Investor Relations 2020
December 2020 Disclaimer
This financial information in this document are consolidated earnings results based on K-IFRS.
This document is provided for the convenience of investors only, before the external audit on our 3Q 2020 financial results is completed. The audit outcomes may cause some parts of this document to change.
In addition, this document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, “forward-looking statements” often address our expected future business and financial performance, and often contain words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks” or “will”. Our actual results to be materially different from those expressed in this document due to uncertainties. Investor Relations 2020 TABLE OF CONTENTS
I Studio Dragon at a Glance
II 3Q 2020 Earnings Release
III Growth Strategy
Appendix I Studio Dragon at a Glance
1. Highlights 2. Comprehensive Studio 3. Studio Dragon at a Glance 4. Studio Centered Industry Change 5. No.1 Studio in Korea We Create New Culture 1 Highlights
(1) (1) (1) (2) PRODUCTION REVENUE GROWTH OVERSEAS REVENUE CREATORS
28titles 23% 34% 230People
+4.1%P +45.5% +51.4% +72People +42Titles
46.8 230 166 160.4 14.4 42.7 124 110.2 158 9.5
2018 2019 2018 2019 2018 2019 2018 3Q20 2018 3Q20 Sales Proportion Overseas Revenue Non-captive Revenue No. of Creators Library Sales (%) (Wbn) (Wbn) (people) (titles)
Note (1) As of 2019, (2) As of 3Q 2020 5 | Investor Relations 2020 – I. Studio Dragon at a Glance We Create New Culture I.2 Comprehensive Studio
6 | Investor Relations 2020 – I. Studio Dragon at a Glance We Create New Culture I.3 Studio Dragon at a Glance
4,616 28 25 22 18 16 1,097 339 470
Studio Dragon 2015 2016 2017 2018 2019
Note (1) Each companies’ audit report (consolidated basis) 7 | Investor Relations 2020 – I. Studio Dragon at a Glance We Create New Culture I.4 Studio Centered Industry Change
8 | Investor Relations 2020 – I. Studio Dragon at a Glance We Create New Culture I.5 No. 1 Studio in Korea ① Production Capability (1)
9 | Investor Relations 2020 – I. Studio Dragon at a Glance We Create New Culture I.5 No. 1 Studio in Korea ① Production Capability (2)
10 | Investor Relations 2020 – I. Studio Dragon at a Glance We Create New Culture I.5 No. 1 Studio in Korea ② Business Capability
11 | Investor Relations 2020 – I. Studio Dragon at a Glance We Create New Culture II.5 No. 1 Studio in Korea ③ Stable Profit Structure
Annual Production Trend Production Cost to Revenue Revenue to Cost of Sales
Unit: titles Unit: Wbn
468.7
28 379.6 25 22 286.8 18 16 195.5
97.4 89.8% 86.1% 85.4% 93.5% 83.6%
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
Note Companies’ homepage and other sources
12 | Investor Relations 2020 – I. Studio Dragon at a Glance II 3Q 2020 Earnings Release
1. 3Q 2020 Earnings Release 2. Programming 3. Distribution 4. Cost We Create New Culture 1 1 3Q 2020 Highlights
It’s Okay to Missing: < >
Revenue Operating COGS Creators Profit
w106.3bn w16.0bn w85.0bn 230creators (YoY -19.0%) (YoY +46.8%) (YoY -26.6%) (YoY +45 creators)
14 | Investor Relations 2020 – lI. 3Q 2020 Earnings Release We Create New Culture 1 1 3Q 2020 Operating Performance
Summary
3Q20 Revenue W106.3bn (-19.0% YoY): Fewer titles (-4 titles YoY) affected by COVID-19, high-base in 3Q19(1) → sluggish revenue OP W16.0bn (+46.8% YoY): Expanded library value, China-bound sales, cost efficiency → steep margin improvement 4Q20 Increase hit-ratio via new lineups(2) that diversifies genres and visualizes webtoon IPs
Revenue Operating Profit Net Profit
Unit: Wbn Unit: Wbn Unit: Wbn
15.1% 8.8% 10.0% 10.4% 7.1% 8.3% 161.4 8.3% 9.7% 20.3 131.2 120.3 10.4 -1.7% 8.2 106.3 97.4 75.7 9.7 16.9 16.0 13.4 60.0 8.9 -4.1% 11.5 10.9 11.6 10.6 66.9 8.5 42.8 50.9
60.8 65.4 -1.6 45.7 45.2 45.7 -4.0
3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20
Programming Distribution Others Operating Profit OP Margin Net Profit NP Margin
Note (1) Big-budget titles including
Programming
3Q20 Reduced from fewer lineups and absence of big-budget dramas (vs. high-base in 3Q19
4Q20 Focus on genre diversification and target influence via titles incl.
Programming Revenue Production Trend (1)
Unit: Wbn Unit: Titles
100.0% 65.4 88.9% 60.8 83.3% 81.8% 76.9% 10.4 45.7 45.2 27.6 45.7 0.8 7.4
50.4 13 45.7 44.4 12 11 37.8 38.3 9 9
3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 Captive Non-captive Current Titles % of Captive Titles
Note (1) Each quarter includes all titles in progress 16 | Investor Relations 2020 – lI. 3Q 2020 Earnings Release We Create New Culture 3 3Q 2020 Operating Performance
Distribution
3Q20 Recorded solid overseas distribution mainly attributable to expanded library value (China-bound sales, increased ASP)
4Q20 Aim to enhance distribution efficiency by promoting library sales and upscaling size of Netflix original
Distribution Revenue No. of Library Sales
Unit: Wbn Unit: Titles (1) 0.41bn 0.29bn 0.42bn 0.47bn 0.31bn 166 160 161
75.7 148 149 10 14 19 66.9 60.0 23 26
50.9 42.8 59.4 52.8 150 43.9 147 147 42.1 125 123 31.7
16.1 14.1 16.3 11.1 8.8 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 Domestic International Old Titles New Titles
Note (1) Average distribution revenue per title (distribution revenue / number of library sales) 17 | Investor Relations 2020 – lI. 3Q 2020 Earnings Release We Create New Culture 4 3Q 2020 Operating Performance
Cost
3Q20 OPEX W90.3bn (-24.9% YoY): COGS Ratio 80.0% (-8.3%p YoY), SG&A Ratio 4.9% (+1.6%p YoY)
4Q20 Continue to implement reasonable cost policy such as monitoring production-budget control process, etc.
COGS and SG&A Ratio OPEX Breakdown (1)
Unit : % Unit: Wbn
3Q19 4Q19 1Q20 2Q20 3Q20 97.8 Production COGS 70.8 48.6 61.9 75.0 46.8 88.3 86.2 86.5 Labor Costs 5.5 6.4 5.4 5.4 7.8 80.0 Depreciation 0.5 0.5 0.6 0.6 0.8
6.4 Amortization 28.4 27.7 25.6 44.7 18.9 4.9 4.2 Commissions 11.1 12.6 11.3 13.9 11.2 3.3 3.1 Others 4.0 5.6 3.9 4.9 4.8
3Q19 4Q19 1Q20 2Q20 3Q20 OPEX 120.3 101.4 108.7 144.5 90.3 COGS Ratio SG&A Ratio
Note (1) COGS + SG&A Cost 18 | Investor Relations 2020 – lI. 3Q 2020 Earnings Release III Growth Strategy
1. Media Industry 2. Production & Business Capability 3. Short to Mid-term Strategy We Create New Culture II.1 Growth Strategy - Media Industry
Global OTT BIGBANG Maintain competitiveness Expand Presence
20 | Investor Relations 2020 – lII. Growth Strategy We Create New Culture 2 Growth Strategy - ① Production Capability
Discover new writers Promote Producer·Director ↑
Create ↑ Hit Ratio Internalize Profits Virtuous Cycle
21 | Investor Relations 2020 – lII. Growth Strategy We Create New Culture 2 Growth Strategy - ② Business Capability
Movie Game Performance
OIMU Bad Guys:
Remake MD
Asia
Exhibition Crash Landing It’s Okay to
Memories of
Distribution
Overseas Domestic Overseas Domestic Domestic Overseas
23 | Investor Relations 2020 – lII. Growth Strategy We Create New Culture II.3 Growth Strategy - ST/MT Strategy
Increased ASP and Global Performance
ASP Growth WORLDWIDE 25% #6 #4
2017 2018 2019 2020(E)
It’s Okay to
Expand Partnership with New Players
Region Players
2017 2018 2019 2020(E)
2017 2018 2019 2020(E)
Note : Asia region excludes Japan 2017 2018 2019 2020(E)
24 | Investor Relations 2020 – lII. Growth Strategy Investor Relations 2020 APPENDIX
1 Corporate Overview
2 Vision
3 Business Model
4 Financial Statements Summary 1. Financial Position 2. Income Statement
5 4Q 2020 Lineups We Create New Culture I.1 Corporate Overview
Group Structure Shareholder Structure
Reflects rights offering Reflects rights offering * CJ Corp. * Listed companies (NAVER-SD equity swap)
39.36% Others * CJ ENM 32.12%
54.48% CJ ENM * 54.48%
100% 100% 100% 100% 100% NETFLIX CJ ENM 20% 19% 4.68% 66.08% NAVER 6.26% Related Parties Share Price Trend 2.46%
2017.11.24=100
17.11 18.1 18.3 18.5 18.7 18.9 18.11 19.1 19.3 19.5 19.7 19.9 19.11 20.1 20.3 20.5 20.7 20.9 20.11 Studio Dragon KOSPI KOSDAQ
26 | Investor Relations 2020 – Appendix We Create New Culture I.2 Vision
27 | Investor Relations 2020 – Appendix We Create New Culture I.3 Business Model
28 | Investor Relations 2020 – Appendix We Create New Culture I.4 Financial Statements - Financial Position
(Unit: Wbn) 3Q19 2Q20 3Q20 % QoQ % YoY Total Assets 585.4 635.0 637.1 0.3 8.8 Current Assets 259.0 269.4 266.2 (1.2) 2.8 Cash and Cash Equivalents 103.5 79.0 68.9 (12.7) (33.4) Others 155.5 190.4 197.3 3.6 26.9 Non-Current Assets 326.4 365.6 370.9 1.4 13.6 Tangible Assets 1.3 4.6 7.9 73.5 494.3 Intangible Assets 230.0 220.9 226.7 2.6 (1.5) Others 95.1 140.1 136.3 (2.7) 43.4 Total Liabilities 154.9 184.5 175.5 (4.9) 13.3 Current Liabilities 146.4 176.8 165.5 (6.4) 13.0 Non-Current Liabilities 8.5 7.7 10.0 29.3 17.5 Shareholders’ Equity 430.5 450.5 461.6 2.5 7.2 Capital Stock 14.0 14.0 14.1 0.1 0.1 Paid-In Capital in Excess of Par Val 321.7 321.7 322.9 0.3 0.4 Retained Earnings 95.7 115.9 126.1 8.7 31.7 Other Components of Equity (0.9) (1.1) (1.5) CR CR Key Financial Ratios Current Ratio (%) 177.0 152.4 160.9 8.5%p (16.1)%p Net Debt (Net Cash) to Equity (%) (24.0) (17.5) (14.9) 2.6%p 9.1%p Cash Ratio (%) 70.7 44.7 41.7 (3.0)%p (29.1)%p
Note (1) K-IFRS consolidated basis (2) Current Ratio = Current Assets / Current Liabilities, Net Debt (Net Cash) to Equity = Net Debt (Net Cash) / Shareholders’ Equity, Cash Ratio = Cash and Cash Equivalents / Current Liabilities (3) TR (Turn To Red), TB (Turn To Black), CR (Continue Red), n/a (not available)
29 | Investor Relations 2020 – Appendix We Create New Culture I.4 Financial Statements - Income Statement
(Unit: Wbn) 3Q19 4Q19 1Q20 2Q20 3Q20 % QoQ % YoY 2018 2019 % YoY
Sales Revenue 131.2 97.4 120.3 161.4 106.3 (34.2) (19.0) 379.6 468.7 23.5
Programming 60.8 45.7 45.2 65.4 45.7 (30.1) (24.9) 178.1 208.7 17.2
Distribution 60.0 42.8 66.9 75.7 50.9 (32.8) (15.2) 162.1 219.2 35.3
Others 10.4 8.9 8.2 20.3 9.7 (52.4) (6.4) 39.4 40.8 3.2
OPEX 120.3 101.4 108.7 144.5 90.3 (37.6) (24.9) 339.7 440.0 29.5
Cost of Goods Sold 115.9 95.2 103.6 139.6 85.0 (39.1) (26.6) 324.0 420.8 29.9
SG&A 4.4 6.2 5.1 4.9 5.3 5.3 20.0 15.7 19.2 22.4
Operating Profit 10.9 (4.0) 11.6 16.9 16.0 (5.0) 46.8 39.9 28.7 (28.1)
Margin (%) 8.3 (4.1) 9.7 10.4 15.1 4.6%p 6.8%p 10.5 6.1 (4.4)%p
Non-operating Profit 2.2 (1.1) 0.4 0.3 (0.8) TR TR 5.7 4.4 (1.4)%p
Non-operating Income 4.8 (0.9) 7.3 0.1 0.1 24.9 (97.5) 7.0 10.7 52.7
Non-Operating Expenses 2.6 0.2 6.9 (0.2) 0.9 expense (64.6) 1.3 6.3 396.4
Pre-tax Profit 13.1 (5.1) 12.0 17.2 15.2 (11.4) 16.2 45.6 33.1 (27.6)
Income Taxes 1.6 (3.5) 3.5 3.8 4.6 20.6 194.6 9.8 6.7 (32.4)
Net Profit 11.5 (1.6) 8.5 13.4 10.6 (20.6) (8.0) 35.8 26.4 (26.3)
Margin (%) 8.8 (1.7) 7.1 8.3 10.0 1.7%p 1.2%p 9.4 5.6 (3.8)%p
Note (1) K-IFRS consolidated basis (2) TR (Turn To Red), TB (Turn To Black), CR (Continue Red), n/a (not available)
30 | Investor Relations 2020 – Appendix We Create New Culture 5 4Q 2020 Lineups
Distributor ∙ tvN ∙ tvN ∙ tvN ∙ tvN Date (#. of episodes) ∙ Sept. 7~Oct. 27 (16) ∙ Oct. 7~Dec. 3 (16) ∙ Oct. 17~Dec. 6 (16) ∙ Dec. 30~Jan. 19 (16) ∙ ∙ ∙ ∙ Writer / Director Ha Myoung-Hee / Ahn Gil-Ho Han Woo-Ri / Kang Shin-Hyo Park Hye-Ryeon/ Oh Choong-Hwan Shin Yoo-Dam / Kim Jung-Hyun ∙ ∙ ∙ ∙ Main Cast Park Bo-Gum, Park So-Dam Lee Dong-Wook, Cho Bo-A Nam Joo-Hyuk, Bae Su-ji Nam Goong-Min, Kim Seol-Hyun
Distributor ∙ tvN ∙ tvN ∙ OCN ∙ Netflix Original Date (#. of episodes) ∙ Dec. 9~Jan. 28 (16) ∙ Dec. 12~Feb. 14 (20) ∙ Nov. 28~Jan. 28 (16) ∙ Dec. (10) Writer / Director ∙ Lee Si-Eun / Kim Sang-Hyeop ∙ Park Gye-Ock, Choi Jin-Young / ∙ Yeo Ji-Na / Yoo Sun-Dong ∙ Hong So-ri, Kim Hyung-Min / Lee Eung-Bok ∙ ∙ ∙ Main Cast Cha Eun-Woo, Moon Ga-Young Yoon Sung-Sik Cho Byeong-Kyu, Kim Se-Jung Lee Jin-Wook, Song Kang, Lee Si-Young ∙ Shin Hye-Sun, Kim Jung-Hyun
31 | Investor Relations 2020 – Appendix Thank You
Studio Dragon Investor Relations | [email protected] | www.studiodragon.net