Today Nexon announced its financial results for the second quarter of 2020, related to the period between April 1 and June 30.
According to the press release, the company achieved record-breaking performance for a Q2,
Revenue was up 20% year-on-year and the best result for a second quarter in the history of the company. Operating income also exceeded expectations.
President and CEO Owen Mahoney accompanied the press release with a statement mentioning that the company is “performing exceptionally well” and praising the strategy that involves releasing fewer but bigger games.
“Nexon is performing exceptionally well. Our tent-pole franchises are setting records for revenue, consumer engagement and longevity. These franchises are fueling our cash flow which, in turn, further strengthens our balance sheet, providing liquidity to invest in growth.”
“Our recently revised creative strategy calls for delivering fewer but bigger games onto fast-growing platforms like mobile is on a path to become an enormous success. We’re thrilled to see the early success of KartRider Rush+ as well as The Kingdom of the Winds: Yeon, and by the end of this year, five of Nexon’s biggest franchises will be available as PC-quality mobile games. This includes MapleStory M, KartRider Rush+, The Kingdom of the Winds: Yeon, EA SPORTSTM FIFA MOBILE and the new mobile game of our massively popular franchise – Mobile Dungeon&Fighter.”
Below you can read a number of highlights shared by Nexon.
Second Quarter 2020 Highlights:
- Nexon posted the best Q2 in company history with group revenues of ¥64.5 billion, up 20% year-over-year on an as-reported basis, up 27% on a constant currency basis[i]. Our stronger-than-expected performance was driven by KartRider Rush+, MapleStory and Korea Dungeon&Fighter.
- Operating income ¥26.7 billion – exceeded our expectations driven by revenue outperformance. On the cost side, marketing costs were lower than our plan while platform gateway fees and royalties were higher than planned.
- Net income[ii] ¥19.8 billion – below our outlook due to a \6.7 billion FX loss primarily on U.S. dollar-denominated cash deposits.
Other Recent Highlights Include:
- The solid Q2 performance was driven by a record-breaking second quarter in Korea with MapleStory, Dungeon&Fighter and Sudden Attack each contributing double-digit or even triple-digit year-over-year growth[iii].
- KartRider Rush+ launched globally[iv] in May is showing early success on mobile, particularly in Korea where there is little overlap with PC players. The performance of KartRider Rush+ strengthens our belief that platform expansion – particularly on mobile – represents a massive opportunity for Nexon’s tent-pole franchises.
- In China, a shortfall in revenue is attributable to recent content updates for Dungeon&Fighter, which proved popular with existing players but fell short in recapturing players who have not logged on recently. Importantly, the existing player base is stable and we do not expect that to change this year.
- V4, Nexon’s mobile MMORPG launched in Q4 2019 in Korea and contributed there in Q2, is now available in over 150 countries. V4 will also launch in Japan later this year.
- In July, Nexon announced an agreement with Electronic Arts Inc. to bring EA SPORTSTM FIFA MOBILE to Japan. Extending a highly successful partnership that began with FIFA Online[v] in Korea, the mobile game will offer an authentic football experience supported by Nexon’s best-in-class live operations. Japanese players can register for a closed-beta test of the game beginning August 7.
- In June, Nexon announced that its board of directors authorized US$1.5 billion for investments in publicly traded global entertainment companies that share our vision for creating and sustaining strong intellectual properties across multiple markets for long periods of time.
- Also in June, Nexon announced the establishment of two joint ventures for game development with Seoul-based Wonder Holdings for development of two titles based on popular Nexon IP, MABINOGI MOBILE and KartRider: Drift. Both companies will hold a 50% stake in the joint ventures with leadership provided by Wonder Holdings founder Min Hur and two Nexon leaders. Upon completion, Nexon will publish the games.
- New games in development by Nexon include KartRider: Drift, a cross-platform adaptation of one of Nexon’s most versatile franchises to be launched globally[vi], and new content from Nexon’s Embark Studios which will define a new generation of online games and influence the way games are developed going forward.
- Mobile Dungeon&Fighter will go live in China with 60 million players who pre-registered ahead of the August 12 launch. Following its debut in 2005, Dungeon&Fighter became one of the world’s top-grossing entertainment franchises with more than US$15 billion in life-time revenues on the PC alone. The mobile adaptation is built on the same success formula: a fun, easy-to-play game with best-in-class live operations providing support and fresh content.
Third Quarter 2020 Outlook:
- Expect revenues in the range of ¥77.3 to ¥85.4 billion, up 48% to 63% year-over-year on an as-reported basis, up 49% to 65% year-over-year on a constant currency1 basis
- Expect operating income of ¥30.5 to ¥37.4 billion
- Expect net income2 of ¥25.5 to ¥31.0 billion
- Forex sensitivity[vii]: Every one Japanese yen move against the U.S. dollar would have the following impact on our financials for Q3 2020
- Revenues: \0.76 billion
- Operating Income: \0.34 billion
And if you’re wondering, because I know some of you are, the Final Fantasy XI mobile remake is still there in Nexon’s pipeline, even if we get no updates.