NEXON Annual Securities Report: 16th Fiscal Year

Key insights

6 takeaways

01
Nexon achieved significant financial growth in the 2017 fiscal year, with consolidated revenue rising 28.3% to 234,929 million yen and net income increasing 181.9% to 56,750 million yen.See it on page 38
02
The company’s financial performance was heavily driven by its free-to-play, microtransaction-based model, anchored by flagship titles such as Dungeon&Fighter and MapleStory.See it on page 14
03
Strategic reliance on the Chinese market remains a core pillar of the business, supported by a critical partnership with Tencent Holdings Limited for royalty-based revenue.See it on page 15
04
Nexon maintains a conservative dividend policy, prioritizing the retention of capital for R&D, business expansion, and strategic acquisitions like the purchase of Pixelberry Studios.See it on page 26
05
The company underwent a corporate restructuring in early 2018, during which NXC Corporation ceased to be the parent company while remaining a major shareholder.See it on page 34
06
Operational risks are managed through a governance framework that includes an Audit and Supervisory Committee and performance-linked equity compensation to address regulatory challenges like loot box policies and foreign exchange volatility.See it on page 95

Summary

The 16th Annual Securities Report for NEXON Co., Ltd. details the company’s financial and operational performance for the fiscal year ending December 31, 2017. As a global holding company specializing in PC online and mobile games, Nexon leverages a vertically integrated model across Japan, Korea, China, and North America. The primary thesis of the report centers on the company’s successful execution of its free-to-play, microtransaction-based business model, which drove significant financial growth through flagship titles such as Dungeon&Fighter and MapleStory.

Financially, the company experienced a strong year, with consolidated revenue rising 28.3% to 234,929 million yen and net income increasing 181.9% to 56,750 million yen. This performance was bolstered by robust royalty income from the Chinese market, where Tencent Holdings Limited remains a critical strategic partner. Despite this growth, the company maintains a conservative dividend policy, prioritizing capital retention for R&D, strategic acquisitions—such as the purchase of Pixelberry Studios—and business expansion. The report also highlights a transition in corporate structure, noting that NXC Corporation ceased to be the parent company in early 2018, though it remains a major shareholder.

Nexon’s operational strategy involves balancing aggressive global expansion with rigorous risk management. The company faces inherent industry challenges, including evolving regulations regarding loot boxes and data privacy, as well as foreign exchange volatility. To mitigate these risks and align management interests with shareholders, Nexon employs a governance framework featuring an Audit and Supervisory Committee and performance-linked equity compensation. By maintaining a strong cash position and focusing on long-term content updates, the company aims to sustain its competitive advantage in the global interactive entertainment market.