Good afternoon. I'm Sang Hoon Lee from Netmarble IR team. First, let me extend my sincere appreciation to investors and analysts for joining Netmarble 2022 Q1 earnings conference call despite your busy schedule. With us are CEO Young-sig Kwon, CEO Gi-wook Do, and President of Global Headquarter, Seungwon Min. After the formal presentation, we will have a Q&A session. I would like to remind you that contents presented during today's call have been prepared before the completion of the external audit. Therefore, based on the outcome of the audit, please understand that there may be some changes. Now, Netmarble CEO Gi-wook Do will present the company's earnings. Good afternoon. This is Gi-wook Do. First, summary of our Q1 earnings. Please turn to page 3.
Q1 revenue was KRW 631.5 billion, an increase of 10.7% YOY, and a decrease of 16.1% QoQ, due to the absence of a new blockbuster title, downward stabilization of previously released games revenue, along with seasonality in overseas business. EBITDA was KRW 45.7 billion, a decrease of 43.1% YOY, and a decrease of 62.2% QoQ due to the decrease in revenue. EBITDA margin was 7.2%. Next page is operating profit and net profit. In the first quarter, operating loss was KRW 11.9 billion, net loss was KRW 51.8 billion, and controlling shares net loss was KRW 43 billion. Non-operating profits fell quarter-over-quarter to KRW 130.4 billion.
The main reason for the decline was that in this quarter, we didn't experience the one-off temporary equity method-based gain from the high capital increase that we experienced in the previous quarter. Next page is revenue breakdown by region. Q1 overseas revenue was KRW 529.4 billion. The share of overseas revenue increased by six percentage points to 84%, with a reduction in the share of domestic revenue from the downward stabilization of revenue for games already released in the domestic market. By region, revenue shares were in the order of North America 49%, Korea 16%, Europe 12%, Southeast Asia 10%, Japan 8%, and other 5%. Next page is revenue breakdown by genre. In the first quarter, casual games 48%, RPG 21%, MMORPG 19%, and other 12%. We are continuing to further diversify our portfolio.
MMORPG's revenue share fell by seven percentage points quarter-over-quarter, with a downward revenue stabilization of previously released MMORPG games, including Ni no Kuni: Cross Worlds. Next page is game portfolio. As of the end of the first quarter, revenue share by key title, Marvel Contest of Champions 9%, Cash Frenzy 9%, Jackpot World 7%, Lotsa Slots 7%, The Seven Deadly Sins: Grand Cross 7%, and Ni no Kuni: Cross Worlds 7%. As such, we continue to maintain a well-diversified portfolio.
(다음은 주요 비용 구조에 대한 내용입니다. 1분기 영업비용은 6,434억 원으로 전분기 대비 7.9% 감소, 전년 동기 대비 24.6% 증가하였습니다. 지급 수수료는 2,455억 원으로 매출이 감소함에 따라 전분기 대비 13.2% 감소, 전년 동기 대비 4.8% 증가하였습니다. 인건비는 1,868억 원으로 신작 관련 개발 인력이 투입되면서 전분기 대비 2.1% 증가, 전년 동기 대비 30.3% 증가하였습니다. 마케팅비는 1,129억 원으로 1분기 대형 신작 부재로 전분기 대비 7.2% 감소, 전년 동기 대비 45.5% 증가하였습니다.)
Next page is major cost structures. In Q1 operating costs were KRW 643.4 billion, a decrease of 7.9% QoQ, and an increase of 24.6% YOY. Commissions were KRW 245.5 billion, and with the fall in revenue, commissions declined by 13.2% QoQ, however, increased by 4.8% YOY. Labor cost was KRW 186.8 billion, an increase of 2.1% QoQ, and 30.3% YOY due to the headcount increase related to the development of new titles. Marketing cost was KRW 112.9 billion, a decline of 7.2% QoQ and an increase of 45.5% YOY due to the absence of a new blockbuster title in Q1.
(신작 라인업에 대해 말씀드리겠습니다. 이 분기에는 제2의 나라: Cross Worlds 글로벌, 골든브로스, BTS Dream: TinyTAN House, 디즈니 미러버스, 머지 쿵야 아일랜드를 출시할 예정입니다.)
Let me talk about the lineup for new titles. In Q2, we plan to launch Ni no Kuni: Cross Worlds Global, Golden Bros, BTS Dream: TinyTAN House, Disney Mirrorverse, and Merge Kuya Island.
이어서 하반기에는 세븐나이츠 레볼루션, 오버프라임, 몬스터길들이기 아레나, 킹 오브 파이터즈 아레나, 챔피언스 어센션, 모두의 마블 메타월드, 그랜드 크로스W, 하이프스쿼드를 출시하고자 합니다.
In the second half, we plan to roll out Seven Knights Revolution, Overprime, Monster Arena, The King of Fighters Arena, Champions Ascensio n, Everybody's Marble: Meta World, Grand Cross W, and HypeSquad.
(이 중 몬스터길들이기 아레나와 킹 오브 파이터즈 아레나, 챔피언스 어센션, 그리고 모두의 마블 메타월드는 블록체인을 적용하여 출시할 예정입니다.)
Out of these titles, we plan to apply blockchain for Monster Arena, The King of Fighters Arena, Champions Ascension, and Everybody's Marble: Meta World.
(네, 당사는 지난 1분기에 올해 출시될 작품들의 게임성을 강화하고 폴리싱 작업에 심혈을 기울이며 숨 고르고 있는 시간을 보냈습니다. 이 분기부터는 블록체인이 결합된 제2의 나라: Cross Worlds Global, Golden Bros를 비롯하여 다양한 디바이스와 플랫폼 기반의 신작들을 다수 출시할 예정입니다. 그 어느 때보다 다양하고 풍성한 신작 라인업을 준비 중이며, 메타버스 그리고 블록체인 등 신사업도 적극적으로 진행하고 있는 만큼 많은 성원과 관심을 부탁드립니다.)
We spent the first quarter pacing ourselves to strengthen the playability and focus on polishing and refining the titles scheduled to be released this year. From the second quarter, we are planning to release multiple new titles played on a variety of devices and platforms, including games using blockchain such as Ni no Kuni: Cross Worlds Global and Golden Bros. Please stay tuned and give us your support as we are preparing a more diverse and richer new title lineup and by actively progressing with new businesses such as Metaverse and blockchain.
(네, 이상으로 실적 발표를 마치겠습니다. 궁금한 사항 질문 주시면 답변드리도록 하겠습니다. 감사합니다.)
This is the end of the earnings presentation. We'll now move on to the Q&A session. Thank you.
(그럼 지금부터 질의응답을 시작하겠습니다. 질문을 하실 분은 전화기 버튼의 별표와 일번을 눌러주시기 바랍니다. 별표와 일번을 누르신 순서대로 발언 기회를 드리겠습니다. 질문을 취소하시려면 별표와 이번을 눌러주시면 됩니다.) Now Q&A session will begin. Please press star one if you have any questions. Questions will be taken according to the order you have pressed the number and star one. For cancellation, please press star two. That is star number two on your phone. (처음으로 질문해 주실 분은 HSBC의 김준현 님입니다.) The first question will be presented by Junhyun Kim from HSBC. Please go ahead with your question.
(질문 기회 감사드립니다. 일단 첫 번째 질문은 1분기 때 신작도 부재하고 지속적으로 기존 작품에서 어느 정도 감소하는 모습이 보였는데, 이렇게 해서 영업이익에서도 적자 전환이 있었고, 이 분기 때는 어떻게 전망을 하시는지, 그쪽에 대한 설명해 주시면 감사하겠습니다. 그리고 혹시 blockchain 적용으로 인해서 신작의 매출에 미치는 영향에 대해서도 설명해 주시면 감사하겠습니다.)
Thank you for the opportunity. I have two questions. The first question is that in respect to your activities in the first quarter, I know that you have been pacing yourself and gearing to actually prepare and release titles going forward. That's the main reason why in terms of Q1 earnings, we saw a decline in your revenue and overall profit. Now, I would like to take this opportunity to hear the company's outlook. As you look out to the second quarter, could you actually elaborate and give us more color as to what to expect from the company going forward? The second question is related to the comment about how you are continuously applying blockchain technology in the new titles that you will be launching overall.
I just would like to get a better understanding of how this application will mean to the new titles that will be rolled out. What is the significance of this? Thank you. Let me first address your first question related to the earnings outlook. As you correctly mentioned in Q1, in respect to the existing games revenue performance, we experienced a downward trend. We, at the same time, did not launch a new blockbuster title. At the same time, we were also affected by the seasonality in the overseas business. That is the reason why we saw a decline in both the revenue and also the operating profit. As we look to the second quarter, we have a full lineup ready to be launched going forward.
Specifically, we have Ni no Kuni: Cross Worlds global, as well as many other titles that we have been preparing for. We believe that the releases will help us to drive revenue growth. At the same time, we will have to recognize that as we release new titles, we will be incurring additional marketing costs and higher labor costs going forward. Overall, we believe that we'll see an upside on the revenue side starting from the Q2. Overall, for a full-fledged recovery in our profitability, that will begin to happen from the second half of this year. In respect to your second question, I will address that question. I am Young-sig Kwon. In respect to Netmarble, we are using the blockchain system and applying that to our games.
The way we have designed this was to make sure that blockchain system will continuously attract users, and it will also lead to the increase in our in-app revenue as well. For the past two months, in terms of our operations, we actually saw, witnessed this happening, and we saw a rise in our in-app revenue. Specifically, as we actually applied this in A3: Still Alive Global, we saw increases in both the DAU and our in-app revenue. That is why we believe that it has a direct correlation. Moving on to the next question.
The next question will be provided by Ui Hoon Jeong from Eugene Investment & Securities. Please go ahead with your question.
Thank you for the opportunity, and good afternoon. I am Ui Hoon Jeong. I will broadly ask three questions. The first question is related to the announcement made yesterday, where you will be actually launching the Ni no Kuni: Cross Worlds global on May 25. Of course, this is global market, and we're not familiar with the region, and that is why if the company can share the status of the pre-registration and also share with us the expectations you have for this new title. I would also appreciate the company talking about its plans to how it plans to build up the blockchain ecosystem going forward. The second question is related to the company's overall profit structure. You also previously mentioned that you saw a rise in the in-app revenue as well.
I'm just wondering, going forward, would the company also entertain the possibility of taking commissions as you apply the tokens to your games as well? An additional question that I would like to ask is related to the comment made earlier, where one of the reasons for the fall in the revenue was the seasonality of the overseas business. Specifically, was it related to just the SpinX Games or was it more general, the performance of the overseas games? This is CEO Young-sig Kwon, and I will address your questions. I think you were talking about three main aspects. I will first talk about the performance, the pre-registration and the expectations that we have for the Ni no Kuni: Cross Worlds global.
Also, the company's plan in respect to how we would like to build up the blockchain ecosystem. At the same time, I will also talk about the commission model. Lastly, to talk about the performance of the overseas business. Moving to the first area, the Ni no Kuni: Cross Worlds global, we are scheduling to release this on May 25. In terms of the pre-registration performance, it is progressing smoothly as the company has anticipated. In particular, we see some meaningful user registration numbers coming from U.S. and Europe. Oh, and we are applying the overall blockchain system to this title. We believe that it's going to be satisfying both the existing users as well as P2E users as well.
The expectation that the company has is really to build a title so that we will have a long run hit of this MMORPG game as well. Moving to Netmarble's blockchain system ecosystem, just to briefly explain the business model that we are thinking about. For the company, our focus is really to generate in-app revenue, and that's going to be the main income driver. On the other hand, we will also allow P2E users to earn money through the coins. It is not structured or designed so that the company actually seeks to generate additional income through the token commission. It's purely focusing on generating in-app revenue. For the third question, this is Seungwon Min.
In respect to the seasonality issue for the first quarter, we were referring to the overall performance of the overseas market because it was a low season in terms of the game performance. This is something that we have been experiencing for multiple years, over time. Usually the seasonality peaks in the fourth quarter and they sharply decline in the first quarter. This year, of course, was no exception. Another factor that did amplify the performance was the reopening, as it related to the COVID-19 pandemic. Thus, the impact actually somehow amplified the impact of the seasonality as well. On this note, we will conclude Netmarble's 2022 Q1 earnings conference call. For any additional questions, please reach out to the IR team. Thank you once again for your participation.