Nexon set a record high for a single quarter in the first quarter this year, led by its flagship MapleStory and the new ARC Raiders, which sold 16 million copies. As revenue from overseas markets such as North America, Europe and Southeast Asia surpassed 60%, the trend of expanding the share of overseas business continued, and PC and console revenue topped 1 trillion won for the first time.
In particular, despite some expense losses due to the full refund measure for Maple Raising, revenue exceeded 1.4 trillion won and operating profit surpassed 540 billion won, both hitting record highs. However, Nexon said it expects results to slow in the second quarter due to weakness in the China business and the DUNGEON & FIGHTER franchise, and it will focus in the second half on strengthening mid- to long-term growth drivers by expanding overseas service of its flagships and centering on new titles.
◇Western push pays off… overseas revenue share 62%
Nexon disclosed to the Tokyo Stock Exchange that consolidated revenue in the first quarter this year rose 34% year over year to 152.2 billion yen (about 1.4201 trillion won). Listed on Japan's securities market, Nexon releases its results in yen. Operating profit climbed 40% in the same period to 58.2 billion yen (about 542.6 billion won). Net profit jumped 118% to 57.2 billion yen (about 533.8 billion won).
Revenue, operating profit and net profit all hit a record high for a single quarter. The results for the period were converted based on the first-quarter exchange rate (932.8 won per 100 yen).
The results were driven by Nexon's flagship intellectual property (IP) MapleStory franchise and the shooter ARC Raiders, released in Oct. last year. As key games succeeded in the global market, Nexon's overseas revenue share rose sharply to 62% from 52% in the first quarter last year. Revenue in North America and Europe increased 310% in the same period, and revenue in Southeast Asia rose 111%.
With ARC Raiders making waves in the global market, Nexon's first-quarter PC and console revenue exceeded 1 trillion won for a single quarter for the first time. Nexon's growth engine has diversified from Asia-focused live service to the Western PC and console fields.
Nexon said the MapleStory franchise contributed to overseas revenue growth. In particular, Maple Raising and MapleStory Worlds, released last year, delivered solid results, lifting overall franchise revenue 42% year over year. Maple Raising beat the company's outlook in regions including North America, Europe and Southeast Asia. MapleStory Worlds saw revenue in Taiwan climb 79% year over year thanks to Lunar New Year update effects, and global MapleStory also gained popularity in Western regions, with revenue up 8%.
ARC Raiders, developed by Nexon's Sweden-based subsidiary Embark Studios, has cemented its position as the company's next-generation "blockbuster IP," with cumulative sales surpassing 16 million copies since launch. Chief Executive Lee Jeong-heon said on an earnings conference call that day, "More than half of active users in ARC Raiders have logged over 100 hours of gameplay, showing high engagement," adding, "Total gameplay time invested by users in ARC Raiders so far has reached 1.5 billion hours."
Nexon's other key IP, DUNGEON & FIGHTER and FC, also maintained solid growth. The FC franchise exceeded the company's outlook thanks to a new class release and major login reward events during the Lunar New Year holidays, and China PC DUNGEON & FIGHTER posted double-digit year-over-year growth on the back of Spring Festival update effects.
◇2Q seen as a "breather" on China market, 'DF' weakness
Nexon offered a somewhat conservative outlook for the second quarter this year. It sees revenue at 107 billion to 119.7 billion yen (about 995.9 billion won to 1.1143 trillion won), down as much as 10% or up a slight 1% from the second quarter last year. Operating profit is projected in a range of 16.1 billion to 25.3 billion yen (about 149.5 billion won to 236.0 billion won).
The company expects revenue to decline as the DUNGEON & FIGHTER franchise is likely to be weak and the initial launch effects of Mabinogi Mobile fade and the title stabilizes. It also projected operating profit to fall as the highly profitable China business continues to underperform.
As Nexon takes a breather in the second quarter, it said it will shore up a mid- to long-term growth base by expanding overseas service and updates for the popular IPs that drove strong first-quarter results and by launching new titles. Chief Financial Officer Shiro Uemura said, "Although the China business is expected to be weak, we have several growth drivers to offset it."
In particular, to relaunch the DUNGEON & FIGHTER franchise, the company plans to transplant the IP expansion strategy proven with MapleStory. As part of that, NEXON Games will release the mobile idle game DUNGEON & FIGHTER Raising within the year. It will then sequentially roll out the action role-playing game (RPG) DUNGEON & FIGHTER Classic, the open-world action RPG DUNGEON & FIGHTER: Arad, and the 3D action RPG Project Overkill.
In the second half of the year, Mabinogi Mobile will launch in Taiwan and Japan. The company will also unveil new publishing titles, including the fantasy world role-playing game (RPG) Azure Promillia and the massively multiplayer online role-playing game (MMORPG) Project T.
It will also expand overseas service for its flagships. With Electronic Arts (EA), it signed a long-term publishing contract for the FC franchise in Korea, and with Tencent, it extended the publishing contract for PC DUNGEON & FIGHTER in China by 10 years. In Mar., it also signed a publishing deal with Blizzard Entertainment to target a Korea launch this year of the PC version of the global blockbuster Overwatch.
In the mid to long term, the company is preparing in-house developed new titles such as DUNGEON & FIGHTER Classic, Paradise: LAST PARADISE, Durango World and Uchi the Wayfarer.
Nexon management also expressed an intention to use artificial intelligence (AI) to improve efficiency in developing new titles. Lee Jeong-heon said, "The goal is to automate repetitive tasks with AI to reduce the burden of game development."