Nexon Q1 2019 Earnings Prepared Remarks

Key insights

7 takeaways

01
Nexon achieved record-breaking Q1 2019 financial results with 93.1 billion yen in revenue, a 7% increase on a constant-currency basis.See it on page 2
02
Operating income reached 52.6 billion yen and net income hit 53.4 billion yen, both exceeding internal company expectations.See it on page 4
03
MapleStory PC revenue grew by 69% year-over-year, marking the title's fifth consecutive quarter of double-to-triple-digit growth.See it on page 2
04
The mobile launch of Crazy Arcade BnB M surpassed 10 million global downloads, validating the company's strategy of expanding legacy PC franchises into the mobile market without cannibalizing existing player bases.See it on page 3
05
Q2 2019 revenue is projected to be between 52.1 and 56.7 billion yen, with growth expected across most global regions despite anticipated currency headwinds.See it on page 6
06
Operating income in Q2 faces pressure from higher human resource expenditures and impairment losses related to the adoption of IFRS 16.See it on page 8
07
Nexon is prioritizing long-term investment in artificial intelligence tools specifically designed to improve player retention and monetization.See it on page 4

Summary

Nexon’s first-quarter 2019 earnings report highlights a record-breaking period of financial growth, driven by the sustained performance of core PC franchises and successful mobile expansions. The company achieved revenues of 93.1 billion yen, representing a 3% year-over-year increase on an as-reported basis and a 7% increase on a constant-currency basis. Operating income reached 52.6 billion yen, while net income totaled 53.4 billion yen, both exceeding internal expectations. This performance was bolstered by strong results in China and Korea, where established titles demonstrated significant longevity and resilience.

Key growth drivers included the enduring popularity of Dungeon&Fighter in China and MapleStory in Korea. MapleStory, in particular, recorded its fifth consecutive quarter of strong double-digit or triple-digit growth, with a 69% year-over-year revenue increase for its PC version. Furthermore, the company successfully leveraged its intellectual property by launching mobile versions of legacy titles, such as Crazy Arcade BnB M, which generated over 10 million global downloads. These mobile initiatives have proven to be complementary to existing PC titles rather than cannibalistic, supporting a strategy of reviving "Forever Franchises" to reach a broader, converged audience.

Looking ahead to the second quarter of 2019, the company anticipates continued growth despite potential currency headwinds. Projections for revenue range between 52.1 and 56.7 billion yen, with expectations for expansion across most global regions. While operating income faces pressure from increased variable costs, higher human resource expenditures, and planned impairment losses related to the adoption of IFRS 16, the company remains focused on long-term investment in artificial intelligence tools to enhance player retention and monetization. The outlook remains positive, supported by a robust pipeline of new mobile titles and the continued strength of its core online gaming portfolio.