NEXON Co ((JP:3659)) has held its Q2 earnings call. Read on for the main highlights of the call.
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NEXON’s recent earnings call painted a picture of a company experiencing both triumphs and challenges. The overall sentiment was positive, highlighting strong performances in key franchises and successful new title launches. However, the earnings were tempered by foreign exchange losses and difficulties in maintaining player engagement, particularly in Dungeon&Fighter Mobile.
Strong Performance in Key Franchises
NEXON’s key franchises, Dungeon&Fighter PC and MapleStory, demonstrated impressive growth. Dungeon&Fighter PC saw a remarkable 67% year-over-year (YoY) revenue increase, while MapleStory achieved a 60% YoY revenue growth. In Korea, these titles set new quarterly revenue records, with monthly active users (MAUs) and paying users (PUs) nearly doubling, resulting in a 132% YoY revenue growth.
Successful Launch of New Titles
The launch of new titles has been a significant success for NEXON. MABINOGI MOBILE exceeded expectations with robust MAUs, PUs, and average revenue per paying user (ARPPU). Additionally, ARC Raiders, set for release on October 30, is already the sixth most wish-listed game on Steam, indicating strong anticipation and potential success.
Strong Revenue and Operating Income Performance
NEXON reported strong financial performance in the second quarter, with revenue reaching JPY118.9 billion, 8% above the high end of guidance. Operating income was also impressive at JPY37.7 billion, 21% above guidance, showcasing the company’s ability to exceed market expectations.
Shareholder Return Initiatives
In a move to return value to shareholders, NEXON implemented a JPY100 billion buy-back policy. By June, JPY50 billion worth of shares had been repurchased, with plans for further repurchases, demonstrating the company’s commitment to enhancing shareholder value.
Negative Impact of Foreign Exchange
Despite strong operational performance, NEXON’s net income was adversely affected by foreign exchange losses. The company reported a net income of JPY16.8 billion, falling short of expectations due to a JPY17.5 billion FX loss on US dollar-denominated cash deposits, resulting in a 58% YoY decline.
Decline in Key Franchises
While some franchises performed well, the collective revenue for NEXON’s three major franchises declined by 13% YoY. Notably, the Dungeon&Fighter franchise experienced a significant 40% YoY revenue decline, highlighting areas needing attention.
Challenges in Sustaining Player Engagement
NEXON faced challenges in maintaining player engagement, particularly with Dungeon&Fighter Mobile. Although the May anniversary update initially succeeded, it was less effective at sustaining returning players than anticipated, indicating a need for strategic adjustments.
Forward-Looking Guidance
Looking ahead, NEXON remains optimistic about its future performance. Despite an expected YoY revenue decline of 6% to 14% in Q3 on an as-reported basis, the company anticipates strong performances from its flagship titles. The upcoming release of ARC Raiders and the expansion of the MABINOGI MOBILE franchise are expected to support future growth, positioning NEXON for continued success.
In summary, NEXON’s earnings call reflected a company navigating both successes and challenges. While strong performances in key franchises and new title launches were evident, foreign exchange losses and player engagement issues posed hurdles. Nonetheless, with strategic initiatives and promising future releases, NEXON is poised to overcome these challenges and continue its growth trajectory.