Nexon FY2025 Q1 Online Earnings Presentation: Q&A Summary

Key insights

6 takeaways

01
Nexon exceeded operating income expectations due to disciplined marketing spend and lower performance-based bonuses resulting from the underperformance of Dungeon&Fighter Mobile.See it on page 2
02
The Dungeon&Fighter franchise in China is in a recovery phase, with recent daily active user data showing a positive turnaround following new progression systems and holiday updates, despite flat year-over-year user numbers in Q1.See it on page 1
03
Dungeon&Fighter Mobile in China underperformed during the Lunar New Year period, prompting management to initiate a hyperlocalization strategy and deepened co-development with Tencent ahead of the title's first anniversary.See it on page 2
04
The First Berzerker: Khazan failed to meet internal sales projections, though it achieved high critical acclaim as a strategic foundation for future franchise releases.See it on page 3
05
Nexon has scheduled the release of two major franchise titles, Project OVERKILL and Dungeon&Fighter: ARAD, for 2027 to drive long-term brand expansion.See it on page 3
06
Dungeon&Fighter performance in Korea showed consistent growth throughout the quarter, providing a stable base alongside the recovery efforts in the Chinese market, which is ten times larger by player count.See it on page 1

Summary

Nexon’s first-quarter 2025 earnings discussion centers on the performance recovery of the Dungeon&Fighter franchise and the strategic outlook for its global portfolio. The primary thesis emphasizes a stabilization of core titles in Korea and China, supported by improved in-game economies and content updates, alongside a shift toward long-term brand expansion in Western markets. While revenue aligned with initial guidance, operating income exceeded expectations due to disciplined marketing expenditures and lower-than-anticipated performance-based bonuses linked to the underperformance of Dungeon&Fighter Mobile.

Key performance indicators for Dungeon&Fighter in Korea showed consistent growth throughout the quarter, while the Chinese market, which maintains a player base ten times larger than Korea, is currently in a recovery phase. Although year-over-year user numbers in China remained flat during the first quarter, recent data, including daily active users, indicates a positive turnaround following the implementation of improved progression systems and successful holiday-themed updates. Conversely, Dungeon&Fighter Mobile in China faced challenges, with revenue and user metrics falling short of expectations during the Lunar New Year period. Management is addressing this through a hyperlocalization strategy and deepened co-development efforts with Tencent to improve engagement ahead of the title’s first anniversary.

Regarding global expansion, The First Berzerker: Khazan is positioned as a strategic entry point for the Dungeon&Fighter franchise in Western markets. Despite sales figures trailing internal projections, the title achieved high critical acclaim, successfully establishing a foundation for future franchise releases, including Project OVERKILL and Dungeon&Fighter: ARAD, scheduled for 2027. Moving forward, the company plans to leverage localized releases in China and ongoing content support to maximize the long-term value of its intellectual property, while maintaining a cautious approach to marketing costs and performance-based compensation.