[NX] Nexon’s 1st Quarter Earnings Report
So I have good news and bad news. The good news is that Nexon beat expectations globally and recorded record revenue for the first quarter due to a variety of excellent reports from global markets. The bad news is that Nexon America continued to struggle, being the only individually reported region where Nexon reports revenue for to have its revenue fall year-over-year.
Nexon reported quarter one revenue of 30.377 billion JPY ($380.3 million; 435.7 billion KRW), operating income of 17.384 billion JPY ($217.6 million; 249.4 billion KRW) and net income of 12.377 billion JPY ($154.9 million; 177.5 billion KRW).
Performance results by reportable segments are as follows:
In Japan, while sales from existing game titles, such as “Maple Story,” “Tales Weaver,” and “Counter-Strike Online,”
continued to show a steady growth, because of the cost increase due to factors such as aggressive marketing activities for
new game titles, Net sales amounted to ¥3,087 million and Segment income amounted to ¥374 million.
In Korea, strong growth of sales primarily from major updates of “Maple Story,” “Sudden Attack,” and “Mabinogi
Heroes” in Lunar New Year and an increase in royalty income due to significant increase in sales from
“Dungeon&Fighter” in China contributed to Net sales of ¥24,147 million and Segment income of ¥16,032 million.
In China, an increase in consulting income as a result of significant increase in sales from “Dungeon&Fighter” contributed
to Net sales of ¥1,327 million and Segment income of ¥1,028 million.
(d) North America
In North America, sales from existing game titles increased as planned, but the delay in update as a consequence of the
hacking attempt to “Maple Story” at the end of the previous consolidated fiscal year resulted in Net sales of ¥1,336 million
and Segment income of ¥154 million.
In other areas, sales remained at the same level as the previous year, but the impact of foreign exchange rates resulted in
Net sales of ¥478 million and Segment income of ¥116 million.
Nexon also saw growth in several of their key monetization metrics in Q1. Average Monthly
Active User count (“MAUs”) for Q1 2012 declined slightly to 82.8 million from 86.2
million in Q1 2011 (and was up from Q4 2011 MAU count of 80 million.) Their paying
user rate was up year-over-year, with 10.9% of users paying (“pay rate”) in Q1 2012,
up from 8.3% in Q1 2011. As a result, their total number of paying users increased from
7.1 million to 9.1 million. Their Average Revenue Per Paying User (“ARPPU”) worldwide,
calculated using month-end exchange rates, was ¥1,761 for Q1 2012, up from ¥1,427 in
Nexon Korea’s revenue increased 34% year-over-year. Korea contributed approximately 29% of revenue for the quarter. Sudden Attack and Vindictus were standout titles during the quarter for Nexon Korea.
Nexon’s Chinese publishing arrangements continues to grow greatly. Increasing 89% year-over-year, Nexon’s Chinese operations contributed all of 50% of Nexon’s quarterly earnings. Dungeon Fighter Online, Counter-Strike Online and KartRider all performed well in China this quarter.
Increasing earnings 17% year-over-year was Nexon Japan. The growth was driven primarily by MapleStory, Counter-Strike Online and Sudden Attack.
Nexon America saw revenues falling 19% year-over-year which is blamed on “the hacking attack and stability issues that [Nexon] experienced in late Q4”. Maximum concurrent users for MapleStory hit 109,757 as all Nexon America PC game went through major content update during the quarter.
Other regions, mostly consisting of Europe, South America and South East Asia saw revenue increasing 3% year-over-year. MapleStory, Combat Arms and Vindictus were the standouts for Nexon Europe while Mabinogi was shut down. Nexon currently operates through partners in seven markets in South East Asia. KartRider was launched in Indonesia during the quarter while Cyphers is going to Taiwan and Hong Kong.
For more information see FY2012 Q1 Introduction to Nexon, FY2012 Q1 Shareholder Letter and Consolidated Financial Results for the First Three Months of the Fiscal Year Ending December 31,2012 <under Japanese GAAP>.