DeNA Q1 FY2011 Operating Results

Key insights

7 takeaways

01
DeNA reported strong Q1 FY2011 financial growth, with net sales reaching 34,649 million yen (up 43% YoY) and net income rising 45% YoY to 9,456 million yen.See it on page 3
02
The Mobage platform reached 29.71 million registered users in Japan, with top-performing third-party titles now generating over one billion Moba-coins in monthly consumption.See it on page 9
03
Mobage smartphone usage is scaling rapidly following its December 2010 launch, with ARPU increasing nearly tenfold between December 2010 and June 2011.See it on page 11
04
DeNA is aggressively pursuing global expansion by establishing a worldwide common platform, including new operations in China, South Korea, Europe, and Southeast Asia.See it on page 20
05
The company is scaling its smartphone application development workforce from approximately 400 to 1,000 staff to support both first-party and third-party content.See it on page 20
06
DeNA maintains a high-margin business model, reporting an operating income of 15,809 million yen for the quarter, representing a 45.6% operating margin.See it on page 6
07
Strategic partnerships with telecommunications carriers like NTT DOCOMO and hardware manufacturers like Samsung Electronics are central to DeNA's user acquisition and platform distribution strategy.See it on page 20

Summary

DeNA’s operating results for the first quarter of fiscal year 2011 demonstrate a period of record-breaking financial growth driven by the rapid expansion of its Mobage social gaming platform. The company achieved all-time highs in both net sales and operating income for the seventh consecutive quarter, reporting net sales of 34.6 billion yen and operating income of 15.8 billion yen, representing year-over-year increases of 43% and 32%, respectively. This performance underscores the company's successful transition toward a smartphone-centric strategy and its aggressive international expansion.

The primary driver of this growth is the Mobage platform, which saw a steady increase in third-party titles and Moba-coin consumption. By the end of the quarter, the platform hosted over 1,000 titles, with high-performing games generating significant monthly revenue. The company’s strategic focus during this period centered on the integration of the ngCore game engine, the launch of Android-based smartphone applications, and partnerships with major telecommunications carriers like NTT DOCOMO and Samsung Electronics. These initiatives were supported by a workforce expansion, with the number of employees rising to 1,282 by June 30, 2011.

Geographically, the company is positioning itself to capture a larger share of the global social gaming market, which it estimates will reach several trillion yen. To facilitate this, DeNA established a subsidiary in South Korea and planned further operational centers in London and Singapore to complement its existing hubs in Japan, the United States, and China. While the company maintains a positive outlook, it acknowledges the inherent volatility of the emerging social gaming sector. Consequently, management provides performance forecasts on a quarterly basis, citing the difficulty of predicting market growth and the impact of evolving user preferences on game profitability.