPs • Strengthening of legacy IPs is one of our strategies for building solid foundations • Along with efforts to extend the life cycle of our live services, regional expansion and genre diversification of our legacy IPs are also on track Strategy with Legacy IPs Expa
Slide 22: Strategy: In-house R&D Efforts for Portfolio Diversification
7. Strategy : In-house R&D efforts for Portfolio Diversification • We aim to continuously diversify our offerings across IP, genre, platform, and region R&D efforts to develop new IPs <Battle Crush> <Hoyeon> <Project G> <AION 2> <LLL> <Project M> [Future] PC / Mobile / Console [Present] MMORPG / Cas
Slide 23: Strategy: Collaboration and Investment for Globalization
7. Strategy : Collaboration and Investment for Globalization • Collaboration with global partners is one of the most effective ways to deliver our products around the world • Equity and publishing rights investments in external developers will generate additional business opportunities and accelerat
Slide 24: Strategy: Pursuing Business Opportunities with PURPLE
7. Strategy : Pursuing Business Opportunities with PURPLE • NC’s global game platform, PURPLE, has a potential to be expanded by offering 3rd parties’ titles • With launching external AAA games through PURPLE platform within this year, the business opportunities of PURPLE will be visualized PURPLE,
Slide 25: Game Pipeline
8. Game Pipeline 1998 2017 2023 2024 2025 MMO MMO MMO Action Brawler MMORTS 2003 2019 MMO MMO MMO Switching RPG 2008 MMO 2021 Puzzle MMO MMO-Shooting 2012 MMO +1 title of new genre (based on our legacy IP) MMO MMO + 2 titles of new genres (based on our legacy IPs) & 2 casual games 25
Slide 26: Consolidated Financial Statements
9. Consolidated Financial Statements Statement of Financial Position (UNIT : KRW MN) FY 2023 2Q 24 FY 2023 2Q 24 Assets Liabilities I. Current Liabilities 614,287 447,191 I. Current Assets 2,336,839 2,001,832 Borrowings 239,954 129,999 Cash and cash equivalents 365,200 254,991 Account payables 78,08
Slide 27: Consolidated Financial Statements
9. Consolidated Financial Statements Income Statement (UNIT : KRW MN) 2Q 23 3Q 23 4Q 23 1Q 24 2Q 24 FY 2022 FY 2023 Sales 440,246 423,108 437,709 397,911 368,869 2,571,792 1,779,833 Operating Expenses 404,971 406,581 433,856 372,188 360,025 2,012,786 1,642,549 Operating Income 35,275 16,527 3,853 25
Slide 28: NCSOFT ESG Performances
10. NCSOFT ESG Performances KCGS ESG Ratings MSCI ESG Ratings Sustainalytics ESG Risk Rating Comprehensive Rating 2020 [B+] → 2023 [A] Comprehensive Rating 2020 [BBB] → 2023 [AA] Risk Rating 2021 [16.8] → 2023 [14.3] Environment (E) B+ A (comprehensive) Social (S) A Governance (G) A [Ref] ESG Rating
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