Greetings everyone. I am Kim Yoon from Pearl Abyss IR team. First of all, I express my deepest gratitude to the analysts and investors in and out of Korea for taking part in the 2025 Q1 Pearl Abyss earnings presentation, despite your busy schedules.
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Before elaborating on today's business results, I would like to ask for your understanding regarding the following. The financial and business results contained in today's earnings release have been prepared for the convenience of investors and are subject to change depending on the final closing of our books. In addition, the accuracy and completeness of the financial and business results and the earnings results material are not guaranteed, and the company is not obliged to give updates of the accounts given after this date. So please take these factors into consideration.
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We have here with us at the earnings presentation today, Pearl Abyss CEO 허진영, CBO 김경만 and CFO 조미영. We will first hear the business performance presentation highlights from CFO 조미영, and then engage in a Q&A session.
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Greetings. I am 조미영. Thank you once again for taking part in our company's earnings conference call despite your busy schedule.
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I would like to cover 2025 Q1 major financial highlights and performance. Black Desert and EVE provided stable live service in Q1 as well through strengthening contents and continued consistent performance. Black Desert in Q1 added the new Dream Horse Voltarion that uses lightning as well as Orzeca, which is the last story of cooperative dungeon Atoraxxion. Atoraxxion content following the first update with the field hunting ground and main quest, added a five-person cooperative conquest content to add to the fun. For console, while carrying out steady updates, including season server and Dream Horse, we stepped up efforts to prepare for PlayStation 5 and Xbox Series X and S versions. For mobile, we consecutively updated Nightmare, Tshira, and Serene Forest and provided the fun of PVP and monster hunting at the same time.
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For EVE Online, we had additional updates to the Revenant expansion pack and strengthened our game strategy and game immersiveness to users. In addition, we revealed our 2025 roadmap and shared that we have been preparing for two expansion packs a year and the Alliance Tournament.
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Apart from this, we were thorough in preparing for new services to expand revenue. First, Crimson Desert participated in GDC in March. Based on Crimson Desert assets, we demonstrated the BlackSpace Engine. In the Crimson Desert open world, we provided demos which allow you to directly experience interaction with nature and physics effects, which also heightened expectations to another level. In addition, in the three Benelux countries and in London, we held a hands-on demo for media and creators. We had continued positive responses by the media to our excellent graphics in death battles, open world views, and physics effects, and we continued our successful demonstration. Blockchain-based EVE Frontier provided 10 days of free play, and we added new contents and had in-game events and continuously upgraded the game.
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Next, I would like to cover 2025 Q1 performance. Q1 operating revenue posted KRW 83.7 billion and went down 12.5% QOQ. This was caused by the removal of 2024 Q4 Pearl Abyss Capital's additional revenues, as well as Black Desert Mobile China related revenues. Operating losses posted KRW 5.2 billion and turned to a deficit with increase in CCP Games' new title development costs. Net profit posted KRW 500 million. With reduction of gains on valuation of fair value financial assets and foreign exchange related gains in Q4 of 2024, it went down 98.9% QOQ.
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I would like to walk you through more details related to operating revenue. The operating revenue from this quarter's gains posted KRW 83.5 billion and decreased 8.3% QOQ. Looking at the operating revenue breakdown for different regions, it was 20% for Korea, 22% for Asia, and North America and Europe reported 58%.
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Next, I would like to cover operating expenses. Q1 operating expenses posted KRW 88.9 billion, a 4.8% decrease QOQ. For labor, it posted KRW 49 billion, a 4.5% increase QOQ. For your reference, headcount at the end of Q1 recorded 1,336, and 761 are in the developer category, which is 57% of the total headcount. Commissions posted KRW 17.3 billion, a 6.1% decrease QOQ, and advertising posted KRW 7.3 billion, a 38.1% decrease QOQ.
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Lastly, I will cover 2025 Q2 major highlights.
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Black Desert in April added a new difficulty level in the Land of the Morning Light's Donghae Golden Pig King Boss. As this is a challenging difficulty content update, a variety of rewards were provided upon successful conquest, and we provided an environment where the users could immerse themselves more in the game. Apart from this, we plan to continuously improve live content and node war and siege war to continue stable and consistent service. In addition, in June, through Heidel Ball, we plan to communicate second half major updates and provide more to enjoy and strengthen more communication with our users. For Black Desert console, we plan to launch PlayStation 5 and Xbox Series X and S versions on June 26th and provide a better experience to users. We will provide diverse contents that we could not until now due to the limitations of devices, and provide more fun to the game. In the case of mobile, we updated the Rabam skill in April, which could enable stronger attacks. We have plans to launch Atoraxxion Vahmalkea, where five party members could play together.
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For EVE, we are planning to launch the new expansion pack, Legion, that implemented the freelance system. Until now, you needed to join certain groups to enable contracts between users, including for transport, work delegation, and related supplies. But when Legion is updated, users can enjoy free economic activity regardless of whether they belong in their group. In addition, during the EVE Fanfest that was held in the first week of May, we disclosed our second half update, including our map revamp and strengthened communication with users.
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We are also smoothly carrying out preparations for our new titles to secure new growth engines. First, we are continuously implementing tests for EVE Frontier and plan to strengthen marketing. We thoroughly will test and validate so that we can offer high-quality new content. For Crimson Desert, before its launching in Q4 of this year, we plan to heighten marketing intensity. Last week, we participated in PAX East, held in Boston in the US, and successfully concluded the first Crimson Desert B2C demonstration in North America. We plan to participate in a global game event in June and plan to show a new demo build for Crimson Desert for the media.
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Crimson Desert is carrying out full-scale marketing from Q2. Until last year, through notable events including Gamescom and TGA, we focused on sharing game development progress. From now on, we are carrying out marketing that can lead to real game performance by meeting more users, media, and creators each month. In addition, apart from the boss wars that we have been sharing with you so far, we will consecutively showcase our open world and story that you are very curious about. As many of you have been waiting for so long, in order to achieve the performance that can repay you for your patience, everyone here at Pearl Abyss will do our best until the very end. We will be looking forward to more of your interest and support. Thank you very much.
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With this, we will conclude 2025 Q1 earnings presentation by Pearl Abyss and start our Q&A session.
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Now Q&A session will begin. Please press star one, that is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two on your phone.
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It seems that we do not have any questions in the queue now. I believe that it's a good time for us to give you a progress update on Crimson Desert. I would like to tell you that for Crimson Desert, while implementing our QA process, we are in the last stages of preparing for launching, including having our voiceover work and preparing for console certification as well.
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In the case of marketing, we plan to participate in more and more diverse game events this year. In Q1, we had a demo event in Benelux three countries and in London with core media and influencers, and we also participated in the GDC as well. Last week, we participated in PAX East and continued our aggressive marketing actions.
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Through this, we have been sharing our game to our global users who have actually come in contact with our game for the first time. We have been receiving very positive feedback. Through this, we have been increasing the name recognition of Crimson Desert, and we have been heightening expectations.
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Also, at a global game event that will be held in June, we plan to have for the media, not just sharing with you our Boss War, but a demo with our new build. Also, in the process of our marketing, we plan to consecutively share with you new content, including our open world and story to heighten the effect of marketing. Everyone here at Pearl Abyss is doing our utmost for the successful launching of Crimson Desert. I hope that all of our shareholders, investors and everyone have continued interest and support for the game development.
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It was a comment made by our CEO, Heo Jin-young. We will take the next question.
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The first question will be provided by Jee-eun Lee from Daishin Securities. Please go ahead with your question.
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If you can hear me, we welcome your questions.
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Yes.
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Thank you for the opportunity. I think until the last quarter you have been sharing with us your Black Desert Mobile and PC revenue breakdown. But I think that for this quarter, this was not included in your presentation. So can you share the breakdown with us?
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Regarding the contribution of the revenues for Black Desert and IP, it is at a similar level for each quarter. In addition, in regards to your question about a platform revenue contribution, although we do have slight differences for each quarter according to content updates, it generally shows a similar trend to the past.
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The question was answered by CBO Kevin Kim .
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We will take the next question.
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The following question will be presented by Junhyun Kim from HSBC. Please go ahead with your question.
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Thank you for the opportunity. Thank you for sharing with us updates related to Crimson Desert. I am wondering if you can share with us in numbers about any performance or results that you gained from your marketing efforts for Crimson Desert. Will that be possible?
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Thank you very much for your question. I think I will need to apologize that although we are meeting diverse users in different regions directly, and we are receiving feedback and getting many reviews and feelings firsthand, the responses, the warm responses that they are showing to the game. We are also seeing a lot of the articles by the media regarding our game. I think it will not be possible for us to give you in numbers or metrics about the performance of our marketing. However, we can tell you that we are keeping a very close eye on the different responses by influencers. For example, video feedback or the feedback by different users. We are feeling firsthand that the expectations of the market and the users is heightening. Although I cannot answer your question in numbers, I hope you can understand that we are getting the responses firsthand and feeling them.
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The answer was given by our CEO, Heo Jin-young. We will take the next question.
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Currently, there are no participants with questions. Please press star one to give your question.
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The following question will be presented by Jihyun Kim from Heungkuk Securities. Please go ahead with your question.
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Thank you for the opportunity. I have a question about whether you are applying any of the diverse feedback that you said you're getting from global users through your marketing. Are you applying any of that feedback to the game? We know that you've shared with us at G-Star, the Boss Wars, but after you had that revealed to us, can you tell us if any development direction has changed or has been revised with the feedback? Thank you.
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Until now, when we see the current situation, we mentioned that we participated in the North America PAX East. We were successful in our first B2C demo in North America, and it seems that we have almost ended the tour when we were able to showcase the different demos through our Boss Wars.
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At the event, we had the demo booth where users can experience firsthand the Boss Wars of Crimson Desert. Through diverse events, we actually were one of the companies that participated in PAX East that received the most amount of attention. We could find out firsthand the positive responses we got to Crimson Desert graphics and our combat system.
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However, we are aware that some of the users who experienced Crimson Desert for the first time gave some feedback that it was a little more challenging to play, and we also are aware that we have been getting some feedback about the optimization for console control. We have been getting this feedback with our Boss War demos, and we have been making improvements based on these pieces of feedback. With the demos of the Boss Wars, we have been getting more increased positive feedback about the unique and dynamic combat system that is very special to Crimson Desert. We will do our best to enhance our strength, but we will do our best to also incorporate this feedback so that we can have more development in the right direction and do our best until the launch in optimization so that everyone can enjoy our console play with more convenience and fun.
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Our CEO, Heo Jin-young, answered the question. We will take the next question.
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Currently, there are no participants with questions. Please press star one to give your question.
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Thank you very much for your participation. It seems that we have reached the end of the earnings conference call for Pearl Abyss 2025 Q1. Thank you very much once again.