NEXON : Consolidated Financial Results for the Six Months Ended June 30, 2021

[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 Six Months Ended June 30, 2021 [IFRS]

	August 11, 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: August 11, 2021
Scheduled date of commencing dividend payments: September 27, 2021
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 Six Months Ended June 30, 2021 (from January 1, 2021 to June 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
Six months ended	144,322	(2.0)%		58,730	(14.0)%	77,470	(10.6)%		54,267	(21.7)%	54,991	(21.1)%		69,935		60.7%
June 30, 2021
Six months ended	147,228	0.2%		68,254		4.1%	86,667	3.3%		69,293	(2.8)%	69,674		(4.0)%		43,514		15.2%
June 30, 2020
						Basic earnings per share		Diluted earnings per share
											Yen						Yen
Six months ended June 30, 2021							61.90						60.32
Six months ended June 30, 2020							78.91						77.97
(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 June 30, 2021					928,109			795,576				785,392						84.6%
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 Nine Months Ending September 30, 2021 (from January 1, 2021 to September 30, 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
3rd Quarter	209,695	(7.5)%	78,807	(17.8)%	98,260	(10.3)%	68,557	(19.8)%	69,946	(18.7)%	78.70
～	～	～	～	～	～	～	～	～	～	～
(cumulative)
215,834	(4.8)%	84,033	(12.3)%	103,487	(5.5)%	72,548	(15.1)%	73,867	(14.1)%	83.11

(Note) As it is difficult to reasonably estimate financial results for the year ending December 31, 2021 at the moment, only the financial results forecast for the nine months ending September 30, 2021 is disclosed. Also, 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

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

1. Number of Shares Issued (common stock)

1. Total number of shares issued at the end of the period (including treasury stock): As of June 30, 2021: 889,489,539 shares
   As of December 31, 2020: 886,961,539 shares
2. Total number of treasury stock at the end of the period:

As of June 30, 2021: 44 shares

As of December 31, 2020: 44 shares

• 1. Average number of shares during the period (cumulative): Six months ended June 30, 2021: 888,359,209 shares Six months ended June 30, 2020: 882,913,222 shares
• 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 ……………………………………………………………………………	4
(3) Explanation on Future Forecast Information including Consolidated Financial Results Forecast ……………	5
(4) Basic Policy on the Distribution of Profits and Dividends for the Current Fiscal Year………………………	6
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 …………………………………………………………… 15

(6) Notes on Going Concern Assumption …………………………………………………………………………	16
(7) Application of New Accounting Policy ………………………………………………………………………	16
(8) Notes on Significant Changes in the Amount of Equity Attributable to Owners of the Parent Company ……	17
(9) Segment Information …………………………………………………………………………………………	18
(10) Subsequent Events ……………………………………………………………………………………………	24

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1. Qualitative Information on Consolidated Financial Results for the Period

(1) Explanation on Operating Results

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

During the three months ended June 30, 2021, the global economy was on a recovery trend with the U.S. recovered to nearly pre-COVID-19 levels primarily due to its monetary and fiscal policies and widespread vaccinations, and China also showing a high economic growth rate. However, outlook remains uncertain in some regions including the European nations where economic activities have been restricted as the COVID-19 infection flared up again. In Japan, while the vaccination program has begun, the economy remains in a harsh situation primarily due to the redeclaration of the state of emergency.

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 June 30, 2021, revenue decreased year-over-year due to tough comparisons with Q2 2020.

In Korea, PC online revenue decreased year-over-year. While EA SPORTS™ FIFA ONLINE 4 and Sudden Attack grew year-over-year, these were more than offset by the year-over-year decrease in revenues from MapleStory and Dungeon&Fighter. As for MapleStory, we have rapidly responded to our players' feedback that arose in late February in relation to the probability-based items. We took various measures including compensation, probability disclosure for paid probability-based items and engagement with users. As a result, the number of active users, which had dropped sequentially since February, started to stabilize from late April and then picked up in late June driven by the Summer update introduced on June 17th. We are still working on recovering our players' trust, and will continue to focus on this as well as making our games better by introducing a probability monitoring system and incorporating players' feedback to improve the game experience and user-friendliness. Mobile revenue increased year-over-year driven by contributions from The Kingdom of the Winds: Yeon and growth of EA SPORTS™ FIFA ONLINE 4 M, despite a decrease in revenues from V4 and KartRider Rush+. As a result, overall revenue in Korea was flat year-over-year.

In China, revenue decreased year-over-year due to a decline in Dungeon&Fighter, our key PC online game. Dungeon&Fighter's user metrics continued to decline until we introduced the 13th Anniversary update on June 17th, and while user metrics rebounded due to the update, the overall revenue for the three months ended June 30, 2021 decreased as a result of the year-over-year decreases in active users and paying users.

In Japan, revenue decreased year-over-year due to revenue decreases from TRAHA and MapleStory M despite contributions from V4 and EA SPORTS™ FIFA MOBILE, both of which launched in FY2020, and Blue Archive launched in Q1 2021.

In North America and Europe, revenue decreased year-over-year primarily due to a revenue decrease from Choices: Stories You Play despite revenue increases from MapleStory and MapleStory M.

In Rest of World, revenue decreased year-over-year due to revenue decreases from KartRider Rush+ and V4 despite revenue increases from MapleStory and MapleStory M.

In terms of expenses, cost of sales increased year-over-year primarily due to an increase in HR costs associated with the introduction of a new compensation policy in Korea and an increase in royalty costs for The Kingdom of the Winds: Yeon and EA SPORTS™ FIFA ONLINE 4. Selling, general and administrative expenses increased year- over-year due to increased stock option costs and HR costs associated with the introduction of a new compensation policy in Korea, as well as increased research and development costs, despite decreases in marketing costs and platform fees for mobile games.

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