Nexon Q3 2024 Earnings Letter

Key insights

6 takeaways

01
Nexon reported strong Q3 2024 financial results with revenue of ¥135.6 billion and operating income of ¥51.5 billion, marking year-over-year growth of 13% and 11%, respectively.See it on page 2
02
The company has set ambitious 2027 financial targets, aiming for a 15% revenue CAGR and a 17% operating income CAGR.See it on page 3
03
Nexon is successfully diversifying its geographic footprint, with non-Korean markets now contributing over 40% of MapleStory revenue and Western markets accounting for approximately 75% of The First Descendant's revenue.See it on page 5
04
The company is implementing a revised shareholder return policy that includes a 10% to 15% return on equity target, a commitment to return over 33% of annual operating income to shareholders, and a ¥20 billion share repurchase program.See it on page 7
05
Strategic growth is driven by a dual approach: vertical expansion of established franchises like Dungeon&Fighter and MapleStory, and horizontal expansion into new genres, such as the global shooter segment with The First Descendant.See it on page 2
06
Nexon is prioritizing long-term technical and creative investment, including migrating legacy titles to Unreal Engine 5 and developing sequels like The Kingdom of the Winds 2.See it on page 6

Summary

Nexon’s Q3 2024 performance reflects a strategic focus on long-term IP growth, characterized by record-breaking financial results despite foreign exchange headwinds. The company reported quarterly revenue of ¥135.6 billion and operating income of ¥51.5 billion, representing year-over-year increases of 13% and 11%, respectively. These results underscore the effectiveness of a dual-pronged strategy: vertical expansion of established franchises like Dungeon&Fighter, MapleStory, and FC, alongside horizontal growth through new intellectual properties such as The First Descendant.

The company’s growth strategy is anchored by ambitious 2027 financial targets, aiming for a 15% revenue CAGR and a 17% operating income CAGR. Key drivers include the successful launch of Dungeon&Fighter Mobile in China and a hyperlocalization initiative that has expanded the MapleStory franchise’s reach, with non-Korean markets now accounting for over 40% of its total revenue. Furthermore, the successful debut of The First Descendant, which derived approximately 75% of its revenue from Western markets, validates the company’s push into global shooter segments and its commitment to diversifying its portfolio beyond traditional strongholds.

Looking ahead, Nexon is prioritizing sustained investment in innovation, including transitioning legacy titles to Unreal Engine 5 and developing sequels such as The Kingdom of the Winds 2. While these investments may temporarily influence the pace of financial growth, they are intended to secure long-term profitability. Complementing this operational strategy is a revised shareholder return policy, which includes a minimum return on equity target of 10% to 15%, a commitment to return over 33% of annual operating income to shareholders, and a significant increase in dividend forecasts alongside a ¥20 billion share repurchase program.