Quarterly Securities Report: The First Quarter of the 19th Fiscal Year

Key insights

6 takeaways

01
Nexon reported Q1 2020 revenue of ¥82,762 million, an 11.1% year-over-year decline from ¥93,077 million, driven by weakness in the Chinese market and unfavorable foreign exchange rates.See it on page 6
02
Despite revenue contraction, the company maintained strong profitability with ¥61,989 million in income before income taxes and ¥49,754 million in net income.See it on page 14
03
The company holds a robust liquidity position, ending the quarter with ¥275,144 million in cash and cash equivalents and generating ¥29,548 million in net cash from operating activities.See it on page 12
04
Nexon prioritized shareholder returns and equity optimization by authorizing a dividend of ¥2.5 per share (totaling ¥2,206 million) and retiring over 20 million shares of treasury stock.See it on page 31
05
The company recognized approximately ¥5.9 billion in impairment losses related to goodwill and game copyrights during the quarter.See it on page 29
06
Operational reporting was refined by reclassifying regional segments to group Europe with North America to improve service delivery analysis.See it on page 23

Summary

Nexon’s financial performance for the first quarter of 2020 reflects a period of consolidation and strategic adjustment amidst challenging global market conditions. The company generated ¥82,762 million in revenue, representing an 11.1% year-over-year decline compared to the ¥93,077 million recorded in the same period of 2019. This downturn was primarily attributed to weakened performance within the Chinese market and unfavorable foreign exchange fluctuations. Despite the revenue contraction, the company demonstrated operational resilience, reporting income before income taxes of ¥61,989 million and a net income of ¥49,754 million, supported by ¥29,548 million in net cash provided by operating activities.

The company maintains a robust financial foundation, ending the quarter with ¥275,144 million in cash and cash equivalents. Strategic financial management during this period included the retirement of over 20 million shares of treasury stock to optimize equity structure, alongside the issuance of 740 stock acquisition rights to subsidiary personnel, representing 1,480,000 underlying common shares. Furthermore, the Board of Directors authorized a dividend payment of ¥2.5 per share, totaling ¥2,206 million, signaling a commitment to shareholder returns despite the broader revenue headwinds.

Operational reporting underwent minor structural refinements, including the reclassification of regional segments to group Europe with North America, ensuring more consistent service delivery analysis. While the company recognized approximately ¥5.9 billion in impairment losses related to goodwill and game copyrights, it continued to adhere to IFRS standards, specifically IAS 34, ensuring consistency in accounting policies. These financial results underscore a focus on maintaining liquidity and long-term stability while navigating geographic volatility and internal equity adjustments during the first quarter of the 19th fiscal year.