Nexon First Quarter 2013 Financial Results

Key insights

7 takeaways

01
Nexon reported Q1 2013 consolidated revenue of ¥44,364 million, a 46% year-over-year increase, with operating income rising 24% to ¥20,716 million.See it on page 4
02
The mobile segment experienced massive growth, increasing 33-fold year-over-year to reach ¥7,487 million in revenue.See it on page 3
03
Operating margins declined from 55% in Q1 2012 to 47% in Q1 2013, driven by lower-margin mobile acquisitions, increased development costs, and higher royalty payments.See it on page 2
04
Performance was bolstered by key PC title updates, specifically a tier 1 update for Dungeon&Fighter in China and the launch of FIFA Online 3 in Korea.See it on page 1
05
The company successfully integrated mobile acquisitions gloops and inBlue, which contributed to the significant expansion of the mobile business segment.See it on page 1
06
Nexon transitioned to International Financial Reporting Standards (IFRS) starting in Q1 2013 to improve global financial comparability.See it on page 1
07
Management plans to sustain growth in Q2 2013 through the launch of new titles, including Dragon Girls in Korea and Guardian Break in North America.See it on page 4

Summary

Nexon reported strong financial results for the first quarter of 2013, exceeding its previously stated outlook. The company achieved total consolidated revenues of ¥44,364 million, representing a 46% year-over-year increase, or 26% on a constant currency basis. Operating income rose 24% to ¥20,716 million, while net income grew 17% to ¥15,150 million. This performance was primarily driven by robust results in China and Korea, alongside a favorable currency environment and the successful integration of mobile acquisitions, specifically gloops and inBlue.

The company’s growth was supported by successful content updates for major PC titles, such as a tier 1 update for Dungeon&Fighter in China, and the launch of FIFA Online 3 in Korea. While PC revenue remained the core of the business, the mobile segment experienced significant expansion, growing 33-fold year-over-year to ¥7,487 million. However, the overall operating margin decreased from 55% in the first quarter of 2012 to 47%, a shift attributed to the lower-margin nature of the newly acquired mobile business, increased development and support costs for new titles, and higher royalty payments.

Effective this quarter, the company transitioned to International Financial Reporting Standards (IFRS) to enhance comparability for its global investor base. Looking ahead to the second quarter of 2013, management anticipates continued revenue growth driven by existing PC titles and momentum in the mobile sector. The company plans to further expand its portfolio with upcoming launches, including Dragon Girls in Korea and Guardian Break in North America, while maintaining a focus on navigating the margin pressures associated with its evolving platform mix and increased marketing investments.