Nexon Q3 2019 Financial Results

Key insights

7 takeaways

01
Nexon reported Q3 2019 revenue of ¥52.4 billion, a 24% year-over-year decline, while operating income reached ¥24.4 billion due to cost-management and the consolidation of Embark Studios.See it on page 1
02
Net income for the quarter was ¥39.8 billion, significantly bolstered by a ¥15.4 billion foreign exchange gain.See it on page 2
03
The 16-year-old MapleStory franchise achieved record-breaking quarterly revenue, while FIFA ONLINE 4 delivered strong year-over-year growth across PC and mobile platforms.See it on page 1
04
Nexon is shifting its development strategy to focus on fewer, large-scale projects, supported by the full acquisition of Embark Studios and a strategic investment in Wonder Holdings.See it on page 2
05
The company is divesting from its browser-based mobile games business in Japan to reallocate resources toward higher-margin opportunities.See it on page 2
06
To address performance challenges with the Dungeon&Fighter franchise in China, the company is implementing rapid content updates based on player feedback.See it on page 1
07
Nexon projects Q4 2019 revenue to fall between ¥41.4 billion and ¥44.5 billion as it continues to integrate AI technology via its Intelligence Labs unit.See it on page 2

Summary

Nexon’s third-quarter 2019 financial results reflect a strategic pivot toward streamlining operations to focus on high-impact intellectual property and immersive online virtual worlds. The company reported revenues of ¥52.4 billion, representing a 24% year-over-year decline, which aligned with internal projections. Despite the revenue contraction, operating income reached ¥24.4 billion, bolstered by cost-management initiatives and a ¥7.5 billion gain from the consolidation of Embark Studios. Net income for the period was ¥39.8 billion, significantly aided by a ¥15.4 billion foreign exchange gain.

Performance was driven by the sustained success of core franchises in Korea, most notably MapleStory, which achieved record-breaking quarterly revenue in its 16th year of operation. FIFA ONLINE 4 also contributed strong year-over-year growth across PC and mobile platforms. Conversely, the company faced short-term challenges in the Chinese market regarding the Dungeon&Fighter franchise, prompting a shift toward rapid content updates based on player feedback. To support these operational goals, the company is increasingly leveraging AI technology through its Intelligence Labs unit.

The company’s broader corporate strategy involves narrowing its development focus to fewer, larger-scale projects. This transition is supported by the full acquisition of Embark Studios and a strategic investment in Wonder Holdings to bolster development capabilities. Furthermore, the company is divesting from its browser-based mobile games business in Japan to reallocate resources toward higher-margin opportunities. Looking ahead to the fourth quarter of 2019, the company anticipates revenues between ¥41.4 billion and ¥44.5 billion, maintaining a cautious but focused outlook as it prepares for the next generation of genre-defining online games.