4by4, First Half Sales Up 45% Year-on-Year... "Subsidiary Acquisition Effects Becoming Visible"

Slight Increase in Losses... Impact of Accounting Costs Unrelated to Actual Cash Flow

Visual content technology company Poby4po's sales in the first half of the year increased significantly compared to the same period last year.

According to the Financial Supervisory Service's electronic disclosure system on the 15th, Poby4po recorded sales of 12.9 billion KRW in the first half of this year, an increase of about 45% compared to 8.9 billion KRW in the same period last year. Quarterly sales were 5.5 billion KRW in Q1 and 7.4 billion KRW in Q2.

A Poby4po representative explained, "This is thanks to the 'subsidiary acquisition effect' resulting from the aggressive M&A efforts since last year."

Since its listing on the KOSDAQ market in April last year, Poby4po has continuously acquired related companies according to strategies for external expansion, market growth, and efficient business strengthening of each division. It acquired MedPictures, which focuses on various VFX (visual effects) technology businesses needed for movies and dramas; 4RX, which plans, builds, and constructs media exhibitions and theme park spaces; and SBXG, an e-sports team operator and related content company. Including RollQ, a game-specialized influencer channel subsidiary of SBXG, a total of four companies have been incorporated as subsidiaries.

Thanks to the subsidiary acquisition effect, sales increased, but the scale of losses also slightly grew. On a consolidated basis, operating loss in the first half of this year was 7.1 billion KRW, and net loss was 7.3 billion KRW.

Poby4po explained the relatively increased costs by stating, "As the organization rapidly expanded due to subsidiary incorporation, related incidental costs such as labor costs, welfare expenses, insurance premiums, and rental fees increased along with the increase in personnel."

The loss scale also grew due to the reflection of depreciation expenses and amortization costs of tangible and intangible assets, which were largely acquired last year to expand the stock platform and AI solution business. Generally, acquiring tangible and intangible assets is an essential element for business base expansion. Most of Poby4po's intangible assets consist of videos and images that are paid services within the stock platform. Since these videos and images are products sold to stock users, Poby4po expects that "once sales start in earnest, the existing purchase costs and depreciation expenses will be offset."

In the first half of this year, Poby4po newly added an image category to its stock platform 'Keycut Stock,' which previously only provided videos, thereby beginning to offer creators a variety of video and image content. It is also known that the company is currently expanding its service scope further through partnerships with multiple content companies.

The AI image quality enhancement solution 'PIXELL,' which accelerates commercialization by increasing R&D personnel and related equipment, is also undergoing performance tests with many companies in SaaS form. It is expected to contribute as a new revenue source in the second half of this year.

The 'stock compensation cost' due to employees exercising stock options also influenced the increase in expenses on the financial statements. Since stock compensation costs and depreciation of tangible and intangible assets are all accounting expenses, it is common to separate them from cash expenses that gauge the actual fundamentals of the company.

A Poby4po representative said, "As the company grows, the projects we undertake are also increasing in scale with more long-term contracts. Sales from contracts conducted in the first half and those concentrated in the summer will be recognized together in Q3 and Q4, so performance is expected to improve in the second half."

He added, "If business synergies from subsidiary acquisitions such as SBXG are gradually realized, we expect not only external expansion but also a clear improvement in profitability by reducing the loss margin in the second half of this year."