Nexon Surges to Record as Older Games Continue to Drive Growth

Owen Mahoney, chief executive officer and president at Nexon, discusses 3Q earnings, their M&A prospects, his outlook for the company and his expansion plans for the U.S. He speaks on 'Bloomberg Daybreak: Asia.' (Source: Bloomberg)

Shares of Nexon Co., the Tokyo-based maker of PC and mobile games, climbed to a record high after software updates to older games pushed its earnings above forecasts.

Operating income in the June quarter rose 22 percent from a year ago to 16.3 billion yen ($149 million), topping its projection for as much as 14 billion yen. Net income more than doubled to 19.4 billion yen, aided by a 6.3 billion yen gain from a weakening Korean won. The stock jumped as much as 12 percent to 2,480 yen.

The results highlight the resilience of the company’s aging roster of games. Nine-year-old Dungeon&Fighter contributed the most to the quarter after the role-playing title was updated in China with new characters, while MapleStory, which debuted over a decade ago, helped with strong performance from Korean gamers.

“The key word is longevity,” Chief Executive Officer Owen Mahoney said in an interview with Bloomberg Television on Friday. "Once you ship a game, it’s not the end of our job. It’s the beginning of our job. We think a game can last for a very long period of time.”

The company said revenue in the third quarter is expected to increase 17 to 26 percent, driven by growth in China, which generated 44 percent of sales in the second quarter. Net income was forecast to more than double.

“Given that Nexon tends to issue cautious guidance, we see a strong possibility of a beat,” Keiichi Yoneshima, an analyst at Credit Suisse Group AG, wrote in a note to clients.

On Aug. 8, Nexon released its highly-anticipated LawBreakers, a first-person shooter with a wide cast of characters, similar to Activision Blizzard Inc.’s Overwatch. The title was produced by Cliff Bleszinski, best-known for creating the Gears of War franchise.

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