KRAFTON

Elevated marketing costs and the one-time cost incurred from stock compensation contributed to the slight increase in operating costs. More than $50.9 million USD in expenses for the gifting of shares to shareholders was accounted for when calculating the 2021 Operating Profit. Taking this into consideration, KRAFTON actually secured an operating profit of more than $585.3 million USD , the second consecutive year it’s achieved that result.

FACTORS THAT CONTRIBUTED TO YEAR-OVER-YEAR GROWTH

KRAFTON’s steady growth was led by PUBG: BATTLEGROUNDS and PUBG MOBILE. PUBG: BATTLEGROUNDS drove $96.1 million USD in revenue during the fourth quarter of 2021. For the full year, PUBG: BATTLEGROUNDS reported $333.6 million USD in revenue. In late 2021, KRAFTON prepared for PUBG: BATTLEGROUNDS’ January 2022 transition to free-to-play, ensuring a sustainable live service structure. A variety of in-game paid products were developed, which increased PUBG: BATTLEGROUNDS’ in-game average revenue per user (ARPU) by more than four times compared to 2020. This contributed significantly to strong year-over-year sales growth.

PUBG MOBILE recorded revenue of $1.18 billion USD for 2021 and $253.7 million USD in revenue for the fourth quarter of 2021, making it the best-performing mobile game. Increased sales in PUBG MOBILE, the growth of BATTLEGROUNDS MOBILE INDIA and the release of NEW STATE MOBILE contributed to the sales increase in 2021.

NEW GAMES AND EXPANDED BUSINESS FOCUSES IN 2022

With KRAFTON’s earnings announcement, the company emphasized its focus on strengthening its game-related capabilities and accelerating new business opportunities in 2022. The company aims to further solidify its competitive edge by increasing its game publishing capabilities and streamlining game operations while targeting gamers with new titles.

A new game, code name “Project M,” by Unknown Worlds (the creators of the Subnautica series that KRAFTON acquired in 2021) is slated for early access in 2022. “Project M” is a wholly unique turn-based strategy game set in a sci-fi world. The Callisto Protocol, an original survival horror game develop by Striking Distance Studios, is also set to launch in 2022. Additionally, new mobile titles, including Road To Valor: Empires from Dreamotion and Defense Derby from RisingWings, are waiting to be launched.

KRAFTON also plans to introduce a new production program called “The Potential” and actively push into new businesses such as deep learning, Web 3.0, NFT, VR and others. Specific to deep learning, KRAFTON is developing an audio-driven user-generated content (UGC) platform using voice AI that is text-based. The company will also build a high-quality metaverse with a content creation tool that leverages Unreal Engine. KRAFTON has also entered a memorandum of understanding with NAVER Z and ZEPETO to develop a new Web 3.0 and non-fungible token (NFT) project aimed at building an NFT metaverse platform. Through partnerships like these, KRAFTON aims to invigorate the NFT-based creator economy while also focusing on developing technologies that can contribute to the creation of a Create to Earn (C2E) ecosystem by collaborating with strong partners.

DETAILED BREAKDOWN OF 2021 PERFORMANCE RELATIVE TO PREVIOUS PERIODS

	Annual Earnings (2021)	Annual Earnings 2020)	Variance (YoY %)
Revenue	18,863	16,704	+13%
Operating profit	6,396	7,739	-17.3%
Net profit	5,199	5,563	-6.5%

▲Table: KRAFTON’s 2021 operating (tentative) performance according to the consolidated financial statements (Unit: 100M South Korean Won)

	Actual Performance (Q4 2021)	Actual Performance (Q4 2020)	Variance (YoY %)	Actual Performance (Q3 2021)	Variance (QoQ %)
Revenue	4,440	3,526	+25.9%	5,219	-14.9%
Operating profit	430	926	-53.6%	1,953	-78.0%
Net profit	62	413	-84.9%	1,783	-96.5%

▲Table: KRAFTON’s 4Q 2021 operating (tentative) performance according to the consolidated financial statements (Unit: 100M South Korean Won)

For the latest information on KRAFTON, please visit www.krafton.com. Assets and further press releases can be found on the official KRAFTON press room.