Nexon Third Quarter 2016 Financial Results

Key insights

6 takeaways

01
Nexon reported Q3 2016 revenue of 44.3 billion yen, an 11% year-over-year decline that still exceeded the company's internal outlook.See it on page 1
02
Operating income reached 16.3 billion yen, outperforming expectations due to disciplined marketing cost management and high-margin revenue from China.See it on page 1
03
Net income was 7.6 billion yen, falling below projections primarily due to foreign exchange losses on U.S. dollar-denominated cash and receivables.See it on page 1
04
Financial performance was driven by the sustained popularity of core PC online titles, specifically Dungeon & Fighter and MapleStory, in the Korean and Chinese markets.See it on page 1
05
Management projects Q4 2016 revenue to fall between 39.3 billion and 42.2 billion yen, with a strategic focus on both PC and mobile segments.See it on page 1
06
Future growth strategy centers on a pipeline of titles including Dungeon & Fighter: Spirit, Project Dynasty Warriors, DARK AVENGER 3, LawBreakers, and Moonlight Blade.See it on page 1

Summary

Nexon’s financial results for the third quarter of 2016 demonstrate a period of solid performance, with revenues exceeding internal outlooks despite an 11% year-over-year decline to 44.3 billion yen on an as-reported basis. The company’s growth was primarily fueled by the strong performance of its PC online game business in Korea and China, specifically driven by the enduring popularity of MapleStory and Dungeon & Fighter. Operating income reached 16.3 billion yen, surpassing expectations due to higher-margin revenue contributions from China and disciplined cost management, particularly regarding marketing expenditures.

While operating performance remained robust, net income attributable to owners of the parent totaled 7.6 billion yen, falling below projections due to foreign exchange losses associated with U.S. dollar-denominated cash deposits and accounts receivable. The company continues to leverage its strategic investments and internal development pipeline to bolster its global presence. Looking ahead, management maintains a positive outlook for the fourth quarter of 2016, projecting revenues between 39.3 and 42.2 billion yen, with a balanced focus on both PC online and mobile game segments.

The company’s strategic focus remains centered on expanding its footprint in the global free-to-play market. Future growth initiatives are supported by a pipeline of highly anticipated titles, including Dungeon & Fighter: Spirit, Project Dynasty Warriors, DARK AVENGER 3, LawBreakers, and Moonlight Blade. These titles are positioned to capitalize on the company's established expertise in microtransactions and massively multiplayer online gaming, as Nexon continues to service nearly 100 titles across more than 190 countries.