Korea-based game company Pearl Abyss posted a surprise earnings beat in the third quarter this year on the back of its flagship game Black Desert. Pearl Abyss said it plans to make thorough preparations to launch the major new title Crimson Desert in March next year. Pearl Abyss had previously delayed the launch of Crimson Desert for more than four years, but this time signaled its intention to roll it out without a hitch.
Pearl Abyss said on the 12th in its earnings release that third-quarter operating profit on a consolidation basis was 10.6 billion won, up 34.3% from a year earlier. Revenue rose 34.2% in the same period to 106.8 billion won. Net profit came to 29 billion won, swinging to the black.
The figures far exceeded the securities market consensus. According to FnGuide, Pearl Abyss' third-quarter consensus was revenue of 79.7 billion won and an operating loss of 12.5 billion won.
The flagship intellectual property (IP) Black Desert drove the earnings growth. The company said game revenue increased thanks to the impact of a major update to Black Desert, and operating profit also improved due to factors such as foreign exchange translation gains. Cho Mi-young, Pearl Abyss chief financial officer (CFO), said at the third-quarter earnings conference call held that day, "Black Desert IP revenue rose 45% from the previous quarter, marking the highest quarterly revenue since the shift to self-publishing in 2021."
Black Desert revenue was 79.5 billion won, up 47% from a year earlier, about 47% above the securities market forecast. By region, Black Desert's revenue share was North America/Europe (65%), Korea (18%), and Asia (17%). By platform, it was PC (85%), mobile (10%), and console (5%).
With the launch of the new class "Wukong" and the new region "Nether: Edania," user inflows increased in the third quarter, and the release of the new console versions "Atoraxxion" and "Edania" appears to have lifted revenue.
In the conference call, Pearl Abyss stressed that it will definitely launch Crimson Desert in March next year, the top concern among gamers and investors. Chief Executive Heo Jin-young of Pearl Abyss said, "Over the next four months, as we build awareness of the game, we will begin full-scale marketing to boost sales with our partners starting in mid-January, two months before launch," adding, "Preparations for launch are going smoothly, and as we have begun preorders, we will meet the expectations of waiting users and launch on schedule."
They assessed that preorders are proceeding smoothly. Heo said, "We have no prior experience with preorders for a triple-A game, so it is difficult to accurately predict sales levels, but based on what we have heard from partners, we are receiving positive feedback, including sales comparable to other new triple-A titles."
Pearl Abyss has faced calls to diversify its IP because of its high dependence on Black Desert revenue. In response, Pearl Abyss selected the open-world action-adventure game Crimson Desert, whose development began in 2018, as the standard-bearer to carry on Black Desert's success, but the launch date was postponed twice. Initially, Pearl Abyss first unveiled Crimson Desert at the domestic game show G-Star in 2019 and announced it would be released in the fourth quarter of 2021.
However, as the gap between new releases lengthened, Pearl Abyss' top-line growth was also constrained, and with waning market expectations for the next title, the company's share price had struggled. On the news of a swing to profit that day, Pearl Abyss shares rose more than 6% intraday to trade around 38,000 won.
If Pearl Abyss releases Crimson Desert in March next year as scheduled, it is expected to be the company's first major new title in about seven years.
Mirae Asset Securities analyst Lim Hee-seok said, "Although the launch of Crimson Desert is four months away, we have yet to observe strong overseas buzz, including on the Steam wishlist," adding, "We expect Crimson Desert sales next year to be in the 4 million to 5 million unit range."