Pearl Abyss Q4 2024 Earnings Call

On Tuesday in South Korea, Pearl Abyss held its earnings call for the fourth quarter of 2024. The company experienced a quarter-over-quarter increase in revenue of 20.4%, from ₩79.5 billion ($58.6 million) in Q3 to ₩95.7 billion ($68.5 million) in Q4. Year-over-year the company's fourth quarter revenue increased by 13.4%. For the entire year, revenue increased 2.7% from ₩333.5 billion ($255.5 million) in 2023 to ₩342.4 billion ($251.0 million) in 2024.

Despite bouncing back with a ₩2.4 billion ($1.7 million) operating profit in the fourth quarter, Pearl Abyss suffered an operating loss of ₩12.1 billion ($8.8 million) for 2024. This is the second year in a row the company posted an operating loss, as the South Korean game studio posted a 16.4 billion ($12.4 million) loss in 2023.

Pearl Abyss did post a net profit of ₩61 billion ($44 million) in 2024, thanks in large part to a ₩46.8 billion ($33.5 million) net profit in the final quarter of the year. While I wondered how the company made a ₩46.8 billion net profit on ₩95.7 billion in revenue, an analyst brought up a different question. Pearl Abyss claimed ₩53.3 billion ($38.1 million) in financial income but only ₩46.8 billion in net profit. The analyst was told the amount came from FX (foreign exchange) gains for Q4 plus a revaulation of some of the company's assets. All told game revenue only made up 59.4% of Pearl Abyss' income in the fourth quarter. I was left wondering if not for the weakening of the South Korean won would the company have recorded a second straight year of losing money.

A bigger surprise on the call was Pearl Abyss changing the way it reports revenue. No longer is game revenue broken down between the Black Desert and EVE franchises. Instead, the revenue is broken down between game and non-game (Pearl Abyss Capital) revenue. When asked by an analyst for a breakdown between the Black Desert and EVE game revenue, the reply was the breakdown was similar to the 3rd quarter numbers. 

I believe this marks a point where Black Desert revenues, even with the launch of Black Desert Online in China last quarter, are so poor the company's leadership has decided to hide the numbers. The leading reason I believe Black Desert is doing poorly financially is the failure of the Pearl Abyss leadership to tout a successful entry into the Chinese market. At the same time CCP Games not only launched an EVE Online expansion, but a new mobile game, EVE Galaxy Conquest as well. Noticeably, Galaxy Conquest was not mentioned once.

One game under development mentioned on the call was EVE Frontier. I don't know if there was a problem with the translation but apparently the blockchain-based game "is in its last stages of completion." I think when a transcription of the call is provided the wording may change. If not, Pearl Abyss really buried the lede.

Finally, the subject of Crimson Desert. Pearl Abyss confirmed on the call that "late 2025" means the fourth quarter. Still, I think at least one analyst was skeptical. Another wanted to know how many devs were working on the next scheduled game, DokeV. Pearl Abyss replied that all resources were working on completing Crimson Desert but that DokeV shouldn't take that long afterwards to publish.