Nexon Q1 2018 Earnings Conference Call Transcript

Key insights

7 takeaways

01
Nexon achieved record-breaking Q1 2018 financial results, with revenue, operating income, and net income all exceeding initial projections.See it on page 3
02
Growth was primarily driven by the sustained performance of Dungeon&Fighter in China, where high average revenue per paying user compensated for normalized monthly active user counts.See it on page 3
03
Nexon is undergoing a strategic transition in the Korean market, shifting from EA SPORTS FIFA Online 3 to FIFA ONLINE 4 to ensure long-term stability around the World Cup.See it on page 4
04
The company decentralized its Korean development operations into seven independent studio hubs to increase creative autonomy and accelerate decision-making.See it on page 4
05
Management expects short-term pressure on profit margins due to increased investments in human resources, marketing, and organizational restructuring.See it on page 15
06
The acquisition of Pixelberry Studios successfully expanded Nexon’s mobile gaming portfolio, contributing to the company's overall positive financial performance.See it on page 4
07
Nexon maintains a focus on long-term engagement for core franchises like Dungeon&Fighter rather than aggressive short-term monetization, while continuing to prioritize both PC and high-end mobile gaming.See it on page 19

Summary

Nexon achieved record-breaking financial results in the first quarter of 2018, with revenue, operating income, and net income all surpassing initial projections. This growth was primarily fueled by the sustained dominance of Dungeon&Fighter in the Chinese market, where high average revenue per paying user offset normalized monthly active user counts. The integration of Pixelberry Studios further bolstered these results, signaling a successful expansion of the company’s mobile gaming portfolio. While the company maintains a positive outlook, it is currently navigating a transitional period in Korea as it shifts from EA SPORTS FIFA Online 3 to FIFA ONLINE 4, a strategic move intended to secure long-term stability following the World Cup.

To sustain this momentum, the company has implemented a significant organizational restructuring, decentralizing its Korean development operations into seven independent studio hubs. This shift is designed to foster creative autonomy and accelerate decision-making processes. Management acknowledges that this transition, alongside increased investments in human resources and marketing, will exert short-term pressure on profit margins. These expenditures are framed as essential capital allocations aimed at retaining top-tier talent and supporting the launch of new titles.

Despite the rapid rise of the Battle Royale genre, core franchises like Dungeon&Fighter remain resilient due to their unique market positioning. Leadership maintains a firm commitment to the longevity of these titles, prioritizing stable user engagement over aggressive short-term monetization. Looking ahead, the company continues to view the PC market as a robust foundation while simultaneously leveraging advancements in mobile hardware to deliver the deep, immersive experiences that define its long-term development strategy.