Results Briefing Materials for the First Half of Fiscal Year Ending March 31
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Marvelous Inc. Stock Code: 7844 (First Section of Tokyo Stock Exchange) Results Briefing Materials Fiscal Year Ending March 31, 2019 First Half October 31, 2018 Contents ◆ Fiscal Year Ending March 2019, First-Half Results Summary ◆ Segment Results ◆ Fiscal Year Ending March 2019, Full-Year Business Forecast Copyright (c) 2018 Marvelous Inc. All rights reserved. 2 Fiscal Year Ending March 2019, First-Half Results Summary Copyright (c) 2018 Marvelous Inc. All rights reserved. 3 Earnings Highlights (Statement of Profit and Loss) In addition to solid performances of titles at the Consumer Game Business, recognition of special revenue from sale of software assets mainly contributed to a strong rise in revenues and earnings (Unit: million yen) 1H FY ended March 2018 1H FY ending March 2019 YOY change Actual Profit ratio Actual Profit ratio (Amount) (%) Net sales 11,014 - 13,314 - 2,299 120.9% Cost of sales 4,877 - 6,348 - 1,470 130.2% SGA expenses 4,372 - 4,198 - -173 96.0% Thereof advertising expenses 886 - 671 - -215 75.7% Operating profit 1,764 16.0% 2,767 20.8% 1,002 156.8% Non-operating profit/losses 19 - 103 - 83 524.2% Ordinary profit 1,784 16.2% 2,870 21.6% 1,086 160.9% Extraordinary profit/losses 25 - 2 - -22 11.3% Income taxes 573 - 931 - 358 162.4% Profit attributable to owners of parent 1,236 11.2% 1,941 14.6% 705 157.0% Copyright (c) 2018 Marvelous Inc. All rights reserved. 4 Segment Results (Unit: million yen) Highlights 1H FY ended 1H FY ending YOY change March 2018 March 2019 ◆ Online Game Business Actual Actual (Amount) (%) • Lower revenues from long-seller Online Game titles ● 4,573 4,478 -95 97.9% Business • Insufficient contributions from Consumer ● 3,497 5,716 2,219 163.4% most titles released in the Game Business Net sales previous fiscal year Audio & Visual ● 2,962 3,125 163 105.5% Business ◆ Consumer Game Business Total 11,014 13,314 2,299 120.9% • Solid performance of domestic Online Game new titles and amusement ● 441 364 -76 82.7% Business business Consumer ● 939 2,036 1,096 216.7% • Recognition of special revenue Segment Game Business from sale of software assets profit Audio & Visual ● 1,030 1,042 12 101.2% Business ◆ Audio & Visual Business Total 2,411 3,444 1,032 142.8% • Strong stage performances and packaged product sales Company-level costs, etc. -646 -676 -29 104.6% • Favorable profit from secondary Operating profit total 1,764 2,767 1,002 156.8% uses Copyright (c) 2018 Marvelous Inc. All rights reserved. 5 Development of Net Sales and Operating Profit by Segment (Quarterly) 12,000 ■ Audio & Visual Business Unit: million yen (percent of sales) ■ Consumer Game Business ■ Online Game Business 10,000 8,000 1,459 912 1,189 862 (16.9%) (11.3%) (14.2%) (11.1%) 1,564 1,897 2,115 (26.8%) 1,655 (20.6%) 1,303 (24.5%) 6,000 2,086 1,799 (20.6%) 945 (19.2%) (24.8%) 2,177 2,986 1,318 1,326 (25.6%) (15.2%) (28.0%) 1,625 (34.6%) 1,798 (20.6%) (21.1%) (21.4%) (29.0%) 1,542 1,970 2,568 1,164 (29.0%) (33.1%) 3,051 4,000 (24.9%) (24.1%) 2,341 (38.6%) 2,668 3,048 2,159 (36.7%) 1,338 (42.4%) (43.4%) (34.8%) 5,479 5,129 (27.8%) (68.1%) 4,743 (61.0%) 4,403 4,207 2,000 (61.0%) 3,717 (58.0%) 3,530 (48.7%) 3,295 (59.9%) (51.9%) 2,724 2,736 (42.5%) 2,330 2,243 2,302 (42.7%) (34.6%) 2,175 (48.3%) (36.2%) (36.6%) (31.0%) 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q FY ended March 2016 FY ended March 2017 FY ended March 2018 FY ending March 2019 Net sales 8,045 8,402 7,781 7,591 6,203 6,795 8,637 7,751 4,822 6,192 6,375 7,901 6,296 7,018 Operating 1,376 1,464 1,130 1,446 638 679 2,503 1,932 708 1,055 1,197 2,184 650 2,116 profit Consolidated Note: Totals may not tally to 100% due to rounding of sales percentages to the first decimal point. Copyright (c) 2018 Marvelous Inc. All rights reserved. 6 Segment Results Copyright (c) 2018 Marvelous Inc. All rights reserved. 7 Online Game Business: 1H FY Ending March 2019 Progress Status (Unit: million yen) Results Up Until 1H FY Ending March 2019 ■ Net sales ■ Segment profit Lower revenues and earnings as titles released in the 5,000 1000 4,573 previous fiscal year could not cover the sales declines in 4,478 long-seller titles 4,000 800 Title Performance Revenues declined despite robust sales of core long-seller 3,000 600 titles "Logres of Swords and Sorcery: Goddess of Ancient" 441 and "Browser Sangokushi" 2,000 364 400 Favorable performance of "SHINOVI MASTER -SENRAN KAGURA NEW LINK-" among titles released in the 1,000 200 previous fiscal year 0 0 Multiple titles finalized for overseas roll-out 1H Fiscal Year 1H Fiscal Year Some titles transferred to other companies, to summarily ended March ending March 2018 2019 write off the development cost 〈Title Rollouts〉 Logres of Swords and Sorcery: SHINOVI MASTER Browser Sangokushi Goddess of Ancient -SENRAN KAGURA NEW LINK- (native app) (PC browser) (native app) Launched Launched Launched on on December 17, on July 15, 2009 November 2013 29, 2017 ©Marvelous Inc. ©Marvelous Inc. Aiming Inc. ©Marvelous Inc. ©HONEY PARADE GAMES Inc. Copyright (c) 2018 Marvelous Inc. All rights reserved. 8 Online Game Business: Initiatives Starting in 3Q of FY Ending March 2019 Structural reform to rebuild performance in next fiscal year and the year after 1 Organizational reform New structures Segregation of President Vice President decision-making Creation of structures Haruki Nakayama Toshinori Aoki processes of the that permit speedy Online Game Consumer Game Online Game Business Business Business decision-making and Consumer Game Business 2 Compilation of new titles with high probability of success • Promotion of projects based on invitation of external renowned producers • Joint development agreement with Aiming Inc. which has track record of joint development of the "Logres of Swords and Sorcery: Goddess of Ancient" series • Acquisition of major overseas titles 3 Review of personnel systems Implementation of early Personnel Business efficiency enhancement retirement preferential reduction by through fixed-cost compression and about 20% treatment system pipeline review Copyright (c) 2018 Marvelous Inc. All rights reserved. 9 Consumer Game Business: 1H FY Ending March 2019 Progress Status Results Up Until 1H FY Ending March 2019 ■Net sales ■Segment profit (Unit: million yen) In addition to strong performance of domestic new game 6,000 5,716 4,000 software products and the amusement business, revenue recognition from software asset sale contributed to rise in 4,500 3,000 revenues and earnings 3,497 Title Performance 2,036 3,000 2,000 Domestic sales launch of new software products "Fate/EXTELLA LINK" and "Little Dragons Cafe HIMITSU NO RYU TO FUSHIGI NA SHIMA" 1,500 939 1,000 Start of overseas dissemination of "SENRAN KAGURA Reflexions" "Pokémon Ga-Olé" in its 3rd year of operation marks highest-ever 0 0 performance level 1H Fiscal Year 1H Fiscal Year ended March ending March "TRYPOD" performing favorably in domestic and overseas markets 2018 2019 Title Rollouts TRYPOD 〈 〉 Little Dragons Cafe Pokémon Ga-Olé HIMITSU NO RYU TO (Amusement) (Amusement) Fate/EXTELLA LINK FUSHIGI NA SHIMA SENRAN KAGURA (Nintendo Switch Reflexions (PlayStation®4/PlayStation®Vita) /PlayStation®4) (Nintendo Switch) Operations Released Released Released in Operations North America started in on June 7, on August started in and Europe on November 2018 30, 2018 July 2016 September 13, 2017 2018 ©Marvelous Inc. ©2018 Pokémon. ©1995-2018 Nintendo/Creatures lnc. /GAME FREAK ©2018 Marvelous Inc./HONEY PARADE GAMES Inc. inc.Developed by T-ARTS and MARV ⒸTYPE-MOON Ⓒ2018 Marvelous Inc. ©Aksys Games Localization Inc / TOYBOX Inc. Licensed to and published by XSEED Games/Marvelous USA, Inc. TM, ®, and character names are trademarks of Nintendo. Licensed to and published by Marvelous Inc. and Marvelous Europe Ltd. Copyright (c) 2018 Marvelous Inc. All rights reserved. 10 Consumer Game Business: Initiatives Starting in 3Q of FY Ending March 2019 New product "PEACH BALL SENRAN KAGURA" slated for domestic sales launch Together with the overseas roll-out of "Fate/EXTELLA LINK," a Nintendo Switch version is scheduled to be newly released in Japan Steam version of "SENRAN KAGURA Burst Re:Newal" scheduled to be newly released together with overseas roll-out Start of location tests for new amusement machines "TRYPOD Big!!" and "WACCA" SENRAN KAGURA Fate/EXTELLA LINK PEACH BALL SENRAN KAGURA Burst Re:Newal (PlayStation®4/PlayStation®Vita (Nintendo Switch) (PlayStation®4/Windows PC) /Nintendo Switch) Scheduled to Scheduled Scheduled be released for for on December overseas overseas 13, 2018 roll-out roll-out ©2018 Marvelous Inc./HONEY PARADE GAMES Inc. ©2018 Marvelous Inc./HONEY PARADE GAMES Inc. ©TYPE-MOON ©2018 Marvelous Inc. Licensed to and Licensed to and published by XSEED Games/Marvelous USA, Inc. and Marvelous Europe Ltd. published by XSEED Games / Marvelous USA, Inc. TRYPOD Big!! WACCA (Amusement) (Amusement) Operations scheduled Operations to start in scheduled 2019 to start in 2019 ©Marvelous Inc. ©Marvelous Inc. / Supported by HARDCORE TANO*C Copyright (c) 2018 Marvelous Inc. All rights reserved. 11 Audio & Visual Business: 1H FY Ending March 2019 Progress Status (Unit: million yen) Results Up Until 1H FY Ending March 2019 ■Net sales ■Segment profit 3,500 1,500 Revenues and earnings rising on strength in stage 3,125 2,962 performances and profit from secondary uses 2,800 1,200 Title Performance 1,030 1,042 Broadcasts of TV anime "Tokyo Ghoul:re" (Stage 1) and "The 2,100 900 Thousand Noble Musketeers" Highly successful performances of latest major series including 1,400 600 "Touken Ranbu the Stage," "MUSICAL THE PRINCE OF TENNIS 3rd SEASON National Tournament SEIGAKU vs 700 300 HYŌTEI," and "Ensemble Stars! On Stage" Festival Other series of performances as well as new performances 0 0 1H Fiscal Year 1H Fiscal Year received favorable reviews ended March ending March 2018 2019 MUSICAL 〈Title Rollouts〉 THE PRINCE OF TENNIS TV anime TV anime 3rd SEASON "Tokyo Ghoul:re" "The Thousand National Tournament "Ensemble Stars! On Stage" Touken Ranbu the Stage (Stage 1) Noble Musketeers" SEIGAKU vs HYŌTEI Festival Public Public Public Broadcast Broadcast performances performances performances © Touken Ranbu the Stage Production in Jun.