NEXON Consolidated Financial Results: Three Months Ended March 31, 2019

Key insights

6 takeaways

01
Nexon reported Q1 2019 consolidated revenue of 93,077 million yen, a 2.8% year-over-year increase driven by PC and mobile titles in Korea and China.See it on page 5
02
Net income rose 14.6% to 53,400 million yen, primarily due to favorable foreign exchange gains despite a 3.9% decline in operating income to 52,601 million yen.See it on page 8
03
The decline in operating income was attributed to increased expenditures in human resources, research and development, and royalty payments.See it on page 5
04
Management projects revenue growth between 4.9% and 8.3% for the first half of 2019, contingent on new mobile title launches and consistent content updates.See it on page 7
05
The company maintains a strong financial position with an 85.2% equity ratio, though it has declined to provide full-year financial guidance due to market volatility.See it on page 19
06
Adoption of IFRS 16 accounting standards effective January 1, 2019, resulted in the recognition of 6,357 million million yen in lease liabilities and 2,499 million yen in right-of-use assets.See it on page 12

Summary

Nexon achieved a stable financial performance during the first quarter of 2019, reporting consolidated revenue of 93,077 million yen. This represents a 2.8 percent year-over-year increase, fueled primarily by the sustained popularity of PC online and mobile titles within the core markets of Korea and China. While revenue growth remained positive, operating income experienced a slight contraction of 3.9 percent to 52,601 million yen, a result of elevated expenditures in human resources, research and development, and royalty payments. Conversely, net income attributable to owners of the parent rose by 14.6 percent to 53,400 million yen, bolstered significantly by favorable foreign exchange gains.

The company maintains a robust financial foundation, characterized by an 85.2 percent equity ratio. Effective January 1, 2019, the adoption of IFRS 16 accounting standards necessitated the recognition of 6,357 million yen in lease liabilities and 2,499 million yen in right-of-use assets. Despite these structural accounting shifts and the inherent volatility associated with hit-driven game performance, management projects continued revenue growth between 4.9 percent and 8.3 percent for the first half of the year. This outlook is predicated on the successful deployment of new mobile titles and consistent content updates, even as the company anticipates seasonal headwinds in its primary Asian markets following the Lunar New Year.

Due to the unpredictable nature of the global gaming landscape, the company has opted to withhold full-year financial guidance. The current strategy focuses on balancing aggressive investment in development and talent acquisition against the potential for fluctuations in operating and net income. By prioritizing long-term content engagement and regional expansion, the organization aims to navigate market uncertainties while leveraging its established portfolio of digital entertainment assets.