KADOKAWA DWANGO CORPORATION Financial Results for the Fiscal Year Ended March 31, 2016

Transcription

1 KADOKAWA DWANGO CORPORATION Financial Results for the Fiscal Year March 31,

2 Contents 1 1. Review of the Fiscal Year March 31, Policies for the Fiscal Year Ending March 31, Medium-Term Visions Reference materials Full-year results data for the Fiscal Year March 31, 2016

3 1. Review of the Fiscal Year March 31, 2016 (1) Full-year results for the fiscal year ended March 31, Forecasts for the Fiscal Year March 31, 2016 (April 2015 March 2016) Results for the Fiscal Year March 31, 2016 (April 2015 March 2016) Progress rate Revenue 200, , % Operating income 7,000 9, % Ordinary income 6,800 10, % Profit attributable to owners of parent 4,000 6, % Revenue achieved the full-year forecast. Operating income, Ordinary income and Profit attributable to owners of parent all ended up exceeding the full-year forecasts by a large margin.

4 3 1. Review of the Fiscal Year March 31, 2016 (2) Full-Year Results by Segment Forecasts for the Fiscal Year March 31, 2016 (April 2015 March 2016) Results for the Fiscal Year March 31, 2016 (April 2015 March 2016) Revenue Operating Income Revenue Operating Income Revenue Difference Full-year Results Forecasts (April 2015 March 2016) Operating Income Total 200,500 7, ,945 9, ,124 Books and IP Business 70,000 4,900 77,848 7,429 7,848 2,529 Information Media Business 34,200 (1,200) 28,080 (1,650) (6,119) (450) Video and IP Business 28,500 1,300 28,817 1, Portal Business 21,000 2,100 20,117 2,122 (882) 22 Live Business 3,500 (1,000) 4,464 (790) Mobile Business 7,900 2,600 8,619 3, Game Business 18,200 2,500 15,599 2,268 (2,600) (231) Others 20, ,337 (469) 837 (1,269) Eliminations/Corporate (3,300) (5,000) (3,940) (4,437) (640) 562 Operating income in the Books and IP Business exceeded the full-year forecast by a large margin as the business was strong, and the Video and IP Business and the Portal Business remained firm. However, operating income in Others fell short of the full-year forecast.

5 1. Review of the Fiscal Year March 31, 2016 (3) Operating Income: Difference between full-year forecasts and actual results 4 10,000 8,000 Books and IP Business +2,529 Information Media Business (450) Video and IP Business +46 Portal Business +22 Live Business +209 Mobile Business +705 Game Business (231) Others (1,269) Eliminations /Corporate +562 Total +2,124 6,000 4,000 7,000 9,124 2,000 0 Forecasts for the Fiscal Year March 31, 2016 ((Announced on May 14, 2015) Results for the Fiscal Year March 31, 2016

6 5 1. Review of the Fiscal Year March 31, 2016 (4) Trends in Half Results by Segment Results for the Fiscal Year March 31, 2015 (October 2014 March 2015) Results for First Half of Fiscal Year March 31, 2016 (April 2015 September 2015) Results for Second Half of the Fiscal Year March 31, 2016 (October 2015 March 2016) Revenue Operating Income Revenue Operating Income Revenue Operating Income Total 100,566 1,391 93,926 3, ,019 5,619 Books and IP Business 38,343 3,038 35,437 1,935 42,411 5,493 Information Media Business 15,953 (1,164) 13,257 (1,068) 14,822 (581) Video and IP Business 15, , , Portal Business 9,565 1,377 9,861 1,248 10, Live Business 1,191 (459) 2,636 (219) 1,827 (570) Mobile Business 4,966 1,756 4,526 1,829 4,093 1,475 Game Business 7,169 (1,015) 6, ,285 1,460 Others 9,620 (326) 10, ,479 (633) Eliminations/Corporate (2,109) (2,803) (1,864) (1,836) (2,075) (2,601)

7 6 1. Review of the Fiscal Year March 31, 2016 (5) Main Points 1. In the Books and IP Business, the e-books business grew stronger than expected and contributed to income. (Operating income: up 2.8 billion yen from the full-year forecast) 2. In the paper books business, operating income was slightly below the full-year forecast. (Operating income: down 300 million yen) Increase in sales by media mix and improvement in the return ratio made progress as expected. Bad debts written off of 300 million yen were generated. The result : KADOKAWA CORPORATION s business expend to digital business, right business, and e-commerce business at an accelerated rate by integration. 3. The Portal Business and the Video and IP Business continued to be firm. 4. The trading card game business in Others did not catch on and became a reason for the loss. 5. The Game Business just missed achieving the budget, but increased its income significantly from the previous fiscal year.

8 7 2. Policies for the Fiscal Year Ending March 31, 2017 (1) Quantitative targets Results for the Fiscal Year March 31, 2016 (April 2015 March 2016) Forecasts for the Fiscal Year Ending March 31, 2017 (April 2016 March 2017) Revenue 200, ,000 Operating Income 9,124 3,100 Ordinary Income 10,189 3,300 Profit attributable to owners of parent 6,845 1,750

9 8 2. Policies for the Fiscal Year Ending March 31, 2017 (2) Basic Policies 1. A stable business base has been put in place thanks to the recovery of profitability of BOOK IP Business. 2.Operating income is expected to decline in existing businesses. 3.We need investment to start new services and to change business structure of the existing businesses.

10 9 2. Policies for the Fiscal Year Ending March 31, 2017 (3) Stance on Operating income Unit: Billion yen 10,000 9,000 9 Fiscal Year March 31, 2016 Operating income 9.1 billion yen 5,000 4,000 Total amount of investments 5 4 Fiscal Year Ending March 31, 2017 Total amount of new investments 4.6 billion yen 8, , , , , ,000 3 Fiscal Year Ending March 31, 2017 Operating income expected to decline in existing businesses 2.6 billion yen 3, , , Fiscal Year March 31, 2016 Total amount of new investments 1.2 billion yen Fiscal Year Ending March 31, 2017 Expected operating income 3.1 billion yen 2, ,000 1 Fiscal Year Ending March 31, 2017 The amount of new investments expected to increase 3.3 billion yen 0

11 10 2. Policies for the Fiscal Year Ending March 31, 2017 (4) Breakdown of investment in new services New services for smartphones Game information portal Learning services on the Internet Inbound business Renewal of niconico Higher picture quality Infrastructure building Transformation of the revenue model for the magazine business Enhancement of UGC-type posting site Promote sustainable development in the future and the enhancement of corporate value in the medium to long term.

12 11 2. Policies for the Fiscal Year Ending March 31, 2017 (5) Change of segments In the Fiscal Year Ending March 31, 2017, the reported segments will be changed to Web Services, Publication and Video and Game, and operations that do not belong to these segments will be categorized as Others. Old segments Before change Results for the Fiscal Year March 31, 2016 (April 2015 March 2016) Operating Revenue Income Books and IP Business 77,848 7,429 Information Media Business 28,080 (1,650) Video and IP Business 28,817 1,346 Portal Business 20,117 2,122 Live Business 4,464 (790) Mobile Business 8,619 3,305 Game Business 15,599 2,268 Others 21,337 (469) New segments Web Services After change *Results for the Fiscal Year March 31, 2016 (April 2015 March 2016) Operating Revenue Income 33,136 4,638 Publication 105,200 6,314 Video and Game 44,284 3,614 Others 21,337 (1,011) Eliminations /Corporate Old segments that are included in new segments Portal Business, Live Business Mobile Business Books and IP Business Information Media Business Video and IP Business Game Business Others Some businesses in Information Media (3,013) (4,431) Eliminations/Corporate Total 200,945 9,124 Eliminations /Corporate (3,940) (4,437) Total 200,945 9,124 *Results for the Fiscal Year March 31, 2016 that were changed from old segments to new segments are estimates as of the announcement of this material.

13 12 2. Policies for the Fiscal Year Ending March 31, 2017 (6) Budget by Segment Results for the Fiscal Year March 31, 2016 (April 2015 March 2016) Forecasts for the Fiscal Year Ending March 31, 2017 (April 2016 March 2017) New segments Revenue Operating Income Revenue Operating Income Web Services 33,136 4,638 32,000 2,700 Publication 105,200 6, ,000 4,400 Video and Game 44,284 3,614 44,000 2,500 Others 21,337 (1,011) 20,000 (1,300) Eliminations /Corporate (3,013) (4,431) (3,000) (5,200) Total 200,945 9, ,000 3,100 *Results for the Fiscal Year March 31, 2016 that were changed from old segments to new segments are estimates as of the announcement of this material.

14 13 2. Policies for the Fiscal Year Ending March 31, 2017 (7) Focused businesses in New Segments Web Services Launch of new services for smartphones Renewal of niconico Strengthening of the web response in publication Publication Video and Game Promotion of the fundamental structural reforms in the magazine business Active overseas offering of Cool Japan content Promotion and active development of video production in cooperation with overseas companies Securing of revenues through stable development and sales of hot-selling game titles Advancement into the inbound business Others New business Strengthening of planning, production and promotion of Internet learning services Launch of new services for game community users (Game information portal)

15 14 2. Policies for the Fiscal Year Ending March 31, 2017 (8) Focused Business On April 1, 2016, N High School opened New services for smartphones Broadcasting system which realize next generation interactive services corresponding to education The large reinforcement of a line server

16 2. Policies for the Fiscal Year Ending March 31, 2017 (8) Focused Business Strengthening of the web response in publication Kakuyomu, a novel posting site ComicWalker, a web comic service Launched in February 2016 Promote the production of web novels and enclosure of the talent on the Internet. Launched in March 2014 More than 700 KADOKAWA comic works have been posted. A new promotion function has been enhanced. Enhancement of the creation capability of novels and comic works and the Internet promotion capability 15

17 2. Policies for the Fiscal Year Ending March 31, 2017 (8) Focused Business Deliver Cool Japan content to the world by expanding and enhancing overseas bases Establish a joint venture with Hachette Book Group, a leading publisher in the United States In November 2015, acquired shares in Gala Unggul Resources SDN.BHD., the core company of Art Square Group, a leading publisher of comics and children s books, etc. in Malaysia. Develop as a base for inbound business in Guangzhou, China, Hong Kong and Taiwan Strategic alliance with Crunchyroll, a leading anime delivering company Establish a base in Malaysia Expand the operation of the content business into Southeast Asia and the Islamic cultural area. Advance into the United States, a growing comic market Maximize the value of content by connecting the media mix effect with anime delivery and the offering of goods, in addition to translation and publication, in English-speaking countries centered on the United States. 16

18 17 2. Policies for the Fiscal Year Ending March 31, 2017 (8) Focused Business KADOKAWA Taiwan KADOKAWA HongKong Guangzhou Tianwen KADOKAWA Animation & Comics Sun Wah Kadokawa [Cinema complex in China] KADOKAWA GEMPAK STARZ (Malaysia) Yen Press (North America) KADOKAWA Contents Academy (School operation in Taiwan and Thailand) Overseas bases Our existing strengths Developing IP and media in overseas markets [Stock content-related] Comic, light novels, regular books, anime, movies, goods [Media-related] Taipei Walker, Japan Walker, Hong Kong Walker, Nihon Jiyuko, Nihon Yuseikatsu, Indonesian version of Japan Walker [Digital-related] BOOK WALKER, Walkerland SNS sites <Overseas/outbound> Create fans by making excellent use of the Company s own IP and media at overseas bases Increase fans of the Company s content Create fans of Cool Japan Potential markets (whole world) Visiting Japan Year 2015: 19.4 million people Year 2020: 40.0 million people (Japanese government s target) <Japan/inbound> Take in consumption when foreigners visit Japan in various ways Information sites SIM cards Experience to be exposed to content Sightseeing Respond to inbound demand Create additional new fans in potential markets by spreading foreigners who have experienced visits to Japan

19 3. Medium-term Vision 18 The time for achieving the Operating income target of 18 billion yen to 20 billion yen in the Medium-term Vision announced on May 14, 2015 is expected to be moved back one year from the Fiscal Year Ending March 31, 2018 to the Fiscal Year Ending March 31, 2019 in light of changes in the operating environment surrounding the Group.

20 19 Reference materials Full-year results data for the Fiscal Year March 31, 2016

21 Summary 20 Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Results for the Fiscal Year Mar. 31, 2016 Revenue 46,906 47,020 52,112 54, ,945 Cost of Revenue 33,107 32,892 36,728 38, ,144 Gross Margin 13,799 14,127 15,383 16,490 59,801 SG&A 12,653 11,768 12,598 13,656 50,676 Operating Income 1,145 2,359 2,785 2,834 9,124 Ordinary Income 1,648 2,554 3,410 2,576 10,189 Profit Attributable to Owners of Parent (220) 2,134 3,410 1,521 6,845 Results exceeded planned values because income has been steadily accumulated after the second quarter.

22 Summary (by Segment) 21 Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Results for the Fiscal Year Mar. 31, 2016 Revenue Operating Income Operating Revenue Income Revenue Operating Income Revenue Operating Income Revenue Operating Income Total 46,906 1,145 47,020 2,359 52,112 2,785 54,906 2, ,945 9,124 Books and IP Business 17, ,921 1,647 21,114 2,975 21,297 2,518 77,848 7,429 Information Media Business 6,491 (615) 6,766 (453) 7,614 (96) 7,208 (485) 28,080 (1,650) Video and IP Business 5, , ,003 (35) 8, ,817 1,346 Portal Business 4, , , , ,117 2,122 Live Business 1,329 (271) 1, (530) 1,245 (40) 4,464 (790) Mobile Business 2, , , , ,619 3,305 Game Business 3, , , ,577 1,302 15,599 2,268 Others 6, , ,963 (195) 4,515 (438) 21,337 (469) Eliminations/Corporate (1,090) (755) (774) (1,080) (1,144) (1,041) (931) (1,559) (3,940) (4,437)

23 22 Cost of Revenue / SG&A Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Results for the Fiscal Year Mar. 31, 2016 Cost of Revenue 33,107 32,892 36,728 38, ,144 Major Accounts: Direct Costs 15,881 16,770 17,315 17,626 67,593 Labor Costs 5,232 5,273 5,239 5,532 21,278 Commission Paid 1,352 1,250 1,298 1,192 5,092 Royalties ,423 Outsourcing Costs 2,525 2,370 2,536 3,211 10,645 Communication Costs ,261 Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Results for the Fiscal Year Mar. 31, 2016 SG&A 12,653 11,768 12,598 13,656 50,676 Major Accounts: Promotion Costs 2,146 3,590 3,488 3,605 12,830 Labor Costs 4,202 4,116 4,255 4,538 17,112 Commission Paid 1,281 1,560 1,266 1,815 5,923

24 Segment Information 23 Results for the Fiscal Year March 31, 2016 Books and IP Information Media Video and IP Portal Live Mobile Game Others Eliminations /Corporate Total Revenue 77,848 28,080 28,817 20,117 4,464 8,619 15,599 21,337 (3,940) 200,945 Cost of Revenue 51,691 23,291 22,377 12,147 4,475 3,191 10,397 16,101 (2,530) 141,144 percentage 66.4% 82.9% 77.7% 60.4% 100.2% 37.0% 66.7% 75.5% % Gross Margin 26,157 4,788 6,439 7,970 (10) 5,428 5,201 5,236 (1,409) 59,801 percentage 33.6% 17.1% 22.3% 39.6% % 33.3% 24.5% % SG&A 18,727 6,438 5,093 5, ,122 2,932 5,706 3,027 50,676 percentage 24.1% 22.9% 17.7% 29.1% 17.5% 24.6% 18.8% 26.7% % Operating Income 7,429 (1,650) 1,346 2,122 (790) 3,305 2,268 (469) (4,437) 9,124 percentage 9.5% - 4.7% 10.5% % 14.5% %

25 24 Results for Fiscal Year March 31, 2016 Forecasts for the Fiscal Year March 31, 2016 (April 2015 March 2016) Results for the Fiscal Year March 31, 2016 (April 2015 March 2016) Progress rate Revenue 200, , % Operating income 7,000 9, % Ordinary income 6,800 10, % Profit attributable to owners of parent 4,000 6, % Revenue achieved the full-year forecast. Operating income, Ordinary income and Profit attributable to owners of parent all ended up exceeding the full-year forecasts by a large margin.

26 Full-year Results by Segment 25 Forecasts for the Fiscal Year March 31, 2016 (April 2015 March 2016) Results for the Fiscal Year March 31, 2016 (April 2015 March 2016) Revenue Operating Income Revenue Operating Income Total 200,500 7, ,945 9,124 Books and IP Business 70,000 4,900 77,848 7,429 Information Media Business 34,200 (1,200) 28,080 (1,650) Video and IP Business 28,500 1,300 28,817 1,346 Portal Business 21,000 2,100 20,117 2,122 Live Business 3,500 (1,000) 4,464 (790) Mobile Business 7,900 2,600 8,619 3,305 Game Business 18,200 2,500 15,599 2,268 Others 20, ,337 (469) Eliminations/Corporate (3,300) (5,000) (3,940) (4,437) Operating income in the Books and IP Business exceeded the full-year forecast by a large margin as the business was strong, and the Video and IP Business and the Portal Business remained firm. However, operating income in Others fell short of the full-year forecast.

27 Books and IP Business 26 e-books Regular Bunko Light Novels Comics Regular Books, Shinsho,etc Others Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Mar. 31, ,000 15,000 Total 17,515 3,250 Total 17,921 2,901 Total 21,114 Total 21,297 3,409 3,457 4,679 4,842 Total 18,924 2,471 Revenue 17,515 17,921 21,114 21,297 18,924 Cost of Revenue Gross Margin 12,000 12,361 13,131 14,198 12,116 5,515 5,560 7,983 7,098 6,808 SG&A 5,227 3,912 5,008 4,579 5,475 10,000 5,000 4,336 4,736 3,400 2,858 2,265 1,665 1,763 1,366 3,737 2,109 1,826 4,310 2,181 1,607 5,801 3,994 2,397 1,412 Operating Income 287 1,647 2,975 2,518 1, ,352 4,897 3,240 3,650 Months Months Months Three Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Jun.30, 2015 Sep.30, 2015 Dec.31, 2015 Dec. 31, ,848 Mar. 31, 2015 Dec. 31, 2014 Revenue: In addition to the effect of media mix and the creation of hit titles, e-books that continue to see the market expanding achieved significantly increased revenue by maximizing the campaign effect. Operating income: The profitability of publication recovered due to the effect of structural reforms and improvements in the return rate. In addition, income also increased significantly in e-books due to higher revenue.

28 27 Trends in quarterly revenue of e-books 6,000 Quarterly Revenue Accumulated e-book Titles (The number of titles) 45,000 5,000 40,000 35,000 4,000 30,000 3,000 25,000 20,000 2,000 15,000 1,000 10,000 5, /30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 CY2012 CY2013 CY2014 CY2015 CY CY2012 CY2013 CY2014 CY2015 CY2016 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 Quarterly Revenue ,129 1,692 1,429 1,865 2,755 2,848 3,240 3,650 5,352 4,897 Accumulated e-book Titles 7,259 8,280 10,233 12,089 14,516 16,055 18,751 22,074 24,543 27,467 30,481 33,083 34,642 36,141 37,874 39,580 *Revenue (quarterly) was the results for KADOKAWA CORPORATION before September 2014 and for KADOKAWA DWANGO CORPORATION after October 2014.

29 Information Media Business 28 Magazines Magazines Advertising Custom Magazines Internet Advertising Others Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Mar. 31, 2015 Revenue 6,491 6,766 7,614 7,208 7,930 Cost of Revenue 5,488 5,689 6,221 5,892 6,662 9,000 8,000 7,000 6,000 5,000 4,000 Total 6,491 1, Total 6,766 1, ,571 1,700 Total 7,614 1, ,715 Total 7,208 1, ,647 Total 7, ,219 1,112 Gross Margin 1,003 1,077 1,392 1,315 1,268 3,000 2, SG&A 1,618 1,530 1,488 1,801 1,995 1,000 2,559 2,465 2,780 2,377 3,039 Operating Income (615) (453) (96) (485) (726) 0 Three MonthsThree MonthsThree Three Months Months Three Three Months Months Jun.30, Jun. 30, Sep.30, Sep. 30, Dec.31, Dec. 31, Mar. Dec. 31, 31, Three Three Months Months Mar. Dec. 31, 31, Revenue: Revenue declined significantly for magazines and mooks (magazine style books), and advertising, reflecting the shrinking market. However, web advertising revenue increased due to the digital shift. Operating income: A decline in operating income was larger than planned due to a significant decline in revenue and the stagnation of partwork projects.

30 Trends in the return rate of books and magazines 29 Return Rate Regular Bunko Light Novels Comics Regular Books, Magazines 60% 50% 40% 30% 20% 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 CY2013 CY2014 CY2015 CY2016 KADOKAWA DWANGO Industry Bench mark Return Rate of Books FY % 37.5% FY % 37.6% FY % 37.5% FY % 36.9% Return Rate of Magazines FY % 37.9% FY % 39.6% FY % 40.2% FY % 41.8% *The industry benchmark figures are from A Month Report of Publications and Annual Report on the Publication Market from the All Japan Magazine and Book Publisher's and Editor's Association and the Research Institute for Publications. The data on FY2015 are for the period from Apr 2015 to March Regular Bunko Light Novels Comics Regular Books, Shinsho, etc. Magazines CY2013 CY2014 CY2015 CY2016 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 Revenue 2,986 1,355 1,800 1,651 1,926 1,128 1,956 1,412 1,763 1,366 1,826 1,607 Return Rate 30.9% 56.6% 48.3% 44.7% 41.0% 55.5% 41.5% 43.8% 42.7% 43.9% 37.3% 41.9% Revenue 2,980 3,337 2,639 3,406 2,992 2,029 2,386 2,397 1,665 2,265 2,109 2,181 Return Rate 35.5% 30.4% 40.1% 29.8% 35.2% 44.3% 37.6% 33.2% 43.8% 34.7% 36.7% 35.8% Revenue 3,518 3,948 4,106 4,870 3,010 3,828 4,418 3,994 2,858 3,400 3,737 4,310 Return Rate 35.8% 30.3% 28.0% 22.5% 36.4% 29.7% 25.2% 26.2% 29.9% 31.2% 31.6% 26.6% Revenue 5,280 5,380 6,685 6,411 5,071 5,732 6,121 5,801 4,736 4,336 4,679 4,842 Return Rate 39.8% 36.8% 32.5% 32.7% 41.1% 34.3% 34.3% 34.9% 38.4% 38.9% 33.9% 29.0% Revenue 3,408 3,439 3,974 3,380 3,051 3,054 3,411 3,039 2,559 2,465 2,780 2,377 Return Rate 36.2% 34.8% 30.9% 32.6% 36.9% 35.5% 30.6% 31.1% 32.5% 34.2% 32.4% 31.6%

31 Video and IP Business 30 Packaged Products Movie Production and Distribution Others Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Mar. 31, ,000 9,000 8,000 Total 7,104 Total 7,003 Total 8,915 Total 7,627 Revenue 5,794 7,104 7,003 8,915 7,627 7,000 6,000 Total 5,794 3,948 3,026 Cost of Revenue 4,386 5,468 5,813 6,709 6,197 5,000 4,000 2,741 3,957 3,622 1, Gross Margin 1,408 1,635 1,189 2,205 1,429 3, SG&A 1,148 1,252 1,225 1,466 1,259 2,000 1,000 2,603 2,668 2,903 3,854 3,803 Operating Income (35) Three Three Months MonthsThree MonthsThree Three Months Months Three Three Months Months Jun. Jun.30, 30, Sep.30, Sep. 30, Dec.31, Dec. 31, Mar. Dec. 31, 31, Three Months Mar. Dec. 31, 31, Revenue: In packed products, anime works such as Kantai Korekushon Kan Kore and Overlord contributed to revenue. Operating income: Anime copyright revenue overseas increased, contributing to income.

32 Portal Business Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Mar. 31, 2015 Revenue 4,822 5,039 5,176 5,079 4,754 6,000 5,000 4,000 Premium membership Advertising Points and Others Total 4, Total Total Total 5,176 5,079 5,039 Total 4, Cost of Revenue 2,770 2,906 2,981 3,489 2,761 3,000 Gross Margin 2,052 2,132 2,195 1,589 1,992 2,000 3,811 3,895 3,944 3,989 3,761 SG&A 1,442 1,494 1,447 1,464 1,346 1,000 Operating Income Revenue: The number of premium members increased annually as planned, to 2.56 million at the end of the Fiscal Year. An increase in the number of members of niconico Channel also helped points and other revenues grow. Operating income: Income was secured as planned due to cost control, despite an increase in SG&A expenses associated with higher personnel expenses. 0 Months Three Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Jun.30, 2015 Sep.30, 2015 Dec.31, 2015 Dec. 31, 2015 Mar. 31, 2015 Dec. 31,

33 32 niconico Users Data and Profile niconico live programs niconico Users Data *as of Mar. 31, 2016 Premium Members 2.56million Issued IDs 55.41million Gender 66% 34% niconico Usage Data *average of Jan-Mar, 2016 MAU (million) 8.79 (average of Oct-Dec, 2015) 8.71 Sojourn time per visitor per day (minute) (average of Oct-Dec, 2015) (108.2) Age *as of Mar. 31, % 39.9% 23.4% 14.6% 3.8% 4.8% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 10's 20's 30's 40's 50's Others

34 Live Business 33 1,400 Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Mar. 31, ,200 1,000 Revenue 1,329 1, , Cost of Revenue 1,383 1, , ,329 1,307 1,245 Gross Margin (54) 232 (359) 170 (15) SG&A Operating Income (271) 51 (530) (40) (189) 0 Three Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Jun.30, 2015 Sep.30, 2015 Dec.31, 2015 Dec. 31, 2015 Mar. 31, 2015 Dec. 31, 2014 Revenue: Events such as niconico Cho Kaigi 2015 and Game party 2016 all recorded a larger number of visitors than in the last year. Operating income: As support money and exhibitions at events also increased steadily, the amount of the operating loss was less than the initial plan.

35 Mobile Business 34 3,000 Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Mar. 31, ,500 2,000 Revenue 2,313 2,212 2,094 1,999 2,426 1,500 Cost of Revenue Gross Margin ,505 1,415 1,311 1,195 1,527 1,000 2,313 2,212 2,094 1,999 2, SG&A Operating Income Three Months Dec. 31, 2015 Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Three Months Dec. Mar. 31, 31, Revenue: A decline in members remained modest in both smartphones and feature phones. Operating income: Higher income than the planned value was secured thanks to the containment of advertising expenses and cost control.

36 Game Business 35 6,000 Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Mar. 31, ,000 Revenue 3,671 2,642 3,707 5,577 3,147 4,000 Cost of Revenue 2,448 1,731 2,809 3,407 3,626 3,000 5,577 Gross Margin 1, ,169 (478) 2,000 3,671 2,642 3,708 3,147 SG&A ,000 Operating Income Revenue: ,302 (1,255) Witcher 3 Wild Hunt, Kan Kore Kai and DARK SOULS Ⅲ, etc. contributed to revenue. Operating income: As the launch of blockbuster titles was concentrated in the fourth quarter, higher income than the year-ago level was recorded. 0 Months Months Three Jun. 30, 2015 Sep. 30, 2015 Dec. 31, 2015 Mar. 31, 2016 Jun.30, 2015 Sep.30, 2015 Dec.31, 2015 Dec. 31, 2015 Three Mar. 31, 2015 Dec. 31, 2014

37 Balance Sheet, Cash Flow Statement 36 As of March 31, 2015 Percentage As of March 31, 2016 Percentage Current Assets 131, % 131, % Non-Current Assets 74, % 69, % Tangible Assets 36, % 34, % Intangible Assets 5, % 6, % Investment and Other Assets 32, % 28, % Total Assets 205, % 201, % Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities Cash and Cash Equivalents at End of Period Results for the Fiscal Year March 31, 2016 (April 2015 March 2016) 6,733 (4,673) (8,775) 52,175 Current Liabilities 63, % 61, % Non-Current Liabilities 38, % 35, % Shareholders' Equity 101, % 102, % Total Equity 104, % 104, % Total Liabilities and Equity 205, % 201, %

38 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. 37