Gravity Co., Ltd. (GRVY) Income Statement

The company's top line exhibits extreme quarterly swings, with recent quarters showing both sharp contractions and expansions. This pattern is characteristic of a game publisher reliant on major title launches or seasonal content updates, making revenue forecasting difficult. The 32.9% growth in 2026Q2, while strong, follows a period of significant decline, indicating the growth may be a recovery or a one-time event rather than a sustainable trend.

The decline in gross margin from the 40% range to the low-30% range over two years suggests a structural change in the cost of revenue. This could be driven by a higher proportion of lower-margin revenue streams, increased royalties to platform holders, or rising development costs for new titles. The margin profile now appears more in line with peers like Bilibili (36.6%) but remains well below the industry leader NetEase (64.3%), indicating limited pricing power or a less favorable product mix.

The relationship between gross profit and operating income is not stable. For instance, in 2026Q2, gross profit grew 31.3% sequentially while operating income grew 135.9%, showing strong leverage. However, in other periods like 2025Q4, a 21.3% sequential drop in gross profit led to a 43.2% drop in operating income, indicating high fixed costs. The erratic SG&A line, which spiked to $40.7B in 2024Q4 before normalizing, suggests that expense discipline is not a consistent strength, making it difficult to model future operating margins.

In several quarters, such as 2024Q4, SG&A ($40.7B) was nearly half of revenue, severely compressing operating margins. The company's ability to control these costs is paramount; when SG&A is managed down to the $15-20B range, as in 2025Q1 and 2026Q2, profitability improves markedly. This suggests that a significant portion of SG&A may be tied to variable marketing and launch costs for new games, making expense discipline a key indicator of management's operational execution.