NEXON Q4 2013 Investor Presentation

Key insights

6 takeaways

01
Nexon achieved 43% annual revenue growth in 2013, driven by strong performance in its core Korean and Chinese markets.See it on page 6
02
The company reported a ¥4.4 billion net loss in Q4 2013, primarily due to ¥12 billion in impairment charges related to NDOORS and 6waves.See it on page 5
03
Despite the Q4 loss, Nexon maintains a strong liquidity position with ¥138.8 billion in cash and cash equivalents and ¥60.2 billion in operating cash flow.See it on page 5
04
Operations in Japan and Western markets continue to underperform, prompting a strategic shift toward native mobile development and content partnerships to stabilize these regions.See it on page 32
05
Nexon projects declines in revenue and operating income for Q1 2014 as it pivots its business model toward live game development and higher quality standards.See it on page 15
06
The company is streamlining its global portfolio to mitigate recent impairment losses and prioritize operational excellence in its live service titles.See it on page 29

Summary

Nexon’s 2013 fiscal performance reflects a period of significant top-line expansion coupled with substantial bottom-line volatility. Driven by robust demand in the Korean and Chinese markets, annual revenue grew by 43 percent, underscoring the efficacy of the company’s core content-led strategy. Despite this growth, the fourth quarter of 2013 resulted in a net loss of ¥4.4 billion. This deficit was primarily precipitated by ¥12 billion in impairment charges tied to NDOORS and 6waves, alongside unfavorable currency fluctuations that impacted overall financial stability.

The company maintains a strong liquidity position, evidenced by cash and cash equivalents reaching ¥138.8 billion and operating cash flow climbing to ¥60.2 billion. However, the geographic disparity in performance remains a critical challenge, as operations in Western markets and Japan have consistently underperformed relative to the company’s Asian strongholds. To address these regional weaknesses, the strategic focus for the upcoming fiscal year centers on reallocating resources toward native mobile application development and fostering strategic content partnerships to stabilize international operations.

Looking toward the first quarter of 2014, the outlook remains cautious. Anticipated declines in revenue and operating income reflect the ongoing transition as the company pivots toward live game development and higher product quality standards. By prioritizing operational excellence in its live service titles and streamlining its global portfolio, the organization aims to navigate current market shifts and mitigate the impact of recent impairment losses. The overarching objective remains the long-term stabilization of its global footprint through a disciplined focus on high-quality, sustainable content delivery.