NCsoft Earnings Release Q3, 2007 November 7, 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 3Q 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) 3Q 07 2Q 07 QoQ(%) 3Q 06 YoY(%) Net Sales 80,050 75,882 5% 84,981 -6% - Online Game Sales 75,548 72,076 5% 79,589 -5% - Royalties 4,502 3,806 18% 5,392 -17% Expenses 70,315 65,279 8% 67,486 4% Operating Profit 9,735 10,603 -8% 17,495 -44% (%) 12% 14% 21% Pre-tax Profit 13,702 14,571 -6% 18,257 -25% (%) 17% 0% 0% Net Income 10,075 10,562 -5% 12,801 -21% (%) 13% 14% 15% 1) NC Taiwan has been consolidated beginning 1Q07. Royalties in 3Q06 include royalties from NC Taiwan(1.5 billion Won). 1/18 Global Online Game Publisher NCsoft Earnings Highlights Net Sales Mix by Geography QoQ 3Q 07 2Q 07 Taiwan Taiwan Japan Japan 3% 3% 10% 10% Europe Europe 6% (Unit : W Mn) 3Q 07 2Q 07 QoQ(%) 3Q 06 YoY(%) 10% Korea North 55% America Korea North Korea 47,760 48,502 -2% 53,940 -11% 17% 59% America 17%Royalties Royalties 5% 5% - Game Sales 43,403 44,863 -3% 48,632 -11% - Royalties1) 4,357 3,639 20% 5,308 -18% YoY North America 13,662 12,884 6% 15,791 -13% 3Q 07 3Q 06 Europe 8,181 4,525 81% 6,115 34% Taiwan Japan Japan 7,798 7,669 2% 9,135 -15% Japan 3% 11% 10% Europe Europe 7% Taiwan 2,649 2,302 15% - New 10% Korea North Korea 55% America North 57% Total 80,050 75,882 5% 84,981 -6% America 19% 17%Royalties Royalties 5% 6% * NC Taiwan has been consolidated beginning 1Q07. 1) Royalties in 3Q06 include royalties from NC Taiwan(1.5 billion Won). 2/18 Global Online Game Publisher NCsoft Earnings Highlights Online Game Sales Mix by Games QoQ 3Q 07 2Q 07 Other Guild Guild 0% Wars Wars 17% Lineage (Unit : W Mn) 3Q 07 2Q 07 QoQ(%) 3Q 06 YoY(%) COH/V11% 31% Lineage 9% COH/V 35% Lineage 23,651 25,503 -7% 29,504 -20% 8% Lineage Lineage II II Lineage II 32,424 32,080 1% 31,135 4% 43% 45% CoH / CoV 5,721 6,370 -10% 7,429 -23% Guild Wars 13,012 8,264 57% 11,264 16% YoY Other 740 -141 NM 257 188% 3Q 07 3Q 06 Total 75,548 72,076 5% 79,589 -5% Guild GuildOther Wars Wars 0% 17% Lineage 14% COH/V 31% Lineage COH/V 9% 37% 8% Lineage II Lineage 43% II 40% 3/18 Global Online Game Publisher NCsoft Earnings Highlights Royalties Breakdown (Unit : W Mn) 3Q 07 2Q 07 QoQ(%) 3Q 06 YoY(%) Lineage 3,900 3,168 23% 3,329 17% Taiwan 3,758 3,022 24% 3,214 17% China 127 130 -2% 94 35% H.K 15 16 -6% 21 -29% Lineage II 448 460 -3% 1,935 -77% Taiwan - - NM 1,446 NM China 158 166 -5% 175 -10% Thailand 290 294 -1% 314 -8% Guild Wars - - NM 33 NM Taiwan - - NM 33 NM Others 154 178 -13% 95 62% Royalty Total 4,502 3,806 18% 5,392 -17% ※ 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) 3Q 07 2Q 07 QoQ(%) 3Q 06 YOY(%) sales cost Payroll 33,822 34,058 -1% 42% 48% 29,829 13% Sales Variable Costs 7,566 7,301 4% 9% 11% 11,498 -34% - Royalties 930 967 -4% 1% 1% 1,093 -15% - Payment processing fees 3,750 2,496 50% 5% 5% 2,390 57% - Sales commissions 1,344 1,251 7% 2% 2% 2,141 -37% - Box production costs 323 1,716 -81% 0% 0% 3,401 -91% - Other sales variables 1,219 870 40% 2% 2% 2,473 -51% Advertising 6,532 2,623 149% 8% 9% 3,402 92% Depreciation & Amortization 4,917 4,751 3% 6% 7% 5,992 -18% Others 17,478 16,546 6% 22% 25% 16,765 4% Total : 70,315 65,279 8% 88% 100% 67,486 4% 5/18 Global Online Game Publisher NCsoft Earnings Highlights Quarterly Sales by Equity-Method Affiliates (Unit : W Mn) 3Q 07 2Q 07 QoQ(%) 3Q 06 YoY(%) NC China 1,430 926 54% 728 96% (RMB Mn 11.7) (RMB Mn 7.7) (RMB Mn 6.1) NC True 458 447 2% 507 -10% (Baht Mn 15.5) (Baht Mn 15.7) (Baht Mn 20.3) Total 1,888 1,373 38% 1,235 53% 6/18 Global Online Game Publisher NCsoft Earnings Highlights Equity Method Gain or Loss Breakdown (Unit : W Mn) 3Q 07 2Q 07 QoQ(%) 3Q 06 YoY(%) Korea (273) (206) Loss continued (83) Loss continued Orion Soft (13) (69) Loss continued (16) Loss continued J Interactive (263) (137) Loss continued (67) Loss continued Next Play 3 New New Overseas 22 (279) Turn to black (1,257) Turn to black NC Taiwan - - - (18) - NC China (16) (226) Loss continued (597) Loss continued NC True (3) (85) Loss continued (246) Loss continued NCRC (5) 71 Turn to red (45) Loss continued NCsoft Japan 46 (39) Turn to black (351) Turn to black Total (251) (485) Loss continued (1,340) 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 1st Half, 2008 Aion – 10/27 Closed beta test Aion – Commercialization 한국 Atrix – Commercialization Punch Monster –beta test Action a side-scrolling RPG Point Blank –beta test Dragonica –beta test FPS a side-scrolling RPG Richard Garriott’s Tabula Rasa – 11/2 북미 / 유럽 Guild Wars : Eye of the North -8/31 Exteel (In-game item sales) 8/18 Global Online Game Publisher NCsoft Earnings Highlights Consolidated Balance Sheet (Unit : W Mn) 3Q 07 2Q 07 Change Asset 544,898 527,069 17,829 Current Asset 380,670 382,753 -2,083 (Cash & cash equivalents) 51,803 55,259 -3,456 (Short term investments) 241,626 248,490 -6,864 (Accounts Receivables) 41,037 36,196 4,841 Fixed Asset 164,228 144,316 19,912 (Investment) 10,539 8,422 2,117 (PPE) 122,406 102,235 20,171 Liability 93,260 83,243 10,017 Current Liability 85,988 76,707 9,281 Fixed Liability 7,272 6,536 736 (Debt) - - - 451,638 443,825 7,813 Shareholder's Equity (Paid in Capital) 10,235 10,202 33 9/18 Global Online Game Publisher NCsoft User Statistics Operating Metrics (Lineage) Korea As of September 2007 Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Sep. 2007 Servers 43 43 43 43 43 45 45 45 45 Highest concurrent users 150,863 187,786 161,038 144,109 138,733 144,430 149,034 120,012 134,596 Monthly access 1,220,491 1,627,159 788,180 746,291 716,772 775,579 733,593 583,426 590,542 Personal accounts 256,758 309,452 299,313 262,019 266,564 302,469 287,058 224,664 218,650 Taiwan Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Sep. 2007 Servers 36 38 39 40 40 40 40 40 40 Highest concurrent users 135,731 134,462 157,365 159,309 168,218 177,571 193,119 192,546 158,386 Monthly access 428,152 472,156 470,855 434,623 445,636 423,212 428,845 417,365 386,601 Japan Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Sep. 2007 Servers 666666666 Highest concurrent users 12,550 14,534 12,448 12,836 12,643 10,599 12,016 10,339 9,322 Monthly access 69,538 74,671 76,027 69,641 76,191 80,019 79,252 48,083 56,430 China Sep. 2005 Dec. 2005 Mar. 2006 Jun. 2006 Sep. 2006 Dec. 2006 Mar. 2007 Jun. 2007 Sep.