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  • 1. Nexon Investor Presentation Q3 2012 NEXON Co., Ltd.
  • 2. Q3 2012 Results 2
  • 3. Highlights Quarterly revenue of ¥24.2 bn and operating income of ¥10.0 bn – Revenues flat YoY, up 3% on constant currency basis, slightly below (-2.8%) management outlook – Operating income down 8% YoY, above (+8.5%) management outlook; operating margins of 41% – China continues to grow, with revenues of ¥11.4 bn (+31% YoY, +36% on constant currency basis) – High level of competition in Korea in Q3 relative to Nexon’s release and update schedule Transformative acquisition of gloops, Inc. – Establishes Nexon as the #1 independent mobile game developer1 by revenue – Immediately accretive to Nexon – Strong growth opportunities in Japan and internationally – Diversifies revenue base significantly Entering 2013 with strongest pipeline to date – Dota 2 reinforces our competitive position in Korea and Japan; expected launch mid-2013 – FIFA Online 3: positive feedback/engagement metrics collected from first closed beta – Q4 pipeline also includes Counter-Strike Online 2, Warface, Epic of the Three Kingdoms Revising Q4 outlook to reflect competitive environment, gloops acquisition and pipeline 1 Based on publicly available information 3
  • 4. Summary of results1 and key operational metrics (in ¥ millions, except per share data and metrics) Prev. vs. Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Outlook QoQ YoY Outlook Revenues ¥24,156 ¥22,190 ¥30,377 ¥22,876 ¥24,256 ¥24,943 6.0% 0.4% -2.8% Operating income 10,948 9,354 17,384 10,678 10,032 9,249 -6.0% -8.4% 8.5% Ordinary income 10,170 8,627 17,677 9,368 9,057 9,191 -3.3% -10.9% 1.5% Net income 7,232 5,815 12,377 6,768 6,348 6,598 -6.2% -12.2% -3.8% Adjusted net income 2 7,582 6,153 12,738 7,148 6,791 7,007 -5.0% -10.4% -3.1% Earnings per share 3 Basic EPS 20.39 15.59 28.82 15.63 14.63 15.30 Adjusted EPS 21.37 16.49 29.66 16.51 15.65 16.24 Customer metrics MAU (millions) 87.3 80.0 82.8 77.4 78.8 Pay Rate 9.3% 9.9% 10.9% 10.3% 9.6% ARPPU ¥1,486 ¥1,350 ¥1,761 ¥1,521 ¥1,729 1 Prepared in accordance with Japanese GAAP, which is rounded down to the nearest million yen. 2 Adjusted net income is a non-GAAP measure that excludes non-cash amortization of goodwill related to our acquisitions and negative goodwill in the case of acquisitions occurring before April 1, 2010, which is required under Japanese GAAP. We provide this information to investors for the purpose of comparing our net income with that of companies that do not amortize goodwill or negative goodwill associated with acquisitions in their financial results, including those reporting in accordance with U.S. GAAP. 3 Adjusted to reflect the 1:100 stock split that occurred on July 21, 2011. 4
  • 5. Quarterly revenues and operating income(Unit: ¥ millions) Revenues Operating income35,000 35,000 30,37730,000 30,00025,000 24,156 24,256 25,000 22,876 22,19020,000 20,000 17,38415,000 15,000 10,948 10,678 10,03210,000 10,000 9,354 5,000 5,000 0 0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 5
  • 6. Q3 2012 Regional Highlights 6
  • 7. Revenue by region1 Q3 2012 revenue by region Others North 7% America 6% Japan 13% Korea China 27% 47% (in ¥ millions) YoY YoY Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 As-reported Constant currency 3 China ¥8,684 ¥8,281 ¥15,175 ¥10,737 ¥11,404 31% 36% Korea 8,521 7,224 8,856 6,251 6,578 -23% -20% Japan 3,459 3,687 3,096 2,826 3,231 -7% -7% North America 1,700 1,407 1,397 1,515 1,340 -21% -22% 2 Europe and others 1,791 1,590 1,850 1,545 1,701 -5% 1% Total 24,156 22,190 30,377 22,876 24,256 0% 3% 1 Based on the region in which revenues originate. Not a presentation of our revenues according to Nexon entities. 2 Others: United Kingdom, other Asian countries, and South American countries. 3 YoY Constant currency is the growth rate had the currency rate not changed from Q3 2011. Rates used: 1,344 Korean won/100 Japanese yen, 12.39 Japanese yen/Chinese yuan, and 80.66 Japanese yen/U.S. dollar. 7
  • 8. China – Highlights (Unit: ¥ millions) Continued strength; largest portion of revenue 16,000 YoY% change 15,175 As-reported: +31% Growth driven primarily by top 2 titles – Constant currency: +36% Dungeon&Fighter and Counter-Strike Online – both 14,000 launching successful updates for summer and national holidays 12,000 11,404 10,737 10,000 Upcoming pipeline: Cyphers 8,684 8,281 – Award winning action MMO gaining traction in Korea 8,000 – Alpha test: Q4 2012 – Commercial launch: 2013 6,000 4,000 2,000 0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 8
  • 9. Korea – Highlights (Unit: ¥ millions) As anticipated at last quarter’s update, a competitive quarter in the region’s peak season for games 10,000 – Several blockbuster releases by global competitors YoY% change impacted the hardcore market 9,000 8,856 As-reported: -23% 8,521 – Our key titles – MapleStory, Dungeon&Fighter, Sudden Constant currency: -20% Attack – maintained top positions 8,000 – No major Nexon releases or updates 7,224 7,000 Nexon updates for the quarter prioritized user retention 6,578 rather than monetization 6,251 – Strengthened gameplay elements to keep players engaged 6,000 and extend game lifetimes – Short-term impact on revenue as a result 5,000 Solid slate of new games for Q4 and 2013 4,000 – Dota 2, FIFA Online 3, Counter-Strike Online 2, Warface, Epic of the Three Kingdoms, and others – Mabinogi 2: first collaborative project with NCsoft 3,000 2,000 1,000 0 Epic of the Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Three Kingdoms 9
  • 10. Japan – Highlights (Unit: ¥ millions) Continue to be a market leader in PC online YoY% change 4,000 As-reported: -7% 3,687 Constant currency: -7% Dota 2 expected to grow existing PC business 3,459 3,500 Transformative acquisition of gloops, Inc. 3,231 3,096 – Japan now 33% of worldwide revenue1 – Growth opportunities: 3,000 2,826 1) Leverage Nexon’s IP on mobile 2) Leverage Nexon’s live development expertise to extend gloops’ games user lifetimes 2,500 3) Leverage Nexon’s international footprint to expand gloops’ globally 2,000 Positioned to return to double digit growth 1,500 1,000 500 0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Note: Q3 2011 results include contribution from inBlue Inc. 1 Based on illustrative Q3 2012 pro forma 10
  • 11. North America/Europe and others – Highlights YoY% change (Unit: ¥ millions) As-reported: -21%North America 1,800 1,700 Constant currency: -22% 1,600 1,515 Hacking and server issues under control 1,407 1,397 1,340 1,400 1,200 Focusing on customer acquisition and retention to rebuild our userbase 1,000 800 Made changes to management team and added key live 600 operations personnel from Korea 400 200 0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 (Unit: ¥ millions) YoY% changeEurope and others As-reported: -5% 2,500 Constant currency: +1% Europe up 12% YoY on a constant currency basis 2,000 1,850 1,791 1,701 1,590 1,545 Continue to build out team in our new Luxembourg office 1,500 Focused on establishing the infrastructure needed to support 1,000 larger games in the market 500 0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 11
  • 12. Q4 2012 and Full Year Business Outlook 12
  • 13. Summary of business outlook(in ¥ millions) Prev. Outlook Revised Outlook Nexon Group (excluding gloops) gloops (standalone) Nexon Group (including gloops)3 Full year 2012 Q4 2012 Full year 2012 Q4 2012 Full year 2012 Q4 2012 Full year 2012Revenues 104,334 21,263 ~ 24,000 98,773 ~ 101,510 6,200 ~ 6,700 6,200 ~ 6,700 27,463 ~ 30,700 104,973 ~ 108,210Operating income 47,082 5,580 ~ 8,102 43,676 ~ 46,198 1,500 ~ 1,800 1,500 ~ 1,800 6,335 ~ 9,157 44,431 ~ 47,253Ordinary income 46,043 5,770 ~ 8,292 41,873 ~ 44,395 1,500 ~ 1,800 1,500 ~ 1,800 6,525 ~ 9,347 42,628 ~ 45,450Net income 32,737 3,188 ~ 5,099 28,684 ~ 30,594 900 ~ 1,080 900 ~ 1,080 3,381 ~ 5,471 28,876 ~ 30,966Adjusted net income 1 34,294 3,597 ~ 5,507 30,275 ~ 32,185 900 ~ 1,080 900 ~ 1,080 4,441 ~ 6,531 31,119 ~ 33,210Earnings per share 2 Basic EPS 75.88 7.34 ~ 11.74 66.31 ~ 70.72 7.78 ~ 12.59 66.75 ~ 71.59 Adjusted EPS 79.49 8.28 ~ 12.68 69.99 ~ 74.40 10.22 ~ 15.03 71.94 ~ 76.77 “Tier 2” content updates focused on supporting game community rather than bolstering near-term revenue Lowered guidance reflects reduced expectations in North America and Europe regions for the upcoming holiday season and focus on engagement over near-term monetization for Korea and China Japan expected to return to double digit growth in Q4 with gloops1Adjusted net income is a non-GAAP measure that excludes non-cash amortization of goodwill related to our acquisitions and negative goodwill in the case of acquisitions occurringbefore April 1, 2010(, which is required under Japanese GAAP. We provide this information to investors for the purpose of comparing our net income with that of companies that do notamortize goodwill or negative goodwill associated with acquisitions in their financial results, including those reporting in accordance with U.S. GAAP.2 Adjusted to reflect the 1:100 stock split that occurred on July 21, 2011.3 Business outlook includes amortization impacts resulting from consolidation 13
  • 14. Acquisition of gloops 14
  • 15. Overview 2012 Japanese game markets size estimates1 Immediate and significant opportunities (Unit: ¥ billions) in the Japanese mobile games market 500 425 400 – Mobile is now the largest market by revenue in Japan 300 281 – Mobile games market estimated to be ¥425 billion1 in 2012 200 80 100 - Mobile Console PC online Overview of gloops, Inc. – Founded: 2005 – Located: Tokyo, Japan – Financials for 12 months ended June 30, 20122 • Revenue: ¥23.7 billion • Operating income: ¥5.8 billion – Robust IP portfolio Guardians of the Royale Three Kingdoms Guild Battle Transaction details – Transaction amount: JPY 36.5 billion – Financed from cash on hand – Transaction closed October 1, 2012 Warriors of Odin Japan Pro Baseball Card Battle 1 Sources: Nomura Equity Research (Mobile), Enterbrain, Inc. (Console). Console revenue excludes hardware sales. 15 2 Unaudited.
  • 16. Transformative deal driving Nexon’s mobile expansion Strong financial contribution – ¥36.5 billion purchase price: 5.5x EV/EBITDA1 – Immediately accretive to Nexon Substantial opportunities for growth 1) Combine Nexon’s popular IP with gloops’ world-class mobile development 2) Leverage Nexon’s live game development expertise to extend user lifetimes of gloops’ games 3) Leverage Nexon’s substantial international footprint to expand gloops’ business globally Transform Nexon’s base of business – #1 independent mobile developer 2 – 20-25% of revenues now from mobile – Japan now contributes 33% to revenues 3 1 Based on gloops’ balance sheet and financials for most recent fiscal year ended June 30, 2012 2 Based on publicly available information 3 Based on illustrative Q3 2012 pro forma 16
  • 17. Illustrative pro forma: Q3 2012 Nexon Group Q3 2012 Pro Forma1 31.1 24.2 gloops Revenue Financial impact Nexon group (Units: ¥ billion) 10.0 11.5 Operating income Others North Others North 7% America 5% America 4% 6% Japan 13% Japan 33% Regional diversity Korea China China 27% 37% 47% Korea 21% Mobile 3% Mobile 24% Platform expansion PC Online PC Online 76% 97% 1 For illustrative purposes only. Based on Nexon’s Q3 2012 revenue and gloops’ unaudited quarterly revenue 17 for the 3 months ended September 30, 2012.
  • 18. Key Titles Three Kingdoms Guild Battle Japan Pro Baseball Card BattleXXX Online real-time synchronous battles among player guilds. Card battle game based on Japan’s official professional baseball Features characters from Three Kingdoms lore. league. Over 1,200 cards available based on real life players. Warriors of Odin Guardians of the Royale Online real-time synchronous battles among player guilds. Evolutionary step in synchronous gameplay, with battles Set in a fantasy world, players fight alongside Odin to defeat between guilds taking place on interactive maps adding the dark forces of Ragnarok. freedom of movement to gameplay 18
  • 19. New and upcoming launches New title launches  Warriors of Odin (Global Launch)  MLB Winning Streak – Released: October 2012 – Released: October 2012 – Regions: Global – Regions: Global – Platforms: iOS, Android – Platforms: iOS, Android – Global version of highly popular game in Japan which – Trading card battle game based on the MLB franchise pioneered real-time battle game featuring synchronous PvP combat between guilds Upcoming releases  Several titles for Mobage (Japan) currently in development for launch in Q1 2013  Planning to launch 10 titles in 2013  Titles targeting overseas markets currently in development 19
  • 20. Upcoming Pipeline 20
  • 21. Key upcoming titles: Dota 2 and FIFA Online 3 Regions: Korea, Japan  Regions: Korea Expected launch: mid-2013  Launch schedule – 2nd CBT: November 27 Sequel to the pioneer of “multiplayer online battle – OBT: December arena” games which inspired League of Legends – Commercial launch: 2013 172,000 MCCU1 generated in North America’s OBT  Extremely positive feedback and high retention rates from 1st CBT held in September 1 Maximum Concurrent Users 21
  • 22. Strong pipelineEpic of the Three Kingdoms Counter-Strike Online 2 Regions: Global  Regions: Global Launched October 25, 2012 (OBT)  Expected launch (Korea): Q1 2013 (2nd CBT in November, OBT in December) High quality cross platform game targeting tablet, mobile, and PC  Co-developed with Valve  Sequel to one of Nexon’s top global FPS titlesWarface Mabinogi 2: ARENA Regions: Korea  Regions: Global Expected launch: Q1 2013 (2nd CBT in November, OBT in January)  Expected launch (Korea): 2013 Triple AAA military MMOFPS  First collaborative project with NCsoft Partnered with Crytek, developer of the critically acclaimed Crysis  Large scale fantasy MMORPG series 22
  • 23. Introduction to Nexon’s Business 23
  • 24. Nexon overview 1.3 billion+ cumulative player registrations 60 titles+ in games portfolio 100 countries+ serviced 10 years+ of revenue growth Other North America Japan Korea China 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Note: 2001 to 2007 revenues from audit reports of NXC, Nexon’s parent company. 2008 revenues from Nexon’s unaudited Consolidated Financial Statements. Revenue breakdown by region is available from 2009. 24
  • 25. Pioneers of the Free-to-play (F2P) business model Free-to-play (F2P): Users play games for free and use virtual currency to purchase in-game items to enhance their playing experience MapleStory Gameplay MapleStory In-Game Item Shop Counter-Strike Online Gameplay Counter-Strike Online In-Game Item Shop 25
  • 26. F2P: Revenue model MASSIVE AUDIENCE (MAU1) Pay rate ARPPU2 As of Q3 2012: - MAU: 78.8 million - Pay rate: 9.6% Retention - ARPPU: ¥1,729 FY2011 Consolidated Revenue: ¥87.6 billion 1 Monthly Active Users 26 2 Average Revenue per Paying User
  • 27. F2P: Revenues and development costs F2P Online Packaged Goods RevenuesRevenues Time Packaged Goods F2P Online Product Revenue Product Revenue Development Cost Development Cost Development Generating Development Generating Period Period Period Period 2 – 5 years 1 – 2 years 1 – 3 years Over 10 yearsDevelopment costs Initial Costs Initial Continuous Development Costs Time Time 27
  • 28. Key franchises Title Year of Launch Cumulative Gross Revenue 1 2005 $2,000,000,000+ 2003 $1,500,000,000+ 2004 $500,000,000+ 2 2008 $400,000,000+ 2004 $300,000,000+ 2006 $300,000,000+ 2008 $100,000,000+ 1 Cumulative gross revenue over the life of each game as of March 31, 2012 includes revenue received from local publishing partners in areas where Nexon doesn’t publish directly (e.g. China), and those generated prior to acquisition by Nexon (MapleStory in 2004, Dungeon&Fighter in 2008, Sudden Attack in 2010, and Atlantica in 2010). 2 Shared franchise jointly developed by Nexon and Valve. 28
  • 29. Growth driversGrowth of existing titles Introduction of new IP Epic of the Three KingdomsExpansion to new geographies Expansion onto new platforms 29
  • 30. Growth drivers: Growth of existing titles “Mabinogi”: Revenue by Geographic Market North America (2008) Europe (2010) China (2005) Japan (2005) Taiwan (2005) Korea (2004) ( ) indicates year of launch 2004 2005 2006 2007 2008 2009 2010 2011 30
  • 31. Growth drivers: Introduction of new IP Epic of the Three Kingdoms 31
  • 32. Growth drivers: Expansion to new geographies 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(Kingdom of the Winds) Q3 2012 revenue breakdown by region Others North 7% America 6% Japan 13% Korea China 27% 47% 32
  • 33. Growth drivers: Expansion onto new platforms 33
  • 34. Worldwide leader in immersive F2P games Offline Online Single Player Multiplayer Pay-to-play Free-to-play 34
  • 35. DisclaimerThis presentation is prepared to offer reference information about NEXON group to the investors. NEXON Co., Ltd. (“Nexon”) has not verified andwould assume no responsibility for the accuracy, appropriation, or completeness thereof. This presentation does not contain all relevant informationrelating 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 investmentdecision with respect to any shares of Nexon should be made solely upon the basis of the information contained in the disclosure documents and isqualified in its entirety by reference to the detailed information appearing in the disclosure documents.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 otherforward-looking information. The forward-looking statements in this presentation are subject to various risks, uncertainties and assumptions aboutNexon’s business and results of operations. The expectations expressed in these forward-looking statements may not be achieved, and actualresults could differ materially from and be worse than expectations. Potential risks and uncertainties that could cause actual results to differmaterially 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 newinformation, future events or otherwise. We caution you not to place undue reliance on the forward-looking statements contained in this presentation. 35

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