Consolidated Financial Results for the Nine Months Ended September 30, 2021 [IFRS]

[This is an English translation prepared for the convenience of non-resident shareholders. Should there be any inconsistency between the translation and the official Japanese text, the latter shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translations.]

Consolidated Financial Results

for the Nine Months Ended September 30, 2021

[IFRS]

	November 9, 2021
Company name: NEXON Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange
Stock code: 3659
URL: http://www.nexon.co.jp/
Representative: Owen Mahoney, Chief Executive Officer and President
Contact: Shiro Uemura, Representative Director and Chief Financial Officer	Phone: [phone]
Scheduled date for filing of quarterly securities report: November 10, 2021
Scheduled date of commencing dividend payments: -
Supplementary briefing material on quarterly financial results: Yes
Quarterly financial results briefing: No

(Amounts are rounded to nearest million yen)

1. Consolidated Financial Results for the Nine Months Ended September 30, 2021 (from January 1, 2021 to September 30, 2021)

(1) Consolidated Operating Results (cumulative)						(% changes year-over-year)
														(Millions of yen)
												Net income			Total
			Operating	Income before				attributable to
	Revenue	Net income		comprehensive
		income	income taxes	owners of the
									income
												parent company
Nine months ended	220,212	(2.8)%	88,565		(7.6)%	125,828	14.8%	91,948	7.6%	92,893	8.0%		91,346	17.1%
September 30, 2021
Nine months ended	226,640	13.7%	95,861		6.5%	109,568	(13.4)%	85,465	(22.5)%	86,004	(23.5)%		77,980	38.5%
September 30, 2020
					Basic earnings per share		Diluted earnings per share
								Yen					Yen
Nine months ended September 30, 2021					104.36				102.08
Nine months ended September 30, 2020					97.32					95.81

(2) Consolidated Financial Position

									(Millions of yen)
							Total equity		Ratio of equity
		Total assets	Total equity	attributable to		attributable to
		owners of the parent	owners of the parent
							company		company
As of September 30, 2021	957,998	817,824		807,985		84.3%
As of December 31, 2020	862,161	720,445		709,882		82.3%
2. Dividends
									(Yen)
					Annual Dividends
	End of 1st Quarter	End of 2nd Quarter	End of 3rd Quarter	End of Year	Total
FY 2020		－		2.50		－	2.50	5.00
FY 2021		－		2.50		－
FY 2021 (Forecast)							2.50	5.00

(Note) Revision of most recently announced dividend forecasts: No

3. Consolidated Financial Results Forecast for the Year Ending December 31, 2021 (from January 1, 2021 to December 31, 2021)

(% changes year-over-year) (Millions of yen)

									Net income
	Revenue	Operating	Income before	Net income	attributable to	Basic earnings
	income	income taxes	owners of the	per share
									parent company
											Yen
	271,431	(7.4)%	91,030	(18.3)%	128,865	19.1%	92,036	65.9%	93,179	65.7%	104.48
Full year	～	～	～	～	～	～	～	～	～	～	～
	277,183	(5.4)%	95,467	(14.3)%	133,303	23.2%	95,429	72.0%	96,472	71.6%	108.18

(Note) As it is difficult to estimate specific figures, disclosure is made with a range. For details, please refer to "1. Qualitative Information on Consolidated Financial Results for the Period (3) Explanation on Future Forecast Information including Consolidated Financial Results Forecast" on page 5 of the Appendix.

*(Notes)

(1) Changes in Significant Subsidiaries during the Period : No

(Changes in specified subsidiaries accompanying changes in scope of consolidation)

1. Changes in Accounting Policies and Changes in Accounting Estimates
2. 1. Changes in accounting policies required by IFRS: Yes
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
3. Number of Shares Issued (common stock)
4. 1. Total number of shares issued at the end of the period (including treasury stock): As of September 30, 2021: 897,424,469 shares
      As of December 31, 2020: 886,961,539 shares
   2. Total number of treasury stock at the end of the period: As of September 30, 2021: 865,814 shares
      As of December 31, 2020: 44 shares
   3. Average number of shares during the period (cumulative): Nine months ended September 30, 2021: 890,113,590 shares

Nine months ended September 30, 2020: 883,684,304 shares

(Note) "Total number of treasury stock at the end of the period" includes Nexon's stock held by Stiftelsen Embark Incentive ("Foundation") (as of September 30, 2021: 865,770 shares; as of December 31, 2020: - share) and the number of treasury stock deducted in the calculation of the "average number of shares during the period" also includes Nexon's stock held by the Foundation (as of September 30, 2021: 177,091 shares; as of September 30, 2020: - shares). This is because we have consolidated the Foundation in our condensed quarterly consolidated financial statements from the three months ended September 30, 2021.

• This quarterly financial report is outside the scope of quarterly review procedures by a certified public accountant or an audit firm.
• Explanation of the Proper Use of Financial Results Forecasts and Other Notes

(Caution Concerning Forward-Looking Statements)

The forward-looking statements including the financial results forecast herein are based on information currently available to the Company and certain assumptions that can be deemed reasonable, and are not intended as the Company's commitment to achieve such forecasts. Actual results may differ significantly from these forecasts due to a wide range of factors. For conditions prerequisite to the financial results forecast and the points to be noted in the use thereof, please refer to "1. Qualitative Information on Consolidated Financial Results for the Period (3) Explanation on Future Forecast Information including Consolidated Financial Results Forecast" on page 5 of the Appendix.

(Method of Obtaining Supplementary Briefing Material on Financial Results)

The supplementary briefing materials on quarterly financial results are available on the Company's website.

Contents of Appendix

1. Qualitative Information on Consolidated Financial Results for the Period ……………………………………	2
(1) Explanation on Operating Results……………………………………………………………………………	2
(2) Explanation on Financial Position……………………………………………………………………………	3
(3) Explanation on Future Forecast Information including Consolidated Financial Results Forecast …………	5
2. Matters Related to Summary Information (Notes) ………………………………………………………………	7
(1) Changes in Significant Subsidiaries during the Period ………………………………………………………	7
(2) Changes in Accounting Policies and Changes in Accounting Estimates ……………………………………	7
3. Condensed Consolidated Financial Statements and Major Notes ………………………………………………	8
(1) Condensed Consolidated Statement of Financial Position …………………………………………………	8
(2) Condensed Consolidated Income Statement ………………………………………………………………	10
(3) Condensed Consolidated Statement of Comprehensive Income ……………………………………………	12
(4) Condensed Consolidated Statement of Changes in Equity …………………………………………………	14
(5) Condensed Consolidated Statement of Cash Flows …………………………………………………………	16
(6) Notes on Going Concern Assumption ………………………………………………………………………	17
(7) Application of New Accounting Policy ……………………………………………………………………	17
(8) Notes on Significant Changes in the Amount of Equity Attributable to Owners of the Parent Company …	17
(9) Segment Information…………………………………………………………………………………………	19

1. Subsequent Events…………………………………………………………………………………………… 25

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1. Qualitative Information on Consolidated Financial Results for the Period

(1) Explanation on Operating Results

Nexon Group discloses our financial outlook for the upcoming quarter as a range so as to provide our shareholders and investors with more accurate information, while the explanation on operating results in our quarterly consolidated financial results focuses on analyses and comparisons with the same quarter in the previous accounting year.

During the three months ended September 30, 2021, the recovery of the global economy has varied due to differences in the infection statuses and economic measures taken in each country and region. A trend towards economic recovery has continued in the U.S. and China boosted by huge economic stimulus packages and widespread vaccinations. In Japan, while the COVID-19 vaccination program has progressed and there are some signs of a gradual recovery, the economic situation remains unclear primarily due to repeated declaration of the state of emergency and implementation of key measures to prevent the spread of the infection.

Under these circumstances, although the situation varies slightly depending on the region, Nexon Group has continued to operate its PC online and mobile businesses without its overall business being largely affected, endeavoring to provide users with an enjoyable game experience by developing high-quality games, acquiring more contents, servicing new titles, and updating existing titles. Specifically, we have established the following as Nexon's Focus Strategy: (i) focusing on massive multiplayer online games, (ii) enabling our service to be played across multiple platforms including PC, console and mobile, (iii) leveraging Nexon's IPs, and (iv) investing in new IPs that we think are really special. We have also worked on initiatives for the growth of our global business.

For the three months ended September 30, 2021, revenue decreased year-over-year due to a tough comparison with Q3 2020 when we achieved record-breaking Q3 revenue.

In Korea, PC online revenue increased year-over-year. While MapleStory's revenue decreased year-over-year, other key titles including EA SPORTS™ FIFA ONLINE 4, Sudden Attack and Dungeon&Fighter grew year-over- year. As for MapleStory, we have continued to work on regaining our players' trust in the three months ended September 30, 2021. Consequently, the net promoter score, which is an indicator of player satisfaction, has consistently improved throughout the quarter, with the events and contents updates introduced being well-received by players. As for mobile games, revenue decreased year-over-year due to a tough comparison with Q3 2020 which marked record-breaking mobile revenue driven by contributions from V4 and KartRider Rush+, as well as The Kingdom of the Winds: Yeon following its recent launch. As a result, overall revenue in Korea decreased year-over- year.

In China, revenue increased year-over-year driven by an increase in revenue from Dungeon&Fighter, our key PC online game. Dungeon&Fighter's revenue increased due to the successful Summer update in July and National Day update in September. User engagement improved and the number of paying users and ARPPU increased year- over-year as content updates and new initiatives under the new director who assumed his post in August were well- received by players.

In Japan, revenue decreased year-over-year due to declines in revenues from TRAHA and MapleStory M, which more than offset MapleStory's growth and contributions from BlueArchive and EA SPORTS™ FIFA MOBILE.

In North America and Europe, revenue decreased year-over-year due to declines in revenues from Choices: Stories You Play and V4, which more than offset MapleStory M's growth and a contribution from KonoSuba: God's Blessing on this Wonderful World! Fantastic Days launched on August 19th.

In Rest of World, revenue increased year-over-year driven by growth of MapleStory and MapleStory M despite revenue decreases from KartRider Rush+ and V4.

In terms of expenses, cost of sales decreased year-over-year primarily due to an increase in HR costs associated with the introduction of a new compensation policy in Korea being more than offset by a decrease in royalty costs for The Kingdom of the Winds: Yeon. Selling, general and administrative expenses decreased year-over-year due to decreases in marketing costs and platform fees for mobile games, despite increases in HR costs and research and development costs, which were associated with increased stock option costs and the introduction of a new compensation policy in Korea. Other expenses decreased compared to Q3 2020 when we recorded an impairment loss on the goodwill of our consolidated subsidiary, Big Huge Games, Inc.

Finance income increased year-over-year due to a foreign exchange gain primarily on foreign currency- denominated cash deposits in the three months ended September 30, 2021.

As for cypto-assets in the three months ended September 30, 2021, a reversal of loss on revaluation of ¥1,714 million was recorded due to movements in the market price of crypto-assets.

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