Nexon Fourth Quarter and Full Year 2013 Results

Key insights

6 takeaways

01
Nexon achieved a 43% increase in full-year 2013 revenue to ¥155.3 billion, though fourth-quarter operating income plummeted 96% year-over-year due to a ¥9.5 billion impairment loss from NDOORS Corporation.See it on page 1
02
Full-year net income rose by 7% to ¥30.1 billion, supported by over ¥60 billion in operating cash flow generated throughout the fiscal year.See it on page 1
03
Performance was geographically divided, with the Korean market and titles like FIFA Online 3 and Dungeon&Fighter driving growth, while Japan and Western markets experienced revenue declines.See it on page 2
04
The company is undergoing a leadership transition, with Owen Mahoney replacing retiring President and CEO Seungwoo Choi to address regional underperformance through strategic studio investments.See it on page 3
05
PC revenue grew by 17% in the fourth quarter, while mobile revenue experienced a 5% decline, highlighting the company's continued reliance on the free-to-play model.See it on page 2
06
Management projects continued revenue growth for the first quarter of 2014, bolstered by favorable currency exchange assumptions and a focus on global partnerships.See it on page 2

Summary

Nexon’s 2013 fiscal results reflect a period of significant top-line growth contrasted by operational challenges in specific markets. The company reported a 43% increase in full-year revenue, reaching ¥155.3 billion, and generated over ¥60 billion in operating cash flow. However, fourth-quarter operating income experienced a sharp 96% year-over-year decline, largely attributed to a ¥9.5 billion impairment loss related to the subsidiary NDOORS Corporation. Despite this, net income for the full year rose 7% to ¥30.1 billion.

Geographically, the company’s performance was bifurcated. The Korean market served as a primary growth engine, bolstered by the strong performance of titles such as FIFA Online 3 and consistent gains from established games like Dungeon&Fighter. China also remained a critical contributor, maintaining solid cash flow. Conversely, the company acknowledged underperformance in Japan and Western markets, where revenue faced downward pressure. To address these regional weaknesses, management initiated strategic investments in external studios and announced a leadership transition, with Owen Mahoney appointed as the incoming President and CEO to succeed the retiring Seungwoo Choi.

The financial data, reported under IFRS, highlights a reliance on the free-to-play model across PC and mobile segments. While PC revenue grew 17% in the fourth quarter, mobile revenue saw a slight decline of 5%. Looking ahead to the first quarter of 2014, the company projected continued revenue growth, supported by favorable currency exchange assumptions. The results underscore a strategic pivot toward strengthening management and global partnerships to stabilize performance in underperforming territories while leveraging the sustained success of core titles in Asia.