Nexon Q4 2024 Earnings Letter

Key insights

6 takeaways

01
Nexon reported full-year 2024 revenue of ¥446.2 billion, a 5% year-over-year increase, though operating income fell 8% to ¥124.2 billion due to IP investment costs.See it on page 2
02
Q4 2024 revenue declined 6% year-over-year to ¥79.7 billion, impacted by underperformance in the FC franchise, The First Descendant, and a ¥7.0 billion one-time impairment loss.See it on page 2
03
To address slowing momentum in the Dungeon&Fighter franchise, Nexon has formed a co-development partnership with Tencent to improve hyperlocalization and production capacity in China.See it on page 4
04
Nexon maintains a strong financial position with over ¥600 billion in cash and seven consecutive years of generating more than ¥100 billion in operating cash flow.See it on page 8
05
The company is prioritizing long-term growth through a pipeline of seven new titles, including The First Berserker: Khazan and ARC Raiders, targeting 2027 objectives.See it on page 7
06
To support shareholder value, the board authorized a ¥100 billion stock buyback program and committed to a stable annual dividend of 30 yen per share.See it on page 8

Summary

Nexon’s 2024 fiscal performance reflects a year of record-breaking revenue alongside strategic challenges that have necessitated a shift in operational focus for 2025. The company reported full-year revenue of ¥446.2 billion, a 5% year-over-year increase, though operating income declined by 8% to ¥124.2 billion due to ongoing investments in IP portfolio expansion. The fourth quarter proved difficult, with revenue falling 6% year-over-year to ¥79.7 billion, driven by underperformance in the FC franchise and The First Descendant, as well as a one-time impairment loss of ¥7.0 billion.

The primary strategic priority for 2025 is the revitalization of the Dungeon&Fighter franchise. While the franchise grew 53% in 2024, recent momentum has slowed in both China and Korea. To address this, the company has entered a co-development agreement with Tencent to enhance hyperlocalization and production capacity for the Chinese market. Simultaneously, Nexon is advancing a robust pipeline of seven new titles, including The First Berserker: Khazan, ARC Raiders, and various extensions of the Dungeon&Fighter and Mabinogi franchises, all aimed at achieving long-term growth targets set for 2027.

Despite the Q4 shortfall, the company maintains a strong financial position, having generated over ¥100 billion in operating cash flow for the seventh consecutive year and holding a cash balance exceeding ¥600 billion. To bolster shareholder value during this transitional period, the board has authorized a ¥100 billion stock buyback program and committed to a stable annual dividend of 30 yen per share. Management remains focused on leveraging its creative talent and strategic partnerships to navigate current market headwinds and return to sustainable growth.