NEXON Co., Ltd. Q4 2013 Earnings Conference Call Transcript

Key insights

6 takeaways

01
NEXON achieved a 43% revenue increase in fiscal year 2013, reaching ¥155.3 billion, driven primarily by the Korean market and the performance of Dungeon&Fighter in China.See it on page 4
02
Q4 2013 financial results were negatively impacted by ¥11.1 billion in non-cash impairment charges, including ¥8.6 billion for NDOORS and ¥2.5 billion for 6waves.See it on page 7
03
The company is undergoing a leadership transition with CFO Owen Mahoney set to succeed CEO Seungwoo Choi to address underperformance in Japan and Western markets.See it on page 3
04
Operating margins were pressured by a shift in revenue mix away from the high-margin Chinese market and a decline in monthly active users for the flagship title, Dungeon&Fighter.See it on page 4
05
Management is restructuring its mobile strategy for 2014, specifically shifting the subsidiary gloops from browser-based titles to native applications.See it on page 10
06
The company is adopting a more selective portfolio management approach, prioritizing fewer, higher-quality projects and disciplined live game operations to stabilize long-term growth.See it on page 10

Summary

NEXON Co., Ltd. concluded the 2013 fiscal year with a 43% revenue increase to ¥155.3 billion, underpinned by strong performance in the Korean market and the sustained dominance of Dungeon&Fighter in China. Despite this top-line growth, the company encountered significant operational headwinds, including underperformance in Japan and Western markets, which necessitated a leadership transition as CFO Owen Mahoney prepared to succeed CEO Seungwoo Choi. This shift marks a strategic pivot toward high-quality product development, aggressive talent acquisition, and the cultivation of global partnerships to stabilize long-term growth.

Financial results for the fourth quarter were tempered by substantial non-cash impairment charges, specifically ¥8.6 billion related to the NDOORS subsidiary and ¥2.5 billion tied to the 6waves affiliate. Operating margins faced additional pressure from a revenue mix shift away from the high-margin Chinese market, compounded by a noticeable decline in monthly active users for the company’s flagship title, Dungeon&Fighter. To mitigate these inconsistencies, management is prioritizing disciplined execution in live game operations and maintaining a robust cash position to ensure flexibility for future strategic investments.

The company’s 2014 outlook emphasizes a fundamental restructuring of its mobile gaming strategy, particularly regarding the subsidiary gloops. By transitioning away from browser-based titles toward native applications and consolidating resources into fewer, higher-quality projects, the firm aims to reverse recent performance declines. These efforts reflect a broader commitment to operational efficiency and a more selective approach to portfolio management, ensuring that the company remains well-positioned to navigate the evolving global digital entertainment landscape.