Gaming

Five Million Copies Sold, and Still a Net Loss

Krafton grew quarterly revenue 94.9 percent and still posted a net loss of 29.9 billion won. The company attributes it to non-operating losses from the acquisition that produced the hit. A lesson in reading a record.

GamingBy Servola Tech Desk2026-08-045 min read

AI-assisted, edited by humans. | Editor-in-Chief: Leon Soliman | Editorial standards

Five Million Copies Sold, and Still a Net Loss

Key takeaways

Krafton sold five million copies of Subnautica 2 in 22 days, grew quarterly revenue 94.9 percent to 1,290.2 billion won, and still reported a net loss of 29.9 billion won, because the cost of the acquisition that produced the game sits below the operating line.
Costs in the quarter rose 102.8 percent against revenue growth of 94.9 percent, so the record quarter converted less of each won than the one before it.
By subtraction from the company's own half-year figures, the operating margin fell from about 40.9 percent in the first quarter to 31.8 percent in the second, and the entire half's net profit was earned in the first three months.
Krafton bought Unknown Worlds in 2021 for up to 750 million dollars, of which 250 million was an earnout tied to Subnautica 2's performance, and it settled the founders' litigation over that earnout after a Delaware court found against it.
When you read a partner's record quarter, read down to the net line and ask what the operating line excludes, because a deal that worked and a deal that is paid for are two different facts.

The quarter the hit arrived

Subnautica 2 went into early access on 15 May and sold five million copies in 22 days. Around half the buyers had never played the series. Krafton's chief executive Kim Chang-han told investors the quarter had "proved the potential of our core IP". By any product measure it had: quarterly PC revenue passed 500 billion won for the first time in the company's history, reaching 560.4 billion won, up 155 percent on the year.

The half-year numbers are the best Krafton has ever reported. Revenue of 2,661.6 billion won, up 73.3 percent. Operating profit of 972.5 billion won, up 38.3 percent. Net profit of 484.2 billion won, up 25 percent. In the second quarter alone revenue rose 94.9 percent to 1,290.2 billion won and operating profit rose 67 percent to 410.9 billion won.

And in that same quarter the company reported a net loss of 29.9 billion won. Management attributed it primarily to non-operating losses linked to the Unknown Worlds acquisition rather than to anything operational. The game worked. The quarter it landed in did not.

Where the money went below the operating line

The operating line and the net line disagreed by design. Second-quarter costs reached 879.3 billion won, up 102.8 percent year on year against revenue growth of 94.9 percent. Cost growth outran revenue growth by roughly eight points, and the largest single item was paid commissions at 342.5 billion won, ahead of labour at 237.4 billion and cost of revenue at 166.5 billion. Marketing, at 44.9 billion, was not the driver.

Subtract the second quarter from the half and the shape becomes clearer. First-quarter revenue was about 1,371.4 billion won with operating profit of about 561.6 billion, an operating margin near 40.9 percent. The second quarter ran at about 31.8 percent. On the same arithmetic, the first half of 2025 implied a margin closer to 45.8 percent. The best half in the company's history is also its thinnest.

The net line is starker still. Half-year net profit was 484.2 billion won and the second quarter lost 29.9 billion, so the whole of the half's net income was earned in the first three months and some of it was given back in the second. These are derived figures, obtained by subtracting the reported quarter from the reported half, not separate disclosures.

An earnout is a bill that grows with the win

Krafton acquired Unknown Worlds, the studio behind Subnautica, in 2021 in a deal worth up to 750 million dollars: 500 million paid up front and 250 million structured as an earnout tied to the performance of Subnautica 2, measured on group company revenue through the end of 2025. The earnout was steeply geared, paying a reported 3.12 dollars for every dollar of revenue above a 69.8 million dollar threshold, subject to the cap.

That structure produced the most expensive kind of dispute. The studio's founders sued, alleging the publisher had delayed the game to avoid triggering the payment, and the Delaware Court of Chancery found that Krafton had schemed to remove them. Krafton later settled. Krafton has not broken the second-quarter non-operating charge into components, and the figure it published is the aggregate attributed to the acquisition, so the precise composition is not on the record.

Yes, but: the mechanism is not exotic and the direction is not ambiguous. Contingent consideration is a liability the acquirer carries, and a liability tied to a product's success moves against the acquirer exactly when the product succeeds. The better the game does, the more the deal costs, and accounting puts the success above the operating line and the cost below it.

What to carry into your own deal

Three practical points. First, if you are buying a company with an earnout, model the payment as a liability that appreciates with performance and budget for it in the quarter you expect to win, not the quarter you expect to pay. Second, if you are selling into or partnering with a business that has done such a deal, read its results down to the net line and ask which charges the operating line excludes, because operating profit up 67 percent and a net loss can describe the same three months. Third, if you are the seller, note that the litigation here turned on whether the buyer controlled the trigger, and structure the earnout on facts the buyer cannot schedule.

European studios have an immediate reason to watch this one. Krafton brings five titles to Gamescom in Cologne between 26 and 30 August, including a new PUBG project, all aimed at 2027, and it has said it will seek outside investment to fund the scale of its AI spending. That is a publisher whose record half already carries a cost it is still absorbing, going into a spending cycle in public.

Frequently asked questions

How can operating profit rise 67 percent and the quarter still lose money?

Because operating profit measures the trading business and stops there. Charges classified as non-operating, such as those arising from an acquisition, fall below that line and still reduce net income. Krafton reported second-quarter operating profit of 410.9 billion won and a net loss of 29.9 billion won, and attributed the gap primarily to non-operating losses linked to the Unknown Worlds acquisition.

Is Subnautica 2 finished?

No. It launched into early access on 15 May 2026 and Krafton has said it plans roughly two years of continuous updates before a full release. The five million figure covers the first 22 days of that early access period, and about half of those buyers were new to the franchise.

Which margin figures here come from Krafton and which are calculated?

Krafton reported the half-year and second-quarter revenue, operating profit and net figures directly. The first-quarter revenue and operating profit, the quarterly margins and the implied prior-year margin are derived by subtracting the reported quarter from the reported half and by applying the stated growth rates, and are described as such.

A record top line and a net loss in the same three months is not a contradiction. It is the price of the deal arriving at the same time as the product it bought.

KraftonSubnautica 2Unknown WorldsEarnoutsGames industry earningsGamescomPUBG

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