Date: Thursday, April 30, 2026, 16:00
Attendees: CEO Kim Chang-han, CFO Bae Dong-geun
Agenda: Q1 2026 Earnings and Future Strategy

■ Summary of Krafton Q1 2026 Earnings and Status

▣ Q1 2026 Revenue Summary

- Revenue: ₩1.3714 trillion (+56.9% YoY, +49.1% QoQ)

ㄴ Quarterly revenue of ₩1 trillion achieved through PUBG IP alone

- Operating Profit: ₩561.6 billion (+23% YoY, +22,980% QoQ)

- Net Profit: ₩514.1 billion (+38.4% YoY, turned profitable QoQ)

▣ Q1 2026 Expense Summary

- Q1 Operating Expenses: ₩809.9 billion (+94.3% YoY, -11.7% QoQ)

ㄴ Labor Costs: ₩276.1 billion (+86% YoY, -2.8% QoQ)

ㄴ App Store Fees/Cost of Sales: ₩114.7 billion (+9.3% YoY, +10.6% QoQ)

ㄴ Payment Commissions: ₩288.7 billion (+243.1% YoY, -26.0% QoQ)

ㄴ Marketing Expenses: ₩42 billion (+83.1% YoY, -19.1% QoQ)

ㄴ Stock-based Compensation: ₩13.4 billion (-25.3% YoY, +110.6% QoQ)

▣ Shareholder Return Execution and Plans

- Q1 2026 Shareholder Returns: Completed acquisition of ₩200 billion in treasury shares and ₩99.6 billion in reduction dividends

- Completed cancellation of ₩336.2 billion in treasury shares (newly acquired and previously held; 2.7% of total issued shares)

- Q2 2026 Shareholder Return Plan: Additional acquisition of ₩100 billion in treasury shares, followed by full cancellation

- As of H1 2026, shareholder return scale increased by 23% compared to the full year of 2025 (cumulative ₩399.6 billion); treasury share cancellation scale increased by 115% (cumulative ₩436.2 billion)

▣ Q2 Key Plans and New Title Lineup

- PUBG IP Q2 Key Content Plans

ㄴ Expanding modes and gameplay experiences across PC/mobile; strengthening the foundation for structural traffic growth

ㄴ Stellar Blade Contender: Idol collaboration (launched April 8) showing over 20% higher revenue efficiency compared to previous collaborations

ㄴ Mode based on the famous 'Payday' IP scheduled for release on May 13

- InZOI Key Plans

ㄴ Focusing on two directions for long-term scale-up

ㄴ Strengthening core experience: Enhancing content and stability based on user feedback; expanding accessibility via console porting

ㄴ Building a platform-type IP based on a modding ecosystem; expanding participation through the introduction of multiplayer

- Subnautica 2 Key Plans

ㄴ Over 18.5 million units sold cumulatively over 10 years; ranked #1 on Steam Wishlist for 7 months; positive feedback confirmed from major tests.

ㄴ Early Access launch in 2026: Planning content enhancements based on feedback until official release

ㄴ Expectations for extended lifecycle and expanded regional fan base

- AI for Game Key Plans

ㄴ Announced 'RAON,' a multi-modal AI applicable to individual games

ㄴ Four models unveiled, covering voice, conversation, and image processing

ㄴ 'RAON Speech' features 9 billion parameters and ranks #1 globally in performance for both English and Korean among models of its class

ㄴ PUBG ALLY: Beta service scheduled for later this year in Arcade

■ Q&A

Please disclose details regarding the investment in Socar announced today (the 30th).

CEO Kim Chang-han = Krafton and Socar have agreed to establish a joint venture for autonomous driving services. We intend to conduct autonomous driving business through independent R&D within the new entity. Krafton plans to use the data obtained during this process to conduct separate research on Physical AI.

Regarding Subnautica 2, there was some noise with the developer recently. Can we assume the Early Access launch will proceed without major setbacks.

CEO Kim Chang-han = Setting aside the noise you mentioned, cooperation is proceeding smoothly, and I can say that we are approaching an Early Access launch in the near future.

Given the high reliance on PUBG, quarterly earnings fluctuate based on momentum. Do you have any revenue guidance for Q2.

CEO Kim Chang-han = As you know, PUBG has seasonal peaks and troughs. While this doesn't mean Q1 results will be identical every quarter, please understand that these Q1 results demonstrate our potential for structural growth.

CFO Bae Dong-geun = Adding to the Q2 guidance, it is now the end of April, so we are monitoring how business is progressing. PUBG traffic is quite strong. The Stellar Blade Contender collaboration launched in April and new mobile access features are delivering record-breaking results, so we are quite positive about Q2 revenue.

Regarding PUBG IP, revenue was very high. Could you explain by region? Third-party data suggests high growth in India and China.

CFO Bae Dong-geun = Third-party data may not be entirely accurate, but the relative regional scale is likely not far from what you have observed.

Specifically, for PUBG Mobile, premium products during the Ramadan season performed well, receiving a positive response from Middle Eastern users and contributing to double-digit growth. In Q1, we also saw significant growth from Chinese users in both PUBG PC and Peacekeeper Elite, centered around the Lunar New Year.

Regarding the additional ₩100 billion treasury share buyback, what were the criteria for this decision? What does management consider to be an undervalued stock price.

CFO Bae Dong-geun = Regarding treasury share acquisitions, we established internal criteria—such as whether the current stock price is undervalued—when we formulated our three-year shareholder return policy. However, I am not sure if it is appropriate to disclose those specific criteria. If the market knows the mathematical basis for our actions, it could be exploited to create distortions.

That said, I think it is easy to agree that a company generating ₩560 billion in operating profit in Q1 is undervalued at the current stock price.

Regarding PUBG BM, the release of popular items likely increased the number of paying users. How was ARPU as spending intensity increased.

CFO Bae Dong-geun = We do not disclose all operational metrics. However, figures like concurrent users can be verified via SteamDB. In reality, revenue efficiency has improved significantly relative to the increase in the user base.

We track key indicators such as time spent, paying users, and ARPU, and we have recorded double-digit growth across all these metrics.

You mentioned that XenoPoint did not cannibalize the main PUBG game. How much of the user traffic increase was due to new content?

CFO Bae Dong-geun = Regarding the effect of XenoPoint, it wasn't just XenoPoint; attractive collaborations like the Stellar Blade Contender event were happening simultaneously. You know that PUBG traffic has grown to a new level, but I can say that this was our first 'well-made' mode.

We have operated Arcade modes before, but XenoPoint recorded the highest concurrent user count in Arcade history. Since over one-third of Battle Royale users played XenoPoint, it achieved record-breaking results as a PvE-style gameplay experience within PUBG.

You explained the non-gaming sector; what are your expectations? Do you see it contributing to consolidated operating profit, or is it for bottom-line management via equity method accounting? When do you expect monetization.

CEO Kim Chang-han = Regarding the non-gaming joint venture, as I mentioned, we plan to expand into the Physical AI business using Krafton's AI capabilities. Since Krafton is a pure software AI company, we believe a partnership with a company strong in offline or physical domains is essential for Physical AI.

Socar is the only company in Korea with the capability to manage large-scale automobiles and drivers offline, similar to the past 'Tada' service. We judged that they have the potential to be the strongest player when autonomous driving services are commercialized, and that collaborating with Krafton's AI capabilities would increase the chances of success. It also has the advantage of securing data that can be used for other Physical AI applications.

We may see more collaborations of this type in the future. Physical AI requires cooperation between companies with offline/physical strengths and those with AI/software strengths. It is difficult to say when monetization will occur at this stage, as we are just establishing the entity, but we will share more once it becomes more tangible.

The XenoPoint mode seems to end in May like past Arcade modes. Will it be permanently integrated in parallel, or will you continue to rotate updates and closures.

CEO Kim Chang-han = XenoPoint is the first PvE mode developed as a 'well-made' mode. PvE content cannot have the same long-term sustainability as PvP. We believe the effect is maximized when we provide it for a specific period and offer upgraded modes, which keeps users waiting for those moments. Of course, we are preparing other modes that can be played on a permanent basis besides XenoPoint.

Regarding PUBG Mobile, the Middle East conflict broke out in early March. How did it affect traffic in the Middle East, India, and Southeast Asia.

CFO Bae Dong-geun = I am hesitant to link geopolitical risks—or what you describe as war—directly to business. However, as you might guess, when such events occur, mobility is restricted, which often leads to an increase in traffic.

However, for Q1 of this year, traffic was quite strong due to the Ramadan period, so it is difficult to conclude that traffic and revenue improved solely due to geopolitical issues. We believe the results were driven by content and user response.