NEXON FY2022 Q4 Earnings Conference Call: Q&A Summary

Key insights

6 takeaways

01
Nexon achieved a 29% operating profit margin in 2022 and intends to maintain this level in 2023 despite shifting cost structures.See it on page 1
02
Dungeon&Fighter in China is projected to grow by approximately 30% in Q1 2023 following a successful 2022 recovery, though management warns this growth rate is not sustainable for the full year.See it on page 1
03
FIFA ONLINE 4 reached record-high revenues in 2022, bolstered by World Cup engagement, but leadership expects more conservative performance in 2023 due to the absence of those specific seasonal factors.See it on page 2
04
Nexon has secured regulatory approval to launch MapleStory M in China, with specific release and marketing timelines currently pending.See it on page 2
05
The company is shifting its financial strategy for 2023 by moderating the rate of headcount expansion while simultaneously increasing marketing spend to support major title launches.See it on page 5
06
Nexon’s long-term growth strategy focuses on the development of cross-platform virtual worlds, with KartRider: Drift serving as a primary example of this initiative.See it on page 3

Summary

The NEXON FY2022 Q4 earnings conference call highlights the company’s strategic focus on long-term operational stability and the cultivation of virtual worlds. Management reports a successful turnaround for the China-based Dungeon&Fighter title, which saw consistent recovery throughout 2022 following adjustments to farming systems and improved developer-to-player communication. While the company projects approximately 30% growth for this title in Q1 2023, it cautions against extrapolating this rate for the remainder of the year, emphasizing a commitment to sustainable longevity over short-term spikes.

Key performance indicators for 2022 included record-high revenues for FIFA ONLINE 4, driven by both World Cup-related engagement and effective community-focused operations. However, leadership maintains a conservative outlook for this title in 2023, noting that the previous year’s performance was bolstered by unique seasonal factors. Regarding new market opportunities, the company confirmed regulatory approval for the launch of MapleStory M in China, though specific marketing and release timelines remain forthcoming.

The company’s broader strategy centers on the development of high-quality, cross-platform virtual worlds, exemplified by the global rollout of KartRider: Drift. Management posits that innovation and meaningful differentiation are the primary drivers of user retention, effectively mitigating concerns regarding competition for limited consumer leisure time. Financially, the company plans to moderate the rate of headcount expansion in 2023 compared to the previous year, while simultaneously increasing marketing expenditures to support major title launches. Despite these shifting cost structures, the company aims to maintain an operating profit margin consistent with its 2022 performance of 29%.