DeNA FY2018 Operating Results

Key insights

7 takeaways

01
DeNA reported a significant decline in FY2018 performance, with annual revenue falling 11% to 124.1 billion yen and operating profit dropping 51% to 13.5 billion yen compared to the previous fiscal year.See it on page 23
02
The company announced a major share buyback program of up to 38 million shares (26.14% of issued stock) at a total cost of up to 50 billion yen, running from May 13, 2019, to April 30, 2020.See it on page 24
03
DeNA is shifting its game business strategy toward a pipeline focused on major intellectual property, including an upcoming smartphone title developed in partnership with The Pokémon Company.See it on page 12
04
The automotive business, anchored by the 'MOV' taxi dispatch app, is scaling rapidly with a 9.4x increase in daily dispatches in Kanagawa Prefecture by the end of FY2018 compared to the base quarter.See it on page 18
05
To foster innovation, DeNA plans to establish a 10 billion yen venture capital fund in summer 2019 to support internal entrepreneurial activities and external startup investments.See it on page 22
06
The sports business remains a core pillar, with ongoing expansion of Yokohama Stadium and an aim to increase segment revenue and operating profit in FY2019.See it on page 15
07
DeNA completed the divestment of its e-commerce business, transferring all shares in DeNA Travel Co., Ltd. on May 31, 2018.See it on page 4

Summary

DeNA experienced a challenging fiscal year in 2018, characterized by a notable contraction in core financial metrics. Consolidated revenue declined by 11 percent to 124.1 billion yen, while operating profit plummeted by 51 percent to 13.5 billion yen. This downturn was primarily driven by the company’s gaming segment, which suffered a 15 percent revenue decrease and a 27 percent drop in segment profit, largely attributed to a 12 percent reduction in virtual currency consumption. Despite these headwinds, the company maintains a robust financial position, holding 101.4 billion yen in cash, though free cash flow saw a significant reduction to 2.0 billion yen.

The company’s strategic response involves a dual focus on stabilizing its core gaming operations and diversifying into new growth sectors. To revitalize the gaming business, management is prioritizing the launch of high-profile titles developed in collaboration with major intellectual property holders such as Nintendo and The Pokémon Company. Simultaneously, the company is aggressively investing approximately 10 billion yen into emerging business pillars, including automotive services like the MOV taxi application and various healthcare and wellness initiatives. The sports segment serves as a secondary growth engine, having achieved record attendance figures in 2018 with ongoing investments in stadium infrastructure and team performance.

Reflecting the inherent volatility of the gaming market and the uncertainty surrounding the performance of upcoming titles, leadership has opted not to provide a consolidated financial forecast for the 2019 fiscal year. Instead, the company is emphasizing long-term value creation through cost-streamlining measures, strategic M&A activity, and a substantial share buyback program of up to 50 billion yen. This approach underscores a transition period aimed at restoring profitability while balancing the risks of the gaming industry with the potential of its diversified business portfolio.