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 for 'PlayerUnknown's Battlegrounds', despite the off-season

▣ 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 impact of new releases takes effect, 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 prepay a portion of our debt, thereby reducing financial costs.

Kakao Games retired 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. These titles are ready to be released as planned without further modifications. I believe the schedule I am sharing 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 as the impact of these releases is gradually reflected, and we anticipate both top-line growth and improved profitability starting in 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 the recently revealed original webtoon 'Myeongwi Sudojeon' has received positive feedback. As this is the first new release under the new management, we are preparing for a successful launch with special care, and we expect it to be a beloved title based on Supercat's proven expertise.

'ArcheAge Chronicles' has been validating its 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 by featuring 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 the Early Access launch in Q1. 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 the restoration of trust through flawless execution. We have established several principles to get the company back on a growth trajectory, which I will now outline.

Moving forward, new investments and the continuation of projects at Kakao Games will be judged based on capital profitability. We plan to make decisions based on whether future capital deployment can generate sufficient returns, rather than being tethered to costs already incurred.

First, we will thoroughly re-examine the priority and viability of non-core or inefficient businesses and pursue bold restructuring where necessary. Resources secured through this process 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 alleviate the burden of commission fees 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 shareholder value at Kakao Games. Furthermore, since LINE Yahoo invested a significant amount of capital in this transaction, they have a strong interest in enhancing the corporate value of Kakao Games.

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

Additionally, we plan to strengthen our compensation system by implementing an RSU (Restricted Stock Unit) program for employees, aligning long-term company performance with 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 title competing with the original 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 a traditional MMORPG and a large-scale open world experience, Odin Q will provide a new experience centered on quarter-view large-scale combat content.

As the combat mechanics and player preferences are quite different, 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 ready for launch; we even considered a Q4 opening. However, Kakao Games and Lionheart are working together to further enhance its quality to ensure it surpasses Odin's performance, and we determined that January of next year is the optimal time considering overall market conditions. As of now, we are not considering any further schedule adjustments.

Furthermore, starting with 'Dokkaebi World' in October, we plan to stagger the release 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 greeting 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 MMO-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 our 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 utilizes 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 studios that have strengths in those genres.

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

Our new management team consists of personnel who have 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 for 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 the 50+ age demographic 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 platformer games, thereby increasing both the revenue share by genre and our global revenue share.

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, 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 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 rate is low, similar to startup investing. Instead, we plan to prioritize acquiring 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 enhancing 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, so we will start with 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' is 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, we expect it to fully meet the expectations of original fans.

As an authentic MMORPG, 'ArcheAge S' inherits the core of ArcheAge, featuring competitive PVP, maritime resource gathering, and intense battles for territorial control. 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 fully meet the expectations of that market.