FIFA, Dungeon & Fighter boost Nexon's nine-month results
"Impairment losses on prepaid royalties" for LawBreakers didn't prevent major increases in revenue and profit
FIFA Online 3 and Dungeon & Fighter powered Nexon to strong nine-month results, with revenue up 30 per cent year-on-year and net income increasing by a factor of five.
After the third quarter of the calendar year, Nexon had earned ¥182.3 billion ($1.6 billion), up 30.3 per cent over the same period last year. The company's nine-month net income was ¥58.8 billion ($518 million), a huge 531 per cent increase year-on-year.
Speaking to investors after the results were announced, Nexon CFO Shiro Uemura attributed the performance to the strength of Dungeon & Fighter in China, and the PC and mobile versions of FIFA Online 3 in Korea. However, the company took a hit on Boss Key's LawBreakers, which pushed up the company's expenses due to related "impairment losses on prepaid royalties."
Nexon continues to make the majority of its revenue through online PC games, which contributed ¥144 billion ($1.3 billion) in revenue, up from ¥107.7 billion ($949 million) last year. Mobile games contributed ¥36.8 billion ($324 million), a relatively slim increase over the ¥31.4 billion ($277 million) earned last year.
South Korea is by far Nexon's largest market, with its revenue in the region growing 38 per cent to ¥163 billion ($1.4 billion), and profit up 49 per cent to ¥92 billion ($811 million). Regional revenue decreased in the company's three other major territories: Japan, North America and China, and it made a loss in both Japan and North America.
However, Nexon CEO Owen Mahoney told investors that it expects its North American business to improve following the acquisition of Pixelberry Studios last week. Mahoney wouldn't comment on the value of the deal, but he did confirm that it was smaller than Nexon's $468 million acquisition of Gloops in 2012.
"Pixelberry Studios generates tens of millions of dollars in revenues per year, is profitable, is growing quickly and we expect it to be accretive to Nexon starting in 2018," Mahoney said.
"The company targets a massive highly-valuable and very underserved demographic: women. While hundreds of millions of women use mobile devices, the games market targeting them is highly fragmented, and hits that last more than even a few weeks are very elusive. It is still very early innings in this market."
Mahoney later said that Nexon was excited about the deal, "because it opens the opportunity to bring immersive games to a much broader audience of women. While much of the rest of the industry is spending heavily into the most competitive and established segments of the market in the busy third and fourth quarters, we see in Pixelberry Studios a blue ocean opportunity in a highly complementary segment that is both massive and barely noticed by the games industry incumbents."
Looking ahead, Nexon is bullish about its chances for further growth. The company has an impressive release slate for the fourth quarter and 2018, including the mobile title Overhit in Korea, Maple Story 2 in China, and the prospect of FIFA Online 4 for both PC and mobile.
