NEXON Investor Presentation: Q3 2018

Key insights

6 takeaways

01
Nexon reported record Q3 2018 revenue of ¥69.3 billion, a 15% year-over-year increase driven by the performance of Dungeon&Fighter in China and MapleStory in Korea.See it on page 7
02
The company projects an 8–10% annual revenue growth for fiscal year 2018, with net income expected to rise by 92–95%.See it on page 15
03
Nexon remains heavily reliant on the PC segment, which generates 78% of total revenue, and the Chinese market, which accounted for 49% of annual revenue as of 2017.See it on page 8
04
Operating income is expected to face near-term pressure due to increased spending on human resources, marketing, and infrastructure to support mobile expansion and a 2019 title pipeline.See it on page 14
05
Nexon anticipates a revenue decline in Q4 2018 compared to previous quarters due to a temporary lack of major content updates in its core markets.See it on page 12
06
The company is diversifying its portfolio through a strategic partnership with Embark Studios to develop next-generation online virtual worlds.See it on page 4

Summary

Nexon achieved record-high financial results in the third quarter of 2018, generating ¥69.3 billion in revenue, which represents a 15% year-over-year increase. This growth was primarily fueled by the sustained popularity of core franchises, specifically Dungeon&Fighter in China and MapleStory in Korea. Despite this strong performance, the company maintains a cautious outlook for the final quarter of 2018, projecting a revenue decline due to a temporary lack of major content updates in its primary markets. Nevertheless, the fiscal year remains positive, with annual revenue growth projected at 8–10% and a substantial anticipated increase in net income of 92–95%.

The company’s operational structure remains heavily concentrated in the PC gaming segment, which accounts for 78% of total revenue, while the Chinese market serves as the primary geographic driver, contributing 49% of annual revenue as of 2017. Looking toward future expansion, Nexon is actively diversifying its portfolio through strategic investments, most notably the partnership with Embark Studios. This collaboration aims to leverage the expertise of industry veterans to develop immersive, next-generation online virtual worlds.

While the long-term growth strategy is robust, the company faces near-term financial headwinds. Increased expenditures related to human resources, marketing, and platform infrastructure are expected to impact operating income as the firm scales its mobile business and prepares for a significant pipeline of new titles in 2019. By balancing the stability of its established PC titles with aggressive investment in new development talent and mobile expansion, the company seeks to mitigate regional dependencies and sustain its upward trajectory in the global gaming market.