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NEXON Co (NEXOF)
:NEXOF
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Positive Factors
Financial Performance
Nexon’s 1Q results surprised positively with OP of ¥41.6b (+43% YoY) well above the mid-point guide of ¥32.5b and Cons of ¥34b.
Stock Buybacks
A 7% capital return yield is hard to argue with, as management promises significant buybacks and dividends, making a negative view on Nexon’s shares high-risk.
Negative Factors
Earnings Guidance
Nexon's stock derated despite strong first and second quarter results due to weak guidance.
Management Changes
The departure of prior CEO Owen Mahoney added to the de-rating with an increased language barrier between domestic investors and top management.
NEXON Co (NEXOF) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$14.40B
Dividend Yield0.84%
Average Volume (3M)50.00
Price to Earnings (P/E)17.6
Beta (1Y)1.21
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees9,329
SectorCommunication Services
Sector Strength88
IndustryElectronic Gaming & Multimedia
Share Statistics
EPS (TTM)0.22
Shares Outstanding822,990,840
10 Day Avg. Volume0
30 Day Avg. Volume50
Financial Highlights & Ratios
PEG Ratio-2.59
Price to Book (P/B)2.16
Price to Sales (P/S)0.00
P/FCF Ratio15.86
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$16.58Price Target Upside-4.71% Downside
Rating ConsensusHold
Number of Analyst Covering7
NEXON Co Business Overview & Revenue Model
Company DescriptionNEXON Co., Ltd. produces, develops, and services PC online and mobile games. It operates through five segments: Japan, Korea, China, North America, and Others. The company's PC online game titles include MapleStory, Dungeon & Fighter, and EA SPORTS FIFA ONLINE 4. It offers approximately 60 online games in 190 countries. The company was formerly known as NEXON Japan Co., Ltd. and changed its name to NEXON Co., Ltd. in April 2009. The company was founded in 1994 and is headquartered in Tokyo, Japan.
How the Company Makes Money
NEXON Co Earnings Call Summary
Earnings Call Date:May 13, 2025
(Q1-2025)
| % Change Since: 11.83%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call reflected significant revenue and operating income growth, strong franchise performance, and successful new game launches, but challenges remain with Dungeon&Fighter Mobile in China and net income declines. Although Q2 projections indicate a decrease in revenue and income, strategic partnerships and successful tests provide a positive outlook.Q1-2025 Updates
Positive Updates
Revenue and Operating Income Growth
NEXON's first quarter revenue grew 5% year-over-year to JPY 113.9 billion, and operating income increased by 43% to JPY 41.6 billion, exceeding expectations.
Franchise Performance
Dungeon&Fighter, MapleStory, and FC franchises delivered 21% year-over-year growth. MapleStory in Korea saw a 43% year-over-year revenue growth.
New Game Launches
MABINOGI MOBILE outperformed expectations in Korea, becoming the #1 most popular and #3 grossing game on Android and the #1 grossing game on iOS.
Strong Partnerships
Progress on partnerships with Tencent includes new content for Dungeon&Fighter Mobile in China and preregistrations for Khazan and THE FINALS.
ARC Raiders Global Tech Test Success
ARC Raiders exceeded expectations with over 20 million YouTube views, becoming a top 6 viewed game on Twitch, with a 25-point retention rate improvement.
Negative Updates
Dungeon&Fighter Mobile Challenges
In China, Dungeon&Fighter Mobile's DAUs tracked below expectations, leading to revenue falling short of the outlook.
Net Income Decline
Net income fell 27% year-over-year to JPY 26.3 billion due to an FX loss of JPY 4.2 billion, contrasting with a previous FX gain.
Q2 Revenue and Income Projections
Q2 revenue is expected to decrease by 19% to 10% on an as-reported basis, with operating income expected to decrease by 50% to 31%.
Company Guidance
During NEXON's earnings call for Q1 of fiscal year 2025, the company reported a 5% year-over-year revenue increase to JPY 113.9 billion, with operating income rising by 43% to JPY 41.6 billion, surpassing expectations. Key franchises like Dungeon&Fighter, MapleStory, and FC demonstrated a 21% year-over-year growth. Notably, MapleStory in Korea showed a 43% increase in revenue, driven by improvements in DAUs, pay rate, and ARPPU. Two new games, Khazan and MABINOGI MOBILE, were launched, with MABINOGI MOBILE reaching the #1 grossing game on iOS in Korea. The company anticipates Q2 2025 revenues to be similar to the previous year on a constant currency basis despite a challenging comparison period. Operating income for Q2 is projected to decrease by 31% to 50% year-over-year, largely due to anticipated FX impacts and increased costs associated with new game launches and marketing expenses.NEXON Co Financial Statement Overview
Summary
NEXON Co displays strong financial performance with solid revenue growth and profitability, efficient cost management, and robust cash flow generation. The balance sheet is stable with low leverage and a strong equity base, though slight cost pressures and declining ROE warrant monitoring.Income Statement
NEXON Co has demonstrated strong profitability with a consistent gross profit margin averaging around 63% over the recent periods. The net profit margin in the TTM is robust at approximately 27.7%, reflecting efficient cost management and profitability. Revenue growth has been steady, with a notable increase of 6.7% from 2023 to 2024 and a further increase in the TTM. While the EBIT margin is strong at 30.4%, there is a slight decrease from previous years, indicating potential cost pressures. Overall, the income statement reflects a healthy financial performance with solid growth and profitability metrics.85
Very Positive
Balance Sheet
The balance sheet of NEXON Co shows a healthy equity position with an equity ratio of approximately 81.2% in the TTM, indicating a solid financial structure. The debt-to-equity ratio is low at 0.038, showcasing conservative leverage levels. Return on equity has been strong, though there has been a slight decline in ROE in the TTM as compared to 2024. The company maintains a substantial cash position, which provides financial flexibility. Overall, the balance sheet is strong, with minimal leverage risk and a robust equity base, though the slight dip in ROE warrants monitoring.78
Positive
Cash Flow
NEXON Co exhibits impressive cash flow management, with a substantial free cash flow growth rate of 37.4% in the TTM, driven by strong operating cash flow performance. The operating cash flow to net income ratio is approximately 1.10, indicating effective cash conversion from earnings. The free cash flow to net income ratio is also high, at 1.07, reflecting efficient use of capital expenditures to generate free cash flow. Overall, the cash flow statement highlights robust cash generation capacity and efficient capital management, positioning the company well for future investments or shareholder returns.90
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 451.73B | 446.21B | 423.36B | 353.71B | 274.46B | 293.02B | Gross Profit |
| 288.20B | 281.37B | 281.11B | 247.94B | 202.34B | 224.01B | EBIT |
| 137.20B | 139.20B | 137.68B | 158.77B | 138.42B | 111.45B | EBITDA |
| 180.13B | 134.32B | 140.79B | 115.83B | 102.75B | 130.07B | Net Income Common Stockholders |
| 125.20B | 134.85B | 70.61B | 100.34B | 114.89B | 56.22B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 585.85B | 600.87B | 596.76B | 432.45B | 394.38B | 279.91B | Total Assets |
| 1.22T | 1.26T | 1.10T | 1.04T | 986.63B | 862.16B | Total Debt |
| 37.92B | 40.00B | 29.72B | 23.32B | 15.33B | 16.59B | Net Debt |
| -303.03B | -291.93B | -250.79B | -386.04B | -349.91B | -235.98B | Total Liabilities |
| 219.06B | 226.25B | 191.53B | 175.30B | 140.74B | 141.72B | Stockholders Equity |
| 991.93B | 1.02T | 896.27B | 858.19B | 836.67B | 709.88B |
| Cash Flow | Free Cash Flow | ||||
| 133.75B | 97.33B | 123.00B | 124.24B | 91.79B | 134.37B | Operating Cash Flow |
| 138.07B | 100.97B | 128.71B | 130.14B | 105.91B | 137.60B | Investing Cash Flow |
| 64.93B | 7.45B | -188.37B | -10.92B | 18.08B | -140.23B | Financing Cash Flow |
| -91.19B | -64.78B | -78.55B | -105.86B | -21.05B | -2.63B |
NEXON Co Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| $14.40B | 17.60 | 12.67% | 0.84% | ― | ― | ||
61 Neutral | $14.60B | 5.95 | -4.32% | 3.69% | 2.76% | -30.49% | |
| ¥2.68T | 36.69 | 16.43% | 0.82% | ― | ― | ||
| $12.44B | 39.28 | 22.64% | 0.89% | ― | ― | ||
| $3.86B | 14.61 | 11.92% | 1.71% | ― | ― | ||
| $7.44B | 46.56 | 7.32% | 1.37% | ― | ― | ||
72 Outperform | ¥766.83B | 19.25 | 2.62% | -1.70% | 11.29% |
* Communication Services Sector Average
Performance Comparison
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Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.