Q1 FY2015 Operating Results

Transcription

1 Q1 FY2015 Operating Results August 7, 2015 DeNA Co., Ltd.

2 1. Financial Results 2. Strategy and Initiatives 3. Guidance 4. Reference 1

3 Q1 FY2015 Consolidated Financial Results Both revenue and operating profit reached our original guidance, driven by effective game operations in Japan and cost control FY2014 FY2015 Item* YoY QoQ Q1 Q2 Q3 Q4 Q1 Change Change Revenue % 4% Game % 5% E commerce % 5% Sports % 411% New Businesses and Others % 23% Adjustments Operating profit % 13% Operating profit margin (billion yen) 19% 22% 15% 13% 11% Segment profit / loss % 33% Game % 7% E commerce % 9% Sports % New Businesses and Others Adjustments Other income / expenses (net)** *All FY2014 figures have been restated in accordance with the changes to the reportable segments made in Q1 FY2015. The restated revenue and profit breakdown for FY2014 are before auditing. Note that segment revenue now represents revenue before elimination of intersegment revenue. **Includes non extraordinary gains and losses under Japanese GAAP. (e.g. Loss on sales / retirement of tangible / intangible assets) 2

4 Q1 FY2015 Cost and Expense Breakdown ROI based marketing strategy helped control sales promotion and advertising expenses Studio and game portfolio optimization in the West successfully completed as planned Related one time expense was within budget and incurred entirely in Q1 (Recorded 2.4 billion yen in Other Expenses and 300 million yen in Personnel Expenses within Cost of Sales and SG&A) Item Q1 Q2 Q3 Q4 Q1 YoY Change QoQ Change Cost of Sales % 9% Personnel Expenses % 33% Depreciation and amortization % 3% Outsourcing expenses % 22% Commission fees % 3% Others % 34% Selling, general, and administrative expenses % 9% Personnel Expenses % 8% Sales promotion & Advertising expenses % 36% Outsourcing expenses & Commission fees FY % 0% Others % 13% Other income/ expenses (net)* Consolidated employee headcount 2,312 2,389 2,420 2,424 2,411 4% 1% *Includes non extraordinary gains and losses under Japanese GAAP. (e.g. Loss on sales / retirement of tangible / intangible assets) FY2015 (billion yen) 3

5 Key Metrics: Game Business Strong performance of native apps continued, driven primarily by effective operation of existing titles in Japan and the West Decline in browser games was within forecast range; expect continued profit contribution for the long term Native App Coin Consumption by Region* Coin Consumption in Japan by Type of Device and Business* *Exchange rates at the end of each quarter: (Unit :yen) FY2013 FY2014 FY2015 Q4 Q1 Q2 Q3 Q4 Q1 1 USD RMB *Includes coin consumption, monthly membership service fees, and ticket sales. Includes consumption of virtual currency in mixi Games from Q2 FY2013 **Includes Yahoo! Mobage 4

6 Key Metrics: E commerce Business Segment revenue was 5.0 billion yen (+2% YoY) Transaction volume of Shopping and Travel grew steadily Growth in Shopping driven by our focus areas such as groceries and daily consumables Revenue* Shopping Transaction Volume Travel Transaction Volume *Key brands in each sub segment: Travel and adjustments: DeNA Travel, Shumee to Club Auction: Mobaoku Shopping: DeNA Shopping, au Shopping Mall, DeNA BtoB market, SEIYU.com, etc. Processing Settlement: Paygent 5

7 Changes to Reportable Segments Reportable segments were reclassified to explicitly highlight trends in the core game business as well as our new businesses Segments until Q4 FY2014 Segments from Q1 FY2015 Social Media Business Game Business Entertainment Services (Everystar, Manga Box, Showroom, etc.) Game Business E Commerce Business E Commerce Business Sports Business Baseball, Running Club, etc. Others Baseball New Businesses (Healthcare, Curation Platform, etc.) New Businesses and others Main projects and services 1. IP generating platform (Everystar, Manga Box, Showroom, etc.) 2. Mobile Services 3. Automotive 4. Healthcare 5. Curation Platform 6

8 1. Financial Results 2. Strategy and Initiatives 3. Guidance 4. Reference 7

9 Corporate Value Creation Profit (i) Stable contribution from existing businesses in Japan (games, e commerce, etc.) (ii) Contribution from overseas gaming business (iii) Growth potential from strategic alliances such as Nintendo alliance (iv) New business pillars FY2015 FY2016 FY2017 8

10 (i) Japan Game Business: Strategy Plan to launch original as well as premium IP native app titles that steadily generate profit Japan Game Business Operating Profit* Updates on Three Key Strategies 1. Maximize hit titles Continued stable performance of FINAL FANTASY: Record Keeper due to effective game operation 2. Create DeNAoriginal hits Successful launch of original title Sentama Strong user engagement experienced following marketing campaigns Continued contribution expected 3. Launch premium IP titles Super Gundam Royale* expected to launch this fall *Provided by: BANDAI NAMCO Entertainment Inc. * Figures are based on management accounting 9

11 (i) Japan Game Business: Native App Market Landscape Healthy growth in overall market is favorably impacting strong and competent players The Beginning Top title developed and occupied almost entire market Transition of Japan s Native App Games Market Rapid Growth & Popularization User base and business opportunities expanded; many players entered the market and created medium size hits Stable Growth Many titles other than top 3 also generate significant revenue Top Grossing January 2013 January 2014 June 2015 (billion Yen) (billion Yen) (billion Yen) Top Over 5.0 Over 10.0 # Average monthly revenue per title # # # Source: DeNA estimates based on App Annie, financial reports, etc. 10

12 (i) Japan Game Business: Native App Market Landscape With superior game development and operational capabilities, top 10 players are consistently maintaining their high rankings App Store Top Grossing Ranking by Publisher Ranking 1 1 Jan Jun Jan Jun Source: App Annie 11

13 (i) Japan Game Business Strengthen in house development capabilities by constantly evolving proven technology and knowledge base, developed in successful titles Technology & knowledge base D.O.T Sangokushi Royale FFRK Kingdom Eiyu no Keifu Sentama Superior live operation expertise supports long term revenue generation across titles Post Launch Monthly Coin Consumption from Key Titles *Bar charts are not drawn to the same scale Revenues from our native apps are generally stable, despite fluctuation in top grossing rankings Native App A Native App B Native App C Well positioned to achieve repeatable success in the native app market Established framework to continuously launch multiple profitable titles Rich medium to long term pipeline of premium IP titles 12

14 (ii) International Game Business Studio and game portfolio optimization in the West successfully completed and bottom line improved significantly, excluding the one time expense West: Coin consumption from new titles offset the decrease from existing titles Costs were optimized and the studio shifted focus to high LTV genres China: Coin consumption from key titles was below original forecast but costs were carefully controlled International Coin Consumption International Operating Loss* * Figures are based on management accounting 13

15 (ii) International Game Business: China By leveraging strengths in localization and IP, DeNA China will continue to create and promote titles with long term profit potential Updates on Three Key Strategies Maximize title potential Sustain profitability Proven strategies Use premium IP to attract users immediately after launch Generate profit through efficient allocation of operational resources Areas of improvement Seamless coordination of development, operation and marketing during game updates Optimum marketing mix for big name titles Continue to release new titles Exciting lineup Q2 onwards TRANSFORMERS Gundam Card Collection Provided by: BANDAI NAMCO Entertainment Inc. Fairy Tail NBA BLEACH Gintama Provided by: BANDAI NAMCO Entertainment Inc. China Joy Booth (July 2015) 14

16 (iii) Partnership with Nintendo Development of the first game app and membership service is progressing as planned; currently making announcement plans Apps First game app to be released this calendar year; key talent from both companies currently developing the title Planning to launch approximately five carefully selected titles by the end of fiscal year ending March 2017 All IP, including major franchises, will be considered Global launch planned Achieve mid to long term profitability by delighting users Membership Service Targeting fall launch of an integrated membership service that connects smart devices and Nintendo s dedicated game systems Common ID can be used for Nintendo s dedicated game systems and smart device apps Evolved version of Nintendo s loyalty program under development Outlook Goal is to create world class hits with massive reach Contribution from this alliance is expected to start in FY

17 (iv) New Business Strategy Develop a well balanced business portfolio by pursuing investments that enable growth and contribute towards profit in the medium to long term New Business Strategy Updates (April August 2015) Launch Select appropriate alternative (In house development, collaboration, M&A) Scale Carefully monitor service specific metrics to make investment decisions Monetize Implement monetization that is relevant to each service Knowledge shared across curation services; new genres added Joint venture between SHOWROOM and Sony Music Entertainment established to promote new business opportunities MyAnimeList hit 10 million MAU globally Time 16

18 1. Financial Results 2. Strategy and Initiatives 3. Guidance 4. Reference 17

19 Consolidated Financial Guidance for Q2 FY2015 Consolidated financial guidance for Q2 FY2015 (July September) Revenue: 36.8 billion yen Operating Profit: 6.6 billion yen Key factors for QoQ revenue change Japan coin consumption: Expected to be flat QoQ due to stable performance of native apps, primarily existing titles, and a modest decline in browser games International coin consumption: Expected to decrease QoQ due to moderate decrease in existing titles and limited contribution from new titles Key factors for QoQ profit change Sales promotion and advertising expenses are expected to increase QoQ by 1 billion yen due to increased marketing efforts primarily in Japan and China One time expense of 2.7 billion yen related to West optimization incurred entirely in Q1 Sale of DeNA BtoB Market business expected to yield 1.2 billion yen in operating profit Item Q1 Actual Q2 Guidance QoQ Change (billion yen) QoQ Change(%) Revenue % excl. Sports % Expenses (COGS / SG&A /other expeses) % Operating Profit % excl. Sports % One time factors Reorganization in the West Sales of DeNA B to B Market business 18

20 1. Financial Results 2. Strategy and Initiatives 3. Guidance 4. Reference 19

21 Consolidated Cash Flow Overview FY2014 FY2014 Q1 (billion yen) FY2015 Q1 Operating cash flow (A) Profit before tax Depreciation and amortization Income tax paid Others Investing cash flow (B)* Financing cash flow Cash dividends paid Disposition of Treasury stock* Others FCF ((A)+(B)) Cash and cash equivalents (Consolidated) (Non consolidated basis) * Impact from the business and capital alliance with Nintendo is reflected to investing cash flow and disposition of treasury stock in financing cash flow by approximately 22 billion yen respectively. Acquisition of Nintendo s treasury shares and disposition of our treasury stock were both effective April 2,

22 The information and data contained within this presentation and these presentation materials have been determined based on information available as of August 7, The company disclaims any obligation to update or revise such information and data, whether as a result of new information, future events or otherwise. In addition, any forward looking statements contained in this presentation or these presentation materials are based on our opinions and information available as of August 7, 2015, and involve uncertainty. Please be aware that the actual performance data and similar information are subject to influence from diverse factors and may differ from the forecasts presented herein. DeNA Co., Ltd. 21