NCSoft Sees 80% Drop in Q1 Operating Profit... "Aiming for 2 Trillion Won in Revenue Next Year" (Comprehensive)

First Quarter Revenue at 360.3 Billion Won, Down 9.5%
"Seven New IPs to Launch Next Year... Labor Cost Optimization"

NCSoft reported that its operating profit for the first quarter of this year dropped by nearly 80% compared to the same period last year, due to a decline in revenue from existing games and the absence of successful new releases.

On May 14, NCSoft announced in a regulatory filing that its consolidated operating profit for the first quarter of this year was provisionally calculated at 5.2 billion won, a decrease of 79.7% from the same period last year. Revenue stood at 360.3 billion won, down 9.5% year-on-year.

NCSoft recorded an operating loss of 129.5 billion won in the previous fourth quarter due to the impact of a voluntary retirement program. However, in the first quarter of this year, the effect of retirement severance payments was reduced, allowing the company to return to profitability despite a decrease in revenue.

By game, revenue was as follows: Lineage M at 112.7 billion won, Lineage W at 53.1 billion won, Lineage 2M at 37.9 billion won, PC Lineage at 22.3 billion won, Guild Wars 2 at 19.3 billion won, PC Lineage 2 at 19.0 billion won, and Blade & Soul at 14.1 billion won. Both mobile and PC game revenue decreased compared to the previous quarter, by 4% and 11%, respectively.

By region, revenue was 228.3 billion won in Korea, 56.1 billion won in Asia, and 30.9 billion won in North America and Europe. High royalty income was recorded at 45.0 billion won.

Total operating expenses were 355.1 billion won, down 4.6% year-on-year and 34% quarter-on-quarter. Of this, labor costs amounted to 187.2 billion won, variable and other expenses related to revenue were 129.4 billion won, depreciation expenses were 25.1 billion won, and marketing expenses were 13.3 billion won.

Hong Wonjun, Chief Financial Officer (CFO), stated, "We are establishing a structure in which the cost base can be fully covered by legacy IP revenue alone," and added, "For new titles, we plan to aggressively launch a spin-off game, Aion 2, LLL, Breakers, and Time Takers by early next year."

Hong also emphasized, "Next year, we will launch as many as seven new IPs, and there will be three new titles based on legacy IPs."

Regarding labor costs, he said, "We are continuing to pursue cost reductions this year as well. Additional workforce reductions will be implemented at overseas subsidiaries," and added, "We will work to optimize labor costs to meet market expectations."

The progress of mergers and acquisitions (M&A) was also mentioned. Hong stated, "We are in discussions regarding M&A to enter new genres and markets, and will soon deliver tangible results," adding, "We look forward to sharing good news with you shortly."

NCSoft announced its goal to increase 2026 revenue to between 2 trillion and 2.5 trillion won through the expansion of existing intellectual property (IP), the launch of new titles, and external IP game publishing. Specifically, the company aims to achieve 1.4 trillion to 1.5 trillion won from legacy IPs, and 600 billion to 1 trillion won from new IPs and external publishing.

Co-CEO Park Byungmoo commented on "Aion 2," which recently launched its brand website, saying, "We are highly confident in the game's level of completion, and starting with a live broadcast on the 29th, we will conduct a Focus Group Test (FGT) with a small group of participants to strengthen feedback and marketing."