SOURCE: Gmarket

April 29, 2008 16:00 ET

Gmarket Reports First Quarter 2008 Financial Results

Revenues Increased to Won 64.6 Billion ($65.4 Million), up 35% Year-Over-Year

Operating Income Increased to Won 10.3 Billion ($10.4 Million), up 89% Year-Over-Year

SEOUL, SOUTH KOREA--(Marketwire - April 29, 2008) - Gmarket Inc. (NASDAQ: GMKT) ("Gmarket") announced today its financial and operating results for the first quarter ended March 31, 2008.

Gmarket reported total revenues of Won 64.6 billion ($65.4 million) for the first quarter of 2008, representing a 35% increase from total revenues of Won 48.1 billion for the first 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 29% to Won 933.4 billion ($944.2 million) for the first quarter of 2008 compared to Won 723.0 billion for the same period in 2007. Transaction fee revenues for the first quarter of 2008 were Won 36.8 billion ($37.2 million), representing a 22% increase from Won 30.3 billion for the first quarter in 2007. Advertising and other non-transaction revenues for the first quarter of 2008 were Won 27.8 billion ($28.2 million), representing a 56% increase from Won 17.8 billion for the same period in 2007.

Operating income for the first quarter of 2008 was Won 10.3 billion ($10.4 million), representing an 89% increase from Won 5.5 billion for the same period in 2007.

Net income for the first quarter of 2008 was Won 10.3 billion ($10.4 million), representing a 55% increase from Won 6.7 billion for the same period in 2007. Earnings per diluted share for the first quarter of 2008 increased to Won 204 or, $0.21, up from Won 132 for the same period in 2007.

"We are off to a good start in 2008," said Young Bae Ku, Chief Executive Officer of Gmarket. "In the first quarter, we achieved record-high operating income and solid revenue growth in a typically slow period as compared to the fourth quarter. We believe that these results reflect our strong market position and have put us on track for another successful year."

During the first quarter of 2008, the Company's registered user base grew to approximately 14.3 million from 13.7 million registered users at the end of the fourth quarter of 2007. In addition, the Company averaged 18.0 million monthly unique visitors in the first quarter of 2008, compared to 16.9 million unique visitors during the first quarter of 2007.

Investor Conference Call / Webcast Details

The Company's management will review detailed first quarter 2008 results on Tuesday, April 29, 2008 at 6:00 p.m. U.S. Eastern Time (7:00 a.m., April 30, 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: +1 800 295 3991 or +1 617 614 3924
    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 April 29 at 9:00 p.m. U.S. Eastern Time (10:00 a.m., April 30, 2008 in Seoul) at www.gmarket.co.kr/IR/ and by telephone at +1 888 286 8010 or +1 617 801 6888 with passcode 46625355 (telephone replay available through 10:59 a.m. on May 7, 2008 U.S. Eastern Time (11:59 p.m., May 7, 2008 in Seoul)).

Notes: (1) The Dollar amounts provided in this release are based on an exchange rate of Won 988.60 to US$1.00, which is the noon buying rate in effect on March 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 in this filing on 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. Investors should consider the information contained in the Company's submissions and filings with the SEC, including the Company's registration statement on Form F-1, as amended, together with such other documents as the Company may submit to or file with the SEC from time to time, including on Forms 20-F and 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.


                               GMARKET INC.
                         UNAUDITED BALANCE SHEETS


(in millions of Korean Won and in thousands of US dollars)

                                        December 31, March 31,   March 31,
                                           2007        2008        2008
                                        =========== =========== ===========
Assets

Current assets:

    Cash and cash equivalents               \48,367     \57,407 $    58,069

    Cash on deposit                         190,000     201,500     203,824

    Restricted cash                           8,110      10,100      10,216

    Accounts receivable, net                 52,565      53,154      53,767

    Other current assets                      8,120       8,990       9,093
                                        =========== =========== ===========
        Total current assets                307,162     331,151     334,969

Property and equipment, net                  23,577      24,026      24,303

Other assets                                  6,305       7,058       7,140
                                        =========== =========== ===========
Total assets                               \337,044    \362,235 $   366,412
                                        =========== =========== ===========

Liabilities and Shareholders' Equity

Current liabilities:

    Amounts payable to sellers             \147,300    \159,724 $   161,566

    Accounts payable                         22,727      21,893      22,146

    Deferred revenue and advances             5,196       5,751       5,817

    Loyalty program reserves                  8,619       9,077       9,182

    Other current liabilities                 8,336       9,495       9,603
                                        =========== =========== ===========
        Total current liabilities           192,178     205,940     208,314

Other liabilities                             3,268       3,884       3,928
                                        =========== =========== ===========
Total liabilities                           195,446     209,824     212,242
                                        =========== =========== ===========
Shareholders' equity:

    Common shares                             4,975       4,978       5,036

    Additional paid-in capital               88,080      88,569      89,590

    Retained earnings                        48,543      58,864      59,544
                                        =========== =========== ===========
       Total shareholders' equity           141,598     152,411     154,170
                                        =========== =========== ===========
Total liabilities and shareholders'
 equity                                    \337,044    \362,235 $   366,412
                                        =========== =========== ===========



                               GMARKET INC.
                      UNAUDITED STATEMENTS OF INCOME

(in millions of Korean Won and in thousands of US dollars, except per share
                                  data)


                                             Three Months Ended March 31,
                                           ================================
                                             2007        2008       2008
                                           ========== ========== ==========
Revenues:

    Transaction fees                          \30,237    \36,813 $   37,237

    Advertising and other                      17,814     27,836     28,158
                                           ========== ========== ==========
    Total revenues                             48,051     64,649     65,395

Costs and expenses:

    Cost of revenues                           25,595     34,120     34,513

    Sales and marketing                        12,247     12,925     13,074

    General and administrative                  4,759      7,288      7,373
                                           ========== ========== ==========
       Total costs and expenses                42,601     54,333     54,960
                                           ========== ========== ==========
Operating income                                5,450     10,316     10,435

Other income:

    Interest income                             2,053      3,143      3,179

    Others, net                                    74        133        135
                                           ========== ========== ==========
Income before income tax expenses               7,577     13,592     13,749

Income tax expenses                               898      3,271      3,309
                                           ========== ========== ==========
Net income                                     \6,679    \10,321 $   10,440


Net income per share - basic                     \135       \207 $     0.21

Net income per share - diluted                    132        204       0.21

Weighted average number of shares - basic  49,506,210 49,752,548 49,752,548

Weighted average number of shares -
 diluted                                   50,529,648 50,613,952 50,613,952



                               GMARKET INC.
                    UNAUDITED STATEMENTS OF CASH FLOWS

(in millions of Korean Won and in thousands of US dollars)

                                              Three Months Ended March 31,
                                              ============================
                                                2007      2008      2008
                                              ========  ========  ========
Cash flows from operating activities:

Net income                                      \6,679   \10,321  $ 10,440

Adjustments

  Depreciation and amortization                  1,471     2,129     2,153

  Stock-based compensation expense                 237       470       475

  Provision for bad debt                            51       133       135

  Provision for severance benefits                 418       688       696

  Deferred tax assets                             (455)        4         4

  Provision for loyalty program reserves           844     1,383     1,399

  Others, net                                        5         5         6

Changes in operating assets and liabilities

  Accounts receivable                             (590)     (722)     (730)

  Amounts payable to sellers                     5,694    12,424    12,567

  Accounts payable                              (2,625)     (834)     (844)

  Deferred revenue and advances                    446       554       561

  Other current assets                            (735)     (933)     (944)

  Other current liabilities                      1,464       236       239

  Payment of accrued severance benefits            (26)      (79)      (80)
                                              ========  ========  ========

    Net cash provided by operating activities   12,878    25,779    26,077
                                              ========  ========  ========

Cash flows from investing activities:

(Increase) in cash on deposit, net              (7,420)  (11,500)  (11,633)

(Increase) in restricted cash, net                (110)   (1,990)   (2,013)

Purchase of property and equipment              (2,433)   (2,564)   (2,593)

Decrease (Increase) in other assets, net           109      (708)     (717)
                                              ========  ========  ========
    Net cash used in investing activities       (9,854)  (16,762)  (16,956)
                                              ========  ========  ========
Cash flows from financing activities:

Issuance of common shares, net                       -        23        23
                                              ========  ========  ========

    Net cash provided by financing activities        -        23        23
                                              ========  ========  ========

    Net increase in cash and cash equivalents    3,024     9,040     9,144
                                              ========  ========  ========
Cash and cash equivalents

Beginning of year                               34,930    48,367    48,925
                                              ========  ========  ========
End of period                                  \37,954   \57,407  $ 58,069
                                              ========  ========  ========



                               GMARKET INC.
                  UNAUDITED SUPPLEMENTAL OPERATING DATA

                                                    2007              2008
                                        ===========================  ======
                                           1Q     2Q     3Q     4Q     1Q
                                        ====== ====== ====== ======  ======
G M V (in billions of Won)(1)            723.0  780.0  775.6  970.0   933.4
                                        ------ ------ ------ ------  ------
Registered Users(2) (000)               11,754 12,408 12,981 13,674  14,260
                                        ====== ====== ====== ======  ======
Average Monthly Unique Visitors(3)(000) 16,931 17,581 17,925 18,712  18,036
                                        ------ ------ ------ ------  ------

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.

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