Marvelous Inc. Stock Code: 7844 (First Section of Tokyo Stock Exchange) Results Briefing Materials Fiscal Year Ended March 31, 2019 May 13, 2019 Contents Fiscal Year Ended March 2019, Results Summary Segment Results Fiscal Year Ending March 2020, Full-Year Business Forecast Copyright (c) 2019 Marvelous Inc. All rights reserved. 1 Fiscal Year Ended March 2019, Results Summary Copyright (c) 2019 Marvelous Inc. All rights reserved. 2 Earnings Highlights (Statement of Profit and Loss) Sales and earnings have met initial forecasts Overall sales rose from the previous fiscal year due to sales glowth at the Consumer Game Business and Audio & Visual Business, but earnings declined due to weakness in the Online Game Business and development costs for some titles charged in a lump-sum. (Unit: million yen) FY ended March 2018 FY ended March 2019 YOY change Actual Profit ratio Actual Profit ratio (Amount) (%) Net sales 25,291 - 26,777 - 1,485 105.9% Cost of sales 11,035 - 13,457 - 2,421 121.9% SGA expenses 9,108 - 8,613 - -495 94.6% Thereof advertising 1,895 - 1,387 - -507 73.2% expenses Operating profit 5,147 20.4% 4,706 17.6% -440 91.4% Non-operating profit/loss -41 - 84 - 126 - Ordinary profit 5,105 20.2% 4,791 17.9% -314 93.8% Extraordinary profit/loss -71 - -156 - -84 - Income taxes 1,520 - 1,282 - -237 84.4% Profit attributable to owners of parent 3,513 13.9% 3,351 12.5% -162 95.4% Copyright (c) 2019 Marvelous Inc. All rights reserved. 3 Segment Results (Unit: million yen) Highlights FY ended FY ended YOY change March 2018 March 2019 ◆ Online Game Business Actual Actual (Amount) (%) ・ Lower sales of majour titles Online Game 10,034 9,698 -335 96.7% Insufficient contributions from ♦ Business ・ new titles Consumer 8,891 10,222 1,331 115.0% Development costs for some ♦ Game Business ・ Net sales titles charged in a lump-sum Audio & Visual 6,396 6,876 480 107.5% ♦ Business ◆ Consumer Games Business Total 25,291 26,777 1,485 105.9% ・ Game software sales were solid Online Game Solid results in amusement 1,390 1,235 -154 88.9% ・ ♦ Business business Consumer 2,969 2,848 -120 95.9% ・ Deveropment costs for some titles ♦ Game Business Segment charged in a lump-sum profit Audio & Visual ♦ 2,052 2,102 50 102.4% Business ◆ Audio & Visual Business Total 6,411 6,186 -225 96.5% ・ Anime and movies performed favorably Adjustments,retirements,etc. -1,264 -1,480 -215 117.0% ・ Strong stage performances and packaged product sales Operating profit total 5,147 4,706 -440 91.4% ・ Favorable profit from secondary uses Copyright (c) 2019 Marvelous Inc. All rights reserved. 4 Development of Net Sales and Operating Profit by Segment (Quarterly) Unit: million yen (percent of sales) 12,000 ■ Audio & Visual Business ■ Consumer Game Business ■ Online Game Business 10,000 8,000 1,189 1,459 912 (16.9%) (14.2%) (11.3%) 862 (11.1%) 1,564 1,897 2,115 (20.6%) (24.5%) (26.8%) 1,655 2,086 1,303 1,799 6,000 (20.6%) 2,177 945 (19.2%) (24.8%) 2,986 1,318 1,326 (25.6%) 2,261 1,489 (28.0%) (15.2%) (22.6%) 1,625 (34.6%) 1,798 (20.6%) (21.1%) (32.9%) (21.4%) (29.0%) 1,542 1,970 2,568 1,164 (24.9%) (29.0%) (33.1%) 3,051 4,000 (24.1%) 2,341 (38.6%) 2,309 2,668 3,048 2,196 2,159 (36.7%) (35.1%) 1,338 (42.4%) (43.4%) (31.9%) 5,479 (34.8%) 5,129 4,743 (27.8%) (68.1%) (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 2,790 (42.5%) 2,330 2,243 2,302 2,430 (34.6%) 2,175 (48.3%) (42.7%) (35.3%) (42.4%) (36.2%) (36.6%) (31.0%) 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY ended March 2016 FY ended March 2017 FY ended March 2018 FY ended 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 6,879 6,583 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 1,443 495 profit Consolidated Copyright (c) 2019 Marvelous Inc. All rights reserved. 5 Segment Results Copyright (c) 2019 Marvelous Inc. All rights reserved. 6 Online Game Business Performances of Titles in the Fiscal Year Ended March 2019 Long-seller titles performed favorably but sales decreased from the previous fiscal year "SHINOVI MASTER -SENRAN KAGURA NEW LINK-" performed well in the second year Some titles released in the previous fiscal year were transferred to other companies and services discontinued Additionally, some titles in development were scrapped and development costs charged in a lump-sum Active overseas business development centered on Asia; licensing agreements were concluded with companies in China, Korea, Taiwan, etc. ◆ To rebuild the sluggish business, structural reforms and an early retirement preferential treatment system(charged as extraordinary loss) are implemented 〈Title Rollouts〉 Logres of Swords and Sorcery: SHINOVI MASTER Goddess of Ancient Browser Sangokushi -SENRAN KAGURA NEW LINK- (native app) (PC browser) (native app) Launched Launched in Launched in December in July 2009 November 2013 2017 ©Marvelous Inc. ©Marvelous Inc. Aiming Inc. ©Marvelous Inc. ©HONEY PARADE GAMES Inc. Copyright (c) 2019 Marvelous Inc. All rights reserved. 7 Online Game Business Performance in the Fiscal Year Ended March 2019 ◆ Sales and earnings decreased as lower sales of major long-seller titles were not covered by new titles (Unit: million yen) 25,000 7,500 19,755 20,000 6,000 15,379 14,750 15,000 4,182 4,500 3,815 3,271 10,034 9,698 10,000 3,000 1,390 5,000 1,235 1,500 0 0 FY ended March FY ended March FY ended March FY ended March FY ended March 2015年3月期 2016年3月期 2017年3月期 2018年3月期 2019年3月期 2015 2016 2017 2018 2019 Net sales Segment profit Copyright (c) 2019 Marvelous Inc. All rights reserved. 8 Consumer Game Business Performances of Titles in the Fiscal Year Ended March 2019 Sales launch of "Fate/EXTELLA LINK," "Little Dragons Cafe HIMITSU NO RYU TO FUSHIGI NA SHIMA" and "PEACH BALL SENRAN KAGURA" Overseas releases comprised the North America/Europe and Steam versions of "SENRAN KAGURA Burst Re:Newal" and "Fate/EXTELLA LINK" In Amusement, "Pokémon Ga-Olé" performed well in the third year of operation, setting a historical high Overseas performance of "PokémonTRETTA" and domestic and overseas sales of "TRYPOD" were also favorable ◆ Based on reviews of future earnings of some titles in development, development costs were charged in a lump-sum 〈Title Rollouts〉 Little Dragons Café Fate/EXTELLA LINK HIMITSU NO RYU TO (PlayStation®4/PlayStation®Vita FUSHIGI NA SHIMA PEACH BALL /Nintendo Switch/Windows PC) (Nintendo Switch SENRAN KAGURA Pokémon Ga-Olé TRYPOD /PlayStation®4) (Nintendo Switch) (Amusement) (Amusement) North America/Europe Domestic PS4/PSV version: Sales launch PS4/PSV/NS Operations Operations in June 2018 version, PC Released in Released in started in started in NS version: Sales version: Sales August 2018 December 2018 November July 2016 launch in January launch in March 2017 2019 2019 ©Marvelous Inc. ©TYPE-MOON ©2018 Marvelous Inc. ©2019 Pokémon. ©1995-2019 Nintendo/Creatures lnc. /GAME ©Aksys Games Localization Inc / TOYBOX Inc. ©2018 Marvelous Inc./HONEY FREAK inc. Licensed to and published by Marvelous Inc. PARADE GAMES Inc. ＊ Developed by T-ARTS and MARV The image shows the domestic version. TM, ®, and character names are trademarks of Nintendo. Copyright (c) 2019 Marvelous Inc. All rights reserved. 9 Consumer Game Business Performance in the Fiscal Year Ended March 2019 The amusement business performed well, supplemented by temporary income from the sale of software assets continued from the previous fiscal year Despite higher revenues year on year, earnings decreased due to lump-sum charges of development cost for some titles (Unit: million yen) 12,000 5,000 10,222 9,067 8,891 4,000 9,000 7,544 2,969 2,848 6,376 3,000 6,000 2,042 2,000 3,000 1,006 1,000 502 0 0 FY ended March FY ended March FY ended March FY ended March FY ended March 2015年3月期 2016年3月期 2017年3月期 2018年3月期 2019年3月期 2015 2016 2017 2018 2019 Net sales Segment profit Copyright (c) 2019 Marvelous Inc. All rights reserved. 10 Audio & Visual Business Performances of Titles in the Fiscal Year Ended March 2019 TV anime “Hug! Pretty Cure,” “Tokyo Ghoul:re” (Stage 1, Stage 2), and “The Thousand Masketeers” were broadcast and respectively package-commercialized Movie “Hug! Pretty Cure, Futari wa Pretty Cure the Movie” “TOUKEN RANBU: THE MOVIE,” and “Pretty Cure Miracle Universe the Movie” were released respectively in October 2018, January 2019, and March 2019, attracting large number of spectators In new works, for “Stage : SENGOKU NIGHT BLOOD” and “REBORN! THE STAGE” public performances started respectively in August and September 2018 and were well received by spectators ◆ For "Touken Ranbu the Stage," "MUSICAL THE PRINCE OF TENNIS," and "Ensemble Stars! On Stage" the latest performances of each series were staged 〈Title Rollouts〉 TV anime TV anime "Hug! Pretty Cure" "Tokyo Ghoul:re" "TOUKEN RANBU: THE MOVIE" "Ensemble Stars! Extra Stage" REBORN! THE STAGE ～Memory of Marionette～ Broadcast Public Public Broadcast Stage 1 in Apr.