NEXON Q4 2015 Earnings Conference Call

Key insights

7 takeaways

01
Nexon achieved significant 2015 financial growth with total revenue rising 10% year-over-year to ¥190.3 billion and net income surging 88% to ¥55.1 billion.See it on page 2
02
Mobile revenue grew by 23% in 2015, bolstered by the successful launches of titles such as DomiNations and HIT.See it on page 2
03
Q4 2015 revenue reached ¥45.8 billion, exceeding internal expectations due to strong performance from Dungeon&Fighter in China and the launch of HIT in Korea.See it on page 3
04
Operating income in Q4 was negatively impacted by increased marketing and royalty costs, as well as impairment losses associated with the company's mobile expansion.See it on page 3
05
Nexon is pursuing strategic partnerships with major industry players including EA, Respawn Entertainment, and Square Enix to strengthen its future game pipeline.See it on page 2
06
Management plans to reclassify capital stock to capital surplus to increase financial flexibility for shareholder returns, including potential dividends and stock buybacks.See it on page 7
07
The company faces ongoing financial headwinds from foreign exchange fluctuations, specifically the strengthening of the Japanese yen against the Korean won.See it on page 4

Summary

NEXON’s 2015 fourth-quarter earnings call highlights a year of significant financial growth, characterized by a 10% year-over-year increase in total revenue to ¥190.3 billion and an 88% surge in net income to ¥55.1 billion. The company’s performance was driven by strong live game operations and successful mobile title launches, such as DomiNations and HIT, which helped mobile revenues grow by 23% for the full year. While PC online game revenues saw a slight decline, the company maintained a robust global presence, particularly in China and Korea, despite experiencing performance challenges in the Japanese market.

The company’s strategy centers on high-quality internal development and strategic partnerships with entities like EA, Respawn Entertainment, and Square Enix to bolster its future pipeline. For the fourth quarter specifically, revenues reached ¥45.8 billion, exceeding internal outlooks due to the strong performance of Dungeon&Fighter in China and the successful launch of HIT in Korea. However, operating income was impacted by higher-than-expected expenses, including impairment losses and increased marketing and royalty costs associated with new mobile growth.

Looking toward 2016, the company maintains a focus on long-term growth and shareholder value. Management plans to reclassify capital stock to capital surplus to increase flexibility for future shareholder returns, including dividends and potential buybacks. While the company faces headwinds from foreign exchange fluctuations—specifically the strengthening of the Japanese yen against the Korean won—it remains committed to optimizing its resources, including a planned increase in headcount to support its expanding portfolio of PC and mobile titles.