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Gmarket Reports Third Quarter 2008 Financial Results Revenues Increased to Won 68.5 Billion, up 32% Year-Over-Year; Operating Income Increased to Won 12.2 Billion, up 189% Year-Over-Year; Net Income Increased to Won 14.7 Billion, up 154% Year-Over-Year SEOUL, SOUTH KOREA--(MARKET WIRE)--Oct 28, 2008 -- Gmarket Inc. (GMKT - News) ("Gmarket")
announced today its financial and operating results for
the third quarter
ended September 30, 2008.
Gmarket reported total revenues of Won 68.5 billion for the third quarter of 2008, representing a 32% increase from total revenues of Won 52.1 billion for the third quarter of 2007. The Company's gross merchandise value ("GMV"), which represents the total value of all items sold on Gmarket's website, increased by 26% to Won 974.7 billion for the third quarter of 2008 compared to Won 775.6 billion for the same period in 2007. Transaction fee revenues for the third quarter of 2008 were Won 37.3 billion, representing a 24% increase from Won 30.0 billion for the third quarter in 2007. Advertising and other non-transaction revenues for the third quarter of 2008 were Won 31.2 billion, representing a 41% increase from Won 22.1 billion for the same period in 2007. Operating income for the third quarter of 2008 was Won 12.2 billion, representing a 189% increase from Won 4.2 billion for the same period in 2007. Net income for the third quarter of 2008 was Won 14.7 billion, representing a 154% increase from Won 5.8 billion for the same period in 2007. Earnings per diluted share for the third quarter of 2008 increased to Won 290 or $0.24, up from Won 115 for the same period in 2007. "We are very pleased with our excellent third quarter performance, as we posted solid growth in GMV and revenues and tremendous growth in profitability," said Young Bae Ku, Chief Executive Officer of Gmarket. "Our business fundamentals are stronger than ever, and we look to further separate ourselves from the competition in the upcoming quarters." Investor Conference Call / Webcast Details The Company's management will review detailed third quarter 2008 results on Tuesday, October 28, 2008 at 6:00 p.m. U.S. Eastern Time (7:00 a.m., October 29, 2008 in Seoul, South Korea). A live webcast of the conference call will be available on Gmarket's website at www.gmarket.co.kr/IR/. Dial-in details for the conference call are as follows:
US: +1.866.713.8563 or +1.617.597.5311
Hong Kong: +852 3002 1672
Singapore: +65 6823 2164
U.K.: +44 207 365 8426
Korea: +82 00 308 13 1153
Password for all regions: GmarketA replay of the call will be available beginning October 28 at 8:00 p.m. U.S. Eastern Time (9:00 a.m., October 29, 2008 in Seoul) at www.gmarket.co.kr/IR/ and by telephone at +1 888 286 8010 or +1 617 801 6888 with passcode 15579983 (telephone replay available through 9:59 a.m. on November 4, 2008 U.S. Eastern Time (11:59 p.m., November 4, 2008 in Seoul)). Notes: (1) The Dollar amounts provided in this release are based on an exchange rate of Won 1,206.30 to US$1.00, which is the noon buying rate in effect on September 30, 2008 as quoted by the Federal Reserve Bank of New York. (2) GMV should not be construed as an alternative to revenues or any other measure of performance determined in accordance with U.S. GAAP. Other companies may determine GMV in a different manner than Gmarket does. About Gmarket Gmarket Inc. is a leading retail e-commerce marketplace in Korea, offering buyers a wide selection of products at competitive prices and sellers a comprehensive and flexible sales solution. Gmarket's e-commerce marketplace is highly scalable and facilitates the sale of products in small or large quantities to a large number of potential buyers in a convenient, cost effective and secure manner. Gmarket's e-commerce marketplace is located primarily at www.gmarket.co.kr. Safe Harbor Under the Private Securities Litigation Reform Act of 1995 Certain statements contained in this Form 6-K may include, in addition to historical information, "forward-looking statements" within the meaning of the "safe-harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "project," "continue," "plan" or "predict" or the negative thereof or other similar words, although not all forward-looking statements will contain these words. These forward-looking statements are based on the Company's current assumptions, expectations and projections about future events. All forward-looking statements involve risks and uncertainties that may cause the Company's actual performance, financial condition or results of operations to be materially different from those suggested by the forward-looking statements, including, but not limited to, the Company's ability to diversify revenues; the Company's ability to compete effectively in a highly competitive industry; the Company's ability to anticipate and access technological developments in the Company's industry; the Company's ability to recruit and retain quality employees as the Company grows; the Company's ability to implement the Company's growth strategies; and economic and political conditions in and outside of Korea. Recent global economic events including, but not limited to, the downturn in global economic and financial markets, changes in political, business and economic conditions, fluctuations in foreign exchange rates, tightening of the global credit markets, decreasing consumer confidence and slowing of ecommerce growth could also cause or contribute to such material differences in our actual performance, financial condition or results from those contained in this Form 6-K. Investors should consider the information contained in the Company's submissions and filings with the SEC, including the Company's most recent annual report on Form 20-F, together with such other documents as the Company may submit to or file with the SEC from time to time, including on Forms 6-K. The forward-looking statements speak only as of this filing on Form 6-K and the Company assumes no duty to update them to reflect new, changing or unanticipated events or circumstances. You should not unduly rely on the forward-looking statements contained in this Form 6-K.
GMARKET INC.
UNAUDITED BALANCE SHEETS
(in millions of Korean Won and in thousands of US dollars)
December 31, September 30, September 30,
2007 2008 2008
------------- ------------- -------------
Assets
Current assets:
Cash and cash equivalents W48,367 W77,844 $ 64,531
Cash on deposit 190,000 236,063 195,692
Restricted cash 8,110 10,100 8,373
Accounts receivable, net 52,565 56,890 47,160
Other current assets 8,120 11,896 9,862
------------- ------------- -------------
Total current assets 307,162 392,793 325,618
Property and equipment, net 23,577 30,051 24,911
Other assets 6,305 8,895 7,375
------------- ------------- -------------
Total assets W337,044 W431,739 $ 357,904
------------- ------------- -------------
Liabilities and Shareholders'
Equity
Current liabilities:
Amounts payable to sellers W147,300 W184,068 $ 152,588
Accounts payable 22,727 27,869 23,103
Deferred revenue and advances 5,196 6,432 5,332
Loyalty program reserves 8,619 10,379 8,604
Other current liabilities 8,336 10,204 8,459
------------- ------------- -------------
Total current liabilities 192,178 238,952 198,086
Other liabilities 3,268 5,120 4,245
------------- ------------- -------------
Total liabilities 195,446 244,072 202,331
------------- ------------- -------------
Shareholders' equity:
Common shares 4,975 5,029 4,169
Additional paid-in capital 88,080 92,901 77,013
Accumulated other comprehensive
income - 66 55
Retained earnings 48,543 89,671 74,336
------------- ------------- -------------
Total shareholders' equity 141,598 187,667 155,573
------------- ------------- -------------
Total liabilities and
shareholders' equity W337,044 W431,739 $ 357,904
------------- ------------- -------------
GMARKET INC.
UNAUDITED STATEMENTS OF INCOME
(in millions of Korean Won and thousands of US dollars, except per share
data)
Three Months Ended September 30,
----------------------------------
2007 2008 2008
---------- ---------- ----------
Revenues:
Transaction fees W29,964 W37,261 $ 30,889
Advertising and other 22,091 31,257 25,911
---------- ---------- ----------
Total revenues 52,055 68,518 56,800
Costs and expenses:
Cost of revenues 28,870 35,574 29,490
Sales and marketing 12,790 13,408 11,115
General and administrative 6,162 7,288 6,042
---------- ---------- ----------
Total costs and expenses 47,822 56,270 46,647
---------- ---------- ----------
Operating income 4,233 12,248 10,153
Other income (expense):
Interest income 2,352 4,190 3,474
Others, net 1 515 427
---------- ---------- ----------
Income before income tax
expenses 6,586 16,953 14,054
Income tax expenses (1) (784) (2,228) (1,847)
---------- ---------- ----------
Net income W5,802 W14,725 $ 12,207
Net income per share - basic W117 W294 $ 0.24
Net income per share - diluted 115 290 0.24
Weighted average number of
shares - basic 49,747,035 50,159,545 50,159,545
Weighted average number of
shares - diluted 50,572,249 50,771,945 50,771,945
Nine Months Ended September 30,
----------------------------------
2007 2008 2008
---------- ---------- ----------
Revenues:
Transaction fees W92,330 W111,466 $ 92,403
Advertising and other 63,343 91,714 76,029
---------- ---------- ----------
Total revenues 155,673 203,180 168,432
Costs and expenses:
Cost of revenues 83,719 106,168 88,012
Sales and marketing 38,147 39,825 33,014
General and administrative 16,533 21,439 17,773
---------- ---------- ----------
Total costs and expenses 138,399 167,432 138,799
---------- ---------- ----------
Operating income 17,274 35,748 29,633
Other income (expense):
Interest income 6,471 10,801 8,954
Others, net (24) 798 662
---------- ---------- ----------
Income before income tax
expenses 23,721 47,347 39,249
Income tax expenses (1) (2,823) (6,219) (5,156)
---------- ---------- ----------
Net income W20,898 W41,128 $ 34,093
Net income per share - basic W421 W822 $ 0.68
Net income per share - diluted 413 810 0.67
Weighted average number of
shares - basic 49,647,353 50,024,505 50,024,505
Weighted average number of
shares - diluted 50,541,286 50,759,920 50,759,920
(1) On June 27, 2008, the Company was granted renewal of its status as an
eligible venture Company under the Special Tax Treatment Control Law of
Korea. This renewal entitles the Company to a reduced tax rate of
13.75%, which is 50% of the statutory tax rate, for taxable income
directly generated from operations, effective until at least through
the end of 2008. This discounted tax rate was not applied in the first
quarter 2008 as the Company had deemed that renewal of the 13.75% rate
was not probable at that time.
GMARKET INC.
UNAUDITED STATEMENTS OF CASH FLOWS
(in millions of Korean Won and thousands of US dollars)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2007 2008 2008 2007 2008 2008
-------- -------- -------- -------- -------- --------
Cash flows from
operating
activities:
Net income W5,802 W14,725 $ 12,207 W20,898 W41,128 $ 34,093
Adjustments
Depreciation
and amortization 1,694 2,682 2,224 4,699 6,990 5,795
Stock-based
compensation
expense 433 699 579 1,070 1,860 1,542
Provision for
bad debt 59 35 29 205 168 139
Provision for
severance
benefits 409 556 461 1,180 1,871 1,551
Deferred tax
assets (395) (331) (274) (1,423) (925) (766)
Provision for
loyalty
program
reserves 1,423 1,815 1,505 3,590 4,911 4,071
Others, net 106 (349) (289) 220 (392) (325)
Changes in
operating
assets and
liabilities
Accounts
receivable (22,024) (2,184) (1,810) (28,191) (4,395) (3,643)
Amounts
payable to
sellers 7,116 31,438 26,061 19,691 36,768 30,480
Accounts
payable 606 (310) (258) 980 5,142 4,262
Accrued income 1,384 (384) (318) - (2,357) (1,954)
Other assets,
net 824 1,924 1,595 (241) 539 447
Other current
liabilities (2,270) (1,304) (1,082) (2,608) (1,282) (1,062)
Payment of
accrued
severance
benefits (49) (132) (110) (211) (361) (299)
-------- -------- -------- -------- -------- --------
Net cash
provided by
(used in)
operating
activities (4,882) 48,880 40,520 19,859 89,665 74,331
-------- -------- -------- -------- -------- --------
Cash flows from
investing
activities:
Decrease
(Increase) in
cash on
deposit, net 14,997 (22,360) (18,536) (9,656) (45,382) (37,621)
(Increase) in
restricted
cash, net - - - (110) (1,990) (1,650)
Purchase of
property and
equipment (3,191) (4,554) (3,775) (6,884) (13,424) (11,128)
Decrease
(Increase) in
other assets,
net 3,284 (95) (78) 3,253 (2,408) (1,996)
-------- -------- -------- -------- -------- --------
Net cash
provided by
(used in)
investing
activities 15,090 (27,009) (22,389) (13,397) (63,204) (52,395)
-------- -------- -------- -------- -------- --------
Cash flows from
financing
activities:
Issuance of
common shares,
net 24 922 764 154 3,016 2,500
-------- -------- -------- -------- -------- --------
Net cash
provided by
financing
activities 24 922 764 154 3,016 2,500
-------- -------- -------- -------- -------- --------
Net increase
in cash and
cash
equivalents 10,232 22,793 18,895 6,616 29,477 24,436
-------- -------- -------- -------- -------- --------
Cash and cash
equivalents:
Beginning of
period 31,314 55,051 45,636 34,930 48,367 40,095
-------- -------- -------- -------- -------- --------
End of period W41,546 W77,844 $ 64,531 W41,546 W77,844 $ 64,531
-------- -------- -------- -------- -------- --------
GMARKET INC.
UNAUDITED SUPPLEMENTAL OPERATING DATA
2007 2008
--------------------------- --------------------
1Q 2Q 3Q 4Q 1Q 2Q 3Q
------ ------ ------ ------ ------ ------ ------
G M V
(in billions of Won)(1) 723.0 780.0 775.6 970.0 933.4 971.1 974.7
------ ------ ------ ------ ------ ------ ------
Registered Users(2) (000) 11,754 12,408 12,981 13,674 14,260 14,735 15,204
------ ------ ------ ------ ------ ------ ------
Average Monthly Unique
Visitors(3) (000) 16,931 17,581 17,925 18,712 17,861 18,651 17,840
------ ------ ------ ------ ------ ------ ------
(1) Represents the aggregate value of all products sold on the Company's
website for the period. GMV is commonly used in the e-commerce
industry to measure a company's operating performance as transaction
fees depend in part on GMV. GMV should not be construed as an
alternative to any measure of performance determined in accordance
with U.S. GAAP. Other companies may determine GMV in a different
manner to Gmarket.
(2) Registered Users include both buyers and sellers who have registered
with the Company as of the end of the period.
(3) Average monthly unique visitors represents the average number of
monthly unique visitors to the Company's website during the period,
measured and announced by Metrix Corporation, a Korean Internet
research company. Other research companies' results may differ.Contact: Contacts:
Paul J. Lee
Gmarket Inc.
+82-2-3016-4372
Email Contact
In the U.S.
John Robertson
The Ruth Group
+1-646-536-7024
Email Contact
Source: Gmarket
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