Krafton posted record results in both the second quarter and the first half. It said the outcome reflected the transformation of "PUBG: Battlegrounds" into a content platform and the success of new title "Subnautica 2", released in May.

To sustain the growth, Krafton plans to unveil five new titles at Gamescom in August and expand its artificial intelligence (AI) research beyond games to physical AI.

Krafton unveiled its business strategy for the second half and a five-year growth plan centred on securing franchise intellectual property (IP) at a conference call on its 2026 second-quarter results on Tuesday.

CEO Chang-han Kim (김창한) said the company had built multiple growth pillars based on franchise IP through PUBG and Subnautica. He said Krafton would raise its strategic focus on core IP and secure new franchise IP through a repeatable growth system that discovers, validates and expands IP.

Two-track growth from PUBG and Subnautica drives record results

Krafton posted consolidated second-quarter revenue of 1.29 trillion won and operating profit of 410.9 billion won, up 94.9 percent and 67 percent, respectively, from a year earlier. Both revenue and operating profit were the highest for any second quarter. First-half revenue totalled 2.66 trillion won and operating profit was 972.5 billion won, up 73.3 percent and 38.3 percent from a year earlier. Both were the highest for any first half, and first-half operating profit equalled 92 percent of last year’s full-year operating profit.

The results were driven by growth in users and revenue for the PUBG franchise and early success for Subnautica 2. First-half revenue for the PUBG franchise rose 25 percent from a year earlier, raising the likelihood of meeting the company’s previously presented goal of double-digit revenue growth for the year.

Krafton is focusing PUBG’s growth strategy on turning it into a content platform that offers diverse play experiences within existing games rather than releasing new standalone games. In the second quarter, high-quality modes such as "Genopoint" and "Payday" on PUBG PC drove returning users and longer time spent. Genopoint continued to lift traffic and time spent after its release, and user demand was also confirmed for switching it to a permanent mode.

Krafton is developing follow-up work to operate Genopoint on a permanent basis and advance its content, and it will introduce two additional high-quality modes in the second half. It is also developing multiple new modes targeting service in 2027 to 2028.

The content expansion translated into revenue. Second-quarter monthly active users (MAU) for PUBG PC and console rose more than 20 percent from a year earlier, and revenue increased more than 70 percent. Including Subnautica 2 sales, second-quarter PC revenue rose to 560.4 billion won, topping 500.0 billion won for the first time on a quarterly basis. Mobile revenue rose 5.5 percent from a year earlier, supported by record daily revenue from the new X-Suit "Phoenixtra". Console revenue increased 143.3 percent as Subnautica 2 sales were reflected.

Subnautica 2, released in early access on May 15, topped cumulative sales of 5 million units in 22 days and has maintained a "very positive" rating in Steam user reviews. First-half revenue for the Subnautica IP was 232.5 billion won. Supported by the new title’s success, "Subnautica" and "Subnautica: Below Zero", released about 10 years ago, also generated about 42.0 billion won in revenue.

Krafton chose to add content for about two years and broaden the fandom rather than immediately move Subnautica 2 to a full release. Kim said it had not confirmed the timing of a full release because it uses an open development approach. He said about half of early users were new users who had not played the previous titles, and that the franchise’s reach is expanding as new users join an existing fan base of more than 12 million.

Five Gamescom titles and AI expansion to prepare the next growth pillar

Krafton will unveil five new titles at Gamescom 2026 in August that it aims to release by 2027. Starting with the Gamescom reveal, it plans to gauge market response and user feedback to verify each title’s franchise potential. PUBG Studios will first unveil a new project at Gamescom based on the PUBG franchise, applying a new setting and gameplay, and said specific names and details will be announced at the event.

The other four are Neon Giant’s first-person open-world shooter RPG "NO LAW", tactical battle game "Project Zeta" in which four teams compete on a single battlefield, two-player co-op puzzle adventure "Age Twister" for families and friends, and action RPG "Tarae: Unbound" based on an Eastern fantasy world. Among them, "Project Zeta" is planned to verify live-service scalability through open development and early access.

In AI, Krafton said it had confirmed technical implementation and the potential for service deployment through the on-device conversational AI character "PUBG Ally", which it tested on PUBG. Kim said it was developing an upgraded version based on user response and feedback, and is internally reviewing whether to pursue it as content that adds new fun or link it to a separate monetisation model.

It will broaden its research scope to include multimodal large language models (LLM) and world models. Kim said the company sees physical AI opening bigger market opportunities after LLMs, and that its game data and experience operating virtual environments are proving advantageous for developing world models.

Krafton is securing research personnel through its U.S. subsidiary "Ludo Robotics" and plans to pursue external investment alongside its own investment as large-scale funding is required.

ADK and non-operating costs are variables; additional share buybacks on view stock is undervalued

The company also has variables that require management behind the expansion of growth pillars. CFO Dong-geun Bae (배동근) explained that in ADK’s second-quarter results, animation production and content business was solid, but its advertising business was weak as advertisers cut budget spending due to external uncertainty including the Middle East situation.

As a result, overall performance also declined somewhat from a year earlier. Krafton said it does not expect the advertising slowdown to persist for a long period and will manage it while watching for a recovery. Synergy between game and animation IP is also still in the preparation stage, and Kim said the company is seeking measures that go beyond simple collaboration.

Second-quarter operating costs rose 111.4 percent from a year earlier to 879.3 billion won, affected by factors including the consolidation of ADK. App fees, cost of sales, and increased fees paid related to game production and e-sports, driven by higher Subnautica 2 and PUBG PC revenue, also contributed, and the operating margin fell to 31.8 percent, down 5.3 percentage points from a year earlier.

Second-quarter net profit and loss posted a net loss of 29.9 billion won as non-operating costs related to Unknown Worlds were reflected. First-half net profit totalled 484.2 billion won, up 25.1 percent from a year earlier.

Krafton also expanded shareholder returns, judging the current share price to be in an undervalued range. It acquired treasury shares worth 300.0 billion won in the first half and carried out a capital-reduction dividend worth 99.6 billion won.

The total amount of treasury shares to be cancelled this year, including newly acquired shares and existing holdings, is 431.5 billion won, equivalent to 3.5 percent of outstanding shares. Of that, 336.2 billion won has been cancelled, and 95.3 billion won acquired in the second quarter will be cancelled on Aug. 5.

The company decided to acquire an additional 100.0 billion won of treasury shares in the third quarter and cancel all of them, and plans to adjust the timing and size of acquisitions in the future considering market conditions and the share price level.