MIXI, Inc. (MXN.F) Earnings Call Transcript & Summary

Thank you very much for taking the time to attend today's financial results briefing. I am Shimamura, Senior Corporate Officer and CFO. Today, I will explain according to 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. Let me first explain the financial status. Please turn to Page 5. This is the third quarter consolidated income statement. Net sales were JPY 41.5 billion. EBITDA was JPY 9.5 billion. Operating income was JPY 8.2 billion and profit attributable to owners of parent was JPY 5.1 billion. Both sales and profit rose year-on-year. Sales were down slightly in the Digital Entertainment and Lifestyle segments, but were up in other segments. EBITDA, on the other hand, increased in all segments. With recorded impairment losses on goodwill of equity method affiliates and business withdrawal in the same period of the previous fiscal year, the percentage change in ordinary income and below is significantly positive. Please turn to Page 6. This is the quarterly consolidated performance report. Please turn to Page 7. From here, I will explain the business status of each segment. Please turn to Page 8. This is a review of the Sports segment. Sales increased 20.8% year-on-year to JPY 10.1 billion. The main factors were an increase in ticket sales for the Chiba Jets, growth in betting ticket sales for TIPSTAR and the addition of Arena sales from the second quarter. Excluding the impact of the opening of the Arena, sales increased by 17.6% year-on-year. EBITDA increased in line with the increase in sales in each business. Please turn to Page 9. This is the status of the Spectator Sports business. For the Chiba Jets, the number of B League B1 game attendees exceeded 1 million in October 2024. With the completion of a new arena, we hope to welcome even more fans in the future. For FC Tokyo last season, a new home game attendance record was set after 5 years. Starting tomorrow, the 2025 season will begin under a new management with the aim of reaching top rankings with an aggressive one more gold style. Please turn to Page 10. This shows the net sales trends for main services in the betting businesses. TIPSTAR, Chariloto and Net Dreamers continued to grow steadily and total sales increased by 11.4% year-on-year. As Chariloto had recorded a onetime sales in the same period of the previous year, sales increase was limited to 1.2%. TIPSTAR continues growing at a high rate with a 36.1% year-on-year increase in sales. Please turn to Page 11. This is the status of TIPSTAR. TIPSTAR MAU has steadily increased due to successful continuous product improvements, including improved app operability and the implementation of social functions as a result of increased investment in user acquisition in the third quarter, EBITDA declined slightly from the second quarter, but remained positive. We will continue to carry out efficient operations in parallel with product improvements, and we hope to make significant growth investments when we see such potential. Please turn to Page 12. I will now explain the Lifestyle segment. Please turn to Page 13. Net sales were JPY 5.9 billion. While sales of premium services and major products grew for Family Album, the New Year's card service struggled and net sales were down 3.1% year-on-year. Despite increased investment for user acquisition overseas by limiting advertising expenses for the New Year card services and increasing sales of high profit margin products, EBITDA increased from the previous year. Please turn to Page 14. I will explain the status regarding the Family Album. In the Family Album economic sphere with the New Year's card market expected to shrink, we have been reviewing our product portfolio. As a result, while the New Year's card market shrunk more than expected, we were able to maintain the same level of sales as last year. In addition, product with high profit margins such as premium plan grew and profitability improved. In January 2025, the number of cumulative users exceeded 55 million. It is expected by about 60% of all parents with newborns in Japan each year. So more than half of households with children use the service. We will continue to expand our user base, both in Japan and overseas and aim for revenue growth across the Family Album economic sphere. Please turn to Page 15. I will explain the Digital Entertainment segment. Please turn to Page 16. Net sales were JPY 25.3 billion, down 5.1% year-on-year. Monster Strike saw a slight decrease in sales year-on-year, but it exceeded internal targets. EBITDA increased 14% year-on-year to JPY 12.3 billion. This was due to cost reductions from withdrawals from businesses. Kotodaman saw a decrease in both sales and profit. Please turn to Page 17. This is the status of Monster Strike. Throughout Q3, MAU decreased compared to the same quarter last year when the 10th anniversary took place, but ARPU increased due to successful collaborations. In addition, new character sales in early 2025 were also strong. We will continue to aim for an upside in our performance through collaborations and other initiatives. Please turn to Page 18. I will explain the Investment segment. Please turn to Page 19. Net sales were JPY 100 million and EBITDA was JPY 170 million. EBITDA exceeded sales, but this was due to the fact that costs were negative in the accounting treatment of fund revaluation. Please turn to Page 20. I will explain the revision of our results forecast. Please turn to Page 21. We have revised upward the full year forecast of net sales to JPY 153 billion, EBITDA to JPY 31 billion, operating income to JPY 26.5 billion and profit attributable to owners to JPY 17.5 billion. Due to the upward revision, ROE is expected to exceed 9% and expected to exceed the cost of shareholders' equity. Please see Page 22. These are segment performance forecast revisions. Sales were down in the Lifestyle segment due to the New Year card market shrinking more than initially expected, but each business in the Sports segment performed well. And in the Investment segment, there was an upside such as the recording of a gain on the sale of shares in Timee. In terms of EBITDA, in addition to the increased profits in the Sports and Investment segment, profits grew in the Digital Entertainment segment due to greater-than-expected cost effectiveness. Due to these factors, we have revised upward our full year forecast for both sales and profits. As a result of the strong performance of various businesses this fiscal year, we were able to announce an upward revision today. Although only a short time remain until the end of the fiscal year, we will continue to aim for further upsides. Thank you for listening.