Smartphone Growth And AI Integration Will Expand Global Markets

Key Takeaways

• Successful new game launches, operational agility, and global expansion are driving stronger revenue growth and market leadership across mobile and PC/console segments.
  
• Proprietary platforms, declining commissions, and investment in next-gen technologies are structurally expanding margins and enabling high-margin, recurring revenue streams.
  
• Heavy reliance on a few hit titles, rising costs, regional market concentration, and industry-wide pressures threaten revenue stability, international growth, and long-term profitability.

Catalysts

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

• Analyst consensus highlights the successful launch schedule and game portfolio diversification, but recent launches like Seven Knights Re:BIRTH and RF Online Next are already outperforming expectations, with rapid early market dominance and ongoing regional launches likely to drive meaningfully higher revenue growth through sustained player engagement and new market penetration than currently modeled.
  
• While analysts see cost savings from platform diversification, commissions are falling faster than expected due to aggressive rollout of proprietary PC payments and an increasing share of internal IPs, strongly supporting a structural expansion in net margins as reliance on high-fee mobile channels diminishes.
  
• Netmarble's demonstrated operational agility in managing and releasing titles-proven by track record of timely, quality launches-positions it to outpace industry growth in the fast-evolving mobile and PC/console segments, enabling more frequent monetization cycles and mitigating revenue risk.
  
• The accelerating adoption of smartphones and expanding digital payment capabilities, particularly in high-growth emerging markets, unlocks a vast pool of new paying users for Netmarble's diverse portfolio, potentially driving both higher volumes of in-app purchases and broader international revenues.
  
• Investments in next-generation technologies such as AI-driven personalization, blockchain integrations, and possible moves into the metaverse are set to differentiate Netmarble's titles, fostering deeper long-term user engagement and opening significant new, higher-margin recurring revenue streams that can boost long-range earnings power.

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 8.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 3.8% today to 13.5% in 3 years time.
• The bullish analysts expect earnings to reach ₩460.4 billion (and earnings per share of ₩5890.53) by about August 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 21.4x on those 2028 earnings, down from 44.8x today. This future PE is greater than the current PE for the KR Entertainment industry at 19.3x.
• 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 10.19%, as per the Simply Wall St company report.

Netmarble Future Earnings Per Share Growth

Risks

• Revenue growth in recent quarters is highly dependent on a small number of blockbuster titles such as Seven Knights Re:BIRTH and RF ONLINE NEXT, creating revenue concentration risk that could impact future revenue and earnings stability as these titles mature or face heightened competition.
  
• The company's cost structure shows increasing marketing and labor expenses alongside escalating operating costs for new launches, and continued high spending may put sustained pressure on net margins, especially if the newly released titles underperform or have short lifecycles.
  
• Netmarble's heavy exposure to the increasingly saturated mobile RPG and MMORPG segments, particularly in the hyper-competitive Korean and Asian markets, makes it vulnerable to both rising user acquisition costs and shorter product lifespans, potentially reducing profitability.
  
• While regional expansion is a stated strategy, Netmarble continues to face challenges in penetrating Western markets, as reflected in the concentration of revenue in Korea and North America; inability to meaningfully diversify internationally may hinder long-term revenue and limit international earnings growth.
  
• Secular trends such as tightening global regulation on digital gaming and app store commission structures, alongside margin pressures from dominant platforms, could erode Netmarble's global reach and monetization opportunities and thus negatively affect both revenue and margins.

Valuation

• The assumed bullish price target for Netmarble is ₩91000.0, 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 ₩91000.0, 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 ₩3416.2 billion, earnings will come to ₩460.4 billion, and it would be trading on a PE ratio of 21.4x, assuming you use a discount rate of 10.2%.
  
• Given the current share price of ₩55600.0, the bullish analyst price target of ₩91000.0 is 38.9% 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.