Nexon Earnings for Second Quarter 2021

Key insights

7 takeaways

01
Nexon reported Q2 2021 group revenues of ¥56.0 billion, a 13% year-over-year decline, with operating income at ¥15.4 billion and net income at ¥9.0 billion.See it on page 1
02
Net income was negatively impacted by a ¥4.5 billion revaluation loss on the company's bitcoin holdings.See it on page 1
03
Regional performance was uneven, highlighted by a 30% year-over-year revenue decline in China and flat growth in Korea, where gains in FIFA ONLINE 4 and Sudden Attack offset losses in MapleStory and Dungeon&Fighter.See it on page 2
04
The company is shifting focus toward long-term IP revitalization and a new development pipeline of 12 titles, including Project Magnum and Mabinogi Mobile.See it on page 2
05
Strategic leadership changes include appointing Myeong-jin Yun to lead the Dungeon&Fighter franchise and Nick van Dyk as Chief Strategy Officer to spearhead global film and television IP expansion.See it on page 2
06
Nexon maintains an investment portfolio in global entertainment companies that generated an unrealized gain of ¥27.6 billion.See it on page 2
07
Management projects continued year-over-year revenue declines for Q3 2021 as the company prioritizes the development of new gaming projects over current operations.See it on page 1

Summary

Nexon’s second-quarter 2021 financial results reflect a period of transition characterized by a focus on long-term intellectual property revitalization and an expanded development pipeline. The company reported group revenues of ¥56.0 billion, representing a 13% year-over-year decline on an as-reported basis. Operating income reached ¥15.4 billion, while net income totaled ¥9.0 billion, the latter being slightly impacted by a ¥4.5 billion revaluation loss linked to bitcoin holdings. Despite these figures, the company maintained that its performance remained within its projected outlook across both PC and mobile segments.

Geographically, results were mixed. Korea saw flat year-over-year revenue growth on an as-reported basis, with strong performances from titles like FIFA ONLINE 4 and Sudden Attack offsetting declines in MapleStory and Dungeon&Fighter. Conversely, revenues in China decreased by 30% year-over-year, and Japan’s performance fell below expectations due to specific title underperformance. North American and European revenues also saw year-over-year declines, while the Rest of World segment exceeded expectations.

To drive future growth, the company is prioritizing the revitalization of its core franchises and the expansion of its content portfolio. Strategic leadership changes include the appointment of Myeong-jin Yun to oversee the Dungeon&Fighter franchise and Nick van Dyk as Chief Strategy Officer to lead global IP expansion, including film and television initiatives. Furthermore, the company is actively developing a robust pipeline of 12 new titles, including Project Magnum and Mabinogi Mobile, while maintaining a significant investment portfolio in global entertainment companies, which has yielded an unrealized gain of ¥27.6 billion. Looking ahead to the third quarter of 2021, the company anticipates continued year-over-year revenue declines as it balances current operations with the development of new, high-potential gaming projects.