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Gmarket: Gmarket Reports Fourth Quarter and Full Year 2008 Financial Results

^{Published on 2009-02-24 13:54:00, Last Modified on 2009-02-24 13:57:54 - Market Wire}
 

SEOUL, SOUTH KOREA--(Marketwire - February 24, 2009) - Gmarket Inc. (NASDAQ: [ GMKT ]) ("Gmarket") announced today its financial and operating results for the fourth quarter and full year ended December 31, 2008.

Gmarket reported total revenues of Won 77.0 billion for the fourth quarter of 2008, representing a 15% increase from total revenues of Won 67.2 billion for the fourth 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 14% to Won 1,107 billion for the fourth quarter of 2008 compared to Won 970 billion for the same period in 2007. Transaction fee revenues for the fourth quarter of 2008 were Won 40.8 billion, representing an 8% increase from Won 37.7 billion for the fourth quarter in 2007. Advertising and other non-transaction revenues for the fourth quarter of 2008 were Won 36.2 billion, representing a 23% increase from Won 29.5 billion for the same period in 2007.

Operating income for the fourth quarter of 2008 was Won 13.9 billion, representing a 51% increase from Won 9.2 billion for the same period in 2007.

Net income for the fourth quarter of 2008 was Won 15.3 billion, representing a 23% increase from Won 12.4 billion for the same period in 2007. Earnings per diluted share for the fourth quarter of 2008 increased to Won 300 or $0.24, up from Won 245 for the same period in 2007.

For the year ended December 31, 2008, Gmarket's GMV increased by 23% to Won 3,986 billion compared to total GMV of Won 3,249 billion in 2007. The Company reported total revenues of Won 278.7 billion, representing a 25% increase from total revenues of Won 222.9 billion in 2007. Operating income was Won 49.6 billion, representing an 87% increase from Won 26.5 billion in 2007. Net income was Won 56.4 billion or $0.88 diluted earnings per share, representing a 69% increase from Won 33.3 billion.

"Looking back on 2008, we ended the year very strongly, with solid growth in GMV and revenues and good profitability," said Young Bae Ku, Chief Executive Officer of Gmarket. "Given the current economic climate, we are working harder than ever to improve our efficiency while developing new opportunities and expanding our user base by bringing more offline shoppers online."

Investor Conference Call / Webcast Details

The Company's management will review detailed fourth quarter 2008 results on Tuesday, February 24, 2009 at 6:00 p.m. U.S. Eastern Time (8:00 a.m., February 25, 2009 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: +1 866 356 4279 or +1 617 597 5394 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: Gmarket 

A replay of the call will be available beginning February 24 at 8:00 p.m. U.S. Eastern Time (10:00 a.m., February 25 in Seoul) at [ www.gmarket.co.kr/IR/ ] and by telephone at +1 888 286 8010 or +1 617 801 6888 with passcode 42248632 (telephone replay available through 9:59 a.m. on March 4, 2009 U.S. Eastern Time (11:59 p.m., March 4, 2009 in Seoul)).

Notes: (1) The Dollar amounts provided in this release are based on an exchange rate of Won 1,262.00 to US$1.00, which is the noon buying rate in effect on December 31, 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, December 31, December 31, 2007 2008 2008 ------------ ------------ ------------ Assets Current assets: Cash and cash equivalents W48,367 W79,470 $ 62,971 Cash on deposit 190,000 217,000 171,949 Restricted cash 8,110 10,100 8,003 Accounts receivable, net 52,565 51,725 40,987 Current held-to-maturity securities - 34,000 26,941 Other current assets 8,120 13,256 10,504 ------------ ------------ ------------ Total current assets 307,162 405,551 321,355 Property and equipment, net 23,577 30,546 24,206 Held-to-maturity securities 6,000 4,754 Other assets 6,305 10,093 7,998 ------------ ------------ ------------ Total assets W337,044 W452,190 $ 358,313 ------------ ------------ ------------ Liabilities and Shareholders' Equity Current liabilities: Amounts payable to sellers W147,300 W184,221 $ 145,975 Accounts payable 22,727 28,358 22,471 Deferred revenue and advances 5,196 6,000 4,754 Loyalty program reserves 8,619 10,955 8,681 Income tax payable 1,856 5,711 4,525 Other current liabilities 6,480 7,568 5,998 ------------ ------------ ------------ Total current liabilities 192,178 242,813 192,404 ------------ ------------ ------------ Accrued severance benefit 2,781 4,467 3,540 Other liabilities 487 1,085 859 ------------ ------------ ------------ Total liabilities 195,446 248,365 196,803 ------------ ------------ ------------ Shareholders' equity: Common shares 4,975 5,033 3,988 Additional paid-in capital 88,080 93,782 74,312 Accumulated other comprehensive income - 79 63 Retained earnings 48,543 104,931 83,147 ------------ ------------ ------------ Total shareholders' equity 141,598 203,825 161,510 ------------ ------------ ------------ Total liabilities and shareholders' equity W337,044 W452,190 $ 358,313 ------------ ------------ ------------ GMARKET INC. UNAUDITED STATEMENTS OF INCOME (in millions of Korean Won and thousands of US dollars, except per share data) Three Months Ended December 31, ---------------------------------- 2007 2008 2008 ---------- ---------- ---------- Revenues: Transaction fees W37,680 W40,792 $ 32,323 Advertising and other (1) 29,531 36,192 28,678 ---------- ---------- ---------- Total revenues 67,211 76,984 61,001 Costs and expenses: Cost of revenues (1) 35,949 39,791 31,530 Sales and marketing 14,319 15,008 11,892 General and administrative 7,738 8,305 6,581 ---------- ---------- ---------- Total costs and expenses 58,006 63,104 50,003 ---------- ---------- ---------- Operating income 9,205 13,880 10,998 Other income: Interest income 2,724 4,977 3,944 Others, net 73 191 152 ---------- ---------- ---------- Income before income tax expenses 12,002 19,048 15,094 Income tax income (expenses) 403 (3,788) (3,002) ---------- ---------- ---------- Net income W12,405 W15,260 $ 12,092 Net income per share - basic W249 W303 $ 0.24 Net income per share - diluted 245 300 0.24 Weighted average number of shares - basic 49,747,035 50,325,581 50,325,581 Weighted average number of shares - diluted 50,619,956 50,871,560 50,871,560 Year Ended December 31, ---------------------------------- 2007 2008 2008 ---------- ---------- ---------- Revenues: Transaction fees W130,010 W152,258 $ 120,648 Advertising and other (1) 92,875 126,419 100,174 ---------- ---------- ---------- Total revenues 222,885 278,677 220,822 Costs and expenses: Cost of revenues (1) 119,668 144,473 114,479 Sales and marketing 52,466 54,832 43,449 General and administrative 24,272 29,744 23,569 ---------- ---------- ---------- Total costs and expenses 196,406 229,049 181,497 ---------- ---------- ---------- Operating income 26,479 49,628 39,325 Other income: Interest income 9,195 15,778 12,502 Others, net 49 989 784 ---------- ---------- ---------- Income before income tax expenses 35,723 66,395 52,611 Income tax income (expenses) (2,420) (10,007) (7,930) ---------- ---------- ---------- Net income W33,303 W56,388 $ 44,681 Net income per share - basic W671 W1,126 $ 0.89 Net income per share - diluted 659 1,111 0.88 Weighted average number of shares - basic 49,657,673 50,088,204 50,088,204 Weighted average number of shares - diluted 50,552,784 50,766,344 50,766,344 (1) Certain prior balances have been reclassified to conform to the current period presentation GMARKET INC. UNAUDITED STATEMENTS OF CASH FLOWS (in millions of Korean Won and thousands of US dollars) Three Months Ended December 31, Years Ended December 31, -------------------------- -------------------------- 2007 2008 2008 2007 2008 2008 ------- ------- -------- ------- ------- -------- Cash flows from operating activities: Net income W12,405 W15,260 $ 12,092 W33,303 W56,388 $ 44,681 Adjustments Depreciation and amortization 1,968 2,882 2,283 6,667 9,872 7,823 Stock-based compensation expense 434 698 554 1,504 2,558 2,027 Provision for bad debt 181 220 174 386 388 308 Provision for severance benefits 467 399 316 1,647 2,270 1,799 Deferred tax assets (883) 1,296 1,026 (2,306) 371 294 Provision for loyalty program reserves 1,380 2,205 1,747 4,970 7,116 5,639 Others, net 5 943 745 225 550 432 Changes in operating assets and liabilities Accounts receivable 9,307 5,209 4,128 (18,884) 814 645 Amounts payable to sellers 24,010 153 122 43,701 36,921 29,256 Accounts payable 2,505 489 388 3,485 5,631 4,462 Accrued income (1,241) (460) (364) (1,864) (2,817) (2,232) Other assets, net 1,780 (3,016) (2,389) 2,162 (2,477) (1,961) Other current liabilities 1,132 1,446 1,145 (1,476) 164 130 Payment of accrued severance benefits (51) (223) (177) (262) (583) (462) ------- ------- -------- ------- ------- -------- Net cash provided by operating activities 53,399 27,501 21,790 73,258 117,166 92,841 ------- ------- -------- ------- ------- -------- Cash flows from investing activities: Decrease (increase) in cash on deposit, net (40,946) 18,382 14,566 (50,602) (27,000) (21,395) Increase in restricted cash, net (1,600) - - (1,710) (1,990) (1,577) Increase in current held-to-maturity securities - (6,000) (4,754) - (6,000) (4,754) Decrease in long-term financial instruments, net 4,000 - - 4,000 - - Increase in held-to-maturity securities (34,000) (26,941) - (34,000) (26,941) Increase in available-for-sale securities - - (1,000) (792) Purchase of property and equipment (3,730) (3,371) (2,672) (10,614) (16,795) (13,309) Increase in other assets, net (4,302) (1,072) (849) (1,049) (2,480) (1,965) ------- ------- -------- ------- ------- -------- Net cash used in investing activities (46,578) (26,061) (20,650) (59,975) (89,265) (70,733) ------- ------- -------- ------- ------- -------- Cash flows from financing activities: Issuance of common shares, net - 186 148 154 3,202 2,537 ------- ------- -------- ------- ------- -------- Net cash provided by financing activities - 186 148 154 3,202 2,537 ------- ------- -------- ------- ------- -------- Net increase in cash and cash equivalents 6,821 1,626 1,288 13,437 31,103 24,645 ------- ------- -------- ------- ------- -------- Cash and cash equivalents: Beginning of period 41,546 77,844 61,683 34,930 48,367 38,326 ------- ------- -------- ------- ------- -------- End of period W48,367 W79,470 $ 62,971 W48,367 W79,470 $ 62,971 ------- ------- -------- ------- ------- -------- GMARKET INC. UNAUDITED SUPPLEMENTAL OPERATING DATA 2007 2008 --------------------------- --------------------------- 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q ------ ------ ------ ------ ------ ------ ------ ------ G M V (in billions of Won)(1) 723 780 776 970 933 971 975 1,107 ------ ------ ------ ------ ------ ------ ------ ------ Registered Users(2) (000) 11,754 12,408 12,981 13,674 14,260 14,735 15,204 15,685 ------ ------ ------ ------ ------ ------ ------ ------ Average Monthly Unique Visitors(3) (000) 16,931 17,581 17,925 18,712 17,861 18,651 17,840 18,092 ------ ------ ------ ------ ------ ------ ------ ------ (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.