NEXON Co’s Earnings Call: Growth Amid Challenges

NEXON Co ((JP:3659)) has held its Q1 earnings call. Read on for the main highlights of the call.

NEXON Co’s recent earnings call painted a picture of robust growth in revenue and operating income, driven by strong franchise performances and successful new game launches. However, the company faces challenges with its Dungeon&Fighter Mobile in China and a decline in net income. Despite these hurdles, strategic partnerships and successful tests offer a promising outlook for the future.

Revenue and Operating Income Growth

NEXON reported a 5% year-over-year increase in revenue, reaching JPY 113.9 billion, and a significant 43% rise in operating income to JPY 41.6 billion. These figures surpassed expectations, highlighting the company’s strong financial performance in the first quarter.

Franchise Performance

The company’s key franchises, including Dungeon&Fighter, MapleStory, and FC, delivered impressive results with a 21% year-over-year growth. Notably, MapleStory in Korea experienced a remarkable 43% increase in revenue, underscoring its continued popularity and success.

New Game Launches

MABINOGI MOBILE made a significant impact in Korea, outperforming expectations by becoming the #1 most popular and #3 grossing game on Android, and the #1 grossing game on iOS. This success highlights NEXON’s effective strategy in launching new games.

Strong Partnerships

NEXON’s collaboration with Tencent has shown progress, with new content for Dungeon&Fighter Mobile in China and preregistrations for Khazan and THE FINALS. These partnerships are expected to drive future growth and expansion.

ARC Raiders Global Tech Test Success

The global tech test for ARC Raiders exceeded expectations, garnering over 20 million YouTube views and becoming a top 6 viewed game on Twitch. This success is indicative of the game’s strong potential and market interest.

Dungeon&Fighter Mobile Challenges

In China, Dungeon&Fighter Mobile’s daily active users (DAUs) fell below expectations, resulting in revenue not meeting the outlook. This challenge highlights the competitive and dynamic nature of the Chinese gaming market.

Net Income Decline

NEXON experienced a 27% year-over-year decline in net income to JPY 26.3 billion, primarily due to a foreign exchange loss of JPY 4.2 billion, contrasting with a previous foreign exchange gain. This decline underscores the impact of currency fluctuations on the company’s financial results.

Q2 Revenue and Income Projections

Looking ahead, NEXON anticipates a challenging second quarter with revenue expected to decrease by 19% to 10% on an as-reported basis, and operating income projected to decline by 50% to 31%. These projections are influenced by anticipated foreign exchange impacts and increased costs associated with new game launches and marketing expenses.

In summary, NEXON’s earnings call highlighted a strong start to the fiscal year with notable growth in revenue and operating income, driven by successful franchises and new game launches. However, challenges remain, particularly in the Chinese market and with net income declines. Despite these challenges, strategic partnerships and successful tests provide a positive outlook for the future.