Typically, during earnings conference calls, securities analysts ask management not only about financial results but also about key issues such as release schedules for new titles and business strategies. However, it is believed that these companies have felt burdened by holding quarterly conference calls amid a confluence of major issues, including recent poor earnings and management changes.
This shift in communication methods is drawing attention because these companies had previously faced collective action by minority shareholders due to recent declines in their stock prices. Kakao Games Corp.(293490)skipped its Q1 earnings call while a management transition was underway but resumed the call in Q2 once the new management structure was in place.
Wemade Co., Ltd.(112040)For Wemade Co., Ltd., this marks the first time since the fourth quarter of 2017 that it has not held a quarterly conference call. Wemade Co., Ltd. had held conference calls in the first and third quarters of 2017.
Wemade Co., Ltd. posted a loss in the second quarter of this year, following a loss in the second quarter of last year. Revenue for the second quarter of this year was 108.3 billion won, a 7% decrease from the same period last year. The operating loss was 21 billion won; while the loss narrowed by 7.5 billion won compared to the same period last year, the company failed to return to profitability.
Compounding these issues were the recent WEMIX hacking incident and a change in the company’s largest shareholder. Last month, a hack targeting a vulnerability in the smart contract administrator privileges of “WEMIX$,” the stablecoin within the WEMIX ecosystem, resulted in the unauthorized issuance of approximately 7.7 billion won worth of WEMIX$.
Furthermore, procedures to change the largest shareholder are underway after Wemade Co., Ltd.’s founder, Chairman Park Kwan-ho, decided to transfer his entire stake to the Chinese-owned firm Neopulse.
Com2uS Corporation(078340)Com2uS also did not hold a conference call for its second-quarter earnings announcement, instead releasing only its financial results and investor relations materials.
Com2uS Corporation reported second-quarter consolidated revenue of 157 billion won and operating profit of 7.2 billion won. While revenue decreased by 15% year-over-year, operating profit increased by 420.7%. Although the company improved profitability through cost efficiency and steady revenue from its baseball games, overall revenue growth appears to have slowed.
PearlAbyss Corp. switches to earnings letters starting in Q1… Explanations provided via detailed Q&A
PearlAbyss Corp.(263750)has replaced the quarterly conference calls it held through last year with an “Earnings Letter” starting in the first quarter of this year. PearlAbyss Corp. stated, “Our policy is to refrain from holding earnings conference calls for the time being.”
An earnings letter is a method of communicating financial results and key business updates in writing, rather than having management directly explain the results and engage in a Q&A session with analysts. The second-quarter earnings letter included a detailed Q&A on key business matters, ranging from expansion plans for the *Red Desert* DLC to the development status of the new title *Dokkaebi*.
PearlAbyss Corp. posted an operating profit of 67.6 billion won in the second quarter of this year. While this represents a 7,411% increase year-over-year, driven by the success of *Red Desert*—which sold 6 million copies—it fell short of market expectations that operating profit would exceed 100 billion won.
PearlAbyss Corp. cited “deferred revenue” as the reason its second-quarter results fell short of guidance. The deferred revenue is expected to be recognized sequentially in the second half of the year.
PearlAbyss Corp. explained, “For physical sales, revenue is recognized as a certain percentage of the actual sales proceeds after deducting distribution commissions and various logistics and promotional costs.” The company added, “Due to settlement procedures between wholesalers and retailers, there is a time lag between sales and revenue recognition. Additionally, 20% of the amount subject to settlement is deferred as a refund guarantee, resulting in revenue that fell short of our guidance.”
