NC swings to profit, Nexon beats expectations as Krafton struggles
A promotional poster for NC's AION 2 / Courtesy of NC
NC, Nexon benefit from stronger game sales, while Krafton faces falling PC revenue, rising costs
Korean game developers have reported mixed third-quarter earnings.
NC returned to profitability from a year earlier, while Nexon defied market pessimism with solid revenue from its live service games. Krafton, meanwhile, saw its operating profit decline as revenue from PUBG: Battlegrounds (PUBG) failed to keep pace with rising costs associated with its business diversification efforts.
NC announced its third-quarter earnings Wednesday, reporting sales of 686.5 billion won ($514.2 million) and an operating profit of 119.6 billion won. Revenue surged 91 percent year-on-year, while the company swung to an operating profit from a loss of 750 million won in the same period last year.
Overseas sales accounted for 54 percent of total revenue, marking the fifth consecutive quarter of growth in their share, as the company continued to expand its global revenue base, particularly in North America and Europe.
Notably, revenue from mobile casual games increased from the previous quarter to 171.9 billion won. The segment accounted for 25 percent of total revenue, contributing to the diversification of the company's revenue portfolio.
AION 2, which launched globally on Oct. 5, is also expected to contribute to the company's earnings starting in the fourth quarter. The game recorded a peak of 410,000 concurrent players and generated cumulative revenue of 110.3 billion won between the start of early access on Sept. 30 and Tuesday.
A promotion image of MapleStory: Idle RPG / Courtesy of Nexon
Nexon posted stronger-than-expected earnings, with third-quarter revenue rising 17 percent year-on-year to 138.4 billion yen ($920.45 million). Operating profit also increased 11 percent to 418 billion yen during the same period. Nexon reports its earnings in Japanese yen as it is listed on the Tokyo Stock Exchange.
The results defied market pessimism and Nexon's own guidance for the third quarter, which had projected that operating profit could decline by as much as 39.8 percent from a year earlier.
Flagship titles MapleStory and FC Online fueled the strong performance, with both games posting record quarterly revenue.
Revenue from the MapleStory franchise surged 72 percent year-on-year, driven by growth in the original PC game in Korea and overseas, the global expansion of MapleStory: Idle RPG and continued growth of MapleStory Worlds.
FC Online launched a major overhaul of its game systems and updated new content, including additional player classes, during the third quarter. These pushed average playtime per user to an all-time high.
The company said it expects to drive further growth through titles targeting global markets.
On Nov. 26, Nexon will launch TEMPPAL: OVERGEARED in Korea, Taiwan, Hong Kong and Macao. In the first half of 2027, Nexon plans to launch the mobile idle role-playing game Arad: Idle RPG globally. The company also plans to introduce several internally developed titles, including the action RPG Vindictus: Defying Fate and the zombie survival game NAKWON: LAST PARADISE.
A promotion image of a collaboration event between Krafton's PUBG: Battlegrounds and Bentley / Courtesy of Krafton
On the other hand, Krafton suffered a slowdown in its growth. Its third-quarter sales grew 11.6 percent year-on-year to 971.4 billion won, but operating profit remained at 225 billion won, down 35.5 percent during the same period.
The main reason for weakened profit was a decline in PC game revenue. The company's PC game revenue plunged 57.4 percent to 238.9 billion won in the third quarter from 560.4 billion won in the previous quarter.
During its earnings call Tuesday, the company said it had released relatively little paid content for the PC version of PUBG in the third quarter and that the impact of initial sales of Subnautica 2 had faded. However, it added that PC traffic has since recovered to a healthy level and that it expects strong performance in the fourth quarter.
In contrast, the company's operating expenses rose 43 percent year-on-year to 746.4 billion won. This reflected the weaker-than-expected performance of ADK Holdings, a Japanese advertising and animation firm Krafton acquired in June last year, and the company’s increased marketing costs, including expenses related to its participation in Gamescom trade show in August.
“ADK's animation business is performing better than we initially expected, but its advertising business is struggling as Japan's traditional advertising market continues to shrink,” the company said during the earnings call.
Krafton is now expanding its business into various areas beyond gaming. The company is developing its proprietary large language model, Raon-1 Mini, which raised questions from analysts over why the game company is developing its own artificial intelligence (AI) model from scratch.
“We believe the capabilities we have built through developing AI for games are among the best in Korea,” Krafton CEO Kim Chang-han said. “Earlier this year, we announced plans to expand our AI business beyond gaming, and developing our own models is part of that effort.”