Q4 2019 Investor Presentation

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Q4 2019 Investor Presentation INVESTOR PRESENTATION Q4 2019 February 13, 2020 NEXON Co., Ltd. Owen Mahoney Shiro Uemura President and Chief Executive Officer Chief Financial Officer CEO Highlights © 2020 NEXON Co., Ltd. All Rights Reserved. 2 The Four Quadrants Massive TAM1 Growth In Deeply Immersive Online Games Deep Offline Online Casual 1 TAM means “Total Addressable Market”. 3 The categorization of the games shown in this material is based on our own view. 2 It may not necessarily reflect the common views in the market. The letters, graphics, symbols, logos and other marks, and illustrations, characters and other works, © 2020 NEXON Co., Ltd. All Rights Reserved. 3 which are shown in this material are trademarks, registered trademarks, copyrighted works or other legally protected materials owned by respective right holders. Results Driven by Phenomenal Strength of Major Franchises Korea MapleStory, MapleStory M and FIFA ONLINE 41 Each Achieved All-Time High Full-year Revenues. V4 Off to a Great Start. Highest Ever Q4 Revenue in Korea 1 2 Q4 2019 Results Full-year 2019 Results • Q4 2019 revenues exceeded our outlook. • Constant-currency2 revenues, operating income and 3 • Outperformance driven by exceptionally strong net income all grew Y/Y driven by strength in Korea. performances of MapleStory and FIFA ONLINE 41, • As-reported revenues and operating income were as well as good start of V4 down Y/Y due to FX headwinds • Net income3 was up Y/Y 3 4 5 Korea MapleStory - PC Korea MapleStory M FIFA ONLINE 41 • Constant-currency2 Q4 revenue grew 88% • Constant-currency2 Q4 revenue grew 114% • Combined PC and mobile, Q4 and full-year Y/Y. Y/Y revenues grew significantly Y/Y. • Constant-currency2 full-year revenue grew • Constant-currency2 full-year revenue grew • Recorded the highest Q4 and full-year 39% (on top of the 67% Y/Y growth in 2018) 65% (on top of the 81% Y/Y growth in 2018) revenues, surpassing the previous peak of • Double-digit growth for the 6th consecutive • Double-digit growth for the 3rd consecutive FIFA Online 31 achieved in 2017. year. years • Both Q4 and full-year revenues surpassed • Both Q4 and full-year revenues surpassed previous peak set in 2018. previous peak set in 2018. 1 Official titles are EA SPORTS™ FIFA Online 3 (PC), EA SPORTS™ FIFA Online 3 M (mobile), EA SPORTS™ FIFA ONLINE 4 (PC) and EA SPORTS™ FIFA ONLINE 4 M (mobile) 2 Constant currency is a non-GAAP measure used to show performance unaffected by fluctuations in foreign currency exchange rates. Constant currency basis amounts are calculated using the average foreign currency exchange rates for the comparable period in the prior year and applied to the current period. As an example,we calculate royalty revenues from China Dungeon&Fighter by applying the same CNY/USD, USD/KRW and KRW/JPY exchange rates from last year's same fiscal quarter. © 2020 NEXON Co., Ltd. All Rights Reserved. 4 3 Net income refers to net income attributable to owners of the parent, as stated in Nexon’s consolidated financial results. FY2019 MapleStory Franchise Marks All-time High in Korea Another True Forever Franchise Korea MapleStory Korea MapleStory M Revenue Revenue Year Year 2003 2019 2016 2019 1 The letters, graphics, symbols, logos and other marks, and illustrations, characters and other works, which are shown in this material are trademarks, © 2020 NEXON Co., Ltd. All Rights Reserved. 5 registered trademarks, copyrighted works or other legally protected materials owned by respective right holders Dungeon&Fighter New Key Update Comes to China in March. Strong Progress on the Mobile Version Dungeon&Fighter Dungeon&Fighter 2D Mobile2 • Expect sales from 2020 Lunar New Year update to decline substantially • Began the second closed beta test in December from 2019’s strong performance. Expect revenue growth to remain • Observed encouraging results during the test challenging for a few quarters • Started pre-registration in late December • Next important event comes in March 2020 when the new key update • Over 16 million3 people have signed up for its coming launch in 1H 2020. goes live – addresses the primary feedback received from our players; • Immersive Dungeon&Fighter experience to mobile represents a massive Includes the level cap release and the third awakening1. increase in the total addressable market. • In January, the update went live in Korea – historically been a good indicator of China service. Feedback in Korea positive; improved KPIs. Dungeon&Fighter PC 1 Third awakening allows players to gain new skills for their characters 3 Pre-registration as of February 12th, 2020 2 Mobile game based on original IPs. 4 The letters, graphics, symbols, logos and other marks, and illustrations, characters and other works, which are shown in this material © 2020 NEXON Co., Ltd. All Rights Reserved. are trademarks, registered trademarks, copyrighted works or other legally protected materials owned by respective right holders 6 New Mobile MMORPG V4 Early Performance Is Solid, Despite Strong Competition in Korea Top Grossing 1 iOS : # X iOS : #4 Google Play : #4 APP RANKING Google Play: # X 1 Ranking sourced from App Annie as of February 12th, 2020 2 The letters, graphics, symbols, logos and other marks, and illustrations, characters and other works, which are shown in this material are trademarks, registered trademarks, copyrighted works or other legally protected materials owned by respective right holders © 2020 NEXON Co., Ltd. All Rights Reserved. 7 Enormous Value of Nexon’s IP Franchises Launched 2003 Launched 2004 Launched 2005 More than 180 million registered users worldwide Registered users over 380 million on PC platform Life-to-date gross revenue well over $10 billion Player registrations now equal to 45% of Korean alone Gross revenue several billion dollars more than population Over half of all Korean population; over 45% of life-to-date box office of Star Wars series, Harry Combined PC and mobile revenue is about equal Taiwanese population has played the game Potter series; approximately double the revenue 1 to global box office of the movie franchise Frozen of the entire Avengers series – one of Disney’s biggest1. 1 Source: BoxOfficeMojo.com 2 The letters, graphics, symbols, logos and other marks, and illustrations, characters and other works, which are shown in this material are trademarks, © 2020 NEXON Co., Ltd. All Rights Reserved. 8 registered trademarks, copyrighted works or other legally protected materials owned by respective right holders Focus 1 2 Fully-online multiplayer games Multiple platforms: PC, console and mobile 3 4 Leveraging Nexon’s substantial IP portfolio Selective Investment in highly unique new IPs 1 The letters, graphics, symbols, logos and other marks, and illustrations, characters and other works, which are shown in this material are trademarks, © 2020 NEXON Co., Ltd. All Rights Reserved. 9 registered trademarks, copyrighted works or other legally protected materials owned by respective right holders Three Product Beats in 2020 © 2020 NEXON Co., Ltd. All Rights Reserved. 10 Dungeon&Fighter 2D Mobile1 Expect to launch in 1H 2020. Pre-registration Exceeded 16 Million2 1 Mobile game based on original IPs. 2 Pre-registration as of February 12th, 2020 3 The letters, graphics, symbols, logos and other marks, and illustrations, characters and other works, which are shown in this material are trademarks, registered trademarks, copyrighted works or other legally © 2020 NEXON Co., Ltd. All Rights Reserved. 11 protected materials owned by respective right holders. KartRider: Drift Fully Cross-Platform Multiplayer Online Game 1 The letters, graphics, symbols, logos and other marks, and illustrations, characters and other works, which are shown in this material are trademarks, registered trademarks, copyrighted works or other legally protected materials owned by respective right holders. © 2020 NEXON Co., Ltd. All Rights Reserved. 12 First Game from Embark Studios 1 The letters, graphics, symbols, logos and other marks, and illustrations, characters and other works, which are shown in this material are trademarks, registered trademarks, copyrighted works or other legally protected materials owned by respective right holders. © 2020 NEXON Co., Ltd. All Rights Reserved. 13 Solid Foundation. Significant Opportunities for Growth Nexon is Well-positioned to Lead the Next Wave of Online Games Opportunity REVENUE Solid Foundation YEAR 1 The letters, graphics, symbols, logos and other marks, and illustrations, characters and other works, which are shown in this material are trademarks, registered trademarks, copyrighted works or other legally protected materials owned by respective right holders. © 2020 NEXON Co., Ltd. All Rights Reserved. 14 FY 2019 Capital Allocation (Unit: ¥ billions) Working Capital1 Investment -10.3 Embark Studios Wonder Holdings -38.4 Shareholder Return 2 105.1 Share Buyback -30.0 26.4 Operating Cash Flow Surplus 1 Working Capital includes increase/decrease in working capital as well as other proceeds and payments that are not included in “Investment” and “Shareholder Return” such as “purchases of property, plant and equipment” and “proceeds from exercise of stock options”. 2 Including purchases of treasury stock in January 2020, based on the share repurchase program of ¥30 billion © 2020 NEXON Co., Ltd. All Rights Reserved. 15 FY 2019 Results © 2020 NEXON Co., Ltd. All Rights Reserved. 16 FY 2019 Financial Results (Unit: ¥ billions) Revenues Operating Income Net Income1 253.7 248.5 115.7 107.7 98.4 94.5 2018 2019 2018 2019 2018 2019 As reported: -2% As reported: -4% As reported: + 7% Constant currency2: +4% Constant currency2: +3% Constant currency2: +16% 1 Net income refers to net income attributable to owners of the parent, as stated in Nexon’s consolidated financial results. 2 Constant currency is a non-GAAP measure used to show performance unaffected by fluctuations in foreign currency exchange rates. Constant currency basis amounts are calculated using the average foreign currency exchange rates for the comparable period in the prior year and applied to the current period.
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