KRAFTON

The spike in quarter-over-quarter and year-over-year Operating Profit was driven by reduced operating costs (e.g., marketing costs) and the removal of one-off costs incurred from stock compensation in 2021.

FACTORS THAT CONTRIBUTED TO QUARTERLY GROWTH

During Q1 2022, the PUBG IP showed balanced growth on each platform. As a strong number of legacy users returned to the game following PUBG: BATTLEGROUNDS’ transition to free-to-play (F2P) in January 2022, average monthly active users (MAU) nearly tripled compared to Q4 2021. The number of paying users increased more than two-fold, thereby considerably contributing to bolstered quarterly sales. As a result, PUBG: BATTLEGROUNDS PC sales reached $82.3 million USD, up 61% YoY. PUBG: BATTLEGROUNDS console sales increased 124% QoQ and 274% YoY.

PUBG: MOBILE recorded revenue of $307.1 million USD during Q1 2022, which was up 30% QoQ and up 5% YoY. These increases were driven by a number of in-game IP collaborations and robust live service systems.

International markets (outside South Korea) drove 95% of KRAFTON’s Q1 2022 revenue. The company has contributed to the development of the local game industry in India by strategically investing in the country’s IT and media ecosystems. Accordingly, BATTLEGROUNDS MOBILE INDIA sustained an uptrend of market share and sales.

NEW GAMES AND EXPANDED BUSINESS FOCUSES IN 2022

KRAFTON is set to release new titles, such as code name “Project M” and The Callisto Protocol this year. Unknown Worlds, the creators of the Subnautica series that KRAFTON acquired in 2021, are creating a new game, code name “Project M,” which is slated for early access later this year. “Project M” is a wholly unique turn-based strategy game set in a sci-fi world. The Callisto Protocol, an original survival horror game developed by Striking Distance Studios, is also set to launch in 2022. Furthermore, in-house project incubation teams have been developing deep learning-based games and running public tests on Steam.

In addition, the company has been working on strengthening the Web 3.0 business and establishing a joint venture with NAVER Z. A team consisting of members who are dedicated to NFT research and have game R&D experience has been designing a Sandbox editing tool that can be utilized to develop games and implement the metaverse. The team aims to conduct an alpha test in the first quarter of 2023. As such, KRAFTON plans to make wide-ranging efforts to build the Create to Earn (C2E) ecosystem.

BREAKDOWN OF Q1 2022 PERFORMANCE RELATIVE TO PREVIOUS PERIODS