NEXON Consolidated Financial Results for the Three Months Ended March 31, 2013

Key insights

6 takeaways

01
Nexon reported Q1 2013 consolidated revenue of ¥44,364 million and net income of ¥15,350 million, marking year-on-year growth of 46.0% and 19.1% respectively.See it on page 5
02
Revenue growth was primarily driven by the acquisition of gloops, Inc. and the integration of its mobile game business, alongside strong performance from PC titles Dungeon&Fighter and Sudden Attack.See it on page 5
03
China served as the company's largest geographic revenue contributor during the first quarter of 2013.See it on page 5
04
Nexon transitioned from Japanese GAAP to International Financial Reporting Standards (IFRS), resulting in a net increase in total equity due to changes in goodwill amortization and development expense capitalization.See it on page 5
05
The adoption of IFRS introduced new revenue recognition policies, specifically requiring the deferral of income from in-game items based on their estimated usage periods.See it on page 29
06
Management has limited financial guidance to second-quarter cumulative forecasts, citing market volatility as the primary reason for the cautious outlook.See it on page 7

Summary

Nexon demonstrated robust financial growth during the first quarter of 2013, reporting consolidated revenue of ¥44,364 million and net income of ¥15,350 million. This performance represents a significant year-on-year increase of 46.0% in revenue and 19.1% in net income compared to the same period in 2012. The expansion was primarily fueled by the successful integration of the mobile game business following the acquisition of gloops, Inc., alongside sustained royalty contributions from core PC titles such as Dungeon&Fighter and Sudden Attack. China emerged as the most significant geographic contributor to these results, underscoring the company’s strong international market presence.

A central component of this reporting period is the company’s formal transition from Japanese GAAP to International Financial Reporting Standards (IFRS). This shift necessitated comprehensive reconciliations of financial statements, involving the reclassification of assets and liabilities, the cessation of goodwill amortization, and the capitalization of development expenses. These accounting adjustments resulted in a net increase in total equity, reflecting a more standardized approach to valuation, depreciation, and revenue recognition—particularly regarding the deferral of income from in-game items over their estimated usage periods.

Despite the complexities introduced by the adoption of IFRS, the underlying cash flow statements remained consistent with previous reporting frameworks. The company has adopted a cautious outlook, limiting its financial guidance to second-quarter cumulative forecasts due to prevailing market volatility. By aligning its accounting policies with global standards, the organization has established a rigorous framework for assessing impairment, managing employee benefit obligations, and reporting performance across its five primary geographic segments, ensuring greater transparency for stakeholders as it continues to scale its global digital entertainment operations.