Wemade Co.,Ltd. (A112040) Q4 FY2025 Earnings Call Transcript & Summary

Good afternoon. Thank you all for joining the conference call for the Wemade earnings results. This conference will start with a presentation followed by a Q&A session. [Operator Instructions] Now we will begin the presentation on Wemade's fourth quarter of fiscal year 2025 earnings results.

Hello. This is [indiscernible] of Wemade IR division. Thank you for joining Wemade's 2025 Fourth Quarter and Full Year Earnings Presentation. I would like to express my sincere appreciation to the investors and analysts. We have with us Mr. [indiscernible], Head of the IR Division; and Mr. Young Jun Go, Head of the Corporate Finance Division. We'll start with the presentation of key business results by Mr. [indiscernible], which will be followed by a Q&A session. Before we begin the presentation, please note that the preliminary results we are sharing today is provided for the convenience of the investors without completing the external auditor's review. It is subject to change upon completion of the final audit review. For more details, please refer to the disclaimer from the presentation material posted on our website. Now Mr. [indiscernible] will provide a review of fourth quarter and the annual business results.

Hello. This is [indiscernible] from the IR division of Wemade. I will now present the key business results of the fourth quarter and full year of 2025. Our consolidated revenue for the fourth quarter was KRW 191.7 billion, up 17% quarter-on-quarter, continuing its upward trend. This growth was driven by the performance of the new title Legend of YMIR Global and a KRW 50 billion payment from the IP licensing agreement for China. Operating expenses for the fourth quarter amounted to KRW 167.5 billion, showing a small increase due to launch-related costs. For detailed line items, custom expenses increased slightly as a result of impairment losses recognized on advanced payments for the development of sports games launched earlier this year. As a result, operating profit for the fourth quarter was recorded at KRW 24.3 billion. In nonoperating P&L, a loss of KRW 44.1 billion was recognized due to valuation loss on investment assets, bringing fourth quarter net loss to KRW 36.5 billion. Moving on to our full year results for 2025. Wemade recorded full year revenue of KRW 614 billion in 2025. The year-on-year decline is because of high base effect stemming from the record-breaking success of Night Crows Global in 2024. With Night Crows now firmly established as a stable cash cow for the company, we continue to focus on securing new growth engines by leveraging the performance of existing IP. Full year operating expenses for 2025 amounted to KRW 603.4 billion, down KRW 101.4 billion year-on-year, demonstrating a continued improvement in our cost structure since 2024. In particular, commission expenses decreased by KRW 123.7 billion Y-o-Y, demonstrating overall improvement in profitability. This is mainly thanks to the internalization of revenue-linked fees previously paid to external developers before the consolidation of MADNGINE. As a result, full year operating profit reached KRW 10.7 billion, up 51% year-on-year, reflecting efficient cost management and a focus on operational discipline. As disclosed after market close today, Wemade have decided on the dividend amount of approximately KRW 10 billion, equivalent to KRW 295 per share as part of our shareholder return initiative. We will continue to explore diverse shareholder return policies, including dividends going forward. Next, I would like to briefly share an update on our key business development, strategic direction and 2026 road map. Since the launch on October 28, Legend of YMIR Global has shown a solid revenue trend supported by stable DAU. This performance indicates that the game's sophisticated playability has translated into a tangible reward system for users, leading to strong retention and a loyal community. Building on this tight-knit community, we plan to host our first global esports competition, the YMIR Cup World Championship on February 28. Through this initiative, we aim to position YMIR not merely as a game, but as a global esports IP and a cultural phenomenon. Turning to our China business, MIR M, which was released on January 13, garnered meaningful initial interest by ranking third on the App Store chart. However, overall revenue performance has fallen short of our expectations. Next, I would like to provide some updates on our Korean won-denominated Stablecoin initiative. Wemade first demonstrated the potential of its Korean won Stablecoin business through a technical showcase in September 2025. And at the end of January, we successfully hosted the Korean won Stablecoin tech seminar, launched the StableNet Testnet, thereby validating the technological prowess across the entire spectrum of Stablecoin operation. Leveraging our extensive experience and capabilities in blockchain business as a listed company, we will actively contribute to the development of a Korean won Stablecoin ecosystem led by the government. Next, I will walk you through our new title pipeline and global launch strategy. For Wemade, 2025 was the year in which we demonstrated growth through execution. Beginning with the launch of the subculture game, Lost Sword, in January, and the blockbuster MMORPG Legend of YMIR Korea in February, we released diverse new titles across multiple genres, including Golf Super Crew and Fantastic Baseball Japan U.S. Pro. In particular, Legend of YMIR Global launched in October, opened up new possibilities for blockchain games through its advanced tokenomics, while ROM: Golden Age onboarded in August also helped generate new revenue streams. In addition, we successfully integrated our own payment system, WEMIX PAY, into in-game environments, establishing a user-centric blockchain ecosystem that delivers both payment convenience and enhanced security. Building on this ability to execute, in 2026, Wemade will focus on diversifying genres beyond MMORPGs and expanding its global capabilities across both development and marketing. In the first quarter, we will make Legend of YMIR Global available on stream to broaden our user pool. We also plan to launch our next flagship titles, Night Crows 2 and Mir 5 within the year. The sequential releases of these major titles are expected to drive game-led earnings growth through 2027. Looking ahead to 2027, with the release of the highly anticipated console titled TAL set in a Joseon-era fantasy world, we will further diversify our platforms and genres, thereby creating another momentum for the stable -- sustainable growth. Alongside our genre diversification strategy supported by a lineup of more than 20 titles, our core strategic pillar will be one-build based simultaneous launch in both domestic and global markets. This one-build launch strategy will be fully implemented, starting with Night Crows 2 slated for this year to optimize development resources while maximizing global momentum for success from the initial stage. Furthermore, in our upcoming flagship titles, we will work to successfully obtain the high proportion of PC payment, which is already proven with global game titles. Through this approach, we aim to ensure the revenue growth translates directly into meaningful profitability while building a sustainable ecosystem together with our users. In 2026, Wemade will strengthen our global capabilities and the portfolio in the game business, establishing a solid foundation for tangible growth, thereby enhancing long-term corporate value. This concludes our preliminary briefing on the fourth quarter and the full year performance of 2025. We will now open the floor for Q&A.

[Operator Instructions] The first question will be provided by Hee-Seok Lim from Mirae Asset Securities.

First question is, can you provide some updates on the pipeline for the year? And second question is, can you also provide more details regarding the proprietary payment scheme that you have?

Thank you for the questions. Your first question has to do with the pipeline of new releases. And the second one is about the adoption of our own payment system. I will answer them one by one. In 2026, as per our plan, MIR M China was already launched on the 13th of January and Midnight Walkers steam was already launched on the 29th of January. And we are also planning to launch 3 different releases within the year, which are Mir 4 China, Night Crows 2 and Mir 5. And as was mentioned in the presentation, for the year 2027, we are planning the release of TAL, which is Joseon fantasy world console game. So we do also have 20 or -- 20-something new releases or pipeline titles planned in the mid- and long-term perspective, and we'll be able to share more details in 2027. Turning to the second question. Previously, we prioritized on the ranking of the different stores. That's why we leveraged Google PC Payment more. But as was validated by the AION 2 from NCSoft, we can really see when we leverage our own payment system, cost reduction is significant. So for upcoming releases, we are looking to proactively increase the proportion of our proprietary payment system and the proportion of our own web store. And we will be able to share the results of these initiatives going forward in 2027.

If there is no further questions, we will draw to a close our Q&A session and earnings conference call. Thank you once again for your attendance. Should you have more inquiries, please contact IR division of Wemade. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]