NCSOFT Corp., a major South Korean game developer and publisher, has regained its lead over rival Krafton Inc. in the stock market after posting stronger-than-expected second-quarter results.
Shares in NCSOFT jumped more than 13% on Tuesday, taking its year-to-date gain above 25% and overtaking Krafton, which has gained a mere 1% this year.
On the main bourse, NCSOFT closed up 9.6% at 222,000 won, outperforming the broader benchmark Kospi index’s 0.5% decline. Krafton closed 1.1% lower at 315,500 won.
NCSOFT’s strong stock performance comes after the gaming blue chip delivered a strong second-quarter profit improvement, while Krafton disappointed investors with a steeper-than-expected earnings drop.
NCSOFT posted 15.1 billion won ($11 million) in operating profit on sales of 382.4 billion won on a consolidated basis for the quarter ended on June 30, up 71% and 4%, respectively, from the year-earlier period.
NCSOFT's R&D center in Pangyo From the previous quarter, its operating profit and sales rose 189% and 6%, respectively.
Still, the company posted 36 billion won in net loss in the second quarter due to the Korean won’s gains versus the dollar, which hurt its overseas business.
PERFORMANCE DETAILS
By segment, its PC game revenue rose 10% on-quarter to 91.7 billion won, with the sale of its flagship game Aion climbing 53% after a new server launch.
Mobile game revenue increased 6% to 219 billion won, bolstered by a 27% jump in Lineage 2M sales following expansion into Southeast Asia.
Aion is a flagship game of NCSOFT (Screenshot captured from its website) By region, its sales revenue in Korea reached 244.8 billion won in the second quarter, followed by Asia with 69.1 billion won and North America and Europe with 26.2 billion won. It earned 42.3 billion won in royalty fees.
Overseas and royalty revenue accounted for 36% of the total.
NEXT VERSION OF MEGA-HIT GAME AION DUE IN H2
NCSOFT is betting on a wave of new releases to sustain momentum.
Flagship title Aion 2 is undergoing final refinements after focus group testing and is scheduled for launch in Korea and Taiwan in the fourth quarter.
NCSoft has stated that Aion 2’s regional soft launch will occur first in Korea in late 2025, followed by a full global rollout around mid-2026. This staggered strategy allows for crucial testing and feedback before unleashing the game worldwide.
NCSOFT's gameplay trailer of LLL, its online shooting game The company plans to release seven new titles by 2026, including Breakers, Time Takers and the much-anticipated LLL.
Hong Won-jun, chief financial officer at NCSOFT, said that with legacy franchises and new IPs combined, the company could generate between 2 trillion won and 2.5 trillion won in annual revenue by 2026.
NCSoft is also expanding into mobile casual games, investing in AI-driven development, and exploring acquisitions to strengthen its global competitiveness.
TO LEVERAGE AI TECH
To strengthen its global competitiveness, NCSOFT said it is establishing a mobile casual games division and developing new titles that leverage its artificial intelligence (AI) and data science capabilities.
NC AI is a unit of NCSOFT Corp. Executives said the company is also exploring mergers and acquisitions (M&A) opportunities for business expansion.
Earlier this month, NC AI, a unit of NCSOFT, was named among the five tech firms to spearhead Korea’s flagship sovereign AI initiative, as Seoul moves to build large-scale artificial intelligence models independent of US tech giants such as OpenAI, the operator of ChatGPT.
Meanwhile, Krafton also reported its second-quarter earnings on Tuesday.
The company posted 246.1 billion won in operating profit on sales of 662 billion won in the April-June quarter, down 26% and 6.4%, respectively, from a year earlier.
Its second-quarter operating profit fell short of market expectations of 269.9 billion won.
Write to In-Soo Nam at isnam@hankyung.com Jennifer Nicholson-Breen edited this article.
