Nexon Reports Fourth Quarter and Fiscal Year 2012 Financial Results
Nexon Reports Fourth Quarter and Fiscal Year 2012 Financial Results
Business Wire
TOKYO -- February 13, 2013
NEXON Co., Ltd. (“Nexon”) (3659.TO), a worldwide leader in free-to-play online
games, today announced financial results for its fourth quarter and fiscal
year ended December 31, 2012. Fourth quarter revenues grew by 39% and
operating income increased 5% year-over-year, both exceeding the Company’s
outlook. Full year revenues grew 24% year-over-year, and full year operating
income grew 25%.
“2012 was a pivotal year of transformation for Nexon, during which we
completed several transactions that have reshaped our business model as our
dynamic industry continues to evolve. We invested for growth in our PC
business and in the important – and rapidly growing – mobile arena, while
maintaining our strategic and operational focus and delivering another year of
solid growth,” said Seungwoo Choi, President and Chief Executive Officer of
Nexon. “We enhanced our mobile business through the successful acquisitions of
inBlue and gloops, positioning Nexon as the leading third-party mobile game
developer globally. Since acquiring these companies, both have outperformed
our expectations and each is set to deliver a strong 2013 lineup for the
domestic and international markets. Importantly, through our recent alliance,
DeNA is running strong marketing promotions for our games on the Mobage
platform. We expect continued strength in our PC business over 2013 as we
begin to realize the returns from the large publishing deals we signed in
2012.”
“Longer term, we expect to see continued convergence between the PC and mobile
devices. As a content creator, this trend presents significant opportunities
for Nexon and increases the number of ways consumers can enjoy our games,”
continued Mr. Choi. “These industry trends, coupled with the groundwork we
have laid, position Nexon well to deliver growth and value to our
shareholders.”
Fourth Quarter Fiscal 2012 Financial Highlights
* Total consolidated revenues were ¥30,937 million, an increase of 39% over
the fourth quarter of 2011 (or 30% on a constant currency basis).
* Operating income was ¥9,778 million, a 5% increase from the fourth quarter
of 2011. Operating income margin was 31.6%, as a result of the addition of
significant new mobile revenues at lower margins, increased marketing
expenses, amortization expenses from our gloops acquisition and changes in
the geographic mix shift as the increase in Japan mobile revenues caused
our higher-margin China business to decrease as a percentage of total
revenue.
* Net loss for the quarter was ¥94 million, below the Company’s outlook, due
to a write-down related to Nexon’s investment in JC Entertainment.
Additionally, tax expenses were higher than expected due to a new
interpretation of Korean tax regulation. Write-downs were also taken on
smaller impairments of IP and goodwill of minority investment
subsidiaries.
* Adjusted net income ^ 1 for the quarter was ¥1,033 million.
* Basic earnings per share were a loss of ¥0.22. Adjusted earnings per share
were ¥2.38.
Footnote:
Adjusted net income is a non-GAAP measure that excludes the non-cash
amortization of goodwill related to our acquisitions (and negative
goodwill in the case of acquisitions occurring before April 1, 2010),
^1 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.
Revenue by Region^1,4
(Millions of yen)
Q4 2012 Q4 2012 YoY % Change
Q4
2011 (As- (Constant As- Constant
Currency^3
Reported) Currency^3) Reported
China ¥ ¥ 11,074 ¥ 9,862 34 % 19 %
8,281
Korea 7,224 7,057 6,340 -2 % -12 %
Japan 3,687 10,037 10,037 172 % 172 %
North 1,407 1,117 1,036 -21 % -26 %
America
Europe
and 1,590 1,651 1,534 4 % -4 %
Others^2
Nexon 22,190 30,937 28,811 39 % 30 %
Total
FX
Rate^5
100 7.23 7.10 7.23
KRW/JPY
CNY/JPY 12.34 12.64 12.34
USD/JPY 79.84 79.82 79.84
Footnotes:
The above table presents a breakdown of our revenue based on the region
^1 in which revenues originate. It is not a presentation of our revenues
according to Nexon entities.
^2 Others consists of United Kingdom, other Asian countries, and South
American countries.
^3 Constant currency percent change is the growth rate had the currency rate
not changed from Q4 2011.
^4 Revenues are Nexon Group’s consolidated revenues, which include gloops’
revenue.
Constant currency is calculated differently under Japanese GAAP compared
to U.S. GAAP. Instead of fixing the exchange rate at the end of each
quarter, we apply one of the approved methods under Japanese GAAP and
^5 take the cumulative average from the beginning of the year. For example,
the Q2 rate is the average from the beginning of year through Q2. Also,
when converting currency for China revenue, Tencent pays Nexon Korea in
USD, which is converted to KRW in Nexon Korea’s books and then converted
to JPY for reporting purposes.
Fourth Quarter Actual Results versus Outlook
The following table shows Nexon’s results relative to the Company’s outlook.
In future disclosures, Nexon intends to present its revenues in two
categories: mobile revenues and PC revenues.
Q4 2012 Actual Results versus Outlook
(Millions of yen, except per share data)
Q4 2012 Q4 2012
Q4 2012 Q4
Nexon ^ Outlook Nexon 2012
gloops Outlook
(excluding gloops) (excluding gloops
gloops)
Revenues ¥21,263 ~ ¥24,000 ¥24,492 ¥6,200 ~ ¥6,700 ¥6,445
Operating 5,580 ~ 8,102 8,613 1,500 ~ 1,800 1,910
income
Net
income 3,188 ~ 5,099 (400 ) 900 ~ 1,080 1,013
(loss)
Adjusted
net 3,597 ~ 5,507 74 900 ~ 1,080 1,013
income
Basic EPS 7.34 ~ 11.74 (0.92 ) 2.07 ~ 2.49 2.33
(LPS)
Adjusted 8.28 ~ 12.68 0.17 2.07 ~ 2.49 2.33
EPS
Fiscal Year 2012 Financial Highlights
* Total consolidated revenues were ¥108,448 million, an increase of 24% over
the prior fiscal year.
* Operating income was ¥47,874 million, an increase of 25% over the prior
fiscal year. Operating income margin was 44.1%, slightly higher than the
43.7% in 2011.
* Net income for the year declined 1% over the prior fiscal year to ¥25,401
million.
* Adjusted net income for the year was ¥27,711 million, up 2% over the prior
fiscal year.
* Basic earnings per share were ¥58.71. Adjusted earnings per share were
¥64.05.
First Quarter 2013 Business Outlook
In an effort to provide shareholders with more precise information, Nexon
plans to provide a quarterly outlook rather than a full year outlook beginning
in the first quarter of 2013. The Company will continue to provide additional
detail and commentary regarding longer-term trends in its quarterly
shareholder letter and other investor communications.
Nexon expects Q1 2013 revenue in the range of \28.5 billion to \30.3 billion
for PC and \7.4 billion to \8.1 billion for mobile. Management expects the PC
business will benefit from Nexon’s content update schedule, which will be more
evenly weighted between Q1 and Q3 than it was in 2012. Nexon’s mobile
business, which consists of gloops, inBlue and other studios, will benefit
from a solid lineup of marketing initiatives, particularly on the Mobage
platform through our recently announced alliance with DeNA. Further detail
regarding Nexon’s Q1 2013 outlook is provided in management’s letter to
shareholders, which is available on the Company’s investor relations website.
Business Outlook
(Millions of yen, except per share data)
Q1 2011 Q1 2012 Q1 2013
Revenues ¥ ¥ ¥35,965 ~ ¥38,519
20,809 30,377
PC 20,666 30,151 28,553 ~ 30,345
Mobile 143 225 7,411 ~ 8,174
Operating 9,340 17,384 12,330 ~ 14,378
income
Net income 7,586 12,377 7,840 ~ 9,318
Adjusted net 7,968 12,738 8,923 10,401
income
Earnings per
share^2:
Basic EPS 21.50 28.82 18.00 ~ 21.39
Adjusted EPS 22.58 29.66 20.49 ~ 23.88
FX Rate
Assumptions^3
100KRW/JPY 7.37 7.03 7.94 7.94
CNY/JPY 12.52 12.55 13.34 13.34
USD/JPY 82.34 79.28 85.08 85.08
Footnote:
^1 Adjusted to reflect the 1:100 stock splits that occurred on July 21,
2011.
Based on the assumptions above, every one Japanese yen move against the
^2 U.S. dollar would have an impact of 0.32 billion yen on revenue and 0.15
billion yen on operating income for the three months ending March 31,
2013.
Conference Call and Webcast
Nexon management will host a conference call in English on February 13, 2013
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 http://ir.nexon.co.jp/en/.
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
http://ir.nexon.co.jp/en/ to view management’s fourth quarter letter to
shareholders and financial statements.
About NEXON Co., Ltd. http://company.nexon.co.jp/
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
Exchange.
Contact:
NEXON Co., Ltd.
Owen Mahoney, +813-3-3523-7910
Chief Financial Officer
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