DeNA Consolidated Financial Results: Fiscal Year Ended March 31, 2020

Key insights

7 takeaways

01
DeNA reported a significant net loss of ¥49,847 million for the fiscal year ended March 31, 2020, compared to a profit of ¥13,177 million in the previous fiscal year.See it on page 1
02
The company recorded a total impairment loss of ¥51,165 million during the 2020 fiscal year, primarily driven by goodwill related to the Game Business.See it on page 33
03
Consolidated revenue for the fiscal year ended March 31, 2020, was ¥121,387 million, a 2.2% decrease year-on-year, largely due to the transfer of Paygent Co., Ltd. and DeNA Travel Co., Ltd.See it on page 1
04
Operating profit swung from a positive ¥13,512 million in 2019 to a loss of ¥45,676 million in 2020, impacted by increased marketing expenses and growth investments.See it on page 1
05
The company expects a dramatic improvement in segment losses for new business areas in the fiscal year ending March 31, 2021, following the transition of its taxi dispatch app business to an equity-method associate.See it on page 8
06
DeNA recorded a gain of ¥3,185 million from the sale of a portion of its shares in akippa Inc. on October 1, 2019.See it on page 6
07
The company expects to record an additional ¥2.0 billion in other income in the first quarter of the fiscal year ending March 31, 2021, related to the merger of its taxi dispatch app-related businesses.See it on page 8

Summary

DeNA concluded the fiscal year ending March 31, 2020, amidst significant financial contraction, reporting a net loss of ¥49,166 million. This downturn was primarily precipitated by a substantial ¥51,165 million impairment charge, with the vast majority of this loss concentrated within the Game Business. Consequently, operating profit shifted from a gain of ¥13,512 million in the previous year to an operating loss of ¥45,676 million. Despite these challenges, the company maintains a stable financial foundation, evidenced by an equity ratio of 70.6% and the procurement of ¥20 billion in new credit facilities to ensure liquidity and support ongoing working capital requirements.

The company’s strategic focus remains centered on four core segments: Game, Sports, Automotive, and Healthcare. To streamline operations and improve efficiency, management consolidated its reporting structure and transitioned its taxi dispatch application, MOV, into an equity-method associate under Mobility Technologies Co., Ltd. While the new business segment incurred a loss of ¥11.8 billion during the fiscal year, the company anticipates improved performance in the coming period as these structural adjustments take effect. However, the broader impact of the COVID-19 pandemic, particularly on the Sports Business, has introduced enough volatility to preclude the issuance of a consolidated financial forecast for the fiscal year ending March 31, 2021.

Operational risks remain a critical concern, spanning regulatory challenges in international markets, data privacy requirements, and the inherent volatility of user preferences in the mobile gaming sector. The company acknowledges that its reliance on mobile OS providers, the complexities of managing user-generated content, and the potential for M&A integration failures pose ongoing threats to its financial health and brand reputation. While robust internal controls and compliance frameworks are in place to mitigate these exposures, the company remains vulnerable to unpredictable external factors, including technological shifts in artificial intelligence and fluctuations in the value of strategic investments.