NCSOFT Reports Q4 2024 Earnings: Declining Sales and Increased Losses

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NCSOFT has released its Q4 2024 earnings report, revealing a 2% quarter-over-quarter (QoQ) increase in revenue but an overall 6% year-over-year (YoY) decline in total sales. The company reported KRW 409.4 billion ($307 million) in revenue for the quarter, but an operating loss of KRW 129.5 billion ($97 million), driven by rising operational expenses.

While NCSoft does not directly spell out how their latest title, Throne & Liberty, is doing, it can be inferred from the data. NCSoft's royalty revenue increased 140% year over year and the rise was attributed to Throne & Liberty (the game is licensed to Amazon Games). That rise in royalty equals ~44 billion KRW, or ~$30 million.

The results highlight declining revenue from mobile games, which have been NCSOFT’s main revenue source in recent years. However, stronger PC game sales and increasing royalty income from Throne and Liberty could help stabilize future earnings.

The company faces significant challenges in returning to profitability, especially as it continues to invest in marketing and new game development. Investors will be watching how NCSOFT adapts its mobile strategy and whether its expanding global presence with PC titles can offset mobile losses.

With launches and expansions planned for Guild Wars 2, Throne and Liberty, and Blade & Soul NEO, NCSOFT aims to revive growth in 2025 while navigating an increasingly competitive gaming landscape.

Key Financial Highlights

Total Sales: KRW 409.4 billion in Q4 2024 (+2% QoQ, -6% YoY).
Operating Loss: KRW 129.5 billion (significant increase from previous quarters).
Pre-Tax Income: Negative KRW 10.3 billion.
Net Income: Negative KRW 7.5 billion.
Full-Year Revenue: KRW 1.57 trillion (-11% YoY), with an annual operating loss of KRW 109.2 billion.

Sales Breakdown

Mobile Games: KRW 215.6 billion (-15% QoQ), making up 53% of total sales.
PC Online Games: KRW 93.4 billion (+16% QoQ, +6% YoY), representing 23% of total sales.
Royalty Revenue: KRW 73.5 billion (+93% QoQ, +140% YoY), mainly from the global success of "Throne and Liberty".
Regional Performance:
- Korea: KRW 248.5 billion (-13% QoQ).
- North America/Europe: KRW 35.4 billion (+25% QoQ), boosted by a new expansion for Guild Wars 2.
- Asia: KRW 52 billion (modest growth after previous declines).

Operating Expenses Surge

NCSOFT’s operating costs surged by 29% QoQ, reaching KRW 538.9 billion in Q4. The biggest expense increases were:

Labor Costs: KRW 314.4 billion, impacted by severance package payouts and restructuring.
Marketing Expenses: KRW 55.2 billion, up 51% YoY, due to new game launches.
Other Operating Costs: KRW 143.2 billion.

Full-Year 2024 Performance

Mobile Game Sales: KRW 936.7 billion (-22% YoY), comprising 59% of total sales.
PC Online Game Sales: KRW 351.8 billion (-2% YoY).
Total Liabilities: Reduced from KRW 1.14 trillion in 2023 to KRW 890.3 billion in 2024.
Shareholders' Equity: KRW 3.06 trillion, down from KRW 3.25 trillion in 2023.

Further reading: Official Q4 Investor Presentation