Date: August 5, 2026 (Wed) 09:00
Attendees: Co-CEOs Kim Tae-hwan and Lee Si-woo, CFO Shin Kwon-ho
Agenda: Q2 2026 Earnings and Future Strategy

■ Summary of Kakao Games Q2 2026 Earnings and Status

▣ Q2 2026 Revenue Summary

- Revenue: ₩75 billion (-35.2% YoY, -9.5% QoQ)

ㄴ Revenue declined 35% YoY and 10% QoQ due to the natural decline of existing live titles and a lack of new releases

- Operating Loss: ₩23 billion (continued deficit YoY and QoQ)

ㄴ Operating loss narrowed slightly QoQ due to reduced one-time costs and cost-cutting measures

ㄴ Non-operating losses widened due to increased financial costs

- Net Loss: ₩57 billion (continued deficit YoY and QoQ)

ㄴ Mobile games: Impacted by natural decline of legacy titles and the transfer of 'R.O.M' service

ㄴ PC games: Continued growth YoY based on stable metrics, despite the off-season for 'PlayerUnknown's Battlegrounds'

▣ Presentation by CFO Shin Kwon-ho

The company views Q2 and Q3 as the revenue trough. We expect meaningful revenue growth starting in Q4 as the effects of new releases take hold, with a return to profitability projected for Q1 of next year. These targets are based on conservative assumptions regarding release schedules, expected performance, and the impact of management efficiency policies; we are committed to accelerating this timeline as much as possible.

We are also working to improve our financial structure by using ₩300 billion in new capital and convertible bond proceeds from the recent management rights transaction to repay debt early and reduce financial costs.

Kakao Games incinerated a portion of its treasury shares on July 8 and announced plans via public disclosure on the same day to hold an extraordinary general meeting of shareholders to convert capital reserves into retained earnings. We believe these measures will establish a financial foundation for future shareholder return policies, such as share buybacks or dividends.

This decision, made immediately after the appointment of the new management team, is intended to clearly signal to the market that our leadership prioritizes shareholder value.

▣ Q2 2026 Cost Summary

- Costs: ₩98 billion (-21.2% YoY, -9.5% QoQ)

ㄴ Labor costs: ₩39.2 billion - Continued operational efficiency in development subsidiaries, including one-time severance costs

ㄴ Commission fees: ₩36.5 billion - Fluctuations in game revenue and one-time settlement effects

ㄴ Marketing expenses: ₩3.5 billion - Selective spending focused on major live titles; continued cost management

ㄴ Other: ₩8.7 billion - Continued efficiency in general administrative expenses

▣ Co-CEO Lee Si-woo: New Game Lineup

Let me be frank. We are well aware that the repeated delays in our new releases have severely damaged market trust in our schedule, and we take this very seriously. After the success of Odin, we attempted too large a leap by pursuing multiple major projects simultaneously.

Since the beginning of this year, we have re-evaluated our lineup. We distinguished between projects to continue and those to discontinue. The remaining projects have passed testing and are now in the final stages of development. These titles are ready for release as planned without further modifications. I believe the schedule I am presenting today will proceed without significant changes.

Kakao Games plans to release at least five new titles between Q4 and Q1. This is significantly higher than the number of releases over the past two years, and these titles are distinct in scale from our previous offerings. Based on this schedule, we expect revenue recovery to begin in Q4, with both top-line growth and improved profitability expected from Q1 of next year.

In Q4, we will release three titles, including 'Dokkaebi World'. This game is being developed with Supercat, whose development capabilities were proven with 'Nexus: The Kingdom of the Winds', and it is based on the recently revealed webtoon 'Myeongwi Sudojeon', which has received positive feedback. As the first new release under the new management, we are preparing for a successful launch and expect it to be loved by many users.

'ArcheAge Chronicles' has been validated for gameplay and commercial viability through global user tests. We have transitioned to a system where XLGAMES handles the service directly. We plan to release the title via Steam Early Access in Q4.

'Dungeon Arise' is planned to maximize initial user acquisition through popular IP collaborations at launch.

In Q1 of next year, we plan to release three titles, including 'Odin Q' and 'God Save Birmingham'. 'Odin Q' is slated for a January launch and anticipation is building following multiple tests. We chose this timing to ensure the most stable market entry given the competitive MMORPG landscape. As this is our most important project, we will systematically manage user communication and business preparations.

'Odin Q' will offer a differentiated experience with quarter-view fast-paced combat and national-level warfare.

'God Save Birmingham' drew significant interest during its last CBT. We will actively incorporate feedback from that test to boost performance for its Q1 Early Access launch. Specific schedules for these games will be announced separately by the business division.

▣ Co-CEO Kim Tae-hwan: Governance Changes

The new management believes that what the company needs now is not vague, rosy visions, but a return to basics and flawless execution to restore trust. We have established several principles to put the company back on a growth trajectory.

Going forward, new investments and the continuation of projects will be judged based on capital profitability. We will make decisions based on whether future capital deployment can generate sufficient returns, rather than being constrained by sunk costs.

First, we will rigorously review non-core or inefficient businesses for priority and viability, and pursue bold restructuring where necessary. Resources secured through this will be concentrated on core projects.

Second, we will curb organizational expansion and operate efficiently, focusing on high-value tasks. We will improve our cost structure by expanding global co-development partnerships and outsourcing.

Third, we plan to gradually improve cost efficiency by reviewing the expansion of various payment methods to reduce commission burdens in the mid-to-long term, and by diversifying cloud infrastructure vendors.

One question we are frequently asked, both officially and unofficially, is the relationship between LINE Games and Kakao Games. As our CFO mentioned at the last extraordinary shareholders' meeting, Kakao Games has no plans to pursue corporate combinations such as mergers or comprehensive stock swaps with LINE Games. Our position remains unchanged. However, we may consider cooperation opportunities that create business synergies.

Such cooperation falls under the category of general business partnerships, and I want to reiterate that our management will always prioritize the enhancement of Kakao Games' shareholder value. Furthermore, since LINE Yahoo invested a significant amount in this transaction, they have a strong interest in enhancing Kakao Games' corporate value.

Finally, I would like to express the new management's commitment to shareholder value and responsible management. We will secure the capacity for share buybacks through the capital reserve reduction process mentioned by the CFO. Separately, our management team is pursuing a ₩500 million share buyback to demonstrate our commitment to corporate value, stock price recovery, and responsible management.

Additionally, we plan to strengthen our compensation system by operating an RSU (Restricted Stock Unit) program for employees, aligning long-term performance and corporate value enhancement. By having management purchase shares directly and introducing RSUs for employees, we will align the interests of management, employees, and shareholders.

▣ Kakao Games New Game Lineup

Q4 2026

ㄴ Dokkaebi World (MMORPG) - Mobile + PC

ㄴ ArcheAge Chronicles (Online ARPG) - PC/Console

ㄴ Dungeon Arise (Strategy Adventure RPG) - Mobile

Q1 2027

ㄴ Odin Q: Valkyrie's Call (MMORPG) - Mobile + PC

ㄴ God Save Birmingham (Survival) - PC/Console

Q2 2027

ㄴ Chrono Odyssey (Online RPG) - PC/Console

ㄴ ArcheAge S: Sea of Freedom (MMORPG) - PC

Lionheart In-house New Title (Release date TBD)

ㄴ Project C (Subculture Raising Sim) - Mobile + PC

ㄴ Project S (3rd Person PVP Shooter) - PC/Console

■ Q&A

What are your thoughts on the potential cannibalization between Odin and Odin Q?

Co-CEO Lee Si-woo = We view Odin Q not as a competitor to the existing Odin, but as part of a strategy to expand the Odin IP. The gameplay and target audience are clearly distinct. While Odin focuses on the immersive nature of MMORPGs and a large-scale open world, Odin Q will provide a new experience centered on quarter-view large-scale combat content.

As the combat mechanics and target demographics differ significantly, we expect the two games to form a complementary relationship.

If the first game released in Q4 performs well, could there be changes such as delays for subsequent titles.

Co-CEO Lee Si-woo = Odin Q is already in the final stages of development and we did consider a Q4 launch. However, Kakao Games and Lionheart are working together to further refine its quality to ensure it surpasses Odin's performance, and we determined that January of next year is the optimal time considering market conditions. We are not considering any further schedule adjustments at this time.

Furthermore, starting with 'Dokkaebi World' in October, we plan to stagger the releases of our major strategic titles so that each game receives sufficient market attention and achieves its performance goals.

As this is the first time the new management is addressing you, we have checked all schedules very carefully and thoroughly. I want to reiterate that there will be no delays for Odin Q or our other projects.

Do you plan to continue the MMORPG-centric strategy, or is the new leadership looking at new genres.

Co-CEO Kim Tae-hwan = This is something our new management is focusing on heavily. We are securing new titles along three axes. First, we will continue to leverage our core competitiveness in MMORPGs by expanding our proprietary IPs like Odin and ArcheAge into global markets and platforms. We also plan to enhance competitiveness by applying content and business models tailored to global user preferences.

Second, as we announced our MOU with The Grim Entertainment yesterday, we will actively utilize external IPs with global recognition, such as webtoons and animations. External IP is not just about securing famous names; it is a means to lower user acquisition costs and increase the potential for global expansion.

Starting with 'Dokkaebi World', which uses the world of the popular webtoon 'Myeongwi Sudojeon', our MOU with The Grim Entertainment has laid the foundation for cooperation with leading domestic webtoon studios. We are also in discussions regarding global film and entertainment IPs. We plan to maximize IP competitiveness through co-development with global developers who have strengths in those genres.

Third, we will gradually expand our portfolio by selectively securing popular genres like sports casual and proven Steam-based games.

Our new management team consists of personnel with direct experience in publishing, business expansion, and development of global games across various genres, including sports. With our expertise in identifying games proven abroad and successfully growing them in domestic and global markets, we will actively identify and foster competitive titles in mid-core genres, including sports.

Finally, we are researching games and content for users aged 50 and older worldwide, and we expect to show tangible results starting in Q3 of next year.

While we will maintain MMORPGs as a core pillar, we do not plan to rely on them for the entire company. We aim to build a more balanced business portfolio by continuously securing new genres and platform games to increase the revenue share of other genres and global markets.

What are your plans for the company's current capital, and what is the direction of your investment strategy.

Co-CEO Kim Tae-hwan = Regarding capital management, I think it is best to start by discussing our M&A and investment strategy.

Fortunately, during my time at Nexon, I led the most M&A deals in the gaming industry at the time and achieved meaningful results. Since joining Kakao Games, I have already been reviewing over 10 investment and M&A opportunities both domestically and internationally. However, I ask for your understanding that I cannot discuss specific, unconfirmed transactions.

Our investment criteria have become clearer than before. We will avoid investing in games at the early development stage, as the success probability is low, similar to startup investing. Our priority will be to acquire games or developers that have already proven their performance or key metrics.

Scaling the performance of a proven game by several or dozens of times is a much higher-probability investment, and we are continuously upgrading our live operations capabilities to realize this.

We believe we do not currently have the capacity to aggressively pursue large-scale M&A deals worth hundreds of billions of KRW. We plan to start with M&A deals in the tens of billions of KRW and gradually increase the scale.

Prioritizing company normalization and debt stability, we intend to selectively review and pursue opportunities that contribute to long-term corporate value enhancement.

What are the gameplay and differentiation points of the new title 'ArcheAge S: Sea of Freedom'.

Co-CEO Lee Si-woo = If 'ArcheAge Chronicles' is a game that reinterprets the ArcheAge IP into a modern genre, 'ArcheAge S' can be described as a game focused on returning to, inheriting, and developing the original vision of ArcheAge.

Moreover, as Kim Kyung-tae, the original PD of ArcheAge, is participating in the production again, we expect it to fully meet the expectations of original ArcheAge fans.

As an authentic MMORPG, 'ArcheAge S' inherits the core of ArcheAge, featuring competitive PVP, maritime resource gathering, and intense battles for dominance. We are currently testing the game and aim for a Q2 release next year via Steam.

We believe there is still a market for authentic PVP MMORPGs based on Steam in the global market, and we think this game will satisfy the expectations of that market.