NEXON Q1 2018 Investor Presentation

Key insights

7 takeaways

01
Nexon reported record Q1 2018 financial results with a 21% year-over-year revenue increase to ¥90.5 billion and a 38% rise in operating income to ¥54.7 billion.See it on page 6
02
Core franchises remain the primary revenue drivers, specifically Dungeon&Fighter in China and MapleStory in Korea, with additional contributions from North American acquisition Pixelberry Studios.See it on page 28
03
Despite a strategic shift toward mobile, PC titles continue to dominate the company's portfolio, accounting for 78% of total revenue.See it on page 28
04
Geographic revenue is highly concentrated, with Korea and China representing 49% and 34% of total earnings, respectively.See it on page 7
05
Nexon projects a temporary contraction in Q2 2018 operating income due to increased marketing and human resource investments for an aggressive pipeline of new PC and mobile titles.See it on page 14
06
The company maintains financial stability through a disciplined capital management strategy that resulted in a multi-year reduction of total assets and liabilities between 2012 and 2017.See it on page 27
07
Long-term growth strategy focuses on optimizing live operations, developing new intellectual property, and executing targeted M&A to transition toward a more diversified, mobile-heavy portfolio.See it on page 29

Summary

Nexon achieved record-breaking financial performance in the first quarter of 2018, characterized by a 21 percent year-over-year revenue increase to ¥90.5 billion and a 38 percent rise in operating income to ¥54.7 billion. This growth was underpinned by the enduring popularity of core franchises, specifically Dungeon&Fighter in China and MapleStory in Korea, supplemented by strategic contributions from Pixelberry Studios in North America. While net income more than doubled during this period, the company anticipates a temporary contraction in operating income for the second quarter of 2018, a result of elevated marketing expenditures and human resource investments required to support an aggressive pipeline of upcoming mobile and PC titles.

The company maintains a highly concentrated yet robust geographic and platform footprint. Korea and China remain the primary revenue drivers, accounting for 49 percent and 34 percent of total earnings, respectively. Despite a strategic push into mobile gaming, PC titles continue to dominate the portfolio, representing 78 percent of total revenue. Financial stability is evidenced by a multi-year trend of reducing total assets and liabilities between 2012 and 2017, reflecting a disciplined approach to capital management.

Long-term growth remains anchored in a three-pronged strategy: the optimization of live game operations, the development of new intellectual property, and targeted mergers and acquisitions. By balancing the sustained cash flow from established titles with the launch of high-profile projects like FIFA ONLINE 4, the company aims to navigate the transition toward a more diversified mobile-heavy portfolio. This approach positions the organization to leverage its existing market dominance while mitigating the inherent volatility associated with new title releases in the global gaming sector.