[From the industry] Nexon Releases Earnings for Fourth Quarter and Full Year 2020

This is a press release, posted unchanged in addition to our usual news coverage. 

NEXON Co., Ltd. (Nexon), a global leader in online games, today announced the financial results for its fourth quarter and fiscal year ended on December 31, 2020.

“Nexon’s fourth quarter marked a strong finish to a great year,” said Owen Mahoney, President and CEO of Nexon. “The continued outstanding performance of our blockbuster Virtual Worlds serves to validate our belief that this genre of games has a unique ability to grow revenue over the course of decades after the initial launch. In 2020, MapleStory, which originally launched in 2003, grew an incredible 98% year-over-year in our biggest market, Korea.”

“Nexon looks forward to multiple catalysts in 2021, including new games, on new platforms, coming to new markets,” continued Mahoney. “While we expect variation in near-term revenue growth, the drivers for long-term growth are stronger than ever.”

Fourth Quarter 2020 Highlights:

• Revenues ¥66.4 billion, up 35% year-over-year on an as-reported basis, and up 34% on a constant currency[i] basis – exceeding outlook. This performance was driven by solid execution on FIFA ONLINE 4[ii] and MapleStory in Korea

• Revenues from PC online games[iii] were up 16% year-over-year driven by multiple franchises  including MapleStory across multiple geographies, as well as FIFA ONLINE 42, Dungeon&Fighter and Sudden Attack in Korea

• Mobile game revenues in Q4 accounted for 41% of Nexon’s group revenues – up 76% year-over-year benefiting from The Kingdom of the Winds:Yeon, KartRider Rush+ and FIFA MOBILE[iv]

• Operating income of ¥15.6 billion was within the outlook. While revenue exceeded the outlook, HR costs were higher than planned due to higher performance-based bonus related to the outstanding performances of major titles and new mobile games

• Net loss[v] of ¥29.8 billion was below outlook, primarily due to a ¥29.5 billion deferred tax liability additionally recorded on the undistributed profits of an overseas subsidiary as well as a ¥21.0 billion FX loss on U.S. dollar-denominated cash deposits related to the appreciation of the Korean Won against the U.S. dollar during the quarter and its corresponding impact on U.S dollar-denominated cash deposits

• In December, Nexon announced development on DNF Duel[vi], an all-new game based on characters of the blockbuster Dungeon&Fighter franchise. Further details on the game will be announced at a future date

Full Year 2020 Highlights:

• As a result of strong execution on the company’s focus strategy and the performance of global Virtual World franchises, Nexon achieved record-high revenues and operating income for the full year.

• Revenues were ¥293.0 billion, up 18% year-over-year on an as-reported basis, up 21% on a constant currency1 basis

• Outstanding execution by Nexon’s operations in Korea resulted in year-over-year revenue growth of 84%, and accounting for 56% of Nexon group’s full-year revenues

• Operating income ¥111.5 billion, up 18% year-over-year on an as-reported basis, up 23% on a constant currency1 basis

• Net income5 was ¥56.2 billion, down 51% year-over-year on an as-reported basis and down 47% on a constant currency1 basis due to a ¥29.5 billion deferred tax liabilities additionally recorded on the undistributed profits of an overseas subsidiary as well as a ¥17.7 billion FX loss on cash deposits

• ¥92.4 billion ($874 million) of the $1.5 billion investments authorized by Nexon’s board has been committed in shares of publicly traded global entertainment companies that share Nexon’s commitment to create and sustain global entertainment properties. As of December 31, 2020, Nexon recognized, as other comprehensive income, an unrealized gain of ¥29.5 billion[vii] ($279 million7)

• Revenues from mobile games such as MapleStoryM, The Kingdom of the Winds: Yeon, KartRider Rush+, FIFA MOBILE4 and V4 now accounts for roughly one-third of Nexon’s total annual group revenue – up 60% year-over-year

First Quarter 2021 Outlook :

• Expect revenues in the range of ¥82.8 to ¥89.1 billion, up 0% to 8% year-over-year on an as-reported basis, down 3 % to up 5% year-over-year on a constant currency1 basis

• Expect operating income of ¥35.3 to ¥41.9 billion

• Expect net income5 of ¥26.0 to ¥30.9 billion

• Forex sensitivity[viii]: Every one Japanese yen move against the U.S. dollar would have the following impact on our financials for Q1 2021

–  Revenues: ¥0.82 billion

–  Operating Income: ¥0.39 billion