Krafton, Inc. · KRX:259960
Krafton — 2Q22 Earnings Presentation
30 slides from Krafton's earnings presentation, August 2022
Slide 1: Investor Relations Aug 2022
INVESTOR RELATIONS Aug 2022 KRAFION
Slide 2: Disclaimer
Disclaimer Financial statements included in this document are consolidated results of KRAFTON, Inc. (the “Company”) and its subsidiaries and have been prepared in accordance with K-IFRS. Financial results and operational performance included herein have been prepared for investors’ convenience only
Slide 3: 2022 Growth Strategy
2022 Growth Strategy
Slide 4: Our Quests Never End: A Glimpse at 2022
Our Quests Never End : A Glimpse at 2022 Our Core : Games Beyond the Game “ The Potential ” • Games-as-a-Service : Boost player • Expanding into new areas where • A new program that engagement and improve efficiency KRAFTON’s game production encourages a constant flow of of the live service capabili
Slide 5: Boost Play Engagement and Improve Operational Efficiency for the Three PUBG Games
Boost Play Engagementand Improve Operational Efficiency for the Three Most Important PUBG Games “Battlegrounds for All” “Repositioning” “Further grow PUBG fandom” The transition to F2P led to improved new Set a clearly distinctive position in the Strengthen the fandom by constantly user care and mon
Slide 6: KRAFTON Pipeline: 2022 and Beyond (1)
KRAFTON Pipeline : 2022 and Beyond(1) Defense Derby Project M Project Biringam Project Black Budget Rising Wings Unknown Worlds KRAFTON HQ PUBG Studios Real-time strategic defense Turn-based strategy Open world PvP shooter PvPvE Looter Shooter Targeting the first half of Steam Early Access in 2H22 T
Slide 7: Expandable Areas Leveraging KRAFTON's Game Production Capabilities
Expandable Areas Leveraging KRAFTON’s Game Production Capabilities • A platform that allows a fully immersive experience that goes beyond gamers and can offer expanded interactive content to a broader audience Virtual Reality (VR) • The market is still young to reach mainstream popularity, but the C
Slide 8: New Projects within the Web 3.0 & NFT Area
New Projects within the Web 3.0 & NFT Area Web 3.0 Business Direction New Web 3.0 Projects We have come a long way as a gaming company and while we continue to do Fun what we do best, we will also nurture User-Generated a C2E ecosystem wherein fresh content is created endlessly. Metaverse Platform W
Slide 9: "The Potential" - A New Program for Small and Quick Trials
“The Potential” -A New Program that Encourages a Constant Flow of Small and Quick Trials/Challenge-Taking A max 20- Able to set up a team with up to 20 person like-minded colleagues Key Direction team • Spirit: quickly taking on meaningful Aiming to produce a build within 1 challenges on a small sca
Slide 10: 2Q & 1H22 Highlights
2Q & 1H22 Highlights
Slide 11: 2022 1H Results at a Glance
2022 1H Results at a Glance Key Performance ~27M From 2H21 10% ↑ Record High UV, 1.8M New users to PUBG(1) Mobile Avg. ARPPU(2) Global eSports Tournament Key financial Highlights(3) + 3 % YoY + 18 % YoY + 31 % YoY Revenue Operating Profit Net Income Note: (1) Cumulative NRU (New Registered Users) of
Slide 12: PC/Console
PC/Console Improving Overall Gaming Experience for All Users, Yet More Efforts on Securing New and Returned Users 2Q22 Live Service Fostering In & Out Game Experience 3Q22 Live Service & Marketing Plan Dev Talk Live Streaming Original Sanhok Map Rollback +3X YoY 8x8 New Map DESTON Neymar Live Stream
Slide 13: Mobile – PUBGM / New State
Mobile – PUBGM / New State PUBGM on Steady Growth Track backed by Full-Packed Live Service Content, and New State on More Concerted Live Structure Stronger User Engagement and Monetization Faster Gameplay, with Attractive Global Brand Collaborations and Mode Services Better engagement User Engagemen
Slide 14: India
INDIA Continuing the Path for Mutual Growth with India, Pursuing Diverse Business Areas and Expanding Strategic Partnerships India’s Beloved Game with 100M+ Downloads Investment of USD ~100M <KuKuFM> USD 7M cumulative as of 2Q22 (11.7% share) <Silvanus X-Suit Skin> <Evangelion Collaboration> Secure
Slide 15: Project M
New IP Project – 2022/23 New Global Titles from the US to Expand KRAFTON’s Game IP Library and Attract More Fans from Diverse Genres Project M ▪ Turn-based strategy PC game set in a Sci-Fi world ▪ New AAA Title by Glen Schofield & Team ▪ Following the ‘Easy-to-Learn, Hard-to-Master’ formula, ▪ Globa
Slide 16: Project Windless
New IP Project – Project Windless A New IP Expansion Project by KRAFTON, Targeting Global Multi-Media Franchise, Game Development Finally Announced Project Windless ▪ Korean fantasy novel with unique settings and rich narratives ▪ Expansion into media productions backed by strong fan base ▪ Visual R
Slide 17: New Growth – Web 3.0 Metaverse & Virtual Human: Project Migaloo
New Growth – Web 3.0 Metaverse & Virtual Human World concept art Project migaloo 2023, we will meet everyone in the world we are building 17
Slide 18: New Growth – Web 3.0 Metaverse & Virtual Human
New Growth – Web 3.0 Metaverse & Virtual Human World concept art 18
Slide 19: New Growth – Web 3.0 Metaverse & Virtual Human
New Growth – Web 3.0 Metaverse & Virtual Human Leverage Our Core Technology on Building Interactive Virtual World, C2E Metaverse ‘Project Migaloo’ and Virtual Human ‘ANA’ C2E Metaverse: Project Migaloo Virtual Human: ANA Platform Fee Content Web 3.0 Creator Gen. Z Metaverse (Sandbox) Brand/IP Conten
Slide 20: 2Q22 Financials
2Q22 Financials Revenue 1H22 KRW 946.7bn (+2.9% YoY) 2Q22 KRW 423.7bn (-7.8% YoY, -19.0% QoQ) Operating Profit 1H22 KRW 474.2bn (+18.1% YoY) 2Q22 KRW 162.3bn (-6.8% YoY, -48.0% QoQ) 1H Earnings 2Q Revenue 2Q Operating Profit KRW bn 50% 60 KRW bn KRW bn 44% 31% 40 60% 94% 966.0 25% 946.7 20 920.3 38%
Slide 21: Revenue Breakdown
Revenue Breakdown Revenue 1H22 KRW 946.7bn (YoY +2.9%) 2Q22 KRW 423.7bn (YoY -7.8%, QoQ -19.0%) • (PC) 1H22 +25.9% YoY, 2Q22 flat YoY, -16.5% QoQ 2Q22 was flat YoY given elimination of package sales and impact of free G-Coins after F2P transition, and decreased QoQ with more live service focusing on
Slide 22: Expense Breakdown
Expense Breakdown Operating Costs 1H22 KRW 472.5bn (-9.0% YoY) 2Q22 KRW 261.3bn (-8.4% YoY, +23.8% QoQ) • (Personnel) 1H22 +16.4% YoY, 2Q22 +3.7% YoY, -12.4% QoQ • Despite the increase in headcounts from business expansion, 2Q22 slightly rose YoY, but declined QoQ due to the decrease in performance-
Slide 23: Operating Profit / Adj. EBITDA
Operating Profit / Adj. EBITDA Operating Profit 1H22 KRW 474.2bn (+18.1% YoY) 2Q22 KRW 162.3bn (-6.8% YoY, -48.0% QoQ) Adj. EBITDA 1H22 KRW 452.6bn (-3.8% YoY) 2Q22 KRW 174.5bn (-20.0% YoY, -37.2% QoQ) • 2Q22 Adj. EBITDA declined 20% YoY, with adj. EBITDA margin of 41% Operating Profit (2Q) Adj. EBI
Slide 24: Net Profit
Net Profit Profit Before Income Tax 1H22 KRW 586.5bn (+32.3% YoY) 2Q22 KRW 256.8bn (+49.5% YoY, -22.1% QoQ) Net Profit 1H22 KRW 439.2bn (+31.0% YoY), RECORD HIGH 2Q22 KRW 194.0bn (+37.3% YoY, -20.9% QoQ) • 2Q22 net profit rose YoY due to increased non-operating profit caused by f/x effects, with net
Slide 25: Summary of Financial Statements
Summary of Financial Statements Consolidated Income Statement Consolidated Statement of Financial Position KRW bn 2Q21 3Q21 4Q21 1Q22 2Q22 KRW bn 2Q21 3Q21 4Q21 1Q22 2Q22 Revenue 459.3 521.9 444.0 523.0 423.7 Current Assets 1,554.8 4,441.2 3,653.7 3,715.7 3,811.0 Cash and Cash Operating Costs 285.2
Slide 26: Appendix
Appendix
Slide 27: Founder and CEO
Founder and CEO Organization Led & Cultivated by a Tech-based Founder and CEO Byung-Gyu Chang Chang-Han Kim Cofounder & Chairman CEO Member of the Strategy Committee Member of the Strategy Committee • KAIST BS / MS / Ph.D Candidate in Computer Science • KAIST BS / MS / Ph.D in Computer Science • Cur
Slide 28: Independent Studios
Independent Studios Studios Focus on Development Based on Creative Identity, while KRAFTON Provides Publishing, Tech, Biz Support KRAFTON HQ 7 Independent Studios • Approve new games, milestones KRAFTON • Approve studio budget, staffing • Role as a Publisher Publishing Tech (Dev Support) Business Su
Slide 29: Unique Development Culture
Unique Development Culture Nurturing Differentiated Development Culture Aligned with the Studios’ Respective Characteristics and Environment Conception / Development Publishing Pre-production • Review / approve yearly budget and staffing for each studio KRAFTON • Approve beta test / launch based on
Slide 30: Our Vision
Our Vision WHY We believe games will become the world’s most powerful medium. H OW Based on our creativity, steadfast dedication toward new challenges and technological development, WH AT We will further expand our original IPs and build immersive, virtual worlds, where our fans play together and sh