Slide 1: Investor Relations
Investor Relations September 2021
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: Our Vision
Our Vision WHY HOW WHAT We believe games will become the world’s most powerful medium. Based on our creativity, steadfast dedication toward new challenges and technological development, We will further expand our original IPs and build immersive, virtual worlds, where our fans play together and shar
Slide 4: Who we are
Who we are Who We Are What Made it Possible The Future We Envision Financials Appendix
Slide 5: Who We Are
Who We Are IP Owner Developer Publisher Service Provider 5
Slide 6: Creator of the Open World Battle Royale Genre
Who We Are Creator of the Open World Battle Royale Genre 100-Person Multiplayer Free-for-all Battle & Survival Based Realistic Open World 1% Chance to Win Game of Decisions Gunplay & Sound 6
Slide 7: PUBG: Blockbuster Hit Across the Developed and Emerging Markets
Who We Are PUBG: Blockbuster Hit Across the Developed and Emerging Markets REACHED NO.1 GAME IN 90% OF 174 COUNTRIES SERVICED GLOBALLY(1) Countries Where PUBG Has Reached No.1(1) CIS Europe 100% 100% Middle East 100% Africa Southeast Asia 100% 95% Latin America Oceania 97% 95% Source: App Annie. Not
Slide 8: Beyond a Genre-Defining Title That Reshaped the Gaming Industry
Who We Are Beyond a Genre-Defining Title That Reshaped the Gaming Industry No.1 No.1 1+ Billion PC Game Mobile Game Downloads Best-Selling PC Game of All Time(1) Worldwide Gross Revenue # of Cumulative Downloads in 2020(3) 67mn Copies Sold Globally as of March (75+mn Including Console)(2) No.1 Downl
Slide 9: Games-as-a-Service
Who We Are GAMES-AS-A-SERVICE New Map Updates 30+ Modes Collaborations with Leading Brands Erangel Miramar Platoon Crash-Carnage Release 2017 MAR Release 2017 DEC Update 2019 JUL Update 2019 OCT Sanhok Vikendi Release 2018 JUN Release 2018 DEC Update 2020 JUL Update 2020 APR Ghillie PRO Karakin Para
Slide 10: Extend Life Cycle of the Game with Viewers and Players
Who We Are Extend Life Cycle of the Game by Creating a Virtuous Cycle with Viewers and Players 01 Increase awareness / interest in Esports through game contents Form / reinforce 02 fandom by having ex) Pick’em Challenge richer experience Esports Players Viewer Esports Contents Core Fans Fans ex) Esp
Slide 11: Successfully Pioneering New Form of Esports
Who We Are Successfully Pioneering New Form of Esports Regional Leagues 1st Official Esports Competition by PUBG 2017 2018 2019 2020 2021 G-Star Gamescom GLL Faceit MET Major 3rd Party Competitions 11
Slide 12: What made it possible
What made it possible Who We Are What Made it Possible The Future We Envision Financials Appendix
Slide 13: Unwavering Focus on Developing Masterpieces and Original Creatives
What Made It Possible Unwavering Focus on Developing Masterpieces and Original Creatives 2007 2022 (Planned) 2017 To Set a New Standard for the Establishment Pioneered a New Games Genre, “Battle Royale” Survival Horror Game Genre Starting from a Small Team of 40+ PC/Console Focused / 1% Chance to Wi
Slide 14: Reinforcing Global Collaboration System
What Made It Possible Reinforcing Global Collaboration System for Development of Masterpiece & Service Publishing Marketing Development Live Ops Europe Asia Americas Madison Amsterdam Vancouver Spain Turkey Seoul San Ramon Santa Mad Glory Monica India Shanghai / Thailand Chinese Taipei Sao Paulo Mid
Slide 15: KRAFTON: A Magnet for Global Creative Talents
What Made It Possible KRAFTON: A Magnet for Global Creative Talents GLEN SCHOFIELD DAVE CURD JENNY RYU Striking Distance Studios PUBG Creative Director Head of Art Department of Krafton Chief Executive Officer STEVE PAPOUTSIS PAWEL SMOLEWSKI KEVIN LIN Striking Distance Studios Thunder Tier One Non-S
Slide 16: Talent-Centered Principles to Establish Sustainable Creative Platform
What Made It Possible “Talent-Centered” Principles to Establish Sustainable Creative Platform Producer Group A program which provides opportunities for developers to have deeper understanding of game development, to master production management, and to grow up as a talent who can connect creativenes
Slide 17: Best-in-Class Mobile Game Development Capabilities
What Made It Possible Best-in-Class Mobile Game Development Capabilities, Amid Heavy Reliance on Chinese Developers for most AAA Games in Mobile Transition Graphic Rendering Network Sync. / Optimization Global Illumination: Lighting effect for Network Replication Graph: Rapid realistic graphics beyo
Slide 18: The future we envision
The future we envision Who We Are What Made it Possible The Future We Envision Financials Appendix
Slide 19: Game Has Become the Largest Entertainment Segment
The Future We Envision Despite its Short History, Game Has Become the Largest Entertainment Segment Size & Growth Outlook of Key Media / Entertainment Segments #1 Terrestrial Animation(6) Broadcasting(3) Movie(6) Music(6) OTT(3) Book(5) Gaming (2020E)(1) On-demand TV(3) Gaming (2023E)(1) $14B(4) $30
Slide 20: Mainstream Content with 2.8B Global Users
The Future We Envision As a Mainstream Content with 2.8B Global Users, Game is Ever Expanding its Presence Game: Mega Content Market with 2.8B Gamers Generating Highest User Attraction among Other Content Number of Gamers in the World (bn)(1) % of Viewership by Major Category on YouTube Gaming Peopl
Slide 21: Universe Expansion
The Future We Envision KRAFTON Has Been Creating Original Game IPs & Expanding the IP Universe into Various Entertainment Formats Movies Universe Expansion Shows / Series Novels Esports Webtoon / Comics World Builder Game Game IP A B IP Expansion Interaction Fun Designer 21
Slide 22: Expansion of Game IP PUBG to PUBG Universe
The Future We Envision Expansion of Game IP ‘PUBG’ to ‘PUBG Universe’ TITAN Plan to launch in Plan to launch in 2022 2021 Launch in 2017 Webtoon Graphic Novel TV Series Maximizing the IP’s potential by adapting various stories about Short Animation Webtoon Animation “Survival” into different mediums
Slide 23: Continued Investment in Creative and Promising IPs
The Future We Envision Continued Investment in Creative and Promising IPs in Addition to the Expansion of PUBG IP New IP • Korean fantasy novel released in 2003 • Unique story of 4 tribes: Humans, Rekkon, Nhaga, and Tokebi • Solid core fandom Aiming to develop new global mega IPs with our capabiliti
Slide 24: Studios Focus on Development, KRAFTON Provides Publishing, Tech, Biz Support
The Future We Envision Studios Focus on Development Based on Creative Identity, while KRAFTON Provides Publishing, Tech, Biz Support Independent Studios KRAFTON KRAFTON • Approve new games, milestones TERA / ELYON PUBG / NEW STATE • Approve studio budget, staffing Publishing • Role as a Publisher Te
Slide 25: KRAFTON's Unique Development Culture: Bottom-up Development System
The Future We Envision KRAFTON’s Unique Development Culture: A Bottom-up Development System Nurturing Differentiated Development Culture Aligned with the Studios’ Respective Characteristics and Environment Conception / Development Publishing Pre-production • Review / approve yearly budget and staffi
Slide 26: Ready to Provide Global Direct Publishing
The Future We Envision Ready to Provide Global Direct Publishing with Strengthened Publishing Capabilities Publishing Tech – Technical Expansion of Service Marketing • Global Publishing Platform: base technology that enables • Strengthen marketing capabilities with a focus on Creatives efficient ope
Slide 27: Game is an Early Form of Interactive Virtual World
The Future We Envision Game is an Early Form of Interactive Virtual World Core Elements of Game as Interactive Media Core Elements of Interactive Virtual World Social Interactive Networking Content Identity of World & In-World Participants Economy In-Game In-Game Community Content Universe In-Game /
Slide 28: Content Consumption Poised for Explosive Growth
The Future We Envision Content Consumption is Poised for Explosive Growth with the Advancement and Widespread Adoption of Deep Learning and the Advent of Virtual World Advent of Increased Activities Expanded & Virtual World & Time Spent in Virtual World + Enhanced Content in Virtual World Further Fa
Slide 29: Pursuing Enhanced Interactive Experience through Deep Learning
The Future We Envision KRAFTON Ultimately Pursues an Enhanced Interactive Experience such as Virtual Friend, through the Development of Deep Learning Technology 1 Language Model: GPT-3 (Generative Pre-trained Transformer 3) 2 Open Domain Conversation Agent (Chatbot with memory) • Model capable of ge
Slide 30: Financials
financials Who We Are What Made it Possible The Future We Envision Financials Appendix
Slide 31: 2Q21 Results at a Glance
2Q21 Results at a Glance Key Performance More than numbers PUBG: NEW STATE Total PUBG Mobile Global PUBG IP Presence Pre-registration (2) Revenue Growth Revenue Growth ~59 Million ~32 Million +7 % YoY ~+30 % QoQ Global Daily Active Users (1) Battlegrounds Mobile India PUBG PC Adj. EBITDA(5) Margin G
Slide 32: 2Q21 Results at a Glance
2Q21 Results at a Glance Revenue KRW 459.3bn (+7.0% YoY, -0.4% QoQ ) Growth sustained from mobile and PC segments driven by differentiated expertise in live ops and in-game monetization efforts Operating Profit KRW 174.2bn (-0.3% YoY, -23.3% QoQ) Despite the high base, continuous revenue growth offs
Slide 33: Revenue Breakdown
Revenue Breakdown Revenue KRW 459.3bn (+7.0% YoY, -0.4% QoQ) • Mobile segment revenue reached KRW 354.2bn, a 4.3% increase YoY • Successful in-game monetization, including various updates and brand collaborations led to a record high quarterly revenue for PUBG Mobile • PC segment revenue reached KRW
Slide 34: Profits
Profits Operating Profit KRW 174.2bn (-0.3% YoY, -23.3% QoQ) Adj. EBITDA KRW 218.2bn (+11.7% YoY, -13.5% QoQ) • Adj. EBITDA reflecting share-based payment expenses with some one-offs increased 11.7% YoY, with adj. EBITDA margin of 47% • Operating Profit Adj. EBITDA(1) KRW bn KRW bn 55% 52% 47% 49% 4
Slide 35: Expense Breakdown
Expense Breakdown Operating Costs KRW 285.2bn (+12.0% YoY, +22.0% QoQ) • Personnel costs increased 16.6% YoY, and increased 14.1% QoQ at KRW 73.9bn • Increase in headcount due to the inclusion of newly consolidated subsidiary, Dreamotion, ongoing business expansion as well as salary-base raise • Pai
Slide 36: 2H21 Strategy – PUBG IP
2H21 Strategy – PUBG IP IP Life Cycle Extension Through Fresh and Attractive Content and Monetization Scheme for 60 Million Global Avg. DAU Advanced global live service expertise encompassing PC, mobile, in-game contents (maps, events, collaborations) and PUBG Universe From casual to core user base,
Slide 37: 2H21 Strategy – PUBG: NEW STATE
2H21 Strategy – PUBG: NEW STATE The First Premium Mobile Game in PUBG Universe to be Launched Globally During 2H 2021 BEYOND BATTLE ROYALE experience through high-end graphics, realistic gunplay and optimized physics engines for mobile games Level up both gaming experience and profitability by addin
Slide 38: 2H21 Strategy – PUBG: NEW STATE (continued)
2H21 Strategy – PUBG: NEW STATE (continued) 앞으로 출시될 다양한 게임들을 글로벌 커뮤니티 대상 효과적으로 소개하고 직접 서비스 하기 위한 Publishing 역량 강화 글로벌과 여러 플래솜GPP (Global Publishing Platform), Expansion of Game Influence by Providing More Diverse Content for Global Users 크리에이티브, 인플루언서, 지역 를 중심으로 커뮤니티 스노우볼링 마케팅 Marketing Creating a V
Slide 39: 2H21 Strategy – New Markets
2H21 Strategy – New Markets Status as ‘National Game’ in Fast-growing India and MENA region Game App Gross Cumulative Revenue Ranking Downloads DAU India #1 ~270M 17M+ 5th(1) Largest Economy 2020 ~40% of total Jul 2020 in the World Gross Revenue(3) smartphone users (4) Average DAU Average Age of 28
Slide 40: 2H21 Strategy – New Markets
2H21 Strategy – New Markets KRAFTON’s Strategic Initiatives for Pre-empting Leadership in Emerging Markets Initial Success Strengthening Local Network Leading Social Platform “The” Most Iconic PUBG India Established As a social Game in India Nov 2020 Phenomenon • Game with the most users in India #1
Slide 41: Summary of Financial Statements
Summary of Financial Statements Consolidated Income Statement Consolidated Statement of Financial Position (Unit: KRWbn) 2Q20 3Q20 4Q20 1Q21 2Q21 (Unit: KRWbn) 2Q20 3Q20 4Q20 1Q21 2Q21 Revenue 429.4 366.8 352.6 461.0 459.3 Current Assets 1,224.1 1,322.2 1,292.5 1,440.6 1,554.8 Operating Costs 254.6