SOURCE: Gmarket

February 27, 2008 16:00 ET

Gmarket Reports Fourth Quarter and Full Year 2007 Financial Results

SEOUL, SOUTH KOREA--(Marketwire - February 27, 2008) - Gmarket Inc. (NASDAQ: GMKT) ("Gmarket") announced today its financial and operating results for the fourth quarter and full year ended December 31, 2007.

Gmarket reported total revenues of Won 67.2 billion ($71.8 million) for the fourth quarter of 2007, representing a 41% increase from total revenues of Won 47.7 billion for the fourth quarter of 2006.

The Company's gross merchandise value ("GMV"), which represents the total value of all items sold on Gmarket's website, increased by 42% to Won 970.0 billion ($1,036.6 million) for the fourth quarter of 2007 compared to Won 682.4 billion for the same period in 2006. Transaction fee revenues for the fourth quarter of 2007 were Won 37.7 billion ($40.3 million), representing a 29% increase from Won 29.1 billion for the fourth quarter in 2006. Advertising and other non-transaction revenues for the fourth quarter of 2007 were Won 29.5 billion ($31.5 million), representing a 59% increase from Won 18.6 billion for the same period in 2006.

Operating income for the fourth quarter of 2007 was Won 9.2 billion ($9.8 million), representing a 50% increase from Won 6.1 billion for the same period in 2006.

Net income for the fourth quarter of 2007 was Won 12.4 billion ($13.3 million), representing a 98% increase from Won 6.3 billion for the same period in 2006. Earnings per diluted share for the fourth quarter of 2007 increased to Won 245 or $0.26, up from Won 124 for the same period in 2006.

For the year ended December 31, 2007, Gmarket's GMV increased by 43% to Won 3,248.6 billion ($3,471.5 million), compared to total GMV of Won 2,268.2 billion in 2006. The Company reported total revenues of Won 222.9 billion ($238.2 million), representing a 45% increase from total revenues of Won 154.1 billion in 2006. Operating income was Won 26.5 billion ($28.3 million), representing an 87% increase from Won 14.2 billion in 2006. Net income was Won 33.3 billion ($35.6 million) or $0.70 diluted earnings per share, representing a 105% increase from Won 16.3 billion.

"Our fourth quarter performance was strong, with record figures in all of our key operating metrics and financial results," said Young Bae Ku, Chief Executive Officer of Gmarket. "In 2007, we focused on expanding our market leadership by growing some of our smaller categories, creating new markets and diversifying our revenue sources. By achieving solid growth across all product categories and in our non-transaction revenue, we were able to increase our market share and improve profitability."

During the fourth quarter of 2007, the Company's registered user base grew to approximately 13.7 million from 13.0 million registered users at the end of the third quarter of 2007. In addition, the Company averaged 18.7 million monthly unique visitors in the fourth quarter of 2007, compared to 17.1 million unique visitors during the fourth quarter of 2006.

Investor Conference Call / Webcast Details

The Company's management will review detailed fourth quarter 2007 results on Wednesday, February 27, 2008 at 6:00 p.m. U.S. Eastern Time (8:00 a.m., February 28, 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: +1.800.706.7748 or +1.617.614.3473
        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 27 at 8:00 p.m. U.S. Eastern Time (10:00 a.m., February 28, 2008 in Seoul) at www.gmarket.co.kr/IR/ and by telephone at +1-888-286-8010 or +1-617-801-6888 with passcode 37141938 (telephone replay available through 9:59 a.m. on March 6, 2008 U.S. Eastern Time (11:59 p.m., March 6, 2008 in Seoul)).

Notes: (1) The Dollar amounts provided in this release are based on an exchange rate of Won 935.80 to US$1.00, which is the noon buying rate in effect on December 31, 2007 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, December 31, December 31,
                                         2006         2007         2007
                                     ============ ============ ============
Assets
Current assets:
  Cash and cash equivalents               W34,930      W48,367 $     51,685
  Cash on deposit                         134,398      190,000      203,035
  Restricted cash                           6,400        8,110        8,666
  Accounts receivable, net                 33,827       52,565       56,171
  Current held-to-maturity
   securities                               4,000            -            -
  Other current assets                      5,119        8,120        8,678
                                     ============ ============ ============
      Total current assets                218,674      307,162      328,235
Long-term financial instruments             5,000            -            -
Property and equipment, net                19,582       23,577       25,194
Other assets                                4,846        6,305        6,738
                                     ============ ============ ============
Total assets                             W248,102     W337,044 $    360,167
                                     ============ ============ ============

Liabilities and Shareholders' Equity
Current liabilities:
  Amounts payable to sellers             W103,599     W147,300 $    157,405
  Accounts payable                         19,242       22,727       24,286
  Deferred revenue and advances             3,532        5,196        5,553
  Loyalty program reserves                  6,608        8,619        9,210
  Other current liabilities                 6,854        8,336        8,908
                                     ============ ============ ============
      Total current liabilities           139,835      192,178      205,362
Other liabilities                           1,397        3,268        3,493
                                     ============ ============ ============
Total liabilities                         141,232      195,446      208,855
                                     ============ ============ ============
Shareholders' equity:
  Common shares                             4,951        4,975        5,316
  Additional paid-in capital               86,445       88,080       94,122
  Retained earnings                        15,474       48,543       51,874
                                     ============ ============ ============
     Total shareholders' equity           106,870      141,598      151,312
                                     ============ ============ ============
Total liabilities and shareholders'
 equity                                  W248,102     W337,044 $    360,167
                                     ============ ============ ============


                             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,
                          ==================================
                             2006        2007        2007
                          ==========  ==========  ==========
Revenues:
  Transaction fees           W29,130     W37,680  $   40,265
  Advertising and other       18,599      29,531      31,556
                          ==========  ==========  ==========
 Total revenues               47,729      67,211      71,821
Costs and expenses:
  Cost of revenues            25,619      35,949      38,415
  Sales and marketing         11,861      14,319      15,301
  General and
   administrative              4,123       7,738       8,269
                          ==========  ==========  ==========
     Total costs and
      expenses                41,603      58,006      61,985
                          ==========  ==========  ==========
Operating income               6,126       9,205       9,836
Other income (expense):
  Interest income              1,943       2,724       2,911
  Others, net                   (252)         73          78
                          ==========  ==========  ==========
Income before income tax
 expenses                      7,817      12,002      12,825
Income tax expenses
 (benefits)                    1,566        (403)       (431)
                          ==========  ==========  ==========
Net income                    W6,251     W12,405  $   13,256

Net income per share -
 basic                          W126        W249  $     0.27
Net income per share -
 diluted                         124         245        0.26
Weighted average number
 of shares - basic        49,506,210  49,747,035  49,747,035
Weighted average number
 of shares - diluted      50,495,363  50,619,956  50,619,956



                                Year Ended December 31,
                          ===================================
                             2006        2007        2007
                          =========== =========== ===========
Revenues:
  Transaction fees            W99,252    W130,010 $   138,929
  Advertising and other        54,881      92,875      99,246
                          =========== =========== ===========
 Total revenues               154,133     222,885     238,175
Costs and expenses:
  Cost of revenues             78,954     119,668     127,878
  Sales and marketing          46,427      52,466      56,066
  General and
   administrative              14,577      24,272      25,937
                          =========== =========== ===========
     Total costs and
      expenses                139,958     196,406     209,880
                          =========== =========== ===========
Operating income               14,175      26,479      28,294
Other income (expense):
  Interest income               5,189       9,195       9,826
  Others, net                     202          49          53
                          =========== =========== ===========
Income before income tax
 expenses                      19,566      35,723      38,173
Income tax expenses
 (benefits)                     3,289       2,420       2,585
                          =========== =========== ===========
Net income                    W16,277     W33,303 $    35,588

Net income per share -
 basic                           W371        W671 $      0.72
Net income per share -
 diluted                          345         659        0.70
Weighted average number
 of shares - basic         40,468,471  49,657,673  49,657,673
Weighted average number
 of shares - diluted       47,177,311  50,552,784  50,552,784


                               GMARKET INC.
                    UNAUDITED STATEMENTS OF CASH FLOWS



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

                       Three Months Ended
                          December 31,           Year Ended December 31,
                   ==========================  ===========================
                     2006     2007     2007      2006      2007     2007
                   =======  =======  ========  ========  =======  ========
Cash flows from
 operating
 activities:
Net income          W6,251  W12,405  $ 13,256   W16,277  W33,303  $ 35,588
Adjustments
 Depreciation and
  amortization       1,165    1,968     2,103     3,347    6,667     7,124
 Stock-based
  compensation
  expense              242      434       464       850    1,504     1,608
 Provision for bad
  debt                 220      181       193       283      386       412
 Provision for
  severance
  benefits             261      467       498     1,039    1,647     1,760
 Deferred tax
  assets              (364)    (883)     (944)     (767)  (2,306)   (2,464)
 Provision for
  loyalty program
  reserves           2,023    1,380     1,474     6,400    4,970     5,311
 Others, net           134        5         7       115      225       242
Changes in
 operating assets
 and liabilities
 Accounts
  receivable        (6,567)   9,307     9,946   (17,792) (18,884)  (20,179)
 Amounts payable
  to sellers        11,340   24,010    25,657    10,141   43,701    46,699
 Accounts payable    5,867    2,505     2,677     8,383    3,485     3,724
 Deferred revenue
  and advances         184      492       525     1,352    1,664     1,778
 Other current
  assets            (1,070)      22        24    (2,328)  (1,399)   (1,495)
 Other assets          (25)      25        26        21       33        35
 Other current
  liabilities        1,389    1,132     1,211     2,635   (1,476)   (1,579)
 Payment of
  accrued
  severance
  benefits             (22)     (51)      (55)      (71)    (262)     (280)
                   =======  =======  ========  ========  =======  ========
  Net cash
   provided by
   (used in)
   operating
   activities       21,028   53,399    57,062    29,885   73,258    78,284
                   =======  =======  ========  ========  =======  ========
Cash flows from
 investing
 activities:
(Increase) in cash
 on deposit, net   (12,527) (40,946)  (43,754)  (88,827) (50,602)  (54,073)
(Increase) in
 restricted cash,
 net                  (600)  (1,600)   (1,710)   (4,300)  (1,710)   (1,827)
Decrease
 (increase) in
 long-term
 financial
 instruments, net      (30)   4,000     4,274      (120)   4,000     4,274
Purchase of
 property and
 equipment          (9,195)  (3,730)   (3,986)  (14,749) (10,614)  (11,342)
Decrease
 (increase) in
 other current
 assets                  -   (3,990)   (4,264)       47       15        16
(Increase) in
 other assets, net  (3,190)    (312)     (334)   (3,960)  (1,064)   (1,138)
                   =======  =======  ========  ========  =======  ========
  Net cash
   provided by
   (used in)
   investing
   activities      (25,542) (46,578)  (49,774) (111,909) (59,975)  (64,090)
                   =======  =======  ========  ========  =======  ========
Cash flows from
 financing
 activities:
Issuance of common
 shares, net             -        -         -    79,668      154       165
Decrease in loan
 to employees for
 stock purchase          -        -         -       388        -         -
                   =======  =======  ========  ========  =======  ========
  Net cash
   provided by
   financing
   activities            -        -         -    80,056      154       165
                   =======  =======  ========  ========  =======  ========
  Net increase in
   cash and cash
   equivalents      (4,514)   6,821     7,288    (1,968)  13,437    14,359
                   =======  =======  ========  ========  =======  ========
Cash and cash
 equivalents
Beginning of year   39,444   41,546    44,397    36,898   34,930    37,326
                   =======  =======  ========  ========  =======  ========
End of period      W34,930  W48,367  $ 51,685   W34,930  W48,367  $ 51,685
                   =======  =======  ========  ========  =======  ========



                               GMARKET INC.
                  UNAUDITED SUPPLEMENTAL OPERATING DATA

                               2006                        2007
                    =========================== ===========================
                      1Q     2Q     3Q     4Q     1Q     2Q     3Q     4Q
                    ====== ====== ====== ====== ====== ====== ====== ======
G M V (in billions
 of Won)(1)          469.2  543.8  573.0  682.4  723.0  780.0  775.6  970.0
                    ------ ------ ------ ------ ------ ------ ------ ------
Registered Users(2)
 (000)               8,311  9,239 10,111 10,967 11,754 12,408 12,981 13,674
                    ====== ====== ====== ====== ====== ====== ====== ======
Average Monthly
 Unique Visitors(3)
 (000)              15,179 16,543 17,051 17,130 16,931 17,581 17,925 18,712
                    ------ ------ ------ ------ ------ ------ ------ ------


(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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