Game sector Nexon (3659) and Square Enix HD (9684): Jan-Mar results and briefing takeaways

Research evidence excerpt

Game sector Nexon (3659) and Square Enix HD (9684): Jan-Mar results and briefing takeaways

J P M O R G A N Asia Pacific Equity Research

15 May 2026

Game sector

Nexon (3659) and Square Enix HD (9684): Jan-Mar

results and briefing takeaways

Nexon: Negative: 1Q operating profit was ¥58.2 billion, below our estimate of ¥62 Japan Equity Research

billion but above the Bloomberg consensus estimate of ¥54 billion. We have no

Games, Internet, Services

issues with the result but consider 2Q operating profit guidance of ¥20.7 billion (the

midpoint of the range) a negative surprise as it is well below our estimate of ¥49.2 Junko Yamamura AC

billion and the Bloomberg consensus estimate of ¥45.3 billion. We had expected (81-3) 6736-8644

junko.yamamura@jpmorgan.com

operating profit to overshoot on cost controls, but management said that weakness

Ryo Nakagawa

in sales of the highly profitable PC version of Dungeon&Fighter in China would (81-3) 6736-8643

be greater than that. While the weakness of Dungeon&Fighter Mobile in 1Q was ryo.nakagawa@jpmorgan.com

not entirely surprising as the sustainability of the level cap increase fell short of JPMorgan Securities Japan Co., Ltd.

expectations, the April update did not sell well, leading management to anticipate

a significant YoY sales decline for the PC version in 2Q, which came as a surprise.

Management looks to re-energize users with an anniversary event in June and aims

for a recovery in 2H, but flat YoY sales in the Chinese PC game business may now

be the best-case scenario. Additionally, management intends to outsource the

development of Dungeon&Fighter Mobile to Tencent in China, and while it said

it does not expect any changes to licensing fees at this point, we would watch for

any change in this situation.