NEXON Q3 2014 Investor Presentation

Key insights

7 takeaways

01
Nexon reported Q3 2014 revenue of ¥45.6 billion, a 14% year-over-year increase that exceeded the company's previous forecast.See it on page 14
02
Net income rose 69% year-over-year to ¥13.6 billion, primarily driven by favorable foreign exchange gains.See it on page 6
03
Mobile revenue grew 41% year-over-year to ¥9.7 billion, with native mobile games now accounting for nearly 50% of the segment's total.See it on page 11
04
The Korean market served as a primary growth engine, delivering a 64% revenue increase fueled by the performance of FIFA Online 3 and a strong mobile lineup.See it on page 10
05
Operating income reached ¥15.1 billion, benefiting from robust Korean performance, delayed marketing expenditures, and lower-than-expected human resource costs.See it on page 6
06
Management projects Q4 2014 revenue growth between 14% and 22% year-over-year, though potential impairment losses related to the subsidiary gloops remain a risk to year-end dividends.See it on page 17
07
The Japanese market saw a 17% revenue decline during the quarter, reflecting a transition in performance between browser-based and native mobile games.See it on page 11

Summary

Nexon’s third-quarter 2014 investor presentation outlines a period of strong financial performance characterized by consistent execution across its core markets and a successful expansion of its mobile gaming portfolio. The company reported quarterly revenues of ¥45.6 billion, representing a 14% year-over-year increase on an as-reported basis, which exceeded the high end of its previous forecast. Operating income reached ¥15.1 billion, bolstered by robust results in Korea, delayed marketing expenditures, and lower-than-anticipated human resource costs. Net income saw a significant 69% year-over-year rise to ¥13.6 billion, largely attributed to favorable foreign exchange gains.

The company’s growth strategy remains anchored in its PC online titles while aggressively scaling its mobile segment. Mobile revenues reached ¥9.7 billion, a 41% year-over-year increase, with native mobile games accounting for nearly half of that total. Geographically, Korea served as a primary growth engine with a 64% revenue increase, driven by the sustained popularity of FIFA Online 3 and a strong mobile lineup. In China, the company achieved stability in monthly active users for its flagship title, Dungeon&Fighter, for the third consecutive quarter. Conversely, the Japanese market experienced a 17% revenue decline, reflecting a shift in performance between browser and native mobile games.

Looking toward the fourth quarter of 2014, the company projects continued year-over-year revenue growth between 14% and 22%. Management maintains a cautious outlook regarding potential impairment losses related to the goodwill of its subsidiary, gloops, which could impact year-end dividend distributions. The company’s forward-looking strategy emphasizes a robust pipeline of new PC and mobile titles, including upcoming releases such as Sudden Attack 2 and various mobile-native games, supported by ongoing content updates for its established portfolio.