Gumi's Crypto Investments Boost Profit Despite Game Sales Dip
Gumi's Crypto Bets Pay Off
Tokyo-based mobile game developer, Gumi, has reported a significant increase in quarterly profits. This turnaround is largely attributed to strategic investments in cryptocurrency, specifically Bitcoin and planned XRP acquisitions.
Despite a 52.5% year-on-year decrease in revenue to $9.2 million, caused by restructuring and asset sales within its gaming division, Gumi leveraged its crypto holdings to achieve impressive financial results.
Financial Highlights
- Operating Profit: Increased by 11.0% to $491,000.
- Ordinary Profit: Surged 371.1% to $8.3 million.
- Net Income: Climbed to $8.4 million, a stark contrast to the $1.13 million net loss from the previous year.
Gumi's investment strategy involved purchasing $6.7 million in Bitcoin and plans to acquire $17 million worth of XRP. Mark-to-market accounting of these assets generated $7.4 million in non-operating income, effectively offsetting weaker performance in the core gaming business. The company intends to continue focusing on blockchain-related activities as a key driver of future earnings.
Gaming Division Downturn
The mobile gaming sector, traditionally Gumi’s core business, experienced a significant decline. Sales plummeted by 66.5% to $4.7 million as Gumi exited unprofitable titles, outsourced operations, and sold its Alim subsidiary. This resulted in a $630,000 operating loss for the segment, reversing the previous year’s profit.
Gumi plans to shift its focus towards third-party intellectual property titles instead of developing original games. Due to unpredictable market conditions, the company has not provided a full-year forecast.
Blockchain Initiatives Show Promise
In contrast to the gaming division, Gumi’s blockchain business demonstrated growth. Revenue increased with the launch of "Phantom of Kill—Alternative Imitation," the initial title in its OSHI3 fan-engagement project. Additional revenue was generated from crypto earned through blockchain activities. The company is dedicated to expanding its blockchain initiatives as its traditional gaming sector faces challenges.