DeNA FY2019 Results Briefing: Q&A Summary

Key insights

7 takeaways

01
DeNA reported its first full-year operating loss since going public, driven significantly by impairment losses on goodwill and software recognized in Q3 FY2019.See it on page 4
02
The company aims to reduce fixed costs in the Game Business by billions of yen while shifting its development strategy to focus exclusively on major IP titles for the global market.See it on page 3
03
Q1 FY2020 Game Business performance is expected to decline year-on-year, reflecting both a typical seasonal drop-off from a strong Q4 and the anticipated revenue deceleration of the 'Slam Dunk' title in China.See it on page 1
04
The company secured 20 billion yen in borrowing to maintain sufficient operating capital and provide flexibility for potential M&A, targeting profitable acquisition candidates.See it on page 2
05
Sports Business revenue faces significant uncertainty due to COVID-19, with management noting that high fixed costs make it challenging to mitigate the financial impact of restricted stadium attendance.See it on page 3
06
Accounting practices have shifted to a more conservative approach for asset recognition, resulting in lower amortization costs but higher personnel and outsourcing expenses under Cost of Sales.See it on page 3
07
Healthcare and wellness insurance initiatives are expected to provide meaningful financial contributions starting in FY2021, rather than in the current fiscal year.See it on page 3

Summary

This summary outlines the key takeaways from the DeNA FY2019 operating results briefing held in May 2020. The primary purpose of the session was to address the company’s financial performance, specifically the first full-year operating loss since going public, and to provide strategic guidance regarding the impact of the COVID-19 pandemic on its diverse business segments, including gaming, sports, and healthcare.

The company reported a strong fourth quarter in the gaming division, bolstered by the performance of existing titles and the successful launch of Slam Dunk in China. However, management anticipates a year-on-year decline in gaming operating profit for Q1 FY2020, citing typical seasonal trends and the conclusion of initial launch-related promotions. To address profitability concerns, the company is implementing a pipeline strategy focused on major intellectual property for the global market and aims to reduce fixed costs in the gaming segment by billions of yen. A shift in accounting practices—moving toward a more conservative recognition of development assets—resulted in a reallocation of expenses from amortization to personnel and outsourcing costs.

The pandemic introduced significant uncertainty, particularly for the sports business, where the inability to host spectators at professional baseball games poses a challenge to revenue targets. While the company maintains a healthy balance sheet and remains open to profitable M&A opportunities, it has prioritized securing operating capital through recent borrowing. Looking forward, the company intends to leverage its digital expertise to drive transformation across industries, including healthcare, where meaningful contributions are expected from FY2021 onward. Operational adjustments, such as the transition to remote work and the elimination of traditional hanko seals, are being integrated into the company’s long-term administrative strategy.