Nexon Earnings for First Quarter 2021

Key insights

6 takeaways

01
Nexon reported Q1 2021 revenue of ¥88.3 billion, a 7% year-over-year increase, with operating income reaching ¥43.3 billion and net income rising to ¥46.0 billion.See it on page 1
02
Net income was significantly bolstered by an ¥18.1 billion foreign exchange gain, while operating income exceeded projections due to lower-than-anticipated marketing and payment gateway costs.See it on page 1
03
Geographic performance varied significantly: Japan revenue more than doubled, North America and Europe grew by 16% driven by MapleStory, while China revenue declined 23% year-over-year.See it on page 1
04
The company’s core Korean market underperformed expectations due to the weak performance of MapleStory and KartRider Rush+, despite growth in mobile segments.See it on page 1
05
Nexon pursued strategic diversification in early 2021, including a $100 million bitcoin investment and the acquisition of equity stakes in Hasbro, Bandai Namco, Konami, and Sega Sammy.See it on page 2
06
Management projects a cautious Q2 2021 outlook, forecasting a year-over-year revenue decrease of 8% to 16% as the company focuses on new virtual world developments like Overkill.See it on page 1

Summary

Nexon’s financial results for the first quarter of 2021 demonstrate a period of steady growth, with total revenues reaching ¥88.3 billion, a 7% increase year-over-year. This performance aligns with the company’s strategic focus on high-impact projects, specifically the expansion of online-multiplayer virtual worlds across mobile and console platforms. Operating income reached ¥43.3 billion, exceeding internal projections due to lower-than-anticipated marketing and payment gateway costs, while net income rose to ¥46.0 billion, bolstered significantly by an ¥18.1 billion foreign exchange gain.

Geographic performance was mixed but largely positive. Revenues in North America, Europe, and the Rest of World exceeded expectations, with North American and European markets seeing a 16% increase driven by the MapleStory franchise. Japan’s revenue more than doubled compared to the previous year, supported by the launch of Blue Archive and strong contributions from FIFA Mobile and V4. Conversely, while China’s revenue surpassed internal outlooks, it experienced a 23% year-over-year decline. Korea, a core market, fell below expectations due to the underperformance of specific titles like MapleStory and KartRider Rush+, despite strong growth in mobile segments.

Beyond core operations, the company pursued strategic diversification in early 2021. This included a $100 million investment in bitcoin to maintain long-term liquidity and the disclosure of equity stakes in major global entertainment firms, including Hasbro, Bandai Namco, Konami, and Sega Sammy. Looking ahead to the second quarter, the company maintains a cautious outlook, projecting a year-over-year revenue decrease of 8% to 16% as it continues to refine its portfolio and invest in new virtual world developments, such as the upcoming title Overkill.