📄 What This Document Is

This is GRAVITY Co., Ltd.'s annual report (Form 20-F) for the fiscal year ended December 31, 2025. It's a comprehensive filing required by the U.S. SEC for foreign companies listed on American exchanges. It combines the year's financial results, a deep dive into business risks, and detailed company disclosures.

👉 Why it matters: This document is the single best source to understand Gravity's financial health, strategy, and the challenges it faces. It's the company's official report card and risk warning for investors.

🎮 What The Company Does

In simple terms, Gravity is the company behind the massively popular Ragnarok video game franchise. They develop and publish online PC games and mobile games, primarily based on the Ragnarok universe. Their business model revolves around earning money through in-game purchases (microtransactions), subscription fees, and licensing their games to partners around the world for them to operate.

👉 Key Insight: Their success is overwhelmingly tied to one intellectual property: Ragnarok. In 2025, about 96.6% of their total revenue came from Ragnarok games and related royalties.

💰 Financial Highlights

Gravity had a strong year financially, showing solid growth.

• Total Revenue: Won 561.4 billion (approx. US$ 388.6 million) for 2025. This is an increase from Won 501.1 billion in 2024.
• Profitability: The company reported an operating profit and net profit for the year, though the specific figures aren't highlighted in the snippet provided. The focus is on the top-line growth.
• Mobile is King: Mobile games generated 81.2% of total revenue in 2025, highlighting the company's successful shift to the mobile platform.
• Star Performer: The newly launched Ragnarok M: Classic was a massive hit, accounting for 27.6% of all revenue (Won 154.6 billion / US$ 107.0 million) in its launch year.

⚠️ Major Risk Factors

The filing spends significant time outlining what could go wrong. These are critical for any investor to understand.

• Over-Reliance on Ragnarok: This is the #1 risk. If the franchise declines or new Ragnarok games fail, the company's revenue would be severely impacted.
• Controlling Shareholder: GungHo Online Entertainment, a Japanese game company, owns 59.3% of Gravity's shares. This gives GungHo effective control over the company's decisions, which may not always align with the interests of other shareholders.
• Intense Competition: The gaming industry is fiercely competitive, with Gravity competing against giants like Tencent, NetEase, and Activision Blizzard.
• Dependence on Partners: A large portion of revenue comes from overseas licensees. If these partners fail to market or operate the games well, or violate laws, it hurts Gravity.
• Regulatory & Geopolitical Risks: The company faces complex and changing regulations in every country it operates in (like Korea, Taiwan, Thailand). Geopolitical tensions, especially between the U.S. and China, could also disrupt business.
• Currency Fluctuations: Earning revenue in multiple currencies (Won, USD, Yen, etc.) while having costs in others creates financial risk from exchange rate movements.

🏢 Corporate Structure & Governance

Gravity is a Korean company headquartered in Seoul. Its American Depositary Shares (ADSs) trade on the NASDAQ Global Market under the ticker GRVY. Each ADS represents one share of common stock.

• Majority Owner: As mentioned, GungHo Online Entertainment is the controlling shareholder.
• Leadership Ties: Several of Gravity's executive directors also hold senior positions at GungHo, which could create potential conflicts of interest.
• "Controlled Company" Status: Due to GungHo's ownership, Gravity is considered a "controlled company" under NASDAQ rules, which allows it to bypass some standard corporate governance requirements.

📈 Segment & Geographic Breakdown

The business is organized into three reportable segments:

1. Online Games: Traditional PC games like Ragnarok Online.
2. Mobile Games: The dominant segment, including all Ragnarok mobile titles.
3. Others: Includes other business activities.

Geographically, the company operates and earns revenue across Asia and the Americas. Key countries include South Korea, Taiwan, Japan, the United States, Thailand, the Philippines, Indonesia, and Hong Kong. This global footprint is a strength but also adds operational complexity.

🔮 What's Next / Strategic Outlook

The forward-looking statements (which are predictions, not guarantees) point to several strategic focuses:

• Continued Mobile Focus: The future growth engine is clearly in mobile gaming.
• Live Operations & Updates: A key strategy is to continually update and improve existing games (like Ragnarok M: Classic) to retain players and drive ongoing revenue.
• New Game Development: The company must consistently develop or acquire new successful titles to reduce its reliance on the core Ragnarok franchise over the long term.
• Navigating Risks: A significant part of their strategy involves managing the many risks outlined, from competition to regulatory compliance.

🧠 The Analogy

Gravity's business is like a Hollywood studio that built its entire empire on one incredibly successful movie franchise (think Marvel or Harry Potter). The studio knows how to make great films in that universe, and each new release is a blockbuster event that fans love. However, the studio's entire financial health depends on that single franchise staying popular. If audiences get tired of it, or if a new sequel flops, there's no other major franchise to fall back on. They have a controlling parent company (like a major media conglomerate) that makes most of the big decisions.

🧩 Final Takeaway

GRAVITY Co., Ltd. is a financially strong, Ragnarok-powered gaming company that delivered impressive revenue growth in 2025, driven by its hit mobile titles. However, investors must weigh this performance against the concentrated risk of depending almost entirely on one franchise and the corporate governance structure where a single majority shareholder holds the reins.