NEXON Q4 2017 Earnings Call

Key insights

7 takeaways

01
Nexon achieved record-breaking 2017 results with a 25% increase in annual revenue and a 100% increase in operating income.See it on page 3
02
Growth is primarily driven by the sustained performance of core PC franchises Dungeon&Fighter and MapleStory, with the former seeing revenue gains through increased average revenue per paying user.See it on page 3
03
Management projects 2018 revenue growth between 10% and 20%, supported by a strong Chinese market and an expanded mobile portfolio.See it on page 6
04
The company is undergoing a structural reorganization and strategic pivot toward mobile innovation, bolstered by the integration of acquisitions like Pixelberry Studios.See it on page 4
05
Nexon is prioritizing long-term user retention over immediate monetization, exemplified by the launch of the immersive title Durango.See it on page 16
06
The company maintains a cautious stance on professional eSports, requiring organic community interest before committing to developer investment.See it on page 18
07
Despite Q4 headwinds from foreign exchange losses and impairment charges, the long-term strategy focuses on platform convergence across PC, mobile, and console.See it on page 11

Summary

Nexon achieved record-breaking financial performance in 2017, characterized by a 25 percent increase in annual revenue and a doubling of operating income. This growth was primarily fueled by the enduring popularity of core franchises such as Dungeon&Fighter and MapleStory, which continue to defy industry expectations regarding the lifecycle of online titles. While the company faced significant fourth-quarter headwinds due to foreign exchange losses and impairment charges, the overall fiscal trajectory remains positive. Management is now pivoting toward a strategy centered on mobile innovation, the integration of recent acquisitions like Pixelberry Studios, and a structural reorganization designed to enhance governance and operational agility.

Looking toward 2018, the company anticipates continued revenue growth between 10 and 20 percent, supported by the strength of the Chinese market and an expanding mobile portfolio. Although the company expects to navigate regional declines in Japan and Europe alongside rising operational costs, the long-term outlook emphasizes platform convergence across PC, mobile, and console. Leadership remains committed to prioritizing deep, immersive gameplay experiences, as evidenced by the launch of Durango, which focuses on long-term user retention over immediate monetization.

Strategic decision-making remains grounded in a pragmatic assessment of market trends. While the company continues to monitor the rise of game-viewing culture, it maintains a cautious stance on professional eSports, asserting that organic community interest must precede developer investment. By balancing the aggressive development of new intellectual property with the sustained monetization of established hits like Dungeon&Fighter—where revenue growth is currently driven by increased average revenue per paying user—the company aims to maintain its competitive position within the global gaming landscape.