Q3 FY2017 Operating Results
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Q3 FY2017 Operating Results February 8, 2018 DeNA Co., Ltd. Copyright © DeNA Co., Ltd. All Rights Reserved. 1. Financial Results & Business Updates 2. Guidance 3. Reference 1 Copyright © DeNA Co., Ltd. All Rights Reserved. Financial Results Summary (billion yen) FY2016 FY2017 Item YoY QoQ Q3 Q4 Q1 Q2 Q3 Change Change Revenue* 32.2 35.1 36.5 36.9 32.8 2% -11% Revenue excl. Sports 31.6 33.7 30.1 30.7 30.1 -5% -2% Operating profit (IFRS)** 3.4 4.5 6.4 7.3 12.6 265% 73% Operating profit (Non-GAAP)*** 3.4 5.8 7.4 7.2 2.3 -35% -69% Operating profit excl. Sports 5.0 7.2 5.2 5.1 3.3 -35% -36% Profit before tax 5.8 4.6 8.1 8.0 13.1 125% 64% Income tax expense -12.7 2.7 2.5 2.7 0.6 - - Profit for the period 18.6 2.0 5.6 5.3 12.5 -33% 137% Profit for the period: Owners of the parent 17.6 2.0 5.3 5.0 12.4 -29% 147% Profit for the period: Non-controlling interests 1.0 -0.1 0.3 0.2 0.1 -95% -78% EPS (Yen) 121.13 13.94 36.67 34.61 85.64 -29% 147% *For IFRS revenue, we defer revenue over the period that we expect the user to use a particular game in games that have a single payment model or are similar to that model. **We recognized approx. 10.7 billion yen in other income during Q3 FY2017, which was profit recognized from the cumulative amount of the exchange differences related to the overseas subsidiaries. For the details, please refer to the disclosure of December 27, 2017, titled “Notice Regarding Financial Results Forecast Revision”. ***For full reconciliation of GAAP to Non-GAAP metrics, please see the reference section. 2 Copyright © DeNA Co., Ltd. All Rights Reserved. Financial Results by Segment (IFRS) (billion yen) FY2016 FY2017 Item YoY QoQ Q3 Q4 Q1 Q2 Q3 Change Change Revenue 32.2 35.1 36.5 36.9 32.8 2% -11% Game 23.6 27.4 24.3 24.4 24.2 2% -1% E-commerce 5.1 4.5 4.0 4.0 3.8 -26% -7% Sports 0.6 1.4 6.3 6.2 2.7 329% -56% New Businesses and Others 3.1 2.1 2.1 2.4 2.4 -21% 0% Adjustments -0.2 -0.3 -0.2 -0.2 -0.3 - - Operating profit 3.4 4.5 6.4 7.3 12.6 265% 73% Operating profit margin 11% 13% 18% 20% 38% - - Segment profit / loss* 3.6 6.9 6.5 7.0 2.9 -21% -59% Game 6.1 9.4 7.3 6.1 5.7 -7% -7% E-commerce** 0.5 0.7 -0.5 0.4 0.2 -59% -50% Sports -1.6 -1.3 2.2 2.2 -1.0 - - New Businesses and Others -1.4 -1.6 -1.4 -1.1 -1.2 - - Adjustments -0.0 -0.3 -1.2 -0.6 -0.8 - - Other income *** 6.1 0.1 0.3 0.4 10.8 76% 2762% Other expenses*** 6.2 2.5 0.4 0.1 1.0 -83% 753% *During Q1 FY2017 we reviewed the segment allocation of overall company costs, and reflected those changes for each segment for past quarter results stated above. The breakdown of businesses and services in each segment has not changed. These updated segment operating results have not been audited. **During Q1 FY2017, recorded 872 million yen in cost of sales as corrections of costs attributed to DeNA Travel during FY2016 and before. ***Includes non-extraordinary gains and losses under Japanese GAAP (e.g. Loss on sales / retirement of tangible / intangible assets). Please see footnote ** on slide 2 for the major factors included in Other income. 3 Copyright © DeNA Co., Ltd. All Rights Reserved. Cost and Expense Breakdown (IFRS) (billion yen) FY2016 FY2017 Item YoY QoQ Q3 Q4 Q1 Q2 Q3 Change Change Cost of Sales 12.9 13.7 15.0 14.2 14.2 10% 0% Personnel Expenses 1.1 0.8 1.1 0.9 0.9 -16% 4% Depreciation and amortization 2.3 2.1 2.1 2.2 2.5 9% 13% Outsourcing expenses 2.6 2.5 2.8 3.2 3.4 30% 5% Commission fees 5.8 6.4 5.8 5.9 5.6 -3% -5% Others* 1.2 1.9 3.1 2.0 1.8 54% -9% Selling, general, and 15.7 14.5 15.0 15.7 15.8 1% 1% administrative expenses Personnel Expenses 3.6 3.7 4.1 3.6 3.6 0% -1% Sales promotion & Advertising expenses 2.9 2.2 2.6 3.3 3.5 21% 4% Outsourcing expenses 7.0 6.6 6.3 6.7 6.6 -5% -2% & Commission fees Others 2.3 2.0 1.9 2.1 2.2 -5% 5% Other income** 6.1 0.1 0.3 0.4 10.8 76% 2762% Other expenses** 6.2 2.5 0.4 0.1 1.0 -83% 753% Consolidated employee 2,413 2,400 2,441 2,344 2,387 -1% 2% headcount *During Q1 FY2017, recorded 872 million yen in cost of sales as corrections of costs attributed to DeNA Travel during FY2016 and before. **Includes non-extraordinary gains and losses under Japanese GAAP. (e.g. Loss on sales / retirement of tangible / intangible assets). Please see footnote ** on slide 2 for the major factors included in Other income. 4 Copyright © DeNA Co., Ltd. All Rights Reserved. Game Business Virtual currency consumption: holiday season initiatives did not reach expectations for existing 1st and 2nd party apps Costs: • Costs remained at a higher level due to proactive marketing for the holiday season. Increased amortization from larger live game portfolio and outsourcing expenses from increased operations also contributed • Refining operating approach and reallocating resources to promising titles Virtual Currency Consumption* Game Business Segment Operating Profit** FY2016 FY2017 FY2016 FY2017 *Includes consumption of free virtual currency **During Q1 FY2017 we reviewed the segment allocation of overall company costs, and reflected those changes for each segment for past quarter results, as shown above. These updated segment operating results have not been audited. 5 Copyright © DeNA Co., Ltd. All Rights Reserved. Game Business (Nintendo Alliance) Super Mario Run In September 2017, Super Mario Run received a major update to version 3.0 Hit the 200 million mark for downloads, and the number of downloads has continued to increase since then, while maintaining a base of approximately 20 million monthly active users © 2016 Nintendo Fire Emblem Heroes In November 2017, Fire Emblem Heroes received a major update to version 2.0 The number of active users is being maintained and grown, and also seeing good business performance Implemented one-year anniversary initiatives, including a special campaign celebrating the app’s anniversary, and also running TV commercials © 2017 Nintendo / INTELLIGENT SYSTEMS *The titles referenced on this slide are published by Nintendo 6 Copyright © DeNA Co., Ltd. All Rights Reserved. Game Business (Nintendo Alliance) Animal Crossing: Pocket Camp Released in Q3 Through adding game content and other continuous updates, and holding in-game events, we aim to create a service that consumers can play daily, and that simultaneously contributes financially © 2017 Nintendo FY2018 onwards We continue to service existing smart-device applications Plan to release Mario Kart Tour during FY2018 © 2018 Nintendo *The titles referenced on this slide are published by Nintendo 7 Copyright © DeNA Co., Ltd. All Rights Reserved. Game Business (Excluding Nintendo) Megido 72 Original RPG launched on December 7 Jointly developed with Media.Vision Features highly strategic battles Allows formation of diverse parties out of many distinct and individual characters Unique battle system where players compete with their enemy for attack resources Aim to make this title more exciting for users through future updates and other initiatives 8 Copyright © DeNA Co., Ltd. All Rights Reserved. E-commerce Business Revenue* Updates Processing Settlement • Transactions from non-DeNA services continue to grow Travel • Gross transaction value for Q3 of 16.5 billion yen** (15.2 billion yen for Q3 FY2016) • Revenue down year-on-year due to changes in the product mix not being offset by growth in the transaction volume Auction • Pace of decline in the number of paid members is softening *Previous quarter revenue has been restated to exclude the DeNA Shopping and au Shopping Mall businesses which were sold on December 28, 2016. **From FY2017, the gross transaction value for the Travel business includes the gross transaction value from the Singapore subsidiary. 9 Copyright © DeNA Co., Ltd. All Rights Reserved. Sports Business Strong, appealing team & solid business structure • Reached the Climax Series and the Japan Series, leading to higher fan excitement beyond the regular baseball season, which boosted non-ticket sale revenue, such as merchandise • Revenue composition and business opportunities are changing due to business strategy as well as realized synergies between the baseball business & stadium operations Game & Ticket Updates Goods & Advertising Updates Introducing flex price system Providing unique products, such as (2018 season onward) official documentaries Yokohama Stadium expansion begins Baseball Had title sponsors for every (add approx. 6,000 seats by 2020) Revenue available 2017 home game Composition* Implementing variety of initiatives, such as Yokohama Stadium Legend Matches *Revenue figures are for the three quarters between April and December 10 Copyright © DeNA Co., Ltd. All Rights Reserved. 1. Financial Results & Business Updates 2. Guidance 3. Reference 11 Copyright © DeNA Co., Ltd.