NEXON Co., Ltd. (3659) Q4 FY2025 Earnings Call Transcript & Summary

Good day, everyone, and welcome to Nexon's 2025 Fourth Quarter Online Earnings Presentation. Today's presentation is being recorded. [Operator Instructions] We will now hand over to Takanori Kawai, Team Leader of Investor Relations. Please go ahead, sir.

[interpreted] Hello, everyone, and welcome to Nexon's online earnings presentation. Thank you for joining us today. With me are Junghun Lee, President and CEO of Nexon; Shiro Uemura, CFO. Today's presentation will contain forward-looking statements, including statements about our results of operations and financial condition, such as revenues attributable to our key titles, growth prospects, including with respect to the online games industry, our ability to compete effectively, adapt to new technologies and address new technical challenges, our use of intellectual property and other statements that are not historical facts. These statements represent our predictions, projections and expectations about future events, which we believe are reasonable or based on reasonable assumptions. However, numerous risks and uncertainties could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Information on some of these risks and uncertainties can be found in our earnings-related IR documents. We assume no obligation to update or alter any forward-looking statements. Please note, net income refers to net income attributable to owners of the parent as stated in Nexon's consolidated financial results. Furthermore, this presentation is intended to provide investors and analysts with financial and operational information about Nexon, not to solicit or recommend any sale or purchase of stock or other securities of Nexon. A recording of this presentation will be available on our Investor Relations website following this presentation. Unauthorized recording of this presentation is not permitted. Now I'll pass to Junghun.

[interpreted] Thank you, Kawai-san, and good afternoon, everyone. We appreciate you joining our call. Earlier today we have posted the letter, slide deck and press release detailing our Q4 and full year 2025 performance plus our Q1 2026 outlook. We are pleased to report that 2025 marked significant progress in Nexon's [indiscernible] growth initiative. We renewed momentum in our core games, MapleStory and Dungeon & Fighter PC and delivered extremely popular new titles, including MABINOGI Mobile, MapleStory: Idle RPG and of course ARC Raiders. As a result, we achieved record high full year revenue of JPY 475.1 billion representing year-over-year growth of 6%. Our first quarter was highlighted by the new launches of 2 significant titles MapleStory: Idle RPG and ARC Raiders, harnessing distinct and increasingly popular game genre, MapleStory: Idle RPG reimagines the core MapleStory experience in a highly accessible Idle RPG. Our game released on November 6 and quickly reached #1 in Taiwan and Singapore, charted well in North America and held a #1 position in Korea for more than 10 weeks. However, we later discovered a coding error which misapplied the stated value for a specific paid item. This had been corrected without notifying players or management. Recognizing the error, on January 25, the management acted quickly and processed the funds and disciplinary action and to reaffirm trust to the players made on [indiscernible] funds upon request or in-game purchase January 28. The refund application is open from February 5 to February 15, which will be processed through app stores with completion expected by March 15, 2026. Uemura-san will walk you through the details of how this affects our results and outlook. Nexon has the case of history in sustaining and growing games for many years. Building and maintaining the trust of our player communities is a fundamental principle of how we operate. When we discovered our flaw, we quickly and company admit our mistakes, reforms and making things right for our players. This refund offer is a big commitment, but one we believe is critical to maintaining the trust in our games and our company. Now turning to ARC Raiders, the largest and most successful new product launch in Nexon's history, sustaining engagement 15 weeks after the October 30 launch. ARC Raiders has outperformed our most optimistic projections. The game reached unit sales of 10 million in December and as of today an incredible 14 million. The true measure of our hit game is sustainability. And for ARC Raiders, 2 metrics demonstrate robust and sustained engagement. First, in January, we reached a peak user milestone of 960,000 players two months after the launch. And second, we have increased and sustained approximately 6 million weekly active users to date, which means that millions of players around the world have integrated ARC Raiders into their weekly routine. Driven by a steady cadence of content updates from Embark Studios and supported by Nexon live operations. ARC Raiders defines the traditional trajectory of most games and driven by the ongoing full year content plan currently in development at Embark. We strongly believe that ARC Raiders will continue to engage the core and attract new players into the foreseeable future, making the game a sustainable pillar in Nexon's portfolio of global game franchises. The enduring success of ARC Raiders stands as a clear proof point in our strategy for global expansion and the foundation for future new IP development. It's a success that demonstrates we have creative teams, the operating model and live operations capability to breakthrough and sustain games in the world's largest market. In summary, 2025 was a year that Nexon demonstrated the constant rigor and resilience of core franchises. Our breakthrough in Western markets and our ability to add all new IP to appeal to global players and execute across regions, platforms and business models. On this foundation, we have entered a new year as a more diversified durable and globally competitive company. With that, I will turn the call over to Uemura-san.

[interpreted] Q4 revenue increased 55% year-over-year to JPY 123.6 billion, and operating income turned positive to JPY 7.2 billion. These results include the deferral of JPY 27.7 billion of ARC Raiders revenue and operating income out of Q4. ARC Raiders is a game offered through upfront payment, providing multiplayer experience played on online servers and no single player mode. To better reflect these characteristics and in consultation with our auditors, we deferred a portion of the revenue from a certain sales channel. More than half of the JPY 27.7 billion deferral out of Q4 will be recognized in Q1 of 2026. Our Q4 results also include the estimated impact of the refund for MapleStory: Idle RPG, which reduced revenue and operating income by approximately JPY 9 billion and JPY 4 billion, respectively. Moving to expenses. Strong sales from our titles, including ARC Raiders resulted in a level of performance-based bonuses that was not incorporated in our guidance. Platform costs also exceeded our plan due to the strong performances of our new titles. Additionally, we recorded a onetime impairment loss of JPY 3 billion, primarily related to the service termination of our published game. Net income was JPY 10.9 billion, down 66% year-over-year, primarily due to an FX gain of JPY 9.6 billion on cash deposits in Q4 2025 compared to an FX gain of JPY 31.7 billion in the year ago quarter. Turning to the franchise revenue or rather review, we delivered solid progress on our IP growth strategy in Q4, including 13% aggregate year-over-year vertical growth in 3 major franchises plus horizontal growth from new titles like Mabinogi Mobile and ARC Raiders. PC Dungeon&Fighter achieved double-digit growth in both China and Korea, driven by sustained player engagement. On the other hand, revenue from the mobile version fell year-over-year, resulting in a 16% decline in franchise revenue. The MapleStory franchise delivered exceptional results with revenues increasing 54% year-over-year, primarily driven by the highly significant launch of MapleStory: Idle RPG. In Korea MapleStory, the winter update drove 14% year-over-year revenue growth and achieved a record-breaking 45% share in PC cafes. Global MapleStory increased 24% year-over-year. In the West, the game achieved its highest ever quarterly revenue, fueled by a major winter update. Revenues for MapleStory World approximately doubled year-over-year, driven by regional expansion. MapleStory: Idle RPG was well received for its approachable casual gameplay experience enjoy of leveling up, appealing to a broad audience. The game achieved the #1 spot in app stores in multiple markets. Despite recognizing an approximate JPY 9 billion revenue reversal in Q4, the game made a solid contribution in Q4. FC Franchise revenue grew year-over-year, driven by holiday updates and sales promotions. Mabinogi Mobile made a significant revenue contribution to the franchise from the well-received Sanrio collaboration update released in late December. Following its launch on October 30, our creators sold over 10 million units by the end of December, significantly exceeding our expectations. The game was maintained or has maintained strong player engagement across multiple platforms with high levels of WAUs, peak concurrent users and retention. Next, I will move on to the full year 2025 financial results. In 2025, we renewed momentum in our flagship titles, including Dungeon&Fighter and MapleStory as well as delivering the phenomenal success of new titles, including MABINOGI Mobile and ARC Raiders. As a result, we achieved record high full year revenue of JPY 475.1 billion, representing year-over-year growth of 6%, demonstrating the power and success of our IP growth initiative. Revenues from our 3 major franchises were flat year-over-year to JPY 331.5 billion. And horizontally, we grew 25% year-over-year to JPY 143.6 billion. Operating income was JPY 124 billion, flat year-over-year. On the cost side, HR costs increased year-over-year due to proactive talent, investments for long-term growth. Additionally, marketing expenses and variable costs such as platform fees and royalties increased primarily due to launches of large-scale titles, including ARC Raiders, Mabinogi Mobile and MapleStory: Idle RPG. Net income was JPY 92.1 billion, down 32% year-over-year. We recognized an FX loss of JPY 2.7 billion in 2025, while recording a gain of JPY 30.9 billion in 2024. Moving on to our first quarter 2026 outlook. We anticipate continued strong momentum across our portfolio and expect record-breaking quarterly revenue driven by solid contributions from new games as well as year-over-year growth in PC, Dungeon & Fighter and MapleStory franchise. Q1 group revenues are expected to be in the range of JPY 150.5 billion to JPY 164 billion, representing a 32% to 44% increase on an as-reported basis or 23% to 34% increase on a constant currency basis year-over-year. For the PC version of Dungeon & Fighter, we anticipate year-over-year revenue growth driven by a good start for the New Year update, which includes package item sales. For Dungeon&Fighter Mobile in China, we expect revenue to be roughly flat quarter-over-quarter while anticipating a year-over-year decline. Overall, we expect Q1 Dungeon&Fighter franchise revenues to decline year-over-year. In 2026, we will prioritize getting Dungeon&Fighter Mobile back on track for growth and we will continue our collaboration with Tencent to release more hyper-localized content for players in China. Moving to MapleStory. We expect Q1 franchise revenues to increase approximately 30% year-over-year, driven by a contribution from MapleStory: Idle RPG. For both MapleStory in Korea and Global MapleStory, we expect player engagement to remain solid, supported by the winter update that began last Q4. We also expect increased year-over-year revenues for MapleStory World. For MapleStory: Idle RPG, in 2 weeks since announcing the coding issue, our player base has remained strong and active, highlighting the demand and interest that our players have for this new game. We expect ongoing contributions while incorporating a revenue reversal of approximately JPY 5 billion and an operating income reduction of approximately JPY 3 billion into our Q1 outlook. And throughout 2026, we plan to maintain the franchise positive momentum with further hyper localization and content updates. FC franchise revenues are expected to be roughly flat year-over-year in Q1. We aim to build greater enthusiasm leading up to the World Cup, which begins in June. MABINOGI Mobile is expected to contribute to the franchise performance with new battle content, new year promotions and anniversary updates. ARC Raiders has already sold 14 million copies to date, and we expect to sustain strong player engagement and sales momentum in Q1, backed by monthly content drops and live events. Moving to the operating income outlook. We expect Q1 operating income to be in the range of JPY 51.2 billion to JPY 61.1 billion, representing 23% to 47% increase on an as-reported basis or a 7% to 30% increase year-over-year on a constant currency basis. On the cost side, we expect an increase in platform and royalty fees in relation to sales from ARC Raiders, MapleStory: Idle RPG and MABINOGI Mobile. HR costs are also expected to increase due to performance-based bonuses linked to ARC Raiders and higher headcount. Additionally, marketing costs are expected to increase due to promotions of new titles. We expect net income to be in the range of JPY 40.9 billion to JPY 48.4 billion, which represents 56% to 84% increase on an as-reported basis or 31% to 58% increase on a constant currency basis year-over-year. Finally, I would like to offer some perspective on our shareholder returns. We continue to generate significant cash flows, which further strengthens our balance sheet. In 2025, we generated more than JPY 100 billion in operating cash for the eighth consecutive year with a cash balance exceeding JPY 800 billion at year-end. Nexon's strong balance sheet has allowed us to materially increase the dividend while also buying back our shares. In 2025, we doubled the dividend payout from JPY 22.5 to JPY 45 per share and executed share buyback of JPY 96.9 billion. Additionally, on January 28, we completed the remaining JPY 25 billion buyback based on the JPY 100 billion share buyback policy outlined in February 2025. Today, the Board of Directors resolved to cancel all shares previously repurchased under this share repurchase program. We remain committed to proactive shareholder returns as outlined by our commitment to return more than 33% of the previous year's operating income to shareholders. For 2026, we plan a semiannual dividend of JPY 30 per share or an annual total of JPY 60 per share, and we continue to actively consider share buybacks. Looking ahead, we are committed to maintaining a robust balance sheet to support growth investment and capital allocation while enhancing capital efficiency. With that, I will turn the call back to Junghun.

[interpreted] Thank you, Uemura-san. To close our prepared remarks today, I would like to offer some context on our recent success and what it means for the longer-term future of our company on the financial metrics and many success of the most recent quarter. We recognize that for the past 2 years Nexon has been progressing through a complex and highly promising transformation to become one of a small number of two global game companies. At the center of this transformation is the IP growth initiative outlined at our capital market briefing in 2024, calling for growth in established franchises and highly disciplined approach to launching new games and nurturing emerging IP. We have strengthened our established blockbusters and launched several new games, not all but most of which achieved a degree of success in establishing foundations for additional growth with content updates and regional expansion. Most notably, the enduring success of ARC Raiders stands as a clear trigger point in our strategy and one that shows where we plan to take our company in the months and years ahead. Nexon has developed a creative and operating model that can deliver linear and resilience in core franchises while introducing new games and experience that attracts players across all regions, platforms and business models at scale. Today, we are more diversified, durable and globally company. To hear more about our progress and plans for the future, investors are invited to Nexon's Capital Market briefing in Tokyo on March 31. The event will feature presentations from our executives and creative readers with detail on our strategy for achieving our midterm financial targets, including a preview of our content pipeline. With that, operator, we are ready to take questions from our guests.

[Operator Instructions] The first question is from Seyon Park-san of Morgan Stanley.

Can you hear me?

[interpreted] Yes, we can.

I have 3 questions, and I'll ask them one by one. The first question is relating to the MapleStory: Idle RPG refunds. I think we have 3 days remaining for players to apply for the refund if they request so. The provisioning that you have booked already for the fourth quarter and the upcoming guidance, should we assume that it is conservative? And maybe can you provide some color given that you have 3 days remaining on the refund, whether you are expecting a meaningful exit of players or whether we can assume that most of the players will continue to play this game?

[interpreted] Thank you very much for your question. Regarding the refund, I would like to refrain from giving you the details, but please be aware of the fact that we have already given you tangible figures regarding what kind of impact we are foreseeing in Q4 as well as Q1. For Q4, we have mentioned the revenue impact of JPY 9 billion and the operating income impact of JPY 4 billion, whereas in Q1, we have factored in the impact of JPY 5 billion for the revenue and JPY 3 billion for the operating income. Regarding the estimate figures that I have mentioned to you now, I believe that this is within the rational range that we have estimated. Therefore, I can say that the numbers are neither conservative nor aggressive. And I believe that these numbers are quite appropriate. Regarding the issues related to Idle RPG, it was quite regrettable. But after the discovery, we believe that as a company, we had immediately taken appropriate measures. In terms of the user sentiment, it is neutral and some are slightly positive. So we believe that this is a very popular title, and we will put our effort in rebuilding the game.

[interpreted] Hello, this is Junghun Lee here. I would like to add a little bit on to that from my end as well. First of all, I would like to offer my deepest apologies to all of our shareholders and our friends of MapleStory: Idle RPG for the concern that we have caused as a CEO of the company. So I would like to reiterate that building confidence and confidence from our user base is definitely the basic and fundamental principle of how we operate, and that has been on the background of our making this decision to offer full refunds to our users. So for this, I definitely feel both apologetic and grateful, but the player engagement has shown resilience following this incident. So I believe we will be able to infer this from the current rank chart from the Google Play Store and Apple App Store. But with this -- after this incident, the revenue has stabilized at this moment and DAU is also remaining largely consistent from what we have seen before, showing only a modest decline. So when it comes to the user sentiment lately, we are seeing some increasing interest once again on the actual content of the game, including game updates and events or game updates on the MapleStory: Idle RPG and we are now seeing active posting of experiences, playing on their newly created accounts. And lastly, I would like to mention that for MapleStory: Idle RPG, most of the users are newly acquired users. When it comes to -- for some, I would believe you might be concerned about cannibalization, but the kind of overlap between MapleStory: Idle RPG and the core game is only a single-digit percentage, which is pretty small. So we believe this is a very important point when it comes to vertical expansion of MapleStory franchise. Going forward, we will do our best to fully and diligently wrap up the remaining refund procedure, and we will make our best efforts so that we can earn back the hearts of our fans and players with great content updates that we provide going forward.

If I can switch the subject to matters that are much more constructive. ARC Raiders has been a phenomenal success so far. It seems like even coming into 2026, you've sold now 4 million copies in 1.5 months. Can you maybe provide us a little bit more color as to whether this sales through is still continuing and whether we should expect ongoing sales of additional copies in the coming months?

[interpreted] This is Junghun Lee again. Let me answer your question. So when it comes to the success of our creators, it is definitely highly encouraging and meaningful for us since as a games company, there's nothing more important than equipping ourselves with multiple and solid IP pillars. And as you may understand already, ARC Raiders is a completely new IP, which means that it did not have any precedented level of brand awareness in the market. Nonetheless, it was able to sell over 10 million units in less than 2 months. And even when we look at the latest number right before this earnings call, the numbers are pretty solid right now. The first metrics I would like to note is the peak concurrent user milestone of 960,000 players, which recorded -- which we recorded in January 2 months after the launch. And when it comes to weekly active user count or WAU, it is sustaining approximately 6 million right now. So we believe this really implies how millions of players around the world are now integrating ARC Raiders as part of their weekly routine. And even though we are unable to disclose specific numbers here, the retention is also very strong. In addition to that, the recently announced monthly content road map of ARC Raiders was well received and welcomed by our users. When it comes to the objective of the Embark team for this year 2026, it is to provide monthly content updates and live operations so that they can continue to drive unit sales by keeping the game engaging for a long period of time. So we believe we will be able to deliver a steady cadence of updates that are both engaging and steady. And lastly to comment a little bit about ARC Raiders' IP as a higher-level concept. We still believe it is still in its early stage as an IP, and we are now exploring many possibilities to expand the reach of ARC Raiders. So what we can disclose at this moment in regards to the IP expansion would be the launch of hyperlocalized version of ARC Raiders for Chinese players under the cooperation and partnership with Tencent. I would like to say that the management team is putting our best effort in a macro level perspective so that in the longer term, this ARC Raiders' IP as well as Embark development team can become an enduring pillar of Nexon's entire portfolio. That concludes my answer. Thank you.

Just my last question is also a separate subject on the shareholder return policy. I noticed that there is no buyback policy program, which was announced this time around. I know you have a shareholder return policy of 1/3 of the previous year net income. But can we get maybe just a little bit of an update as to how you're thinking about share buybacks for this year and going forward?

[interpreted] Regarding the shareholders' return policy, we buy back 1/3 or rather more than 33% of the previous year's operating income. And even in the past, we did actually provide a return of more than 33%. Going forward, we will pursue two ends, one being investment in growth, and secondly, we would try to provide the shareholders' return and be flexible at the same time.

[interpreted] This is Zhai of UBS Securities. I have three questions. My first question is related to ARC Raiders. You have mentioned the deferral of the revenue. And in the previous briefing session, you have commented that this is upfront charging, so there is no deferral. However, this time around, you have explained that there will be revenue deferral and the amount seems to be quite large. So I would like to reconfirm the content of the revenue that will be deferred. Is it in-game charge? Or is it upfront payment? So what is the content of the revenue? That is my first point. And also, please explain the rules of these deferrals to be recognized. You mentioned that more than half of the deferral will be recognized in the following quarter. But what about the quarters beyond that? And also, I would like to ask about the bonus linked to performance. On Q-on-Q basis, the personnel cost has been rising and in the following quarter as well, do you expect another increase in the personnel cost? Also, when you look at the percentage on the revenue, it seems to have gone down. So could you elaborate in more details on these points? That was my first question.

[interpreted] With regards to the ARC Raiders, as you have pointed out, when we explained our guidance, at that time, we have consulted with the audit firm of the subsidiary. And at that point, it was deemed that the deferral was necessary. However, through the process of the consolidation, we consulted with the audit firm of our company and as a result, we received the view from the audit firm that the deferral will be necessary. So let me correct at the audit firm of the subsidiary, they mentioned that the deferral was not necessary. Let me correct. In such situation, after the repeated deliberation, given the characteristics of this game, we agreed to conduct a deferral as part of the adjustment of consolidation. To be specific, the revenue from the sales through Steam, we will defer for a certain period. Steam's sales make up roughly 60%. The 60% of the cash-based revenue in the fourth quarter will be deferred to FY '26. And as a result, the majority of the JPY 27.7 billion will be recognized in the first quarter of 2026. Next is on your question on incentive bonus. As we do with other new titles regarding the profit generated from the game after we recoup, the bonus will be provided with a certain ratio. As you know, ARC Raiders made a major hit in the fourth quarter and the level of revenue was higher than our expectation. And related to that, incentive bonus was paid and that is booked in the fourth quarter. ARC Raiders performance continued to be strong and part of the profit generated from the game will be distributed -- a portion of it will be distributed to the development team. Zhai-san, did I answer all your questions or do you have any other points?

[interpreted] I have a follow-up question. The 60% of the sales in the first quarter from January to March period, will that be further deferred to the following quarter?

[interpreted] You are right, the mechanism is all the same.

[interpreted] I understood. My second question is on Dungeon & Fighter Mobile in China. Usually, in January to March period, there is a new year, and there is usually a seasonality in the first quarter for PC. But for the Dungeon & Fighter Mobile, the guidance shows that the revenue will be more or less flat. So is seasonality of mobile different from PC? And also, you are developing content jointly and the benefit of that, will that decline, as the impact of the previous co-developed content starting to decline? I'm referring to the co-development with Tencent. And could you also talk about the frequency of the release of content co-developed with Tencent for PC and mobile as well? What is your plan? And also the contract update timing will come up soon for the PC. And for the co-developed content, will that be an opportunity to negotiate the take rate?

[interpreted] Sure, I'll be able to answer to the question on the Dungeon & Fighter Mobile, which is now maintaining quite a stable DAU level up to the most recent period. But as time has passed by since the previous level kept increase, we have seen some decline in the monetization metrics. So from this, we believe it is not -- it is less about the seasonality, but it is more about the quality and the cadence of the content that we provide for our users that really affects how the user metrics move as a whole. So in regards to that, as we have mentioned in previous quarter calls, we are now taking a long-term approach so that we can improve the fundamentals of Dungeon & Fighter Mobile in the longer term. So I would say that we haven't yet fully leveraging the increase in the productivity of the -- increase in the production volume of the content from these co-development initiatives just yet. What we are assessing internally is that through the full execution and the exploitation of this co-dev process with Tencent within the 2026 year, we believe we will be able to produce content to engage more and acquire more. And I believe a piece to your question was whether we have any priorities or orders when it comes to applying this co-development procedure to PC or Mobile. For us, we are now focusing more on the mobile side to fully adopt this -- to actively adopt this co-development procedure. To explain a little bit about the background of this for the PC service, we believe it is now maintaining pretty stable rebound year-over-year basis. And we believe the content update speed as well as the quality is pretty decent right now. For the 2026, one of our key focal points of the entire Nexon Group is to achieve a recovery in Dungeon & Fighter Mobile. In that sense, we are putting or concentrating more of our resource on adopting or fully applying the co-development effort in mobile version. And lastly, in order to talk a little bit about the PC contract renewal, even though we are unable to disclose too much details regarding the contracts, I would like to take a note how for the past 20 years, this partnership has been remaining very strong and solid. And both companies, Nexon and Tencent are very satisfied about it. So without [indiscernible] provide the Dungeon & Fighter service to our Chinese players stably. That concludes my answer. Thank you.

[interpreted] My third question is related to the overall MapleStory franchise. This time on RPG, there was an issue or event that happened, but the company reacted speedily. And I understand that there was no major impact to the sales. But when we look at the past, there were similar -- there was a similar incident related to MapleStory. This -- at that time also on the probability. And in the same franchise under the probability related area, the happening occurred twice. So will that impact the brand image going forward? And I also would like to ask about your corporate governance. Do you have a measure to prevent the recurrence of such happening?

[interpreted] I would first like to start off my response in acknowledging that going through the similar probability issue twice is definitely something we should feel very apologetic about. However, when it comes to how we have responded to this incident apart from this mistake or this wrongdoing that we have done, this choice or this decision to offer full refund or providing compensation to our users and giving that kind of option to our users was based off of the fact that we are putting -- we are putting the confidence of all users for all our Nexon games before anything when it comes to operating our company. So if you could take a long-term perspective and see how our decision that was made out of our earnest and sincerity really plays out as well as how we -- all the measures that we take in order to prevent any recurrence from taking place, we believe we will be -- such hard effort will be acknowledged by our users as well in terms of the brand reputation or image. Lastly, to add a little bit in terms of the governance, ever since our last probability-related incident, we have executed and implemented an automated infrastructure to validate probabilities of the product and all the outcomes of such validation is being disclosed to our users in real time. However, when it comes to this incident on MapleStory: Idle RPG, as you know, it was a product that was born from a partnership and co-worked with outside entity, and there has been some small hole in terms of executing such infrastructure to this title. At the same time, it also had to do with misjudgments of an individual who did not disclose or notify to users regarding the correction of the error even though it had to be. Right now, immediately after this incident, we have established a task force to address this so that no similar issue happens throughout the entire company. So we do not believe that even this truly reflects any fundamental issue with our company culture, which emphasizes compliance and user trust and putting them before anything. However, the incident did highlight some areas where operational control and accountability frameworks has to be improved, and that is why we are taking such immediate actions.

[interpreted] The next question is from Munakata-san from Goldman Sachs Japan.

[interpreted] My name is Munakata of Goldman Sachs. I have 2 questions. So let's go one at a time. The first question is on ARC Raiders. I understand that weekly users being 6 million and I think this is a very strong figure. And I want to know going forward, what kind of user profile do you have on your mind regarding the new inflow? So you can talk by region or maybe you can tell me the attributes of the new inflow users.

[interpreted] Four months have passed since the launch of ARC Raiders, and it is trending very well. And Embark Studios have the plan to provide new monthly content update, and this energizes the players. As long as the users enjoy the in-game play, I believe that we will be able to secure robust new unit sales. So we believe that short-term wise, we want to provide further unit sales, which will lead to more user base, and we will be in the position to promote the next stage of this title.

[interpreted] This is Junghun Lee. I would like to add a little bit on to that by first stating that for ARC Raiders, the share from -- the user share from Western and European region is a little bit higher. Already, the team has announced regarding its annual content road map. And through that kind of very densely built update plan, we believe we are putting some plans in place so that the existing users can be better engaged with our games. [Audio Gap] acknowledge from recent data is that the percentage or the share from console is gradually growing, and we believe this trend is definitely encouraging. Now adding on to this kind of solid traffic level that we are seeing in the Western and European region, we believe the Asian region also has more upside for us. So when it comes to such more upsides remaining in the Asian region, right now, we are seeing the most share -- the highest share of traffic from Japan. And even aside from Japan, for Korea and China as well [Audio Gap] place for 2026 so that we can earn more hearts of users through various service, marketing and events plans for operators.

[interpreted] Thank you very much for your very thorough explanation. I understood it very well. Let's move on to the second question, which pertains to FY 2026. And I want to know the overall direction in which you will be proceeding in the next 12 months. I know that as a company policy, you only provide quarterly guidance, having said that, I would like you to talk about which of the three segments that I'm going to mention now will be the driver to further increase the revenue in FY 2026. Three categories being, one the major titles that are Dungeon & Fighter, FC and MapleStory. And the second category is the new titles that you have launched last year, and the third category being the titles in the pipeline that you plan to launch in 2026.

[interpreted] First, I would like to start off by saying that we are entering this year of 2026 with a very solid and prosperous growth momentum from both existing franchises and new experiences for this first quarter. Our first quarter outlook represents quite a solid momentum here with both operating income and revenue growing roughly 30% to 40%. And regarding the growth driver -- potential growth driver for 2026, I believe there could be a couple of items, including 5 of them. First off, for the MapleStory franchise, we believe we do expect around 30% year-over-year growth for the first quarter. And in 2026, from both Korea service and global service of MapleStory PC, we believe we will be able to maintain some solid momentum. Next is our Dungeon & Fighter PC service, which is expected to grow in the first quarter, and that would be based on the sustained momentum from 2025. When it comes to 2026, the growth of Dungeon & Fighter Mobile -- the annual growth of Dungeon & Fighter Mobile, recovering that remains one of our top priorities. And we do hope to see some tangible outcomes from such efforts. And next, for the FC Franchise, we believe the World Cup season, which begins in June, will provide and offer some momentum for the franchise. Fourth, we have MABINOGI Mobile expanding to Japan, and this definitely is a title that has seen quite a great performance in Korea. And lastly, number five, ARC Raiders, of course, we do expect the title to sustain the strong momentum throughout the year based on monthly content drops as well as strong live events. And before wrapping up, I would also like to comment a little bit on the pipeline. So 2 years ago in our Capital Markets briefing, we have disclosed and introduced several new games in the pipeline that will be launched by 2027. We are hard at work to introduce the games to our users. And right now, the development is smooth sailing overall. And we believe for 2026, we will be able to introduce a new -- a few new titles based on a strong partnership. For more details, we would be disclosing more at the Capital Markets briefing, which will be taking place in March.

[interpreted] I look forward to participating in the CMB scheduled in March.

[Operator Instructions] This concludes the question-and-answer session. Mr. Kawai, I'd like to hand over to you for any additional or closing remarks.

[interpreted] Thank you. If there are no further questions, I would like to take this opportunity to thank you for your participation in this call. Please feel free to contact the Nexon Investor Relations at [email protected] should you have any further questions. We appreciate your interest in Nexon and look forward to meeting with you whether it is here in Tokyo or in your corner of the world.

That brings us to the end of the meeting. Thank you for your participation. [Portions of this transcript that are marked [interpreted] were spoken by an interpreter present on the live call.]