Notice of Revision to Nexon Announces Second Quarter 2014 Results

Key insights

6 takeaways

01
Nexon reported Q2 2014 revenue of ¥36.9 billion, a 1% year-over-year increase, while operating income fell 26% to ¥9.96 billion.See it on page 3
02
The company revised its Q3 2014 outlook for the Chinese market from a projected mid-to-high single-digit revenue increase to a mid-to-high single-digit revenue decrease.See it on page 1
03
Mobile revenue grew by 16% in Q2 2014, led by titles such as Legion of Heroes and FIFA Online 3M, while PC revenue contracted by 3%.See it on page 3
04
Korea served as the primary growth engine with a 56% revenue increase, whereas China, Japan, North America, and Europe all experienced year-over-year revenue declines.See it on page 3
05
Q3 2014 operating margins are expected to remain between 27% and 30%, pressured by increased headcount, strategic marketing, and higher royalty costs for third-party intellectual property.See it on page 4
06
Nexon projects overall Q3 2014 revenue growth between 0% and 7%, with mobile revenue expected to rise by 19% to 30%.See it on page 4

Summary

Nexon Co., Ltd. released its financial results for the second quarter of 2014, reporting a 1% year-over-year revenue increase to ¥36.9 billion. Despite this modest top-line growth, operating income declined by 26% to ¥9.96 billion, resulting in an operating margin of 27%. The company’s performance was characterized by a significant 16% growth in mobile revenue, driven by titles such as Legion of Heroes and FIFA Online 3M, while PC revenue experienced a 3% contraction.

Geographically, the results were mixed. Korea emerged as a primary growth engine with a 56% revenue increase, bolstered by the popularity of FIFA Online 3 and strong performance from established PC titles. Conversely, China—a major market for the company—saw a 13% revenue decline, though user metrics for Dungeon & Fighter remained stable. Operations in Japan, North America, and Europe also faced year-over-year revenue decreases.

The company issued a revision to its third-quarter 2014 business outlook, specifically adjusting its forecast for the Chinese market from an expected mid to high single-digit revenue increase to a mid to high single-digit revenue decrease. Overall, the third-quarter outlook anticipates flat to 7% revenue growth, with mobile revenues expected to rise between 19% and 30%. Operating margins are projected to remain between 27% and 30%, influenced by higher royalty costs for third-party intellectual property, increased headcount, and strategic marketing investments. Nexon continues to focus on expanding its portfolio through partnerships with Western developers to secure high-quality content for global markets.