Nexon Q4 2023 Earnings Prepared Remarks

Key insights

7 takeaways

01
Nexon achieved record fiscal year 2023 performance with ¥423.4 billion in revenue and ¥134.7 billion in operating income, marking year-over-year growth of 20% and 30% respectively.See it on page 3
02
Q4 2023 results missed expectations, with revenue at ¥84.6 billion and operating income at ¥4.5 billion, due to underperformance in key franchises like MapleStory, Dungeon&Fighter, and FC ONLINE, alongside AGBO-related impairment losses.See it on page 3
03
The Board of Directors authorized a new ¥100 billion share repurchase program to be executed over the next three years, signaling confidence in the company's long-term business model.See it on page 8
04
The launch of the new IP THE FINALS exceeded bookings and engagement expectations, establishing a technology stack intended to facilitate rapid content updates for future growth.See it on page 2
05
Nexon secured an ISBN license for the launch of Dungeon&Fighter Mobile in China, which the company identifies as a significant future growth catalyst.See it on page 5
06
The company anticipates a year-over-year revenue decline in Q1 2024 due to difficult comparisons and in-game economy adjustments, though it expects to maintain its second-highest Q1 revenue on record.See it on page 3
07
Strategic focus remains on sustaining global franchises through live operations and developing a pipeline that includes The First Descendant and MABINOGI MOBILE.See it on page 5

Summary

Nexon’s Q4 2023 earnings report details a year of record-setting financial performance tempered by short-term operational challenges. For the full fiscal year, the company achieved record revenue of ¥423.4 billion and operating income of ¥134.7 billion, representing year-over-year growth of 20% and 30%, respectively. However, Q4 results fell below expectations, with revenue reaching ¥84.6 billion and operating income at ¥4.5 billion, impacted by marketing and content performance issues in key franchises like MapleStory, Dungeon&Fighter, and FC ONLINE, alongside one-off expenses and impairment losses related to AGBO.

Despite the Q4 shortfall, the company highlights the successful launch of its new IP, THE FINALS, which exceeded expectations in bookings and player engagement. This title serves as a cornerstone for the company’s long-term growth strategy, utilizing a new technology stack that enables rapid content updates. Looking toward Q1 2024, the company anticipates a year-over-year revenue decline due to difficult comparisons and adjustments to in-game economies, though it maintains that this period will still represent its second-highest Q1 revenue on record.

Strategic priorities remain focused on sustaining large-scale global franchises through robust Live Operations and the development of a strong pipeline, including titles such as The First Descendant and MABINOGI MOBILE. A significant future growth catalyst is the recent approval of an ISBN license for the launch of Dungeon&Fighter Mobile in China. Reflecting confidence in its long-term business model and future prospects, the Board of Directors has authorized a new ¥100 billion share repurchase program to be executed over the next three years, following the successful completion of a previous ¥100 billion buyback plan.