Nexon Q2 2017 Earnings Call

Key insights

7 takeaways

01
Nexon reported record Q2 2017 results with ¥47.1 billion in revenue and ¥16.3 billion in operating income, exceeding initial guidance.See it on page 3
02
Growth was primarily driven by the sustained performance of Dungeon&Fighter in the Chinese market, validating the company's focus on long-term live operations.See it on page 7
03
Management projects Q3 operating income growth between 9% and 26%, though this will be offset by increased spending on marketing, human resources, and variable costs.See it on page 7
04
The company is shifting its strategic focus toward the convergence of PC and mobile platforms rather than maintaining rigid revenue ratios between the two segments.See it on page 11
05
New mobile title Dark Avenger 3 is performing in line with the company's previous success, HIT, bolstering confidence in their mobile development pipeline.See it on page 12
06
Nexon is actively evaluating eSports integration for new titles, noting that the sector is mature in Korea but still in a nascent stage in Western markets.See it on page 12
07
The organization maintains a projected full-year tax rate of approximately 20% while continuing to prioritize global development partnerships.See it on page 13

Summary

Nexon achieved record-breaking financial results in the second quarter of 2017, generating ¥47.1 billion in revenue and ¥16.3 billion in operating income. These figures surpassed the company’s initial guidance, largely fueled by the enduring popularity of Dungeon&Fighter within the Chinese market. This performance underscores the efficacy of a business model centered on long-term player engagement and consistent live operations, which remains the primary driver of the company’s current growth trajectory.

Looking toward the third quarter, the company anticipates continued year-on-year revenue expansion, supported by the introduction of new titles such as LawBreakers and Dark Avenger 3. While management projects an operating income increase between 9% and 26%, they acknowledge that this growth will be tempered by rising expenditures in marketing, human resources, and variable costs. The company is prioritizing player retention for these new releases and is actively evaluating the potential for eSports integration, noting that while the sector is highly mature in Korea, it remains in a nascent stage across Western markets.

The broader strategic outlook reflects a shift toward the convergence of PC and mobile gaming platforms, moving away from a rigid focus on specific revenue ratios between the two segments. Early performance metrics for Dark Avenger 3 indicate it is tracking alongside previous successes like HIT, reinforcing confidence in the company’s mobile development capabilities. With a projected full-year tax rate of approximately 20%, the organization remains committed to a strategy of global development partnerships and a robust pipeline of new content to sustain its competitive position in the evolving international gaming landscape.