NEXON Q3 2021 Investor Presentation

Key insights

7 takeaways

01
Nexon reported Q3 2021 revenue of ¥75.9 billion, a 4% year-over-year decline driven by a 44% contraction in the mobile segment.See it on page 11
02
Net income surged 132% year-over-year, primarily due to favorable foreign exchange movements and the revaluation of bitcoin holdings.See it on page 9
03
PC gaming remains the company's core revenue driver, accounting for 75% of total Q3 2021 revenue.See it on page 11
04
Operating income increased by 8% despite higher human resource costs resulting from updated compensation policies and stock option programs.See it on page 18
05
The company’s growth strategy centers on the long-term cultivation of established PC franchises, specifically Dungeon&Fighter, MapleStory, and KartRider.See it on page 20
06
Management anticipates a revenue decline in Q4 2021, citing the difficulty of repeating the record-breaking performance achieved in the same period of 2020.See it on page 15
07
The firm maintains a cautious outlook due to external risks, including intense market competition, evolving regulatory landscapes, and technical security challenges.See it on page 49

Summary

Nexon’s financial performance during the third quarter of 2021 demonstrates the resilience of its established PC-based franchises, even as the company navigates a period of transition in its mobile segment. Revenue reached ¥75.9 billion, representing a 4% year-over-year decline, largely attributed to a 44% contraction in mobile earnings. Despite this top-line pressure, net income experienced a significant 132% surge, bolstered by favorable foreign exchange movements and the revaluation of bitcoin holdings. Operating income also saw an 8% increase, reflecting disciplined management despite rising human resource expenditures related to updated compensation policies and stock option programs.

The company’s strategic focus remains anchored in the long-term cultivation of virtual worlds, with core titles such as Dungeon&Fighter, MapleStory, and KartRider serving as the primary engines for engagement and revenue. PC gaming continues to dominate the portfolio, accounting for 75% of total revenue. By prioritizing the evolution of these long-running franchises over traditional, finite development cycles, the company aims to maintain stable, recurring user bases across its key markets in Korea and China.

Looking toward the immediate future, expectations for the fourth quarter of 2021 suggest a continued year-over-year revenue decrease, primarily due to the difficulty of matching the record-breaking performance achieved during the same period in 2020. While the company maintains a robust pipeline of upcoming titles, it remains cognizant of external risks, including intense market competition, evolving regulatory landscapes, and technical security challenges. These factors underscore the necessity of a cautious outlook as the firm balances its legacy success with ongoing efforts to diversify its mobile presence and operational infrastructure.