Month end update - July 2023

As at the end of July 2023 my wealth is 1.13 trillion ISK after paying 8.2bn to upgrade to Omega for another 30 days for four accounts.

I am an Investor on the Oz Tank and during July i distributed 42.5bn isk to projects that were presented.

Hence, in July i generated profits of 54.0bn isk and distributed 42.5bn isk, therefore my wealth rose by 11.5bn isk.

Technically, my wealth is 1.4 trillion ISK but i always take a 20% provision against Sell Orders to be conservative.  Hence i quote 1.13 trillion.

Much like June, July was was a slower month and August is shaping up to be much the same.

Quick Summary of July

A slower month vs June and much more like a summer month.  Some days did not happen and some hit the jackpot.

That said, sales actually rose 3% vs June.

But profits fell 12%.  For the first time in since November 2021 my item market was below the target 25% at 24.4%.

In the last 12 months i have made sales of 4.4 trillion isk and profits (after everything including Plex but before distributions to the Oz Tank Show) of 732bn isk having spent 84bn on Plex.

And then i distributed 43bn to the Oz Tank Show.

The next goal

For the last 9 months, my daily profits have been around 2.6 billion isk generated by daily sales of over 10bn.  From this i need to take the Plex off but i have long left the days of trying to make 10bn profits in a month and then 1bn per day.

We are onto new higher levels.

So the aspiration is now if i can make 100bn profit in a month before Plex and Distributions.  That is likely a winter aim when things rack up.  But an aim nonetheless.

Activity

I continue to come on once a day to update Sell orders and replace items sold.  About 30-45 minutes.  Getting closer to 45 minutes these days.

There are some week days where i don't log in at all if sales are low (summer can be slow) and/or real life time is tight.

Target daily sales required to achieve 2 bn profits per day

In summary, i generally need to make around 15bn sales per day assuming my item margin is 25%

As the cost of plex rises then my daily sales requirement also rises.

On the current taxation levels to make 60bn ISK per month (=2bn per day) i would need to cover:

 - Plex costs of 4 x 500 x 4.7m = 9.4bn

 - Courier costs 2% of sales (i.e. = purchase cost + collateral)

 - Broker Listing fees 1.5% of sales

 - Broker re-listing fees 0.3% of sales (lets assume all sales changed at least five times per month)

 - Transaction Taxes 3.6% of sales

That all works out at 425bn monthly sales will generate profits, after all costs including Plex, of 60bn isk. = 14.2bn daily sales.

Bottom line is that assuming i make my 25% profit margins then each 1bn of sales creates profits of 164m and these go towards buying Plex for the Omega accounts and whatever is left is reinvested in the business.

Looking at some sensitivity analysis

- if my item margins were 28% instead of 25% then i need only make 360bn isk of sales (or 12bn per day)

- if Plex rose from 4.7m to 5.0m then then i need to make 430bn isk of sales (or 14.3bn per day)

Review of the July aims

Overall, the aim was to keep sales from falling 20% - same as June

1) Plex the four omega accounts - aim number one all the time - achieved

2) Hold sales in Dodixie to down 20% - achieved, up 49%

3) Hold sales in Amarr to down 20% - missed, down 23%

4) Hold sales in Rens to down 20% - achieved, up 20%

5) Hold sales in Hek to down 20% - missed, down 27%

6) Hold sales in Sobaseki to down 20% - achieved, up 9%

7) Hold sales in Tush-Murkon Prime to down 20% - achieved, up 4%

8) Ramp up Arnon and Alentene - ongoing

9) Hold the investment and profits in Manufacturing - achieved, profits up to 1.5bn

On balance, a better month than expected for sales, weaker on margins so on balance a success.

Reminder of my Current Business.

For now 99% of what i do is inter-regional trading - buying from Sell Orders in Jita to sell elsewhere.  The rest is made up from Manufacturing and some Station Trading in Jita.

For Trading i focus on slow moving but high margin items.  That keeps me away from fierce competition and i only need to sell an item once every 10 days to make good income.  In other words, i don't really care if an item sells once every 10 or 20 days, if have many hundreds of items for sales across Eve and so each days a few items will sell and that generates all my income.

To put this in perspective.  I had Sell Orders of 1.2 trillion up at the start of July which generated sales of 394bn.  In other words, i sold between 1% to 2% of everything i had for sale every day.  That is slow and i like it.  Not for me the cut and thrust of high volume low margin world.  Slow and easy for me.  Tortoise and hare stuff.

My business model evolves over time.  As my wealth increases i focus on higher value items.  Therefore, i try also to stick to the rule of making a minimum of 100m profit per item sold.  i.e. if i buy an item for 70m then i aim to sell it for at least 170m isk.  This makes sure i don't waste my time on making low absolute profits and so preserves the 45 minute rule.

My main business is operated with four omega accounts (paid for with plex) with twelve alts.

The main Trading alts (all Omega) sit in Dodixie, Amarr, Rens and Hek.  I have also omega alts in the new Trading locations of Sobaseki (in Lonetrek), Tash-Murkon Prime (in Tash-Murkon), Arnon (in Essence) and Alentene (in Verge Vendor).

The other Omega four alts sit in Jita and buy from Sell Orders, has these items couriered to the alts in Dodixie / Amarr and Rens / Hek and Sobaseki / Tash-Murkon Pime and Arnon / Alentene who then put them onto these markets for sale.

The Jita alts also serve to sell items that i can no longer sell in my trading locations  Sort of clearance sales.

I also started in December 2021 to place alpha alts in other regions to see how it goes.  I just need two of them to demonstrate that they can combine to justify an Omega account.  Also, they need to take up very little of my time.  So far the Sobesaki / Tash-Murkon alts and Arnon / Alentene made the grade and were upgraded in two accounts.

The other regions so far are: Placid; Citadel and Khanid.  And i am in an NPC station in Delve and Outer Ring.  I have started in Venal.

I am struggling to make the Low Sec locations work.

What do i sell?

I sell blueprints, skill books, implants and ship equipment.

I am trialling selling structures like jump gates, stations, station modules and other infrastructure items.  This is doing better than i expected.

What was selling in July?

Implants, structures and ship equipment did well.  Blueprints picked up a bit.

There is still a Blueprint competitor in Dodixie and Amarr who i am fighting.  They seem to be on 24/7.

Implants are still doing well and tend to be the most competitive - i am slowly expanding into more types and moving up the ISK value curve.  And rolling them out to all my Trade Hubs.  They don't sell quickly but when they do i tend to get a whole family sold at a time (alpha, beta, delta, epsilon, gamma, omega).  Again, that's how i like it.  A 1-5 billion or so of investment can take 30 days to sell.

Ship equipment is a staple revenue stream for me.  Especially Vorton items.  and Deadspace items.

Mining equipment is making a comeback of sorts but is competitive.

Skill books are now my lowest income generator - very few sales now.  Barely happening at all.

Jita

I do station trading in Jita (that is - put Buy Orders up in Jita and then when those Buy Orders are executed i then put the item up for Sale in Jita at a higher price).  I stick to the slow moving items again.  That said, i don't actually know how much this earns me but i know it is getting better.  The margins are huge.  I am buying items for 500m and selling them for 1bn.

Also, in JIta, i manufacture items and sell them in the Jita market.

Manufacturing

I am now twelve months into my Manufacturing project.  It remains slow and i need to up my game (i know, i said that before).

In July i made 7bn of sales generating an item profit of 1.9bn and so after taxes a profit of 1.5bn.

Still not great.  I need to put more time into this and think it through more.

Other High Sec Trading Locations

I don't want to spend all my time on Eve doing Regional Trading (buying from one region, mainly Jita, to sell to another) but i do want to see if i can find really low competition but stable revenue streams of trading.

The current alpha account regions so far are: Placid; Citadel and Khanid.  And i am in an NPC station in Delve, Outer Ring and now Venal.

My alts in Arnon and Alentene were upgraded to Omega during January.

In these alpha accounts i am winding them down.  I don't want to convert anymore to Omega.

Delve

I want to experiment with selling in null/low Sec.  Hence, i have found an NPC station in Delve and started experimenting with items to sell.

It is not going well - sometimes threatens to improve but then fall back again.

As with my other alpha accounts i am letting it wither away on the vine.

I am rethinking how to make low/null sec work.

Plex

I am aim to store up to 6 months of Omega for each of the Omega accounts which would mean buying 12000 Plex (= 6 x 4 x 500).

That said, CCP are changing their attitude to Omega prices and there is a permanent sale on that gives a discount to the Plex required for longer periods of Omega purchases.

Given my sale at the start of June i currently hold none.  When the price falls back to around 4.6m i will start to rebuild stocks.

Analysis of Trading Profits

In total i made 394bn ISK of sales in July which made me item profits of 96bn ISK.

(item profit is the simply difference between sales done vs costs spent buying products, so before fees and taxes.  Because i don't yet invest in items other than Plex i don't make any allowance for items still in stock - in part because i don't track the cost per item spent).

Overall, sales rose by 3% in July mainly due to Dodixie sales rising 49% to 120bn isk.

Amarr sales fell 23% and Hek sales fell 27%.  Whilst Rens rose 20% and the other stations rose under 10%.

Sobaseki at 41b overtook Hek to become the fourth best station after Dodixie, Amarr and Rens.  I did not expect that but this was mainly due to Hek declining 27%.  Even Jita did better than Hek in July.

Sobaseki + Tash murkon did 59bn whilst Arnon + Alentene did 29bn.  So both of these Omega accounts are more than justifying themselves.

The item profits of 96bn was an item margin of 24.4% (96/394) vs my target of 25%.  That was the first time since March 2022 that the item margin fell below 25%.  The miss was due to competitors putting up items for sale at much lower prices and me responding aggressively.  It is dangerous to allow a competitor a foothold into my markets.

From this I then need to take a whole series of costs off before i get to my Business profits (and notice how they are more related to Sales rather than costs):

Courier Fees: i aim to pay 2% of sales value to the Courier = 7.9bn

Sales tax cost me 13.0bn ISk (=3.3% of sales) - the Dodixie, Amarr, Rens, Hek Sobaseki, Tash-Murkon, Arnon and Alentene and Jita characters are level 5 in Accounting (=sales tax of 3.6%); and of course all the alpha alt accounts are only Level 1 (=sales tax of 8%).  Not sure why the tax rate is below the base.

Broker Fees costs me 12.5bn (=3.7% of sales, Dodixie is more competitive so i was changing prices more often).  Now, i can break this down into the initial listing fee of 1.5% (because i am Level 5 Broker Relations on all Omega characters and lets to make the sums easier and include all the alpha alts) and therefore the rest is the cost of changing the price which is 0.30% a shot (i may have that 0.30% completely wrong!).

So, Listing Fee = 1.5% x 394= 5.9bn and so the Relisting Fee = 12.5-5.9 = 6.6bn which is 1.7% of sales.  That shows that i do change prices quite often, bias to Amarr, Jita and now Dodixie.

Manufacturing Job Cost fees were 0.4bn - shows how little i did.

This takes my 'Business Profits' fell to 62bn ISK for July vs 74bn in June.  This is what 30-40 minutes a day in July gave me.

So, the post-tax margin is 15.8% (62/394) and so i achieved the 15% target.

The omega charge was then 8.2bn for July.

And, finally, i paid over 42.5bn to the Oz Tank show for projects i agreed to contribute to.

That, therefore, is the road map from 394bn sales to 12bn increase in wealth.

Courier Contracts

Each night, i get home from work and determine what i need to sell in all the locations.

The time is taken changing prices were necessary (especially Amarr given it is competitive and increasingly Dodixie) and then figuring out what to sell with the ISK made from the prior 24 hours sales.

I have a list of items that feature regularly and i add to this list as time goes by.  So is a case of checking Jita prices vs current location prices.

The Rens, Hek, Sobaseki, Tash Murkon, Arnon and Alenetene markets take less than 2 minutes each to check.

To look up prices in Eve I am using Eve Tycoon which seems to have more of the latest items in its market browser.  I used to use evemarketer but i just got used to Eve Tycoon.

Each night i courier about 10 to 50bn ISK of items from Jita.  Used to be 2-10bn but things are better these days and i have more items up for sale.  The total cargo volume is 10-250m3 per shipment though more recently often over 10,000m3.  So small but valuable items.  But this allows the couriers to use small, fast ships with much less chance of being ganked.  So there is always someone willing to pick up the contract quickly.

I pay a generous 1.5 to 2.0% of collateral as fees.  I am more interested in getting my items onto the market quickly than penny pinching on distribution costs.

Outlook

August will have the same ten conservative aims - summer can be slow.  Hence, the aims will be:

1) Plex the four omega accounts - aim number one all the time

2) Hold sales in Dodixie to down 20%

3) Hold sales in Amarr to down 20%

4) Hold sales in Rens to down 20%

5) Hold sales in Hek to down 20%

6) Hold sales in Sobaseki to down 20%

7) Hold sales in Tush-Murkon Prime to down 20%

8) Ramp up Arnon and Alentene

9) Hold the investment and profits in Manufacturing

 

The daily sales in June averaged 12.7bn.

Current wealth is 1.13 trillion ISK made up from:

• Plex held as an investment 0bn ISK
• Items in hanger for sale 24bn ISK
• Items in hanger for use in business 11bn ISK
• Omega brought forward 25bn ISK
• Buy orders on the market 65bn ISK
• items for sale 1.2 trillion ISK

• less a 20% provision 240bn ISK*

• ISK in wallet 94bn ISK from which 42.5bn of Oz Tank distributions need to be taken off

When i add up my wealth, I don't count assets I use in the course of my business such as ships, fittings etc nor do I add back any expenses such as skills purchased etc.  The wealth I disclose is made up of items that are ISK or are in the process of being converted to ISK or are used to generate isk that can be readily resold back onto the market.  Any ships or skills or fittings etc i buy are counted as expenses in that month.  The only exception to this rule is Blueprint Originals i use for manufacturing.  They are held at cost.

* I take a 20% provision against the items I am selling.  Eve calculates wealth by adding up the value of the sell orders hence it is possible to increase your wealth by buying an item for 100m ISK and putting a sell order for 120m ISK (in this case your wealth would increase by 20m ISK).  For me, I want my wealth to be calculated at cost.  I know that the value of my sell orders will likely fall over time as I update my orders downwards as competition reduces their prices before my items are sold.  Hence the 20% provision is my best guess as to what the maximum reduction I would need to make to my sell orders as a whole before they are sold.  In an ideal world I would value my sell orders at the value which I bought the items for.

Pearl Abyss Q2 2023 results

Last week, Pearl Abyss, the owner of CCP, had its second quarter results.

Nosy Gamer has also done a good writeup on his blog.

The entire transcript including the question and answer session is at the bottom of this post.

Just looking at Eve Online

In Korean Won, Eve Online (so PC and Mobile) rose from 17.7bn Won in Q2 2022 to 20.2bn in Q2 2023, a rise of 14%.  (Was 16.9bn in Q1 2023).

Always best to compare to the same quarter in the prior year - this therefore avoids seasonal factors.

I looked at currency, the USD was broadly flat Q2 2022 vs Q2 2023.whilst the Euro got 5% stronger.

So, for now, lets leave currency out of it though not forget it perhaps added a 1-3% to the revenue growth in Won.

Q2 2022 was when we saw the 30% monthly subscription price rise which came into affect in May 2022.  It would have taken a while to affect the entire player base but i suspect now is.

So, Pricing is up 30% and overall revenues are up 14%, that suggests (paying) account numbers are down around 12-15% vs Q2 2022. That will not be the same as players given some players will have dropped an account or more but stayed with at least one account.

What did Pearl Abyss actually say about Eve?

From the translated transcript which is at the bottom they said the following about EVE:

"In the case of EVE Online, which did not have major competition launches like Black Desert, in Q2 it was able to enjoy a IP effect, which have been accumulated until now. In addition, we have an event which celebrated its 20th year anniversary and had an update, which completed a new expansion pack Viridian. In particular, we added detailed new tools in this expansion pack and it is praised as being the essence of EVE Online, which has been accumulated for the past 20 years. Accordingly, there was a great increase of users and EVE IP sales increased around 20% and recorded highest sales among the past five quarters."

"EVE IP operating revenue recorded KRW20.2 billion and increased 19.4% Q-o-Q."

"EVE also is planning to offer diverse content and service. In particular in Q3, we plan to hold the Alliance Tournament which is a 10to10 PvP event. We are planning to hold Alliance Tournament as an event where the best members of each alliance engage in combat and others can cheer them on and users can solidly unite.

Most of all, EVE celebrates its 20th anniversary this year and we are preparing for the biggest ever fan fest this year. The fan fest which will be held in September will not only be a festival for users that enjoy live service but also introduce diverse genre games which utilize EVE IP that we have been preparing and we have plans to share these plans at the festival as well."

What does the market think about CCP / Eve Online?

The analysts who write about Pearl Abyss, as usual, never make any mention of Eve Online or CCP.  They see it as a revenue line in their models that has matured.

Looking at the overall results of Pearl Abyss

They looked weak to me on revenues and produced an overall loss but hoped of a better Q3

In Korean Won, revenues fell 17% vs Q2 2022 (it is best to compared to Q2 2022 rather than Q1 2023, irons out seasonality).  This, i think, was less than was hoped and was due to lower than hoped revenues from Black Dessert mobile and Black Desert PC.  Diablo 4 released in June can't have helped the PC version where as more competition in Korea mobile gaming will have been a headwind to the mobile version.  This, therefore, continues the ongoing revenue decline from Black Desert.

But, the company is hoping for a better Q3 given they are seeing improving user traffic in Black Desert PC following a well received update (player numbers were up 65% in July 2023 vs July 2022) and this is continuing into August.

They are also showing a new trailer for Crimson Desert at Gamescom this month (23-27 August in Cologne, Germany) - though no news of any launch and pricing.

What makes Pearl Abyss different to other Korean gaming companies is that Pearl Abyss targets a global audience vs other Korean gaming companies which target the smaller domestic audience.

The lower revenues, ongoing wage inflation pressures and higher marketing costs to fight back against the competition pushed the company to an operating loss of 14bn Won.  That all came to a final loss of 4bn.

And so the shares were actually up 7% over the week.

The entire transcript of the earnings call

Operator

Good morning and good evening. First of all, thank you all for joining this conference call. And now we will begin the conference call for the Fiscal Year 2023 Second Quarter Earnings by Pearl Abyss. This conference call will start with a presentation followed by a divisional Q&A session. (Operator Instructions) Now we shall commence the presentation on the fiscal year 2023 Second quarter earnings results by Pearl Abyss.

Speaker

Greetings. I am Kim Yoon[ph] from Pearl Abyss IR team. First of all, I express my deepest gratitude to the analysts and investors in and out of Korea for taking part in the 2023 Q2 Pearl Abyss earnings presentation despite your busy schedules.

Before elaborating on today's business results, I would like to ask for your understanding regarding the following: the financial and business results contained in today's earnings release have been prepared for the convenience of investors and is subject to change depending on the final closing of our books. In addition, the accuracy and completeness of the financial and business results in the earnings results material are not guaranteed and the company is not to obliged to give updates of the accounts given after this date, so please take these factors into consideration.

We have here with us at the earnings presentation today Pearl Abyss' CEO, Heo, Jin-young; CBO, Kim, Geong Man; and CFO, Joh, Seokwoo. We will first hear the business performance presentation highlights from CFO, Joh, Seokwoo, and then engage in a Q&A session.

Seokwoo Joh

Greeting.s I am Pearl Abyss' CFO, Joh, Seokwoo. Thank you once again for taking part in our company's earnings conference call despite your busy schedules.

During the past couple of months, there were many implications for the game industry. In the case of the PC market, we were able to feel how important IP was through the high performance of IPs with legacy leading the market. In the case of the mobile market, competition was getting fiercer, profitability was declining, and accordingly the importance of the console market was getting more important. To keep in step with this market situation during the past several months, we were able to experience both the positive and negative aspects while operating our service.

Now I will touch upon the Q2 major business activities and results from core IPs. Black Desert was able to expand the new zone Land of the Morning Light globally around the world, which first launched earlier in Korea in March and received great response. Land of the Morning Light, thanks to detailed background based on excellent graphics as well as a highly immersive story received higher claim from overseas media and users. The update of Land of the Morning Light which received higher claim from Summer Game Festa with content at the level of a new game recorded 81 scores, 81 metascore for a PC game and received historic record high score among all Korean Games. However, due to the high performance of major PC and console RPG competitors, large scale execution of Global Marketing of Land of the Morning Light was delayed and, accordingly, there were not significant financial results in Q2 with the update.

Afterwards, the Black Desert Festa was held on July 1st and thanks to the continuously improved game user convenience, Land of the Morning Light update with the storytelling improvement, which was previously pointed out as a weakness, and the content which was accumulated for the past nine years, we were able to have a great increase in new and returning users. I will go over this once again in the Q3 highlights.

Also in the case of Black Desert console, due to influence of large global titles with IP legacy in Q2, sales was weak. We launched Megu Class and Usa Class Awakening which received good reviews in PC and mobile and continued a positive user trend. In Black Desert Mobile, due to the fiercer competition of the mobile market after the rebound in the previous quarter, sales showed a declining trend.

However, we launched the new zones Everfrost and Guardian Class in June and maintained positive user reviews. In the case of EVE Online, which did not have major competition launches like Black Desert, in Q2 it was able to enjoy a IP effect, which have been accumulated until now. In addition, we have an event which celebrated its 20th year anniversary and had an update, which completed a new expansion pack Viridian. In particular, we added detailed new tools in this expansion pack and it is praised as being the essence of EVE Online, which has been accumulated for the past 20 years. Accordingly, there was a great increase of users and EVE IP sales increased around 20% and recorded highest sales among the past five quarters.

Next, I will go over Q2 performance. This quarter's operating revenue posted KRW78.4 billion and decreased 8.6% Q-o Q and operating loss and net loss posted KRW14.1 billion and KRW4.4 billion respectively and posted loss.

I will explain in more detail about operating revenue. First, operating revenue by core IP. Operating revenue for Black Desert IP in this quarter posted KRW56.5 billion and decreased 16.3% Q-o-Q. EVE IP operating revenue recorded KRW20.2 billion and increased 19.4% Q-o-Q. For operating revenue by region, it was 21% for Korea, 22% for Asia and 57% for North America and Europe. For operating revenue by platform, it was 79% for PC, 16% mobile and 5% for console.

Next, I will walk you through our operating expenses. Q2 operating expenses posted KRW92.5 billion, a 9.2% increase Q-o-Q. In the case of labor expenses, it was KRW49.6 billion, a 12% increase Q-o-Q. This was an increase including around KRW7 billion of incentives including treasury shares. For your reference, head count at the end of Q2 is 1,341 employees and there are 801 developers among the total employees, which is around 60%. In the case of commissions, it recorded KRW18.1 billion, a 5.3% decline. Q-o-Q. In the case of advertising expenses, despite the Land of the Morning Light large scale update, it posted KRW8 billion, a 26% decrease Y-o-Y. However, we greatly decreased advertising expenses in the previous quarter, so on the whole, it increased KRW2.3 billion Q-o-Q.

Lastly, I will cover Q3 major highlights.

Black Desert in Q3 will also showcase diverse new content. The Black Desert Factor, which was held on July 1st was a paid event, but all tickets completely sold out in just 10 seconds and was greatly successful. The event showcased and promised diverse updates and improvement in user convenience and existing users greatly emphasized and was able to elicit interest from new users and returning users. Although there wasn't aggressive marketing, through natural user inflow, EAU increased 51% in Korea and 74% in North America/Europe, and (inaudible) increased 65% Q-o-Q.

Recently, consistent interest is being maintained through additional user convenience improvements and user feedback improvements, and new season of 3to3 PvP Arena of Solare and update of Sea Palace as the summer event of Land of the Morning Light. Most of all, we are operating meeting the needs of users and working hard to improve new user retention.

In addition, we are updating new zones and we have an update of large-scale PvP Faction War of the Roses and we are preparing for an Asia siege or event. War of the Roses is a massive battlefield that will pitch 300 players against 300, a total of 600 split into two factions and we're preparing a large scale war-style PvP which is different from the past. The Asia siege war event where yields with the best performance in each region, Korea, Taiwan, Hong Kong, Macau, Thailand, Southeast Asia and Japan, will gather and play together. And this is expected to give players the unique fun of playing Black Desert with Special features of global IP and being directly serviced to all regions.

For Black Desert console, we recently updated Land of the Morning Light that we first showcased online. We are seeing that along with the PC platform users and revenues are growing. In the console platform, we are following the diverse updates that were showcased on PC including Megu class awakening and we are preparing to continue our solid performance.

For Black Desert Mobile, we plan to increase the fun of game playing through large scale updates including new class Wizard and through season characters. In particular, the season system which was designed so previous efforts do not disappear and go wasted and differentiate it from other mobile games offers continuous fun and is expected to lead to great performance for the long run of our IPs.

In addition, we plan to increase contact with global users in Q3 as well. Recently, Black Desert participated in TwitchCon which was held in France, and in August, we plan to hold the Heidel Ball for Black Desert Mobile users. EVE also is planning to offer diverse content and service. In particular in Q3, we plan to hold the Alliance Tournament which is a 10to10 PvP event. We are planning to hold Alliance Tournament as an event where the best members of each alliance engage in combat and others can cheer them on and users can solidly unite.

Most of all, EVE celebrates its 20th anniversary this year and we are preparing for the biggest ever fan fest this year. The fan fest which will be held in September will not only be a festival for users that enjoy live service but also introduce diverse genre games which utilize EVE IP that we have been preparing and we have plans to share these plans at the festival as well.

Black Desert franchise and EVE franchise performance has rebounded and EBIT admits the solid performance we are continuously preparing for new IPs, in particular with the recent growing importance of the console game market and by seeing the size of the market growing once again, we could confirm that we were not wrong to prepare for new IPs for the console market that we deeply thought about in the past.

We are working hard to develop Crimson Desert with the goal of completing development within this year. After previously twice disclosing footage, we will showcase the more developed Crimson Desert at Gamescom, which will be held in August. We will do our best not to disappoint investors and game users who have been waiting a long time for Crimson Desert, which received high expectations from when it was first disclosed. In particular, in the AAA console market where competition is getting more heated, we will do our best not only for game Development, but also in service and marketing so that this will take root as new IP and become a title which will continue for the next 10 years or more of performance.

For the IPs which were already disclosed including DokeV and PLAN 8, we will review the appropriate timing and methods to communicate according to the development situation of the game. While seeing the numerous players who are still enjoying playing Black Desert which has been in service for nearly 10 years and EVE Online, which has been in service for more than 20 years, we are once again recognizing the importance of IP and community. Through continuous investment for Black Desert and EVE IP, which are live, we will prepare for longer service of the two IPs on the one hand and also work hard so that our new IPs can live up to their high expectations. We will look forward to your interest and support. Thank you very much.

With this, we will conclude the Pearl Abyss 2023 Q2 Earnings Release Presentation and start the Q&A session.

Questions And Answers

Operator

Now, Q&A session will begin.

Question

Thank you very much for this opportunity. I have two detailed questions. I am Kim Jingu from Kiwoom Securities. First of all, I would like to know about what is your direction for the update of Black Desert when you think about user traffic and continuity? And can you also tell us about how you're going to have more engagement with your streamers or users and give us your direction to do so including other attempts? And can you give some color to Black Desert revenue or sales op site? Also, can you give us some of your thoughts on your confidence in your Crimson Desert in-game footage and the implications of engine advancements, and also I would like to know more about DokeV and in-game footage as well.

Answer - Geong Man Kim

Thank you very much for your questions. I would like to answer them. And regarding the Q2 Black Desert sales, it is true that it was impacted by the launch of large-scale competitor titles and the seasonality. So there was some weakness.

Regarding Black Desert in Q2, with the expansion of Land of the Morning Light, which was first showcased in Korea in Q1 to global in June of this year, we were able to have great interest from overseas media and users.

In particular, we scored 81 in Metacritic which is an overseas review platform, which was the highest score among all Korean RPG games.

However, since we launched this content in late Q2, we expect the updated effect to be reflected in Q3.

In addition, with the Black Desert Festa, which was held in early July, the user event, we are seeing a very positive user trends not only in Korea but around the world.

In addition, we have seen the DAU for July, which increased 65% compared to the previous month, and we have seen an increase of 151% for Korea and 74% for North America and Europe. And even now when we are in mid-August, we are seeing these positive user trends continue, and we are seeing it as a cornerstone for long run success.

And regarding your question about streamers. We are seeing very famous streamers in Korea and also in North America and Europe who are voluntarily streaming Black Desert, and we are seeing many people are joining the stream. So we tend to have a great relationship and maintain a great relationship with them and to have a very positive relationship going forward.

Black Desert is celebrating its 9th anniversary this year and it is being actually very positively reviewed once again in the market recently, and we are going to do our best for the best quality of service, so that all the increased new and returning users can enjoy the content in the way that they want in a variety of different ways.

Answer - Jin-young Heo

Thank you very much for your question. And I would like to answer your question about Crimson Desert. First of all, I would like to express my deepest gratitude to everyone who is having high expectations for our new title and showing a great interest, and thank you also to our investors as well.

Crimson Desert is targeting the global AAA console market. For the past year or so, we have had countless tests with our external partners and we have received great reviews regarding the high expectations that best fit a AAA game and diverse are very positive reviews for our games.

In particular, we have been closely listening to the feedback of our partners who are experts in the console market and we have been perfecting our game and listening to their feedback very closely. So we expect to have great performance.

It has been some time since we first disclosed Crimson Desert but for this long time we have been working very hard so that the quality of the game has developed by leaps and bounds.

In particular, at Gamescom this year, we plan to disclose new footage of the games that will actually showcase the real gameplay of Crimson Desert.

We will show you how Crimson Desert is being developed and perfected and show you the level of quality that we are aiming for.

Regarding the details of our footage. We would like to kindly ask you to actually wait until Gamescom and see our footage, and I'm sure that you can find out.

For DokeV, I believe that we had given you information that through black-based engine. We have been shared the resources and assets that are being used for Crimson Desert and it is being developed greatly as well.

Since we are using the black-based engine, we are improving the development efficiency, so we believe that after Crimson Desert, it will take a relatively short amount of time for us to actually finish the development of DokeV.

Since we are smoothly developing the game so far, after we disclosed the Crimson Desert footage, we will be able to actually think about how we can give you more information about our development status and the high quality of our game going forward.

Question

Thank you very much for this opportunity. And actually looking at the game industry, it seems that there are some times when game development is being delayed or there needs to be more time for late minute polishing-- last-minute polishing. And we have been waiting a long time for Crimson Desert. And I know that you have said that you are pushing for late within this year to complete the Game. But as stock investors, I believe that maybe to invest conservatively, if there is a possibility that this can be delayed, do you think there is that type of possibility that investors should keep in mind?

Second question is regarding exclusive contract with Sony or Xbox or other platforms that is being mentioned in the media. So can you give us some color on the future direction of whether you're going to maybe engage in some exclusive offers with certain platforms and have first publishing on them or first contracts with them, or are you going to push for all the game platforms actually launching your game at the same time? Thank you.

Answer - Jin-young Heo

Well, first of all, I would like to truly thank everyone for waiting for such a long time for Crimson Desert so far. Thank you very much for your patience.

I know that time has been passing, and we have seen the development of technology and we have seen many of the titles that have been launched, so I know that user expectations has been heightening. But I can tell you that Crimson Desert is following the heightened expectations of those users.

So I believe to meet the heightened expectations of everyone, we are spending a little more time in order to perfect the game. And for Crimson Desert, we have been working very hard with the target of completing development by the second half of this year.

Our development of the game is very smooth and we are going to do our best so that we can perfect the development of the game as is targeted and do our best so that it can be launched as soon as possible.

And regarding partnerships, well, we have been talking to many partners, but we haven't had any conclusive talks or discussions that have been in conclusion yet.

We will consider Pearl Abyss profits and our interest for the utmost priority, so that we can make the best decisions that can lead to the best performance in the market.

What I can tell you is that for Crimson Desert, we want the most global users to enjoy our game. So we're going to do our best so that our goal will be to provide our games to everyone through as many platforms as possible.

Question

Thank you for the opportunity. I think others have asked a similar question, so I only have one question to ask you. And for Black Desert Online, we have seen a very encouraging trend after the update with traffic. And I would like to ask you about, what are your forecast for sales revenues going forward for Q3 or even Q4 for Black Desert Online?

Answer - Geong Man Kim

Well, thank you for your question about Black Desert sales, and it seems that for the different trends they are a little bit different for different regions and for different services, but we are seeing that the rise in the revenues or sales is actually following our rise in the numbers of users.

And our Black Desert team will do our best so that these positive trends can be continued going forward.

Question

Thank you very much for this opportunity. My questions might overlap with other questions, because I came a little bit late to the con call, so please excuse me if they are overlapping questions. My first question is about your current development status of DokeV. And can you tell us a bit more about the DokeV development situation and what is happening with the team? We are hearing some noise in the market about DokeV and I am curious about why there is some noise in the market, and I would appreciate your comments.

And for our investors, well, can you give us what should be their level of expectations for DokeV, and if you can compare it to the expectations that they can have for Crimson Desert, it will be greatly appreciated. And after the (inaudible) update, while we are seeing that there has been great maintenance of traffic and can you tell us about any other updates for the second half that you are expecting? Thank you very much.

Answer - Jin-young Heo

Well, thank you for your question about DokeV and I think what you are mentioning stems from the fact that there are high expectations for DokeV and we are actually focusing a lot of our manpower and our efforts into the completion of Crimson Desert. So I think that is a part of the reason behind what you have just mentioned.

Well, we also have shown you some footage of Crimson Desert and DokeV and we do know that there is great interest in DokeV from everyone and we are also in line with your high expectations.

And we believe that this high interest also is from the fact that this is a unique genre, so it stems from the characteristic of the genre as well. And we promise you that we will do our best to complete Crimson Desert as soon as possible and to have more focus into developing of DokeV with our core manpower after that so that we can do our best to meet the high expectations of the market.

Answer - Geong Man Kim

And you asked a question about Black Desert. And even after the update of Land of the Morning Light, we are maintaining our traffic very well.

And like we have been doing for the last nine years, we are planning to have diverse update of content for the second half of this year, so that our interest and our success can be continued.

Question

Thank you very much for this opportunity. And first question is about when you're going to have the update of Land of the Morning Light for Black Desert Mobile. And can you tell us about what are the expectations you have internally for Crimson Desert. For example, are you targeting it to be a global action RPG game level that is very popular? Can you give us some color on that? Thank you very much.

Answer - Geong Man Kim

Well, regarding your question about the update of Land of the Morning Light for Black Desert Mobile, what we normally do is we prepare for the content and then we see our internal scheduling and we disclose it to users and have the updates. So we are going to do our best so that we can follow this process and to let the market know as soon as this is decided.

Answer - Jin-young Heo

Well, regarding your question about expected results for Crimson Desert, well, as mentioned several times, we are targeting it to be a global AAA console game. And we have shown our game countless times to our partners and have received great acclaim and they said they have high expectations as well. So internally, we also have very high expectations for Crimson Desert as well.

However, we know that in order to turn these high expectations into great performance, we must have a great degree of perfection to meet the very strict preferences of our users and to have a great playing environment that is optimal for users to play, so we are well aware that we need to meet these requirements.

And we promise you that we will do our best not only for the quality of the game, but to also polish the game to perfection, so that we can have a great developed game so that it can lead to great performance at the end of the day.

Nice deal - 25 free Plex / 10 days Omega for 10 Plex

Its a small deal on the New Eden Store but not to be missed

Firstly to note, this is available to Alpha and Omega accounts.

CCP are giving all accounts that claim it 25 free Plex and also all accounts can buy 10 days of Omega for 10 Plex.

So, this is self financing: CCP are effectively giving everyone 10 days of Omega and 15 Plex.

Basically CCP are giving ISK for free here

25 plex at 4.7m = 118m isk.

But, that is small fry.  It is the conversion to Omega that makes this deal work spectacularly.

One month Omega = 500 Plex at 4.7m = 2.4bn isk.  So 10 days for free is equivalent to 780m isk.  Add in the remaining 15 Plex (=70m isk) then CCP is giving the equivalent of 780+70 = 850m isk to every account.

So, what did i do?

For my Omega accounts i took the 25 free plex and spent 10 Plex buying the 10 Omega Days.  So, leaves 15 Plex with each of the Omega accounts.

So my Omega accounts have made 850 x 4 = 3.4bn isk for free.

For the Alpha accounts i took the 25 free plex only = 118 x 3 = 350m isk.

The Oz Tank Show

The Oz Tank Show

Oz, the host of Oz Show / Oz Report in Twitch / youtube has launched a new show called The Oz Tank on the same platforms.

The idea is that other Eve players who want to raise some isk for a project can come and pitch their idea on the show.  20 minutes per pitch which is a 10 minute presentation and 10 minute questions from the investors.

There is no requirement for these projects to make a return.  They can or they can not.  All part of the pitch.

Oz and the other Investors (so Eve trillionaires) will then decide if they want to contribute and how much.

The first show was last Saturday (29 July 2023) where the ideas pitched were to host an Eve music contest, run a Bounty system, start a newbie wormhole corporation, run fleets to destroy leftover towers and put down a new trading station in Perimeter.

The youtube of the first Oz Tank show is just over 2 hours long but a good watch,

Went very well, i thought.

In all, 115bn isk was marked down to be provided across those 5 projects.

What does this mean for me?

I am now worth 1.2 trillion isk and it would take me about 1 year to get to 2 trillion, likely less.  But that is very boring.

Therefore, i have decided to give the lower of what i make in a month after all costs or 50bn isk or what is asked for each month to the show.

On Saturday i agreed to finance 42.5bn isk worth.

To put that in context, in July, a normally slow month, i made 54bn isk of which i have now marked 42.5bn to go to these projects.

Music in Eve

Short post but have to say it.

I don't know about you but the Eve music i find incredibly relaxing.  Can easily listen to it whilst working.

Almost 7 hours can be found on SoundCloud from CCP

Easily my favourites are Below the Asteroids, Miners Stories and Nouvelle Rouvenor Hero. 

And i think the music and the space station sounds add a lot to the game.

I keep a link to CCP on Soundcloud in the links to the right.

. . . . . no isk to be made here but something to listen to as the isk flows in.

Month end update - June 2023

As at the end of June 2023 my wealth is 1.12 trillion ISK after paying 6.7bn to upgrade to Omega for another 30 days for four accounts.  My Wealth increased by 56bn in June.

Technically, my wealth is 1.400 trillion ISK but i always take a 20% provision against Sell Orders to be conservative.  Hence i quote 1.12 trillion.

A slower month in June.  I did spend 12bn on bits and bobs discussed below - so excluding all that i would have increased my wealth by 67bn.  But, times are a changing and the pure pursuit of watching numbers go up is important, but less so.

The Next Chapter

OK, in the last 12 months my wealth rose by 711bn.  That would suggest around 15-18 months to generate the next 1 trillion isk  But life is too short, there needs to be other aims in life.

1 trillion was always the aim.  The question i am asking myself is what to do now?

One dream is to increase my wealth by more than 100bn in a month.  I think that can be done this winter but is a big push for the summer months.

Now, family life is busy.  2 children who don't make time for the finer points of being an Eve Trillionaire.  A wife who just confiscated my entire hoard of Coke Zeros because they potentially contain some harmful substance.

So, what can i do:

I want to major in manufacturing - if i can find some cookie cutter way here, that would be ideal.

I want to see if i can get invention to work - but i hate the Contract Market System.

And if i can find some other ISK making venture that does not take too much time that would be great.

Oz Tank

Enter Oz Eve.  Active on twitch, discord, youtube, apple podcasts you name it.  And tweets.

Now, i have been following Oz since the dawn of time and is one of my go to Eve Market information sources.

Oz already does a weekly twitch show talking Eve Markets but is planning to expand into hosting show that gives ISK to content providers / other Eve businesses.

A post is coming on this next.  But i can see my monthly profits going here.

Quick Summary of June

A slower month vs May but still a better month than i expected.  In the top 5 and the best in a summer month.

Sales down 8% to 382bn.

Profits down 2%.  So the item margin rose to 28% (profit on sale before all taxes and costs divided by sales).  So, nicely ahead of the 25% target i set myself.

No records in any regions except for Sobaseki, more in that debacle next - the whole war dec'g on structures in High Sec.

In the last 12 months i have made sales of 4.2 trillion isk and profits (after everything including Plex) of 711bn isk having spent 82bn on Plex.

I need to adjust my aims

The orginal overall aim of what i do is to increase my wealth by at least 10bn per month.  And this had been the aim in prior periods when i used to play Eve.

But i have now achieved this in 27 / 34 months - and i am pretty confident that this is achievable going forwards.

So, lets drop this target.  It was great at first but now blends into the general environment and is expected.

My next dream was to make 1bn profits after everything a day.  I have now achieved that for the last 12 months.  Can i call this a foregone conclusion?  Perhaps so.  But lets keep this as the base line from here.

For the last 8 months, my daily profits have been around 2.8 billion isk generated by daily sales of over 10bn.  From this i need to take the Plex off.  So, post Plex, it has been 2.2bn though in June was 1.8bn (see below for the one-offs).

High Sec Structures coming down

During June CCP changed the rules and no longer can Extra Large Structures be anchored in High Sec.  This had the knock on effect of such structures being war dec'd - i wrote about this effect from high sec structures coming down.

For me, i was in two iChooseYou stations and i chose to move to an NPC station in the same system to be on the safe side.

The whole cost of Asset Safety (0.5%) + Relisting my Sell Orders (1.5%) and the difference between the value of the relisted Sell Orders vs the old value came to 5.6bn isk.

Omega + MCT

During June there was a fantastic deal on a combined bundle of Omega plus Multiple Character Training for Plex in the ingame store which i posted on.

The summary of it all is that i was coming to the point where i needed to buy 3 more months of Omega across my 4 Omega accounts and by spending 28bn isk i did just that for 25bn isk and for only 3bn more isk i got 3 months multiple character training across all my Omega characters.  A 90% discount to normal prices.

Therefore, i am now in the skill farming market and there is a good chance that over the next 3 months i can easily cover the entire 28bn cost of this 3 month Omega and more.

Other One Offs

In June i spent 900m on a Large Skills injector to create for Sell Order capacity in one character and 5.2bn isk to buy +5 implants to speed up my skill point training (see above).

But, add the cost of moving out of iChooseYou stations and these implants all cost me around 12bn isk in June.

Plex sale

Right at the start of June there was an ingame offer that discounted the number of Plex required to buy Extractors - i wrote about this.

As is always the case, the price of Plex goes up as players buy Plex to take up the offer and i sold all my Plex (4500) at 5.6m isk each vs the holding cost of 4.4m.

Activity

I continue to come on once a day to update Sell orders and replace items sold.  About 30-45 minutes.  Getting closer to 45 minutes these days.

There are some week days where i don't log in at all if sales are low (summer can be slow) and/or real life time is tight.

Target daily sales required to achieve 1bn profits per day

In summary, i generally need to make 7.5bn sales per day assuming my item margin is 25%

As the cost of plex rises then my daily sales requirement also rises.

On the current taxation levels to make 30bn ISK per month i would need to cover:

 - Plex costs of 3 x 500 x 4.7m = 7.1bn

 - Courier costs 2% of sales (i.e. = purchase cost + collateral)

 - Broker Listing fees 1.5% of sales

 - Broker re-listing fees 0.3% of sales (lets assume all sales changed at least five times per month)

 - Transaction Taxes 3.6% of sales

That all works out at 225bn monthly sales will generate profits after all costs including Plex of 30bn isk. = 7.5bn daily sales.

Bottom line is that assuming i make my 25% profit margins then each 1bn of sales creates profits of 164m and these go towards buying Plex for the Omega accounts and whatever is left is reinvested in the business.

Looking at some sensitivity analysis

- if my item margins were 28% instead of 25% then i need only make 192bn isk of sales (or 6.4bn per day)

- if Plex rose from 4.7m to 5.0m then then i need to make 228bn isk of sales (or 7.6bn per day)

Review of the June aims

Overall, the aim was to keep sales from falling 20%.

1) Plex the four omega accounts - aim number one all the time - achieved

2) Hold sales in Dodixie to down 20% - missed, sales down 44%

3) Hold sales in Amarr to down 20% - achieved, up 8%

4) Hold sales in Rens to down 20% - achieved, down 13%

5) Hold sales in Hek to down 20% - achieved, up 42%

6) Hold sales in Sobaseki to down 20% - achieved, up 61%

7) Hold sales in Tush-Murkon Prime to down 20% - missed, sales down 42%

8) Ramp up Arnon and Alentene - achieved

9) Hold the investment and profits in Manufacturing - missed

On balance, a positive month against expectations.

Reminder of my Current Business.

For now 99% of what i do is inter-regional trading - buying from Sell Orders in Jita to sell elsewhere.  The rest is made up from Manufacturing and some Station Trading in Jita.

For Trading i focus on slow moving but high margin items.  That keeps me away from fierce competition and i only need to sell an item once every 10 days to make good income.  In other words, i don't really care if an item sells once every 10 or 20 days, if have many hundreds of items for sales across Eve and so each days a few items will sell and that generates all my income.

To put this in perspective.  I had Sell Orders of 1156bn up at the start of June which generated sales of 382bn.  In other words, i sold between 1% to 2% of everything i had for sale every day.  That is slow and i like it.  Not for me the cut and thrust of high volume low margin world.  Slow and easy for me.  Tortoise and hare stuff.

For this side of my business, lets call it Merchanting or inter-regional trading, i want to generate at least 1bn profits per day after all Plex costs (i used to target 10bn profits per month but that is an old target easily achieved to dropped).

My business model evolves over time.  As my wealth increases i focus on higher value items.  Therefore, i try also to stick to the rule of making a minimum of 100m profit per item sold.  i.e. if i buy an item for 70m then i aim to sell it for at least 170m isk.  This makes sure i don't waste my time on making low absolute profits and so preserves the 45 minute rule.

My main business is operated with four omega accounts (paid for with plex) with twelve alts.

The main Trading alts (all Omega) sit in Dodixie, Amarr, Rens and Hek.  I have also omega alts in the new Trading locations of Sobaseki (in Lonetrek), Tash-Murkon Prime (in Tash-Murkon), Arnon (in Essence) and Alentene (in Verge Vendor).

The other Omega four alts sit in Jita and buy from Sell Orders, has these items couriered to the alts in Dodixie / Amarr and Rens / Hek and Sobaseki / Tash-Murkon Pime and Arnon / Alentene who then put them onto these markets for sale.

The Jita alts also serve to sell items that i can no longer sell in my trading locations  Sort of clearance sales.

I also started in December 2021 to place alpha alts in other regions to see how it goes.  I just need two of them to demonstrate that they can combine to justify an Omega account.  Also, they need to take up very little of my time.  So far the Sobesaki / Tash-Murkon alts and Arnon / Alentene made the grade and were upgraded in two accounts.

The other regions so far are: Placid; Citadel and Khanid.  And i am in an NPC station in Delve and Outer Ring.  I have started in Venal.

I am struggling to make the Low Sec locations work.

What do i sell?

I sell blueprints, skill books, implants and ship equipment.

I am trialling selling structures like jump gates, stations, station modules and other infrastructure items.  This is doing better than i expected.

What was selling in June?

Implants, structures and ship equipment did well.  Blueprints struggled.

There is a Blueprint competitor in Dodixie and Amarr who i am fighting.  They seem to be on 24/7.

Implants are still doing well and tend to be the most competitive - i am slowly expanding into more types and moving up the ISK value curve.  And rolling them out to all my Trade Hubs.  They don't sell quickly but when they do i tend to get a whole family sold at a time (alpha, beta, delta, epsilon, gamma, omega).  Again, that's how i like it.  A 1-5 billion or so of investment can take 30 days to sell.

Ship equipment is a staple revenue stream for me, better in June.  Especially Vorton items.  and Deadspace items.

Mining equipment is making a comeback of sorts but is competitive.

Skill books are now my lowest income generator - very few sales now.  Barely happening at all.

Jita

Traditionally i never sold anything in Jita unless it was being transported back from one of my trading hubs because i could not sell it and so to be sold at Jita prices to get some isk back.

For a while over winter i did very good Blueprint sales but the main competitor returned in February and forced me out of the market.

I also do station trading in Jita (that is - put Buy Orders up in Jita and then when those Buy Orders are executed i then put the item up for Sale in Jita at a higher price).  I stick to the slow moving items again.  That said, i don't actually know how much this earns me but i know it is getting better.  The margins are huge.  I am buying items for 500m and selling them for 1bn.

Also, in JIta, i manufacture items and sell them in the Jita market.

Manufacturing

I am now eleven months into my Manufacturing project.  It remains slow and i need to up my game (i know, i said that before).

In June i made 3bn of sales generating an item profit of 0.7bn and so after taxes a profit of 0.5bn.

Barely happening.

Other High Sec Trading Locations

I don't want to spend all my time on Eve doing Regional Trading (buying from one region, mainly Jita, to sell to another) but i do want to see if i can find really low competition but stable revenue streams of trading.

The current alpha account regions so far are: Placid; Citadel and Khanid.  And i am in an NPC station in Delve, Outer Ring and now Venal.

My alts in Arnon and Alentene were upgraded to Omega during January.

In these alpha accounts i am winding them down.  I don't want to convert anymore to Omega.

In June the Sell Orders in Placid expired and i will transport the unsold items back to Jita.

Delve

I want to experiment with selling in null/low Sec.  Hence, i have found an NPC station in Delve and started experimenting with items to sell.

It is not going well - sometimes threatens to improve but then fall back again.

As with my other alpha accounts i am letting it wither away on the vine.

I am rethinking how to make low/null sec work.

Plex

I am aim to store up to 6 months of Omega for each of the Omega accounts which would mean buying 12000 Plex (= 6 x 4 x 500).

That said, CCP are changing their attitude to Omega prices and there is a permanent sale on that gives a discount to the Plex required for longer periods of Omega purchases.

Given my sale at the start of June i currently hold none.  When the price falls back to around 4.6m i will start to rebuild stocks.

A minor accounting point (again)

Similar to back in September 2022, i have to think how i account for buying three months of Omega for each Omega account (4 accounts).  I repeated this in December and again in February and now again in June.

Right now, i have spent 28bn isk to Omega my accounts to October / November.

Lets make it easy and assume all 4 Accounts are Omega'd for 3 months (July, August, September).

The way i account for this is to hold the entire amount as wealth and reduce this "asset" by a month at a  time.

The alternative accounting treatment would be to call the 28bn spent as a cost in June and then have no Omega costs in July to September.

It all adds up to the same number just the timing of recognising the cost is different.

So, for each of the next 3 months i will recognise a cost of 9.3bn isk as Plex/Omega cost.  (actually, this is part Omega cost and part the Multiple Character Training costs discussed above).

Analysis of Trading Profits

In total i made 382bn ISK of sales in June which made me item profits of 109bn ISK.

(item profit is the simply difference between sales done vs costs spent buying products, so before fees and taxes.  Because i don't yet invest in items other than Plex i don't make any allowance for items still in stock - in part because i don't track the cost per item spent).

Overall, sales fell by 8% in June mainly due to Dodixie sales coming off 44% from a very strong May.

Amarr this time was the best selling trade hub with 99bn sales (normally it is Dodixie), followed by Dodixie 81bn, jita (station trading doing better), Rens 42bn and Hek 39bn.

Sobaseki at 37bn almost caught up with Hek - unlikely to repeat in June i feel.

Sobaseki + Tash murkon did 54bn whilst Arnon + Alentene did 23bn.

The item profits of 109bn was an item margin of 28.4% (109/384) vs my target of 25%.  28% us within the normal range, so happy here.

From this I then need to take a whole series of costs off before i get to my Business profits (and notice how they are more related to Sales rather than costs):

Courier Fees: i aim to pay 2% of sales value to the Courier = 8.1bn

Sales tax cost me 10.5bn ISk (=2.73% of sales) - the Dodixie, Amarr, Rens, Hek Sobaseki, Tash-Murkon, Arnon and Alentene and Jita characters are level 5 in Accounting (=sales tax of 3.6%); and of course all the alpha alt accounts are only Level 1 (=sales tax of 8%).  Not sure why the tax rate is below the base.

Broker Fees costs me 17.2bn (=4.5% of sales, Dodixie is more competitive so i was changing prices more and i had to relist all Sell Orders in Sobaseki and Alentene as discussed above).  Now, i can break this down into the initial listing fee of 1.5% (because i am Level 5 Broker Relations on all Omega characters and lets to make the sums easier and include all the alpha alts) and therefore the rest is the cost of changing the price which is 0.30% a shot (i may have that 0.30% completely wrong!).

So, Listing Fee = 1.5% x 384= 5.7bn and so the Relisting Fee = 17.2-5.7 = 11.5bn which is 2.2% of sales.  That shows that i do change prices quite often, bias to Amarr, Jita and now Dodixie.  Someone is taking me on in Dodixie.  Will need to be crushed.

Manufacturing Job Cost fees were 1.0bn (i produced alot but sold little).

This takes my 'Business Profits' to 74bn ISK for June vs 77bn in May.  This is what 30-40 minutes a day in June gave me.

A number of my Couriers got ganked and so the surplus collateral that flows to me added 2.1bn to profits.

And then i had a number of one off costs of 11.7bn isk discussed above.

So, the post-tax margin is 19.4% (74/384) and so i achieved the 15% target.

The omega charge was then 6.7bn for June.

That, therefore, is the road map from 384bn sales to 56bn increase in wealth.

Courier Contracts

Each night, i get home from work and determine what i need to sell in all the locations.

The time is taken changing prices were necessary (especially Amarr given it is competitive and increasingly Dodixie) and then figuring out what to sell with the ISK made from the prior 24 hours sales.

I have a list of items that feature regularly and i add to this list as time goes by.  So is a case of checking Jita prices vs current location prices.

The Rens, Hek, Sobaseki, Tash Murkon, Arnon and Alenetene markets take less than 2 minutes each to check.

To look up prices in Eve I am using Eve Tycoon which seems to have more of the latest items in its market browser.  I used to use evemarketer but i just got used to Eve Tycoon.

Each night i courier about 10 to 50bn ISK of items from Jita.  Used to be 2-10bn but things are better these days and i have more items up for sale.  The total cargo volume is 10-250m3 per shipment though more recently often over 10,000m3.  So small but valuable items.  But this allows the couriers to use small, fast ships with much less chance of being ganked.  So there is always someone willing to pick up the contract quickly.

I pay a generous 1.5 to 2.0% of collateral as fees.  I am more interested in getting my items onto the market quickly than penny pinching on distribution costs.

Outlook

July will have the same ten conservative aims - summer can be slow.  Hence, the aims will be:

1) Plex the four omega accounts - aim number one all the time

2) Hold sales in Dodixie to down 20%

3) Hold sales in Amarr to down 20%

4) Hold sales in Rens to down 20%

5) Hold sales in Hek to down 20%

6) Hold sales in Sobaseki to down 20%

7) Hold sales in Tush-Murkon Prime to down 20%

8) Ramp up Arnon and Alentene

9) Hold the investment and profits in Manufacturing

 

The daily sales in June averaged 12.3bn.

Current wealth is 1.12 trillion ISK made up from:

• Plex held as an investment 0bn ISK
• Items in hanger for sale 26bn ISK
• Items in hanger for use in business 11bn ISK
• Omega brought forward 33bn ISK
• Buy orders on the market 64bn ISK
• items for sale 1210bn ISK

• less a 20% provision 242bn ISK*

• ISK in wallet 24bn ISK

When i add up my wealth, I don't count assets I use in the course of my business such as ships, fittings etc nor do I add back any expenses such as skills purchased etc.  The wealth I disclose is made up of items that are ISK or are in the process of being converted to ISK or are used to generate isk that can be readily resold back onto the market.  Any ships or skills or fittings etc i buy are counted as expenses in that month.  The only exception to this rule is Blueprint Originals i use for manufacturing.  They are held at cost.

* I take a 20% provision against the items I am selling.  Eve calculates wealth by adding up the value of the sell orders hence it is possible to increase your wealth by buying an item for 100m ISK and putting a sell order for 120m ISK (in this case your wealth would increase by 20m ISK).  For me, I want my wealth to be calculated at cost.  I know that the value of my sell orders will likely fall over time as I update my orders downwards as competition reduces their prices before my items are sold.  Hence the 20% provision is my best guess as to what the maximum reduction I would need to make to my sell orders as a whole before they are sold.  In an ideal world I would value my sell orders at the value which I bought the items for.