Netmarble Games Aktie

[Interpreted] Good morning and good evening. Thank you all for joining the conference call for the Netmarble Earnings Results. This conference will start with a presentation followed by a Q&A session. [Operator Instructions] Now we will begin the presentation on Netmarble's First Quarter of Fiscal Year 2026 Earnings results.

[Interpreted] Good afternoon. This is Jiwon Lee, Head of the company's IR team. Thank you sincerely to all investors and analysts who have taken the time to attend our 2026 Q1 earnings conference call amidst your busy schedules. Present with us today are CEO, Byeonggyu Kim; CFO, Gi-Wook Do; and other members who will be available to answer questions following the earnings presentation. Please note that this presentation is prepared prior to the completion of our external audit. Therefore, some details may be subject to change based on the audit results.

Now I'll hand it over to our CFO, Do, to proceed with the earnings presentation.

[Interpreted] Good afternoon. This is Gi-Wook Do. Let me begin by presenting our business results for the first quarter of 2026. Please refer to Page 2. 2026 Q1 revenue reached KRW 651.7 billion, down 18.3% Q-o-Q and up 4.5% Y-o-Y. EBITDA fell 43.7% Q-o-Q and rose 2.8% Y-o-Y to KRW 83.9 billion. And EBITDA margin was 12.9%. Revenue and EBITDA increased year-over-year reflecting the performance of new releases, including StoneAge: Idle Adventure, The Seven Deadly Sins: Origin.

Next page covers operating profit and net income. In Q1, operating profit was KRW 53.1 billion. Net income was KRW 210.9 billion, and net income attributable to controlling shareholders was KRW 209.7 billion. Net income increased reflecting gains from the disposal of held assets. The following page provides an overview of our game portfolio. As of the end of Q1, revenue contribution by major titles was as follows: Jackpot World, Lotsa Slot, Marvel Contest of Champions and Cash Frenzy each accounting for 8%, Seven Knights Re:BIRTH 7%, Vampir and 6% our game portfolio continues to become more diversified. In particular, the new titles StoneAge: Idle Adventure and The Seven Deadly Sins: Origin released in March, successfully gained traction in the market. Despite a limited contribution period each accounted for 3%, respectively, of the first quarter revenue.

Next, breakdown of revenue by region and genre. In Q1, revenue by region was comprised of North America at 41%; Korea, 21%, Europe, 13%; Southeast Asia, 12%; Japan, 7%; and other regions at 6%. The Overseas revenue ratio reached 79%, up 2 percentage points quarter-over-quarter. By genre, revenue was composed of casual games at 40%, RPG, 37%; MMORPG, 16%; and others at 7%.

Next page outlines our key cost structure. Q1 operating expenses amounted to KRW 598.6 billion, down 12.8% Q-o-Q and up 4.2% Y-o-Y. Marketing expense ratio increased by 3.4 percentage points Q-o-Q, primarily due to the upfront execution of marketing spend for new title launches. Labor expenses declined by 7.9% Q-o-Q and 2.6% Y-o-Y to KRW 167.6 billion as the head count reduction trend continued. Finally, commission rate declined by 0.8 percentage points Q-o-Q to 30.8%, driven by an increased share of revenue from proprietary IP games.

Next, upcoming game lineup. The company plans to expand Game of Thrones: King's Road in traditional Asian markets in May and launch Sol: Enchant in June. In the second half, we plan to sequentially release 4 new titles. Solo Leveling: KARMA, Shangri-La Frontier: The Seven Colossi, Project Octopus and EVILBANE, along with new titles from overseas subsidiaries, including Project Aegis. We expect top line growth to gain meaningful traction as the performance of newly launched titles is reflected on a full quarter basis, starting from the second quarter.

In addition, ongoing cost efficiency efforts, combined with a more favorable external environment, including the commission ratio -- commission rates are expected to drive gradual structural improvement and profitability. In the second half, we plan to sustain stable momentum by sequentially launching a diverse lineup of new titles across genre with anticipated global reach expansion. We appreciate your continued interest and support.

[Interpreted] That concludes our earnings presentation. We'd be happy to take any questions you may have. Thank you.

[Interpreted] [Operator Instructions] The first question will be provided by Choi Seung-ho from DS Investment & Securities.

[Interpreted] I'm Choi Seung-ho from DS Investment & Securities. I have two questions. First question is related to the performance of your The Seven Deadly Sins: Origin as well as MONGIL: STAR DIVE. I would like to ask the company to share what you can related to the performance of these titles. Moving to my second question is regarding the recent announcement related to your upcoming plans to launch the game title called Project Aegis. Could you please share the scale of the development what genre this title is going to be because, unfortunately, I don't have much information related to this title. So I would greatly appreciate any information that the company can share regarding the Project Aegis title. That would be very much appreciated.

But I do also would like to take this opportunity ask an additional question related to your existing titles performance and your plans to continue to maintain or improve the sales of your existing titles, including, for example, Seven Knights Re:BIRTH, which is currently actually experiencing a steep decline. If you have any plans to expand regional service or any games update that will be greatly appreciated as well.

[Interpreted] This is Kim Byeonggyu. I would like to thank you for your questions. Let me first address your first question. Regarding the The Seven Deadly Sins: Origin, as you may be aware, we launched the PC and console version in the middle of March, and it was towards the end of the fourth quarter that we launched the mobile version. And during the earnings presentation, we were also able to share with you the percentage of contribution that this title is actually delivering.

And regarding MONGIL as well as The Seven Deadly Sins, I would like to share with you some of the common factors that these two titles have. Specifically, they were targeting the global market. We were able to launch these titles in multiple countries as well as in multiple platforms. And thus, this is actually very much in line with the strategy to become a multi-platform player. This is something that we have challenged ourselves and have executed accordingly. But as you also could understand that when we're talking about these platforms as well as countries, each platform as well as each country has its own way of gameplay as well as its own way of how the game titles grow in its respective marketplace.

As we look at the countries as well as the platform that we are seeing our user traffic coming from. We are making the necessary update accordingly in order to actually elongate the PLC of these titles. And regarding these two game titles, the focus the company was to ensure that it had a very successful long-term PLC rather than the company focusing on driving up the revenue in the early days of the launch of these titles. We thought that this approach will be more conducive for the company. And as such, our direction going forward is to deliver the update accordingly to meet the strategic goal that the company has for these titles.

Moving to your second question related to Project Aegis. Now this game title has been in development for the past two years by our North American subsidiary, Kabam. And just to first speak about the genre, it is an AFK genre. And in respect to Project Aegis, Kabam is actually working very closely with a major global IP holder and also very much working very closely with Netmarble as well. And so for today, rather than talking about the overall scale of the title and the expectation that we have for this title, I think it will be more appropriate for us to set a separate time when we are ready to be able to talk about Project Aegis in greater detail.

In respect to your third question related to the company's approach regarding our live games, just to give you a high-level overview of what we are thinking, specifically for Seven Knights Re:BIRTH. This follows a very successful performance and the basis that we have been able to build with the successful launch of its predecessor, which is Seven Knights. And thus, we are very much aware of what we need to be cautious of and what we need to prepare for.

And very soon, the title will be celebrating its first anniversary and for the first quarter, the focus for us was to really set up the appropriate long-term PLC for Seven Knights Re:BIRTH and so as we get closer to the anniversary of Seven Knights Re:BIRTH, I think that the company will be able to share with the market more about what we actually are planning for the anniversary celebration as well as for this title.

And just to touch upon the company's plans for regional expansion. We also see this as an important opportunity for the company. As such, we were able to expand into Taiwan in the first quarter with the Vampir title. And in the Q2, we are actually preparing for a regional expansion of RF Online. And if we look at the game characteristic as well as the look and feel of RF Online. We also believe that there is going to be a global appeal for this title as well. This is the expectation that the company has for RF Online. Thank you .

[Interpreted] The following question will be presented by Junhyun Kim from HSBC.

[Interpreted] I have three questions. My first question is related to what the company is going to be doing related to the performance of newly released titles in the first quarter of this year, including MONGIL. In respect to the performance of your recently launched titles. I have to say that their performance has been actually less than market expectations. I would like to understand if the company has done some internal analysis to better understand the cost for the underperformance? And also, have you made any plans to make a turnaround in respect to how you can actually prevent what you have assessed to happen again for the upcoming titles and what you are planning for to further the improvement of the performance.

Moving to the second question is related to the trend that we're seeing, not only at your company, but for game companies as a whole because there is a growing increasing portion of PC-based payment. But for the outsiders, it's very difficult for us to really have a clear understanding of the revenue breakdown in respect to how much is coming from PC payment. Whether we're talking about the The Seven Deadly Sins as well as MONGIL, if it's possible could the company share the breakdown versus the mobile payment and PC payment. And also, if it's possible, could the company actually give us an indication as to say that the PC payment portion is at present, this percentage, but you have a target to grow this percentage to x percent going forward.

And my last question is related to the earnings presentation. You have mentioned the sale of held assets. Can you also provide additional color in respect to what those assets were?

[Interpreted] Thank you, first of all, for your questions. And to address your first question related the underperformance of the MONGIL as well as The Seven Deadly Sins. You asked about whether or not the company has done a root cause analysis and based on our assessment what we actually are going to do going forward. But I think I would like to take this time to say that overall direction or the approach that we're seeing is somewhat different because when we actually have an actual tangible outcome. Then, yes, I understand that we have to analyze and then identify areas of improvement. And that would be the appropriate approach going forward.

But when we're talking specifically about MONGIL as well as The Seven Deadly Sins: Origin. As you are well aware, we have launched simultaneously, these titles in multiple countries over multiple platforms. And thus, you have to understand that we needed a period to observe explore the user behavior and patterns by country and by platform. And by having this understanding, it gives us insight to what we want to put in for future updates of these titles. And that was the strategy that we had taken, and we are going to follow in respect to how we are going to provide updates going forward. This is something that is going to be somewhat not in line with what the market had expected for the titles because you may say that it underperformed.

But for us, it was very important to understand and explore what was happening to be able to identify the pattern so that we can actually take that and build our ongoing strategy for these titles. And so by saying this, you may say that effectively, we are talking about the same thing. But for us, it was important that having -- looking at the different platforms, whether it's PC, mobile or console, it goes beyond having different devices to play these games. It was very important that each platform has a different way of having the gameplay pattern and how the game play was going as well. So it's not going to be feasible for us to, at one go, be able to satisfy these diverse platform users with the game title and the way they pay the game.

And so it was important for us to understand what was happening. And then based on that, be able to reflect that in the future update and which we actually did because we did have a major update for The Seven Deadly Sins: Origin. And this was really understanding the gameplay pattern and to ensure that we were doing the right updates that will ensure the long-term PLC of this title.

And moving to your second question related to the portion of the payment happening using our own platform. And I think what is a good reference is what the information that we actually share with you on a Page 6, because if you go to our top line performance for 2025, it was KRW 623.9 billion. And during this time, we actually had the commission rate portion to be around KRW 219 billion, whereas in 2026, we are actually seeing that we have been able to improve our top line to around KRW 650 billion, but we were able to actually have a lower portion of the commission payments. So even though top line grew, we were able to actually reduce the commission payment to around KRW 200.9 billion.

Having said that, I think that we have to look at other factors that drive the ship in respect to how the payment is actually being made for these games because I think we have to think about 3 more overriding factors rather than that the company's willingness or drive to increase the own payment portion. I would say that mainly you have to understand the interesting characteristics of the platform itself, also the app market commission policy and also lastly game genre.

And thus, in respect to the platform and having your own payment system in place, in order to be able to have that, you also have to understand whether technologically, there is the foundation or availability so that we can actually introduce our own payment system in a given platform. That's one factor. Moving to a second important factor is related to the app market commission policy, which is actually determined by the respective ap market players. You may think that this is very much a fixed item, but they actually -- the app markets actually have very different characteristics. And also, there is variability as well. And so we are very much affected by this.

And the third factor is not -- it may not be so well known. to the market. But in respect to introducing the PC payment, we also have to understand what the user is actually going to do. And also, you have to understand the different nature that each genre has. We have to be mindful of this. We cannot just totally disregard this difference and to drive our operating profit performance, introduce PC payment. We have to be very much mindful whether or not the users and based on the genre of game that they are paying that they're also going to be willing to make PC payments. So having said that, I would just like to share with you that the company has its drive to increase the PC payment so that we are able to actually control the variable cost better, which is really the commission payment. And we believe that this is in line with our improving shareholder value.

But what is actually more Important is the three factors that I mentioned that are really going to determine how the PC payment is going to be able to be routed in the marketplace. Thank you.

In respect to your third question related to what our assets were disposed. This is very much in line with what we had already communicated in the market in our disclosure back in February. Specifically we're talking about the share disposition of the interest that we have in HYBE.

[Interpreted] Currently, there are no participants with questions [Operator Instructions].

As there are no further questions we will conclude the 2026 Q1 earnings presentation. For any additional inquiries, please feel free to reach out to our IR team. Thank you once again for your participation.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] Good morning, and good evening. Thank you all for joining the conference call for the Netmarble earnings results. This conference will start with a presentation followed by a Q&A session. [Operator Instructions]

Now we will begin the presentation on Netmarble's Fourth Quarter of Fiscal Year 2025 Earnings Results.

[Interpreted] Good afternoon. This is [ Jiwoon Lee ], Head of the company's IR team. Thank you sincerely to all investors and analysts who have taken the time to attend our 2025 Q4 and full year earnings conference call amidst your busy schedules. Present with us today are CEO, Byeonggyu Kim; CFO, Gi-Wook Do; and other members who will be available to answer questions following the earnings presentation. Please note that this presentation is prepared prior to the completion of our external audit. Therefore, some details may be subject to change based on the audit results.

Now I'll hand it over to our CFO, Gi-Wook Do, to proceed with the earnings presentation.

[Foreign Language]

[Interpreted] Good afternoon. This is CFO, Gi-Wook Do. Let me begin by presenting our annual business results for 2025. Please refer to Page 2.

[Foreign Language]

[Interpreted] Full year 2025 revenue reached KRW 2,835.1 billion, up 6.4% year-on-year. EBITDA rose 30.8% Y-o-Y to KRW 484 billion, demonstrating solid profitability. In particular, driven by the launch of multiple successful titles in 2025, the company recorded the highest annual revenue since its IPO. In addition, ongoing cost efficiency initiatives supported the achievement of an EBITDA margin of 17.1%.

[Foreign Language]

[Interpreted] Next, I will walk you through our fourth quarter operating performance. Fourth quarter revenue increased by 14.6% quarter-on-quarter and 22.9% year-on-year to KRW 797.6 billion. EBITDA rose by 21.7% Q-o-Q and 102.9% Y-o-Y to KRW 148.9 billion, and the EBITDA margin reached 18.7%. Both revenue and EBITDA increased quarter-on-quarter, reflecting seasonal updates at overseas subsidiaries and the successful global regional expansion of existing titles.

[Foreign Language]

[Interpreted] Next page covers operating profit and net income. In Q4, operating profit amounted to KRW 110.8 billion, while the company recorded a net loss of KRW 35.9 billion and a net loss attributable to controlling shareholders of KRW 34.1 billion. The operating margin remained solid, supported by revenue growth and continued cost efficiency initiatives. However, a net loss was recorded as non-operating results reflected an impairment charge related to intangible assets.

[Foreign Language]

[Interpreted] The following page provides an overview of our game portfolio. As of the end of Q4, revenue contribution by major titles was as follows: Seven Knights Re:BIRTH 15%; MARVEL Contest of Champions, 11%; VAMPIR and Jackpot World, each at 7%; Lotsa Slot and Cash Frenzy, each accounting for 6%. Our game portfolio, as we have just mentioned, continues to become more diversified.

[Foreign Language]

[Interpreted] Next is a breakdown of revenue by region and genre. In Q4, overseas revenue as a share of total revenue increased by 9 percentage points quarter-on-quarter, reflecting the global regional expansion of existing titles, including Seven Knights Re:BIRTH. The share of RPG revenue also rose by 8 percentage points Q-o-Q. For reference, fourth quarter revenue by region was comprised of North America at 39%, Korea at 23%, Europe and Southeast Asia each at 12%, Japan at 7% and other regions at 7%. By genre, revenue was composed of RPG at 42%, casual games at 33%, MMORPG at 18% and others at 7%.

[Foreign Language]

[Interpreted] Next page outlines our key cost structure. Q4 operating expenses amounted to KRW 686.8 billion, up 13.5% quarter-on-quarter and 11.9% year-on-year. Marketing expenses totaled KRW 178.7 billion, up 23% Q-o-Q and 48.3% Y-o-Y, driven by new title launches and seasonal updates for existing titles.

Next, labor expenses increased by 6.8% Q-o-Q and 1.8% Y-o-Y to KRW 182 billion, primarily reflecting bonus payments.

Finally, the commission rate declined by 0.7 percentage points Q-o-Q to 31.6%, supported by the continued expansion of PC-based payment mix.

[Foreign Language]

[Interpreted] Next, I'd like to discuss our upcoming game lineup. The company plans to launch Stone Age: Idle Adventure and The Seven Deadly Sins: Origin, in the first quarter of 2026, while sequentially rolling out regional expansions for existing titles, including VAMPIR, SOL: enchant, and MONGIL: STAR DIVE are scheduled for release in the second quarter. And in the second half of the year, the company intends to further strengthen its lineup with the launch of 4 additional new titles.

[Foreign Language]

[Interpreted] Finally, I'd like to address our shareholder return policy. The company plans to allocate 30% of consolidated net income attributable to controlling shareholders for 2025 to shareholder returns and to pay cash dividends of KRW 71.8 billion, representing an increase of approximately 110% compared to the prior year. This dividend is expected to be eligible for the special tax treatment for dividend income from shares of high dividend-paying companies. The dividend record date has been set at February 27, 2026.

[Foreign Language]

[Interpreted] In addition, the company has established a new shareholder return policy applicable to fiscal years 2026 through 2028 for 3 years aimed at enhancing shareholder value and improving earnings visibility. Under this policy, the shareholder return ratio will be increased from 30% of consolidated adjusted net income attributable to controlling shareholders to 40%. Based on this, the company plans to implement both cash dividends and treasury share buyback and cancellation.

Furthermore, in 2026, the company plans to retire all treasury shares currently held, representing 4.7% of outstanding shares. The company will continue to make every effort to establish a virtuous cycle in which solid earnings growth translates into tangible shareholder value creation, thereby meeting shareholder expectations.

[Foreign Language]

[Interpreted] In the fourth quarter of 2025, the company delivered its highest quarterly revenue since its IPO, supported by strong live service capabilities and successful regional expansion of existing titles once again, demonstrating the strength of our fundamentals. This year represents a critical turning point as the multi-platform, multi-genre new titles that we have been carefully preparing begin to come to fruition. Through continued global expansion and disciplined cost execution, we expect to deliver meaningful earnings growth going forward. We kindly ask for your continued interest in the company.

And on this note, I'd like to conclude the earnings presentation.

[Foreign Language]

[Interpreted] Now we'd be happy to take any questions you may have. Thank you.

[Interpreted] [Operator Instructions] The first question will be provided by Junyun Kim from HSBC.

[Foreign Language]

[Interpreted] And before my question, I would like to congratulate the company on your excellent earnings release. Now for me, I have 2 questions. My first question is to better understand based on the very much improved top-line performance the company has shown and also the improvements that we have seen in terms of reducing the commission fee as a result of increasing the portion of PC-payment as well as increasing the portion of your own IP titles.

But if we look at the 2026 title lineup, there's also going to be not only titles produced using your own IP, but also there will be external IP as well. External development will also come into play, which could actually increase the burden compared to the previous year on the commission fee payment side. So on this note, I would like to ask the company to share your internal view on this. And if you can share more mid- to long-term projections on this point, that will be very helpful.

My second question moves on to the use of proceeds for the very recently announced the PRS contract that you have disclosed. Would the UOP be used to fully for the debt service? Or would -- and also, if there is any update you can provide related to the sale of G-Tower, your headquarters building or any other asset monetization plan, that would be very helpful.

[Foreign Language]

[Interpreted] To answer your first question, just to summarize your question, you expressed your concerns on the possibility of the commission payment increasing in 2026 compared to 2025. In respect to your question, I can say that in our view, in terms of the commission rate, we do not believe that we will see an increase in the commission fee rate in 2026 compared to 2025. Rather, there is an expectation that the rate will actually go down on a Y-o-Y basis. And the reason for this is not because of the increase of the external IP portion, but because as we have seen most recently and as of end of 2025, there has been a continued improvement or rise in the portion of the PC-payment.

And as a result, that has helped to continue to decrease the commission rate. And we believe that in this area, there is also further room for improvement going forward. And so that's one factor, one reason. And also, we have seen that the PC-payment portion is also on the rise for the overseas subsidiaries as well. And then on top of that, we also have to look at the app market policies as well. So combined, we believe that overall, the environment is quite favorable for the company. So on an aggregate basis, as I have mentioned previously, we believe that the commission rate will actually be lower than in 2026 compared to 2025.

[Foreign Language]

[Interpreted] Moving to your second question. You asked about the purpose of the most recent our PRS transaction. I also have heard that you would like the company to provide an overall update on the company's liability position as well as any potential additional plan for future asset monetization. Moving to the answer portion. In terms of the HYBE PRS transaction, the first priority is really to improve the financial structure of the company. And this is actually very much in line with what we have been communicating to the market for several years now. So the most recent monetization of our interest in HYBE is really to continue on our efforts to improve the company's financial structure. So please consider this as an extension of the efforts that we have been showing in recent years.

And in respect to the -- any updates related to the sale of G-Tower, I'm sure that you had the opportunity to look at the news release. And so I can confirm that we do have already completed the process in terms of selecting the preferred bidder. But there has not been any additional definitive update since then. And so as soon as we have something very definitive to communicate to the market, we will be very swift in coming to the market to provide you with the latest update.

[Interpreted] The following question will be presented by [ Seung-ho Choi from DS Investment & Securities ].

[Foreign Language]

[Interpreted] Thank you for announcing such good earnings performance and the content. Congratulations to the company. My first question is related to the cost. And so could the company provide 2026 guidance for your marketing expense as well as labor expense?

And I also want to secondly ask if it's possible for the company to provide additional details to the impairment loss on the intangible assets that you have mentioned?

And my last question is related to what you have shared on your presentation slide. You have mentioned that there will be 4 new titles that you will be releasing in the second half. But if we actually look from the past experience, it's also possible that there could be some changes to your anticipated schedule for new title releases as well. So how can -- how much confidence does the company have in terms of able to meet the scheduled release targets in respect to the upcoming title lineup.

[Foreign Language]

[Interpreted] Let me first comment on your first question and provide you with the overall guidance for 2026. First, commenting on the cost side. There was already a question related to the commission fee rate. And as I have mentioned previously, that compared to 2025, we do anticipate that we will become more efficient in 2026. That leaves us with 2 big cost items, which is the marketing expense and the labor expense.

And just to address the marketing expense first, as you, probably, have heard that we have continued to communicate this message to the market. And this is the stance of the company, which is that we will be executing our marketing expense in the most efficient fashion tied to new title releases and the company's earnings performance. What this means is that on a consolidated basis, the marketing expense ratio was at around 20% in 2025. So if we're just talking about on a ratio basis, we believe that this is going to be at a very similar level in 2026, which means that we continue to make the marketing expenditure expenses become more efficient for the company.

Moving on the labor expense side, it also remains unchanged from the communication that the company has been making to the market as well. On an absolute basis, we continue to maintain the same number of head count. The size of our labor force will remain the same, which is the expectation that the company has. But at the same time, we will continue to see better performance, earnings performance, which means that in terms of the share of the labor expense to the company's overall top-line, this is going to be actually less.

So just to wrap up on the cost side, in terms of the marketing side, the ratio will be somewhat similar on a Y-o-Y basis, whereas on a labor expense side, the ratio will actually decline because we're going to actually see additional top-line growth in 2026 compared to 2025. And on the commission fee rate, I have already mentioned that we believe that we'll be able to make this more efficient in 2026 as well.

So just moving on to the top-line performance expectations. Internally, we have The Seven Deadly Sins: Origin as well as MONGIL: STAR DIVE to blockbuster new titles that we believe will continue to show a meaningful top-line growth for the company on a Y-o-Y basis for 2026 as well. So if we consider that there is going to be a meaningful top-line growth driven by these blockbuster new title releases in 2026, while we continue to make meaningful earnings -- meaningful improvements on the cost side, we believe that we'll be able to continue the improvements that we have seen -- we have shown in 2025 and be actually further improve that in 2026.

[Foreign Language]

[Interpreted] Moving to your second question related to the impairment loss related to the intangible assets. As you may remember, for several years, it was usually towards the end of the year in Q4, there were several quarters in which we did recognize impairment losses and mostly that was related to SpinX. For this time, there has not been any impairment loss related to SpinX. But as was previously announced, this is directly related to the impairment loss on goodwill as a result of us deciding to suspend the King Arthur service.

[Foreign Language]

[Interpreted] And moving to the third question. This is CEO, Kim. You asked about any potential delays that could happen to our expectation of launching 4 new titles in the second half of this year. In respect to this, in order to prevent any unnecessary delays in our schedule to launch these titles, we are putting a lot of effort to make sure that they are being -- they are going to be released as we have internally scheduled. So we are deploying resources for this end, building out content so that we are able to strike an overall good balance in the development of the titles. But at the same time, before we actually do launch new titles, there's always this variable, meaning that you have to always pass the not only internal testing, but also external testing as well. So that is one moving variable that we do have to take into account.

But in terms of being very specific telling you how many business days of delays that we can anticipate for the upcoming 4 new titles. I think at this point in time, this is actually too early for us to be very detailed in terms of making such comments. As these titles are slated for the second half of this year, we will be having an opportunity as we get closer to this time frame, be able to communicate to you in respect to their release scheduled time. But at the same time, there are external events in which we participate in sharing our overall schedule for new title releases. So by leveraging these opportunities, I think that we will be able to give good indication in respect to when these upcoming titles can be launched to the market.

[Interpreted] Currently, there are no participants with questions. [Operator Instructions]

[Foreign Language]

[Interpreted] If there are no further questions, we will conclude the 2025 Q4 and full year earnings presentation at this time. For any additional inquiries, please feel free to reach out to our IR team. Thank you once again for your participation.

Good morning, and good evening. Thank you all for joining the conference call for the Netmarble earnings results. This conference will start with a presentation followed by a Q&A session.

[Operator Instructions]

Now we will begin the presentation on Netmarble's Third Quarter of Fiscal Year 2025 Earnings Results.

Good afternoon. This is [indiscernible], Head of the company's IR team. Thank you sincerely to all investors and analysts who have taken the time to attend our 2025 Q3 earnings conference call amidst your busy schedule. Present with us today are CEO, Byeonggyu Kim; CFO, Gi-Wook Do; and other members who will be available to answer questions following the earnings presentation.

Please note that this presentation is prepared prior to the completion of our external audit. Therefore, some details may be subject to change based on the audit results. Now I will hand it over to our CFO, Gi-Wook Do, to proceed with the earnings presentation.

Hello. This is Gi-Wook Do. Let me begin by presenting our business results for the third quarter of 2025. Please refer to Page 2. Q3 revenue came in at KRW 696 billion, down 3% Q-o-Q and up 7.5% Y-o-Y. EBITDA was KRW 122.4 billion, down 6.6% Q-o-Q and up 19.1% Y-o-Y. EBITDA margin was 17.6%. Revenue and EBITDA increased year-on-year, driven by the domestic performance of the new title, and the global launch of the Seven Knights Re-BIRTH.

Next, operating profit and net income. In Q3, operating profit was KRW 90.9 billion. Net income was KRW 40.6 billion and net income attributable to controlling shareholders was KRW 37.5 billion. The operating margin came in at 13.1%, supported by solid revenue and a continued decline in commission rates. Net income decreased quarter-on-quarter due to factors such as valuation gains and losses on held assets.

The following page provides an overview of our game portfolio. As of the end of Q3, revenue contribution by major titles was as follows: Seven Knights Re:BIRTH, 12%; Vampire, 9%; Marvel Contest of Champions, Jackpot World, Lotsa Slot, Cash Frenzy, each accounting for 7% and RF Online Next, 5% continue to drive diversification of the game portfolio.

Seven Knights Re:BIRTH, which has continued to account for the largest share of our portfolio since the previous quarter, was launched globally on September 18 and has shown strong performance. We plan to secure additional momentum through regular updates going forward. In addition, Vampire released on August 26, reached #1 on both major domestic app markets immediately after launch and has maintained solid performance since then.

Next is a breakdown of revenue by region and genre. Q3 regional revenue breakdown was as follows: North America 34%; Korea 32%; Europe 11%; Southeast Asia 8%; Japan, 8%; and others, 7%. The share of overseas sales rose by 2 percentage points to a Q2 68%. By genre, Casual Games accounted for 34% of revenue; RPG 34%; MMORPG 22%; and others 10%.

The next page outlines our key cost structure. Operating expenses in Q3 amounted to KRW 605.1 billion, down 1.8% Q-o-Q and up 4% Y-o-Y. Marketing expenses rose to KRW 145.3 billion, up 7.3% Q-o-Q and up 38.9% Y-o-Y, driven by new title launches and the global expansion of existing titles. Labor expenses was down 2.6% Q-o-Q and down 4.9% Y-o-Y. Lastly, the commission rate decreased by 1.5 percentage points to 32.3% as sales of self-developed IP titles increased.

Next, I'd like to discuss our upcoming game lineup. We plan to launch Solo Leveling:ARISE OVERDRIVE In the fourth quarter of 2025. In the first half of 2026, we will sequentially release multiple new titles, starting with 6 games, including The Seven Deadly Sins:Origin, [indiscernible] and MONGIL: STAR DIVE. Additional titles not listed in the materials will be announced at a later date. In addition, at the upcoming G-STAR event next week, we plan to showcase 5 new titles, The Seven Deadly Sins:Origin, MONGIL: STAR DIVE, Solo Leveling:KARMA, EvilBane and Solo Leveling: KARMA to further build anticipation for our next lineup.

In the fourth quarter, we expect solid earnings performance to continue, driven by full quarter contribution from NP and Seven Knights Re:BIRTH with global launches as well as global expansion and seasonal updates of our existing titles. Looking ahead to 2026, we are meticulously preparing a lineup of high-quality, well-made new titles across a variety of platforms and genres, and we kindly ask for your continued interest and support.

That concludes our earnings presentation. We'd be happy to take any questions you may have. Thank you.

[Operator Instructions] The first question will be provided by Ui Hoon Jeong from Eugene Investment & Securities.

I am Ui Hoon Jeong, and I would like to ask you 3 questions. My first question is related to the recent announcement between Google and Epic Games of their agreement related to the app commission. And in respect to the fact that Net Marle has a high sales portion for the United States, I would like to share from the company what effect that could be for Netmarble, exactly when such effect will come into force? And if so, by how much?

My next question is that along with this earnings disclosure, you've also disclosed the issuance of the EB. And thus, could the company provide an update in respect to your borrowing position and as well as your debt service plan for next year.

Moving to my third question is related to the slide in which you show the new pipeline and your future release plans. And I'm just wondering because in terms of the titles and the orders they are showing at this current earnings presentation, it differs from what we saw previously. And so I would just like to better understand if the order that is actually shown on this presentation deck is also very much the order that you will be releasing these titles.

This is Byeonggyu, and thank you very much for your question. I will be answering your first and third question. Going to your first question related to the agreement that was reached between Google and Epic Games, we've also heard about this. But as you know, this is not a final agreement that has been made in the United States. And for Netmarble, the way we are planning for the United States is really that we want to continue to drive PC payment and drive the overall top line growth by enhancing the user convenience as well.

And so when we design our plan, it's not just specifically tied to, for example, the recent set agreement between Google and Epic Games. So I do have to be very cautious in commenting about exactly what effect that this would have on our earnings performance and by how much.

And moving to your third question, I appreciate the question. And in respect to the order that you are currently seeing in the presentation deck, I would like to clarify that this is not the order that these titles will be released. As you know, for the company, we will be basing our decision to release specific titles depending on the readiness of the game and also the market situation.

And so to clarify, I would like to say that the current order that you're seeing in the presentation deck has no correlation with the order that we will be releasing these titles.

This is Gi-Wook Do, and I will be answering your question related to the EV issuance. As was disclosed by the company earlier, we have been -- we have stated that we are going to use the proceeds of this EV issuance to repay our debt. And this is in line with the company's aim to continue to improve its financial structure. But in respect to the specific plans related to the repayment of our debt going forward, you have to please understand that this is very much tied to how we plan to monetize our health assets. And when we make a decision to undertake certain actions, we have to factor in not only the market situation but at the same time, other factors as well. So for the time being, we don't have any near-term specific plans to share with you on this.

Currently, there are no participants with questions. [Operator Instructions]

The following question will be presented by Junhyun Kim from HSBC.

This is Junhyun Kim from HSBC. I have one question that's related to your expenses, specifically your labor expenses. If we think -- if we look at the recent performance of the company on your labor expense side, I can say that it has actually continued to stabilize somewhat and that the company has been able to well manage this stabilization process, not only on a Q-o-Q level but also on a Y-o-Y level. And so I'm curious to know -- and of course, I already know that the company has been maintaining a very conservative approach in new hires as well. But I'm just wondering whether or not such contribution has also come from possibly using AI in your development process, which led to efficiency gains in terms of the work that's being carried out. So I'm just wondering if there are other factors that is contributing to the overall well management of your labor expenses.

And one more, I would like to also ask about the commission expenses as well. As we look to your future pipeline and for next year, you are also going to be launching external IPs such as The Seven Deadly Sins. And so I think I wonder for the company, whether or not when you make decisions and you decide on the -- how you allocate the new title launches, for example, on a yearly basis, do you also factor in the commission rate that you are going to have to pay for licensed IPs as well?

Let me first talk about the labor cost. This is Gi-Wook Do. And just to talk to you about the basic direction for the company is that what we aim to do is to drive efficiency of our workforce, maintaining the current headcount. So our aim is not to actually do restructuring or reduce the headcount for the company but there is going to be a continuous increase in the work carried out by our employees. And the aim is to continue to drive efficiency so that we will be able to have our employees take on more work but work more efficiently, and that would not require the company to have additional increase in the total headcount.

And so as we continue to add efficiency and we have more performance generated from our existing workforce, as the company continues to have revenue gains, the portion of the labor costs will become more efficient and will actually have a doubling impact in how we actually better manage the overall labor cost.

And moving to your second question related to the commission expenses. There are 2 main components related to commission expenses. One is the market commission and the other is IP commission. And I can say that the market commission actually has a greater impact between the 2. But in respect to how we are driving the improvement and increase in the PC users, we're also driving more positive impact on how we are managing the market commission side.

Moving to the IP commission and in terms of how we actually determine the title releases, we don't actually basically make the decision because of how we have to actually pay out the license IP. The main driving force for the company is to be able to build up a very competitive title lineup.

And so if we look at it from a more big picture side that as we continue to have more share of original IP, then naturally, the share of licensed IPs will go down. And ultimately, this will also allow us to have a better utilization of how we pay commission going forward because with the growth of our original IPs, that overall share of the licensed IPs will naturally go down.

We will take the next question. The following question will be presented by Jamie [indiscernible] from NH Securities.

The next question is from [indiscernible]. I just have a very simple question. It goes to one of your slides where you talk about how the company has incurred the nonoperating loss, and you explained that this is a result of the valuation loss of the held assets. So can the company provide additional color to exactly what this means?

In respect to the nonoperating expenses that we have, and there are a couple of items that have -- that are under this. And this is related to and this was also something that we showed in the previous quarter as well. As you may know, we have a PRS, high PRS transaction put in place since the end of last year. And in and the PRS contract has -- it compels us to do the valuation gains or losses assessment on a quarterly basis. So if there is a change in stock price, then we have to also recognize the valuation gains or losses every quarter.

And so for the previous quarter in Q2, we had a significant nonoperating gain as a result of the stock price movement of the HYBE shares. And in respect to the fact that as we move through the Q3 valuation gains and losses, then we have to now recognize a valuation loss because the share prices had fallen at the end of Q3 compared to the end of Q2. But we are currently in the fourth quarter, and we're actually now seeing the performance of high shares in this quarter, which means that when we get to the fourth quarter, we will be able to recover and show an improvement to a very significant degree of a valuation gain for this.

We'll take the next question. Currently, there are no participants with questions.

[Operator Instructions] The following question will be presented by Yansung Kwon from Daiwa Securities Capital Markets Korea.

I would like to follow up on the comment made by the CFO of how your original games are driving the share of your original games to the total revenue is increasing, and that is contributing to the downward stabilization of the commission expenses. So can the company share with us what is the current portion of the original games to your total revenue as of Q3? And if it is possible, can the company share your target possibly for maybe year-end or for 2026?

And if so -- and also how much improvement that you can expect in terms of, for example, OP margin?

In respect to your question, I think that asking about the portion of our original games, I think it actually translates better to the share of the sales from PC. And for us, it's not so easy to give you an average or unilateral number in respect to this because performances vary by country, by genre and by season as well. So in talking about numbers, I don't think that would actually provide an accurate picture. And so that's why for us, for the company internally, we don't have a specific number that we are moving towards.

And I think what's more important than, for example, have the internal target per se is really the changes in the external environment. For example, the mention of the agreement between Google and Epic Games. So likewise, we continue to monitor very closely any development that will have an external impact. And so I can tell you that we do not have any specific internal drivers that we are currently using in this respect.

We'll take the next question. The following question will be presented by Seyon Park from Morgan Stanley.

And I would like to ask about the outlook for Q4. In respect to my understanding that for the game titles, MONGIL: STAR DIVE as well as The Seven Deadly Sins:Origin, these 2 titles were originally scheduled to be released in the fourth quarter. But I think now I see that they have been postponed to be released for next year. So if we look at what is going to be released for Q4, I can say that the global expansion of The Seven Knights Re:BIRTH scheduled for November '25. And then you also have the updates for the solar leveling that we can expect for the fourth quarter. And also factoring in the fact that Vampire, which actually had a huge initial success will, over time, performance will weaken. Is it correct for me to think that your Q4 top line growth will be less than what we actually see for Q3? And is it also possible because as we look at Q4, it's the end of the year, could it be possible for the company to initiate, for example, one-off expense item that could be done in the fourth quarter?

This is Do Gi-Wook. And my understanding of your question is that you wanted to actually do better related to the earnings outlook going forward. And if I were to actually talk to you about on a more high-level basis, yes, it's true that for The Seven Deadly Sins:Origin and MONGIL:STAR DIVE, we are -- we have postponed the launch from 4Q to next year. But nevertheless, we are going to have significant gains in terms of the revenue performance growth because of the global expansions that are scheduled for our existing titles.

So in short, we actually believe that we are going to actually be able to generate higher revenue in Q4 versus Q3. And we already had the global expansion of Seven Knights Re:BIRTH in September. And we also have the RF Online that's going to also have a big contribution in Q4 as well.

And I would also like to add that as we look to 2026, we're going to be launching The Seven Deadly Sins: Origin As well as MONGIL: STAR DIVE in Q1, which is going to help us to have significant growth in the top line in the first half of 2026. But full year-wise, we believe that we're going to be able to have very strong earnings performance next year.

And moving to the second part of your question, whether or not due to -- as you moved into fourth quarter, there could be any seasonality impact that would actually have the company incur a certain cost. But in respect to what we actually see in fourth quarter is that for the overseas business, that was actually the low season was for Q3. So we will actually see some recovery happening as we move into the fourth quarter, that would actually be on the revenue side but not on the cost side.

So at present time, I don't anticipate any one-off or nonrecurring cost that is notable to mention for the fourth quarter. But of course, I do want to say that every -- in recent, and for us, we -- in the fourth quarter, we actually do a fair value assessment for the intangible assets. And so this would be under the nonoperating impairment valuation. And so this is something that we will also be doing in the fourth quarter. But for the time being, we don't think that there's going to be a major cost item to recognize for the upcoming quarter.

If there are no further questions, we will conclude the 2025 Q3 earnings presentation at this time. For any additional inquiries, please feel free to reach out to our IR team. Thank you once again for your participation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]