Pearl Abyss Q2 2024 Earnings Call

On Thursday in South Korea, Pearl Abyss held its earnings call for the second quarter of 2024. The company experienced a quarter-over-quarter revenue decline of 4.2% down to ₩81.8 billion ($59.6 million), although the total was up 4.3% compared to Q2 2023's revenue of ₩78.4 billion ($59.6 million). 

The ₩81.8 billion of revenue recorded last quarter was the second lowest amount since the first quarter of 2018 which recorded ₩75.4 billion ($70.3 million). In addition, Pearl Abyss recorded another operating loss, the third in the past five fiscal quarters. While a ₩5.8 billion ($4.2 million) loss is bad, the amount was less than half the ₩14.1 billion ($10.7 million) recorded in the second quarter of 2023. The CFO explained the losses were due to Pearl Abyss not capitalizing development expenses during the past quarter. When asked by a financial analyst if the situation would improve in the second half of 2024, the CFO left open the possibility of future operating losses as the company continued to work on developing games.

After a good first quarter the Black Desert IP experienced an 11.3% revenue decline down to ₩60 billion ($43.7 million). Still, year-over-year revenue increased by 6.2%. But surrounding news was not very good. Despite receiving a license from the Chinese government in June to operate Black Desert Online on the mainland, the game will not operate in China in the third quarter. The company did state they hoped to launch shortly after Chinese Thanksgiving, which this year is in mid-September.

In other Black Desert news, Pearl Abyss is still working on upgrading Black Desert Console to run on the latest generation of consoles. As BDC is the only game running on consoles, we know the console version experienced a 21.4% revenue decline quarter-over-quarter. 

On the other hand, the EVE IP did very well in the second quarter based on the Equinox expansion. Quarter-over-quarter revenue increased by 20% in South Korean currency or 16.3% in U.S. dollars. The ₩21.6 billion ($15.7 million) is the highest quarterly revenue in South Korean won since Pearl Abyss acquired the Icelandic game studio in October 2018. The company does use U.S. dollars in its financial reports, so the $15.7 million in the second quarter is only the most since Q3 2021.

When the subject turns to new games, CCP Games is working on three out of the four games currently under development. EVE: Galaxy Conquest is still on track to launch in the second half of 2024. The first person shooter EVE: Vanguard is undergoing public testing and will introduce a new map during the third quarter. Finally, Project Awakening, CCP's blockchain game under development, is undergoing player testing.

One of the analysts on the call asked if the revenue trend for EVE is a temporary thing and where the company expected revenue to eventually settle. The company indicated it expects the revenue to reach ₩20 billion every quarter.

After years of asking, analysts finally received news on Crimson Desert. Pearl Abyss will take 30-minute playable demo to both Gamescon in two weeks and G-Star in November. The company also plans to show an hour long gameplay video at future conventions. The executives on the call would not give out possible release dates, referring the analysts to watch for announcements from the Crimson Desert marketing campaign.

A note about currency conversions.

All currency conversions in this blog post were performed using the rates displayed on the Federal Reserve Bank of St. Louis website using the average quarterly exchange rate. As a check on the accuracy of the methodology, I compared the revenue amounts listed on the quarterly investment calls of 2023 with the actual figure from the tax filings released by the Icelandic taxing authority this week. For 2023 I came up with revenues of $55,865,000 and the actual game revenue reported to the Icelandic government was $55,735,000. The difference was 0.2% more, in case the accuracy of the methodology is a concern.