이 기사는 2022년 03월 25일 08시00분 thebell에 표출된 기사입니다

Netmarble generated less cash flow last year because of an increase in intellectual property royalties and labor costs. But that had no effect on the company’s cash position as its reliance on short-term debt increased following the $2.19 billion acquisition of SpinX.

The South Korean gaming firm posted revenue of 2.5 trillion won ($2.1 billion) in 2021, slightly up from 2.48 trillion won a year earlier, according to its latest annual report. However, operating cash flow fell by almost two-thirds to 137 billion won in the same period.

The sharp decrease in operating cash flow was largely attributed to payments to intellectual property licensors, a big component of the gaming firm’s cost structure.

Overseas sales accounted for 73% of Netmarble’s total revenue last year thanks to the strong performance of its gaming titles using foreign intellectual property, such as Ni No Kuni: Cross Worlds and Marvel Future Revolution. This resulted in 1.12 trillion won in royalty expense, equivalent to nearly half of the company’s revenue, putting pressure on operating profit margin.

Adding to that, Netmarble’s working capital position has deteriorated because the amount of payments on payables exceeded the collection of receivables. “Our payments on payables increased last year due to financial costs related to the SpinX acquisition and the addition of SpinX’s payables,” a Netmarble official said.

Despite decreased operating cash flow, the company’s cash position has improved, with cash and cash equivalent of 1.35 trillion won at the end of 2021, compared to 1.25 trillion won a year ago.

That was thanks to increased short-term borrowings and financial assets sales. The gaming firm acquired Hong Kong-based casino game company SpinX for $2.19 billion (about 2.62 trillion won) last year and funded two-thirds of the acquisition costs through short-term debt. To address concerns about its financial health, it subsequently cashed out part of its holdings in KakaoBank and Kakao Games, raising about 1.3 trillion won.

Netmarble’s short-term borrowings grew more than threefold year-on-year to 1.67 trillion won in 2021. Consequently, cash flow from financing activities increased 26% to 1.09 trillion won in the same period. The company's proportion of short-term debt to total debt also rose to 68% from 43%.

Some expect Nermable to consider selling more of its stakes in companies it invested in to improve its financial position.

The firm’s investments include NCSoft, Coway, HYBE and SpinX. Its shares in NCSoft and SpinX are pledged, while Netmarble invested in Coway for strategic reasons. This leaves HYBE shares as the most likely financial assets that Netmarble could use to free up cash. At the end of 2021, Netmarble held an 18.21% stake in HYBE, worth approximately 2.17 trillion won. (Reporting by Won-ji Hwang)