DeNA Co., Ltd. (2432) Earnings Call Transcript & Summary

Hello, everyone. I will be presenting today. Thank you for joining us for our presentation of the operating results briefing for the third quarter of fiscal year 2024. First, I will start with our financial results summary. In Q3, revenue was JPY 46.5 billion. We had an IFRS operating profit of JPY 15.5 billion and also a non-GAAP operating profit of JPY 15.5 billion. Next are the financial results by segment. We had Game Q3 revenue of JPY 28 billion and segment profit of JPY 18.6 billion, which is a dramatic jump both quarter-over-quarter and year-over-year. For Sports as well, you can see how for the April to December period, revenue has grown. And here is the cost and expense breakdown. I have no particular comments to share about this today. That's it for the financial results summary. Now I would like to discuss our progress for each of our businesses. First is the Game business. The Q3 virtual currency consumption was JPY 94.6 billion, and segment profit was JPY 18.6 billion, both of which increased significantly quarter-over-quarter and year-over-year. As you could likely tell from the summary, this is providing significant contribution. Pokemon Trading Card Game Pocket or Poke Poke for short, launched on October 30 and is off to a great start. As a result, we had major top line growth, both in Japan and international app and profit also grew accordingly. I'd like to share a little more about Poke Poke on the next slide. Poke Poke launched on October 30 in 150 countries and regions and is off to a great start, having achieved 60 million downloads globally in December 2024, which we announced on December 12, 2024, a little more than a month after launch. As is clear from the results on the previous slide, the title is being actively enjoyed both in Japan and internationally and seeing success in many countries and regions. This Game has a very high retention rate compared to other DeNA Games and a wide variety of users are enjoying and engaging with the Game on a daily basis, including a large number subscribed to the premium pass. I think many of you have likely observed this. Now that the game is launched, we proceeded with implementing various measures through the end of January, including holding in-game events, implementing the trading function and adding new packs. And we are planning updates and other measures to ensure the game is enjoyed long term. That's it for the Game business. Next is the Live Streaming business. As I mentioned last time, we are placing a greater focus on profitability towards the second half. You can see our revenue and segment profit loss here. And if you look to the right, you'll see that we achieved profitability for Q3. The Live Streaming business has 2 services, Pococha and IRIAM. For Pococha, we are reviewing the cost of marketing initiatives, et cetera, from the second half and focusing on maintaining and enhancing user engagement and securing profitability. For IRIAM, which is on the right, we are prioritizing sound community development and achieving solid growth. We are aiming to achieve revenue growth and early profitability. The downloads as of December 31, 2024, were 6.52 million for Pococha and 4.25 million for IRIAM. Next, let's look at the sports business. Here, we had solid performance, particularly for professional baseball with a year-over-year increase in revenue and profit. We have clearly seen a good recovery since the impact of COVID-19. In the sports business, the BayStars in particular, have done very well. Looking back on last year, 2024, the stadium attendance for the 2024 season home games reached a record high for the team at 2.36 million. The BayStars were the champions of the 2024 JERA Central League Climax Series and the champions of the SMBC Japan Series 2024, making the team the champions of Japan for the first time in 26 years. Amidst this dazzling result, I want to highlight that we are making steady progress in forming a strong multilayered business structure as shown here. For baseball revenue, we have sponsorships, merchandise, food and beverage, ticket sales and other. And as you can see, each of these areas is growing, indicating that we are building our structural strength. Next is the Healthcare & Medical business. I have mentioned before that results tend to focus in Q4, and we work to build towards those fiscal year-end results in the first half onwards. For each area, we are making progress towards achieving a year-over-year increase in full year revenue and profit. And I look forward to sharing our results at the next presentation for Q4. Looking at each area, I'll start with the health care area. Here, we have the data use and data health businesses. In the graph on the bottom left, the darker green is data use and shows a buildup over Q1 to Q2 and into Q3. We will keep working in this area to produce results that we can share in Q4. And again, we are achieving a buildup. Meanwhile, as I've mentioned before, for data health, which is targeting local municipalities, it's important to point out that this year is not a Japanese government Data Health Plan formulation year. So we expect the number of orders to decline to a level similar to fiscal year 2022. Of course, we are proceeding with cost efficiency efforts and considering the strength of this business, we are working to streamline it and to achieve growth in the next fiscal year onward. Next is the medical area, which is primarily the initiatives by Allm. We expect acceleration in individual facility deployment in each region this fiscal year through various efforts, including support from the national government's medical digital transformation and working style reform initiatives. Please take a look at the graph below. The number of facilities using Join in Japan grew to 528 as of December 31, 2024, and examples of deployment through local municipality subsidies, et cetera, expanded into 17 prefectures. This shows how well Join is spreading. But beyond that, we are also making progress in detailed discussions for projects leveraging Join Mobile Care, which combines portable medical devices and Join, which I introduced before, to address regional medical resource shortages with the aim to achieve contribution this fiscal year. I expect to see contribution from these projects in this fiscal year and aim to share more about our results here at the fiscal year-end briefing. That concludes the progress for each business. I would now like to discuss the outlook for fiscal year 2024. I will read through each point. The consolidated financial results forecast cannot be provided due to the difficulty of reasonably and accurately estimating the figures. Full year revenue is expected to increase year-over-year in conjunction with changes to and strengthening of the business portfolio. A non-GAAP operating profit is expected with a year-over-year increase. In the Game business, while it is difficult at present to make reasonable and concrete forecasts, based on the performance through Q3, DeNA expects significant year-on-year increases in revenue and profit. No new titles are scheduled for release in Q4. With regard to the Live Streaming business, a year-on-year decrease in revenue is expected. Initiatives to secure profitability, including reviewing costs, et cetera, have been underway from the second half. With regard to the other businesses, DeNA will aim to increase both revenue and profit year-over-year while continuing to invest for growth. This concludes my brief presentation. Thank you for your attention. [Statements in English on this transcript were spoken by an interpreter present on the live call.]