Nexon Q1 2023 Earnings Prepared Remarks

Key insights

7 takeaways

01
Nexon achieved record-breaking Q1 2023 results, reporting a 36% year-over-year revenue increase and a 46% rise in operating profit.See it on page 2
02
Financial growth was primarily driven by the sustained performance of established franchises, specifically FIFA ONLINE 4 and Dungeon&Fighter.See it on page 8
03
Regional performance exceeded internal expectations in China and Japan, while results in Korea, North America, and Europe aligned with projections.See it on page 6
04
Management is addressing underperformance in KartRider: Drift and a temporary decline in MapleStory’s Korean revenue through aggressive live operations and community-focused updates.See it on page 2
05
The company is expanding its ecosystem by integrating blockchain technology into the MapleStory franchise via the MapleStory Universe project.See it on page 12
06
Nexon’s development pipeline includes upcoming titles THE FINALS, ARC Raiders, and VEILED EXPERTS to create future growth opportunities.See it on page 4
07
Q2 2023 financial guidance anticipates continued growth, supported by the recent launch of Wars of Prasia and the stability of the existing portfolio.See it on page 9

Summary

Nexon’s first-quarter 2023 earnings report details a record-breaking period characterized by significant year-over-year growth in both revenue and operating income. The company achieved a 36% increase in revenue and a 46% rise in operating profit, driven primarily by the sustained performance of established franchises such as FIFA ONLINE 4 and Dungeon&Fighter. This financial success underscores the company’s core business model, which relies on a portfolio of long-term virtual worlds to provide stable, recurring cash flows while simultaneously investing in new titles to create asymmetric upside potential for shareholders.

Geographically, the company saw strong results in China and Japan, which exceeded internal expectations, while performance in Korea, North America, and Europe remained within projected ranges. Despite the overall success, specific titles faced challenges; MapleStory experienced a temporary decline in Korea due to player dissatisfaction with server difficulty, and the launch of KartRider: Drift underperformed in terms of user retention and monetization. Management is actively addressing these issues through aggressive live operations, content updates, and community-focused adjustments.

Looking forward, the company maintains a robust development pipeline, including titles such as THE FINALS, ARC Raiders, and VEILED EXPERTS. Strategic initiatives also include the integration of blockchain technology into the MapleStory franchise through the MapleStory Universe project, aimed at deepening user engagement and expanding the ecosystem. Financial guidance for the second quarter of 2023 anticipates continued growth, supported by the recent launch of Wars of Prasia and the ongoing strength of the existing portfolio. The company remains committed to its long-term strategy of balancing stable, established revenue streams with the high-growth potential of new, innovative virtual worlds.