NEXON Q3FY24: Growth, Innovation, and Strategic Focus

Founded in 1994, NEXON Co., Ltd. has grown into a global powerhouse in online gaming, with a portfolio of 45 live games across PC, console, and mobile platforms in 190 countries. With popular franchises such as MapleStory, KartRider, and Dungeon&Fighter, the company continues to innovate and adapt in a dynamic gaming landscape. In Q3FY24, NEXON reported record-breaking revenues and operating income, reflecting strong performance across key franchises and promising horizontal growth from new titles.

Financial Performance Overview

NEXON delivered a stellar performance in Q3FY24, with its revenue reaching 135,593 million JPY, a 10.71% increase from Q2FY24 and a 12.75% increase compared to Q3FY23. This growth underscores the company’s ability to leverage both its established franchises and emerging opportunities. Key financial highlights include:

• Gross Profit: 89,469 million JPY, up 14.28% from Q2FY24 and 6.07% year-over-year.
• Operating Income: 51,535 million JPY, an increase of 13.95% from Q2FY24 and 11.28% year-over-year.
• Net Profit: 28,696 million JPY, a decline of 27.15% from Q2FY24 and 19.13% year-over-year, due to exceptional items and a challenging comparison base.
• EPS: Basic EPS at 32.55 JPY and diluted EPS at 32.34 JPY.

The revenue split between PC and mobile platforms remained relatively balanced, with PC contributing 51.82% and mobile accounting for 47.79%, showcasing NEXON’s strength in catering to diverse gaming preferences.

Key Drivers of Growth

1. Vertical Growth Initiatives

NEXON’s established franchises, Dungeon&Fighter, MapleStory, and FC, collectively delivered a 15% year-over-year growth, reaffirming the company’s strategy to build on its core strengths:

• Dungeon&Fighter:
  • Mobile version in China contributed to a 142% year-over-year growth. New updates in Q4 and the upcoming New Year update in Q1 FY25 are expected to sustain momentum.
  • The PC version will also see significant updates, including a level cap increase and new progression systems, aimed at long-term player engagement.
• MapleStory:
  • Revenue outside Korea accounted for over 40% of the franchise total, reflecting strong localization strategies.
  • The soft launch of MapleStory Worlds and a large-scale test for MapleStory N integrating blockchain technology signal exciting future prospects.

2. Horizontal Growth Initiatives

NEXON’s new titles have shown promising early performance:

• The First Descendant launched successfully, with 75% of revenue generated from Western markets.
• THE FINALS demonstrated strong retention and engagement, and with the release of Season 5 in December, the title is poised for further growth.
• ARC Raiders underwent a successful public test with improved player sentiment, setting the stage for a 2025 release.

Strategic Developments and Outlook

Capital Markets Briefing Highlights

NEXON hosted a Capital Markets Briefing in September, unveiling its IP Growth Initiative, which aims for:

• 15% CAGR in revenue and 17% CAGR in operating income from 2023 to 2027.
• Annual revenue targets of ¥750 billion and operating income of ¥250 billion by 2027.

This strategy focuses on:

• Vertical Expansion: Enhancing existing franchises with new content, platforms, and hyperlocalization.
• Horizontal Expansion: Introducing new IPs, such as SUPERVIVE and Project OVERKILL, to diversify revenue streams.

Shareholder Return Policy

A revised shareholder return policy was introduced, emphasizing:

• A minimum ROE target of 10%-15%.
• Returning over 33% of annual operating income via dividends and share buybacks.

The company authorized a ¥20 billion share repurchase program for Q4FY24, under a three-year plan totaling ¥100 billion.

Conclusion

NEXON’s Q3FY24 results underscore its robust growth trajectory, driven by innovative strategies across vertical and horizontal initiatives. With record-breaking revenues, strong franchise performance, and promising new IPs, the company is well-positioned to achieve its ambitious long-term targets.

As NEXON continues to expand globally and invest in emerging technologies like blockchain, it remains a formidable force in the gaming industry. The upcoming launches and updates, coupled with a clear focus on shareholder value, make NEXON a company to watch in the evolving world of digital entertainment.