Nippon Ichi Software Q2 FY2015 Financial Results

Key insights

6 takeaways

01
Nippon Ichi Software experienced a sharp decline in profitability for the six-month period ending September 30, 2014, with operating profit falling 55.9% to 164 million yen and net profit dropping 76.5% to 79 million yen.See it on page 4
02
Consolidated net sales remained relatively stable at 2,056 million yen, representing only a marginal 0.9% decrease compared to the same period in the previous fiscal year.See it on page 9
03
The package software segment, which released 13 titles, generated 1,618 million yen in sales but yielded a lower operating profit of 77 million yen compared to the online segment.See it on page 4
04
The online services segment, covering social games and mobile applications, proved to be the company's most profitable division, contributing 363 million yen in sales and 209 million yen in operating profit.See it on page 4
05
Management attributed the earnings downturn to dampened consumer demand following the April 2014 consumption tax increase in Japan.See it on page 4
06
Despite the reduced interim profitability, the company maintained its full-year earnings forecast and reported a stable financial position with an equity ratio of 72.5%.See it on page 10

Summary

The Nippon Ichi Software financial results for the second quarter of the fiscal year ending March 2015 detail a period of significant earnings contraction. The company reported a consolidated net sales figure of 2,056 million yen, representing a marginal decline of 0.9% compared to the same period in the previous fiscal year. Profitability, however, saw a substantial downturn, with operating profit falling by 55.9% to 164 million yen and quarterly net profit dropping by 76.5% to 79 million yen.

The company’s operations are categorized into four primary segments: package software, online services, licensing, and other business activities. The package software segment, which released 13 titles across domestic and international markets, generated 1,618 million yen in sales and 77 million yen in operating profit. The online segment, encompassing social games and mobile applications, contributed 363 million yen in sales and 209 million yen in operating profit. Licensing and other business segments accounted for the remainder of the revenue, with the latter reporting a minor operating loss of 4 million yen.

The financial results cover the six-month period from April 1, 2014, to September 30, 2014. Management attributes the challenging environment to the lingering effects of the April 2014 consumption tax increase in Japan, which dampened consumer demand. Despite the decline in profits, the company maintained its full-year earnings forecast, citing that performance remained largely in line with initial expectations. The balance sheet shows total assets of 3,077 million yen and a solid equity ratio of 72.5%, reflecting a stable financial position despite the reduced profitability observed during this interim period.