NEXON : Consolidated Financial Results for the Three Months Ended March 31, 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 Three Months Ended March 31, 2021 [IFRS]

	May 12, 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: May 13, 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 Three Months Ended March 31, 2021 (from January 1, 2021 to March 31, 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
Three months ended	88,313	6.7%		43,321		4.3%	63,575	2.6%		45,733	(8.1)%	46,034		(7.8)%		60,945		309.6%
March 31, 2021
Three months ended	82,762	(11.1)%		41,543	(21.0)%	61,989	0.3%		49,754	(5.8)%	49,911		(6.5)%		14,879	(67.5)%
March 31, 2020
						Basic earnings per share		Diluted earnings per share
											Yen						Yen
Three months ended March 31, 2021							51.86						50.78
Three months ended March 31, 2020							56.57						56.11
(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 March 31, 2021				932,592			783,370				772,767						82.9%
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	－
FY 2021 (Forecast)		2.50		－	2.50	5.00
(Note) Revision of most recently announced dividend forecasts:	No

3. Consolidated Financial Results Forecast for the Six Months Ending June 30, 2021 (from January 1, 2021 to June 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
2nd Quarter	142,763	(3.0)%	55,361	(18.9)%	76,601	(11.6)%	54,118	(21.9)%	54,999	(21.1)%	61.93
～	～	～		～	～	～	～		～	～		～	～
(cumulative)
147,908	0.5%	59,706	(12.5)%	80,947	(6.6)%	57,483	(17.0)%	58,289	(16.3)%	65.63

(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 six months ending June 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 4 of the Appendix.

*(Notes)

1. Changes in Significant Subsidiaries during the Period : No
   (Changes in specified subsidiaries accompanying changes in scope of consolidation)
2. 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 March 31, 2021: 888,567,539 shares
   As of December 31, 2020: 886,961,539 shares
2. Total number of treasury stock at the end of the period:

As of March 31, 2021: 44 shares

As of December 31, 2020: 44 shares

• 1. Average number of shares during the period (cumulative): Three months ended March 31, 2021: 887,753,495 shares Three months ended March 31, 2020: 882,223,517 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 4 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 …………	4
2. Matters Related to Summary Information (Notes) ………………………………………………………………	6
(1) Changes in Significant Subsidiaries during the Period ………………………………………………………	6
(2) Changes in Accounting Policies and Changes in Accounting Estimates ……………………………………	6
3. Condensed Consolidated Financial Statements and Major Notes ………………………………………………	7
(1) Condensed Consolidated Statement of Financial Position …………………………………………………	7
(2) Condensed Consolidated Income Statement ………………………………………………………………	9
(3) Condensed Consolidated Statement of Comprehensive Income ……………………………………………	10
(4) Condensed Consolidated Statement of Changes in Equity …………………………………………………	11
(5) Condensed Consolidated Statement of Cash Flows …………………………………………………………	12
(6) Notes on Going Concern Assumption ………………………………………………………………………	13
(7) Changes in Presentation Method ……………………………………………………………………………	13
(8) Notes on Significant Changes in the Amount of Equity Attributable to Owners of the Parent Company …	13
(9) Segment Information …………………………………………………………………………………………	14
(10) Subsequent Events …………………………………………………………………………………………	17

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1. Qualitative Information on Consolidated Financial Results for the Period

(1) Explanation on Operating Results

As for the global economy during the three months ended March 31, 2021, although vaccination programs have started in various areas around the world, future outlook remains unclear due to the impact of the COVID-19 pandemic. While the economy in North America showed signs of picking up, economic recovery slowed down in Europe due to prolonged restriction on human activities as the infection flared up again. The economy showed a gradual turnaround in China where economic conditions stayed on a recovery trend. As for the Japanese economy, while signs of recovery were seen mainly in capital investment and production, harsh conditions continued as economic activities were suppressed, and corporate revenue and consumer spending weakened, primarily due to the impact of the third wave of the COVID-19 outbreak and the accompanying redeclaration of a state of emergency in January 2021.

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 March 31, 2021, multiple major titles drove our business and all regions excluding China grew. As a result, revenue increased year-over-year.

In Korea, all four of our major PC titles grew. MapleStory grew year-over-year due to well-received Winter update, while EA SPORTS™ FIFA ONLINE 4 ("FIFA ONLINE 4") grew year-over-year due to well-received Lunar New Year package offerings and promotions. Revenues from Dungeon&Fighter and Sudden Attack also grew by 13% and 56%, respectively, year-over-year. Mobile revenue increased significantly as we benefitted from the mobile versions of our hit titles, such as The Kingdom of the Winds: Yeon, KartRider Rush+ and EA SPORTS™ FIFA MOBILE ("FIFA MOBILE"), and as MapleStory M grew. Accordingly, our Korea business overall grew by 26% year-over-year.

In China, revenue decreased year-over-year due to a slowdown of our major PC title, Dungeon&Fighter. Dungeon&Fighter's active users and paying users decreased year-over-year due to reduced user engagement and constant strengthening of bot sanctions. Revenue decreased accordingly.

In Japan, revenue increased year-over-year driven by TRAHA, V4 and FIFA MOBILE, which all launched in FY2020, as well as contributions from Blue Archive, which launched in the three months ended March 31, 2021.

In North America and Europe, revenue increased year-over-year primarily driven by increases in revenue from MapleStory and MapleStory M.

In Rest of World, revenue increased year-over-year driven by MapleStory's revenue growth.

In terms of expenses, cost of sales increased year-over-year primarily due to an increase in royalty costs for The Kingdom of the Winds: Yeon. Selling, general and administrative expenses increased year-over-year due to an increase in HR costs due to the introduction of a new compensation package in Korea and increased stock option costs, as well as an increase in platform costs of mobile games including The Kingdom of the Winds: Yeon and KartRider Rush+. Other expenses also decreased due to comparisons with Q1 2020, when we recorded an impairment loss on a subsidiary's goodwill and the IP of Choices: Stories You Play. Income tax expense increased year-over-year as a result of an increase in income before income taxes and an increase in deferred tax expenses on undistributed profits of our overseas subsidiary.

As a result, for the three months ended March 31, 2021, Nexon Group recorded revenues of ¥88,313 million (up 6.7% year-over-year), operating income of ¥43,321 million (up 4.3% year-over-year), income before income taxes of ¥63,575 million (up 2.6% year-over-year) and net income attributable to owners of the parent company of ¥46,034 million (down 7.8% year-over-year).

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