Good afternoon, this is Sophie Lee from KRAFTON's Investor Relations team. Thank you to all our investors and analysts at home and abroad for joining KRAFTON's 2025 full year and fourth quarter earnings call.

Joining us today are Mr. Changhan Kim, CEO of KRAFTON, and Dongkeun Bae, our CFO.

For the convenience of our domestic and global participants, the CEO message and the financial results presentation will be simultaneously interpreted, while the Q&A session will be interpreted consecutively. Please note that today's earnings results are based on preliminary consolidated figures prepared in accordance with the K-IFRS and may be subject to change during the external auditor's review.

Now, I'd like to invite Mr. Changhan Kim, CEO of KRAFTON, to deliver his remarks on the essence of games, the expansion of values.

Good afternoon. Thank you to all our domestic and international investors and analysts for joining KRAFTON's 2025 full year earnings call.

I am Changhan Kim, CEO of KRAFTON. First, I'd like to extend my sincere gratitude to our shareholders and investors for your continued interest and support over the past year.

In 2025, we declared securing franchise IPs as our core strategic priority, and for the first time presented a five-year mid to long-term growth roadmap. This roadmap is built on our fundamental belief: games at the core, and value expansion driven by a virtuous cycle of fandom and content.

In 2025, we further strengthened the long-term growth foundation of PUBG, while at the same time confirming early indicators of new IP potentials. We also recruited new production leadership, and on that basis expanded both the breadth and the depth of our lineup, laying a solid execution foundation for our strategic goals.

Building on this momentum, over the mid to long term, we aim to secure a select number of big franchise IPs and drive a structural expansion of corporate value. Looking ahead in 2026, we plan to take the next step, further refining our game-centric strategy, while expanding the AI capabilities we have accumulated through game development and live operations into new business opportunities.

The first part of my presentation will focus on our franchise IP strategy and execution within the gaming domain. I will cover how we are evolving PUBG into an IP with a long-term product lifecycle, namely the PLC, while at the same time preparing for the next growth pillar through new IPs.

I'll walk you through this sequence, starting with enhancements to our core services, new titles, and production and development framework. In 2025, we moved into full-scale execution of our PUBG IP franchise strategy, with a strong focus on expanding the user base of our core services.

At the same time, our new IPs delivered meaningful results at the early access stage, allowing us to begin validating the potential of new titles through key metrics. In summary, 2025 was a year in which we advanced both dimensions in parallel: the resilience of our existing franchise and the initial validation of new growth engines.

Looking ahead to 2026, we plan to take these two new pillars into the next phase, one of expansion and acceleration. 2026 will mark a period of full-scale platform transformation for PUBG, as we evolve it into a gameplay platform.

Under this direction, we will initiate large-scale collaboration for the expansion of new content categories and broadening experiences offered by PUBG, expanding them beyond games into culture experiences, and strengthen PC-mobile connectivity, enhance synergies within the franchise across updates and content, and also through UGC modes co-developed by external developers, we will accelerate both the speed and scalability for content production, reinforcing a virtuous cycle in live services. Based on this direction, we expect the PUBG IP franchise will continue posting double-digit growth in 2026.

Building on PUBG's universe and core gunplay, we are pursuing new title initiatives aimed at expanding the potential fanbase of the franchise. Projects such as Black Budget, Blindspot, and Valor are designed to diversify genres and platforms, and to validate the scalability of the PUBG IP.

What's important here that we're not simply expanding our lineup for its own sake. Rather, we're advancing these projects through a disciplined, test-driven approach, validating the core gameplay loop.

Through this, we aim to enable the PUBG IP to expand across genres, regions, and age groups, and grow into a franchise with a larger and long-term PLC. To secure big franchise IPs, we've also redefined our principles for M&A and strategic equity investments.

Large-scale M&A will be pursued with the objective of securing a mega IP on the scale of another PUBG. Small to mid-sized M&A will focus on scaling up IPs that already possess an established fanbase.

Strategic minority investments and second-party publishing will be centered on projects with clear launch visibility and proven team capabilities. In parallel, we will ensure that we have a well-defined execution path through which KRAFTON can actively add value.

On the in-house development front, we have strengthened our production system by securing top-tier production leadership, enabling multiple small, fast-paced initiatives to run in parallel. In 2025, they expanded the number of 1PP development pipelines, launching multiple new projects, and in 2026, we plan to raise the bar farther and increase the number of active pipelines.

However, as changes in the development landscape have enabled leaner and more efficient experimentation, we'll manage development headcount and investment in new titles with discipline. As we identify products with clear scale-up potential, we will concentrate resources and expand capabilities accordingly.

To secure new franchise IPs, we are preparing a diverse lineup of new titles. Projects such as Subnautica 2, Palworld Mobile, No Law, and Dinkum Together formulate a portfolio designed to diversify genres and platforms, and to expand our long-term growth opportunities.

Subnautica 2 is being developed with a strong foundation aimed at expanding beyond its existing fanbase to reach and appeal new generations in new regions. Palworld Mobile is progressing toward delivering the core fun of the original title while being fully optimized for the mobile environment.

We confirmed its potential through G-STAR and alpha tests in Korea and Japan, and are now enhancing content and game readiness. Through this lineup, we aim to ensure that KRAFTON's growth is not confined to a single genre or platform.

Instead, we are building a structurally resilient portfolio that enables continuous, diversified growth momentum. For IPs acquired last year, as well as the IP titles that displayed early traction, we're reinforcing our scale-up strategy to grow them into a long-term PLCs.

inZOI will continue to improve its overall readiness for full launch, based on content circulation driven by UGC and multiplayer-based experiences. For Last Epoch, we will accelerate seasonal operations and the pace of updates, further enhancing the stability and growth potential of live servicing.

Mimesis will focus on AI-driven core mechanics and expanding connected content to increase replayability and have it grow into the major title within the genre. The second part relates to our strategy to expand into adjacent areas by leveraging our game core capabilities.

While keeping games at the center, KRAFTON is exploring new revenue models and growth opportunities built on our strength in IP, data, and live ops. In particular, we view AI as a key enabler in this journey, as it contributes to internal efficiency and quality enhancement in the short term, and also it creates new business opportunities that are deeply connected to the games in mid to long term.

With clear synergy to our games as a prerequisite, we are pursuing disciplined M&A to expand into adjacent businesses. ADK is strengthening our transmedia strategy, enhancing ability to execute IP expansion across formats.

Meanwhile, Neptune is focused on traffic-driven advertising monetization and the expansion of regional value chains. The key point here is our objective is not to pursue non-gaming businesses for their own sake; rather, we're committed to generating tangible results.

AI is a key driver of KRAFTON's future innovation and value expansion. Today, from the perspective of AI for Games, we have leveraged AI to enhance development and live service efficiency and strength and quality, including in-game AI, production optimization, QA automation, and anti-cheat systems.

At the same time, building on the AI capabilities accumulated through this, for mid to long-term opportunities. At the core of our Game for AI approach is building foundation that allows us to expand capabilities developed in games into the real world.

The interaction data generated within games can serve as high-quality training data, while our experience operating physics-based virtual worlds provides a strong advantage in building learning environments and data-generating infrastructure. Drawing on our global research capabilities, we'll quickly integrate the latest algorithms to add our edge.

In terms of execution, we will pursue a phased approach, validating internally in the short term, and expanding externally over the mid to long term. In the physical AI domain, we'll focus on building a strong AI software core through partnerships with leading global hardware company to maximize synergies.

Areas such as humanoid robotics represent a long-term challenge; however, they also offer substantial potential by transferring AI capabilities validated in games into the real world and by differentiating through human-interaction-focused intelligence. We'll continue to advance our core game capabilities by progressively expanding into new business domains with clear and realizable synergies.

To conclude, 2025 was a year in which we confirmed both the solid growth of the PUBG franchise and the initial traction of new IPs. As we look ahead into 2026 and beyond, we will accelerate PUBG's platform transformation and content expansion, while continuing to strengthen our development, publishing, and investment strategies to secure a select number of big franchise IPs.

Also, at the same time, we aim to enhance game edge through AI, evolving into a global pioneer that links games to mid to long-term new business opportunities beyond gaming. With that, I'll now hand over to our CFO to walk you through how these executions reflected into our financial performance.

Thank you.

Next, Mr. Dongkeun Bae, the CFO of KRAFTON, will walk you through KRAFTON's full year and fourth quarter 2025 financial results.

Good afternoon, this is Dongkeun Bae, the CFO. In 2025, KRAFTON achieved the highest annual revenue in its history, driven by continued growth of the PUBG IP and the performance of the new IPs.

Within the global gaming industry, the shooter genre has continued to expand in both scale and user base with the release of multiple new titles, and amid this environment, the PUBG IP franchise continued to grow in both traffic and revenue, further demonstrating its competitiveness as a global franchise IP. In 2025, the PUBG IP expanded cultural elements and user experiences through collaborations and diverse game modes, while continuing efforts to create synergies across products within the franchise.

As a result, average monthly users for PUBG PC increased by 11% year-over-year, while the PUBG MOBILE and BGMI saw growth in total paying users of 5% and 27% respectively, further strengthening the core fanbase. From a revenue perspective, PUBG PC revenue grew 16% year-over-year, and mobile product recorded 11% year-over-year growth, excluding PUBG IP-related incentive payments recognized from partners in 2024.

Consequently, total PUBG IP franchise revenue increased 13% YoY. In line with our five-year mid to long-term strategy announced in February, KRAFTON also placed a strong focus on securing new franchise IPs in 2025.

We added two million-seller titles to our IP lineup: inZOI launched in March, and Mimesis launched in October. Through continuous content expansion, we plan to grow these titles into IPs with long-term PLC, the product lifecycles.

In addition, throughout 2025, we initiated 15 new projects, and as of February 2026, we are operating a total of 26 game development pipelines. Meanwhile, due to the expansion of development headcount, increased investment related to PUBG 2.0, and the impact of one-off costs, operating profit declined YoY to 1.0544 trillion.

Next, I will walk you through KRAFTON's full year and Q4 2025 revenue performance. For full year 2025, KRAFTON recorded revenue of 3.3266 trillion, representing a 23% increase YoY.

In the fourth quarter, revenue reached 919.7 billion, up 49% YoY. Starting with the PC platform, full year PC revenue totaled 1.1846 trillion, up 26% year-over-year, with double-digit year-over-year growth recorded in every quarter of 2025.

In 2025, PUBG PC and console delivered high-density content updates integrating diverse cultural elements into the gameplay, and for the first time since launch, we achieved annual revenue exceeding 1 trillion won. Fourth quarter PC revenue was driven by the continued growth of PUBG PC; in particular, the Porsche collaboration in November delivered the strongest performance among all supercar collaborations to date, making a meaningful contribution to revenue growth.

In addition, sales from Mimesis, which surpassed a million units sold globally within 50 days following its early access launch, were reflected in the quarter. As a result, Q4 PC revenue reached 287.4 billion, up 24% YoY.

Looking ahead to 2026, we plan to further strengthen the long-term growth foundation of PUBG PC and console through a multi-pronged strategy. We'll continue to enhance monetization efficiency of proven premium content, including collaborations, and at the same time, the contender system first introduced last year will be continuously refined to ensure a stable soft landing as a new content category.

The New Year's rerun event held this January met strong user expectations and recorded the highest revenue ever among New Year rerun events. From a traffic standpoint, we will accelerate PUBG PC's evolution into a game platform by offering diverse gameplay experiences beyond battle royale through the launch of new well-made modes and continued UGC mode updates.

Now, moving on to the mobile platform, the full year mobile revenue totaled 1.7407 trillion, representing a 3% YoY increase; excluding PUBG IP-related incentive payments received from partners in 2024, PUBG IP mobile products on a combined basis continued to deliver double-digit growth. In 2025, PUBG MOBILE strengthened its existing fanbase through new theme modes and World of Wonder UGC updates, while building a virtuous cycle that reinforced the overall power of the PUBG IP franchise through joint collaborations with PUBG PC and console.

BGMI further solidified its position as a national game in India through localized in-game content, such as local skin launches and strategic collaborations with local brands. As a result, BGMI maintained solid annual revenue growth in India's rapidly growing gaming market.

Fourth quarter mobile revenue reached 292.2 billion, down 19% YoY, reflecting seasonal off-peak effects and traffic-driven content updates. Looking ahead to 2026, we plan to drive revenue through the launch of high-efficiency business models, while simultaneously expanding both traffic and monetization by enhancing the UGC mode creator ecosystem and delivering regular new mode updates.

In the first quarter, aligned with the annual peak season and the eighth anniversary event, we will introduce a broader range of content compared to the previous year, aiming to sustain growth in both revenue and traffic. In particular, the technology service fees received from partners, which declined in the fourth quarter due to traffic-oriented operations, have already shown solid recovery in January following multiple monetization-driven content updates.

Turning to console, the full year console revenue amounted to 42.8 billion, down 3% YoY, while the fourth quarter revenue totaled 9.7 billion, a 21% decrease YoY. Finally, other revenue reached 330.4 billion, an increase of 319.9 billion YoY, primarily reflecting the consolidation of ADK in the fourth quarter, which contributed 313.8 billion in revenue.

As a result of ADK's consolidation, the full year 2025 other revenue totaled 358.5 billion, representing a 963% increase year-over-year. Next, I will walk you through the key operating expense items for the full year and the fourth quarter.

During the quarter, consolidated operating expenses increased mainly due to the consolidation of ADK and the recognition of one-off costs. In the fourth quarter, ADK's operating expenses amounted to 292.2 billion post-reconciliation, with the majority attributable to personnel expenses and commission expenses.

One-off expenses recognized in the fourth quarter totaled 106.9 billion, mainly comprising personnel-related costs and litigation expenses. Excluding ADK-related costs and one-off expenses, full year operating expenses totaled 1.8605 trillion, representing a 22% YoY increase, and the fourth quarter operating expenses came in at 518.2 billion, up 2% QoQ and 29% YoY.

Moving on to the breakdown of major operating expense items, the personnel expenses amounted to 734.7 billion for the full year and 284 billion for the fourth quarter. Excluding the impact of ADK consolidation and the one-off contribution to the employee welfare fund, personnel expenses increased 14% year-over-year to 591.5 billion, reflecting an increase in the total headcount across the company.

On a quarter-over-quarter basis, personnel expenses declined 9% to 140.8 billion as we maintain a conservative hiring stance. The contribution to the employee welfare fund was introduced to support the stable settlement of employees and peers following KRAFTON's relocation to its new Seongsu headquarters.

This contribution reflects a lump-sum recognition of resources expected over the next four years, and we do not expect similar expenses to recur. App fees and cost of sales amounted to 421.3 billion for the year, reflecting higher revenue from directly served PUBG PC and console and BGMI, as well as sales of the new IP titles inZOI and Mimesis.

In Q4, this expense decreased QoQ to 103.7 billion, mainly due to seasonal revenue softness. Commission expenses totaled 712.3 billion for the full year and 390.3 billion for Q4.

Excluding the impact of ADK consolidation and one-off items such as litigation costs, commission expenses increased to 490.4 billion, up 55% year-over-year, and 168.4 billion, up 31% QoQ. Marketing expenses totaled 144.1 billion for the full year and 51.8 billion for the quarter.

Excluding the impact of ADK's consolidation, marketing expenses amounted to 144 billion for the full year, up 42% year-over-year, and 51.8 billion for the quarter, up 20% QoQ, driven by the consolidation impact of Neptune in the prior quarter and expanded marketing for live service titles. For stock-based compensation expenses, which declined year-over-year to 49.6 billion, reflecting the changes in the expense recognition method for cash-settled stock options and the declining share price during the second half of the year.

In the fourth quarter, stock-based compensation increased QoQ to 6.4 billion. Moving on to operating profit, despite recording full year revenue growth for the second consecutive year, operating profit declined 11% YoY to 1.0544 trillion, due to increased investments in development headcount, the PUBG 2.0 transition, and the impact of one-off expenses.

In terms of non-operating profit and loss, for FY 2025, FX gains decreased by 559 billion due to smaller increase in the FX rate. In addition, impairment assessments were conducted on existing investment assets, resulting in non-operating losses of 95.4 billion, a 635.6 billion decline YoY.

In Q4, while the FX rate rose QoQ, impairment assessments on existing investment assets led to non-operating losses of 52.9 billion. As a result, we recorded a net loss of 22.7 billion in Q4, while FY 2025 net income totaled 733.7 billion.

Now, this concludes my overview of our financial performance. I will now move on to KRAFTON's new shareholder return policy.

KRAFTON established and consistently executed a three-year shareholder return policy covering 2023 through 2025. Through annual share buybacks and cancellations, we returned a total of 693 billion to shareholders over the past three years.

In particular, in the first year, 2023, we canceled 100% of the treasury shares acquired, and in the subsequent years, we continued to cancel 60% of the acquired shares, maintaining a strong focus on enhancing shareholder value. Based on this track record, as well as feedback from our shareholders and investors, we have established a new shareholder return policy applicable from 2026 to 2028.

Under the new policy, we aim to return more than 1 trillion to shareholders over the next three years, representing an increase of more than 44% compared to the 693 billion returned under the previous three-year policy. As for the key execution measures, for the first time since listing, KRAFTON plans to initiate dividends, providing shareholders with certain and predictable cash returns, and we plan to conduct annual capital reduction dividends of approximately 100 billion per year, funded by the transfer of capital reserves to retained earnings.

The remaining funds, over 700 billion excluding dividends, will be allocated to share buybacks. The timing and amount of the buybacks will be managed flexibly, considering market conditions, and 100% of the acquired shares will be canceled.

At today's board of directors meeting, we approved an initial share buyback of approximately 200 billion, with purchases scheduled to commence on February 10th, which is tomorrow. Depending on market conditions and the company's financial position, the total amount allocated to share buybacks may be further increased over time.

Regarding treasury shares currently held, we plan to proceed in accordance with the procedures prescribed by law, subject to the passage of legislation that would mandate the cancellation of the treasury shares. This concludes my presentation.

Thank you very much.

Thank you for taking my question. I have two questions.

First is regards to the softened bottom line last quarter. Despite the acquisition of ADK and also the one-off costs that you have explained during the remarks, we have concerns that this may be because of the high dependency on particular products, such as Peacekeeper Elite, and also highly influenced by the sales drop from Peacekeeper Elite.

I'd like to understand exactly when the results of the investments might actually lead to a strengthened bottom line. I ask this question because, despite the expanded lineup, it seems like the new titles are being launched not as quickly as the market expects.

Next is my second question. I see difficulty in what kind of synergies can be created between ADK and KRAFTON.

Would much appreciate if you can explain some strategies and plans that might show coming starting from 2026 in terms of the synergy effect.

This is the CEO, and I will answer your question. We are well aware of the mobile-related concerns the market has coming from the fourth quarter.

During the shared remarks, we had stated that the content around that time was focused on expanding, enhancing user volume, and I believe that the concern has led to worries about the fundamentals of the company. I would like to address that that is not the case, because the fourth quarter is affected by seasonality, and also the operations were focused around expanding volume at the time.

If you look at the data currently coming in for January, you'll be able to see that there has been a rebound when it comes to those figures. Right now, although we have expanded our lineup, that is true, that does not mean that all the projects in the lineup will be launched.

That is not an efficient way in terms of operating the process, we believe. Instead, we have gateways to make sure that the right projects are funded, and additional funding and investments are made only to projects that are able to go over these gateways and make it through the process.

It is understandable that it is seen that the number of titles that are being launched are much lower compared to the lineup that we have built. Another thing that we need to consider is that investments made into first-party titles began in earnest only early last year, and that's why the number of titles that are launched into the market might seem a bit low.

However, it will continue to expand as we move on to next year and the year beyond that. ADK has been operating within the Japanese market as an integrated ad agency as well as a content creator.

When it comes to the integrated ad business, ADK has a very sturdy network within the market, and we expect a continued stable operation going forward. When it comes to content, we're trying to discover a synergy effect between KRAFTON and ADK, namely to discover animation IPs that we can create into games, and also vice versa, games that can be created into animated series.

However, at this point in time, we have just begun the PMI process, and our current priority is to continue to discover animations that can become games and also to bring that to a global market leveraging KRAFTON's capabilities as a game maker.

We will receive the next question. We currently do not see any raised hands, if you have any question, please click the raise hand button at the bottom of your screen.

The next question will be from Eric Cha of Goldman Sachs. Please go ahead.

Thank you for taking my question. I actually have multiple questions, a total of three.

First is more of a higher-level question. After Genie 3 came out by DeepMind, the stock prices of game development companies and platforms have been impacted, and that is because existing gaming companies will largely be impacted by the advancement of AI technology.

I think this really reflects the concern coming from the market, and I'm very curious how KRAFTON sees this trend, and if KRAFTON has any counterarguments in regards to these concerns. The second question was touched upon in the previous earnings call, I believe, and may have been a situation that was addressed as a focal point at the time.

It was around intensifying competition when it comes to the shooting genre. There were more concerns about rival games entering the market, and since then, three months has passed, and looking at trends thus far, I would like to inquire on your thoughts about user behavior and the overall situation.

Do you think that everyone can coexist in the market? Do you think KRAFTON has a competitive advantage?

I would like to gain some thoughts on this from you. My third and final question is about the results of 2025.

When it comes to the revenue and the growth achieved by PUBG IP, this largely meets the expectations that the market has, but I think there was a lot of difference when it comes to the expense. There was a lot of difference between what the market expected, that is.

Can you provide some guidance when it comes to expenses, in particular when it comes to 2026?

This is the CEO, and I'd like to answer the question regarding Genie 3. First, it is true that AI technology is developing at a rapid pace, and it is very disruptive, both to our everyday work as well as businesses.

Looking at Genie 3 in particular, it still requires a large capacity of GPU, and also the persistency time is quite short, we do not think that this particular piece of tech will be replacing traditional game development methods anytime soon. That said, the technology that is arising is very disruptive indeed, and we are trying to find ways to protect our core business, and also expand our core business, using AI as a key driver, and also at the same time, seek out opportunities of new businesses.

Moving on to your second question regarding the competitor shooting game genre and also the situation around rival titles, if you look at the characteristic of which you explained, it is limited to China, and I believe that this concern is arising because of our performance in the fourth quarter seen in China. If you look at game Peacekeeper Elite, the average DAU had posted a double-digit growth going into 2025.

The growth of the revenue has softened; however, the user base has expanded, we do believe that coexistence is indeed possible, and this is due to the characteristics of the genre itself. We will continue to seek content cooperation between PC and mobile to find ways to continue growth the way that KRAFTON can discover.

This is the CFO, and I will answer your third question regarding expense guidance in 2026. Please note that because of disclosure-related regulations applied in Korea, we will not be able to provide too much details in terms of the expense guidance.

That said, the labor cost incurred last quarter was largely due to the voluntary resignation program that was implemented, and the departure has been concluded as of January 31st, and related cost, which is roughly around 40 billion Korean Won, will be reflected in Q1. For the marketing expenses in 2026, and I was briefly touched upon in relation to the pipeline explained in the prepared remarks, we have some new titles coming to the market, more titles coming to the market, that is, compared to 2025.

We have the launch of Subnautica 2, and also the ongoing live service of the PUBG IP franchise, and new titles based on the PUBG IP. Due to these new launches, the marketing expenses are expected to increase in 2026.

As you are well aware, the portion that the marketing costs will take against the revenue is not going to be too significant compared to any other year or quarter. We expect this to land somewhere within the mid single-digit range.

Paid commissions account for a large share within the expenses, and you asked the question, when will we be able to see the results of these new title lineups and when will the dependency on PUBG be reduced? We are a game maker, our first and foremost priority is to make sure that we make competitive and good games, and going into 2026, because of that reason, there can be an increase in paid commissions, largely due to outsourcing fees for game development, and also the development of new titles and other activities to strengthen the PUBG IP.

The next question will be from Kim Jin-woo of CIMB. Please go ahead.

Thank you for taking my question. My question relates to the engine updates that is scheduled for 2027.

First off, we believe that the update is scheduled for Q1 of next year. Is this schedule still valid?

Also, how is the process of updating to Unreal Engine being evaluated internally? Then finally, after the update is concluded and the PUBG IP franchise is up and running on the new engine, can we expect a meaningful reduction when it comes to outsourcing development fees?

The update to Unreal Engine 5 for PUBG is something that we started last year. We have been hard at work when it comes to R&D.

We're also working with external agencies and partners to get this going. However, PUBG has nine years' worth of content that needs to be handled with and dealt with, at this point in time, it is difficult to pinpoint when this update will be carried out.

Your second question regarding the meaningful reduction of outsourcing fees once the Unreal Engine 5 update has been completed, I don't know if I understand the question correctly, but the way I heard it is that this is not referring to the engine commission fee, but rather because we have upgraded to the better engine, development costs coming from other activities would drop. This is how I understood the question.

Right now, we are already using the Unreal Engine. We have a very good relationship with the engine provider as well.

Although right now I'm unable to disclose any details of the terms that we have in place, I think we can fairly assume that the next-generation engine will be used by KRAFTON at a competitive rate. Although upgrading to the next generation of the engine does not directly lead to an increase nor a drop of outsourcing fees, that said, AI transformation is a topic that was presented in the previous quarter, and this is something that we are pursuing actively this year as well, and we are feeling that AI is indeed enabling us to do a lot more that we could not do.

For example, we'll be able to create art assets by ourselves without reaching out to art houses outside the company. Although this might not translate directly in the short term, by using AI in the longer term, we can expect these types of outsourcing fees to reduce.

Thank you for taking my question. My question relates to the decision that KRAFTON had made in relation to the shareholder return policy and also making investments into new titles and projects.

I do believe that shareholder returns are very important, but wouldn't KRAFTON also consider making bold investments and therefore pursuing growth going forward? When KRAFTON embarks on investment, and I'm not an expert in this, but feels like KRAFTON considers the gameplay of the titles that are being developed; however, it is less of a priority when it comes to the popularity or also how much performance contribution these new titles can make to KRAFTON.

KRAFTON's priority seems to be bringing IPs and then growing them, leveraging KRAFTON's capabilities. However, in that case, if securing IPs and also titles that can do that is important to KRAFTON, then shouldn't KRAFTON take bold steps when it comes to investments, even though the valuation or the price of the IP is pretty significant?

I would like to inquire about the investment strategy of KRAFTON.

Thank you for asking this question, and I actually am in complete agreement with what you are saying. It is a high priority for KRAFTON to acquire large-scale IPs through M&A activities.

However, it is very rare to encounter such a large-scale M&A opportunities, even though we would like to pursue these types of chances. When it comes to the acquisition costs, we would like to acquire IPs with a reasonable amount of premium as the price, and then continue to grow that leveraging our capabilities.

We are geared up and we are ready to make these actions and activities to carry out these activities. However, we can't really pinpoint when this is going to happen, whether it's going to be this year or next year, but we are prepared for when the opportunity arises.