HN saw both revenue and operating profit grow in the third quarter this year as the games, technology, and payments institutional sectors expanded evenly. HN said it plans to maintain its growth trend next year through a major new title set for release in the first half and government-led artificial intelligence (AI) and GPU (graphics processing unit) businesses.
Ahn Hyun-sik, HN chief financial officer (CFO), said on the 10th during the third-quarter earnings conference call, "Third-quarter revenue was 625.6 billion won, up 2.8% from a year earlier, and operating profit was 27.6 billion won, swinging to a profit from a year earlier," adding, "As a result, the third-quarter operating margin was 4.4%, up 23.1 percentage points (p) from a year earlier."
Regarding results by business unit, Ahn, the CFO, said, "Game revenue was 118.3 billion won, up 5.1% year over year, led by solid growth in mobile game revenue, which increased 11.7%," adding, "In particular, 'Hangeame Royal Hold'em' and Japan's '#Compass' contributed to improved results." He continued, "PC game revenue was 41.7 billion won, down 5.2% from the same period a year earlier due to weakness in PC web board games and seasonal off-peak effects."
On the payments business, he said, "Third-quarter revenue was 327.3 billion won, and in particular, HN KCP posted its highest-ever quarterly results thanks to increased domestic and overseas merchant transactions and the impact of government consumer coupon payments," adding, "As a result, HN KCP revenue rose 16.8% from a year earlier, and in the case of HN Payco, it recorded its first quarterly profit thanks to business structure reorganization and expense efficiency gains."
On the technology business, he explained, "Revenue in the technology institutional sector was 111.8 billion won, up 8.8% from a year earlier," adding, "HN Cloud revenue grew 12% year over year on the expansion of government-led AI and public projects and increased use of the messaging platform 'Notification.'" On other institutional sectors, he said, "Revenue was 89.6 billion won, down 31.4% year over year due to the termination of services and restructuring at some entities such as Travel Doctor and KOMICO Co.," adding, "However, HN Link grew 14.2% year over year on strong sales of sports and performance tickets."
On the expense structure and profitability, Ahn, the CFO, explained, "Third-quarter operating expenses were 598.0 billion won, down 17.2% year over year but up 2.6% from the previous quarter," adding, "Payment fees increased with KCP and cloud revenue growth, but companywide efficiency efforts reduced the headcount by 37 compared with the end of the previous quarter." He added, "Advertising and promotion expenses increased 12.8% from the previous quarter due to new title marketing."
HN expects growth in the games institutional sector to continue with the launch of major new titles. The company expressed confidence in the new title 'Dissidia Duelum Final Fantasy,' scheduled for release next year. Dissidia Duelum Final Fantasy is a new mobile title in the Dissidia Final Fantasy series featuring warriors from the 'Final Fantasy' franchise, and it is targeting a global launch, including Japan, in the first half of next year.
Jeong Woo-jin, HN CEO, said, "The 'Final Fantasy' IP is very strong, and we have prepared for a long time, so we expect the highest revenue among the game lineup HN holds," adding, "We expect to attract interest not only in Japan, but also in Western and Asian markets." He continued, "CBT (closed beta test) is proceeding smoothly, and with a first-quarter release next year, we should be able to look forward to concrete (results)," adding, "We have internal KPIs aiming for a game that rivals PlayArt Live Game."
HN expects revenue related to government-led GPU supply and disaster recovery projects to be reflected starting in the second quarter of 2026. HN Cloud obtained a 'high' grade under National Intelligence Service security standards in Sep. and, after securing additional floor space within the National Computing Resources Daegu Center, is working closely with relevant ministries to transfer key national systems. In addition, for the GPU procurement, build-out, and operation support project, for which it was selected as the largest builder in Jul., the company is accelerating the build-out of the latest GPU infrastructure, including B200, with the goal of full-scale operation in the first quarter of next year.
Kim Dong-hun, HN Cloud CEO, said, "We plan to build the overall system within the first quarter of next year, and sales are expected after that, so actual revenue recognition is expected around the second quarter," adding, "As for the project related to failures in national computing resources, we have already been transferring since the second half, so some revenue is being reflected, but full reflection appears likely around the second quarter of next year." He continued, "Of the total volume, conversion of about five out of 15 systems to HN Cloud appears likely," adding, "Since we secured additional data center floor space, we appear poised to lead subsequent projects as well."