Nexon Q4 2014 Investor Presentation

Key insights

6 takeaways

01
Nexon recorded an ¥11 billion impairment loss in 2014 related to its Japanese subsidiary, gloops, due to the underperformance of specific mobile titles.See it on page 3
02
North American operations grew revenue by 35 percent year-over-year in Q4 2014, though this was offset by revenue declines of 16 percent in Japan and 7 percent in Europe.See it on page 23
03
The company projects a Q1 2015 revenue contraction between 1 percent and 7 percent.See it on page 25
04
Operating margins for Q1 2015 are forecasted to range between 33 percent and 38 percent, impacted by higher marketing, HR, and royalty costs.See it on page 27
05
Nexon’s 2014 fiscal strategy focused on high-quality content and live operations to drive growth in core markets like China and Korea.See it on page 5
06
The company is prioritizing long-term game architecture and tiered content updates to improve player retention and stabilize its global footprint.See it on page 5

Summary

Nexon’s 2014 fiscal performance reflects a strategic pivot toward high-quality content and sustained live operations, which successfully drove revenue growth in core markets like China and Korea. This operational focus remains the cornerstone of the company’s long-term value proposition, even as it navigates significant volatility in its mobile portfolio. A notable challenge during this period was an ¥11 billion impairment loss tied to the Japanese subsidiary, gloops, which stemmed from the underperformance of specific mobile titles and exerted downward pressure on overall operating and net income.

Geographic performance throughout the final quarter of 2014 exhibited marked divergence. While North American operations achieved a robust 35 percent year-over-year revenue increase, these gains were tempered by contraction in Japan and Europe, which saw declines of 16 percent and 7 percent, respectively. Looking toward the first quarter of 2015, the company anticipates a modest revenue contraction between 1 percent and 7 percent. Operating margins are projected to settle between 33 percent and 38 percent, a forecast influenced by planned increases in marketing expenditures, human resource investments, and royalty obligations.

The company continues to prioritize a development philosophy centered on immersive, long-term game architecture and tiered content updates. While these initiatives are designed to foster player retention and consistent engagement, management acknowledges that future results remain subject to inherent market, regulatory, and operational risks. By maintaining a quality-first approach, the organization aims to stabilize its global footprint and mitigate the impact of regional fluctuations while continuing to refine its mobile and PC-based service offerings.