q1 fy2016 operating results - ir webcasting · • with effective user acquisition and improved...

Copyright © DeNA Co., Ltd. All Rights Reserved.

DeNA Co., Ltd.

Q1 FY2016 Operating Results August 10, 2016


1

1. Financial Results 2. Strategy and Initiatives 3. Guidance 4. Reference


Financial Results Summary

2

Showed solid progress towards achieving profit growth in FY2016

*For full reconciliation of GAAP to Non-GAAP metrics, please see the reference section

(bil l ion yen)

FY2016

Q1 Q2 Q3 Q4 Q1

Revenue (IFRS) 37.7 37.1 33.8 35.0 38.3QoQ 4% -2% -9% 3% 9%

YoY 5% 3% -2% -3% 1%

Revenue from Sports 3.7 4.0 0.7 1.5 5.5QoQ 411% 7% -83% 123% 268%

YoY 33% 10% 13% 103% 46%

Revenue excl. Sports 34.0 33.1 33.2 33.5 32.8QoQ -4% -2% 0% 1% -2%

YoY 3% 2% -2% -5% -3%

Operating profit (IFRS) 4.0 7.4 3.3 5.1 7.4QoQ -13% 84% -55% 55% 43%

YoY -43% -8% -36% 11% 83%

Non-GAAP operating profit 6.8 6.1 3.4 3.9 7.8QoQ 41% -10% -45% 15% 101%

YoY -7% -21% -34% -20% 14%

Operating profit from Sports 0.9 1.0 -1.8 -1.1 1.8QoQ - 20% - - -

YoY 254% 25% - - 109%

Operating profit excl. Sports 5.9 5.1 5.2 4.9 6.0QoQ 4% -14% 1% -5% 21%

YoY -16% -27% -22% -13% 0%

ItemFY2015


Consolidated Financial Results (IFRS)

3

*Includes non-extraordinary gains and losses under Japanese GAAP. (e.g. Loss on sales / retirement of tangible / intangible assets)

Q1 Q2 Q3 Q4 Q1 YoYChange

QoQChange

Revenue 37.7 37.1 33.8 35.0 38.3 1% 9%

Game 28.3 27.5 27.3 26.6 26.1 -8% -2%

E-commerce 5.0 4.9 4.8 5.2 4.6 -7% -11%

Sports 3.7 4.0 0.7 1.5 5.5 46% 268%

New Businesses and Others 1.1 1.2 1.4 2.0 2.3 104% 17%

Adjustments -0.4 -0.4 -0.3 -0.2 -0.3 - -

Operating profit 4.0 7.4 3.3 5.1 7.4 83% 43%

11% 20% 10% 15% 19% - -

Segment profit / loss 6.8 6.8 3.5 4.9 7.2 7% 48%

Game 6.8 6.4 6.0 6.6 6.7 -2% 0%

E-commerce 0.6 0.6 0.7 0.7 0.4 -34% -48%

Sports 0.9 1.0 -1.8 -1.1 1.8 109% -

New Businesses and Others -1.1 -1.3 -1.3 -1.0 -1.3 - -

Adjustments -0.3 0.0 -0.1 -0.4 -0.3 - -

Other income * 0.1 1.3 0.1 2.3 0.1 20% -94%

Other expenses* 2.9 0.8 0.3 2.1 0.0 -99% -99%

(billion yen)

Item

Operating profit margin

FY2015 FY2016


Cost and Expense Breakdown (IFRS)

4

*Includes non-extraordinary gains and losses under Japanese GAAP. (e.g. Loss on sales / retirement of tangible / intangible assets)

Q1 Q2 Q3 Q4 Q1 YoYChange

QoQChange

Cost of Sales 16.1 15.2 14.0 14.3 14.9 -8% 4%Personnel Expenses 1.7 1.5 1.5 1.4 1.3 -27% -9%Depreciation and amortization 2.6 2.3 2.2 2.2 2.2 -16% -2%Outsourcing expenses 2.4 2.5 2.2 2.1 2.5 3% 21%Commission fees 6.9 6.4 6.2 6.2 6.1 -12% -2%Others 2.4 2.5 1.9 2.4 2.8 18% 17%

Selling, general, andadministrative expenses

14.8 15.1 16.3 15.8 16.2 9% 2%

Personnel Expenses 3.5 3.3 3.3 3.4 3.7 5% 9%Sales promotion & Advertisingexpenses 2.5 3.1 4.1 3.1 3.2 24% 3%Outsourcing expenses& Commission fees 6.9 6.9 7.0 7.0 7.3 6% 5%

Others 1.9 1.9 1.9 2.4 2.0 5% -18%

Other income* 0.1 1.3 0.1 2.3 0.1 20% -94%Other expenses* 2.9 0.8 0.3 2.1 0.0 -99% -99%Consolidated employeeheadcount

2,411 2,444 2,410 2,435 2,497 4% 3%

FY2015(billion yen)

ItemFY2016


Key Metrics: Game Business

5

Coin Consumption in Japan by Business* Native App Coin Consumption by Region

Exchange rates at the end of each quarter: *Note: For more detail on the accounting relationship between Japan Game business revenue and Japan coin consumption, see page 22

Native app coin consumption grew in Japan and China due to new titles launched during the quarter

FY2016Q1 Q2 Q3 Q4 Q1

1 USD 122 120 120 112 1031 RMB 20 19 19 17 15

(Unit:Yen)FY2015


Revenue**

Key Metrics: E-commerce Business

6

Shopping Gross Transaction Value*

Travel Gross Transaction Value

Accelerated growth in gross travel transaction value through enhanced competitiveness in online airline ticket market

*DeNA BtoB market is not included in Shopping Gross Transaction Value

**DeNA BtoB market figures are excluded beginning Q2 FY2015


7



Corporate Value Creation

8

Prof

it

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


Coin Consumption in Japan by Business

(i) Japan Game Business: Overview

9 **Figures are based on management accounting

Operating Profit from Japan Game Business**

Coin consumption and operating profit were both in line with the previous quarters While ONE PIECE: Thousand Storm* has not become a consistent top 10 grossing title, we intend to

sustain meaningful long term contribution from it *Game provided by: BANDAI NAMCO Entertainment Inc.

Further strengthening in-game operations in core 1st- and 2nd-party native apps to generate continuing stable operating profit


10

(i) Japan Game Business: 1st- and 2nd-Party Native App Games Starting to see steady results from strengthening in-game operations of existing key titles Aiming to solidify earnings base by continually developing and implementing major updates to key titles

10

1st- and 2nd-Party Native App Coin Consumption

• With effective user acquisition and improved retention rates through superior in-game operations, achieved an acceleration in coin consumption growth one year after launch

Example 1: FINAL FANTASY Record Keeper

Example 2: Kinniku-man Muscle Shot

©SQUARE ENIX CO., LTD. ©DeNA Co., Ltd.

Strengthening Operations

Post-launch Quarter

Quarter One Year After Launch

FY2013 FY2015 FY2014 FY2016

• Steady long term performance over two years since launch

• Long term-oriented in-game operations already underway

• New multi-play functionality allowing users to battle cooperatively

Expanded content and in-game operations

Established play cycle

Multi-faceted marketing campaign incl. TV

commercials


11

(ii) International Game Business Making solid progress towards improving the FY2016 bottom line by more than one billion yen YoY QoQ top-line growth was driven by China, which saw contribution from new titles launched in Q1

International Coin Consumption International Operating Loss*

*Figures are based on management accounting


(iii) Nintendo Partnership Update Continuing preparations for new title launches in FY2016 Aiming to achieve sustained medium to long-term growth and profit contribution

Alliance Initiative 1: Joint development and operation of Nintendo-IP game apps

Developing game app lineup with enjoyment tailored for smart devices

Alliance Initiative 2: Joint development of My Nintendo service operation platform

Build user base with strong loyalty and engagement

Connects all Nintendo experiences across devices Miitomo (Launched in March 2016)

IP, combined with social aspects, that appeals to broad audiences across different age/gender groups, countries and regions

First milestone: 100 million global users

↗Continuous improvement of value-added

services ↗Connectivity with game apps

Animal Crossing (Launch planned in fall 2016) Popular series among consumers, especially female and young people, with over 10 million units sold for both DS and 3DS

Fire Emblem (Launch planned in fall 2016) Simulation RPG with character customization and tactical elements, globally loved by fans since the first launch in 1990

Future titles are based on familiar IP that fans around the world have been enjoying

× 12


13

(iv) New Businesses Pillars (Curation Platform Business) Total monthly users* have exceeded 100 million and revenue is growing steadily, showing promising

signs to become a growth driver Steady progress towards goal of achieving profitability by the end of 2H FY2016 and generating

quarterly operating profit of one billion yen by the end of FY2017

Total Monthly 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

Revenue


14

(iv) New Businesses Pillars (Curation Platform Business) MERY’s sponsored articles are performing well, particularly with advertisers for cosmetics, fashion,

and daily consumables, capitalizing on its strengths in branded content as a category-specific medium Revenues from network ads for the other curation media are growing in accordance with their user base

Growth Potential for Brand Advertising

Case study: Shiseido MAQuillAGE Our Branded Content Category specific media have clearly

defined user interests

Our curation media can deliver brand messages to highly relevant target audiences

Native ads are another source of potential growth in addition to performance-based network ads

Sponsored Article Original Videos


15

Government, telecommunications carriers, road system operators, etc.

(Announced July 2016) (Announced July 2016)

ZMP

EasyMile

Automotive Businesses Framework

Aim to become the leading player in Japan by pursuing various initiatives to add value to the service layer in the self-driving field

(iv) New Businesses Pillars (Long term area of interest)

Ligier


16

Entertainment

Games

Commerce

Automotive

Curation Media

Healthcare

Internet + AI

Corporate Value Creation: Long Term Strategy DeNA has leveraged the internet to co-create new markets with various industries since its founding AI (artificial intelligence) has the potential to bring about massive change across many industries Formed a joint venture in July 2016 with Preferred Networks, a front-runner in the AI field


17



18

Consolidated Financial Guidance for Q2 FY2016 Expect non-GAAP operating profit excluding Sports to be flat QoQ

(bill ion yen)

Q1 Q2 Q3 Q4 Q1 Q2e YoY QoQ

Revenue

Revenue (IFRS) 37.7 37.1 33.8 35.0 38.3 38.5 4% 1%

Revenue from Sports 3.7 4.0 0.7 1.5 5.5 5.9 47% 8%

Revenue excl. Sports 34.0 33.1 33.2 33.5 32.8 32.6 -2% -1%

(bil l ion yen)

Q1 Q2 Q3 Q4 Q1 Q2e YoY QoQ

Reconciliation of operating profit to non-GAAP operating profit

Operating profit (IFRS) 4.0 7.4 3.3 5.1 7.4 7.6 4% 4%

Accounting adjustments related to seasonality, net +0.3 -0.2 -0.2 +0.1 +0.1 Acquisition and restructuring related expenses +2.5 +0.2 +0.2 +0.6 +0.3 Sales and disposition related gains - -1.2 - -2.0 -0.0

Non-GAAP operating profit 6.8 6.1 3.4 3.9 7.8 7.6 24% -2%

Profit (loss) from seasonal sports business -0.9 -1.0 +1.8 +1.1 -1.8 -1.7 - -

Non-GAAP operating profit excl. Sports 5.9 5.1 5.2 4.9 6.0 6.0 17% 0%

FY2016 FY2016

FY2015 FY2016


19



20

*Please consult the Q4 FY2015 Operating Results for more information regarding our introduction of Non-GAAP disclosure

IFRS to Non-GAAP Reconciliation

(bil l ion yen)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Reconciliation of Operating profit to Non-GAAP operating profitOperating profit(IFRS) 7.0 8.0 5.2 4.6 4.0 7.4 3.3 5.1 7.4Accounting adjustments related to seasonality, net +0.3 -0.2 -0.2 +0.1 +0.3 -0.2 -0.2 +0.1 +0.1Acquisition and restructuring related, net - +0.0 +0.1 +0.1 +2.5 +0.2 +0.2 +0.6 +0.3Sales and disposition related gain (loss) - - - - - -1.2 - -2.0 -0.0

Non-GAAP operating profit 7.3 7.8 5.1 4.8 6.8 6.1 3.4 3.9 7.8Profit (loss) from seasonal sports business -0.2 -0.8 +1.6 +0.9 -0.9 -1.0 +1.8 +1.1 -1.8

Non-GAAP operating profit excluding Sports 7.1 6.9 6.7 5.7 5.9 5.1 5.2 4.9 6.0

(bil l ion yen)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Reconciliation of Operating profit to Non-GAAP EBITDAOperating profit(IFRS) 7.0 8.0 5.2 4.6 4.0 7.4 3.3 5.1 7.4Accounting adjustments related to seasonality, net +0.3 -0.2 -0.2 +0.1 +0.3 -0.2 -0.2 +0.1 +0.1Acquisition and restructuring related expenses - +0.0 +0.1 +0.1 +2.5 +0.2 +0.2 +0.6 +0.3Sales and disposition related gains - - - - - -1.2 - -2.0 -0.0Depreciation and amortization +2.5 +2.6 +2.8 +2.9 +3.2 +2.8 +2.7 +2.6 +2.7Retirement of fixed assets (excl. one-time factors) +1.0 +0.3 +0.3 +0.6 +0.4 +0.7 +0.2 +1.3 +0.0

Non-GAAP EBITDA 10.8 10.7 8.2 8.3 10.4 9.7 6.3 7.8 10.5

FY 2014 FY 2015

FY 2014 FY 2015


Consolidated Cash Flow Overview

21

*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 in FY2015. Acquisition of Nintendo’s treasury shares and disposition of our treasury stock were both effective April 2, 2015.

(billion yen)

FY2015FY2015Apr-Jun

FY2016Apr-Jun

Operating cash flow (A) 26.7 7.3 5.8

Profit before tax 20.9 4.5 7.0

Depreciation and amortization 11.3 3.2 2.7

Income tax paid -7.8 -2.4 -3.9

Others 2.3 2.1 -0.0

Investing cash flow (B)* -40.0 -23.9 -2.2

Financing cash flow 20.1 19.5 -4.8

Cash dividends paid -2.6 -2.5 -2.8

Disposition of Treasury stock* 22.2 22.1 0.1

Others 0.6 -0.2 -2.1

FCF ((A)+(B)) -13.3 -16.6 3.6

Cash and cash equivalents (Consolidated) 75.2 71.8 73.7

(Non-consolidated basis) 48.6 46.8 47.0


Game Business Revenue Recognition by Financial Accounting Rules

22

Coin Consumption in Japan by Business Japan Game Business Revenue

Revenue recognition by game business segments in financial accounting • 1st- and 2nd-party browser titles: total coin consumption is recognized as revenue (i.e. gross revenue recognition) • 1st- and 2nd-party native app titles: revenue is recognized in one of two ways: gross revenue recognition, and net revenue recognition in

which the partners’ revenue is deducted from the gross revenue before being recognized. Net revenue recognition is expected to increase mainly among IP titles, but neither gross or net revenue recognition impacts profitability of the business.

• 3rd-party browser titles: net revenue recognition • 3rd-party native app titles: net revenue recognition


23

Summary of Partnership with Nintendo Following Miitomo, titles based on the Fire Emblem and Animal Crossing franchises

are planned to be launched in fall 2016 Game details and launch dates will be announced with consumer-oriented

communications as the top priority Planning to launch approximately five carefully selected titles by the end of fiscal

year ending March 2017

Future Plans

The main objective is to produce multiple hit titles and make the collaborated business profitable on its own

Meaningful contribution from this alliance is expected to start in FY2016 • Miitomo is free to download with optional paid items. Monetization methods

are 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

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 will primarily be covered by Nintendo


Segment Breakdown

24

Segments Businesses

Game Business Japan and international game businesses

E-Commerce Business

Sub-segment names (Major service names in parenthesis) • Travel (DeNA Travel, Shumee-to Club) • Shopping (DeNA Shopping, au Shopping Mall, SEIYU.com) • Auction (Mobaoku) • Processing Settlement (Paygent)

Sports Business Baseball, Running Club, etc.

New Businesses and Others

Sub-segment names (major service names in parenthesis) • IP-generating platform (Manga Box, Everystar, MyAnimeList) • Curation platform (MERY, iemo, Find Travel) • Automotive • Healthcare (MYCODE, KenCom) • Mobile social incubation (SHOWROOM, Mirrativ)


DeNA Co., Ltd.

25

The information and data contained within this presentation and these presentation materials have been determined based on information available as of August 10, 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 August 10, 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.

q1 fy2016 operating results - ir webcasting · • with effective user acquisition and improved...

Documents