Good morning. This is Jessup Jang from Netmarble's IR. I thank the shareholders and analysts for taking time out of their busy schedules to attend today's earnings session. Today with us are CEO Yong Shik Kwon and CFO Kiuk Doh, and Head of Global Business, Sungwon Lee. They will address your questions after the results presentation. The content presented today has yet to undergo an independent auditor's review and could be subject to changes upon such review. With that, CEO Doh will give the results presentation.
Goo d morning, this is Kiuk Doh. I will give you the general results for Q1 2023. Please refer to page three. With new title absence and seasonal influence of overseas business, Q1 revenue decreased 12.3% QOQ and 4.6% YOY at KRW 602.6 billion.
With quarterly revenue decrease, EBITDA decreased 43.7% QoQ and 56.0%YoY at KRW 20.1 billion. EBITDA margin rate recorded 3.3%. Next page is on operating and net profits. Q1 saw an operating loss of KRW 28.2 billion and net loss of KRW 45.8 billion, and controlling share of the loss of KRW 37.7 billion. With non-occurrence of intangible asset impairment that was reflected in the previous quarter, non-operating loss increased KRW 377.9 billion over the previous quarter. Next page is on regional revenue breakdown. Overseas revenue in Q1 was at KRW 504.3 billion. Overseas revenue contribution decreased 1 percentage point over the previous quarter at 84%.
The regional breakdown is as follows: North America 48%, Korea 16%, Europe 13%, Southeast Asia 10%, Japan 7%, and others 6%. Next page is on genre mix. In Q1, casual games accounted for 47%, RPG 27%, MMORPG 16%, and others 10%. The genre remains diversified. RPG revenue has decreased 7 percentage points over the previous quarter due to overseas seasonal influence of Marvel Contest of Champions. Next page is on game portfolio. As of Q1, Sapphire World accounted for 10%, Marvel Contest of Champions 9%, Cash Frenzy 9%, Lotsa Slots 9%, The Seven Deadly Sins: Grand Cross 7%, Ni no Kuni: Cross Worlds 5%, Lineage 2 : Revolution 5%. The portfolio remains diverse. Next page is on major cost structure.
Operating expense in Q1 recorded KRW 630.8 billion, which is 11.3% decrease QOQ and 1.9% decrease YOY. Commissions paid was at KRW 247.1 million. With revenue decrease, the amount decreased 9.0% QOQ and increased 0.7% YOY. Labor cost was at KRW 187.5 billion. With headcount decrease, it shrunk 7.4% QOQ and increased 0.3% YOY. Lastly, marketing cost was at KRW 100.3 billion. With absence of new titles in Q1, it decreased 17.9% QOQ and 11.1% YOY. On our new titles lineup. In 2023, the company's going to have a lineup of 14 new titles in total.
They will be nine multi-platform buys, the new titles using competitive IPs such as Solo Leveling: ARISE and Arthdal Chronicles, and five China licensed titles. The company in Q1 focused on adding sophistication and publishing to the to-be launched title. Development is well underway. We are doing our best for successful launches of well-made titles that will set us apart and prove our game development competencies that will place us once again as a global top-tier game company. I look forward to your support and interest. This concludes the results presentation. Should you have any questions, I'll be glad to address them.
Q&A session will begin. Please press star one, then star 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, then star two on your phone. The first question will be presented by Lee Sun from IBK Investment & Securities. Please go ahead with your question.
Yes, I have two questions. Well, first, well, it's related to your introduced Everybody's Marble Metaworld that was duly launched in April. What is the expected revenue for Q2 with this title? What's your expectations going forward? Secondly is on your marketing and labor related cost guidance. Could you give us some numbers as to the marketing cost and labor guidance? Yes, this is CEO Kwon addressing the first question. Now on Metaworld, the global launch. Well, with the given situation, the launch has been optimally in Korea and Japan. This time around, the launch centered around Thailand. In Thailand, we are getting the results required, and we do have plans to engage in earn-out marketing activities for U.S. In 2023, within the year, we are going to launch the title in Korea and Japan.
It's a global launch, but it was first initiated in Asia. With that, we have limited influence from this title on our revenue. With the full launch in US and Korea, we do expect the title to be giving favorable influence to our revenue numbers.
Uh, 비용에 대한 부분은 전년도 사 분기 실적 발표 때 말씀드린 것처럼, 그 전반적으로 비용에 대해서는 굉장히 많은 신경을 지금 쓰고 있으면서 일 분기 실적 발표, 지금 현재 시점에 데이터를 보시면 아시겠지만 전분기 대비 전반적으로 다 감소 추세에 있으면서 사 분기까지 이 기조에 대한 거는 큰 변화가 없을 걸로 예상되면서, 어... 전년 대비는 분명히 줄 것이고, 일 분기 대비로는 어 전체적인 기조는 똑같겠지만, 다만 마케팅비 정도는 하반기 신작 라인업에 따라가지고 약간의 변동은 있겠지만 비율상에 있어서의 큰 변화는 없이 유지하고자 내부적인 계획을 하고 있고, 그런 대로 모니터링하면서 매니지먼트 할 계획입니다.
Yes. This is the second question addressed by CEO Kwon on cost effectiveness. As is communicated in our fourth quarter 2022 earnings release session, we are going to be paying keen attention to adding more efficiency when it comes to our expenditure. As is illustrated in our Q1 data, we've seen tangible results on a QoQ basis. Until the fourth quarter of this year, we will continue our efforts going forward. On a YoY basis, you will be witnessing the influence of our cost cutting measures. Compared to the first quarter with the new title lined up for the launches in the second half, there could be slight changes in our second quarter numbers, but percentage-wise we will be maintaining our status.
We will of course be monitoring and managing the numbers on a very thorough basis.
다음 질문 받겠습니다.
Next question, please.
다음으로 질문해주실 분은 교보증권의 김동운입니다. The following question will be presented by Kim Dong-woo from Kyobo Securities. Please go ahead with your question.
질문 기회 주셔서 감사합니다. 중국 출시 예정 중에 게임들 관련해서 질문이 있는데 먼저 중국 출시 예정작들의 출시 일정과 퍼블리셔 공개해 주실 수 있는 부분 알려주시면 감사하겠습니다. 또한 넷마블 내부적으로 가장 기대하고 계시는 작품이 무엇인지도 공유해 주시면 감사하겠습니다. 이상입니다.
Yes, I have questions of titles to be introduced in the Chinese market. Please brief us of your schedule. Could we know the publisher of your titles to be released in China? For what title do you have the greatest expectation?
Kwon Young-sik. 지금 저희들이 중국 올해 출시를 준비하고 있는 게임이 4 종, 주요 4 종 게임을 출시를 지금 준비를 하고 있습니다. 그게 신석기시대, 일곱 개의 대죄, A3: Still Alive, 또 제이나 Grand Cross World, 이 4 종의 주요 게임 출시를 준비하고 있고요. 지금 신석기시대, A3: Still Alive, 일곱 개의 대죄는 이미 사전 모객을 진행 중이고, 1 차 CBT를 진행 중인 게임, 이미 1 차 CBT를 마친 게임들이 있습니다. 대부분 게임들이 연내에 계획대로 출시가 예정되어 있고, Publisher는 일곱 개의 대죄와 제이나 Cross World는 Tencent가 Publisher이고요. 신석기시대는 신석기시대 개발사와 협력하여 직접 서비스를 진행할 계획이고, A3: Still Alive는 중국의... 여기서 말씀드리겠습니다.
Yes. CEO Kwon addressing your question. Yes, we are making ample preparations for our introduction in the Chinese market. We have four major titles to be introduced in that market, including Stone Age, Seven Deadly Sins, Grand Cross, A three Still Alive, and Ni no Kuni Cross Worlds. As for Stone Age, Seven Deadly Sins, and A three Still Alive, we have begun a pre-subscription process, and we have completed the first round closed beta test. Everything will be on schedule and introduction will be within the year as we have planned. As for your publisher related question, for Seven Deadly Cross, and the Cross Worlds, it will be Tencent. As for Stone Age, we are cooperating with the developer to engage in direct servicing activities in the Chinese market.
A3: Still Alive의 중국 퍼블리셔는 Next Joy입니다. 저희들이 이 모든 게임에 대한 기대가 큰 이유는 대부분의 게임들이 저희들이 중국 현지에서 개발하고 현지화를 진행한 프로젝트들입니다. 저희들이 중국 시장에 대한 디테일과 감성적인 부분까지 전체적으로 견고하게 준비된 프로젝트라고 생각을 합니다. 올해는 중국에서 좋은 성과가 나올 거라고 예상을 하고 있고, 이 모든 게임에 대한 기대는 다 같이 크다라고 말씀을 드릴 수 있겠습니다.
The publisher for A three: Still Alive is Next Joy. As for which title we have the most expectations for. Well, we have great expectations for all four titles because we have developed these titles on the ground and we have done much of a localization process. We have paid keen attention to all the details required by the Chinese market. We've also took into consideration the sentimental and emotional part of the Chinese players as well. It's a very well-prepared project, and we do have big expectations for the Chinese market. We have equal amount of expectation for all the titles in-
Next question, please.
The next question will be presented by Kim Jin-goo from Kiwoom Securities. Please go ahead with your question. .
네, 질문 감사합니다. 그 두 가지 질문드릴 거고요. 첫 번째로 그 신작 게임별 출시 timeline을 좀 분기 기준으로 짚어주시면 감사할 것 같고요, 핵심 게임별 주요 게임성, 뭐 강조 포인트 있으시면 같이 좀 언급을 부탁드리겠습니다. 두 번째 질문은 그 중국 출시 예정 게임에 대한 현지화 수준에 대해서 좀 말씀을 좀 해주시고요, 비출시된 버전 대비 어떤 측면에서 게임성 차별화 포인트가 존재하는지 좀 짚어주시면 감사하겠습니다. 감사합니다.
Yes, I have two questions. First, I would like to know the timeline for your to-be-introduced new titles. Could you please give us the quarter when the new titles will be introduced? What's the major game ability of such new titles? My second question is related to Chinese market. How much of a localization have you done to your titles? Well, how is it different from your existing titles?
네, Kwon Young-sik입니다. 지금 말씀드리는 그 timeline에 대해서, 내부적으로는 변경 가능성이 한 1개월, 2개월 이내라고 생각은 되는데, 그 분기별로 얘기를 좀 드리면 Grand Cross와 Tower of God은 6월, 7월 아마 될 거로 예상하고 있고요. King Arthur은 3분기, 그다음에 4분기에 Level Up Alone, Arthur: The Lost Kingdom, 그다음에 Seven Knights Idle Adventure, 그다음에 그 Paragon과 HypeSquad는 저희들이 지속적으로 soft launching을 하면서 지표를 봐야 되기 때문에 그랜드 론칭 시점에 대해서는, 정확하게 지금 말씀을 드리기가 좀 어려울 것 같습니다.
Yes. This is CEO Kwon addressing your question. On timeline, the exact date could see change by a month or two. If I may talk about the quarterly plans, well, for Tower of God and Grand Cross, we are scheduling it for an introduction in June or July. As for King Arthur, it's scheduled to be at third quarter. Level Up Alone, that's fourth quarter. In the same quarter, we would also be thinking of releasing Arthdal Chronicles . As for Paragon and HypeSquad, we are keeping a keen eye on the soft launch process. According to the results of the soft launches that we did, after that, we will be determining the exact scheduling of a grand launch.
이제 각 게임, 각 게임에 대한 게임성의 차별화 포인트는 사실 게임 숫자가 좀 꽤 많고, 각 게임별로 이 자리에서 설명드리기는 좀 어려울 것 같고요. 잘 아시겠지만 저희들이 주요 게임을 론칭하기 전에는 사전에 기자 간담회를 진행을 합니다. 그 기자 간담회를 하면서 각 게임별 주요 차별화 포인트에 대해서는 상세하게 설명을 드릴 수 있도록 하겠습니다.
Now on game ability. Well, we are planning to introduce a numerous number of titles going forward, so it would take too much of the time to be giving you the detailed game ability of each and all titles. But as you're well aware, before our new title launches, we do have a press meeting during which we give detailed differentiating factor of our new titles.
그리고 중국 그 서비스할 게임들에 대한 현지화 수준은 사실 이 현지화에 대해서 저희들이 의견을 주는 거는 적절하지 않다라고 판단을 했기 때문에, 중국 내에서 publisher와 개발사가 대부분의 게임들을 수정을 해왔습니다. 각 게임마다 현지화 수준이 다 각기 좀 다르고, 현지화 기간이 1년 이상 걸렸기 때문에 많은 부분들이 중국 현지화됐다라고 저희들은 판단하고 있습니다. 이 부분에 대해서는 저희들도 CBT를 하면서 주로 지표 중심으로 보고 있기 때문에 특정 게임에 대한 현지화 수준을 말씀드리기는 좀 어려울 것 같습니다.
As for the second part of your question related to the level of localization for our games to be introduced in the Chinese market, I think it's rather inappropriate that we comment on the level of localization. We will rely on our Chinese publishers and developers to work on the localization process. Having said that, the localization process has taken us more than a year, and I could say that much part of the games in the Chinese market has been localized. As was mentioned, we have conducted the CBT, and we have paid much attention to the indexes during the CBT. With that, I would say is that there has been pretty much a localization for the titles to be introduced in China.
다음 질문 받겠습니다.
Next question, please. 다시 한 번 말씀드리겠습니다. 질문을 하실 분은 전화기 버튼의 별표와 일번을 누르시기 바랍니다. Once again, if you have any questions, please press star one, star and one on your phone.
이것으로 Netmarble 2023년 1분기 실적 발표를 마치겠습니다. 추가 질문 있으신 분들은 당사 IR팀으로 연락주시기 바랍니다. 참석해 주신 여러분께 진심으로 감사드립니다.
Well, with that, we will conclude the earnings session for Q1 2023 of Netmarble. Should you have any follow-up questions, please don't hesitate in contacting our IR team. Thank you.