L2 Year End Earnings Results for NCSoft : Lineage 2 General Discussions

From the news desk of NCSoft:


Seoul, South Korea, February 6, 2007—NCsoft® Corporation (KSE:036570.KS), the world’s leading developer and publisher of online computer games, today reported earnings results for 2006. On a consolidated basis, sales came to KRW 338.7 billion (US$361 million), operating profit to KRW 43.3 billion (US$46.1 million), pre-tax profit to KRW 50.0 billion (US$53.3 million) and net profit to KRW 38.0 billion (US$40.5 million). Compared to the previous year, sales maintained a similar level while operating income and pre-tax profit decreased 44% and 41% respectively. The company saw its net profit drop 43% year to year.

NCsoft explained that sales have remained constant year to year due to continuing success with existing products such as Lineage® and Lineage II. The drop in net profit resulted from increased investment in development to expand the company’s game portfolio and drive future growth. Moreover, the company reported that the results included the one-time write-off related to Auto Assault®, recorded during the second quarter of 2006.

Brisk sales of Lineage and Lineage II and the successful launch of Guild Wars Nightfall™ led to fourth quarter 2006 consolidated sales of KRW 90.2 billion (US$96.1 million), operating profit of KRW 15.4 billion (US$16.4 million), pre-tax profit of KRW 17.7 billion (US$18.8 million) and net profit of KRW 18.7 billion (US$19.9 million). This compared to the previous quarter sales of KRW 84.9 billion (US$90.5 million), operating profit of KRW 17.4 billion (US$18.5 million), pre-tax profit of KRW 18.2 billion (US$19.4) and net profit of KRW 12.8 billion (US$13.6 million). This is an increase in sales of 6% while operating profit and pre-tax profit dropped 12% and 3% respectively. Net income increased 46% due to a tax credit for Research and Development.

▶ By region, fourth quarter sales in Korea and Japan dropped 1% and 13% respectively from the previous quarter to KRW 53.4 billion (US$56.9 million) and KRW 8 billion (US$8.5 million). The successful launch of Guild Wars Nightfall and the increase in the number of Lineage II players helped boost sales in North America and Europe. The two regions recorded sales of KRW 18.0 billion (US$19.1 million) and KRW 10.8 billion (US$11.5 million), a quarter to quarter increase of 14% and 76% respectively. The percentage breakdown of regional sales shows Korea with 54% of total sales followed by North America with 20%, Europe with 12% and Japan with 9%. Overseas royalties amounted to 5%. Of total sales, 46% was derived from overseas.

▶By game titles, sales of Lineage increased 2% quarter to quarter to KRW 30 billion (US$31.98 million) while Lineage II dropped 2% to KRW 30.6 billion (US$32.6 million). Meanwhile, sales of the Guild Wars® franchise rose 65% to KRW 18.6 billion (US$19.8 million). City of Heroes®/City of Villains® saw its sales drop 26% to KRW 5.5 billion (US$5.86 million). The percentage breakdown of sales by game title shows Lineage and Lineage II with 35% and 36%, respectively, followed by Guild Wars with 22% and City of Heroes/City of Villains with 6%.

Regarding its earnings guidance for FY2007, NCsoft projects sales of KRW 358 billion to KRW 367 billion, up 6% to 8% year to year, and operating profit of KRW 42 billion to KRW 49 billion (all on consolidated basis).

Jaeho Lee, CFO of NCsoft, said, “In preparation for growth of the global online game market, NCsoft has set up a development system with the ability to launch more than one major MMO game and several casual game titles every year. To accomplish this goal and establish a strong product pipeline, we plan on 18% year to year increase in the development budget this year as well. After several years of spending on development costs, we believe the fruits of those labors will finally begin paying off soon. NCsoft is excited about the prospects for our gaming community at the end of this year when we expect to launch two highly anticipated products, Tabula Rasa™ from Richard Garriott and Aion™.”

Full service for Aion is expected to launch in Korea at the end of 2007. The company is also set to introduce an upgraded version of the service platform PlayNC® with integrated accounting and payment functions along with new casual games in the second half of 2007.

The company also aims to provide a multi-faceted game portfolio to overseas users. Exteel™ and Dungeon Runners™ will be launched in the first half of the year, while the company anticipates the launching of Tabula Rasa and a new major update to the Guild Wars franchise in the latter half of 2007.

About NCsoft Corporation

Headquartered in Seoul, South Korea, NCsoft Corporation is the world’s leading developer and publisher of online games. Founded in 1997, NCsoft is home to Lineage, the world’s most successful online role playing game and also to Lineage II, City of Heroes and City of Villains, Guild Wars, Guild Wars Factions™, Guild Wars Nightfall and Auto Assault. In coming months, NCsoft is poised to launch other massively multiplayer titles including Tabula Rasa and Aion in addition to various casual games via its game portal, PlayNC. NCsoft has offices in North America, the United Kingdom, Japan, Taiwan, China and Thailand. In fiscal year 2006, NCsoft posted revenues of KRW 338.7 billion. For more information about NCsoft visit http://www.ncsoft.com or http://www.PlayNC.com.



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NCsoft, the interlocking NC logo, Lineage, Guild Wars, Guild Wars Factions, Guild Wars Nightfall, ArenaNet, Auto Assault, Tabula Rasa, Aion, Exteel, Dungeon Runners, PlayNC, PlayNC.com and all associated logos and designs are trademarks or registered trademarks of NCsoft Corporation. City of Heroes, City of Villains and all associated logos and designs are trademarks or registered trademarks of Cryptic Studios, Inc. and NCsoft Corporation. Cryptic Studios is a trademark of Cryptic Studios, Inc. All other trademarks are the property of their respective owners.