Sales are ‘highest in history’ Operating profit is ‘earning shock’… Wemade conflicting performance, why?
Wemade, a game and platform company, accepted somewhat contradictory report cards in the first quarter of this year. Sales hit an all-time high, while operating profit fell far short of analysts’ expectations. Regarding the reason for the contradictory sales and operating profit results, WeMade explained that it was a phenomenon due to the acquisition of ‘WeMade Play’.
In the first quarter of 2022, WeMade recorded 131.35 billion won in sales and 6.494 billion won in acquisition profit. Sales increased by 72.3% compared to the same period last year. This is an all-time high for the quarter. On the other hand, operating profit plunged 76.4% compared to the same period last year. This is far lower than the 12 billion won expected by the stock market. It’s actually an ‘earning shock’.
The acquisition of ‘Wemade Play’ lies in the background of the record high sales achievement and the opposite performance of ‘earning shock’. Wemade Play, previously called ‘Sunday Toz’, was acquired by Wemade last year. As Wemade Play’s earnings were consolidated into accounting, sales increased and operating profit decreased.
A WeMade official said through a conference call held on May 11, “WeMade sales surged following the incorporation of WeMade Play. At the same time, operating expenses skyrocketed following the incorporation of WeMade Play. Operating profit decreased as advertising operating expenses and labor costs increased,” he explained.
The company also announced the company’s policy on the recognition of Wemix sales, which has been controversial since last year. WeMade explained, “We plan to treat the sales of the Wemix platform, a blockchain service, conservatively until an accurate virtual asset accounting method is revealed.”
Wemade announced that it would continue its ‘strategic patience’ for the growth of the platform. He also announced that he would overcome the ‘controversy over rising labor costs’ that has recently held back the Pangyo IT and game companies. WeMade CEO Jang Hyunguk said, “If you look at the current situation, most domestic game companies are following WeMade. The world’s most successful blockchain mainnet project is also following our strategy. I think the Wemade strategy is right. “Now is the time to be much more aggressive and aggressive and execute the strategy now.” CEO Jang said, “Efforts to secure good talent will be done through all methods such as new recruitment and M&A. Total labor costs are likely to rise. We plan to actively recruit talented people without compromising our financial stability,” he added.
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