Pearl Abyss Q2 2025 Earnings Call

On Tuesday in South Korea, Pearl Abyss held its earnings call for the second quarter of 2025. The company experienced a quarter-over-quarter decrease in revenue of 4.9%, from ₩83.7 billion ($57.7 million) in Q1 2025 to ₩79.6 billion ($56.8 million) in the second quarter. Year-over-year the company's first quarter revenue decreased by 2.7%. 

From the Q2 2025 earnings call

For the fourth time out of the last five fiscal quarters Pearl Abyss ran at an operating loss. The ₩11.8 billion ($8.4 million) loss in the first quarter of the year puts the operating losses at ₩24 billion ($17.1 million) over the last 12 months. Pearl Abyss also recorded a net loss of ₩22.7 billion ($16.7 million) in the second quarter of 2025. For the first half of 2025 the company recorded a net loss of  ₩22.2 billion ($15.9 million) and operating loss of ₩17.0 billion ($12.0 million). 

The losses in the last quarter were attributed to foreign exchange effects as the South Korean won strengthened 2.9% against the U.S. dollar in Q2 2025 according to the Federal Reserve Bank of St. Louis. Perhaps the won strengthened a lot more against the euro and east Asian currencies.

IP and platform breakdowns are back

In a somewhat surprising development revenue breakdowns by game IP (Black Desert vs EVE) and platform returned on yesterday's call. For Black Desert the news was probably disappointing. Year-over-year Black Desert income fell by 8.5% down to last quarter's ₩54.9 billion ($39.2 million). Much of the decline can be attributed to the ending of the Black Desert Mobile service in China. The contract with TenCent to operate Black Desert Mobile in China was supposed to run until 26 April but due to poor performance TenCent and Pearl Abyss ended service for the game on 27 January. Mobile game revenue declined ₩6.2 billion ($8.2 million), or 36.3%, from Q2 2024 to Q2 2025.

Over the first half of 2025 Black Desert game revenue was ₩117.9 billion ($82.6 million), a decline of 7.0% in South Korean won. Since the Pearl Abyss representatives on the call said foreign exchange affects affected profitability, I also calculated the decline in terms of the U.S. dollar came out as a decline of 12.0%.

The bright spot on the call was the news about the EVE IP. In Korean won the EVE IP had its highest revenue total of ₩24.2 billion ($17.3 million), a year-over-year increase of 12.0%. In terms of won the EVE IP recorded the highest quarterly revenue total since Pearl Abyss acquired CCP Games in October 2018. The U.S. dollar figure is the highest since the EVE IP brought in $17.9 million in the third quarter of 2020. 

On the call, Pearl Abyss indicated last quarter was EVE Online's most successful quarter in terms of revenue since 2016. In that year CCP Games introduced the free-to-play Alpha clone option in EVE in the final quarter of 2016.

Finally no earnings call is complete without news of the development of Crimson Desert. The CEO of Pearl Abyss Heo Jin-young gave an update on the development and marketing of the long-delayed game. Currently Crimson Desert is undergoing voiceover work and console certification. Pearl Abyss intends to attend Gamescon and PAX East in August and the Tokyo Game Show at the end of September. However, the game will not launch in the final three months of 2025 as originally stated but sometime in the first quarter of 2026.  While the company has an internal date in mind the date will not be revealed at Gamescom.

The update led to only a single question asked by the investment analysts on the call. Heo Jin-young was asked about the possibility of Crimson Desert's release being delayed past the first quarter of 2026. The Pearl Abyss CEO was directly asked "how can we trust you and your company" about any release date after all of the delays over the past several years.

According to the Korean business site Chosun Biz the markets did not respond well to the earnings call.

The market reacted coldly to this announcement. As of 9:46 a.m., Pearl Abyss's stock price plummeted by 9,050 won (-23.15%) to 30,050 won, dropping more than 20% in early trading.

Pearl Abyss has seen multiple delays in its release since its first announcement in 2019. The industry assesses that this schedule change has diminished the likelihood of a performance rebound by the end of the year, and there are concerns that further delays could make it even harder to recover investor sentiment. According to the financial information firm FnGuide, Pearl Abyss was expected to achieve a revenue of 540 billion won and an operating profit of 114.8 billion won this year, but this delay makes it difficult to meet those projections.

As seen during the call, through the first half of 2025 Pearl Abyss has achieved revenue of 163.3 billion won and an operating loss of 17 billion won. And with the delay of Crimson Desert's release into 2026 I don't see a way how the South Korean game maker can come close to meeting market expectations.

Update: 13 Aug 2025: 1300 GMT - At the end of the trading day, Pearl Abyss stock fell 24% since the previous day's close. That represents a loss of ₩581.1 billion ($421.2 million) in the value of Pearl Abyss' market cap.

Pearl Abyss stock price - 13 August 2025

Pearl Abyss Plans To Sell Off CCP Games

In a not entirely unexpected move South Korean-based Pearl Abyss is looking to sell off its Icelandic subsidiary CCP Games. The South Korean financial & economic news Money Today Network broke the story based on an interview.

Pearl Abyss is putting its subsidiary CCP, which developed 'EVE Online', up for sale on the market. The reason is interpreted as CCP acquiring it for 250 billion won in anticipation of the fan base it secured through 'EVE Online' and expansion of its mobile platform, but it fell short of initial expectations.

According to an interview with Money Today Broadcasting MTN on the 19th, Pearl Abyss and CCP have selected an underwriter for the sale of CCP and are sounding out multiple game companies for their interest in acquiring it.

Pearl Abyss launched an IPO in September 2017 bringing in $165 million. The company used the proceeds primarily to fuel global expansion and invest in new game development. A significant portion went into scaling up operations, including establishing overseas subsidiaries and enhancing marketing efforts for Black Desert Online in international markets. They also channeled funds into developing new titles like Crimson Desert and DokeV, aiming to diversify their portfolio and reduce reliance on a single franchise.

The biggest acquisition occurred in September 2018 with the purchase of CCP Games. The initially announced purchase price of $425 million was reduced down to $225 million as the studio failed to meet certain financial conditions. For example, CCP and its new Chinese partner NetEase were unable to reestablish EVE Online service in China until the first half of 2020. 

The biggest disappointment for Pearl Abyss probably was the failure of CCP to immediately launch a FPS game set in the EVE universe. Despite presenting a playable demo of a game known as Project Nova at EVE Vegas in October 2018, the project was shut down in February 2020. CCP continued to work on an FPS game, with EVE Vanguard currently listed but unavailable on Steam.

As often happens with financial drama involving CCP, a loan is involved.

In October 2023, the Group financed USD 50,000,000 from Pearl Abyss Corp. to repay the existing borrowings from banks and other financial institutions in a single loan agreement arranged by The Korea Development Bank. The interest period is 12 months and the interest rate is fixed at 4.6%. Interests are paid every anniversary but the loan principal is due in October 2026.

Any party purchasing CCP Games will also need to pay back the $50 million loan to Pearl Abyss. Something tells me the South Korean company can't afford to refinance the loan to its subsidiary as I honestly don't think CCP will have the ability to repay the loan on time.

Game revenue since the IPO funded spending spree

But while CCP's financial performance may not have met expectations, those of Pearl Abyss' cash cow in comparison utterly collapsed. One example was the cancellation of Tencent's contract to run Black Desert Mobile in China early. Instead of running through April 2025, service ended on 27 January. Since 2019, Black Desert revenue declined over 55% when converted to U.S. dollars. In comparison, CCP's game revenue increased by almost 25%. 

The same holds true concerning game development. While producing two mobile games with two other games under development six years later is probably not what Pearl Abyss expected, CCP outperformed the South Korean studio. Crimson Desert was supposed to launch in the second half of 2021 and is now expected to launch in the fourth quarter of 2025. Pearl Abyss also had to cancel development of DokeV and Plan 8 until Crimson Desert is complete. In fact, Pearl Abyss' ability to support CCP's development efforts is limited, as was shown by the Icelandic studio's reaching out to outside venture capitalists for funding to develop EVE Frontier.

Now for my hot takes. Who do I think will purchase CCP Games? Cross off the list any Chinese company like Tencent or NetEase. The hottest reason for acquiring CCP is EVE Frontier. The Chinese Communist Party is not a big fan of cryptocurrencies, having banned them in September 2021.

The People’s Bank of China, the country’s central bank, said Friday that cryptocurrency transactions are illegal, saying such currencies “do not have legal tender status” and therefore “cannot be circulated as currency in the market.”

In a statement, the bank said that bitcoin and other virtual currency transactions have disrupted economic and financial order, contributing to a rise in “money laundering, illegal fund-raising, fraud, pyramid schemes, and other illegal and criminal activities.”

Crypto transactions are now considered criminal financial activity in China, the bank said, and the country will “resolutely curb the hype of virtual currency transactions, severely crack down on illegal financial activities and illegal criminal activities related to virtual currencies, protect the safety of the people’s property in accordance with the law, and make every effort to maintain economic and financial order and social stability.”

Any door the Chinese government leaves open for people to move wealth out of the country tends to lead to a stampede.

According to the Chainalysis Blockchain data platform, more than $50 billion worth of cryptocurrency left East Asian accounts to areas outside the region between 2019 and 2020. As China has an outsized presence in East Asian cryptocurrency exchanges, Chainalysis staff believe that much of this net outflow of cryptocurrency was actually capital flight from China. Although Chainalysis does not have a definitive figure for how much capital fled China between 2019 and 2020, they estimate that it could be as high as $50 billion.

If not one of the giants out of China, then who? My guess is a venture capital firm heavily interested in cryptocurrencies. Andreessen Horowitz led a $40 million round of funding just to be involved in the project. Would another group want to own the whole thing?

I do want to conclude with a final question I haven't seen asked. Is Pearl Abyss preparing itself for sale? In hindsight the sale of CCP's Newcastle office at the end of 2017 was a prelude to selling itself to Pearl Abyss. Selling its VR studio to Sumo Digital cleared away some business Pearl Abyss didn't want to deal with. Would selling off a studio developing a blockchain game clear the way for Tencent to purchase Pearl Abyss?

Pearl Abyss Q1 2025 Earnings Call

On Tuesday in South Korea, Pearl Abyss held its earnings call for the first quarter of 2025. The company experienced a quarter-over-quarter decrease in revenue of 20.4%, from ₩95.7 billion ($68.5 million) in Q4 2024 to ₩83.7.7 billion ($57.7 million) in the first quarter. Year-over-year the company's first quarter revenue decreased by 2%. 

For the third time out of the last four fiscal quarters Pearl Abyss ran at an operating loss. The ₩5.2 billion ($3.6 million) loss in the first quarter of the year puts the operating losses at ₩18 billion (-$12.9 million) over the last 12 months. Pearl Abyss did manage to pull off a net profit of ₩500 million ($300,000) in the first quarter.

In non-gaming revenue Pearl Abyss saw a drop of revenue from Pearl Abyss Capital of ₩4.4 billion ($3 million) due to lack of activity. The large net profit in Q4 2024 was a one-time event due to FX (foreign exchange) gains plus a revaulation of some of the company's assets. The drop in net profits in the first quarter were the numbers retreating back to the norm.

But the biggest decline in revenue was due to the ending of the Black Desert Mobile service in China. The contract with TenCent to operate Black Desert Mobile in China was supposed to run until 26 April but due to poor performance TenCent and Pearl Abyss ended service for the game on 27 January.

While the company removed platform data this quarter, the earnings call PowerPoint presentation still had revenue breakouts by region. While North American/EU (+2.2%) and Korea (+1.8%) experienced small gains, the rest of Asia region experienced a quarter-over-quarter decline of 32.8%, a drop of ₩8.9 billion ($6.9 million). Pearl Abyss no longer breaks down revenue by game franchise but one can assume most if not all the revenue decline is due to the ending of BDM service in China.

Finally on the subject of profits, the company's CFO did point towards CCP Games' development of two games, EVE Frontier and EVE Vanguard, as another reason for the quarter's operating loss.

The analysts on the call were told of various initiatives designed to increase revenue. Black Desert Console is expected to finish work on porting the game to the current generation of consoles (PS5 & XBox XIS) and release the updated game on 26 June.

For EVE, while the presentation did tout the upcoming Legion expansion, Pearl Abyss chose to make EVE Frontier a bigger focus than normal for a game from CCP. I think progress on a blockchain game is supposed to make investors forget some of the pain surrounding Crimson Desert.

According to the C-Suite members on the call, development of the long-delayed game is in the last stages of preparing to launch. These steps include final voiceover work and certification for consoles. Expect full scale marketing efforts to begin in June to include a new demo build to use at game shows.

Note: The conversion of the QoQ revenue loss in the rest of Asia has been corrected from $11.5 million to $6.9 million.

Black Desert Mobile Merges Servers Down To Three

A day after Pearl Abyss' earnings call for the third quarter of 2024, the South Korean game company merged the six Black Desert Mobile servers down to three. The company did give players two weeks notice, so the news wouldn't have caught vigilant investment companies by surprise.

The three servers being merged into the others were known as Oasis servers. In Black Desert Mobile, Oasis servers were special game servers introduced by Pearl Abyss in April 2024. These servers offered opportunities for both new and returning players compared to players on the regular servers. Here are some key features of Oasis servers:

Leveling Up Quickly: Players could level up five times faster compared to regular servers.

100% Black Pearl Refund: Returning players got a full refund of their Black Pearls, which could be used to purchase in-game items.

Quality-of-Life Improvements: Updates like Shadow Gear upgrades and new crafting recipes were available.

Community Events: Various events, giveaways, and special title events were held to engage players.

Given the servers only lasted six months before their announced merge into regular servers, I assume the idea a failure.

At one point Black Desert Mobile was the main driver of revenue for the Black Desert franchise. In the third quarter of 2019 BDM brought in 57% of Pearl Abyss' overall revenue, or approximately ₩76 billion ($63.6 million). In the last quarter five years later, mobile gaming only brought in 21%, or ₩15.6 billion ($21.2 million) of the company's gaming revenue. And unlike in 2019, last quarter mobile gaming revenue was split between BDM and EVE: Echoes, although the vast majority was probably generated by BDM.

Between the long decline of Black Desert Mobile and the failure to upgrade Black Desert Online for next generation consoles, Pearly Abyss is close to falling below the ₩75 billion recorded in company revenue for Q4 2017, the first month of the operation of BDM.