KOSPIGames259960

Krafton

₩199,300▼ 0.20%2026-10-02 close

Market Cap

₩9.1T

Turnover

₩13.2B

Volume

70,000 shares

Shares out.

45.9M

PER

11.4×

PBR

1.3×

EPS

₩19,040

Dividend Yield

1.03%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩2,240 per share · Prices as of the 2026-10-02 close

Report overview

Record Results, Next Test Is the New Titles

Expansion of the PUBG franchise and the success of Subnautica 2 have pushed the top line to record levels, while the gap between operating and net profit and heavy reliance on a single IP remain unresolved issues.

1
On confirmed figures, second-quarter 2026 revenue reached 1.2902 trillion won with operating profit of 410.9 billion won, yet net profit attributable to owners was a loss of about 27.4 billion won in the same quarter.
2
The annual operating margin fell from around 40% in 2022-2024 to 31.7% in 2025, with the consolidation of the advertising and content subsidiary cited as a key factor in the shift in business mix.
3
The company reported preliminary record first-half 2026 results of 2.6616 trillion won in revenue and 972.5 billion won in operating profit, and said PUBG IP revenue rose 25% year on year.
4
It executed 300 billion won of share buybacks plus a capital-reduction dividend in the first half, and announced a plan to buy back an additional 100 billion won in the third quarter and cancel all of it.
5
The five new titles unveiled at gamescom 2026 target sequential releases through 2027, making the timing of actual revenue contribution and their final quality the key items to watch.

Business structure

KRAFTON's core business is game development and publishing, with multiple in-house studios including PUBG STUDIOS, Bluehole Studio and Unknown Worlds. Revenue still centers on the PUBG: BATTLEGROUNDS franchise, with PC and mobile serving as the two pillars of earnings.

The company reported first-half 2026 revenue by segment of 924.2 billion won for PC, 1.1537 trillion won for mobile, 37.7 billion won for console and 546.0 billion won for other.

According to second-quarter conference call materials, PC came in at 560.4 billion won, topping 500 billion won for the first time in a quarter, while mobile was 451.0 billion won, console 23.8 billion won, and of the 255.0 billion won in other, ADK advertising and content accounted for 240.5 billion won.

Mobile hinges on PUBG MOBILE and the India-only version BGMI, and BGMI has amassed 250 million cumulative registered users since its 2021 launch, making it a flagship local title. Since 2025 the business scope has widened beyond games.

The company acquired domestic developer Neptune and Japanese advertising firm ADK Group in succession, with roughly 75 billion yen deployed for ADK. On top of that, it is expanding physical AI investment around Ludo Robotics, a robotics research entity established in the United States.

Competitively, it vies for user time with Nexon and NCSOFT at home and with large global live-service battle royale and shooter titles abroad.

Earnings trend

Quarterly revenue · Operating profit

₩662B₩246.1B25Q2₩870.6B₩348.6B25Q3₩919.7B₩2.4B25Q4₩1.4T₩561.6B26Q1₩1.3T₩410.9B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩1.9T₩751.6B2022₩1.9T₩768B2023₩2.7T₩1.2T2024₩3.3T₩1.1T2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩662B	₩246.1B	37.2%
2025Q3	₩870.6B	₩348.6B	40.0%
2025Q4	₩919.7B	₩2.4B	0.3%
2026Q1	₩1.4T	₩561.6B	40.9%
2026Q2	₩1.3T	₩410.9B	31.8%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩1.9T	₩751.6B	₩500.2B	40.5%	9.8%	17.9%
2023	₩1.9T	₩768B	₩595.4B	40.2%	10.7%	15.9%
2024	₩2.7T	₩1.2T	₩1.3T	43.6%	19.1%	16.0%
2025	₩3.3T	₩1.1T	₩734.8B	31.7%	10.4%	31.3%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

On an annual basis revenue rose for three straight years: 1.8540 trillion won in 2022, 1.9106 trillion won in 2023, 2.7098 trillion won in 2024 and 3.3266 trillion won in 2025.

Operating profit, by contrast, went from 751.6 billion won in 2022 to 768.0 billion won in 2023 and 1.1825 trillion won in 2024 before easing to 1.0544 trillion won in 2025, with the operating margin sliding from 40.5% in 2022, 40.2% in 2023 and 43.6% in 2024 to 31.7% in 2025.

Net profit attributable to owners was 734.8 billion won in 2025, well below the 1.3061 trillion won of 2024, though it should be noted that in 2024 non-operating gains were large enough for net profit to exceed operating profit.

On the balance sheet, the debt-to-equity ratio rose from 16.0% in 2024 to 31.3% in 2025, while operating cash flow of 1.0451 trillion won showed that core cash generation held up.

Quarterly, second-quarter 2025 revenue was 662.0 billion won with 246.1 billion won operating profit, the third quarter 870.6 billion won and 348.6 billion won, and the fourth quarter 919.7 billion won with just 2.4 billion won, a sharp compression in profitability.

First-quarter 2026 then delivered revenue of 1.3714 trillion won and operating profit of 561.6 billion won, followed by second-quarter revenue of 1.2902 trillion won and operating profit of 410.9 billion won, settling the top line above the trillion-won mark per quarter.

Net profit attributable to owners, however, swung widely: a loss of about 20.0 billion won in the fourth quarter of 2025, a profit of 514.8 billion won in the first quarter of 2026, and a loss of about 27.4 billion won in the second quarter of 2026.

The company attributed the second-quarter net loss to non-operating losses including items related to Unknown Worlds and foreign exchange translation losses. It is also worth noting for consolidated margins that subsidiary ADK's operating margin fell from 13.2% in the first quarter to 3.8% in the second.

Industry analysis

Korea's game industry is in a phase where extending the lifespan of existing live titles matters more to earnings than the new-release cycle. Within that trend, KRAFTON has chosen to expand BATTLEGROUNDS from a single game into a platform.

In its March 2026 roadmap the company said BATTLEGROUNDS peak concurrent users topped 1.3 million and explained that platform expansion would center on new well-made modes and UGC updates.

On the second-quarter call it said UGC modes accounted for around the mid-10% range of all modes in directly serviced regions and BGMI. Geographically, India carries both risk and opportunity.

The Indian government banned real-money gaming, but general titles such as BGMI were classified as social gaming and fall under a relatively more predictable regulatory framework. Even so, observers note that India carries high regulatory volatility given that BGMI was once removed from app stores.

Console remains small in scale, and with many of the new titles aimed at PC and console, how much the comparatively small console revenue can be lifted is seen as the key question.

In short, the company's position is determined less by the industry cycle than by the pace of its own IP expansion and validation of new titles.

Outlook

The company's officially stated second-half plan rests on two axes: PUBG IP expansion and the new-title pipeline. KRAFTON said it will expand new modes and global animation IP collaborations on PC, while on mobile it will upgrade the UGC ecosystem and roll out content based on global IP such as Naruto and Spider-Man.

On the second-quarter call, CEO Kim Chang-han said follow-up development is under way to make Xeno Point a permanent mode, that two well-made modes are in service preparation for the second half, and that additional new modes targeting service in 2027-2028 are also in development.

All five titles unveiled at gamescom are in development targeting release by 2027. At the venue, hands-on areas for PUBG: DED.NET, NO LAW, Project ZETA, Age Twisters and TARAE: The Unbound drew queues of over two hours, with Age Twisters recording the longest line.

For Subnautica 2, the stated policy is to maintain stable service through full release and grow it into a franchise IP. On shareholder returns, execution of the plan to buy back an additional 100 billion won of treasury shares in the third quarter and cancel all of them is the item to verify.

In new businesses, the company has formed a strategic alliance with Hanwha Aerospace in physical AI and is pursuing joint technology development and a joint venture, while newly established entities such as StoryCraft and Ludo Robotics Korea have yet to generate meaningful revenue.

Valuation

PER

11.4×

PBR

1.3×

ROE

11.9%

EPS

₩19,040

BPS

₩165,294

Dividend per share

₩2,240

Looking only at confirmed financials, profit over the most recent four quarters has recovered to a level above full-year 2025 net profit attributable to owners, which works to enlarge the denominator used in earnings multiples.

That said, quarters such as the fourth of 2025 and the second of 2026 saw net profit attributable to owners turn negative even with sizable operating profit, so the multiple varies widely depending on which quarters are used as the base.

On price relative to net assets, the company reduced equity by acquiring and cancelling more than 300 billion won of treasury shares in the first half alone, so the intensity of the return policy directly affects the ratio.

On external valuation views, Hana Securities, in a June 30, 2026 report, maintained a Buy rating and a target price of 460,000 won, named the stock its game sector top pick, and assessed the multiple on expected earnings over the next 12 months as being in a low range.

Yuanta Securities said in a May 8, 2026 report that it maintained a Buy rating and raised its target price from 300,000 won to 350,000 won. Separately, a tally at that time showed the average brokerage target price over the prior six months was 11.3% lower than the average of the preceding six months.

Distributions combine a capital-reduction dividend of 99.6 billion won with share cancellation, a structure weighted more toward buyback cancellation than toward cash dividends.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Continued growth of the PUBG franchise

The company said first-half 2026 revenue from the PUBG IP franchise rose 25% year on year. Second-quarter PC platform revenue topped 500 billion won in a quarter for the first time, helped by new BATTLEGROUNDS modes and PAYDAY and Stellar Blade collaboration content.

That a title more than nine years old is sustaining user metrics through modes, collaborations and UGC is cited as evidence of live-service operating capability. Confirmed financials also show revenue above one trillion won in both the first and second quarters of 2026.

Early results from a new IP

Subnautica 2 surpassed five million units sold 22 days after its May early access launch, the Subnautica IP including legacy titles generated 232.5 billion won in first-half revenue, and the game earned a Very Positive rating on Steam. The company said Subnautica 2 accounted for roughly 200 billion won of that.

This is described as the first case where a lever to ease single-IP dependence showed up in actual revenue. The task of converting early access sales into lasting success nonetheless remains.

Aggressive treasury share cancellation stance

The company said it acquired 300 billion won of treasury shares and completed a 99.6 billion won capital-reduction dividend in the first half of 2026, and that cancellations including newly acquired and previously held shares through the second quarter total 431.5 billion won.

It also announced a plan to acquire a further 100 billion won in the third quarter and cancel all of it. Confirmed 2025 operating cash flow of 1.0451 trillion won supports the funding side of such returns. The scale of returns and actual cancellation can be verified through quarterly disclosures.

Bear factors

Recurring gap between operating and net profit

In confirmed financials, the fourth quarter of 2025 produced only 2.4 billion won of operating profit on 919.7 billion won of revenue, with a net loss attributable to owners of about 20.0 billion won.

The second quarter of 2026 likewise showed a net loss attributable to owners of about 27.4 billion won despite 410.9 billion won of operating profit. The company cited non-operating losses including Unknown Worlds-related items and foreign exchange translation losses for the second-quarter net loss.

Repeated divergence between operating profitability and bottom-line profit reduces the predictability of earnings.

Margin dilution and weakness at an acquired subsidiary

The annual operating margin fell from 43.6% in 2024 to 31.7% in 2025, and despite higher revenue, operating profit slipped from 1.1825 trillion won to 1.0544 trillion won.

Weighed by a weak advertising business since the acquisition, ADK posted second-quarter revenue of 240.9 billion won and operating profit of 9.1 billion won, a 75.2% quarter-on-quarter drop in operating profit, with its margin falling from 13.2% to 3.8% and revenue declining for three consecutive quarters post-acquisition.

As lower-margin businesses grow within consolidation, the pace of company-wide margin recovery can slow. The debt-to-equity ratio also rose from 16.0% in 2024 to 31.3% in 2025.

Still-high concentration in a single IP

Analysts note that most of the first-half growth rests on the single PUBG IP and a sequel to an acquired studio's existing IP, and the company itself faces the annual task of finding a new in-house franchise to succeed PUBG.

Because none of the five titles shown at gamescom has a disclosed release date, their quality at actual launch and the durability of operations are cited as the variables that will determine future results. It is also noted that there is a time lag before interest generated at gamescom translates into revenue. Portfolio diversification thus remains at the planning and early-results stage.

Risk factors

Regulatory and regional risk

India is one of the core regions for mobile revenue. In the course of India's ban on real-money gaming, general titles such as BGMI were classified as social gaming. Still, observers point out that regulatory volatility is high and continuous risk management is needed given that BGMI was once removed from app stores. Policy shifts can therefore directly affect revenue from a specific region.

Return on new-business investment

Amid M&A-driven expansion that more than doubled the number of consolidated subsidiaries in a year, non-game businesses outside advertising remain at an early investment stage, with StoryCraft and Ludo Robotics Korea yet to generate meaningful revenue.

On the second-quarter call, investors also raised questions about M&A and new-business strategy and the prospects for recouping physical AI investment. The larger the outlays, the greater the burden of verifying the timing and manner of returns.

New-title schedule and quality

All five new titles are in development targeting release by 2027, with no confirmed dates announced. With many aimed at PC and console, how much they can lift the relatively small console revenue is seen as the key question.

If development slips or initial reception falls short, the timeline for diversification itself could be pushed back. Subnautica 2 is also still in early access, so operations through full release will shape its outcome.

What to watch next

Late October to early November 2026
Third-quarter results. Key items are whether PC platform revenue holds near the 500 billion won-per-quarter level, whether ADK advertising and content margins recover from the second-quarter trough, and whether the non-operating losses behind the second-quarter net loss recur.
September to December 2026
Disclosures will show whether the announced third-quarter buyback of 100 billion won and full cancellation are actually executed. Whether this follows on from first-half cumulative cancellations provides a basis for judging the consistency of the return policy.
Fourth quarter of 2026
This is when the launch timing and user response for the two well-made BATTLEGROUNDS modes and global IP collaborations such as Naruto and Spider-Man, both flagged in the second-half plan, can be checked. Given that fourth-quarter 2025 operating profit was compressed to 2.4 billion won, year-end cost recognition patterns also warrant attention.
Around February 2027
Confirmed full-year 2026 results and dividend and treasury share policy. The points to watch are how the first-half run rate, which already equaled 92% of full-year 2025 operating profit, closes out on an annual basis, and whether the mix of capital-reduction dividends and cancellation is maintained.
Through the first half of 2027
Items to verify include whether test and release schedules firm up for PUBG: DED.NET, NO LAW, Project ZETA, Age Twisters and TARAE: The Unbound unveiled at gamescom, and any guidance on the full release of Subnautica 2. Progress on the physical AI joint venture with Hanwha Aerospace can also be tracked.

Overall view

KRAFTON's recent results reflect the simultaneous working of the BATTLEGROUNDS franchise's platformization and the early success of the new IP Subnautica 2.

On confirmed financials, first-quarter 2026 revenue was 1.3714 trillion won with operating profit of 561.6 billion won and second-quarter revenue 1.2902 trillion won with operating profit of 410.9 billion won, lifting quarterly scale above the trillion-won mark.

The annual operating margin, however, fell from 43.6% in 2024 to 31.7% in 2025, and in the fourth quarter of 2025 and the second quarter of 2026 net profit attributable to owners was negative even with positive operating profit.

On returns, the company acquired 300 billion won of treasury shares and paid a capital-reduction dividend in the first half, decided on 431.5 billion won of cancellations, and has announced further third-quarter acquisition and cancellation plans.

On the other side stand concentration in the single PUBG IP, margin deterioration at acquired subsidiary ADK, uncertainty over returns from non-game ventures, and Indian regulatory volatility.

The five titles unveiled at gamescom target release by 2027, and there is a time lag before the interest generated converts into revenue. Ultimately, the upcoming third-quarter results and firmer new-title schedules are the next checkpoints that will determine whether the bull or bear factors carry more weight. This report is for informational purposes and contains no buy or sell opinion and no target price.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.