Global Mobile Internet And Marvel Partnerships Will Expand Digital Gaming

Key Takeaways

• Netmarble's expanding multi-platform strategy and technology investments are unlocking new revenue streams, improving user engagement, and enabling stronger global market penetration.
  
• Aggressive platform diversification and strategic partnerships are driving higher margins and delivering more stable, long-term growth through IP leveraging and operational cost restructuring.
  
• Heavy dependence on licensed IPs, high costs, weak M&A execution, and lack of hit original content threaten profitability, margin growth, and market share sustainability.

Catalysts

Develops and publishes PC, mobile, and console games in South Korea and internationally.

• Analyst consensus views upcoming game launches in 2025 as strong, but this could be understated given that Netmarble's increasingly sophisticated multi-platform approach is showing early signs of unlocking new, long-term recurring revenue streams and cross-platform synergies that drive outsized growth beyond legacy mobile performance.
  
• While platform diversification is expected by analysts to lower commissions and boost margins, the scale of Netmarble's shift toward PC/Steam and simultaneous launches is likely to meaningfully accelerate margin expansion by fundamentally restructuring cost bases and mitigating dependence on high-fee app stores, setting up for structurally higher net margins and operating leverage than the market currently discounts.
  
• With 83 percent of revenue already from overseas and a highly diversified regional mix, Netmarble is exceptionally well positioned to capture the next leg of global mobile internet adoption, especially in underpenetrated emerging markets where smartphone gaming and digital microtransactions are surging, suggesting significant long-term revenue upside.
  
• Netmarble's continued investment in proprietary AI, live-ops, and new content delivery methods positions it to deliver exceptional user engagement and retention, which can translate into higher average revenue per user and a more stable, predictable earnings base as user monetization efficiency increases.
  
• The company's deep partnerships with iconic global brands and a proven record of leveraging blockbuster IPs (such as Marvel, Game of Thrones, and Seven Deadly Sins) not only attract established fanbases for rapid user acquisition but also set the stage for future high-margin, event-driven content drops, driving both top-line acceleration and high-return monetization opportunities.

Netmarble Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Netmarble compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Netmarble's revenue will grow by 8.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 3.8% today to 13.4% in 3 years time.
• The bullish analysts expect earnings to reach ₩460.0 billion (and earnings per share of ₩5572.08) by about July 2028, up from ₩101.6 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 19.8x on those 2028 earnings, down from 48.5x today. This future PE is greater than the current PE for the KR Entertainment industry at 19.0x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.22%, as per the Simply Wall St company report.

Netmarble Future Earnings Per Share Growth

Risks

• The company continues to rely heavily on licensed and third-party intellectual properties like Marvel Contest of Champions and Seven Deadly Sins, which results in high royalty and commission costs that suppress net margin growth and present risks to future earnings.
  
• Netmarble's ongoing struggle with impairments and amortization-particularly related to the SpinX acquisition, which has necessitated asset write-downs for three consecutive years-raises concerns about the quality of M&A execution and could reduce profitability and net income in future periods.
  
• Marketing and development expenses remain high as Netmarble seeks to launch nine new titles and diversify across genres and platforms, which, combined with fierce competition for talent and players, threatens to erode operating margins and limit long-term earnings growth.
  
• The increasing proportion of revenue generated from international markets, particularly North America and Europe, exposes Netmarble to greater regulatory scrutiny, possible government interventions, and exchange rate volatility, all of which could adversely impact revenue streams and add to compliance costs.
  
• The lack of sustained breakout original IP successes-in conjunction with rising consumer preference for new entertainment formats like short-form videos and user-generated gaming content-may make it difficult for Netmarble to defend its market share, pressuring user growth and mobile monetization and risking a stagnation or decline in revenues.

Valuation

• The assumed bullish price target for Netmarble is ₩84000.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Netmarble's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₩84000.0, and the most bearish reporting a price target of just ₩32000.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be ₩3429.2 billion, earnings will come to ₩460.0 billion, and it would be trading on a PE ratio of 19.8x, assuming you use a discount rate of 10.2%.
• Given the current share price of ₩60200.0, the bullish analyst price target of ₩84000.0 is 28.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.