Dungeon & Fighter in China drives Nexon above expectations

Asian online game giant Nexon reported fourth quarter revenues that were down from a year ago but exceeded the company’s own outlook. The better-than-expected revenues were due in part to an update for Dungeon & Fighter in China.

Fourth quarter revenues were 43.3 billion yen ($380 million), down 6 percent year-over-year. Operating income was 7.3 billion yen ($64 million), below the company’s outlook primarily due to impairment loss of 3.7 billion yen on prepaid royalties related to publishing titles.

“Our unique ability to develop and operate engaging, distinctive games that cultivate thriving interactive communities and grow steadily over the long term continued to drive value and results in 2016 fourth quarter,” said Nexon CEO Owen Mahoney in a statement. “We continue to see strong performance across our portfolio of games, including storied hits like Dungeon & Fighter in China, as well as titles like EA Sports FIFA Online 3, EA Sports FIFA Online 3 M in Korea, and Hit in Taiwan and Thailand.

“Together, their performance helped drive fourth quarter revenue that was above expectations. Heading into 2017, we have an exceptionally strong pipeline, including titles such as Durango, Dynasty Warriors, and Dark Avenger 3, that we believe will continue to validate our proven and differentiated approach.”

Full year revenues were 183.1 billion yen, down 4 percent from the previous year. Operating income was 40.6 billion yen, down 35 percent from a year ago. Net income was 20.1 billion yen, down 63 percent from the previous year.

In the fourth quarter, net income was 11.2 billion yen, exceeding the outlook primarily due to the currency exchange gain of 20.6 billion yen. For the outlook, Nexon predicted first quarter revenues of 62.4 billion yen to 67.1 billion yen. PC online game revenues are expected to be 52.1 billion yen to 55.6 billion yen. Mobile game revenues are expected to be 10.3 billion yen to 11.6 billion yen.

[Update: Currency fluctuations made a difference in this year’s earnings. Q4 revenue was down 6 percent on an as reported basis, but up 7 percent on a constant currency basis. Full year 2016 revenue was down 4% on an as reported basis, but up 17 percent on a constant currency basis.

Full year 2016 operating income was down 35 percent on an as reported basis, but up 27 percent on a constant currency basis adjusted for the impairment loss (or down 11 percent on a constant currency basis if you don’t adjust for the impairment loss).

Full year 2016 net income was down 63 percent on an as reported basis, but flat on a constant currency basis adjusted for the impairment loss (or down 44 percent on a constant currency basis if you don’t adjust for the impairment loss)].