SOURCE: Gmarket

February 24, 2009 16:01 ET

Gmarket Reports Fourth Quarter and Full Year 2008 Financial Results

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.

Contact Information

  • Contacts

    Paul J. Lee
    Gmarket Inc.
    +82-2-3016-4372
    Email Contact

    In the U.S.

    Joseph Villalta
    The Ruth Group
    +1-646-536-7003
    Email Contact