Investor Presentation Q3 2015

Transcription

1 Investor Presentation Q3 205 November 3, 205 NEXON Co., Ltd.

2 Owen Mahoney President and Chief Executive Officer 2

3 Q3 Key Highlights Q3 results exceeded our outlook PC: Strong execution of key titles in China and Korea, particularly during September Mobile: Successful launch of DomiNations in Asia, particularly in Korea Solid performance of EA SPORTS TM FIFA Online 3 M around September Korean Thanksgiving holiday Enhanced partnerships Mobile games based on Titanfall TM IP with Respawn Entertainment and Particle City TERA mobile with Bluehole Studio Strategic publishing and operation agreement with QC Games Developing mobile games based on the original IPs. 3

4 Shiro Uemura Chief Financial Officer 4

5 Q3 205 Results 5

6 Q3 Highlights Revenues: 49.8 billion, up 9% year-over-year on an as-reported basis, up 5% on a constant currency basis Exceeded our outlook PC revenues exceeded outlook, driven by higher-than-expected sales from Dungeon&Fighter in China Mobile revenues near the high end of outlook, driven by DomiNations in Korea and EA SPORTS TM FIFA Online 3 M Operating income: 8.4 billion, up 22% year-over-year. Exceeded outlook, primarily driven by: Strong performance of Dungeon&Fighter in China Lower-than-planned HR costs Net income 2 : 9.2 billion, up 4% year-over-year. Outperformance primarily due to higher-than-expected operating income and FX gains 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, Neople, the Korean entity that develops Dungeon&Fighter for China, records its revenues in South Korean Won. The constant currency figures for the third quarter show what Neople revenues would have been had the KRW/JPY exchange rate not changed from last year s third quarter. 2 Net income refers to net income attributable to owners of the parent, as stated in Nexon s consolidated financial results. 6

7 Q3 Financial Results (Unit: millions, except per share data) Q3 204 Q3 205 Outlook Q3 205 YoY % Low end High end Revenues 45,63 46,305 49,734 49,8 9% PC 35,93 36,875 39,20 39,48 0% Mobile 9,682 9,430 0,533 0,330 7% Japan 5,570 3,747 (33%) ex-japan 4,2 6,583 60% Operating income 5,24 4,335 7,254 8,436 22% Net income 2 3,585 2,942 5,327 9,84 4% Earnings per share Cash and cash equivalents 4,55 28,236 Exchange rates 00 KRW/JPY CNY/JPY USD/JPY PC revenue includes revenues other than PC/mobile revenues. 2 Net income refers to net income attributable to owners of the parent, as stated in Nexon s consolidated financial results. 7

8 Regional Revenues (Unit: millions) (As- Reported) (Constant Currency 4 ) (As- Reported) (Constant Currency 4 ) Revenue by Region China 5,685 20,247 9,53 29% 24% Korea 9,976 20,63 9,566 % (2%) Japan 7,232 4,972 4,97 (3%) (3%) North America,420 2,045,752 44% 23% Europe and Others 2,300 2,384 2,234 83% 72% Nexon Total 45,63 49,8 48,036 9% 5% Revenue by Platform Q3 204 Q3 205 PC 3 35,93 39,48 38,077 0% 6% Mobile 9,682 0,330 9,959 7% 3% Japan 5,570 3,747 3,746 (33%) (33%) ex-japan 4,2 6,583 6,23 60% 5% Nexon Total 45,63 49,8 48,036 9% 5% FX Rate 00 KRW/JPY CNY/JPY USD/JPY YoY % Change Q3 205 Revenue by Region North America 4% Japan 0% Korea 40% Europe and 2 Others 5% China 4% Q3 205 Revenue by Platform Mobile 2% Based on the regions in which revenues originate; not a representation of revenues according to Nexon entities. 2 Europe and Others includes other Asian countries and South American countries. 3 PC revenue includes revenues other than PC/mobile revenues. 4 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, Neople, the Korean entity that develops Dungeon&Fighter for China, records its revenues in South Korean Won. The constant currency figures for the third quarter show what Neople revenues would have been had the KRW/JPY exchange rate not changed from last year s third quarter. 5 For the KPIs (MAU, Pay Rate and ARPPU) of PC online games, please refer to appendix of this presentation. 3 PC 79% 8

9 China Highlights Dungeon&Fighter Summer Update (7/2) and National Day Update (9/22) introduced in Q3 (Unit: millions) YoY% change: As Reported: +29% Constant Currency : +24% Strong daily revenue during September. National Day Update well received 22,697 20,247 Q3 MAUs and paying users increased quarter-over-quarter Mobile game Pocket MapleStory launched in late September (publisher: Tiancity) 5,685 6,44 5,994 Dungeon&Fighter National Day Update Pocket MapleStory Q3 204 Q4 204 Q 205 Q2 205 Q3 205 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, Neople, the Korean entity that develops Dungeon&Fighter for China, records its revenues in South Korean Won. The constant currency figures for the third quarter show what Neople revenues would have been had the KRW/JPY exchange rate not changed from last year s third quarter. 9

10 Korea Highlights Delivered solid results despite difficult comparison with 204 Q3, which benefited significantly from FIFA World Cup Year-over-year growth from key PC titles including Dungeon&Fighter, Sudden Attack and MapleStory (Unit: millions) YoY% change: As Reported: +% Constant Currency : -2% Solid performance by EA SPORTS TM FIFA Online 3 / 9,976 20,464 20,63 EA SPORTS TM FIFA Online 3 M, especially during September Korean Thanksgiving holiday 6,749 6,25 Solid momentum for DomiNations (8/26) Launched MapleStory2 (7/7) 5,882 6,975 5,423 PC 2 3,492 2,748 4,094 3,257 3,489 3,503 4,740 Mobile MapleStory2 DomiNations Q3 204 Q4 204 Q 205 Q2 205 Q3 205 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, Neople, the Korean entity that develops Dungeon&Fighter for China, records its revenues in South Korean Won. The constant currency figures for the third quarter show what Neople revenues would have been had the KRW/JPY exchange rate not changed from last year s third quarter. 2 PC revenue includes revenues other than PC/mobile revenues. 0

11 Japan Highlights Mobile revenue was 3.7 billion, down 8% quarter-overquarter primarily due to declining browser game revenues (Unit: millions) YoY% change: As Reported: -3% Constant Currency : -3% 2 PC revenue was.2 billion, down % quarter-over-quarter Launched mobile native game MapleStory Pocket (8/5) and DomiNations (8/26) 7,232,662 6,929,545 5,858,37 5,455,382 4,972,225 PC 2 5,570 5,384 4,487 4,073 3,747 Mobile MapleStory Pocket DomiNations Q3 204 Q4 204 Q 205 Q2 205 Q3 205 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, Neople, the Korean entity that develops Dungeon&Fighter for China, records its revenues in South Korean Won. The constant currency figures for the third quarter show what Neople revenues would have been had the KRW/JPY exchange rate not changed from last year s third quarter. 2 PC revenue includes revenues other than PC/mobile revenues.

12 North America, Europe and Others Highlights Soft launch of mobile game Legacy Quest by Socialspiel Launched mobile game DomiNations in Taiwan, Hong Kong and Macau (8/26) (Unit: millions) YoY% change: As Reported: +44% (Unit: millions) YoY% change: As Reported: +83% Constant Currency 2 : +23% Constant Currency 2 : +72%,420 North America,623,695 2,84 2,045,300 Europe and Others,90,258 2,50 2,384 Q3 204 Q4 204 Q 205 Q2 205 Q3 205 Q3 204 Q4 204 Q 205 Q2 205 Q3 205 Europe and Others includes Asian countries (excluding Japan, Korea and China) and South American countries. 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, Neople, the Korean entity that develops Dungeon&Fighter for China, records its revenues in South Korean Won. The constant currency figures for the third quarter show what Neople revenues would have been had the KRW/JPY exchange rate not changed from last year s third quarter. 2

13 Q4 205 Outlook

14 Q4 205 Outlook (Unit: millions, except per share data) Expect revenues to be down 7% to 0% year-over-year on an as-reported basis Q4 204 Q4 205 Outlook YoY % Revenues 42,932 40,060 ~ 42,865 (7%) ~ (0%) PC 34,04 30,89 ~ 3,87 (%) ~ (6%) Mobile 8,89 9,87 ~ 0,994 % ~ 24% Operating income/(loss) (748) 9,692 ~,83 n/a ~ n/a Net income/(loss) 2 (4,498) 7,795 ~ 9,527 n/a ~ n/a Earnings/(loss) per share (0.45) 7.99 ~ 2.99 FX Rate Assumptions 00 KRW/JPY CNY/JPY USD/JPY Forex sensitivity: every one Japanese yen move against the U.S. dollar would have the following impact on our financials for the fourth quarter of Revenue Operating Income 0.3 billion yen 0. billion yen PC revenue includes revenues other than PC/mobile revenues. 2 Net income/(loss) refers to net income/(loss) attributable to owners of the parent, as stated in Nexon s consolidated financial results. 3 In most situations, the exchange rates of both the South Korean won and the Chinese yuan are linked to the U.S. dollar. 4

15 205 Q4 Regional Outlook China Expect low teens to high single digit % YoY decrease on an as-reported basis Dungeon&Fighter - Winter Update scheduled (Dec) - Difficult year-over-year comparison with 204 Q4, which was exceptionally strong due to particularly well-received item sales - Expect FY5 full-year revenue to increase by low teens % YoY on an as-reported basis Korea Expect low single digit % to high single digit % YoY increase on an as-reported basis PC - Launched AIMA (0/22) - Scheduled to launch Ar:pieL / Tree of Savior (Dec) - Need for Speed TM Edge scheduled for CBT (Nov) Mobile - Launched Fantasy War Tactics (/5) - Scheduled to launch HIT (Nov) Presenting 6 new PC and 7 new mobile titles at G-STAR in November Japan North America, Europe and Others Expect 30 + % YoY decrease on an as-reported basis PC - Announced new publishing title Devil s Third Online, developed by Valhalla Game Studios. Scheduled for CBT (Nov) - Conducted CBT for Tree of Savior (Oct) Mobile - Scheduled to launch Mabinogi Duel / Fantasy War Tactics (Nov) - Pre-registration started for gloops new browser game LAPLACE LINK (Nov) North America: Expect 40 + to 50 + % YoY increase on an as-reported basis Europe and Others: Expect 70 + to 90 + % YoY increase on an asreported basis PC: Conducted CBT for Ghost in the Shell Stand Alone Complex - First Assault Online (Oct) 5

16 Q4 205 Operating Income Outlook (Unit: billions) YoY Operating Income Comparison Expect Q4 205 operating income of 9.7 to.8 billion due to: Increase in variable costs including: Royalty costs associated with third-party licensed games PG fee with growth in mobile business.7.8 Increase in marketing costs associated with multiple new title launches Decrease in amortization expense due to completion of amortization associated with Dungeon&Fighter IP Adjusted Operating Income 204 Q4 Variable Cost Marketing Amortization Others Operating Income 205 Q4 (High-end) 2 Adjusted Operating Income 204 Q4 JPY,694 million = Operating loss JPY 748 million + Impairment loss JPY 2,442 million 2 Others include other costs and other income/expenses above operating income 6

17 Disposal of NCSOFT Shares Disposed of all NCSOFT shares held by Nexon Group on October 6 Number of shares: 3,306,897 shares (5.08% of outstanding shares) Disposal price: KRW 83,000 per share Total amount: KRW 605 billion or JPY 64 billion 7

18 Mobile PC Online Pipeline () and onward Counter-Strike Online 2 MapleStory2 Devil s Third Online Ghost in the Shell Stand Alone Complex - First Assault Online LawBreakers by Boss Key Productions Titanfall TM DIRTY BOMB Tree of Savior Need for Speed TM Edge Sudden Attack 2 HYPER UNIVERSE Moonlight Blade DomiNations Fantasy War Tactics LAPLACE LINK by gloops Dungeon&Fighter mobile 3 FINAL FANTASY XI mobile 3 TERA mobile 3 Pocket MapleStory HIT Sangokushi Sousouden Online 2 Durango LEGO mobile 3 Titanfall TM mobile 3 Chart is illustrative excerpt pipeline. 2 Title is tentative and may be subject to change. 3 Developing mobile games based on the original IPs. 4 The letters, graphics, symbols, logos and other marks shown in this material are trademarks or registered trademarks owned by respective right holders. 8

19 Pipeline (2) PC Online Game In-house Ghost in the Shell Stand Alone Complex First Assault Online Publishing Need for Speed TM Edge The letters, graphics, symbols, logos and other marks shown in this material are trademarks or registered trademarks owned by respective right holders. 9

20 Pipeline (3) Mobile Game Publishing HIT In-house Durango The letters, graphics, symbols, logos and other marks shown in this material are trademarks or registered trademarks owned by respective right holders. 20

21 Korea China 205 Tier Content Update Schedule Game Title H 205 Q3 205 Q4 205 Dungeon&Fighter Q: Winter Content Update, Lunar New Year Update Q2: Labor Day Update, 7 th Anniversary Update Summer Update National Day Update Winter Update Q: Lunar New Year Update Summer Update National Day Update Winter Update Counter-Strike Online Q: Lunar New Year Update, Roster Update Q2: Staff System Update LIVE & BROAD Update Korean Thanksgiving Package ENGINE Update EA SPORTS TM FIFA Online 3 Q: MapleStory Ice & Burn Update Q2: 2 th Anniversary Update, Summer Update Summer Update (continued from Q2) New Character Update Heroes of Maple Update New Character Update MapleStory Q: Lunar New Year Update Q2: Children s day Package 0 th Anniversary & D&F Fever Update Korean Thanksgiving Package Rare Avatar & Christmas Package Knight 2 nd Awakening Update Dungeon&Fighter Q: Winter Update (continued from Q4 204) Q2: Summer Update Summer Update (continued from Q2) 0 th Anniversary Event Celebrity Character Update Celebrity Character Update Winter Update Sudden Attack The letters, graphics, symbols, logos and other marks shown in this material are trademarks or registered trademarks owned by respective right holders.. 2

22 Appendix 22

23 Summary of Results and Key Operational Metrics (Unit: millions except per share data) Q 204 Q2 204 Q3 204 Q4 204 Q 205 Q2 205 Q3 205 YoY% (By Region) China 2,302 3,530 5,685 6,44 22,697 5,994 20,247 29% Korea 5,25 3,433 9,976 6,749 20,464 6,25 20,63 % Japan 8,2 7,656 7,232 6,929 5,858 5,455 4,972 (3%) North America,345,3,420,623,695 2,84 2,045 44% Europe and Others,472,44,300,90,258 2,50 2,384 83% (By Platform) PC 40,297 28,459 35,93 34,04 43,602 32,5 39,48 0% Mobile 7,94 8,435 9,682 8,89 8,370 0,53 0,330 7% Japan 6,00 5,959 5,570 5,384 4,487 4,073 3,747 (33%) ex-japan,094 2,476 4,2 3,507 3,883 6,080 6,583 60% Revenue 47,49 36,894 45,63 42,932 5,972 42,664 49,8 9% Operating income/(loss) 2,7 9,962 5,24 (748) 22,29,320 8,436 22% Net income/(loss) 2 6,44 4,085 3,585 (4,498) 8,539 3,00 9,84 4% Earnings/(loss) per share (0.45) Cash and deposits 49,040 40,57 4,55 7,729 20,990 6,26 28,236 FX rate 00 KRW/JPY CNY/JPY USD/JPY Key Performance (Excluding Mobile) MAU (millions) Pay Rate.0% 0.2% 9.7% 9.3% 0.0% 0.0% 0.% ARPPU (as-reported) 3,639 2,78 3,476 3,776 4,805 3,508 4,470 PC revenue includes revenues other than PC/mobile revenues. 2 Net income/(loss) refers to net income/(loss) attributable to owners of the parent, as stated in Nexon s consolidated financial results. 23

24 COGS and SG&A (Unit: millions) FY204 FY205 Q Q2 Q3 Q4 Q Q2 Q3 Total Cost of Revenue 0,249 9,839 2,73,56 2,602,092 2,552 Royalty 2 4,055 3,37 6,606 4,448 5,62 4,263 5,355 HR cost (COGS) 3 3,46 3,580 3,372 3,8 4,022 3,950 4,334 Other (COGS) 4 2,733 2,942 2,753 3,257 2,959 2,879 2,863 Total SG&A 4,855 6,788 7,40 9,556 6,776 9,585 8,269 HR cost 3,602 4,758 4,025 4,202 3,695 3,738 3,428 PG fee 5 2,66 2,649 3,645 3,542 4,63 4,83 5,28 R&D,20,533,645,533,963,97,729 Marketing/advertising expenses,382 2,069 2,05 3,468,630 3,728 3,92 Depreciation and amortization 2,802 2,792 2,94 2,958 3,026 3,76 2,275 Other 3,288 2,987 3,2 3,853,83 2,59,788 Other Income Other Expense 7, , Breakdown of COGS and SG&As are unaudited. 2 Royalty includes royalties paid to third-party developers in order for us to obtain the right to publish their games. 3 HR cost includes salaries, bonuses and benefits for our live game developers, who support post launch servicing, updating and support for our games. 4 Other (COGS) primarily consists of depreciation and amortization of assets related to existing games, connection fees (mainly comprised of co-location and datacenter fees, internet bandwidth and access fees), and the costs of purchasing and maintaining our servers and computer equipment. 5 PG Fee in SG&A includes commissions made to external payment gateway companies when users purchase in-game items in PC Online games that we service. It also includes mobile carrier-related commissions we pay regarding our Japanese mobile browser games, commissions we pay to Apple/Google regarding our mobile native games globally, and platform commission fees related to mobile browser games. Before 204 Q4, platform commission fees related to mobile browser games are included in Other in SG&A. 6 Other Income includes other non-operating income, reversal of deferred revenue, gain on sale of properties, and gain on change in equity. 7 Other Expense includes other non-operating expenses, loss on sale/disposal of properties, loss on impairment of tangible fixed assets, loss on impairment of intangible assets, loss on impairment of other fixed assets, loss on change in equity, and loss on liquidation of subsidiaries. Q 204, Q2 204, Q3 204,Q4 204, Q 205, Q2 205, and Q3 205 Other Expense includes impairment of game IP and impairment of goodwill. 24

25 P&L Below Operating Income (Unit: millions) FY204 FY205 Q Q2 Q3 Q4 Q Q2 Q3 Operating Income/(Loss) 2,7 9,962 5,24 ( 748) 22,29,320 8,436 Finance Income,04,024 5,22 5,38 2,576 2,33 4,277 Finance Costs , Equity income/(losses) of affiliates, equity method companies (32) (73) (93) 0 4 Income/(Loss) before Income Tax 2,768 7,258 9,793 3,852 24,682 3,565 22,490 Tax expense 3 (5,446) (3,089) (6,32) (8,583) (5,835) (452) (3,239) Net Income/(loss) 4 6,44 4,085 3,585 (4,498) 8,539 3,00 9, Q3, Q4 and 205 Q, Q2, Q3 Finance Income include FX conversion gain related to foreign currency deposits & A/R. In addition, 205 Q Finance Income includes dividend received from investee Q2 Finance Costs are primarily caused by FX conversion loss related to foreign currency deposits & A/R Q2 Tax Expense was small because of the partial reversal of income taxes payable due to the difference in opinion between the tax authorities being resolved during 205 Q2 with regards to the estimate of income taxes payable recorded in FY204 at a Korean subsidiary based on findings from tax inspection by the tax authorities. 4 Net income/(loss) refers to net income/(loss) attributable to owners of the parent, as stated in Nexon s consolidated financial results. 25

26 Key Cash Flow Statement Items (Unit: millions) 9 months ended September 30, months ended September30, 205 Cash flows from operating activities 4,930 45,06 Cash flows from investing activities (43,376) (3,258) Cash flows from financing activities (26,47) (6,263) Net increase/(decrease) in cash and cash equivalents (27,593) 5,495 Cash and cash equivalents at beginning of fiscal year 38,843 7,729 Effect of exchange rate change on cash and cash equivalents 2,905 (4,988) Cash and cash equivalents at end of fiscal year 4,55 28,236 26

27 Balance Sheet (Unit: millions) December 3, 204 September 30, 205 Asset Current Assets Cash and cash equivalents 7,729 28,236 Other current assets 40,396 40,754 Total current assets 258,25 268,990 Noncurrent assets Tangible assets 24,039 2,390 Goodwill 35,426 35,800 Intangible assets 6,574 8,984 Others 02,858 97,077 Total noncurrent assets 78,897 63,25 Total assets 437, ,24 Update 5/7 Liability Current liabilities Current tax liabilities, current 2,836 4,234 Current borrowings 3,80 4,099 Others 3,007 25,094 Total current liabilities 57,023 43,427 Noncurrent liabilities Non-current borrowings 23,244 4,099 Others,278 8,447 Total noncurrent liabilities 34,522 22,546 Total liabilities 9,545 65,973 Equity Issued capital 52,48 55,73 Share premium 40,830 33,892 Treasury shares - - Other equity interest 92,044 70,35 Retained earnings 55,025 20,407 Non-controlling interests 5,097 5,03 Total equity 345, ,268 Total liabilities and total equity 437, ,24 27

28 Revenue Our Business Continues to Evolve Long-term Growth Vision and Evolution M&A 204 Year Existing New PC / mobile the West Above graph is illustrative and not to scale. 28

29 Glossary of Terms AOS Term / Abbreviation Meaning AOS is a sub-genre of the real-time strategy genre, in which two teams of players compete with each other in discrete games, with each player controlling a single character through an RTS-style interface. FPS (first person shooter) RTS (real-time strategy) MMORPG (massively multiplayer online role playing game) MAU (monthly active user) ARPPU (average revenue per paying user) Pay Rate MCCU (maximum concurrent users) Closed Beta Open Beta Tier One Update Tier Two Update Immersive Games A game in which the player plays from the point of view of the game character in three-dimensional graphics. A game that is usually played from a third-person perspective, in which the player controls vast numbers of in-game characters in a tactical scenario. An online role-playing game that has a massive number (usually several hundred or more) of players who play concurrently. Update The total number of accounts of users who log in and play a particular game in a given month. 5/7 Online game net revenues for any given period divided by the average number of paying players of such games during the period. The number of paying users divided by monthly active users for any given period of time. The maximum number of users concurrently accessing a game at a particular moment. MCCU is generally used to measure the popularity of a game. A trial period during which a trial model (beta version) of a game is tested by a limited number of users or groups. A trial period during which a trial model (beta version) of a game is tested without restrictions on participation. Large scale updates to existing PC games typically launched in Q or Q3 around peak season. Smaller updates to existing PC games released throughout the year. Games that are designed to be played continuously for hours and enable thousands of concurrent users to interact with each other in real time. Our games are architected to evolve over years, in contrast to packaged goods games, which often have finite story lines and comparatively less open-ended player engagement. 29

30 Disclaimer This presentation is prepared to offer reference information about NEXON group to the investors and is intended to generally provide investors and analysts with financial and operational information about Nexon, but not to solicit or recommend any sale or purchase of stock or other securities of Nexon. NEXON Co., Ltd. ( Nexon ) has not verified and would assume no responsibility for the accuracy, appropriation, or completeness thereof. This presentation does not contain all relevant information relating to Nexon or the sale of its shares, including, without limitation, the information that would be stated under the captions Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and Business in an annual report. Any investment decision with respect to any shares of Nexon should be made solely upon the basis of the information contained in the disclosure documents and is qualified in its entirety by reference to the detailed information appearing in the disclosure documents. This presentation includes non-gaap and non-ifrs financial measures, including but not limited to key performance indicators, as well as ratios calculated on the basis thereof. These non-gaap and non-ifrs financial measures should not be considered in isolation or as a substitute for the most directly comparable financial measures included in our consolidated financial statements and presented in accordance with IFRS. This presentation includes forward-looking statements. In some cases, you can identify forward-looking statements by terms such as anticipate, assume, believe, estimate, expect, forecast, may, plan, potential, predict, seek, should, or will, or by other similar terminology. These statements discuss expectations, identify strategies, contain projections of Nexon s financial condition or results of operations or state other forwardlooking information. The forward-looking statements in this presentation are subject to various risks, uncertainties and assumptions about Nexon s business and results of operations. The expectations expressed in these forward-looking statements may not be achieved, and actual results could differ materially from and be worse than expectations. Potential risks and uncertainties that could cause actual results to differ materially from expectations include, without limitation: Continued growth and popularity of Nexon s key titles; Nexon s ability to maintain favorable relationships with key licensing partners; Nexon s continued ability to offer games in China, through local partners or otherwise; Nexon s ability to compete effectively in the online games industry; Nexon s ability to address hacking, viruses, security breaches and other technical challenges; Fluctuations in currency exchange rates; Nexon s ability to maintain and further develop its brand name; Effective acquisition of new companies, businesses, technologies and games from third parties and the possibility of recognizing impairment losses; Continued growth of the online games market, including the underlying infrastructure, and free-to-play/item-based revenue generation model; Nexon s ability to adapt to new technologies; Nexon s ability to enter into licensing arrangements for third-party titles on terms favorable to it; Effective defense of Nexon s intellectual property; and Legislative, regulatory, accounting and taxation changes in the countries in which Nexon operates. Nexon does not intend, and disclaims any duty, to update or revise any forward-looking statements contained in this presentation to reflect new information, future events or otherwise. We caution you not to place undue reliance on the forward-looking statements contained in this presentation. 30

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