Date: Wednesday, July 29, 2026, 16:00
Attendees: CEO Kim Chang-han, CFO Bae Dong-geun
Agenda: Q2 2026 Financial Results and Future Strategy

■ Summary of KRAFTON Q2 2026 Financial Results and Status

▣ Q2 2026 Revenue Summary

- Revenue: KRW 1.2902 trillion (+94.9% YoY, -5.9% QoQ)

ㄴHighest-ever semi-annual performance

ㄴPUBG franchise H1 revenue +25% → Visibility secured for double-digit annual growth target

ㄴSubnautica 2 reaches 5 million units in 22 days; legacy title sales also rose by approximately KRW 42 billion

ㄴPC Q2: KRW 560.4 billion (+155% YoY), surpassing KRW 500 billion for the first time in a single quarter

ㄴMobile: KRW 451 billion (+5% YoY, -36% QoQ), record-high daily revenue

ㄴConsole: KRW 23.8 billion (+143%); Other: KRW 255 billion (including KRW 240.5 billion from ADK advertising/content)

- Operating Profit: KRW 410.9 billion (+67% YoY, -26.8% QoQ)

ㄴ67% YoY growth driven by PUBG franchise expansion and new title performance

- Net Loss: KRW 29.9 billion (swung to loss YoY and QoQ)

ㄴReflects non-operating losses, including those from Unknown Worlds and foreign exchange translation

ㄴH1 operating profit: KRW 484.2 billion, a 25% increase YoY

▣ Q2 2026 Cost Summary

- Costs: KRW 879.3 billion (+102.8% YoY, +8.6% QoQ)

ㄴQ2 operating expenses increased 111% YoY due to ADK impact

▣ Q2 2026 Performance and Direction

- PUBG Franchise

ㄴExpanding from a single battle royale game into a "platform combining diverse gameplay and content"

ㄴWell-made modes credited with driving sustained traffic and playtime, rather than short-term spikes

ㄴQ2 PUBG PC/Console MAU up 20%+ YoY, revenue up 70%+; validating the link between "content quality → metrics and revenue"

ㄴQ3 focus: Mobile UGC; World of Wonder cumulative maps: 5.4 million, 33 billion matches; plans to enhance creation tools, collaborate with global IP, and expand creator monetization

- Subnautica 2

ㄴ5 million units cumulative, 'Very Positive' on Steam; self-assessed as "very successful" for Early Access

ㄴSuccess attributed to "genre moat of deep-sea exploration and survival" + co-op and content volume scale-up

ㄴPrioritizing quality and community trust until official launch, while concretizing long-term franchise expansion

- NEW Franchise IP

ㄴDefining Q2 as the start of a "full-scale growth system based on franchise IP," formalizing a dual growth engine with PUBG and Subnautica

ㄴPresenting a "repeatable growth system" of IP discovery →validation →scale-up under a 5-year growth plan as the core message

■ Q&A

PUBG PC's 'Well-made' modes performed well in the first half. What are the specific schedules or goals for the second half.

CEO Kim Chang-han = For 'Xeno Point,' we confirmed very positive metrics and user requests for it to become a permanent mode, so we are developing a follow-up. Additionally, two more well-made modes are in the service preparation stage for the second half, and we are currently developing various new modes targeting service between 2027 and 2028.

Regarding PUBG MOBILE's 'World of Wonder' (WOW), could you explain the activity or engagement metrics.

CFO Bae Dong-geun = With the caveat that we do not disclose all metrics for our live games, World of Wonder's UGC modes accounted for the mid-10% range of all modes in Q2, based on PUBG MOBILE Korea/Japan and BGMI, which we service directly. Given that classic battle royale playtime is around 20%, we can say UGC is already quite appealing to users. Moving forward, we plan to introduce maps using popular IP and monetization systems into the UGC ecosystem to increase user retention and attract new users.

What impact do you expect the new 'WOW Token' resource to have on the existing ecosystem.

CFO Bae Dong-geun = The WOW Token was created with a virtuous cycle in mind: users purchase items within creator-made maps, leading to content consumption, repeat play, and conversion to paid users. Since monetization is in its early stages, our top priority is expanding the creator ecosystem and increasing user retention rather than short-term revenue. We plan to operate it separately from the resources used in the existing battle royale.

Please share the official launch schedule for Subnautica 2 and your plans to cultivate it as a franchise IP.

CEO Kim Chang-han = Subnautica 2 is currently being developed using an 'Open Dev' approach, so it is difficult to provide a fixed official launch date. However, we intend to expand the fandom through approximately two years of content updates. Subnautica 1 already had over 12 million users and fans, and we find it encouraging that about half of our current users are new players who did not play the previous title. Based on this, we will focus on expanding the global fandom until the official launch, while simultaneously pursuing franchise expansion as a game and non-game IP expansion.

What are the actual metrics for the recently conducted 'PUBG All-AI' and future update plans? Also, is the AI update leaning more toward monetization or traffic expansion.

CEO Kim Chang-han = We are encouraged by the positive user response to PUBG All-AI in terms of fun and quality. Specifically, PUBG All-AI had the technical characteristic of running entirely on-device as a small model. Initially, as it was a new technology, our goal was to verify the technology and its potential as a service product, which we believe has been achieved. We are currently developing an upgraded version based on user feedback. We are internally reviewing whether, when turned into a service product, it will merely add fun as new content or if it can go further to enable monetization.

How are KRAFTON's AI research and learning achievements, such as recruiting AI talent through subsidiaries and releasing voice LLMs, progressing, and what are your additional investment plans.

CEO Kim Chang-han = I believe our various research results have demonstrated that KRAFTON's AI research capabilities are among the top tier in Korea. Moving forward, we intend to use this foundation to develop and expand larger models. Broadly speaking, we are building multimodal LLMs and world models, and expanding them for use in games or physical AI. Regarding subsidiaries, we are conducting research rapidly by recruiting world-class scholars and researchers through Ludo Robotics, which we established in the U.S.

Was there any synergy or partnership with ADK regarding the animation collaborations for PUBG PC and Mobile? If not, please explain your future synergy plans.

CEO Kim Chang-han = One of the purposes of the ADK acquisition was to create deep synergy regarding animation, so we are preparing for that. While there is nothing tangible yet, I can say that we are exploring ways for animation and games to create synergy beyond simple collaborations in the near future.

ADK's performance seems to show a decline in profit margins compared to Q4 last year and Q1 this year. Is this temporary seasonality, or were there other issues.

CFO Bae Dong-geun = It is true that there has been a slight decline compared to the previous year, including the period before the acquisition, as you noted. If you break it down, ADK's business is divided into two pillars: the advertising business and the content business related to animation production. While the animation business is performing quite well, the advertising business took a hit, leading to a slight overall decline compared to the previous year. The advertising business was affected by advertisers reducing their budgets due to various issues in the Middle East, the U.S., and Iran. We do not believe this will last long, and we plan to manage the advertising business to help it recover to its original position while monitoring the situation.

Could you confirm if the new games to be unveiled at Gamescom are titles that have already been announced? Also, please summarize the pipeline expected for release next year.

CEO Kim Chang-han = As we have decided to unveil them for the first time at Gamescom, I ask for your understanding that I cannot clearly mention them at this time. You can consider the 2027 release lineup to include the games being unveiled at Gamescom and mobile games currently in development that were already known.

While there are positive announcements such as shareholder returns, there are investor concerns regarding the company's M&A and new business strategies. Could you explain the current personnel/investment scale for physical AI, future expansion plans, and how you view concerns regarding the possibility of investment recovery.

CEO Kim Chang-han = Many people believe that physical AI will open up larger market opportunities after LLMs. In particular, among models for physical AI, 'world models' have been in the spotlight since late last year and early this year, and the relevance and advantages that game data or game companies have in developing world models are gradually being revealed. Seeing this, we are researching and applying KRAFTON's technical capabilities to various physical AI areas, including robots. As you mentioned, AI investment can be quite large, so we are striving to grow it further by attracting external investment alongside our own.