Nexon Q2 2018 Investor Presentation

Key insights

6 takeaways

01
Nexon generated ¥47.8 billion in Q2 2018 revenue, a 2% year-over-year increase driven primarily by core PC franchises Dungeon&Fighter in China and MapleStory in Korea.See it on page 12
02
The company remains heavily concentrated in Asia, with Korea and China accounting for 83% of total revenue.See it on page 13
03
Nexon maintains a strong financial position with ¥601.4 billion in total assets and ¥169.3 billion in cash reserves, which are earmarked for aggressive M&A activity.See it on page 32
04
Mobile sector performance fell short of internal targets, and the transition of the FIFA Online franchise created temporary revenue headwinds during the quarter.See it on page 14
05
Growth in North America, bolstered by the acquisition of Pixelberry Studios, was offset by declining performance in Japan and other international markets.See it on page 15
06
Nexon projects revenue growth between 1% and 9% for the third quarter of 2018, focusing on expanding its mobile pipeline and updating legacy PC titles.See it on page 18

Summary

Nexon’s financial performance for the second quarter of 2018 demonstrates a reliance on the enduring popularity of core PC franchises, specifically Dungeon&Fighter in China and MapleStory in Korea. These titles remain the primary engines of the company’s revenue, which reached ¥47.8 billion, representing a 2% year-over-year increase. While profitability surpassed initial expectations due to significant foreign exchange gains and strategic step acquisitions, the company faced challenges in the mobile sector, where performance fell short of internal targets. Additionally, the transition period for the FIFA Online franchise created temporary headwinds during this fiscal window.

Geographically, the company remains heavily concentrated in Asia, with Korea and China accounting for 83% of total revenue. While North American operations saw growth fueled by the acquisition of Pixelberry Studios, these gains were offset by declining performance in Japan and other international markets. Despite these regional disparities, the company maintains a robust financial position, reporting total assets of ¥601.4 billion and cash reserves of ¥169.3 billion. This liquidity supports a broader strategic mandate focused on long-term growth through aggressive mergers and acquisitions, the refinement of live game operations, and continued efforts to penetrate Western markets.

Looking toward the latter half of 2018, the company projects revenue growth between 1% and 9% for the third quarter. Operational priorities center on expanding the mobile game pipeline and delivering consistent content updates for established PC titles to maintain user engagement. By balancing the stability of its legacy franchises with a commitment to inorganic growth and geographic diversification, the company aims to navigate the current transitional phase while securing its long-term competitive standing in the global gaming industry.