Earnings Release 1Q, 2005 NCsoft Corp. May 6, 2005 NCsoft Corp. Online Game Publisher Seung Kwang Bldg., 143-8 Samsung-dong, Kangnam-gu, Seoul 135-090, KOREA Tel : +82-2-2186-3300 Fax : +82-2-2186-3393 www.ncsoft.net
Disclaimer The financial results for Q1 of 2005 have been prepared on an un-audited basis, and may be subject to change during independent auditing process. Some of the information and data in the material have been prepared based on assumptions. There can be no assurance that the assumptions used by NCsoft are correct and even if they are, that the effect of such assumptions on NCsoft s business and results of operations will be as projected. Therefore, NCsoft will not be responsible for individual investment decisions based solely on this material.
Earnings Highlight Sales & Profit (Unit : W Mn) 1Q 05 4Q 04 QoQ(%) 1Q 04 YoY(%) Sales 60,359 62,563-4% 60,974-1% - Korea 48,788 52,335-7% 53,504-9% - Royalty 11,571 10,228 13% 7,470 55% Expenses 39,052 41,044-5% 29,226 34% Operating Profit 21,307 21,519-1% 31,748-33% (%) 35% 34% 52% Pre-tax Profit 17,332 15,510 12% 24,598-30% (%) 29% 25% 40% * * Net Income 12,645 11,948 6% 18,929-33% (%) 21% 19% 31% * Newly enacted accounting standard 16 Income tax is applied and as a result, 04 net income is restated (Income tax expense increased) - Net income before restatement: 4Q04 (\ 13,797 Mn), 1Q04 (\ 21,077 Mn) 01 11
Earnings Highlight Sales Breakdown - Korea (Unit : W Mn) 1Q 05 4Q 04 QoQ(%) 1Q 04 YoY(%) Lineage 26,258 25,930 1% 30,907-15% PC Café 6,476 6,887-6% 9,704-33% Personal 19,782 19,043 4% 21,203-7% Lineage II 22,537 26,415-15% 22,597 0% PC Café 9,630 11,686-18% 10,224-6% Personal 12,907 14,729-12% 12,373 4% Total 48,795 52,345-7% 53,504-9% 02 11
Earnings Highlight Overseas Royalty Breakdown (Unit : W Mn) 1Q 05 4Q 04 QoQ(%) 1Q 04 YoY(%) Lineage 5,373 5,536-3% 7,355-27% Taiwan 4,513 4,657-3% 6,431-30% Japan 683 690-1% 673 1% China 63 71-11% 114-45% U.S 82 84-2% 107-23% H.K 32 34-6% 30 7% Lineage II 5,652 4,552 24% - New Taiwan 2,646 2,301 15% - New Japan 962 960 0% - New China 1,111 420 165% - New U.S 744 682 9% - New Tailand 189 189 0% - New * EverQuest 539 130 315% 115 369% Overseas Royalty Total 11,564 10,218 13% 7,470 55% * Final recognition of EQ royalty (Early termination of EQ contract). 03 11
Earnings Highlight Cost Structure (COGS + SG&A) (Unit : W Mn) 1Q 05 4Q 04 QoQ(%) % of total sales % of total Cost 1Q '04 YoY(%) Payroll 18,551 20,220-8% 31% 48% 12,359 50% Depreciation 2,257 3,157-29% 4% 6% 1,663 36% Other Commission 4,976 5,199-4% 8% 13% 3,948 26% Sales commissi 3,205 3,699-13% 5% 8% 3,890-18% Advertising 4,261 3,683 16% 7% 11% 1,947 119% Others 5,802 5,086 14% 10% 15% 5,419 7% Total : 39,052 41,044-5% 65% 100% 29,226 34% 246894 166537 04 11
Earnings Highlight Quarterly Sales by Subs. & JVs (Unit : W Mn) 1Q 05 4Q 04 QoQ(%) 1Q 04 YoY(%) NC Interactive 8,984 13,828-35% 379 2270% ($Mn 8.8) ($Mn 12.1) NC Japan 7,155 7,425-4% 2,656 169% (JPY Mn 730.7) (JPY Mn 701.3) NC Taiwan 5,763 4,567 26% 1,369 321% (TW Mn 177.3) (TW Mn 132.9) NC Sina 3,558 1,586 124% 317 1022% (RMB Mn 28.8) (RMB Mn 11.5 ) NCSoft Europe 577 - - - - ( Mn 0.3) Total 26,037 27,406-5% 4,721 452% 05 11
Earnings Highlight Equity Method gain or loss breakdown (Unit : W Mn) 1Q 05 4Q 04 QoQ(%) 1Q 04 YoY(%) Korea (5) (60) 92% (24) 79% Orion Soft (5) (60) 92% (24) 79% Overseas (5,790) (6,997) 17% (7,791) 26% NC Interactive (2,070) (1,525) -36% (3,577) 42% NC Japan 1,139 75 1419% (905) 226% Arenanet (3,054) (3,511) 13% (2,345) -30% NC Sina 297 (100) 397% (207) 243% NC Taiwan 527 401 31% (757) 170% NCSoft Europe (1,998) (2,008) 0% - - NC True (453) (216) -110% - - NCRC (178) (113) -58% - - Total (5,795) (7,057) 18% (7,815) 26% 06 11
Earnings Highlight Balance Sheet (Unit : W Mn) 1Q 05 4Q 04 Change Asset 366,545 357,100 9,445 Current Asset 285,697 273,340 12,357 (Cash & cash equivalents) 11,732 30,414-18,682 (Short term investments) 230,100 215,100 15,000 (Accounts Receivables) 20,235 21,489-1,254 Fixed Asset 80,848 83,760-2,912 (Investment) 64,863 68,526-3,663 (PPE) 15,452 14,631 821 Liability 32,665 38,087-5,422 Current Liability 27,588 33,571-5,983 Fixed Liability 5,077 4,516 561 (Debt) - - - Shareholder's Equity 333,880 319,013 14,867 (Paid in Capital) 10,059 10,032 27 07 11
User Statistics Operating Matrix (Lineage I) Korea As of March, 2005 Servers 41 41 41 42 42 42 42 43 Highest concurrent users 129,488 120,623 136,090 138,682 147,960 146,301 135,075 149,946 Daily access 539,449 469,327 562,224 494,616 469,267 420,295 397,010 405,133 Monthly access 1,993,667 1,758,044 2,061,102 1,714,339 1,685,100 1,489,335 1,298,718 1,197,295 Registered PC Café 18,955 19,129 19,334 19,786 20,072 20,224 20,123 19,953 Registered IPs 531,810 629,096 673,070 725,983 774,849 823,697 859,780 897,278 Personal accounts 221,654 196,223 246,511 235,464 242,281 215,539 250,266 251,483 Taiwan Servers 34 34 34 34 34 36 36 36 Highest concurrent users 133,424 119,291 151,617 143,390 147,907 150,219 141,783 155,014 Daily access 348,339 315,534 373,030 346,639 336,564 296,034 265,839 272,370 Monthly access 789,714 732,490 817,943 741,271 720,076 652,063 592,341 579,679 Japan Servers 6 6 6 6 6 6 6 6 Highest concurrent users 18,955 16,745 16,649 16,089 17,064 17,315 13,614 16,864 Daily access 38,966 39,708 40,144 36,081 36,104 35,519 30,994 28,957 Monthly access 73,885 80,275 81,613 75,795 77,438 77,889 70,885 86,431 China Servers 9 11 11 11 11 11 11 11 Highest concurrent users 14,722 13,371 12,767 11,376 10,820 10,080 9,853 10,473 Daily access 63,722 52,781 51,261 42,767 42,194 32,582 28,670 30,247 Monthly access 301,960 271,118 229,182 171,389 169,697 140,422 115,805 123,665 U.S Servers 3 3 3 3 3 3 3 3 Highest concurrent users 1,508 1,678 1,778 1,692 1,321 1,277 1,451 1,660 Daily access 5,032 5,183 5,397 5,276 4,483 4,388 4,348 4,667 Monthly access 8,801 9,071 9,241 8,307 7,191 7,089 7,634 7,623 08 11
User Statistics Opearting Matrix (Lineage II) Korea As of March, 2005 Servers 25 27 28 30 32 32 Highest concurrent users 112,405 110,086 110,215 127,850 123,587 109,381 Daily access 279,630 297,073 336,534 352,863 330,213 309,504 Monthly access 896,210 903,626 1,078,491 1,140,717 1,037,068 1,004,145 Personal account 163,696 153,043 162,870 180,641 169,701 167,427 Taiwan Servers 19 19 21 21 Highest concurrent users 56,541 66,584 72,557 86,068 Daily access 111,054 128,663 122,597 137,812 Monthly access 206,089 217,028 232,223 251,058 Japan Servers 8 9 9 9 Highest concurrent users 27,441 33,926 36,200 33,745 Daily access 51,298 59,687 49,887 52,104 Monthly access 110,017 78,484 82,409 86,260 China Servers 37 41 Highest concurrent users 93,904 122,855 Daily access 188,654 203,860 Monthly access 651,652 700,241 U.S Servers 8 8 9 9 Highest concurrent users 21,631 21,970 17,781 20,912 Daily access 43,958 41,386 31,118 37,223 Monthly access 76,421 76,262 61,835 65,644 09 11
User Statistics Opearting Matrix (City of Heroes) U.S As of March, 2005 Servers 11 11 11 11 Highest concurrent users 31,085 26,870 15,741 18,518 Daily access 69,011 68,073 45,318 50,575 Monthly access 169,925 163,053 124,435 128,280 Europe Servers 4 Highest concurrent users 2,765 Daily access 5,791 Monthly access 12,201 10 11
Progress in Guild Wars U.S & Europe Highest user ratings in famous critic sites such as MMORPG.Com or Gamespot Top seller at Amazon.com and EB game.com Over 250,000 accounts were created within just 1 week since commercial launch on April 28 th Korea 500,000 accounts are created within just 1 week since its open beta on April 28 th - Concurrent users are around 30,000 11 11
Appendix Details on yearly net income restatement from adoption of accounting standard 16 income tax Accounting standard 16 income tax : Deferred tax asset for equity method loss is recognized only when there is specific plan to dispose stake in subsidiaries, that means it is probable that temporary differences will be reversed in a foreseeable future. Impact : - Deferred tax asset is not recognized for equity method loss Income tax expense is increased - Beginning retained earnings was revised for cumulative effect - Changes in beg. retained earnings : 13,173 million Won decreased (199,534 > 186,361) (Unit : Mn Won) FY2000 ~ FY 2002 FY 2003 FY 2004 Total Net income 88,983 31,667 77,718 198,368 Increased in income tax -2,572-6,969-3,632-13,173 Revised net income 86,411 24,698 74,086 185,195