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Copyright © DeNA Co., Ltd. All Rights Reserved.
DeNA Co., Ltd.
Q3 FY2015 Operating Results February 5, 2016
Copyright © DeNA Co., Ltd. All Rights Reserved.
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1. Financial Results 2. Strategy and Initiatives 3. Guidance 4. Reference
Copyright © DeNA Co., Ltd. All Rights Reserved.
Q3 FY2015 Consolidated Financial Results
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Coin consumption and operating profit both exceeded our expectations
*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)
Q3 Q4 Q1 Q2 Q3YoY
Change
QoQ
Change
Revenue 34.4 36.1 37.7 37.1 33.8 -2% -9%
Game 28.3 29.8 28.3 27.5 27.3 -4% -1%
E-commerce 5.1 5.2 5.0 4.9 4.8 -5% -2%
Sports 0.6 0.7 3.7 4.0 0.7 13% -83%
New Businesses and Others 0.9 0.9 1.1 1.2 1.4 64% 19%
Adjustments -0.4 -0.6 -0.4 -0.4 -0.3 - -
Operating profit 5.2 4.6 4.0 7.4 3.3 -36% -55%
15% 13% 11% 20% 10% - -
Segment profit / loss 5.5 5.1 6.8 6.8 3.5 -36% -49%
Game 7.6 6.4 6.8 6.4 6.0 -20% -6%
E-commerce 0.5 0.6 0.6 0.6 0.7 38% 13%
Sports -1.6 -0.9 0.9 1.0 -1.8 - -
New Businesses and Others -1.1 -1.0 -1.1 -1.3 -1.3 - -
Adjustments 0.0 -0.1 -0.3 0.0 -0.1 - -
Other income / expenses (net)** -0.3 -0.5 -2.8 0.6 -0.2 - -
(billion yen)
Operating profit margin
Item*FY2014 FY2015
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Q3 FY2015 Cost and Expense Breakdown
Marketing spend for new game titles and new services was in line with the plan. Additional marketing investments were also made to support a high-performing 3rd-party title
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Q3 Q4 Q1 Q2 Q3 YoY
Change
QoQ
Change
Cost of Sales 14.4 14.7 16.1 15.2 14.0 -2% -8%
Personnel Expenses 1.4 1.3 1.7 1.5 1.5 7% 3%
Depreciation and amortization 2.4 2.5 2.6 2.3 2.2 -7% -4%
Outsourcing expenses 2.7 2.0 2.4 2.5 2.2 -18% -13%
Commission fees 6.4 7.1 6.9 6.4 6.2 -3% -4%
Others 1.5 1.8 2.4 2.5 1.9 24% -23%
Selling, general, and
administrative expenses14.6 16.3 14.8 15.1 16.3 12% 8%
Personnel Expenses 3.3 3.3 3.5 3.3 3.3 0% 0%
Sales promotion & Advertising expenses 3.1 4.0 2.5 3.1 4.1 34% 32%
Outsourcing expenses
& Commission fees6.5 6.9 6.9 6.9 7.0 8% 2%
Others 1.8 2.1 1.9 1.9 1.9 7% 2%
Other income/ expenses (net)* -0.3 -0.5 -2.8 0.6 -0.2 - -
Consolidated employee headcount 2,420 2,424 2,411 2,444 2,410 0% -1%
*Includes non-extraordinary gains and losses under Japanese GAAP. (e.g. Loss on sales / retirement of tangible / intangible assets)
ItemFY2014 FY2015
(billion yen)
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Key Metrics: Game Business
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Coin Consumption in Japan by Type of Device and Business*
*Includes coin consumption, monthly membership service fees, and ticket sales. Includes consumption of virtual currency in mixi Games from Q2 FY2013 **Includes Yahoo! Mobage
Native App Coin Consumption by Region
Exchange rates at the end of each quarter:
Total native app coin consumption is growing steadily, and surpassed 17 billion yen in Q3 Coin consumption in Japan: In addition to the growth of 1st- and 2nd-party titles, both the app and
browser versions of 3rd-party title Granblue Fantasy from Cygames continued to show strong performance
3Q 4Q 1Q 2Q 3Q
1 USD 119 120 122 120 120
1 RMB 19 19 20 19 19
(Unit:Yen)FY2014 FY2015
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Revenue*
Key Metrics: E-commerce Business
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*Key brands in each sub-segment are as follows. DeNA BtoB market figures are excluded beginning Q2 FY 2015. -Travel and adjustments: DeNA Travel, Shumee-to Club -Shopping: DeNA Shopping, au Shopping Mall, DeNA BtoB market(-Q1 FY2015), SEIYU.com, etc. -Auction: Mobaoku -Processing Settlement: Paygent
Shopping Gross Transaction Value
Travel Gross Transaction Value
Gross travel transaction value grew steadily through enhanced competitiveness in online airline ticket
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1. Financial Results 2. Strategy and Initiatives 3. Guidance 4. Reference
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Corporate Value Creation
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Pro
fit
FY2015 FY2016 FY2017
(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
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1st- and 2nd-party titles: Performance of existing native apps remained stable and new titles started to contribute
3rd-party titles: Granblue Fantasy by Cygames resulted in steady performance of both native app and browser
Quarterly profit from Japan Game Business is expected to be maintained at around 9 billion yen
Coin Consumption in Japan by Business
(i) Japan Game Business: Overview
8 *Figures are based on management accounting
Operating Profit from Japan Game Business*
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(i) Japan Game Business: 1st- and 2nd-Party Native Apps
Proactively launch premium IP titles with engaging live operations to stabilize medium- to long-term coin consumption
Aim to create DeNA-original hits by building technical expertise and know-how
Aikatsu! Photo on Stage!! Launched on January 27
ONE PIECE Thousand Storm 3D battle and multiplayer features, completed
closed beta, on track for 2016 launch
©BNP/BANDAI, DENTSU, TV TOKYO ©BANDAI NAMCO Entertainment Inc. © Eiichiro Oda/Shueisha, Fuji Television Network, Toei Animation © BANDAI NAMCO Entertainment Inc. Game provided by: BANDAI NAMCO Entertainment Inc.
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(ii) International Game Business
Existing key titles in China remained steady in Q3. New titles such as Gundam Card Collection* are off to a good start, and both coin consumption and bottom line are expected to improve in Q4 *Game provided by BANDAI NAMCO Entertainment Inc.
Planning to launch multiple new titles in China in 1H FY2016 While carefully managing the bottom line, targeting Q1 FY2016 new title launches in the West
International Coin Consumption International Operating Loss**
**Figures are based on management accounting
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(iii) Partnership with Nintendo (Strategy Progress)
Both Miitomo and My Nintendo are on track for launch
My Nintendo membership service connects all Nintendo experiences across devices
●●● Game Game #1 Miitomo
Alliance Project: Joint development of My Nintendo’s service operation platform • Part of My Nintendo service was launched in Japan in December 2015 • Full launches of My Nintendo and Miitomo are scheduled at the same time (9 languages and 39
countries at launch) Initial offerings will include recommendation and loyalty points; value-added features will be sequentially added
Alliance Project 1: Joint development and operation of Nintendo-IP game apps • Pre-registration for the first title Miitomo is scheduled to start on February 17, 2016, periodic
updates will be provided to users • To be launched first in Japan mid-March followed by US, Europe and other regions (Initial
launch will cover 8 languages across 16 countries in March)
Builds active user base: “Friend” relations established through Mii Improves user loyalty: Recommendation, loyalty points, etc. Designed for easy, long-term use: Access from external accounts such as Facebook ID
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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 Future Plans
The main objective is to produce multiple hit titles and make the collaborated business profitable on its own
Contribution from this alliance is expected to start in FY2016 • Miitomo will be free to download with optional paid items. Monetization
methods will be carefully decided based on user expectation and gameplay • The same approach will be applied to other jointly developed titles
The goal is to achieve sustained, medium-to-long-term profits based on stronger user engagement
Monetization
Role Division/ Revenue Share
Appendix: Partnership with Nintendo (Outlook)
Primary roles • Nintendo: Front-end (ex. IP, art, user interface, etc.) , marketing • DeNA: Back-end (ex. server-side development, infrastructure building,
analytics, quality assurance, etc.) Revenue will be shared based on each party’s role and responsibility
• Apps will be published by Nintendo and revenue from apps will be recognized on a net basis by DeNA.
• Marketing expenses for Miitomo will primarily be covered by Nintendo
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(iv) New Businesses Pillars
Curation platform business is well-positioned to become a new business pillar over medium term MERY (women’s fashion), iemo (home decoration/interior design) and Find Travel (travel) have become
category-leading online media Further growth in ad revenue and additional forms of monetization are planned
Corporate Value Creation Curation Platform Business
Revenue
Total monthly active users *
*Source: Google Analytics. Refers to the total number of monthly users for each service. Figures include users who access the same service across multiple devices, including smartphones and PC
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(iv) New Businesses Pillars: MERY (Women’s Fashion)
Users of the native app version increased drastically following the December 2015 TV commercial campaign, which resulted in increased user engagement
Aiming to increase app users to raise frequency of usage and daily active users In addition to high-quality ads that match users’ interests, other forms of monetization will be added
over medium- to long-term
Daily Active Users* Article Views* User Profiles
*Source: Google Analytics. Refers to the total number of monthly users for each service. Figures include users who access the same service across multiple devices, including smartphones and PC
Main user demographic is women in their 20s
and 30s with interest in fashion and beauty
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Appendix: Sports Business (Completion of TOB over Yokohama Stadium)
Yokohama DeNA Baystars now owns 76.87% of the shares of Yokohama Stadium, which will be consolidated into DeNA Group starting Q4 FY2015
Total amount of the acquisition was 7.4 billion yen (Yokohama Stadium’s total assets and net equity were 16.0 billion yen and 14.8 billion yen as of January 31, 2015, respectively*)
Takeover Bid Results*
The stadium attendance in the 2015 season was approximately a 65% increase from the pre-acquisition year (1.81 million attendees)
Integration of the baseball team and stadium is expected to enhance agility and flexibility of decision making and strategy execution, thereby improving the overall business results
The Sports Business is now in a good position to target a break-even operation in FY2016 onward
Impact on Sports
Business
*For details on TOB results and financial data of Yokohama Stadium, pleased refer to the disclosure released on January 21
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1. Financial Results 2. Strategy and Initiatives 3. Guidance 4. Reference
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(billion yen)
Q1Actual
Q2Actual
Q3Actual
Q4Guidance
QoQ
Change
QoQ
Change(%)
Revenue 37.7 37.1 33.8 35.0 +1.2 4%
excl. Sports 34.0 33.1 33.2 34.2 +1.0 3%
Operating Profit 4.0 7.4 3.3 5.2 +1.9 58%
excl. Sports 3.1 6.3 5.1 6.7 +1.6 31%
-2.7 1.2 - 1.5 - -
Reorganization in the West
Sales of DeNA B to B Market
business N/A TOB-related recognitions, etc.
One-time factors
Item
Consolidated Financial Guidance for Q4 FY2015 Consolidated financial guidance for Q4 FY2015 (January – March)
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Key factors for QoQ change • The first collaborative title with Nintendo, scheduled to be launched in March, is not factored into Q4 guidance • Total coin consumption* is expected to increase QoQ both in Japan and internationally
*Revenue from some new 1st- and 2nd-party titles released in Japan after FY2015 onwards will be recognized on net basis
• Sales promotion and advertising expenses are expected to decrease QoQ as fewer titles will be launched in Q4 • Yokohama Stadium will be consolidated into DeNA Group on January 28. Only two months of this entity’s
financial results will be included in DeNA’s Q4 results • Gain from negative goodwill recognition* is expected to be incurred as a result of the takeover bid *The amount will be finalized following the PPA process
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Consolidated Financial Guidance for FY2015 and Dividends
While we invest proactively to enhance DeNA’s corporate value through business growth, we will continue distributing dividends
Based on our dividend policy outlined below, we forecast the year-end dividend per share of 20 yen (consolidated payout ratio of 24.3%) • Each fiscal year, based on our performance, we aim to pay out a consolidated payout ratio of 15% or an annual
dividend of 20 yen per share of our common stock, whichever is higher • Targeting a consolidated payout ratio of 30% in the future
Consolidated Financial Guidance for FY2015 and Dividends
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(billion yen)
ItemFY2014
(Actual)
FY2015
(Forecast)
YoY
change
Revenue 142.4 143.7 1%
Operating profit 24.8 19.9 -20%
Profit for the year
attributable to owners of the parent14.9 11.8 -21%
Earnings per share attributable
to owners of the parent(Yen)115.35 82.27 -29%
Dividend Per Share(Yen) 20.00 20.00 0%
Consolidated Dividend Payout Ratio(%) 17.3 24.3 -
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1. Financial Results 2. Strategy and Initiatives 3. Guidance 4. Reference
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(billion yen)
FY2014FY2014
Apr-Dec
FY2015
Apr-Dec
Operating cash flow (A) 27.9 30.6 18.4
Profit before tax 28.4 22.4 16.1
Depreciation and amortization 10.8 7.9 8.7
Income tax paid -11.3 -11.3 -7.7
Others 0.0 11.6 1.4
Investing cash flow (B)* -21.3 -17.2 -30.6
Financing cash flow -3.8 -4.4 19.3
Cash dividends paid -4.8 -4.8 -2.6
Disposition of Treasury stock* 0.2 0.1 22.1
Others 0.8 0.3 -0.3
FCF ((A)+(B)) 6.6 13.4 -12.1
Cash and cash equivalents (Consolidated) 68.7 75.1 75.9
(Non-consolidated basis) 44.9 40.6 48.9
Consolidated Cash Flow Overview
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* 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, 2015.
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Changes to Reportable Segments
Social Media Business
E-Commerce Business
Others
Game Business
Entertainment Services (Everystar, Manga Box, Showroom, etc.)
Baseball
New Businesses (Healthcare, Curation Platform, etc.)
Segments until Q4 FY2014 Segments from Q1 FY2015
Game Business
E-Commerce Business
Sports Business
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
Baseball, Running Club, etc.
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Changes in Shareholder Benefit Program
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Shareholder Benefit Program Started in 2013 to enhance the attractiveness of DeNA as a stock investment and allow more shareholders to understand the variety of businesses owned by DeNA
New Changes in Shareholder Benefits To recognize medium- and long-term support from shareholders, DeNA is changing shareholder benefits based on program usage and requests from shareholders
*For more details of the shareholder benefit program, please refer to IR announcement dated on February 5th and our IR webpage (in Japanese only)
Shareholder Benefit Program for FY2015 (Summary)
1. Tickets for the Yokohama DeNA Baystars’ regular season games at the Yokohama Stadium New: Online booking available
2. Discount coupons for infield reserved seats at Yokohama DeNA Baystars’ regular season games at the Yokohama Stadium
3. New: Access to live-streamed regular season games hosted by the Yokohama DeNA Baystars 4. New: Eligibility* to enter a draw for The Yokohama DeNA Baystars’ shareholder-only event
*Available only to shareholders with a one year or longer holding period
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DeNA Co., Ltd.
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The information and data contained within this presentation and these presentation materials have been determined based on information available as of February 5, 2016. 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 February 5, 2016, 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.