Nexon Reports Third Quarter 2012 Financial Results

  Nexon Reports Third Quarter 2012 Financial Results

Business Wire

TOKYO -- November 08, 2012

NEXON Co., Ltd. (“Nexon”) (3659.TO), a worldwide leader in free-to-play online
games, today announced financial results for its third quarter ended September
30, 2012.

“We are pleased to have exceeded our operating income forecast for the
quarter, despite revenue being slightly below our expectations, and to have
announced several key strategic developments,” said Seungwoo Choi, President
and Chief Executive Officer. “Importantly, during the quarter, we continued to
take aggressive steps to capitalize on the rapid evolution of the games market
on the PC and mobile platforms. We launched a closed beta for Counter-Strike
Online 2 and an open beta for Epic of the Three Kingdoms. Today, we announced
that we will be launching Dota 2 (“Defense of the Ancients 2”) in Korea and
Japan with our partner Valve Corporation. Additionally, the development of
FIFA Online 3 has been proceeding rapidly and we are on track to launch the
game at the end of the fourth quarter. We believe our current pipeline is the
most promising slate of games we’ve had yet, ensuring we are well-positioned
for growth in 2013 and beyond.”

Continued Choi, “We also recently announced a transformational transaction
with the acquisition of mobile game developer, gloops, Inc. ('gloops'). We
believe this acquisition makes Nexon the largest mobile game developer in the
world by revenue, based on publicly-available information, and it creates
tremendous opportunities for us. We are particularly focused on combining
Nexon’s popular IP and global footprint with gloops’ world-class mobile
development capabilities to create strong mobile franchises and expand gloops’
business around the world.”

Third Quarter Fiscal 2012 Financial Highlights

  *Total revenues were ¥24,256 million, flat versus the third quarter of 2011
    (an increase of 3% on a constant currency basis) and slightly below
    management’s previous outlook.
  *Operating income was ¥10,032 million, a decrease of 8% over the third
    quarter of 2011 and 8.5% above management’s previous outlook. Operating
    income margin was 41.4%, which was higher than expected. This was driven
    by revenue mix, which was higher in China and lower in some other regions,
    as well as our decision to push back certain launch marketing expenses
    into the fourth quarter of 2012.
  *Net income for the quarter was ¥6,348 million, a decrease of 12% over the
    third quarter of 2011.
  *Adjusted net income for the quarter was ¥6,791 million, a decrease of 10%
    over the third quarter of 2011.
  *Basic earnings per share were ¥14.63. Adjusted earnings per share were
  *Revenue by region is shown below:

Revenue by Region

(Millions of yen)
                        For the three months ended   % Change
                        2011           2012         As-Reported  Constant
China                   ¥ 8,684         ¥ 11,404     31     %      36     %
Korea                   8,521          6,578       -23    %      -20    %
Japan                   3,459           3,231        -7     %      -7     %
North America           1,700           1,340        -21    %      -22    %
Europe and Others ^ 2   1,791          1,701       -5     %      1      %
Nexon Total             24,156          24,256       0      %      3      %

^1 The above table represents a breakdown of our revenue based on the region
in which revenues originate. It is not a presentation of our revenues
according to Nexon entities.
^2 Others: United Kingdom, other Asian countries, and South American
^3 Constant currency percent change is the growth rate had the currency rate
not changed from Q3 2011. Rates used: 1,355 Korean won/100 Japanese yen, 12.39
Japanese yen/Chinese yuan and 80.66 Japanese yen/U.S. dollar.

Business Outlook for Fourth Quarter and Full Year 2012

Nexon revised its outlook for the remainder of 2012, reflecting the
consolidation of gloops and a revision to management’s forecast for Nexon’s
core business.

For the full year 2012, the Company expects revenues of ¥104.9 billion to
¥108.2 billion, of which ¥6.2 billion to ¥6.7 billion is from gloops.
Management anticipates operating income of ¥44.4 billion to ¥47.2 billion, of
which ¥0.7 billion to ¥1.0 billion is from gloops.

Nexon Group Business Outlook^2, 3

(Millions of yen, except per share data)
                       For the three months           For the twelve months

                       ending December31, 2012       ending December31, 2012
Revenues               ¥27,463     ~    ¥30,700       ¥104,973    ~   ¥108,210
Operating income       6,335       ~    9,157         44,431      ~   47,253
Net income             3,381       ~    5,471         28,876      ~   30,966
Adjusted net income    4,441       ~    6,531         31,119      ~   33,210
^ 1
Basic EPS              7.78        ~    12.59         66.75       ~   71.59
Adjusted EPS           10.22       ~    15.03         71.94       ~   76.77

For your reference, gloops’ business outlook is as follows:

gloops Business Outlook

(Millions of yen, except per share data)
                         For the three months         For the twelve months

                         ending December 31, 2012     ending December 31, 2012
Revenues                 ¥6,200     ~     ¥6,700      ¥6,200     ~     ¥6,700
Operating income         1,500      ~     1,800       1,500      ~     1,800
Net income               900        ~     1,080       900        ~     1,080
Adjusted net income ^    900        ~     1,080       900        ~     1,080
Basic EPS                2.07       ~     2.49        2.07       ~     2.49
Adjusted EPS             2.07       ~     2.49        2.07       ~     2.49

^1 Adjusted net income is a non-GAAP measure that excludes the non-cash
amortization of goodwill (and negative goodwill in the case of acquisitions
occurring before April 1, 2010) related to our acquisitions, which is required
under Japanese GAAP. We provide this information to investors for the purpose
of comparing our net income with that of companies that do not amortize
goodwill or negative goodwill associated with acquisitions in their financial
results, including those reporting in accordance with U.S. GAAP.
^2 Nexon group business outlook includes the impact of amortization resulting
from consolidation of gloops.
^3 The exchange rate assumptions used in Nexon’s business outlook are as
follows: 1,431.98 Korean won/100 Japanese yen, 12.55 Japanese yen/Chinese yuan
and 79.31 Japanese yen/U.S. dollar.

Conference Call and Webcast

Nexon management will host a conference call in English on November 8, 2012 at
10:30 p.m. Japan Standard Time (JST) / 8:30 a.m. Eastern Standard Time (EST)
for analysts and investors to discuss Nexon’s financial results and outlook.
The call can be accessed via live audio webcast on Nexon’s Investor Relations
website at

A transcript of the conference call will also be available on Nexon’s Investor
Relations website a few days after the live webcast.

Shareholder Letter and Financial Statements

Please visit the Investor Relations section of Nexon’s website at to view management’s third quarter letter to
shareholders and related financial statements.

About NEXON Co., Ltd.

NEXON Co., Ltd. (“Nexon”) (3659.TO) is a worldwide leader in free-to-play
online games. Founded in Korea in 1994, Nexon developed one of the world's
first graphics-based massively multiplayer online games. Nexon also pioneered
the concept of microtransactions and the free-to-play business model, setting
a new standard in which play is free, and users have the option to purchase
in-game items to enhance their experience. Nexon currently services more than
60 online games in more than 100 countries and since its founding, Nexon has
generated more than 1.3 billion player registrations. The company is
headquartered in Tokyo, Japan and its shares are listed on the Tokyo Stock


NEXON Co., Ltd.
Owen Mahoney, 03-3523-7910
Chief Financial and Administrative Officer
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