WeMade revises 2021 results to exclude crypto earnings

WeMade Co., a pioneer in South Korea's play-to-earn (P2E) game industry, revised its 2021 operating profit downward by 70% after excluding 220 billion won ($181 million) in proceeds from the sale of its digital coin WEMIX. 

After market close on Wednesday, the publisher of the online game Mir 4 corrected its 2021 operating profit to 100.9 billion won, versus the previously stated 325.8 billion won. 

Revenue came to 337.3 billion won, 40% lower than the 560.6 billion won released last month. Compared to the previous year, WeMade turned to the black, with revenue up 167%.

“In accordance with the advice from an external auditor, we listed the proceeds from the monetization of WEMIX as unearned revenue in our annual reports,” said a WeMade official.

Its preliminary 2021 results booked the earnings from the sale of 104 million WEMIX units as profits, reflecting the opinions of two leading accounting firms in the country, according to the company.

Unearned revenue is a prepayment that a company received for a service or product it would provide to customers at a later date.

ABSENCE OF CLEAR STANDARDS

The revised numbers underline the need for a clear set of accounting standards on cryptocurrencies, in tandem with the industry's rapid growth.

"We don’t have clear accounting standards or laws,” said the WeMade official, referring to the digital coin market.

“Until the relevant accounting rules are introduced, we will consult more closely with accounting firms and relevant institutions and share them with investors in a continuous and transparent manner.”

WeMade leads the country’s blockchain-based gaming business with its cryptocurrency. It is the first South Korean developer to apply the play-to-earn gaming model for its popular free-to-play massively multiplayer online role-playing game (MMORPG), Mir 4.

But the game developer came under heavy criticism after it massively sold the WEMIX digital coin earlier this year, which allegedly inflicted losses for retail crypto investors.

This year, WeMade Co. plans to develop some 100 games using the blockchain gaming platform, while its domestic rivals are preparing their foray into the cryptocurrency market.

Last month, Neowiz Holdings Corp. announced a plan for a full-fledged launch of its token business. Com2uS Holdings Corp. and its subsidiary Com2uS Corp. will issue their digital currency C2X in the first half of this year.

Market speculation is that the country's largest mobile gaming company Netmarble Corp. might release its digital coin in the first half of this year.

Shares in WeMade jumped 5.7% to close at 100,300 won on Thursday, versus a 1.33% slip in the wider Kospi market.

The stock recouped part of its losses triggered after the company's heavy selling of the WEMIX virtual currency. But the current share price is less than half of its all-time high of 245,700 won touched in November of last year.

Write to Eun-Seo Koo, Hyun-Il Lee and Ju-Wan Kim at koo@hankyung.com
Yeonhee Kim edited this article