NEXON Consolidated Financial Results for the Fiscal Year Ended December 31, 2018

Key insights

6 takeaways

01
Nexon reported a strong fiscal year 2018 with revenue growing 8.0% to ¥253,721 million and net income surging 89.7% to ¥107,672 million.See it on page 6
02
Performance was primarily driven by the sustained success of the PC title Dungeon&Fighter in China, supplemented by increased royalty income and North American mobile launches.See it on page 6
03
The company ended 2018 with a strong liquidity position, holding ¥205,292 million in cash and cash equivalents and generating ¥118,018 million in operating cash flows.See it on page 7
04
Management has suspended dividend payouts to prioritize capital allocation toward global business development, M&A activity, and the acquisition of new publishing rights.See it on page 10
05
The outlook for Q1 2019 is cautious, with expectations of year-over-year declines in revenue and operating income due to challenging comparative periods in China and inherent segment volatility.See it on page 2
06
While the Korea segment remains the primary profit driver, the company’s consolidated revenue is significantly dependent on a single major customer that accounts for over 10% of total revenue.See it on page 31

Summary

Nexon achieved significant financial expansion during the fiscal year ended December 31, 2018, characterized by an 8.0% increase in total revenue to ¥253,721 million and a substantial 89.7% surge in net income attributable to owners of the parent, reaching ¥107,672 million. This robust performance was largely propelled by the enduring success of flagship PC online titles, particularly Dungeon&Fighter in the Chinese market, alongside increased royalty income and strategic mobile game launches in North America. The company maintains a strong liquidity position, concluding the year with ¥205,292 million in cash and cash equivalents and generating ¥118,018 million in operating cash flows.

The company’s business model centers on a free-to-play, microtransaction-based approach across its PC and mobile portfolios, designed to minimize barriers to entry for a global user base. Financial reporting adheres to International Financial Reporting Standards, including the adoption of IFRS 15, which provides a structured framework for recognizing revenue from microtransactions, royalties, and consulting services. While the Korea segment remains the primary driver of overall segment profit, the firm’s consolidated results are notably influenced by a single major customer, which consistently accounts for more than 10% of total revenue.

Looking forward, the company has elected to suspend dividend payouts to prioritize capital allocation toward global business development, mergers and acquisitions, and the procurement of new publishing rights. Despite the strong results of 2018, the outlook for the first quarter of 2019 reflects a cautious stance, with expectations of year-over-year declines in revenue and operating income. This anticipated contraction is attributed to challenging comparative periods in China and the inherent volatility associated with shifting performance trends across the company’s diverse PC and mobile game segments.