Nexon Q3 2019 Investor Presentation

Key insights

6 takeaways

01
Nexon reported Q3 2019 revenue of ¥52.3 billion, supported by a strong liquidity position of ¥177.5 billion in cash and cash equivalents.See it on page 9
02
Q4 2019 revenue is projected to decline by 4% to 10% year-over-year, driven by ongoing weakness in the Chinese market and international deceleration.See it on page 13
03
Despite the projected revenue dip, net income is expected to increase year-over-year due to reduced operating costs and the absence of prior-year impairment losses.See it on page 13
04
Record-high revenues from the MapleStory franchise and strong performance of FIFA ONLINE 4 in Korea successfully offset the underperformance of Dungeon&Fighter in China.See it on page 3
05
Management anticipates a long-term recovery for the Dungeon&Fighter title in China following major content updates scheduled for early 2020.See it on page 4
06
The company’s growth strategy centers on managing live service games, developing new titles like V4, and pursuing strategic mergers and acquisitions.See it on page 32

Summary

Nexon’s financial performance in the third quarter of 2019 reflects a period of strategic stabilization, characterized by record-high revenues from the MapleStory franchise and robust engagement with FIFA ONLINE 4 within the Korean market. These successes effectively balanced the underperformance of the Dungeon&Fighter title in China, a region where management anticipates a long-term recovery following the implementation of comprehensive content updates scheduled for early 2020. By prioritizing operational efficiency and focusing resources on high-impact intellectual property across diverse platforms, the company maintains a solid financial foundation, evidenced by ¥52.3 billion in quarterly revenue and a strong liquidity position of ¥177.5 billion in cash and cash equivalents.

Looking toward the final quarter of 2019, the company projects a year-over-year revenue decline ranging between 4% and 10%. This anticipated contraction is primarily attributed to continued weakness in the Chinese market and a broader deceleration in international segments. However, this revenue dip is expected to be offset by growth in Korea, driven by the sustained momentum of MapleStory and the introduction of the new title V4. Furthermore, net income is forecasted to rise compared to the previous year, bolstered by a reduction in operating costs and the absence of the significant impairment losses that impacted the prior year’s results.

The company’s long-term growth strategy remains anchored in the management of live service games, the development of new titles, and the pursuit of strategic mergers and acquisitions. While these forward-looking projections are subject to inherent market risks, including regulatory shifts, competitive pressures, and technical security challenges, the organization continues to emphasize a disciplined approach to capital allocation. By streamlining operations and leveraging established franchises, the company aims to navigate current regional volatility while positioning itself for future profitability.