NEXON Q3 2017 Earnings Conference Call Transcript

Key insights

6 takeaways

01
Nexon reported record Q3 2017 financial results with ¥60.4 billion in revenue and ¥22.7 billion in operating income, driven by the performance of Dungeon&Fighter in China and FIFA Online 3 in Korea.See it on page 5
02
Management projects Q4 2017 operating income to grow between 68% and 112% year-on-year, supported by high-margin Chinese operations and a mobile pipeline including AxE and OVERHIT.See it on page 8
03
The company initiated a share buyback program of up to ¥10 billion to signal confidence in its long-term financial trajectory and commitment to shareholder value.See it on page 17
04
Nexon acquired Pixelberry Studios to target the female mobile gaming demographic and diversify its revenue streams within Western markets.See it on page 4
05
The company is managing product transitions, including the delay of Durango to 2018 for monetization optimization and the upcoming shift from FIFA Online 3 to FIFA Online 4.See it on page 13
06
Despite overall growth, the company reported underperformance for LawBreakers in North America and anticipates revenue declines in Japan and Europe.See it on page 7

Summary

Nexon achieved record-breaking financial results in the third quarter of 2017, reporting revenues of ¥60.4 billion alongside operating income of ¥22.7 billion. This performance, which consistently exceeded internal guidance, was anchored by the sustained dominance of Dungeon&Fighter in the Chinese market and the robust contribution of FIFA Online 3 in Korea. While the company encountered headwinds in North America due to the underperformance of LawBreakers, it is actively diversifying its portfolio through the strategic acquisition of Pixelberry Studios. This move aims to capture the underserved female mobile gaming demographic and bolster revenue streams in Western markets.

Looking ahead to the fourth quarter, the company anticipates significant year-on-year growth in operating income, projected to rise between 68% and 112%. This optimism is supported by high-margin operations in China and a robust mobile pipeline, including titles such as AxE and OVERHIT. Although management expects revenue declines in Japan and Europe, these are expected to be offset by the consolidation of Pixelberry and the continued expansion of the mobile segment. To further demonstrate confidence in its long-term trajectory and commitment to shareholder value, the company has initiated a share buyback program of up to ¥10 billion.

Operational strategy remains focused on refining live service models and managing product transitions. The delay of Durango to 2018 reflects a commitment to optimizing monetization, while the transition to FIFA Online 4 is being managed with a focus on continuity. Despite seasonal fluctuations and the natural lifecycle decline of older mobile titles, the company maintains a positive outlook. By balancing aggressive expansion into new demographics with the careful stewardship of established franchises, the organization continues to prioritize sustainable growth and consistent returns for its investors.