KADOKAWA DWANGO Financial Results for the 3rd Quarter Ended December 31, 2017

Transcription

1 0 KADOKAWA DWANGO Financial Results for the 3rd Quarter Ended December 31, 2017 February 8, 2018

2 Contents 1 Results for nine of consolidated fiscal year ending March 31, Topics 9 Reference materials 14

3 2 Results for nine of consolidated fiscal year ending March 31, 2018 Unit: Million yen Nine ended December 31, 2016 Nine ended December 31, 2017 Forecasts for fiscal year ending March 31, 2018 Progress rate 150, , , % 7,388 2,943 5, % Ordinary Profit attributable to owners of parent 7,565 3,455 6, % 5,585 1,705 3, %

4 3 Results for nine of consolidated fiscal year ending March 31, 2018(by segment) Unit: Million yen Nine ended December 31, 2016 Nine ended December 31, 2017 Forecasts for fiscal year ending March 31, 2018 Progress rate Total 150,428 7, ,875 2, ,000 5, % 50.7% Web Services 23,476 2,367 22, ,000 1, % 8.7% Publication 82,579 6,151 82,996 3, ,400 6, % 62.3% Video and Game 32,235 2,671 34,107 1,985 46,500 3, % 53.7% Others 14,447 (770) 14,882 (461) 22,300 (1,200) 66.7% - Eliminations/ Corporate (2,311) (3,030) (2,432) (2,522) (3,200) (4,400) - -

5 4 Web Services Year-on-Year Decreases in Both and Profit (million yen) (million yen) 25,000 23,476 22,320 2,500 2,367 20, % 2,000 15,000 1,500 10,000 1,000 5, % Nine ended December 31, 2016 Nine ended December 31, Nine ended December 31, 2016 Nine ended December 31, 2017 While revenue from Live increased, revenues from Portal and Mobile decreased due to a decline in the number of dues-paying members. decreased due to an increase in investment expenses in the new version ( く ) of Niconico and the new functions, in addition to lower revenue due to the decline in the number of dues-paying members of Portal and Mobile.

6 Publication Year-on-Year Increase in and Decrease in Profit (million yen) (million yen) 90,000 80, % 82,579 82,996 7,000 6,000 6,151 70,000 60,000 5,000 50,000 4, % 3,802 40,000 3,000 30,000 20,000 2,000 10,000 1,000 0 Nine ended Nine ended 0 Nine ended Nine ended December 31, 2016 December 31, 2017 December 31, 2016 December 31, 2017 increased thanks to the strong performance continued in e-books and e-magazines. decreased as a result of a decline in major hit titles and the number of copies sold in books, investment in new businesses in the Publication segment and preparation expenses at the Tokorozawa manufacturing and distribution base, in addition to a reactionary decline in books related to hit movie, Your Name, which was recorded in the previous fiscal year. 5

7 6 Video and Game Year-on-Year Increase in and Decrease in Profit (million yen) (million yen) 40,000 35,000 32, % 34,107 3,000 2,500 2,671 30,000 25,000 2, % 1,985 20,000 1,500 15,000 1,000 10,000 5, Nine ended Nine ended 0 Nine ended Nine ended December 31, 2016 December 31, 2017 December 31, 2016 December 31, 2017 Games contributed to higher revenue because both social games and package games remained strong. The largest factor for the decrease in operating was a reactionary decline in profit from Your Name.

8 Status of Balance Sheet Unit: Million yen As of Dec 31, 2017 Change As of Dec 31, 2017 Change Current assets 167,053 (7,827) Current liabilities 57,286 (3,873) Cash and deposits 94,630 (10,912) Notes and accounts payable - trade 24,219 (1,643) Notes and accounts receivable - trade 41,534 +1,327 Accounts payable - other 5,392 (1,431) Inventories 18,373 +1,544 Advances received 9,016 +1,478 Non-current assets 73,207 +1,139 Provision for sales returns 6,946 (306) Property, plant and equipment 36, Non-current liabilities 72,874 (1,191) Machinery and equipment 1, Long-term loans payable 63,400 (1,541) Construction in progress 1, Total liabilities 130,161 (5,063) Intangible assets 8, Shareholders' equity 104,769 (2,361) Investments and other assets 27, Treasury shares (7,466) (2,577) Investment securities 21, Total net assets 110,100 (1,624) Total assets 240,261 (6,688) Total liabilities and net assets 240,261 (6,688) Cash and deposits declined due to a delay in payments received because December 31 was a bank holiday. Other factors were the payment of accounts payable-other, taxes, summer and winter bonuses, and the acquisition of treasury stock. The equity ratio rose 0.5% from the end of March to 45.0%. Note: Changes are comparisons with the amounts as of March 31,

9 Status of Investment Financial Impact of Investment on Income *1 Capital Investment *2 (million yen) 7,000 6,000 5,000 (million yen) 16,000 14,000 12,000 Amount of capital investment in Tokorozawa Project FY2017 about 9 billion Yen Ref. Upcoming events FY2018 about 8 billion Yen FY2019 about 8 billion Yen FY2020 about 15 billion Yen 4,000 10,000 8,000 3,000 6,000 2,000 4,000 3 Tokorozawa PJ 1,000 2,000 0 Nine ended Plan for 0 3 Tokorozawa PJ Nine ended Plan for December 31, 2017 fiscal year ending December 31, 2017 fiscal year ending March 31, 2018 March 31, 2018 Capital investment in Tokorozawa Project concentrates on Q4. Investment made progress as planned on a consolidated basis. Notes 1. Financial Impact of Investment on Income indicates the progress against the financial impact on the statement for the fiscal year ending March 31, 2018 of 6.3 billion yen stated in the material for the briefing on the full-year results of the fiscal year ended March 31, Capital Investment is the total of purchase of property, plant and equipment and purchase of intangible assets in the consolidated statement of cash flows and the results in Capital investment included the amount of the value of fixed asset which was recorded as assets in FY ended March 31,2017 and cashed out in Nine ended December 31, Tokorozawa Project is the project announced on December 22, 2016, which totals 39.9 billion yen largely for the construction of book manufacturing and distribution base of KADOKAWA. 8

10 Topics 9

11 Future Niconico 10 November 28, 2017 Rollout of new version Niconico ( く ) Dialogue with users December 9, 2017 ~ December 12, 2017 January 25, 2018 Asked for opinions from users about Niconico Live Roundtable discussions on video and live broadcasting services Live Meeting to report improvements in video and live broadcasting services Clarification of coverage and schedule for functional improvements of video and live broadcasting Implementation of new functions of Niconico Implement various new functions to meet strong demand for functional improvements of Niconico while deepening user communication.

12 Future Functional Improvement of Niconico ~Niconico Douga ~ 11 Functional improvements up to January 2018 Enabled video posting and viewing in full HD image quality (1080p) by general members in PCversion Niconico Douga. (January 18, 2018) Future functional improvements ~Planned measures by the end of April 2018~ Niconico Douga will be able to be viewed without a login. *Only for PC and smartphone browsers at the time of commencing the service, and will be compatible with ios/android app at a later date. Automatic switching to the most suitable image quality of video in tune with the line condition of the user Video posting and viewing in full HD image quality (1080p) will become possible in channel video. General members will be able to play video from the desired moment (video seeking). Length of video in full HD image quality (1080p) will be extended to 30 minutes. *Currently up to 15 minutes Editing of video explanatory text at the time of posting will be easier. SWF-format video will be able to be viewed in MP4 format. Waiting time will be eliminated in music app NicoBox. ~Planned measures by the end of 2018~ Implementation of the series video function Review of ranking/categories

13 Future Functional Improvement of Niconico~Niconico Live~ 12 Functional improvements up to January 2018 HD image quality (720p) live broadcasting by users has become available only for 100 slots, in addition to the commencement of HTML5 version and the addition of light traffic mode. (January 23, 2018) Future functional improvements ~Planned measures by the end of April 2018~ Increase in the number of distribution slots for HD image quality (720p) live broadcasting by users Increase in the number of upper limit on follows in Niconico Community Distribution in high image quality, the reduction of time lags, and the automatic image quality selection as a result of transition to a new distribution server for live broadcasting in Niconico Channels Change of the program thumbnail to the screen shot of distribution image Addition of the automatic extension function of distribution slots Response to a new distribution server for video quotation broadcasting ~Planned measures by the end of 2018 ~ The number of distribution slots for HD image quality (720p) live broadcasting by users will become limitless. Improvement of image quality of videos played in time shift mode Participation in questionnaire from Android app

14 13 Future New Functions of Niconico New functions with a quaternity new interface of video + live broadcasting + interactivity + image composition <Interactive functions> <Real time image composition production> Nico Wari Game Niconico Q Opening/Ending Take a break Compulsory participation game and ranking UGC questionnaire site where questionnaires and quizzes can be prepared and shared Decorate video by real time image composition. Provide video for filling in time without tiring viewers. 8 Puzzle Niconico Shin Shijo Quote Distributed images become a puzzle which will be completed in cooperation with viewers. UGC items and playable functions become able to be linked. Live distribution become possible by inserting video and live broadcasting. Multi camera Expand the possibility of distribution style using smartphone as a second camera. <Video excavation/ Creator support> Niconi Koukoku Advance existing Creator encouragement program. Services covered by Niconi Koukoku Niconico Douga/Niconico Live/ Niconico Seiga (illustration, manga)/niconi Rittai RPG Atsumaru/Niconi Commons Cruise Increase opportunities to meet with favorite video and live broadcasting Badge Special benefit to those who have contributed to the discovery of videos and distributors

15 Reference materials 14

16 Results for three ended December 31, Unit: Million yen ended ended December 31, 2016 December 31, 2017 Change Change in % 50,633 50,402 (231) (0.5%) Ordinary Profit (loss) attributable to owners of parent 2, (2,884) (97.2%) 3, (3,138) (88.3%) 2,565 (43) (2,609) -

17 16 Results for three ended December 31, 2017(by segment) Unit: Million yen ended December 31, 2016 ended December 31, 2017 Change Change in % Total 50,633 2,969 50, (231) (2,884) (0.5%) (97.2%) Web Services 7, ,914 (254) (474) (877) (6.4%) ー Publication 28,835 2,266 28,597 1,402 (238) (864) (0.8%) (38.2%) Video and Game 10,680 1,359 11, (1,263) +3.3% (92.9%) Others 4,522 (183) 4,742 (249) +220 (65) +4.9% ー Eliminations/ Corporate (793) (1,096) (887) (909) (94) +186 ーー

18 Web Services Unit: Million yen ended Jun. 30, 2016 ended Sep. 30, 2016 ended Dec. 31, 2016 ended Mar. 31, 2017 ended Jun. 30, 2017 ended Sep. 30, 2017 ended Dec. 31, 2017 Comparison YoY QoQ YoY QoQ 7,917 8,171 7,388 7,798 7,608 7,797 6,914 expenses (loss) 7,468 6,875 6,765 7,350 7,681 7,331 7, , (72) 465 (254) Portal Live Mobile (turned (deficit) to deficit) (deficit) (turned to deficit) +5% or more from 0% to +5% from -5% to 0% -5% or less Note: YoY: Comparison between the 3rd quarter of the fiscal year ending March 31, 2018 and the 3rd quarter of the fiscal year ended March 31, 2017 QoQ: Comparison between the 3rd and the 2nd quarter of the fiscal year ending March 31, 2018 decreased year on year due to a decline in the number of dues-paying members of Portal and Mobile and declined from the previous quarter due to the seasonality of Live. Profit declined year on year due to investment expenses in the new version ( く ) of Niconico and the new functions, in addition to lower revenue, and profit decreased from the previous quarter due to the additional factor of seasonality of Live. Note: Comments on results are based on quarterly comparisons. 17

19 Business results in the Web Services segment (reference) Niconico users data *as of Dec. 31, 2017 Age *as of Dec. 31, 2017 Issued IDs Premium members 70.32million 2.14million Gender 68% 32% Niconico usage data *average of Oct.-Dec., 2017 MAU(million) % 38.9% 25.2% 16.2% 3.8% 5.4% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 10's 20's 30's 40's 50's Others (average of Jul.-Sep., 2017) (9.10) DAU(million) 2.98 (average of Jul.-Sep., 2017) (3.09) Niconico Channel users data *average of Oct.-Dec., 2017 Number of channels 8,396 (thousand) Changes in the number of dues-paying members of niconico channel Number of channels with monthly fee Dues-paying members (thousand) 1,

20 Publication Unit: Million yen ended Jun. 30, 2016 ended Sep. 30, 2016 ended Dec. 31, 2016 ended Mar. 31, 2017 ended Jun. 30, 2017 ended Sep. 30, 2017 ended Dec. 31, 2017 Comparison 25,952 27,791 28,835 30,433 27,013 27,386 28,597 YoY QoQ YoY QoQ expenses 23,794 26,064 26,568 28,242 25,918 26,080 27,195 Books e-books e-magazines (turned (turned to deficit) to deficit) 2,157 1,726 2,266 2,191 1,094 1,305 1,402 Magazines (turned positive) Note: Comments on results are based on quarterly comparisons. +5% or more from 0% to +5% from -5% to 0% -5% or less Note: YoY: Comparison between the 3rd quarter of the fiscal year ending March 31, 2018 and the 3rd quarter of the fiscal year ended March 31, 2017 QoQ: Comparison between the 3rd and the 2nd quarter of the fiscal year ending March 31, 2018 was on par with the level in the previous year when there was the effect of Your Name, thanks to the strong performance of e-books and e-magazines, and increased from the previous quarter due to the additional factor of seasonality of magazines. decreased year on year as a result of a decline in major hit titles and the number of copies sold in books and preparation expenses at the manufacturing and distribution base, but increased from the previous quarter due to the seasonality of magazines and the strong performance of e-books and e-magazines. 19

21 Business results in the Publication segment (reference) 20 (Million yen) 25,000 of books and magazines (Quarterly) of e-books/mags (Quarterly) Accumulated e-book titles (Right axis) ( 点 ) (Million yen) 25,000 Sales of Books & mags. Pocket editions Graphic novels Comics Regular books. Shinsho Magazines Return rate (right axis, excl. mags) 40% 45,000 35% 20,000 40,000 35,000 20,000 30% 15,000 30,000 15,000 25% 25,000 20% 10,000 20,000 10,000 15% 15,000 10% 5,000 10,000 5,000 5,000 5% 0 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 0 0 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 0% CY2015 CY2016 CY2017 CY2015 CY2016 CY2017

22 Video and Game Unit: Million yen ended Jun. 30, 2016 ended Sep. 30, 2016 ended Dec. 31, 2016 ended Mar. 31, 2017 ended Jun. 30, 2017 ended Sep. 30, 2017 ended Dec. 31, 2017 Comparison YoY QoQ YoY QoQ 10,229 11,325 10,680 12,166 10,735 12,336 11,035 Video (deficit) (deficit) expenses 9,176 11,066 9,320 11,526 10,092 11,089 10,939 Game 1, , , % or more from 0% to +5% from -5% to 0% -5% or less Note: YoY: Comparison between the 3rd quarter of the fiscal year ending March 31, 2018 and the 3rd quarter of the fiscal year ended March 31, 2017 QoQ: Comparison between the 3rd and the 2nd quarter of the fiscal year ending March 31, 2018 In Video, revenue declined year on year and quarter on quarter mainly due to a reactionary decline in sales of licenses and packages for overseas. In Game, revenue increased year on year and quarter on quarter due to the hit of ARK: Survival Evolved. Video recorded an operating loss due to the deterioration of sales mix, in addition to lower revenue. In Game, while revenue increased year on year and quarter on quarter, profit declined from the previous quarter due to the effect of development expenses. Note: Comments on results are based on quarterly comparisons. 21

23 Summary of consolidated quarterly statements of 22 Unit: Million yen ended Jun. 30, 2016 ended Sep. 30, 2016 ended Dec. 31, 2016 ended Mar. 31, 2017 ended Jun. 30, 2017 ended Sep. 30, 2017 ended Dec. 31, ,014 50,780 50,633 55,289 49,941 51,531 50,402 Cost of revenue 34,178 36,412 35,090 39,994 36,462 37,018 37,732 Gross margin 14,836 14,367 15,542 15,294 13,479 14,513 12,669 SG&A 12,103 12,680 12,573 14,264 12,688 12,444 12,585 2,732 1,687 2,969 1, , Ordinary (loss) 2,037 1,974 3,553 (158) 640 2, Profit (Loss) attributable to owners of parent 1,059 1,961 2, (23) 1,772 (43)

24 Summary of cost of revenue / SG&A 23 Unit: Million yen ended Jun. 30, 2016 ended Sep. 30, 2016 ended Dec. 31, 2016 ended Mar. 31, 2017 ended Jun. 30, 2017 ended Sep. 30, 2017 ended Dec. 31, 2017 Cost of revenue 34,178 36,412 35,090 39,994 36,462 37,018 37,732 Major accounts: Direct costs 15,709 18,970 18,105 18,994 17,373 17,869 19,475 Labor costs 5,578 5,809 5,651 6,058 5,794 5,972 5,413 Commission paid 1,368 1,174 1,349 1,429 2,071 2,029 2,191 Royalties Outsourcing costs 2,656 2,433 2,607 2,806 2,956 2,972 2,907 Communication costs SG&A 12,103 12,680 12,573 14,264 12,688 12,444 12,585 Major accounts: Promotion costs 2,658 2,895 2,913 3,248 2,690 2,520 2,879 Labor costs 4,446 4,766 4,603 5,448 4,755 4,947 4,799 Commission paid 1,150 1,268 1,

25 Summary of consolidated balance sheet and cash flow statement 24 Unit: Million yen As of March 31, 2017 % As of Dec 31, 2017 % Nine ended Dec 31, 2017 Current assets 174, % 167, % Non-current assets 72, % 73, % Tangible assets 35, % 36, % Cash flows from operating activities (1,355) Cash flows from investing activities (8,035) Cash flows from financing activities (5,793) Intangible assets 8, % 8, % Investment and other assets 27, % 27, % Total assets 246, % 240, % Cash and cash equivalents at the end of period 75,952 Current liabilities 61, % 57, % Non-current liabilities 74, % 72, % Shareholders' equity 107, % 104, % Total equity 111, % 110, % Total liabilities and equity 246, % 240, %

26 25 Forward-looking statements such as results forecasts contained in this material are judgments of the Group based on currently available information. The forward-looking statements include various uncertainties, and actual results may differ from these values. Please refrain from making investment judgments, etc. by relying entirely on these values.