Q1 Results Driven by Record-Breaking Revenues from Major Franchises in Korea – MapleStory, FIFA ONLINE 4, Dungeon&Fighter, V4 and Sudden Attack
China Dungeon&Fighter Revenue within Predicted Range
Development of New Games on Track with Negligible Disruption from COVID-19
TOKYO–(BUSINESS WIRE)–NEXON Co., Ltd. (“Nexon”) (3659.TO), a global leader in online games, today announced the financial results for its first quarter ended March 31, 2020.
“Despite significant damage to the global economy, Nexon posted a solid First Quarter with record revenue in Korea and no significant disruption to our business,” said Owen Mahoney, president and CEO of Nexon. “Throughout the COVID-19 crisis, Nexon has been spared the turbulence due to minimal physical contact with consumers. Player engagement is growing as millions of people recognize that online games and virtual worlds are the pre-eminent form of entertainment in the 21st century – our online games provide a safe, fun place to relax and communicate with friends and family.”
“Nexon has built an all-weather business that delivers strong and predictable cash flows in any economic environment. And because our developers can work effectively from home, production is on track with negligible disruption. Some of our teams are even reporting improved productivity.”
Recent Highlights Include:
- Better than expected Q1 revenues of ¥82.8 billion were driven by the strong performances of our major franchises in Korea. Q1 EBITDA totaled ¥49.9 billion bringing total cash at the end of March to ¥518 billion or about 4.8 billion US dollars.
- In Korea, both the PC and mobile versions of our MapleStory franchise generated record quarterly revenue with 132%1 year-over-year growth on PC and in the same period, 184%1 growth on mobile. Revenue from Dungeon&Fighter grew 53%1 year-over-year following a successful major content update; and revenue from Sudden Attack grew 52%1. V4, a mobile MMORPG launched in last November performed well and FIFA ONLINE 4 2 delivered record quarterly revenue.
- In China, revenues were within the expected range, although at the lower end of guidance. Q1 content releases for Dungeon&Fighter were well received by players, however, the temporary impact of PC café closures in China due to COVID-19 negatively affected our momentum. The benefits from the content updates are expected to accelerate as PC cafés re-open for business.
- Nexon made leadership announcements to strengthen global operations: Simon Cheong was promoted to Global Chief Operating Officer; Kenny Chang was assigned to lead Nexon America; and Chan Park now heads up the PC and mobile business in Japan.
- In 2019 Nexon adopted a strategy which streamlines development to focus content and service on big franchises that deliver great experiences to large number of players on multiple platforms – including billions of potential players on mobile devices.
- KartRider Rush+ – a mobile version of Nexon’s popular racing franchise is performing well in China following a major content update in 2019. In May, the mobile game went live in major markets worldwide3 and is expected to build on its base of 380 million registered PC users. Another title on this franchise, KartRider: Drift is in development for cross-platform play and expected to launch in 2020.
- In March, Nexon announced an agreement with Electronic Arts, Inc. to launch and operate a new standalone mobile game in Korea: FIFA MOBILE 4. The game, which offers an authentic soccer experience on mobile, recently completed beta test and will launch in Korea in 2020.
- Embark Studios, Nexon’s recently acquired team in Sweden is working on projects which we expect will define a new generation of online games in the West as well as a fundamental change in how games are developed.
- Dungeon&Fighter 2D Mobile – a mobile version of one of the world’s most successful entertainment franchises – has completed a second closed beta test and in just over four months, pre-registered more than 34 million players. Together with local partner Tencent, Nexon plans to launch the game in China in the summer of 2020.
First Quarter 2020 Highlights:
- Revenues ¥82.8 billion, down 11% year-over-year as-reported, down 6% constant currency5 – exceeded our outlook driven by the strong performances of our major franchises in Korea.
- Operating income ¥41.5 billion – in-line with our expectations. Revenue outperformance as well as lower-than-planned HR costs were partially offset by a ¥6.1 billion impairment loss primarily on Nexon GT’s goodwill and Pixelberry’s game IP.
- Net income6 ¥49.9 billion – exceeded our outlook largely driven by an ¥18.7 billion FX gain related to the depreciation of the Korean Won against the U.S. dollar during the quarter and its corresponding impact on U.S. dollar-denominated cash deposits.
Second Quarter 2020 Outlook:
- Expect revenues in the range of ¥59.0 to ¥64.0 billion, up 10% to 19% year-over-year on an as-reported basis, up 16% to 26% year-over-year on a constant currency5 basis
- Expect operating income of ¥21.9 to ¥26.2 billion
- Expect net income6 of ¥20.3 to ¥23.7 billion
- Forex sensitivity7: Every one Japanese yen move against the U.S. dollar would have the following impact on our financials for Q2 2020
– Revenues: ¥0.57 billion
– Operating Income: ¥0.24 billion
Conference Call and Replay:
Nexon management will host a conference call for investors, analysts and the media to discuss the company’s financial results and outlook. The conference call will be held at 5:30 p.m. JST / 4:30 a.m. EDT, and will be simultaneously conducted in Japanese and English. It will consist of brief remarks made by the management team followed by a Q&A session. Q&A session will be conducted with consecutive interpretation.
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Time: |
May 13, 2020 at 5:30 p.m. JST / 4:30 a.m. EDT (planned) |
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For English Speakers |
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Telephone Number: |
+81-3-6629-1042 (Japan), +1-408-758-9913 (US), |
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+44-20-3364-5380 (UK), +852-302-77009 (Hong Kong), |
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+65-640-85783 (Singapore), +82-70-4732-0202 (South Korea) |
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Pass Code: |
70748902# |
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For Japanese Speakers |
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Telephone Number: |
+81-3-6630-2234 (Japan) |
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Pass Code: |
74378934# |
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A replay of the call will be available about 30 minutes after the conclusion of the conference call and can be accessed until May 20, 2020. Webcast replay and a transcript of the call will be available within several days on Nexon’s Investor Relations website. |
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Conference Call Replay (English) |
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Replay Telephone Number: |
+81-3-6630-2251 (Japan) |
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Reference Number: |
512492497# |
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Conference Call Replay (Japanese) |
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Replay Telephone Number: |
+81-3-6630-2236 (Japan) |
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Reference Number: |
512492495# |
For additional information regarding Nexon’s first quarter financial results, please visit the Investor Relations section of Nexon’s website at http://ir.nexon.co.jp/en/.
This press release is prepared to offer reference information about Nexon to investors and is intended to generally provide investors and analysts with financial and operational information about Nexon, but not to solicit or recommend any sale or purchase of stock or other securities of Nexon.
About NEXON Co., Ltd. http://company.nexon.co.jp/en/
Founded in 1994, NEXON Co., Ltd. (“Nexon”) (3659.TO) is a company engaged in the production, development and operation of online games. First listed on the Tokyo Stock Exchange in December 2011, Nexon was placed on JPX400 in 2015 and the Nikkei Stock Index 300 in 2017. Nexon currently has more than 60 live games in various genres operated across more than 190 countries. Major game titles include MapleStory, Dungeon&Fighter and MapleStory M.
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1 Constant currency basis year-over-year growth rate
2 Official titles are EA SPORTS™ FIFA ONLINE 4 (PC) and EA SPORTS™ FIFA ONLINE 4 M (mobile).
3 Excludes China, Vietnam and Japan
4 Official title is EA SPORTS™ FIFA MOBILE.
5 Constant currency is a non-GAAP measure used to show performance unaffected by fluctuations in foreign currency exchange rates. Constant-currency basis amounts are calculated using the average foreign currency exchange rates for the comparable period in the prior year and applied to the current period.
6 Net income refers to net income attributable to owners of the parent, as stated in Nexon’s consolidated financial results.
7 In most situations, the exchange rates of both the South Korean Won and the Chinese Yuan are linked to the U.S. dollar. For simplicity, forex sensitivity is calculated based on the assumption that Korean Won and Chinese Yuan move similarly against Japanese yen when there is an exchange rate movement in US. dollar and Japanese yen.
Contacts
47 communications on behalf of Nexon
Sibel Sunar
sibel@fortyseven.com
212-391-4707