Ncsoft Earnings Release Q2, 2007 August 8, 2007

NCsoft Earnings Release Q2, 2007 August 8, 2007

NCsoft CORPORATION OK-san Bldg 157-33, Samsung-dong, Kangnam-gu, Seoul 135-090, KOREA | Tel: +82-2-2186-3300 Fax : +82-2-2186-3550 Copyright ⓒ NCsoft Corporation. All Rights Reserved WWW.NCSOFT.COM Global Online Game Publisher NCsoft

Table of Contents

01.01 Disclaimer

02.02 Consolidated Company

03.03 Earnings Highlights | 01

04.04 User Statistics | 10

05.05 Appendix – Parent Earnings | 13 Global Online Game Publisher NCsoft Disclaimer

Disclaimer

The financial results for 2Q 2007 have been prepared on an un-audited basis, and may be subject to change during independent auditing process.

Some of the information and data in the material have been prepared based on assumptions. There can be no assurance that the assumptions used by NCsoft are correct and even if they are, that the effect of such assumptions on NCsoft’s business and results of operations will be as projected.

Therefore, NCsoft will not be responsible for individual investment decisions based solely on this material. Global Online Game Publisher NCsoft Consolidated Company

The consolidated company

NCsoftNCsoft (Controlling(Controlling Company)Company)

ConsolidatedConsolidated SubsidiariesSubsidiaries EquityEquity MethodMethod AffiliatesAffiliates

NCNC InteractiveInteractive (100%)(100%) OrionOrion SoftSoft (100%)(100%)

ArenaNetArenaNet (100%) (100%) JJ InteractiveInteractive (100%)(100%)

NCNC EuropeEurope (100%)(100%) NCRCNCRC (100%)(100%)

NCNC JapanJapan (60%)(60%) NCsoftNCsoft JapanJapan (100%)(100%)

NCNC TaiwanTaiwan (85%)(85%) NCNC ChinaChina (100%)(100%)

NCNC True(49%)True(49%) Global Online Game Publisher NCsoft Earnings Highlights

Consolidated Sales & Profit

(Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%)

Net Sales 75,882 84,715 -10% 85,505 -11%

- Online Game Sales 72,076 80,988 -11% 79,689 -10%

- Royalties 3,806 3,727 2% 5,816 -35%

Expenses 65,279 67,648 -4% 83,830 -22%

Operating Profit 10,603 17,067 -38% 1,675 533%

(%) 14% 20% 2%

Pre-tax Profit 14,571 19,773 -26% 3,993 265%

(%) 19% 23% 5% Net Income 10,562 14,121 -25% -222 NM (%) 14% 17% -

1) In 2Q 2006, one-off expenses related Auto Assault (W11.3bn) were included. 2) NC Taiwan has been consolidated beginning 1Q07. Royalties in 2Q06 include royalties from NC Taiwan of 1.8 billion Won.

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Net Sales Mix by Geography

QoQ 2Q 07 1Q 07

Taiwan Taiwan Japan Japan 3% 3% 10% 10% Europe Europe 9% (Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%) 6% North Korea North Korea America 59% America 59% Korea 48,503 53,698 -10% 52,915 -8% 17% 15% Royalties Royalties 5% 4% - Game Sales 44,864 49,988 -10% 47,177 -5%

- Royalties1) 3,639 3,710 -2% 5,738 -37% YoY North America 12,884 12,932 0% 15,749 -18%

2Q 07 2Q 06 Europe 4,525 7,759 -42% 9,340 -52%

Japan 7,669 8,063 -5% 7,501 2% Taiwan Japan Japan 3% 9% 10% Europe Europe 11% Taiwan 2,302 2,263 2% - New 6% North Korea North Korea America 59% America 55% Total 75,883 84,715 -10% 85,505 -11% 17% 18% Royalties Royalties 5% * NC Taiwan has been consolidated beginning 1Q07. 7% 1) Royalties in 2Q06 include royalties from NC Taiwan of 1.8 billion Won.

2/18 Global Online Game Publisher NCsoft Earnings Highlights

Online Game Sales Mix by Games

QoQ

2Q 07 1Q 07

Guild Other Guild Wars 0% Wars 11% (Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%) COH/V Lineage 14% COH/V Lineage 9% 35% 7% 38% Lineage 25,503 30,408 -16% 28,510 -11% Lineage Lineage II II Lineage II1) 32,080 32,814 -2% 28,355 13% 45% 41%

CoH / CoV 6,370 5,954 7% 5,532 15%

Guild Wars2) 8,264 11,542 -28% 16,389 -50% YoY -152% -116% 2Q 07 2Q 06 Other -141 270 903

Total 72,076 80,988 -11% 79,689 -10% Guild Other Wars Guild 1% 11% Wars * Other revenues in 2Q07 include the cancellation of revenues for Auto Assault (-W380 million). Lineage COH/V 21% Lineage 9% 35% 1) Lineage II sales in 2Q06 include royalties from NC Taiwan of 1.7 billion Won. COH/V 35% 7% 2) Guild Wars sales in 2Q06 include royalties from NC Taiwan of 20 million Won. Lineage Lineage II II 45% 36%

3/18 Global Online Game Publisher NCsoft Earnings Highlights

Royalties Breakdown

(Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%)

Lineage 3,168 3,276 -3% 3,393 -7%

Taiwan 3,022 3,167 -5% 3,278 -8%

China 130 95 37% 95 37%

H.K 16 14 14% 20 -20%

Lineage II 460 428 7% 2,299 -80%

Taiwan - - NM 1,743 NM

China 166 134 24% 230 -28%

Thailand 294 294 0% 326 -10%

Guild Wars - - NM 24 NM

Taiwan - - NM 24 NM

Others 178 23 674% 100 78%

Royalty Total 3,806 3,727 2% 5,816 -35%

※ Other royalties consist of non-game royalties, such as royalties for character and goods guidebooks, from Korea and Japan.

4/18 Global Online Game Publisher NCsoft Earnings Highlights

Consolidated Cost Structure (COGS + SG&A)

% of total % of total (Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YOY(%) sales cost

Payroll 34,058 35,377 -4% 45% 52% 30,456 12%

Sales Variable Costs 7,301 8,649 -16% 10% 11% 8,104 -10%

- Royalties 967 1,116 -13% 1% 1% 763 27%

- Payment processing fees 2,496 2,572 -3% 3% 4% 2,026 23%

- Sales commissions 1,251 1,898 -34% 2% 2% 1,946 -36%

- Box production costs 1,716 2,159 -21% 2% 3% 2,257 -24%

- Other sales variables 870 904 -4% 1% 1% 1,112 -22%

Advertising 2,623 2,015 30% 3% 4% 8,150 -68%

Depreciation & Amortization 4,751 4,593 3% 6% 7% 6,923 -31%

Others (*) 16,546 17,014 -3% 22% 25% 30,197 -45%

Total : 65,279 67,648 -4% 86% 100% 83,830 -22%

(*) Depreciation & Amortization in 2Q06 includes Auto Assault write off expense of 1 billion Won. (*) Others in 2Q06 include Auto Assault write off expense of 10.3 billion Won.

5/18 Global Online Game Publisher NCsoft Earnings Highlights

Quarterly Sales by Equity-Method Affiliates

(Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%)

NC China 926 659 41% 965 -4%

(RMB Mn 7.7) (RMB Mn 5.5) (RMB Mn 8.1)

NC True 447 437 2% 612 -27%

(Baht Mn 15.7) (Baht Mn 15.8) (Baht Mn 24.6)

Total 1,373 1,096 25% 1,577 -13%

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Equity Method Gain or Loss Breakdown

(Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%)

Korea (206) (296) Loss continued (17) Loss continued

Orion Soft (69) (89) Loss continued (17) Loss continued J Interactive (137) (207) Loss continued - New

Overseas (279) (985) Loss continued (979) Loss continued NC Taiwan - - - 352 -

NC China (226) (613) Loss continued (47) Loss continued

NC True (85) (171) Loss continued (874) Loss continued

NCRC 71 57 25% (410) Turn to black

NCsoft Japan (39) (258) Loss continued - New

Total (485) (1,281) Loss continued (996) Loss continued

* NC Taiwan has been consolidated beginning 1Q07.

7/18 Global Online Game Publisher NCsoft Game Launch Schedule

Game launch Schedule

2nd Half, 2007

Aion – 10/31 Closed beta test

Atrix –3Q Point Blank –beta test Korea Action FPS Service Platform

SP JAM –3Q Project D –beta test SetSet upup Casual Game Snowboarding a side-scrolling RPG Casual Game PortfolioPortfolio

Richard Garriott’s Tabula Rasa -fall

U.S. Guild Wars : Eye of the North -8/31 & Europe

Exteel (In-game item sales)

8/18 Global Online Game Publisher NCsoft Earnings Highlights

Consolidated Balance Sheet

(Unit : W Mn) 2Q 07 1Q 07 Change

Asset 527,069 523,164 3,905

Current Asset 382,753 378,764 3,989 (Cash & cash equivalents) 55,259 46,371 8,888 (Short term investments) 248,490 250,000 -1,510 (Accounts Receivables) 36,196 43,088 -6,892 Fixed Asset 144,316 144,400 -84 (Investment) 8,422 10,649 -2,227 (PPE) 102,235 99,246 2,989

Liability 83,243 84,490 -1,247

Current Liability 76,707 78,331 -1,624 Fixed Liability 6,536 6,159 377 (Debt) - - -

443,825 438,674 5,151 Shareholder's Equity (Paid in Capital) 10,202 10,202 0

9/18 Global Online Game Publisher NCsoft User Statistics

Operating Metrics (Lineage)

Korea As of June 2007 Jun. 05 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 43 43 43 43 43 43 45 45 45 Highest concurrent users 151,113 150,863 187,786 161,038 144,109 138,733 144,430 149,034 120,012 Monthly access 1,166,001 1,220,491 1,627,159 788,180 746,291 716,772 775,579 733,593 583,426 Personal accounts 257,385 256,758 309,452 299,313 262,019 266,564 302,469 287,058 224,664

Taiwan Jun. 05 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 36 36 38 39 40 40 40 40 40 Highest concurrent users 138,623 135,731 134,462 157,365 159,309 168,218 177,571 193,119 192,546 Monthly access 475,066 428,152 472,156 470,855 434,623 445,636 423,212 428,845 417,365

Japan Jun. 05 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 666666666 Highest concurrent users 13,498 12,550 14,534 12,448 12,836 12,643 10,599 12,016 10,339 Monthly access 68,182 69,538 74,671 76,027 69,641 76,191 80,019 79,252 48,083

China Jun. 05 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 10 10 10 10 11 11 11 11 11 Highest concurrent users 12,564 14,586 14,149 18,376 20,399 17,246 19,551 20,705 25,354 Monthly access 108,388 140,422 110,182 152,466 139,669 107,644 117,407 126,479 132,758

U.S Jun. 05 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 333333 3 3 3 Highest concurrent users 2,205 1,844 2,200 2,224 2,311 2,780 3,732 3,205 3,077 Monthly access 8,586 6,760 9,059 9,759 9,685 9,727 11,953 9,202 9,093

* Highest concurrent users: Number of users that play simultaneously at one point in time (highest record of the given month) * Monthly access: Number of unique users that log on at least once in the given month * Personal accounts: Number of users that pay flat monthly fees

10/18 Global Online Game Publisher NCsoft User Statistics

Operating Metrics (Lineage II)

Korea As of June 2007 Jun. 2005 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 32 33 33 33 33 33 33 33 31 Highest concurrent users 104,900 109,814 119,345 116,897 110,183 97,558 113,369 123,332 124,566 Monthly access 926,535 944,372 730,837 531,701 508,041 499,894 482,173 460,974 440,509 Personal account 151,997 165,239 174,170 179,298 174,582 165,558 187,005 192,165 187,570 Taiwan Jun. 2005 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 22 22 22 22 22 22 22 22 22 Highest concurrent users 87,722 68,617 71,301 78,550 72,713 66,497 55,571 46,768 50,950 Monthly access 240,911 238,620 198,795 205,661 171,408 160,316 123,006 112,244 111,263 Japan Jun. 2005 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 10 10 10 11 11 12 12 12 12 Highest concurrent users 39,727 35,381 40,088 44,631 48,843 50,188 52,684 49,268 49,693 Monthly access 104,797 102,774 105,097 111,046 111,569 112,670 113,774 116,239 109,249 China Jun. 2005 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 44 21 22 23 15 17 15 15 12 Highest concurrent users 86,463 54,353 43,026 37,806 18,438 18,085 16,888 15,238 16,594 Monthly access 424,355 358,305 354,395 299,675 212,173 204,269 180,584 183,049 126,878 U.S & Europe Jun. 2005 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 9 9 9 9 910101010 Highest concurrent users 22,493 23,923 28,309 32,767 32,099 42,287 32,732 32,767 31,465 Monthly access 66,138 66,975 76,435 89,337 83,221 94,000 105,039 87,652 84,720 Thailand Jun. 2005 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 10108 455556 Highest concurrent users 15,714 13,567 10,202 11,000 7,941 7,616 6,596 5,903 7,232 Monthly access 51,810 75,545 59,938 64,920 52,516 45,778 31,727 30,416 31,637

11/18 Global Online Game Publisher NCsoft User Statistics

Operating Metrics (City of Heroes/Villains)

U.S & Europe As of June 2007 Jun. 2005 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Servers 15 15 15 15 15 15 15 15 15 Highest concurrent users 20,911 22,340 23,730 23,699 22,274 21,500 17,728 14,767 26,669 Monthly access 162,922 150,068 194,000 171,951 171,000 172,420 154,953 143,127 153,331

Operating Metrics (Guild Wars)

US & Europe As of March 2007 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 # of Accounts activated to date 1,000,000 1,270,000 1,490,000 2,080,000 2,447,000 3,122,000 3,555,000 3,917,000

12/18 Global Online Game Publisher NCsoft Appendix – Parent Earnings

Sales & Profit

(Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%)

Sales 52,155 57,473 -9% 55,508 -6%

- Korea 44,863 49,987 -10% 47,177 -5%

- Royalty 7,292 7,486 -3% 8,331 -12%

Expenses 42,017 43,910 -4% 43,035 -2%

Operating Profit 10,139 13,563 -25% 12,473 -19%

(%) 19% 26% 22%

Pre-tax Profit 13,377 18,307 -27% 2,996 346%

(%) 26% 35% 5%

Net Income 10,562 14,121 -25% -222 NM

(%) 20% 27% - * The net loss in 2Q06 was driven by a one-time write off for Auto Assault, which was not tax deductible.

13/18 Global Online Game Publisher NCsoft Appendix – Parent Earnings

Sales Breakdown - Korea

(Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%)

Lineage 23,776 28,828 -18% 26,814 -11%

PC Café 4,045 5,881 -31% 5,093 -21%

Personal 19,731 22,947 -14% 21,721 -9%

Lineage II 20,954 21,046 0% 20,160 4%

PC Café 5,254 5,822 -10% 6,009 -13%

Personal 15,700 15,224 3% 14,151 11%

Others 133 113 18% 203 -34%

Total 44,863 49,987 -10% 47,177 -5%

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Royalties Breakdown

(Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%)

Lineage 3,534 3,681 -4% 3,826 -8%

Taiwan 3,022 3,167 -5% 3,278 -8%

Japan 267 292 -9% 352 -24%

China 130 95 37% 95 37%

U.S 99 113 -12% 81 22%

H.K 16 14 14% 20 -20% Lineage II 3,645 3,685 -1% 4,435 -18% Taiwan 971 878 11% 1,743 -44%

Japan 1,447 1,614 -10% 1,419 2%

China 166 134 24% 230 -28%

U.S / Europe 767 765 0% 717 7%

Thailand 294 294 0% 326 -10%

Guild Wars 102 114 -11% 48 113%

Taiwan 40 46 -13% 24 67%

Japan 62 68 -9% 24 158%

Others 11 6 83% 22 -50%

Royalty Total 7,292 7,486 -3% 8,331 -12%

15/18 Global Online Game Publisher NCsoft Appendix – Parent Earnings

Cost Structure (COGS + SG&A)

% of total % of total (Unit : W Mn) 2Q 07 1Q07 QoQ(%) 2Q 06 YOY(%) sales cost

Payroll 24,950 25,914 -4% 48% 59% 21,415 17%

Sales Variable Costs 3,528 4,323 -18% 7% 8% 3,459 2%

- Royalties 37 65 -43% 0% 0% 0 NM

- Payment processing fees 1,599 1,774 -10% 3% 4% 1,159 38%

- Sales commissions 1,251 1,898 -34% 2% 3% 1,946 -36%

- Other sales variables 641 586 9% 1% 2% 354 81%

Advertising 1,741 1,299 34% 3% 4% 4,740 -63%

Depreciation & Amortization 2,157 2,023 7% 4% 5% 2,897 -26%

Others (*) 9,641 10,351 -7% 18% 23% 10,524 -8%

Total : 42,017 43,910 -4% 81% 100% 43,035 -2%

16/18 Global Online Game Publisher NCsoft Appendix – Parent Earnings

Quarterly Sales by Subs. & JVs

(Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%)

NC Interactive 13,214 13,168 0% 16,207 -18% ($Mn 14.3) ($Mn 14) ($Mn 17.0)

ArenaNet 2,298 3,444 -33% 3,602 -36% ($Mn 2.5) ($Mn 3.6) ($Mn 3.7) NC Japan 7,668 8,063 -5% 7,501 2%

(JPY Mn 996) (JPY Mn 1,025) (JPY Mn 903.9) NC Taiwan 2,302 2,263 2% 4,077 -44%

(TW Mn 82.1) (TW Mn 79.3) (TW Mn 141.1) NC Europe 4,525 7,759 -42% 9,340 -52%

(₤ Mn 2.4) (₤ Mn 4.2) (₤ Mn 5.4) NC China 926 659 41% 965 -4% (RMB Mn 7.7) (RMB Mn 5.5) (RMB Mn 8.1)

NC True 447 437 2% 612 -27% (Baht Mn 15.7) (Baht Mn 15.8) (Baht Mn 24.6)

Total 31,380 35,793 -12% 42,304 -26%

17/18 Global Online Game Publisher NCsoft Appendix – Parent Earnings

Equity Method Gain or Loss Breakdown

(Unit : W Mn) 2Q 07 1Q 07 QoQ(%) 2Q 06 YoY(%)

Korea (206) (296) Loss continued (17) Loss continued

Orion Soft (69) (89) Loss continued (17) Loss continued

J Interactive (137) (207) Loss continued - New

Overseas (716) 1,111 Turn to red (3,439) Loss continued

NC Interactive 3,030 2,226 36% (1,894) Turn to black

NC Japan 475 729 -35% 1,376 -65%

ArenaNet (2,638) (759) Loss continued (1,295) Loss continued

NC China (226) (613) Loss continued (47) Loss continued

NC Taiwan (562) (806) Loss continued 352 Turn to red

NC Europe (742) 706 Turn to red (647) Loss continued

NC True (85) (171) Loss continued (874) Loss continued

NCRC 71 57 25% (410) Turn to black

NCsoft Japan (39) (258) Loss continued - New

Total (922) 815 Turn to red (3,456) Loss continued

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