MIXI, Inc. (2121) Earnings Call Transcript & Summary

Thank you for joining our financial results briefing despite your busy schedules. I am Shimamura, the CFO. Today, I will explain based on the agenda on Page 2. Please turn to Page 3. This is the executive summary. I will explain the details in the following pages. Please turn to Page 4. First, the financial status. Page 5. This is the first quarter consolidated income statement. With net sales of JPY 31.3 billion, EBITDA of JPY 3.8 billion, operating income of JPY 2.6 billion and net income of JPY 1.4 billion, we had higher sales and lower profit. Year-on-year, ordinary income declined due to weaker performance from equity method affiliates. Page 6. This shows the quarterly trend of consolidated performance. Page 7. From here, I will explain the status of each business segment. Page 8. This is a review of the Sports segment. Net sales increased by 29.8% year-on-year to JPY 11.1 billion. We have strengthened user acquisition investment for TipStar and MAU rose significantly. Chiba Jets saw higher ticket sales with the opening of a new arena and sponsorship revenue also grew. Excluding the impact of the arena opening in the second quarter last year, sales were up by 25.7% year-on-year. EBITDA became positive for the segment, thanks to the increase in Chiba Jet sales for Spectator Sports. Please turn to Page 9. This shows the net sales trends for the main services in the bedding business. Overall, sales grew by 23.7% year-on-year. TipStar, in particular, saw net sales increase by 61.1% year-on-year, driven by aggressive marketing that grew MAU by 60%. Sales for Net Dreamers grew by 25%, thanks mainly to the strong performance of its e-commerce business. Please turn to Page 10. Now I will explain the Lifestyle segment. Please turn to Page 11. Sales increased by 28.1% year-on-year to JPY 3.5 billion. Key products such as the FamilyAlbum premium plans and GPS Guardian continued to perform strongly, driving growth across the segment. Although EBITDA remained negative due to continued investment in overseas user acquisition, deficit narrowed year-on-year, thanks to sales growth. Please turn to Page 12. This is the status of FamilyAlbum. Net sales increased by 37.1% year-on-year. Among the key products, the subscription-based premium plans and GPS Guardian each grew more than 1.5x year-on-year. From April, we allow followers to subscribe to the premium plans, enhancing the usability of the payment process. We will continue to enhance convenience to drive further growth in premium memberships. Please turn to Page 13. Now I will discuss the Digital Entertainment segment. Page 14. Sales decreased by 11.4% year-on-year to JPY 16 billion. MAU for Monster Strike was down year-on-year but remained in line with internal projections. EBITDA declined only slightly by 1.1% year-on-year to JPY 7.8 billion. Profitability improved, thanks to cost optimizations. Please turn to Page 15. This is the status of Monster Strike. While MAU declined year-on-year, in the first quarter, ARPU increased slightly in line with internal projections. In July, we had DREAMDAZE III at LALA Arena, attracting 330,000 simultaneous streaming viewers, generating significant excitement. Our collaboration with mobile suit Ganaga announced during the event has been well received. Please turn to Page 16. Now I will explain the investment segment. Page 17. Net sales were JPY 500 million with EBITDA of minus JPY 30 million. Page 18. Now I will explain our utilization of AI. Please turn to Page 19. We are actively promoting AI utilization. Our environment enables all employees to utilize advanced AI services and the AI usage rate among all employees is 99%. Also, employees are actively proposing AI utilization ideas as many as 60 to 70 new proposals each month. Over 250 AI-based measures have already been implemented. We are also redesigning workflows around AI, positioning it as a new driver to support the growth of Mixi as an AI company. These initiatives are expected to improve profits by hundreds of millions of yen this fiscal year. Please turn to Page 20. Finally, I explain the status of our M&A with PointsBet. Originally, we aim to acquire 100% of shares through a scheme of arrangement under Australian corporate law. However, that they do not materialize, and we are now proceeding with the TOB that is scheduled to be completed in late August, and we will continue with share acquisitions to make it a fully owned subsidiary. We will promptly disclose any impact on our earnings forecast once it is confirmed. In the first quarter, all segments did well as seen in the hundreds of millions of yen impact from AI utilization. We are steadily executing measures announced at the beginning of the fiscal year. Thank you very much for your attention.