This week, Pearl Abyss announced its Q2 results (April - June 2025).
I have just come back from holiday, hence the late write up. Nosy Gamer has given an earlier review here.
Crimson Dessert delayed again - shares down 24%
The big news that sent the shares down 24% was the announcement, quite late in the analyst call with no hint in the presentation itself, that Crimson Dessert launch was delayed to Q1 2026, the seventh delay and also missing the Christmas selling window.
Given there was only one question in the Analyst Call (there are normally several) - this felt like the stunned the audience - and that question basically questioned the confidence the market now has in any launch date.
This is having two other affects which i will touch on below - management credibility and the financial health of Pearl Abyss (don't panic, if there was a serious problem the shares would be much much lower).
Background - why we talk about Pearl Abyss
As a reminder, Pearl Abyss, a South Korean gaming companies, bought CCP (Eve Online) in 2018. It has two main income generating games - Black Desert and Eve Online. Black Desert was launched in 2015 and is now in decline vs Eve Online was launched in 2003, peaked in 2013 but is now back to growth.
At the bottom of this post is the full English language translation of the earnings call including questions and answers from the analysts.
The Q2 Results
Firstly, always look year-on-year (i.e. Q2 2025 vs Q2 2024) to iron out holiday season effects (though Easter can move from Q1 to Q2).
This results in a bigger operating loss than the market expected at 11.8 billion Won and this time there was no covering this loss from the magic that is Pearl Abyss Capital and so the Net Loss was 22.7 billion Won.
(Pearl Abyss Capital - I need to dig deeper into Pearl Abyss Accounts again to see what this is all about because i am pretty sure this does not generate cash, i think it is merely accounting profits.)
Revenues were a bit lower than the market expected due to a higher than expected decline in Black Dessert of 8.5% year-on-year (see below).
That said, the main driver of the higher than expected Operating Loss was the marketing costs of Crimson Dessert in the US, marketing costs rose 44%. This is the trouble of missing launch windows - those marketing costs are now literally evaporated.
We have the revenue split between Black Dessert and CCP back again
This time, Pearl Abyss showed the revenues of Black Dessert and CCP separately - this had been missing for two quarters.
The cynic in my says this is being disclosed again because the revenues of CCP are looking good and so making any sale process easier.
Black Desert is in decline vs CCP growing - this is an ongoing trend. But, before CCP Iceland starts walking around as if they own the place - the core Black desert i think is still growing, it is the mobile side that is taking a hit from China. This will become clearer in the coming quarters.
And infact i think core Black Desert is doing better than expected but not able to make up for the speed of decline from the mobile side which Nosy points out is them ending their Tencent China deal 3 months early.
Management are trying to get mobile back up and running with new content.
Eve Online grew revenues 12%, at this stage i am not sure about how this growth splits between core Eve Online and Eve Echoes. But this is now an ongoing trend of Eve Online revenue growth, more on this below.
What can we say about Eve Online Player numbers?
Nothing from these numbers, i fear.
Pre September 2023 we could take the rise in CCP revenues, adjust for subscription price rises and currency and so deduce the player number change.
However, i greatly suspect a higher % of CCP sales now comes from ingame real money sales such as Plex and MCTs - therefore, without knowing how that % or revenues has changed i am unable to work out player number (account number really) changes.
Crimson Dessert
This is where it is all going wrong for now.
Work started on this title back in 2019 and the launch date has been pushed back seven times now.
The normal time to confirm a launch date would be Gamescom (20-24 August, i.e. next week) with other companies typically confirming a launch date six months ahead. But i have heard no whisper of this so i suspect the Q1 2026 launch date will be missed.
And then we start to run into other big titles like GTA6 launching in May 2026 - and i suspect no one wants to launch their new title around this time.
In any event, this has the effect of taking around 150 billion Won of revenues out of 2025 . . . . and putting Pearl Abyss into a loss making result for 2025.
At this point we are talking delays which is bad enough. If Crimson Dessert failed then Pearl Abyss would need a serious restructuring.
Management Credibility
The one and only question in the analyst call summed it up:
"I know that your game launching has been been delayed for several years, and it seems that we are losing trust in the timeline provided by your company. And can we really believe that you will truly launch your game in Q1 of 2026? And how much trust can we have for Pearl Abyss?
I do understand that it's very natural that game launchings can be delayed. However, I believe that since so many delays were made from the year before last year, several times, many investors are losing trust in your company."
The CEO recognised the issue by starting his answer "Once again, I would like to express my deepest apologies that we were not able to keep to the Q4 launching schedule that we had given a promise for. And we would like, once again, your kind understanding that it was a strategic choice for the success that we believe will be significant."
Pearl Abyss Financial Health
We are now looking at Pearl Abyss being loss making in 2025. In 2024 Pearl Abyss made an Operating Loss but was bailed out by Pearl Abyss Capital profits.
The problem with Pearl Abyss Capital, as i see it, is that it does not generate cash.
The Balance Sheet in the Appendix of the Presentation is revealing:
70 billion Won of debt is now short term and so will either need to be repaid or refinanced within 12 months.
And it is fair to say Pearl Abyss will not be able to do this from their own cash resources unless cost cutting starts fairly quickly or Crimson Dessert really is launched in Q1 2026. They will either need to borrow for repay the loan (possible), raise equity (again, possible but would need a credible Crimson Dessert story) or sell an asset.
Sale of CCP
Nothing was mentioned on the call or written up by analysts on this matter . . . . . but a sale of CCP would plug a hole in the Balance Sheet.
In fact, the call did not say the word "CCP" at all.
Eve Online (+ Eve Echoes)
The chart below shows the quarterly revenues from the Eve ecosystem.
So a decent progression since 2023 and the chart below shows the year-on-year change in quarterly revenues. There have now been seven quarters of positive year-on-year growth - never seen in the history of CCP under Pearl Abyss ownership.
There will be some currency fluctuations in here.
What i also suspect we are seeing is CCP monetising the player base better with all its Plex / Omega deals we have seen since 2023. If this is the case we should expect ongoing Plex, Omega, MCT deals firstly in the real money store and then in the Ingame Store (CCP needs to incentivise the player base to buy the Plex from those that paid real money for the stuff).
That said, CCP are making efforts to end the hoarding of Plex - so lets see how all this is reconciled.
And the progress is well seen in the rolling 12 month revenue chart which will be a chart the management in Pearl Abyss South Korea will like to see.
Revenues are up 15.5% over the last 12 months which is a record growth % under Pearl Abyss ownership.
And CCP is hitting new record high rolling 12 month revenues under Pearl Abyss ownership and overall CCP is back up to 2015 revenue levels. Not quite at the records set in 2013 and 2016 but getting there.
What do analysts think of Eve Online?
Surprisingly analysts trimmed their revenue numbers for CCP for 2025 and 2026. I suspect this is much more due to a weak USD and perhaps updated data from Pearl Abyss on CCP rather than any underlying trimming of numbers.
In terms of what analysts write about CCP - basically nothing. They reiterate the content launches and roadmap but nothing on Eve Frontier, losses or any Sale.
So what do investors think of Pearl Abyss?
Investors are very annoyed and starting to wonder when Crimson Dessert will be delayed to next.
What was said about Eve Online by Management in the Call?
Nothing on numbers, more on what we already know about recently launched content.
"For EVE Online, we launched the Legion expansion pack, including Freelancer Mission and New Warships, and through diverse events in the game as well, as changing changing of the product to composition, demonstrated the best performance, since Q4 of 2016.
In addition, we held the EVE Fanfest, revealed our 2025 roadmap, and strengthened communication with users."
and to come:
"For EVE, we plan to have the Legion expansion pack additional update that was given in Q2 and hold the annual Alliance Tournament and annual PDP Games."
And Eve Frontier in the Call?
Refered to it as "Blockcain-based" Eve Frontier.
"Blockchain-based EVE Frontier continues testing, following the previous quarter and we are consistently upgrading the game."
And it was mentioned as a key new IP launch to drive growth:
"for EVE Frontier, we will continue Frontier Access in Q3 as well, and it's growing the community. Going forward, while verifying the game, we will continue marketing, in order to secure core users".
So no numbers.
Full Earnings Call Transcript in English
Q2 2025 Earnings Call
Company Participants
Heo Jin-young, Chief Executive Officer
Jo Mi-yeong, Chief Financial Officer
Kim Yoon, Investor Relations
Presentation
Greetings. I am Kim Yoon 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 2025 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 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 Kyung-man; and CFO, Jo Mi-yeong. We will first hear the business performance presentation highlights from CFO, Jo Mi-yeong, and then engage in a Q&A session.
Jo Mi-yeong
Greetings, everyone. I am Jo Mi-yeong. Thank you once again for taking part in our company's earnings conference call, despite your busy schedules.
I would like to elaborate on 2025 Q2 major business activities and performance. Black Desert and EVE also showed stable live service in Q2, and through Heidel Ball and EVE Fanfest, we revealed the second half roadmap and strengthened communication with users. Black Desert in Q2 added a new difficulty level to Land of Morning Light Donghae, Golden Pig King Boss, improved Siege War and Node War, and heightened gameplay for users.
However, in Q2, in case of revenues, since there were no large-scale updates, it was weak compared to the previous quarter. In addition, Heidel Ball was held and second half major updates were communicated and rich gameplay content was provided. In particular, detailed information related to the new region Edania and new PvP Blue Battlefield was revealed, and based on user feedback, convenience updates were announced and we were able to confirm heightened user responses.
In case of console, we launched PlayStation 5 and Xbox X and S versions and established a stable playing environment, where contents can be delivered faster and provided an opportunity for a rebound.
In case of mobile, we updated Rabam skill, where strong attacks could be made, as well as Atoraxxion: Vahmalkea, where five party members can play the game together consecutively and added more fun to the game. However, with the removal of the China contract effect which was recognized until Q1 of the previous quarter, revenues were weak.
For EVE Online, we launched the Legion expansion pack, including Freelancer Mission and New Warships, and through diverse events in the game as well, as changing changing of the product to composition, demonstrated the best performance, since Q4 of 2016.
In addition, we held the EVE Fanfest, revealed our 2025 roadmap, and strengthened communication with users.
Apart from this, we are continuing to prepare for new services, in order to increase our revenues. First, Crimson Desert participated in PAX East and Summer Game Fest and strengthened North American region marketing.
In particular, at the Summer Game Fest, we demonstrated a new questline demo, where open world could be experienced, which received praise in every aspect. Action, graphics, and presentation further heightening expectations. Blockchain-based EVE Frontier continues testing, following the previous quarter and we are consistently upgrading the game.
Next, I would like to cover 2025 Q2 financial performance. Q2 operating revenue posted KRW79.6 billion, a 4.9% decrease Q-o-Q, and operating losses posted KRW11.8 billion and posted a loss with decrease of operating revenue and marketing cost increase. Net loss posted KRW22.7 billion and due to foreign currency related losses following FX rate drop, it turned to a loss.
I will now cover operating revenue in more detail. First, I will go over the ROP[ph] operating revenue for major IPs. The operating revenue from this quarter's Black Desert IP posted KRW54.9 billion, decreased 12.9% Q-o-Q, and EVE IP operating revenue posted KRW24.2 billion, an increase 18% Q-o-Q.
Breaking down the operating revenue for different regions, it was Korea 18%, Asia 18%, and NA Europe 64%. And in case of operating revenue for different platforms, it recorded 85% for PC, 12% for mobile, and 3% for console.
Next, I will cover operating expenses. Q2 operating expense posted KRW91.3 billion, a 2.7% increase Q-o-Q. Labor cost posted KRW47.2 billion, a 3.8% decrease Q-o-Q. For your reference, Q2 end headcount was 1,360, and those in the development department are 772 headcounts, which is 57% of the total headcount. Commissions posted KRW18.1 billion, a 4.5% increase Q-o-Q. Advertising due to marketing cost increase due to offline events and game show participation posted KRW10.5 billion, a 43.9% increase.
Last but not least, I will cover 2025 Q3 major highlights. Black Desert in July launched new class Wukong, which uses Power Pole as the major weapon, and is planning to showcase our naval PvP content, Blue Battlefield, which is a PvP content, which takes place at sea.
In addition, we plan to update Edania, a new region, and with the playing method, which is different from the existing Black Desert hunting ground, as well as a difficulty level, which encourages player's sense of challenge, we plan to add more freshness to the game.
Apart from this, with the summer season, we provided summer costumes and props, and have been providing diverse convenience updates, so that users can be more immersed in the game. With a wealth of these updates, all the metrics have been increasing from Heidel Ball and is leading to revenues, and we expect Q3 Black Desert performance to significantly increase.
In case of Black Desert Console, based on new devices, new class Deadeye and Wukong, as well as new exalted land, Ulukita was quickly updated and is providing an environment, where console users can enjoy content like PC users and become duly immersed.
In addition, through the Console Adventurer event, we revealed our future roadmap and announced that we will provide content that are at the PC level within this year.
In the case of Black Desert Console, all the metrics have been improving, since the new devices have been launched, and we expect solid performance in Q3. In case of mobile, we hosted the Heidel Ball and revealed second half update plans, including Land of Morning Light, New Region Seoul and new class Seonin.
In particular, we recreated Gwanghwamun and Gyeongbokgung Palace in Land of Morning Light Seoul, which was updated in July and provided a realistic experience of actually traveling in Seoul.
For EVE, we plan to have the Legion expansion pack additional update that was given in Q2 and hold the annual Alliance Tournament and annual PDP Games.
We are smoothly preparing for our new titles, which will secure our new growth engines. First, for EVE Frontier, we will continue Frontier Access in Q3 as well, and it's growing the community. Going forward, while verifying the game, we will continue marketing, in order to secure core users.
For Crimson Desert, continuing from the previous quarter, we plan to strengthen marketing intensity, and we participated in Bilibili World and ChinaJoy in July and successfully concluded the first demo in China for the first time.
In addition, in August, we will participate in Gamescom and PAX West, showcasing our open world demo and plan to participate in the Tokyo Game Show.
Crimson Desert participated in almost all gaming events held this year, and we have built anticipation for Crimson Desert among players worldwide. In addition, we have incorporated the feedback received during this process into the game, upgrading it to enhance its overall quality.
As we carry out actual demonstrations, we have observed increasingly positive reviews, allowing us to gauge the game's strong potential for success. Since many people have been waiting, all employees at Pearl Abyss will do our best till the end. So, that our results will make it worth the wait. We will count on you for your continued interest and support. Thank you very much.
With this, we will conclude Pearl Abyss 2025 Q2 earnings presentation. We will start the Q&A session.
Questions And Answers
Heo Jin-young
Before the Q&A session, I would like to first share an update on the development status and release schedule of Crimson Desert, which many of you have been curious about. Currently, Crimson Desert is in the process of voiceovers, while also carrying out tasks, such as console certification in preparation for its release.
In the case of marketing, we plan to participate in Gamescom and PAX West this August to showcase our open world build, and in September, we will join the Tokyo Game Show to strengthen our marketing efforts in the Japanese market.
The launch of Crimson Desert, our first large scale AAA console game, has been unavoidably delayed by one quarter from the previously announced schedule. This is due to longer than expected timelines arising from schedule coordination and collaboration with multiple partners for offline distribution, voiceover, console certification, and other launch preparation.
We sincerely apologize for not being able to meet the originally promised fourth quarter launch schedule. Please kindly understand that this is a strategic decision aimed at ensuring success on a meaningful scale. The release date has been internally confirmed for Q1 of 2026. However, given the change in launch timing, we will announce the date at a more appropriate time, based on business considerations, rather than making an announcement at Gamescom next week. We are grateful for your continued interest in our company, and we will do our utmost to deliver an even better experience going forward.
Our CEO, Heo Jin-young, delivered these remarks. And now, we will be receiving questions.
Q - Jaemin Ahn
Thank you for the opportunity. I'm Jaemin from NH Investment & Securities. I know that your game launching has been been delayed for several years, and it seems that we are losing trust in the timeline provided by your company. And can we really believe that you will truly launch your game in Q1 of 2026? And how much trust can we have for Pearl Abyss?
I do understand that it's very natural that game launchings can be delayed. However, I believe that since so many delays were made from the year before last year, several times, many investors are losing trust in your company. I would like to ask the management. Do you believe that the game could be launched in Q1 of 2026 for sure? And I think there were comments before that you couldn't launch the game because of GTA V. So, do you think that a similar situation can happen again? Thank you very much.
A - Heo Jin-young
Once again, I would like to express my deepest apologies that we were not able to keep to the Q4 launching schedule that we had given a promise for. And we would like, once again, your kind understanding that it was a strategic choice for the success that we believe will be significant.
And as was aforementioned, for Crimson Desert, although our goal was to have the launching by Q4 of this year, it took more time for us than we had expected in the preparation phase for our launching. So, that is why we couldn't find the appropriate launching timing that is optimal within this year. So, that is why we had to inevitably delay the launching for one quarter.
Since we had internally set a date, we will do our best to strictly manage our schedule. So, that we will not make the delay go further than one quarter, as we had mentioned. And we will do our best to be committed to that.
The answer was given by CEO, Heo Jin-young.
And with this, we will conclude our earnings release for Q2 of 2025. Thank you for your participation.
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