NCSOFT's Q3 2025 Earnings Complex Picture of Declining Sales and Surprising Profit
NCSOFT's earnings report for Q3 2025 paints a very complex financial picture. While the headline net income looks super strong, a dive into the numbers shows that the company is dealing with issues in its core gaming operations, particularly in the dominant mobile segment. Weaknesses characterized the quarter in declining sales and operating loss, final profit figures being even more skewed by a single financial event.
Financial Highlights The Core Story
The top-line numbers speak of contraction. Reported total sales for the quarter were KRW 360.0 billion, down 6% from the prior quarter (QoQ) and down 10% from the same quarter last year (YoY).
This decline in revenues combined with one-off labor costs related to severance payments generated an operating loss of KRW 7.5 billion. This figure relates to the health of core business operations.
Conversely, however, the company reported net income of an astounding KRW 347.4 billion. This contradiction was obviously a windfall due to one-time gains in property sales and favorable foreign exchange (FX)-related profits. In sum, a non-operational financial gain is what strengthened the balance sheet, not improved game sales.
Performance Breakdown by Game Type
From the breakdown of sales by type of game, the source of operating weakness becomes evident.
- Mobile Games: Sales from mobile titles making up 55% of total sales fell 10% QoQ, to KRW 197.2 billion. This dropout in the largest segment of the company's play was a primary driver of the overall revenue drop.
- PC Online Games: Contrasting positively, legacy PC online games showed some resilience. The segment grew 9% YoY to KRW 87.7 billion, marking two consecutive quarters of YoY growth, buoyed by global expansion endeavors.
Regional and Costs Analysis
Regionally, sales in Korea - the company's largest market were down 11% QoQ to KRW 217.8 billion, indicating weak performances across major titles. Slight QoQ declines in sales across Asia were more than offset by a very strong 37% YoY gain, the latter being assisted by the launch of new games in the region.
On the cost side, total operating expenses remained stable compared to the prior quarter at KRW 367.5 billion. Labour costs, however, surged by 5% as a consequence of one-off severance payments, while marketing expenditures were curtailed dramatically by 32%, as part of said strategy.
Our View Difficult Quarter with Some Financial Cushion
NCSOFT's Q3 2025 performance shows a clear challenge for the company on the core business of mobile gaming, especially in its domestic market. The operating loss accurately reflects this operational headwind.
Highly fortunate net income was good for cash flows but will be considered an outlier emerging from a strategic asset sale rather than a sign of anything resembling a turnaround in game performance. Bright spots include the sustaining strength of the PC online portfolio and growth YoY in Asia. From here on, the key challenge for NCSOFT will be to reverse the negative trend in its core mobile segment.
