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Hello. Thank you for participating in today's call. We will now begin the earnings call for fiscal year 2023, Q3 of Wemade and Wemade Max. We will start the call with a presentation by Wemade and Wemade Max and then proceed with the Q&A from the participants. [Operator Instructions]. Now we will start the presentation by Wemade and Wemade Max.
Good morning. This is [ Soo-Rae Han ] from Wemade Strategic Communications division. Thank you very much for joining us for the fiscal year 2023 Q3 earnings results of Wemade and Wemade Max. Today, we have with us CEO, Henry Chang; Senior Managing Director Sang-Won Kim of the Strategic Communications Division; and Director Young-Jun Ko, of the Corporate Finance division.
We will start today's call with opening remarks by the CEO, Henry Chang, and then proceed with a presentation from Senior Managing Director, Sang-Won Kim, explaining the results for Q3 2023, followed by a Q&A session.
The results for Q3 2023 are provided for the convenience of the investors without completing the external auditor's review, and it may be subject to change as a result of accounting audits and as instructed by the Financial Services Commission. Please be advised to refer to the disclaimer stated in the Q3 results presentation material posted on our website. Now CEO, Henry Chang, will give us his opening remarks.
Good morning. I am the CEO of Wemade, Henry Chang. Thank you for attending the earnings call of Wemade for fiscal year 2023 Q3. Today, I would like to start off with a topic of growth. The past 2 years have been a year -- a series of ups and downs for us, and there have been a lot of hardships and challenges we faced home and abroad. The earnings results we announced every quarter was not able to show a consistent trend. Revenue appeared to be stagnant, and we recorded operating losses.
If we look at the current status through a narrow lens or just at a snapshot, the fact is we were not able to show a consistent performance. However, if we look at the bigger picture on a longer time horizon, we are growing, and we will continue to grow. Our revenue, which stood at KRW 335 billion in 2021 increased to KRW 463.5 billion in 2022. This year, in 2023, our revenue as of Q3 stands at KRW 488.7 billion, surpassing last year's performance.
Such growth will also be sustainable moving on to next year and considering the big titles that are set to be released in global, Chinese and Korean market every quarter, the growth trajectory will be leveled up.
It took 7 years for us to normalize the IP in China, 5 years for us to achieve tangible results in our investment into game companies and also a considerable amount of time to release the games we worked on to the market, good things take time. The game scheduled to be released next year are also available to release because of the buildup efforts over many years.
The same is true for the blockchain platforms where we are investing heavily. There are discontinuous innovations, and the industry is still in its infancy, so there have been ups and downs. But since the second half of 2023, there has been a clear trend of growth. The scale is still small, but by following this growth trajectory, anyone can envision the future of the company.
From a competitive standpoint, after 2 years of crypto winter, the competition itself has disappeared from the domestic market and the global competitiveness of WEMIX has leveled up. When the blockchain market grows in earnest, the benefits will go to the most competitive companies and ecosystems and WEMIX will be at the center of it.
Growth comes first. Profit can follow. We can be profitable now if we do not invest for the future. This is not difficult at all. The real challenge is to build sustainable growth and become a company that is on a completely different level than now generating profit that is on a completely different level. The company has been working towards this goal, and I personally have been immersed in it with goals and plans going beyond my tenure.
I'd like to ask you to pay greater attention to the [ diachrony ] of the facts that are underway with the broader and longer perspective. Thank you.
Hello, my name is Sang-Won Kim from Wemade Strategic Communications division. I'd like to briefly discuss our Q3 2023 business highlights and our Q4 status and plans.
In Q3, as a result of our continuous copyright protection efforts for our Mir IP, on August 9, we signed a new license agreement in China with ActozSoft, who was our counterpart in the copyright dispute. For the Legend of Mir 2, 3 IP, we agreed to KRW 100 billion annually with a contract period of 5 years. The contracted amount for year 1, KRW 100 billion, was reflected in the license revenue in Q3, and we expect this agreement to be a new opportunity for continued growth of the Mir IP, the #1 IP in the Chinese game market.
Next, I'd like to talk about our plans to enter the Chinese market and our plans to launch new titles in 2024. First, we have been laying the groundwork in terms of preparation for quite some time now, and many of our shareholders and investors have a lot of interest in the selection of local publishers for the launch of Mir 4 and Mir M in the Chinese market. We expect to successfully finalize this by Q4 of this year.
With plans to enter the Chinese market expected to materialize with the signing of local publishing deals, the upcoming year of 2024 is expected to be the year of big Wemade titles with the highest number of big titles being released in the domestic and global market every quarter throughout the year. First, in Q1, the blockchain game, Night Crows' global will be released globally, followed by sports baseball, Fantastic4 Baseball in the Korean market.
In Q4, Mir 4, which made a historic breakthrough in the global game market in 2021 is scheduled to be released in China, which is the largest market for the Mir IP. In Q3, Legend of Ymir and an epic MMORPG based on the northern European mythology will be released in Korea, carrying on the successful track record of Wemade MMORPGs. And in Q4, Mir M will also be released in the Chinese market, finalizing the lineup for the year of epic title releases for Wemade.
With a series of big releases scheduled for Korea and abroad, all of our employees are working hard to ensure that 2024 will be the beginning year of another year of level up for Wemade. In addition, Legend of Ymir and Fantastic4 Baseball will be publicly showcased for a demo for the first time next week on November 16 at G-STAR, the largest game show in Korea, which -- where we are participating as a main sponsor. Along with such major releases, our consolidated subsidiaries are also preparing to launch games in various genres, including MMORPG, Legend of Mir 2 [indiscernible]; collectible RPG, Lost Sword with the subculture concept; idle healing game Abyssrium Origin and puzzle game Abyssrium Match.
Along with preparation for the release of new games, we are also continuing our efforts to expand our global blockchain business based on WEMIX mainnet. In order to improve user convenience so that users can use blockchain services regardless of the type of chain they use, the WEMIX Foundation founded the omni-chain Unagi initiative. In order to build the Unagi ecosystem, we entered into a strategic partnership with Chainlink Labs, a Web3 Oracle platform and Chainalysis, a blockchain data analysis company.
In addition, on September 18, we entered into a strategic alliance with SK Planet in the form of an equity exchange to expand our blockchain platform ecosystem. SK Planet has a powerful large-scale marketing platform such as OK Cashbag that can create great synergies through partnership with the WEMIX platform.
Global companies continue to join 40 WONDERS, the WEMIX 3.0 node council partners. The examples include HashQuark, a Web3 infrastructure service company founded by a global crypto operator, HashKey Group; and CertiK, a global blockchain security company and Hwik, an urban mobility and logistics innovation platform.
In order to offer greater access for global users, we continue to expand the number of exchanges where WEMIX coin is listed. In Q3, we listed on CoinDCX, a major Indian cryptocurrency exchange and Tapbit, a U.S. exchange. Going forward, we will continue to increase the number of exchanges where WEMIX can be traded.
The number of games onboarded on our global blockchain game platform, WEMIX PLAY, consistently increased. Since the end of the previous quarter, 11 new games have been onboarded, including Taming Master, Soul Seeker Knights and Icarus M, bringing the total to 42 games since the platform launched.
Next, I'd like to provide a brief overview of Wemade's preliminary consolidated results for Q3 2023. Q3 revenues stood at KRW 235.5 billion, thanks to the new Chinese license agreement for Mir IP, setting a new record for the quarterly revenue in the company's history. Operating expenses were KRW 190.2 billion, down Q-o-Q due to lower advertising and marketing expenses and depreciation. As a result, Q3 operating profit turned positive Q-o-Q, posting an operating profit of KRW 45.4 billion. The company swung back to the black with net profit of KRW 37.9 billion, reflecting a gain on foreign currency translation due to dollar appreciation. For more details on our performance, including sales breakdown by businesses and regions, please refer to the materials uploaded on our website.
This concludes the review of Wemade results, and I will now move on to Q3 preliminary results of Wemade Max. Wemade Max's consolidated revenue for the third quarter increased 18% Q-o-Q to KRW 18.4 billion, driven by higher royalty revenues from our web games, Flyff Universe and Silkroad Online. Operating expenses rose 17% Q-o-Q to KRW 17.2 billion due to an increase in revenue linked to commission fees with the newly launched games. Operating income stood at KRW 1.2 billion, up 33% Q-o-Q. Net income was KRW 1.4 billion, posting a 71% increase from the previous quarter.
This concludes the presentation of preliminary results of Q3 2023 of Wemade and Wemade Max. Now we'll take your questions.
We will now proceed with the Q&A session. [Operator Instructions] The first question will be from [ Ye-ji Yoon ] from Hi Investment & Securities.
Hello. I am [ Ye-ji Yoon ]. I have 2 questions. Mir 4 and Mir M, you mentioned that the local publisher selection will be completed by Q4. And Mir 4 will be released in Q4 and Mir M in Q2 and Q4, respectively. So I understand that currently, the copyrights and the details have not been sorted out. Can you actually keep to the schedule? And next year for hiring, will you continue to expand?
Thank you for the question. As we explained before, in terms of the publishing contracts, we are currently in the final stages. We have exchanged the initial drafts of the contracts and finalizing the details.
In terms of the version numbers, that's actually something that the Chinese authorities will assign. It's difficult for us to comment on that at the moment. I hope you understand, however, but regarding the version numbers, we've been making a lot of preparations until now. So the schedule for next year to be released Mir 4 in Q2 and Mir M in Q4. We think that there will be no issues in attaining the version numbers by this time.
In terms of our hiring, so we're currently still hiring. But as you can see, we don't really have a big number of net growth. There are employees that are leaving. And also, we do have performance reviews of our projects. Depending on the outcome, we also strengthened the organizations that we see have strong performance. So it's difficult for me to comment on the net growth projections. But this year, we expect it to be within 200. So this year, we've been very active in terms of recruiting. So next year, we expect it to be quite similar in terms of net growth of our employees. That would be my expectation.
We'll take another question. Next question will be asked by Mr. [indiscernible] of [indiscernible] Securities.
I'm [indiscernible] of [indiscernible] Securities. I have 2 questions. First, when you compare a Legend of Ymir, what is this differentiation of Legend of Ymir compared to Night Crows? The graphic quality is on par or above Night Crows? Can you share a little bit of differences when it comes to game contents. And excessive fund and key marketing activities worked for Night Crows. And do you think the same marketing approaches will be taken for Legend of Ymir?
And second question is license agreement with Mir and the sales of stake will elevate the cash flow. But -- are you -- do you have any plan to incorporate Mad Engine? Or do you have any plan to invest more in stake with the additional cash you secure?
Thank you for the questions. So Night Crows compared to Mir 4 has greater mobility and graphic quality, and we have made great strides in innovation for Night Crows, leading to greater success in Korea would include SSS fund. Likewise, the experience with Night Crows will be further worked on with innovation and enhancement, and that will lead to the success of Legend of Ymir. Next week, in G-STAR, you will be able to find out more about graphics, gameplay and in-game economic system, where details will be showcased and disclosed at G-Star next week.
Of course, I believe SS fund, which contributed a lot to the success of Night Crows, will continue to factor in for the Legend of Ymir. And in Night Crows global, SS fund will be further developed in a more optimized way so that the gamers can grow together with the economics inside the game. We'll present better tokenomics.
To answer your second question, the cash flow is increasing continuously. This is something I've said since last year. We're going to invest for growth but will not put company to a financial vulnerability. Although we are continuously investing the cash flow of the company is on the rise. And last year and this year, where the circumstances were most difficult, cash flow was still very robust, and I think this will go into the future. So we will continue to invest in the endeavors we have underway, and we're going to also invest in the initial phase of good development houses. And there are a lot of good developers in the world, so we will not be spending that much, but we will make best use of our resources.
Regarding Mad Engine, it's the first phase of investment, and I've mentioned this last time as well. So Wemade Next that developed the Mir IP. We're going to set Mad Engine on a similar course of work. And that was the arrangement from the outset with the management of Mad Engine, and we are following that course of pathway. Without drastic change, we're going to go through different business plans and strategies. So we will emulate the pathway of Wemade -- what made Mir IP.
We'll now take the next question. The next question will be from Hee-Seok Lim from Mirae Asset Securities.
Yes. This is Hee-Seok Lim from Mirae Asset Securities. The domestic performance of Night Crows and the expectations in the global market, I am curious what the company is thinking, that's my first question.
And second, I think it's been some time that you started the WEMIX platform business. In terms of the revenue and the proportion that accounts out of the total revenue, it's quite still minimal. Would it be possible to sustain a sustainable portion of revenue moving forward? I think the investors will be curious about that. So if you could share your long-term vision.
Yes, thank you for the question. I guess in terms of our expectations, of course, it could go in the way that we're thinking. But as you mentioned in the second question as well, we've been doing this business for a while. Of course, compared to the market that it's still growing, it's still in its very initial stages. So we shouldn't overexaggerate or even underestimate the current situation. But if we look at certain references that we could look at, even Mir M, which was not successful, it was much successful in the global market compared to the domestic market. And it was quite different for Mir 4 as well. So compared to that, Night Crows, we do believe that there will be much better performance compared to the domestic market in the global market.
The Mir series are based on arts and martial arts and such. So that's kind of a very special culture code in Northeast Asia, but still in the global markets, Philippines, Brazil and U.K., we have achieved great success. So Night Crows is much more western cultural style. And it's much more appealing to the public. So compared to Mir, we think that there will be much bigger multiplying effects that appeals to the public least -- multiple times, maybe up to 10x compared to the performance of the Korean market and the global market is my personal expectation.
And multi chain to be implemented and multi-coin, as well. We've scheduled and thought about releasing it this year. But with such new functions added, we pushed it to next year. So we have high expectations with such new additions, they will perform well.
And to your second question, the revenue for WEMIX platform, it was very high. And when Mir 4 was doing good. And until the very first half of this year, it was going through a lot of ups and downs. If new games were doing well, it went up and then went down again. So to predict the future, it's difficult to, I guess, estimate the future because the data is showing ups and downs. But if we move on to the second half in Q3 and Q4, in the first half of 2023, we do think that we have bottomed out. Now we want to really establish a strong foundation, not like the one-off event, and we need to grow based on such strong foundation.
In Q3, there was platform revenue, although small. In Q4, we are also seeing revenue. So it's just 2 quarters. Maybe it's difficult to just guess from that. But if we also refer to Q1 performance next year, we will be able to have a better idea on the trajectory. So then in that we will have a trend on a monthly basis, on a quarterly basis. And then if we add a time series, we will be able to think about a time where we will be able to reach [ BEP ]. That applies not only for us, but I think that should be the same approach for the investors and the market participants as well when you try to make a projection.
So I have to look at Q4 and also look at Q1 of next year to have a more accurate prediction, but I don't think it will take long because we are currently going up. And the trajectory, if it's just 10% a month, then if we can consider compound interest, then it's going to be 2x, 3x in terms of its effect. So I think with the current trend, it won't take long. I would like to ask for understanding that I can't pinpoint a specific time but thank you.
We'll take the next question -- currently, we do not have any question for the floor. [Operator Instructions] If we do not have further questions. We're going to conclude the Q&A session here. If you have any further inquiries, please contact Strategic Communication division. Now I'd like to ask our CEO, Henry Chang, to offer his concluding remarks. Please go ahead.
Yes. Up until now, we have made a lot of preparations and we have built up a lot for the future. The preparation for development for the inroads into the Chinese market, we've stayed busy. And for the coming year, including next year and the following years, we will be able to realize the benefits of those efforts that we have built up. We will do our utmost to bring greater results. And even during this current quarter, we have about 3 months remains. If there is a good news, we will communicate this to the market in an appropriate manner. Please stay interested and pay attention to us. Thank you.
And with this, we would like to conclude the earnings call of Wemade and Wemade Max with -- third quarter of 2023.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]