DeNA Consolidated Financial Results: Nine Months Ended December 31, 2019

Key insights

7 takeaways

01
DeNA reported a significant financial downturn for the nine months ended December 31, 2019, with a loss attributable to owners of the parent of ¥50,179 million, compared to a profit of ¥8,007 million in the same period of the previous year.See it on page 5
02
The company expects to record a loss at all profit levels for the full fiscal year ending March 31, 2020, citing the impact of impairment losses and ongoing growth investments in new business areas.See it on page 2
03
The Game Business, a primary revenue driver, saw a 3.8% year-on-year revenue decline to ¥60,119 million and a 32.6% drop in segment profit to ¥8,901 million due to decreased virtual currency consumption in existing titles.See it on page 5
04
The Sports Business performed strongly, with revenue increasing 19.4% to ¥18,849 million and segment profit rising 22.6% to ¥3,708 million, bolstered by the partial operation of the renovated Yokohama Stadium.See it on page 5
05
Total assets decreased by ¥33,242 million to ¥263,217 million as of December 31, 2019, driven largely by a ¥40,164 million reduction in goodwill.See it on page 6
06
DeNA announced a strategic shift in its Automotive Business on February 4, 2020, entering a basic agreement to merge its taxi dispatch app operations into JapanTaxi Co., Ltd. via an absorption-type company split.See it on page 19
07
The company adopted IFRS 16 'Leases' starting June 30, 2019, resulting in the recognition of right-of-use assets and corresponding lease liabilities on the balance sheet.See it on page 14

Summary

DeNA experienced a period of significant financial contraction during the nine months ending December 31, 2019, characterized by a consolidated operating loss of ¥44,161 million. This downturn represents a sharp reversal from the previous year, shifting from a profit before tax of ¥11,595 million to a loss of ¥39,212 million. The primary catalyst for these results was a substantial impairment charge totaling ¥50,755 million, of which ¥46,916 million stemmed from a write-down of goodwill and assets within the core Game Business. This adjustment followed a conservative reassessment of future performance projections for the segment, signaling a strategic pivot in how the company values its long-term digital entertainment holdings.

Overall revenue for the period declined by 3.7% year-on-year, a trend exacerbated by the divestiture of certain business units and underperformance within the gaming portfolio. While the Sports Business served as a notable bright spot, achieving a 19.4% increase in revenue, these gains were insufficient to offset the broader systemic losses. The impact of these financial challenges extends to shareholder returns, as the company has reduced its dividend to ¥20 per share to preserve capital.

Looking ahead, the company anticipates recording losses across all profit levels for the full fiscal year ending March 31, 2020. These results underscore a challenging transition period for the Japan-based firm as it navigates the volatility of the mobile gaming market and attempts to stabilize its diversified business model. The current financial trajectory reflects a deliberate effort to align asset valuations with current market realities, prioritizing long-term fiscal discipline over short-term profitability.