NEXON Investor Presentation: Q4 2018

Key insights

6 takeaways

01
Nexon achieved record-breaking 2018 fiscal results with an 8% revenue increase and a 90% surge in net income, driven by the sustained performance of core titles Dungeon&Fighter and MapleStory.See it on page 3
02
Q4 2018 revenue declined 13% year-over-year, missing internal expectations due to underperforming mobile segment contributions and a ¥3.0 billion impairment loss.See it on page 15
03
The company maintains a strong liquidity position, ending 2018 with ¥205.3 billion in cash and cash equivalents and generating ¥118 billion in annual operating cash flow.See it on page 29
04
Revenue remains heavily concentrated in the Korean market, which accounted for 52% of total 2018 revenue.See it on page 13
05
Nexon faces near-term financial pressure from rising operating costs linked to aggressive mobile expansion and increased headcount, leading to projected revenue volatility in Q1 2019.See it on page 22
06
Long-term strategy focuses on leveraging live game operations, diversifying the PC and mobile development pipeline, and pursuing strategic mergers and acquisitions.See it on page 36

Summary

Nexon achieved record-breaking financial performance throughout the 2018 fiscal year, characterized by an 8% increase in revenue and a 90% surge in net income. This growth was primarily anchored by the sustained popularity of core titles such as Dungeon&Fighter and MapleStory. Despite these annual gains, the final quarter of 2018 underperformed against internal expectations, recording a 13% year-over-year revenue decline. This downturn was largely attributed to weaker-than-anticipated contributions from the mobile segment and a ¥3.0 billion impairment loss, which offset growth observed in the Japanese and North American markets.

The company maintains a robust financial foundation, ending the year with ¥205.3 billion in cash and cash equivalents and generating ¥118 billion in annual operating cash flow. Regional performance remains heavily concentrated, with Korea accounting for 52% of total revenue. Looking ahead, the organization faces near-term pressure as it navigates increased operating costs associated with aggressive mobile expansion and headcount growth. Projections for the first quarter of 2019 suggest continued revenue volatility as the company balances these investments against the performance of its existing portfolio.

Long-term strategic objectives center on leveraging live game operations, diversifying the development pipeline for both PC and mobile platforms, and pursuing strategic mergers and acquisitions. However, these forward-looking goals remain subject to significant operational risks, including shifting regulatory environments, cybersecurity threats, and the inherent unpredictability of title popularity. By maintaining a focus on core franchises while scaling mobile capabilities, the company aims to stabilize its market position despite the regional variances and cost pressures identified at the close of 2018.