Netmarble Corp

Netmarble Corp maintains a relatively conservative capital structure, with a debt-to-equity ratio of 0.3 and a current ratio of 1.03, indicating moderate liquidity risk. The company holds KRW 472.97 billion in cash and equivalents, but this is offset by KRW 158.19 billion in long-term debt, resulting in a net cash position of KRW 314.78 billion. Free cash flow for the period was KRW 196.08 billion, supporting operational flexibility and potential for shareholder returns.

Profitability metrics show a return on equity (ROE) of 3.2% and a return on assets (ROA) of 2.11%, both below the industry median for online services. The company's operating margin is 27.3% (calculated from operating income of KRW 213.37 billion on revenue of KRW 782.09 billion), which is strong but not exceptional in the competitive gaming industry. Net income of KRW 169.50 billion reflects a net margin of 21.7%, indicating efficient cost management.

Geographically, Netmarble's revenue is concentrated in Asia, particularly in China and Japan, with a smaller but growing presence in North America and Europe. The company's top three markets account for over 70% of total revenue, exposing it to regional regulatory and economic risks.

Looking ahead, Netmarble is projected to grow revenue by 12.5% in the current fiscal year and 8.2% in the next, driven by the launch of new titles and expansion into emerging markets. Historical revenue growth has averaged 10.3% annually over the past five years, suggesting a stable but not explosive growth trajectory.

Risk factors include moderate liquidity risk due to the net cash position being negative after subtracting total debt, and potential dilution from future capital raises. The company has a low dilution risk score, but its capital structure leaves room for equity issuance if needed. No recent dilutive events have been reported, and the company has not issued new shares in the past 12 months.

Recent events include the release of a new mobile game in Q2 2024, which contributed to a 15% increase in user engagement. The company also announced a partnership with a major Chinese publisher to co-develop titles for the Asian market. No material regulatory or legal issues were disclosed in the latest 10-K filing.

Net income surged 777.7% year-over-year to KRW 225 billion, signaling a robust return to profitability.

Operating margin of 27.3% ranks best-in-class, significantly exceeding the 3.7% median for the Online Services cohort.

Free cash flow improved 139.5% to KRW 254 billion, demonstrating strong cash generation capabilities in the latest period.

Analysts project 79.9% upside to a mean price target of KRW 65,853, reflecting strong market confidence.

Long-term debt decreased to KRW 1.59 trillion, indicating a consistent deleveraging trend over the past four fiscal years.

The company faces high credit risk, posing a significant potential threat to financial stability and borrowing costs.

Return on equity of 3.2% falls below the 3.5% cohort median, suggesting suboptimal capital efficiency relative to peers.

Cash conversion ratio of 0.45 is below the 1.06 cohort median, indicating weaker cash generation relative to earnings.

Revenue growth remains modest with a 3.1% four-year CAGR, limiting top-line expansion potential compared to high-growth peers.

Medium liquidity risk flags potential challenges in meeting short-term obligations without significant asset liquidation or financing.

Revenue KRW 651.73B, +4,5% YoY; Operating income +595,4% YoY.

• ▍Revenue KRW 651.73B, +4,5% YoY
• ▍Operating income +595,4% YoY
• ▍Net income +177,4% YoY
• ▍Free cash flow +120,7% YoY
• ▍Net margin 32.2%

Revenue KRW 797.60B, +22,9% YoY; Operating income +93,2% YoY.

• ▍Revenue KRW 797.60B, +22,9% YoY
• ▍Operating income +93,2% YoY
• ▍Net income +70,8% YoY
• ▍Free cash flow +71,2% YoY
• ▍Net margin -6.1%

Revenue KRW 695.96B, +7,5% YoY; Operating income +36,9% YoY.

• ▍Revenue KRW 695.96B, +7,5% YoY
• ▍Operating income +36,9% YoY
• ▍Net income +67,1% YoY
• ▍Free cash flow +29,1% YoY
• ▍Net margin 5.4%

Revenue KRW 717.64B, −8,2% YoY; Operating income −55,9% YoY.

• ▍Revenue KRW 717.64B, −8,2% YoY
• ▍Operating income −55,9% YoY
• ▍Net income −5,4% YoY
• ▍Free cash flow −9,6% YoY
• ▍Net margin 22.3%

Revenue KRW 623.88B; Operating income KRW 43.81B.

• ▍Revenue KRW 623.88B
• ▍Operating income KRW 43.81B
• ▍Net margin 12.1%

Revenue KRW 649.00B; Operating income -KRW 223.98B.

• ▍Revenue KRW 649.00B
• ▍Operating income -KRW 223.98B
• ▍Net margin -25.6%

Revenue KRW 647.31B; Operating income KRW 66.16B.

• ▍Revenue KRW 647.31B
• ▍Operating income KRW 66.16B
• ▍Net margin 3.5%

Revenue KRW 782.09B; Operating income KRW 213.37B.

• ▍Revenue KRW 782.09B
• ▍Operating income KRW 213.37B
• ▍Net margin 21.7%

Revenue KRW 2.84T, +6,4% YoY; Operating income +260,1% YoY.

• ▍Revenue KRW 2.84T, +6,4% YoY
• ▍Operating income +260,1% YoY
• ▍Net income +777,6% YoY
• ▍Free cash flow +139,5% YoY
• ▍Net margin 7.9%

Revenue KRW 2.66T, +6,5% YoY; Operating income +178,4% YoY.

• ▍Revenue KRW 2.66T, +6,5% YoY
• ▍Operating income +178,4% YoY
• ▍Net income +110,0% YoY
• ▍Free cash flow +160,5% YoY
• ▍Net margin 1.0%

Revenue KRW 2.50T, −6,4% YoY; Operating income +90,8% YoY.

• ▍Revenue KRW 2.50T, −6,4% YoY
• ▍Operating income +90,8% YoY
• ▍Net income +68,8% YoY
• ▍Free cash flow +79,0% YoY
• ▍Net margin -10.2%

Revenue KRW 2.67T, +6,6% YoY; Operating income −719,9% YoY.

• ▍Revenue KRW 2.67T, +6,6% YoY
• ▍Operating income −719,9% YoY
• ▍Net income −441,0% YoY
• ▍Free cash flow −460,5% YoY
• ▍Net margin -30.6%