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Saturday 11 May 2024

Pearl Abyss Q1 2024 earnings call

Pearl Abyss, the parent company of CCP, had its Q1 results on Friday 10 May.

The earnings call transcript is at the bottom of this post.

To us we are interested in what they are saying about EVE Online.

To everyone else Pearl Abyss is a South Korean game developer known mostly for Black Desert Online which is the most successful Korean massively multiplayer online role-playing game outside of Korea.

The shares have fallen 75% from their peak in part due to games developers getting ramped up during the pandemic but also because their next new title Crimson Harvest keeps getting delayed.

The good news is that no further delay was announced in the call.

Overall Results

Revenues were basically flat at 85.4bn won vs Q1 2023.  There was a one-off revenue payment from China which is not quantified relating to Black Dessert mobile.

Black Desert revenue was 67bn won which was down 1% on Q1 2023 and up 11% on Q4 2023.

EVE revenue was 18bn won which was up 6% on Q1 2023 and down 10% on Q4 2024.  It is the Q1 on Q1 we should look it because it removes seasonal distortions.

Labour costs were up 4% on Q1 2024 on flat headcount.  Marketing also flat on Q1 2023.

And Pearl Abyss made a small operating profit of 0.6bn won.

How were the results taken?

Its worth saying that these results were weak but the stock rose 11% on the back of more commentary on the pipeline and no new delay being announced for Crimson Harvest.

The analysis

The market is aware that the existing main games (Black Desert and EVE) are continuing to be dull in PC, Mobile and Console and therefore struggling to cover the costs of the new game development.

That said, this time management gave more detail on Crimson Desert’s pre-marketing schedule.  So for now, at least, the Q1 2025 launch date has not slipped.  Hands-on test of Crimson Desert due at 2024 Gamescom (21-25 August).

And management are confident on getting a license in H2 2024 to launch the Black Desert in China in Q4 2024 in partnership with Tencent.

Eve Online

The revenues produced in Q1 for Eve Online were a little better than expected so analysts are now expecting 75bn won for 2024 and 75bn for 2026 (=$54.8m) and so flat in 2023.  There is one or two analysts who actually expect Eve Online revenues to fall by 1-2% pa.

For Eve Online the earnings call was very quiet.

Management said Eve Online was stable in Q1 despite no new large scale content in the quarter.

They also highlighted the disclosure of the 2024 development roadmap, maintaining user expectations and continued EVE Vanguard playtest and started preparations to expand revenues.

They talked about EVE Vanguard launching new maps so that it can provide a richer FPS experience.  And touch on it being in the Eve ecosystem.

And management then state that they plan to have a large scale test in May for EVE IP based on blockchain platform, Project Awakening.

In the case of EVE Galaxy conquest after soft launching for certain areas late last year, they have been reflecting the user feedback and are continuously upgrading the game.  In addition, they plan to expand the soft launching regions in May.

Earnings Call Transcript


Good morning and good evening. Thank you all for joining this conference call for the earnings results of Pearl Abyss. This conference will start with a presentation followed by a divisional Q&A session. (Operator Instructions)

Now, we will begin the presentation on Pearl Abyss' First Quarter Earnings Results of the Fiscal Year 2024.

Kim Jaehun, IR Team:
Greetings. I am Kim Jaehun 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 2024 Q1 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 and the earnings results material are not guaranteed and the company 
is not 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 Gyeong-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.

Joh Seokwoo, Chief Financial Officer:
Greetings, everyone. 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,

First, I will cover Q1 major management activities and achievements. Black Desert and EVE, based on the accumulated live service know-how, has been continuing consistent performance and has started communication for new titles including Project Awakening. Black Desert has shown diverse contents including Guild League, War of the Roses pre-season in Q1, and has focused on strengthening PvP and RVR. Through this, we were able to heighten the inherent fun of MMORPG, stimulate the user's growth needs, and bring about good responses.

In particular, although there weren't large scale updates in Q1 and thus only a low degree of marketing, based on our accumulated capabilities, we were able to achieve consistent performance. In the case of console, we were able to heighten user satisfaction by improving various system and user convenience, including Great Ocean renewal and item simplification. Apart from this, through new quest scholar update, revenues and DAU all increased, leading to stable performance at the level of the previous quarter. In case of mobile, with launching of the new quest, Letanas, and large scale existing content revamp, including Great Desert contents renewal and improvement of Black Spirit mode, we provided a better gameplay environment and contents. In addition, the user indicators which improved after the December ball have continued to be maintained and brought about stable performance.

EVE Online, despite no large scale content after the Havoc update which occurred in the previous quarter brought about stable performance. In addition, we disclosed 2024 development roadmap, maintaining user expectations and continued EVE Vanguard playtest and started preparations to expand revenues. Apart from this, we took part in the GDC 2024 and officially disclosed Project Awakening, our blockchain based project, and are preparing to enter into new markets.

Next, I will cover our company's Q1 results. Q1 operating revenue posted KRW85.4 billion, a 1.2% Q-o-Q increase, and operating profit and net profit each posted KRW600 million and KRW12.8 billion, respectively, turning a profit.

I will cover our operating revenue in more detail. First, I will explain about operating revenue of major IPs. Operating revenue from Black Desert IP in this quarter posted KRW66.8 billion and increased 11 points Q-o-Q. EVE IP operating revenue posted KRW18 billion and decreased 9.5% Q-o-Q. In case of operating revenue breakdown by region, it recorded 18% for Korea, 29% for Asia, and 53% for North America and Europe. Regarding operating revenue for platforms, 69% was for PC, 26% for mobile and 5% for console.

Next, I would like to cover operating expenses. Q1 operating expenses posted KRW84.9 billion, a 5.6% Q-o-Q decrease. In case of labor, it posted KRW46 billion and due to factors such as increase in the number of employees and salary increase, it increased 13.2% Q-o-Q. For your reference Q1 end total number of employees stands at 1,351, developer headcount is 786, and take up 58% compared to the total number of employees. In case of commissions, it posted KRW17.1 billion, a 2% drop Q-o-Q and in the case of advertising through efficient marketing, it posted KRW5.6 billion, a 30.3% decrease Q-o-Q.

Lastly, I would like to cover Q2 and major highlights for the latter part of the year.  In Q2, Black Desert along with diverse contents, will commemorate our 10th year of service and plan to hold large scale user events. In particular, with the 10th anniversary, we are planning to hold a ball in France which was the motif of the City of Heidel within Black Desert and through this event, we plan to further strengthen communication with global users.

In addition, in the case of War of the Roses, which had a pre-season in the previous quarter, based on the diverse feedback from users, we will showcase an upgraded version. In particular, we received positive reviews about the fact that it broke free from existing PvP rules and the form was refreshing, so we believe that we will have good results since the user expectations have been heightened.

Apart from this, we plan to disclose part two of Land of Morning Light which received many positive reviews with new adventures which were quite different from the past and the second part will be named Land of Morning Light Pt. 2: Seoul. We will showcase it in the summer and we expect that users can once again enjoy diverse adventures.

For Black Desert console, through continuous improvement of various contents and convenience updates, we will work so that consistent user indicators will be continued. In addition, we will drive development of versions for next generation devices so that we can provide better quality and improved game environment to users.

In the case of mobile in April, new hunting ground was added to Land of Morning Light in April and recently launched new quest, Asgia [ph]. In addition, expectations are high for licensed acquisition in the case of Black Desert China service, we are making preparations so that we can quickly provide official service after the license is issued. EVE is planning to launch the fourth new expansion pack, Equinox in June.

In addition, EVE Vanguard, which has monthly patch, will launch new maps so that it can provide a richer FPS experience. We will continuously work to improve the quality of the game and game playing experience based on user feedback until launch so that we can strengthen the EVE's ecosystem. We are smoothly progressing with preparations for new titles to secure new growth engines.

First, we plan to have a large scale test in May for EVE IP based on blockchain platform, Project Awakening. In addition, we plan to have regular tests within the year and polish and perfect the game until launch. In the case of EVE Galaxy conquest after soft launching for certain areas late last year, we have been reflecting the user feedback and are continuously upgrading the game. In addition, we plan to expand the soft launching regions in May and receive more diverse user feedback. We will continuously perfect it until the launching and make preparations so that we will have positive results.

For Crimson Desert, with development in its last stages, we plan to start full-fledged marketing. First, we will participate in Gamescom, the biggest global game event, and plan to hold demos for users. If we had focused on partner-focused marketing until last year, this year we are planning diverse types of marketing which can enable users to experience the game and heighten expectations about the game.

Black Desert celebrates 10th year of service this year, so including EVE IP with more than 20 years, now, we are a company which has two IPs which have been maintained for more than 10 years, respectively. In the game market, which has not only many market changes but also many changes in the regulations, we have secured solid basic fundamentals through consistent IP management capability that we have accumulated until now and we are also confident that we have the ability to grow new titles, including Crimson Desert from mid to long term.

In addition, with the completion of the development of Crimson Desert, the development speed of ladder titles, including DokeV, is accelerating. We will do our best to communicate the development progress consecutively. To be a better company, all employees from the CEO are doing their best. We ask for your continued interest and support. Thank you.

Kim Jaehun, IR Team:
With this, we will conclude Pearl Abyss' 2024 Q1 Earnings Release Presentation and start the Q&A session.

Questions And Answers

Q&A session will begin. (Operator Instructions) The first question will be provided by Jin-Gu Kim from Kiwoom Securities. Please go ahead with your question.

Jin-Gu Kim, Analyst:
Thank you very much for the opportunity. I have two large questions. My first question actually refers to your new titles. And do you have any plans to release any in-game footage for Crimson Desert additionally and can you give us some color on the timeline if possible? And can you also let us know if you are planning to release more in-game footage for DokeV as well?

And my second question is about your expectations about when do you think Black Desert PC China service will be open? I know it's not easy to make predictions, but if you can give us a timeline that you're thinking of and can you also give us some of your thoughts on what kind of financial results you are expecting? Thank you very much.

Heo Jin-young, Chief Executive Officer:
Thank you very much. I would like to answer your question about the current situation for Black Desert -- for Crimson Desert.  And regarding Crimson Desert, we are actually working hard so that it can be completely optimized and for us to actually perfect the game, so we are smoothly going ahead with the final stages and we are receiving feedback from customers and we also are targeting Gamescom for our marketing. So we are quite active in this area.

So we know that it might not be enough for us to just show you some footage from the game. So that is why we are planning to have some demos so that our users can actually participate and experience the game.  And starting with Gamescom, we plan to participate in diverse global game events like G-Star so that we can expand our Crimson Desert marketing activities until we launch and to strengthen those activities, and if needed, we will of course release some of the footage from the game.

And regarding the timeline, I know that many of you are very curious. So in the process of our marketing, we will consecutively give you more information about more detailed timeline, including our pre-signups or pre-registrations.  For your reference, at this Gamescom, we plan to concentrate on letting the users know about our game and to heighten their expectations. So we plan to focus on that. So regarding the pre-registrations and our launch schedule, well, we are planning to do so with an opportune event that can actually lead to many pre-sales.  So according to the different stages of marketing, we plan to give you more information consecutively so that expectations can become more heightened and so that it can lead to many pre-sales. So we are making those preparations.

And for DokeV, as you probably know, through our Black Space engine, we are heightening our efficiency and productivity.  However, I want to tell you that because we are currently in the latter stages of finishing off the development of Crimson Desert, well, we will be able to and we are able to put in the extra manpower into the development of DokeV.

However, and regarding all the footage that you've asked for, for DokeV, we are thinking of actually showing you the footage if possible, so we are actually internally discussing those possibilities. But as I mentioned, because we are focusing on Crimson Desert now, in order for us to showcase it to the public, we will probably find an opportunity after it is released.  And we are well aware that there are heightened expectations in the market about DokeV. So we will do our best to give you more information about DokeV as well.

Kim Gyeong-man, Chief Business Officer:
I would like to cover what is currently going on in China related to Black Desert license. (Foreign Language). Regarding Black Desert Chinese license, we have submitted all the relevant documents to the authorities and we are waiting for their response.

Currently, internally, we have high expectations about issuing of the license, so we are doing our best so that we can service -- provide a service as soon as the license is given. So we are currently working very close with our partners so that we can have the pre-preparation work done for the game and the service.

For Black Desert China, we are actually preparing for it as a global version that we are currently servicing. In order for our Chinese users to enjoy the rich contents of our global version, as soon as it is launched, we are going to showcase many different contents very quickly.  And regarding the expected results, well, for Black Desert China, we have already a great deal of service experience through our mobile service. So we have many data regarding the Chinese users and the Chinese market and we have analyzed the data so we are expecting very good results.

Kim Jaehun, IR Team:
We have had the answers from CEO, Heo Jin-young; and CBO, Kim Gyeong-man. We will take the next question.

The following question will be presented by Jaemin Ahn from NH Investment and Securities. Please go ahead with your question.

Jaemin Ahn, Analyst:
Thank you very much for the opportunity. I am Ahn Jaemin from NH Securities and I have several questions. Well, I'm curious about what is your marketing budget for Crimson Desert? I know it's a AAA game so I believe that the amount of marketing will probably be sizable. So can you give us some numbers and do you have any plans to have any exclusive contracts or publishing contracts with Sony or Xbox? Because to my knowledge, I think Shift Up recently had that kind of arrangement with Sony which actually lessened their marketing burden and heightened their global recognition.

My next question is about your headcount. I know that you have had headcount increase following Q4 and you have mentioned that you have 30 plus headcount increase for this quarter. So do most of the increased headcount go toward working for Crimson Desert or what kind of work do they do?

Heo Jin-young, Chief Executive Officer:
Thank you very much for your questions. I would like to elaborate on the marketing budget for Crimson Desert.

So for Crimson Desert, it has been being developed as AAA game. So regarding our marketing budget, it already has been included in our business plans so far. So it is at a certain level and I don't think you need to be concerned about the level of our marketing budget. And we already have many fan base, a lot of the fan base at this point. So our marketing, I believe, will be very efficient.

And we already have accumulated vast amount of experience with Black Desert, with diverse partners and overseas partners as well. So we have had a lot of these cooperation and collaborations via diverse activities and we are currently in discussion with many of them. So as soon as the marketing begins, I'm sure that we can reap the benefits through these relationships and have very efficient marketing.

Regarding the exclusive partnerships that you have asked about, yes, actually we are thinking of diverse ways of collaboration in depth, through many methods, and we are actually discussing many opportunities in detail. But related to the exclusive partnerships, there are many considerations to have, so that is why we don't have any confirmed cases yet.

And of course we will take into consideration our company's benefits or profits as the first priority. So we will make the best choice that can lead to great results in the market.

And you also asked us about our employees and we actually have a very efficient way of managing and operating our staff numbers, and we have seen some increase in the numbers, but according to the different situation, they can actually be utilized for development and also for other roles if they're needed.

And regarding the development numbers that you have actually asked about, well, in diverse development processes, we have automation and we have made these processes very efficient. So even though we are simultaneously developing many titles at once, we have the strength to have high efficiency in these operations.

Kim Jaehun, IR Team:
It was our CEO, Heo Jin-young, who answered your questions. (Operator Instructions)

It seems that there are no other questions. So with this, we will conclude Pearl Abyss' 2024 Q1 Earnings release presentation. Thank you very much.

Friday 10 May 2024

Review of the 2023 CCP Report & Accounts

The CCP Report & Accounts for the year to December 2023 came out on 30 April 2024.

I want to do a quick review now and perhaps a more in-depth review at a later date.  So I will risk it and post it now without going much deeper into the Accounts.

But in this post we will review the 2023 Consolidated Financial Statements of Pearl Abyss Iceland.

You can access the Pearl Abyss Iceland 2023 Report & Accounts here and also I have a page on this blog that hosts all the Pearl Abyss Iceland from 2019 / CCP from 2013 to 2018 here.   They can also all be found and downloaded for free from the Iceland Company Register.

Lets first be clear as to what we are looking at in this post

. . . . . . or skip this section if you are happy to go with the flow rather than being taken through a crash course in Companies vs Subsidiaries vs Group Accounting.  Personally, I love it.

In the Icelandic Company Register system there are 3 sets of Accounts that are of interest.

the Accounts for the company CCP.

the Accounts for the company Pearl Abyss Iceland.

the Consolidated Financial statements of Pearl Abyss Iceland Group.

Quick lesson on Group vs Company, (or Consolidated Financial Statements vs Company Accounts).

The company CCP is based in Iceland and sells the game Eve Online globally as well as develops and markets the game.  It also owns other companies based such as CCP North America, CCP Games UK Ltd, CCP Platform ehf and CCP Ad Astra ehf.

The Accounts for the company CCP will only have the revenues and costs of CCP.  The profits and losses of these companies it owns will be include in one summary line.  So we wont get the full picture and indeed the company Accounts of CCP also has revenues and costs between other Pearl Abyss Iceland companies.

We want to look at the combined revenues and costs of CCP, not just the Icelandic entity (though it is the most important).

Pearl Abyss Iceland owns CCP in Iceland since it bought it back in 2019.

Again, the Accounts of Pearl Abyss Iceland will only have the revenues and costs of Pearl Abyss Iceland and a summary line showing the profits of CCP.

However, the Consolidated Financial Statements of Pearl Abyss Iceland has the combined revenues and combined costs of Pearl Abyss Iceland and all the companies its owns (so CCP and all the companies that CCP owns).  It also eliminates any revenues and costs between the companies it owns (I.e any cross border charges).  This is what we are after.

One slight wrinkle, Pearl Abyss Iceland also owns Pearl Abyss Iceland Investment and so its revenues and costs will also be included in the Consolidated Financial Statements.

Therefore, from here on in we are reviewing the Consolidated Financial Statements of Pearl Abyss Iceland.

Bottom line Loss of CCP

There is one note in the Pearl Abyss Iceland Accounts that is of interest though.

Note 2.4 shown below states that CCP ehf (and the combined profits and losses of ifs subsidiaries) made a loss of $16.3m.

But, unlike in 2022, there was no impairment.  Recall that in 2022 the loss was $68.6m which was a $50.9m impairment and therefore an underlying loss by CCP of $17.7m.

In, other words, bottom line is that CCP made a loss in 2023 of $16.3m compared to a loss in 2022 of $17.7m.  The loss that i talk about below of $18.8m is close enough to this number.

  • Revenues were flat at $56m
  • Subscriptions and in-game sales revenues rose 3% to $48.7m
  • Subscriptions and in-game sales revenues rose in all regions
  • Considering the May 2022 30% subs price rise, this suggests paying account numbers have fallen 30% over 2 years
  • The Netease revenues (China) fell 20% to $7.0m
  • Costs rose 9% in an inflationary year with wages up 8% due to more employees and higher wages
  • The overall underlying loss was $18.8m in 2023 vs $19.2m in 2022
  • Because of the ongoing sales of cryptocurrencies cash available rose by $12m
  • Without these crypto sales cash would have fallen $15m


Profit & Loss Account

Revenues were essentially flat at $56.0m vs $56.1m in 2022.

Gross profits rose 1% to $51.8m ($51.1m).

Total Operating Costs were $79.2m vs $123.6m in 2022.  But in 2022 there was an impairment of $51.1m.  Therefore the underlying Operating Costs in 2022 were $72.5m.  Therefore, Operating Costs have risen 9%.

Government Grants added $6.2m to income in 2023 vs $5.1m in 2022.

Therefore the Operating Loss came in at $21.2m vs $16.2m in 2022.  (technically the Operating Loss in 2022 was $67.3m if we include the one-off impairment).

And then interest costs, currency movements and taxes take the overall loss to $18.8m in 2023 vs an underlying loss of $19.2m in 2022.

Revenues were flat at $56.0m.

First point to note that in a Game Development business the Revenues and Costs are not all relating to the same thing.  Most of the costs of this business will be to develop new games vs costs to market Eve Online and create new content.

So, yes, the Revenues were are all Eve Online, Eve Echoes etc but the costs are likely going into other ventures.

Second point is that a game that is seeing flat revenues after 20 years is not bad.

Looking at the make up the Revenues is interesting:

This shows that Revenues from subscriptions and in-game sales rose 3% to $48.7.

For reference, in 2021 this came to $53.8m.

In May 2022 the subs price rose 30%.  Therefore, if I used the 2021 base of $53.8m and inflate it by 30% that would suggest that paying account numbers have fallen 30%. [48.7 / (53.8 x 1.3)].

Royalties and licences declined from $8.8m to $7.0m that resulted in overall revenues being flat and that is likely to be NetEase (China) revenues (that is suggested else where in the Statements in note 4.2).  In 2021 this was $10m.

I assume the Revenue from the sale of goods is the hats et all you all buy in Fanfest . . . . .

Looking at Revenues by geography:

The NetEase revenues re in the Asia line and we can strip then out to rewrite this table as:

This shows that subscriptions and ingame sales revenues rose in every region.  North America by +1%, Europe by +4%, Asia by +21% and Other Regions by +10%.

I am being sloppy by missing out on currency movements so I am letting this % increases stand.

But again, assuming the 30% price rise in every region, paying account numbers have therefore fallen in every region biased to North America and Europe.

Gross Profit

The cost of actually running the game (as opposed to creating new code, marketing et al) is very low at around $4m in 2023 and $5m in 2022.  Nothing really to add here.

Operating Expenses

CCP now expense all their development costs (historical costs are still being held on the Balance Sheet and reduced over time).  This is a much cleaner way to account for these costs.

It could be considered better to hold costs spent on developing new games on the Balance Sheet as traditionally was the case and then release the costs as the new game is launched and brining in revenues.  But this relies on the new game being successful which is not always the case.

Ignore the impairment cost in 2022.  That was a 2022 event and a one-off (we hope).

Costs have risen everywhere.  Overall, costs are up 9% (or $6.7m).

But we must remember that 2023 was the year of inflation in both wages and non-wages.

There is one other cost analysis we need to look at to make sense of this:

Employee costs are 58% of all costs (in 2023 and 2022) - so the most important cost in the business.  They will be spread out over the other cost lines when disclosed (i.e some in Research and Development, some in Marketing etc).  They have risen by 8% driven by a 5.5% rise in the number of employees and a 2.8% rise in average employee costs.

We can therefore see what the non-employee costs were.

I guess I am not surprised that non-employee costs rose 10% - 2023 was a vicious year for inflation.

Also, in 2022 costs were down 2% which was a strong result.

But, the same conclusion as last year – it is revenues which are the problem, not costs.

Other Income

There was $5m-$6m of Other Income in each year which is Government Grants

Finance Costs

The Group had a $50m bank loan from The Korea Development Bank which is due for repayment in 2024.  It looks like this loan was repaid and a new loan taken out from the parent company Pearl Abyss in Korea.

Interest rates were on the rise in 2023 so interest costs rose from $2.4m to $3.9m.

The good news is that the old $50m loan was at an interest rate of 5.53%, the new loan is at 4.6%.

The bad news is that the loan is due for repayment in 2026 though I expect it will be rolled into a new loan with (hopefully) lower interest rates at the time.

Currency movements were a positive $1.7m vs a cost $1.6m in 2022.


Given the business makes a loss, in Accounting the loss is reduced by a tax rebate (in actual cash flows tax is still paid given this is a global business making sales across the world – somewhere there will be profits to tax).  This accounting rebate was$2.9m vs $1.4m in 2022.

Underlying operating loss

Add all that up and the underlying operating loss of the business fell from $19.2m to $18.8m.

This year it was driven by inflation pushing costs up whilst revenues stayed flat.

Therefore, if costs were somehow held flat in 2024, revenues would need to rise 39% to $78m for a profit to be made.

Balance Sheet

Normally I would look at cashflows first but there are interesting items on the Balance Sheet.

Aggregate CCP losses since acquisition by Pearl Abyss

Firstly, CCP has been aggregate losses of $87m since it was acquired by Pearl Abyss = underlying losses of around $37m and an impairment of $50m.  Not quite the plan, I suspect.

Deferred Revenues (Plex, Omega and Tokens!!??)

When CCP sells Plex and Omega time to players it can only recognise this as revenues as they are used up.  For example, if in September someone bought 12 months of Omega then in the year to end December only 3 months of that Omega is counted as revenues with 9 months sitting on the balance sheet as Deferred Revenues.  But all the cash inflow is taken as happening in the year it is received - so we get a mismatch between cash and profits.

Deferred Revenues in Current Liabilities (i.e. that will be used up this year) have risen from $6.7m to $8.5m.

Deferred Revenues in Non-Current Liabilities (I,e. will be used up in later years) has increased from $10m to $37.5m.

The notes give more detail on all this:

The near term deferred revenues are Subscriptions paid in advance which were $3.4m in 2023 and In-game purchases not yet consumed which is likely to be Plex derived which was $5.0m.

In any case, we can see the effect of the Omega / Plex sales had in 2023 with players buying $8.5m of advance subs / plex vs $6.7m in 2022.

I will deal with the Tokens / crypto currencies at the end.

Non-Current asset

I,e, buildings and intangible assets.

Nothing to note here other than the crypto currencies (tucked away in the notes to "Other intangible assets") which I will deal with at the end.

Current assets

Again, nothing to note here other than the cash whish is related to the crypto currencies which I will deal with at the end.

Current and non-Current liabilities

Nothing to note here either other than the crypto currencies which I will deal with at the end.


The business has an underlying cash outflow of $15.4m vs $15.0m in 2022.

The three reasons why the cash outflow is less than the loss made is because tax is paid somewhere to the tune of $2.9m in 2023 ($1.4m in 2022)  where as it is an income items in the profits; the business is slowly reducing the development cost of Eve on its Balance Sheet (i.e. all the historic development costs that were put on the Balance Sheet are now being expensed off to the tune of $6m pa); and in 2023 there were more sales of Plex / Omega for use in 2024 (i.e. so not revenues in 2023, only cash inflows).

But, at the end of the day despite a cash outflow of $15.4m the Cash still went up?  How was that?

Meet the crypto sales

The crypto sales
In summary, the sale of tokens generated cash inflows of $27.5m and so the cash balance actually rose $12m despite a cash loss of $15m.

As far as I can tell what is going on here is that the business generated $27.5m of Tokens out of thin air and sold them.  So I see in Fixed Assets the Tokens being created and then being sold and in the cashflow statement I see $27.5m flow in.  and I see the $27.5m Tokens go to Deferred Revenues to one day be recognised as revenues in the Profit & Loss.

So, for all us Accountants out there I think the accounting entries are:

The creation is: Dr Fixed Assets $27.5m / Cr Deferred Revenues $27.5m
The disposal is: Dr Cash $27.5m / Cr Fixed Assets $27.5m

Basically, if this was not happening then CCP would be needing cash injections from Pearl Abyss.

CEO Salary?

I am not here to speculate on someone’s remuneration so I will just put the item below with a few lines of text.

So, $1.2m paid to the Directors.  I don’t think the Korean Board members will be taking any pay.  So this is the CEO and whoever else is not Korean on the Board.

Saturday 4 May 2024

Month end update - April 2024

I made 103bn profits in April 2024.  There was no Oz Tank Show and so no distributions were made.  Therefore my wealth rose by the 103bn to 1.471 trillion isk.

This is the first time i have made over 100bn profit in a single month.  So good news there.


These days, the aim is to distribute my profits to the Oz Tank Show or other ventures.

Watching numbers go up once i got to a trillion wealth is somewhat boring.  Hence, my wealth will barely increase and any monthly surplus will all be given away at some point.

So far i have given 260bn isk to the Oz Tank Show.

The show started in July 2023 and i have generated profits of 607bn in the July - April period and distributed 260bn.

So that leaves 347bn isk to distribute to some venture(s).

Four Omega Accounts to pay for

Keeping 4 accounts on Omega cost me 7.0bn isk in April - that is as a result of taking advantage of the Omega / Plex deals when they come along every 2 months or so.

As i write, i have bought enough Omega to see me through to August / September which comes to around 26bn isk that sits on the Balance Sheet declining by 7bn each month as it is utilised . . . . . . that is a tedious accounting point but i feel it is better than saying the cost of Omega is a cost when i bought it.

I also did a recalculation of the value of the Omega time i have and wrote it down by 3bn.  I.e. i had 36bn at the end of March, used 7bn in April and revalued it downwards by 3 bn to 26bn.

The basic numbers for April

In April i had sales of 408bn isk vs March of 393bn.  Not quite a record but is the second best.

It comes to 13.6bn sales per day.

Item profits were 147bn isk which is a healthy margin of 36% (147/408).  So, again, profitability is good.  Much better than the 25% target i set.

If i am honest, i don't quite understand why it is so good but i am confident my numbers are correct.  The system gives me my sales and all the other costs and i know the value of my wealth.  So the Item Profits number is the balancing figure.

As always, the key point here is that to grow profits i need to grow sales.  The profitability i make is good.  And i am pretty sure 36% is too good.

Taxes and Courier fees came to 37bn isk.  That takes the Trading Profits to 110bn isk and so a trading margin of 27.1% (110/408) which is better than the 15% i target.

Then add in the 7bn plex cost to Omega 4 accounts takes me to 103bn profits made in April.

What is needed to get wealth to rise to 100bn in a month?

Lets assume i only get the 25% item profit margin that i target . . . . 

To get 100bn isk of an increase in wealth before distributions i would need to make daily sales of 18bn isk.

I am pretty sure i wont get there sustanably on the current strategy so i am putting my mind to how else to earning isk.

What i am selling

The market was already picking up in March and was very strong in April.  Still feels good as i write this today.

My strategy is to Buy from Sell Orders in Jita to sell in the trading hubs in other Regions.

I don't sell consumable items such as ammunition given they tend to be high volume and very competitive.  That includes ships.

I rarely sell items used as components in manufacturing because the end buyer tends to be cost conscious (and armed with spreadsheets) and able to manufacture the items themselves if market prices are too high.

I sell items that are in low supply and sell very slowly.  These items tend to have very low competition - sellers want to get cash quickly and so don't bother in these items.  If i put an item on the market and it sells in 15 days that is fine with me.

I sell items that are typically bought to kit a ship as a player progresses or has to replace a destroyed ship / pod.

Each month i sell 30% of what i had to sell at the start of the month.

I have a rule that the minimum profits have to be 100m isk.  It is no use me buying items for 5m to sell them for 15m.  The profitability may be great but that won't move the dials.  That said, it is surprising how many items i can buy for 120m from Jita Sell Orders and sell for 220m in the other trading hubs.  At that isk level, players re-equipping don't care about spending an additional 100m isk to save time.

And in the secondary trading hubs Amarr / Dodixie / Rens / Hek buyers will not travel even one jump to buy a cheaper item.

Therefore, i mostly sell Implants, Blueprints, ship equipment and some structure modules.

Implants have picked up and are doing well, notably mining related implants.  A classic sign of new or returning players.  Implants often sell by the family - in other words, the Alpha / Beta / Delta / Epsilon / Gamma / Omega implant will all sell at the same time.

Structure modules are doing better which suggests more structures are going up somewhere.  Some of the modules i make take 6-14 hours to manufacture - but my strategy works because players are isk rich but time poor in game.  They will happily pay 1.3bn for an item in Dodixie that costs 1bn to buy (from a sell order) in Jita or 800m to manufacture if it saves them a journey to Jita and/or 6 hours.

Blueprints are going ok - i mostly sell ship blueprints.  These are the slowest of all the sales i make and often get towards the end of the 90 days and so i need to update the order to ensure the item does not delist.

Ship Equipment is always a nice earner.  It has been a long time since i have sold mining equipment - the markets are on top of that.  But Armour and Shield modules are fine.  (or Armor in the game's dictionary).

In Jita i dabble in some Station Trading and also manufacturing items for sale in Jita where i am the only seller.  The Station Trading remains competitive.  I may sell an item twice before the market notices what's going on and piles in.  The Manufacturing in the few items that i do does well.

Where is it all selling?

All my 4 trading hubs saw sales rise in April.

This month Amarr was the winner with a new record for Amarr of 118bn isk which was a strong 66% rise on March (Dodixie still holds the record for the best month at 145bn isk).  A normal month for Amarr is around 70bn.

Dodixe did over 100bn as well, a rise of 9% on March.

Rens was 51bn which is about as good as it gets and flat on March and Hek bounced back to a more normal 27bn (well, normal is nearer 32bn).

My other Omega Trading Hubs were a dissappointment:

Sobaseki was 27bn which is below average and Tash Murkon was 19bn which is around avereage.  But that easily covers the cost of the Omega.

Arnon did 18bnbn which is much better than average whilst Alentene only did 6bn isk vs an average of 10bn.  Still, it cleared the Omega cost and so was worth it.

These 4 Trading Hubs literally take minutes to look after.  The real time is spent on Amarr and Dodixie, and then Jita.

Jita sales were 37bn (that's Station Trading + Manufacturing), so a bit below average.


I do this opportunistically and i don't keep track of it.  I don't (yet) do it systematically but i need to get a grip.  I am sure there are many items i sell in the Trade Hubs that i could manufacture in Jita and so get a better in price vs buying them from Jita Sell Orders.

But so far i manufacture items that sell for over 1bn isk.  My favourite items are where the Blueprint Original costs >10bn and there are no Copies in the Contract Market.  Sort of makes me feel i have the market to myself.

Planetary Interaction

Started this up again to remind me how it works.  Following the changes to volumes, i can keep my planets going for a long time before i need to pick anything up.  I have now remembered it is very dull.

The ultimate aim is to do this in low or null sec.

In High Sec it is like watching a tap slow dripping for all the isk it generates.


I am experimenting with this to see if i can get it off the ground.  The idea comes from a video by Strange Net where he discusses how he makes money from BPOs.  It requires the use of the Contract Market which i am not a fan of.

I have kicked it off with a few researched BPOs to see if i can make this work.

Station Trading

All in Jita.  This is going ok.  Sales were 37bn which is a bit below average.

1I still really need to ramp this up but again i don't yet have a systematic way of going about it.  Similar story to Manufacturing.

My idea of station trading is not buying items when they look cheap.  For me, station trading is about sticking to the slow moving items and quite often i am the only person in Jita trying to sell an item.  Almost always Selling for over 1bn isk.

What i don't do is Investing.  I.e. i don't buy an item now i think is cheap and hold onto it to sell it a few months later when the price has risen.

Alpha Accounts

I run them slowly.  I have characters in 6 other locations but i am winding them up slowly.

Cash in Wallet

Was high at the end of the month at 165bn.  In part that is because Real Life is busy so less time to think of new items to sell.  It is also a lost opportunity to make profits.  Every 100bn isk held through the month means i miss out on around 5bn profits.

Current Wealth

Current wealth is 1.471 trillion ISK made up from:
  • Plex held as an investment 0bn ISK
  • Items in hanger for sale 54bn ISK
  • Items in hanger for use in business 11bn ISK
  • Omega brought forward 26bn ISK
  • Buy orders on the market 22bn ISK
  • items for sale 1.49 trillion ISK
  • less a 20% provision 299bn ISK*
  • ISK in wallet 165bn 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.