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Investor Presentaiton

COGS and SG&A1 (Unit: \ millions) FY2020 FY2021 Q1 Q2 Q3 Q4 Q1 1 Total Cost of Revenue ¥15,343 ¥14,574 ¥19,266 ¥19,826 ¥18,699 Royalty 2 5,738 5,074 9,618 7,406 7,977 HR cost (COGS) ³ 3 6,443 6,429 6,241 8,929 7,281 Other (COGS) 4 3,162 3,071 3,407 3,491 3,441 Total SG&A 1 20,614 22,922 29,659 30,516 26,317 HR cost 3,907 4,260 3,968 6,912 6,582 PG fee 5 6,696 7,486 12,311 8,881 8,299 R&D 3,907 4,093 4,490 4,054 4,976 Marketing/advertising expenses 2,836 4,326 5,852 7,401 3,132 Depreciation and amortization 1,299 1,236 1,319 1,398 1,453 Other 1,969 1,521 1,719 1,870 1,875 Other Income 6 Other Expense 7 Includes: impairment loss 1,197 101 294 204 124 6,459 360 3,174 657 100 6,063 251 3,015 326 19 1 Breakdown of COGS and SG&A are unaudited. 2 Royalty includes royalties paid to third-party developers in order for us to obtain the right to publish their games. 3 HR cost includes salaries, bonuses and benefits for our live game developers, who support post launch servicing, updating and support for our games.. 4 Other (COGS) primarily consists of depreciation and amortization of assets related to existing games, connection fees (mainly comprised of co-location and datacenter fees, internet bandwidth and access fees), and the costs of purchasing and maintaining our servers and computer equipment. 5 PG fee in SG&A includes commissions made to external payment gateway companies when users purchase in-game items in PC Online games that we service. It also includes mobile carrier-related commissions we pay regarding our Japanese mobile browser games, commissions we pay to Apple/Google regarding our mobile native games globally, and platform commission fees related to mobile browser games. 6 Other Income includes other non-operating income, reversal of deferred revenue, gain on sale of properties, gain on change in equity. 7 Other Expense includes other non-operating expenses, loss on sale/disposal of properties, loss on impairment of tangible fixed assets, loss on impairment of intangible assets, loss on impairment of other fixed assets and loss on change in equity. It also includes impairment loss of game IPs and goodwill. © 2021 NEXON Co., Ltd. All Rights Reserved. 21
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