The Pearl Abyss Iceland and CCP Report & Accounts for the year to December 2024 came out on 7 May 2025.
Since 2021 they have come out on 30 April. not sure why they would be a few days later this year other than to observe Fanfest was happening?
Right now i will spend 3 to 4 hours or so going over the Accounts a write the review here - so perhaps more will come out as i dig deeper later on.
But in this post we will review the 2023 Consolidated Financial Statements of Pearl Abyss Iceland.
You can access the Pearl Abyss Iceland 2024 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 the company CCP. The profits and losses of these companies it owns will be included in one summary line - i.e. if CCP Games UK makes sales they will not be included in the CCP sales. So we wont get the full picture and indeed the company Accounts of CCP. And this will be further clouded by any sales CCP makes to these companies which is meaningless to us.
We want to look at the combined revenues and costs of CCP, not just the Icelandic entity (though it is the most important). i.e. we want to add all the sales of CCP and all the companies it owns to get the total sales number and we want to eliminate any intercompany trading it does.
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.
From here on in we will call the Consolidated Financial Statements of Pearl Abyss Iceland as CCP.
Bottom line Loss of CCP (again)
There overall loss was $19.4m which compares to a loss of $18.8m in 2023, $19.0m in 2022 (and then we also had the $50m impairment write off), $7.9m in 2021, $1.3m in 2020 but a $13.6m profit in 2019 and then a small $0.7m loss in 2018 after being bought by Pearl Abyss.
The total losses since being bought by Pearl Abyss in 2018 are $106m = $56m trading losses + $50m impairment write off.
I greatly suspect this was not the plan when Pearl Abyss bought CCP in 2018 for $226m (there was also an earnout of $200m but the targets were never met so it was never paid).
To date, the total cost of CCP to Pearl Abyss has been $226 + $106 = $332m.
$19m loss in 2024
Management say that "this result is primarily due to deliberate and increased investment in multiple active development projects — including EVE Frontier, EVE Vanguard, and the Carbon open-source platform — which are scheduled to enter key release phases from mid-2025 onwards".
Summary
- Revenues were up 8% to $60m ($56m)
- Game revenues were up an impressive 13% to $55m and so back at 2020 levels but not yet the all time high in 2013 of $72m
- All Regions grew
- I suspect the 13% rise in game revenues correlates with the rise in paying account numbers vs my estimated 30% decline in 2022-2023
- Europe is declining as a % of Revenues
- Costs rose 6% in 2024 on top of a 9% rise in 2023
- Salaries are a steady 45% of total operating costs
- It is the pension / employee tax costs that brings it up to 59%
- The overall loss was $19.4m vs $18.8m in 2023
- Balance Sheet and Cashflows are cleaner in 2024
- Still Tokens on the Balance Sheet
- The Value of unused Plex (and i guess MCT) has gone up by almost 10% in 2024 despite all the efforts to reduce the hoarding
- Cash is down to $13m, they will need to raise more cash this year given i suspect they will remain loss making
- They can either raise cash by selling these tokens again or going over to South Korea to face their owners and perhaps hurtling back to put up subscription prices in a hurry!
Profit & Loss Account
Revenues rose 8% to $60.2m vs $56.0m 2023.
Gross profits rose 6.4% to $55.1m ($51.8m).
Hence the Gross Profit Margin fell from 92.5% t0 91.5%. I suspect this is because the level of Royalties and licenses fell - more on that below.
Total Operating Costs were $83.9m vs $79.2m in 2023. Therefore, Operating Costs have risen 6% on top of the 9% rise in 2023.
Government Grants added $6.6m to income in 2024 vs $6.2m in 2023.
Therefore the Operating Loss came in at $22.2m vs $21.2m in 2023.
And then interest costs, currency movements and taxes take the overall loss to $19.4m in 2024 vs a loss of $18.8m in 2023.
Revenues
Revenues rose 8% to $60.2m.
That is broadly what we expected quarterly updates Pearl Abyss were giving us.
The revenues from subscription and in-game sales rose an impressive 13% from $48.7m to $55.0m. Given there has been no price rise then this would correlate with an increase in paying account numbers. Though some way to go to catch up on the 30% loss of paying accounts (i estimated ) due to the 30% price increase back in May 2022.
So we are now back up to the recent peak of $55m game revenues in the pandemic (everyone was at home) year of 2020 but still some way to go for the $72m in 2013.
But revenues are clearly going in the right direction and for now are importantly driven by a rise in paying account numbers.
The decline in Royalties and licenses from $7.0m to $5.1m (and this was $10m back in 2021) is i suspect down to lower NetEase revenues in China being replaced by direct sales into China. I am sort of guessing there but there is no obvious movement geographically to suggest the $2m decline in Royalties and licenses sales obviously comes from China this time.
I am not sure what Revenues from sale of goods are (Fanfest items?) but they are deminimus now anyway.
But looking back up at that Geographic Revenues table - it seems Eve Online saw growth in every region and if we strip out the Revenues and licences we can include Asia in that statement also.
One thing that is interesting is that North America used to be 30% bigger than Europe, now it is almost double the size of Europe. Perhaps currency plays a small part.
North America has always been around half of total Revenues. What is going on here is that Europe is becoming a lower % of Revenues as time goes by as Asia / Rest of World grows.
Despite in 2024 Europe growing 14% vs North America a lower growth of 8%.
Gross Profit
The cost of actually running the game (as opposed to creating new code, marketing et al) is very low at around $5m in 2024 and $4m in 2023.
I suspect there is no cost attached to Royalties and licences there of the $5m cost is associated with the $55m game revenues which suggests the Eve Online is a 91% Gross Profit Margin business.
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 would not be unrealistic for CCP to hold the costs of developing new games on the Balance Sheet and wait for the Revenues to be generated before realising those costs through the Profit & Loss Account - but this relies on these new games being successful and therefore profitable.
Costs have risen everywhere. Overall, costs are up 6%, having been up 9% in 2023.
In these businesses the biggest cost is people, so we need to look at the above at the same time as looking at employee costs. Much of the above lines of Operating Expenses will be people costs.
I have done some analysis which is interesting on all this:
The top rows is all data from current and historic Reports and Accounts.
Obviously i have to bring my politics into this some where - look at the bottom line. This is the additional costs CCP must bear when they hire someone. As well as an employees salary they also contribute to their pension funds and pay Employer Staff Taxes (in the UK this is called Employer National Insurance). in 2024 for CCP this was 33% and was as low as 25% in 2020. Hiring people has plenty of additional costs!
But, the main point of doing this was to observe that Salaries + these related costs as a % of total operating costs has generally been 55-59% and looks like it will be around 59% going forwards. Salaries only as a % of total operating costs has been a remarkably steady 45%.
It looks like the average salary at CCP is $93k (hard to compare to prior years without knowing the mix changes in developers vs general staff vs marketing staff et al).
And Revenue per employee is $150k today. It needs to be around $205k for CCP to be making some profits. In other words, a 30% higher number.
But once again i am left with the observation that Costs are not the problem, they seem to be under control. The problem is revenues which need to be $82m for the company to be back in profits = 30% higher than today.
And that really means paying account numbers need to be 30% higher. It seems to me that a 5% sub price rise loses 5% of players = zero sum game.
Other Income
There is $5m-$6m of Other Income in each year which is Government Grants
Finance Costs
The Group had a $50m bank loan from Pearl Abyss itself in Korea (it used to be a bank loan but it was converted to a parent company loan in 2023).
A reasonable number of moving parts but the decline in interest cost is due to being charged 4.6% interest costs by Peal Abyss vs 4.8% by the bank + no longer paying a Guarantee fee.
Interest Income will have fallen because the cash levels have more than halved.
Foreign Currency
OK, we can't ignore this. CCP i suspect has most of it costs in Icelandic Krona, great British Pounds and that Euro muck. But only 28% of its Revenues are in GBP and Euros.
Lets for a moment assume the Asian currencies follow the USD - then we can say that 72% of the Revenues of this business are USD related vs lets say 90% of costs being non-USD related.
If the USD remains weak (it is down 8% vs Icelandic Krona year to date already) then this means lower revenues and because the costs move with GBP and Euros then costs wont fall at the same time.
Tax
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 $4.4m vs $2.9m in 2023.
Underlying operating loss
Add all that up and the underlying operating loss of the business fell from $18.8m to $19.4m
And this year it was driven by costs rising faster than revenues.
Therefore, if costs were somehow held flat in 2025, revenues would need to rise 30% to $83m for a profit to be made.
Balance Sheet
This year the Balance Sheet looks clean with, again, the notable exception of £37.5m long term "deferred revenue" - see below.
Non-current Assets are being depreciated as expected.
I don't see any crypto being created out of thin air this year in Intangible Assets.
Deferred Tax Assets are rising which is a function of the company generating loses and so having a "tax income" in the Profit & Loss Account. That is not a cash item, no money is reclaimed from the Icelandic State. Instead the "tax income" sits on the Balance Sheet as an asset and will be reduced down when the company starts making profits.
Current Assets look ok.
There seems to be a "Tax credit claim" growing to $9.4m in 2024 vs $6.2m in 2023. Not sure what that would relate to?
Non-current liabilities has a couple of points to note.
The leases are effectively a capitalisation of the annual rents they pay for their buildings - looks ok.
The $50m borrowing is from Pearl Abyss, interest charged at 4.6%.
The $37.5m deferred revenues are proceeds from the sale of Token Warrants. $10m was received in 2022 and $27.5m in 2023.
The notes in the Accounts spells it all out - CCP is developing a blockchain-based network and planning to issue crypto tokens on the network upon completion of the development:
Current Liabilities all look ok but lets look at the deferred income here because this gives us an idea of the amount of Omega / Plex in the game.
The $3.4m of Subscriptions is Omega that has been bought but not yet used. It will convert to Revenues as it is used. Accounting rules don't allow it to be recognised as Revenues before all this.
This is flat on 2023 despite a higher number of paying players. That suggests that shorter term Omega is being purchased on average.
The In-game purchases not yet consumer i believe is Plex and i guess any real money purchases other than Omega that are not yet used. This was higher at the end of 2024 vs 2023. As this Plex etc is used up it will be converted into Revenues.
Cashflows
Profits are one thing but cash is real.
And the cashflow is clean this year. A loss of $19.4m resulted in $19.4m less cash.
Nothing really to say here. Nothing looks odd.
Other than at the start of the year the company had $33m cash and now has $13m cash. The company will need a cash injection during the year - i don't think they will make profits this year and therefore i suspect they will burn though this $13m.
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, $0.9m was 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.
One More Thing - Auditor's Fees
Firstly there are interim financial statements which we don't see. We only see the Full Year Statements.
Secondly, and this is interesting, the fees for "Other Services" have risen by 120%. The Auditors have clearly done some special work for the company. Not sure what it is.
