Krafton, Inc. · KRX:259960
Krafton — Q2 2021 Earnings Presentation
46 slides from Krafton's earnings presentation, August 2021
Slide 1: Investor Relations August 2021
Investor Relations August 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: Global Mega IP: Top Best-selling Games of All Time
Top 10 Best-selling Games of All Time GLOBAL 01 Minecraft MEGA 02 03 GTA V Tetris (EA) IP 04 Wii Sports 05 06 Super Mario Bros 07 Wii Fit 08 Pokemon RGBY 05 09 Tetris (Nintendo) 10 Mario Kart 8 Source: PUBG’s sales volume as of March 31, 2021. Sales volume of other games are based on public filings
Slide 8: PUBG: Blockbuster Hit Across 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 9: 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 10: Status as 'National Game' in India and MENA region
Who We Are Status as ‘National Game’ in Fast-growing India and MENA region Game App Gross Cumulative Revenue Ranking DAU Downloads 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 MENA Region 240mn
Slide 11: Strategic Initiatives for Leadership in Emerging Markets
Who We Are 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 Mobile App Ranki
Slide 12: 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 13: Extend Life Cycle of the Game with Esports
Who We Are Extend Life Cycle of the Game by Creating a Virtuous Cycle with Viewers and Players Increase awareness / interest in 01 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 14: 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 14
Slide 15: What made it possible
What made it possible Who We Are What Made it Possible The Future We Envision Financials Appendix
Slide 16: 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 17: 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 18: 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 19: Organization Led by a Tech-based Founder and CEO
What Made It Possible Organization Led & Cultivated by a Tech-based Founder and CEO Chairman CEO Byung-Gyu Chang Chang-Han Kim Cofounder and Chairman of Krafton CEO of Krafton Member of the Strategy Committee Member of the Strategy Committee • KAIST BS / MS / Ph.D Candidate in Computer Science • KAI
Slide 20: Best-in-Class Mobile Game Development Capabilities
What Made It Possible Best-in-Class Mobile Game Development Capabilities, Amid Heavy Reliance of Most AAA Games in Mobile Transition on Chinese Developers Graphic Rendering Network Sync. / Optimization Global Illumination: Lighting effect for Network Replication Graph: Rapid realistic graphics beyon
Slide 21: The future we envision
The future we envision Who We Are What Made it Possible The Future We Envision Financials Appendix
Slide 22: 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 23: 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 24: 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 25: Securing Publishing Technology to Understand Gamers
The Future We Envision Securing Publishing Technology to Better Understand Our Gamers, Transform Them into Our Fans, and Eventually Connect the World Global Publishing Platform (GPP) + Data Analysis + Marketing Tech Base Technology Deep Insights into Efficient / Effective Reach & to Interact with Ga
Slide 26: Talent-Centered Principles for Sustainable Creative Platform
The Future We Envision “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 creativene
Slide 27: Expanding the IP Universe into Various Entertainment Formats
The Future We Envision Krafton Has Been Creating Original IPs Focused on Games and Expanding the IP Universe into Various Entertainment Formats Shows / Movie Series Adaptation into Broader Media Animation Novel Webtoon World Builder / Comics IP Game A Game B Game Franchise Interaction Fun Designer 2
Slide 28: 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 29: 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 30: 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 31: Pursuing Enhanced Interactive Experience via 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 32: Financials
financials Who We Are What Made it Possible The Future We Envision Financials Appendix
Slide 33: 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 ~27 Million +7 % YoY ~+30 % QoQ Global Daily Active Users (1) Battlegrounds Mobile India PUBG PC Adj. EBITDA(5) Margin G
Slide 34: 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 35: 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 36: 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 37: 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 38: 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 39: 2H21 Strategy – NEW Game Launch
2H21 Strategy – NEW Game Launch 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 40: Status as 'National Game' in India and MENA region
Who We Are Status as ‘National Game’ in Fast-growing India and MENA region Game App Gross Cumulative Revenue Ranking DAU Downloads 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 MENA Region 240mn
Slide 41: Strategic Initiatives for Leadership in Emerging Markets
Who We Are 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 Mobile App Ranki
Slide 42: 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
Slide 43: Appendix
appendix Who We Are What Made it Possible The Future We Envision Financials Appendix
Slide 44: Krafton's Independent Studios System
Krafton’s Independent Studios System • Established in 2007 • 2,337 employees • Established in 2020 through a • Founded in 2009 and acquired in • Established in 2020 through a • Established in 2019 by high- • Established in 2016 and acquired spin-off; originally an in-house 2015; merged into Krafton
Slide 45: Board of Directors
Board of Directors Chairman CEO Non-Standing Director Byung-GyuChang Chang-Han Kim Xiaoyi Ma Co-founder and Chairman of Krafton CEO of Krafton Non-standing Director Member of the Strategy Committee Member of the Strategy Committee • Current Chairman of Krafton • PD of PUBG and Devilian • Senior Vice
Slide 46: Battle Royale's Meteoric Rise in Global Game Industry
Battle Royale’s Meteoric Rise in Global Game Industry Battle Royale: Emergence as a Top 3 Genre in 4 Years US$10+ Billion Game Genres by Market Size: US$ bn, 2020E 25.3 Accounting for ~30% of Industry Growth #3 from 2017 to 2020(1) 18.2 15.8 14.7 13.7 11.0 10.1 10.0 Role Playing Adventure Battle Roy