FY2015 First Quarter Financial Results

Key insights

7 takeaways · ~3 min read

01
Net sales for Q1 FY2015 fell 9.9% year-over-year to ¥25.4 billion, driven by the underperformance of existing titles in both domestic and international markets.See it on page 5
02
Operating income remained flat at ¥6.4 billion despite the sales decline, supported by a ¥1.4 billion reduction in advertising expenditures.See it on page 7
03
Ordinary income saw a significant boost of ¥2.27 billion, primarily attributed to a ¥17.2 billion exchange gain on USD-denominated loans.See it on page 5
04
Net income was reduced to ¥3.48 billion after accounting for a ¥2.03 billion extraordinary loss related to asset write-downs for discontinued titles.See it on page 9
05
The company is shifting its strategic focus toward native game development, having added 12 new production lines and scheduled three first-party native titles for a winter launch.See it on page 12
06
Total costs decreased by 7% to ¥19.0 billion, achieved through a 13% quarter-over-quarter reduction in advertising and lower commission fees.See it on page 8
07
Management forecasts FY15 first-half net sales of ¥49.0 billion and operating income of ¥10.5 billion, relying on native hit titles as the primary growth driver.See it on page 10

Summary

The first‑quarter fiscal 2015 results show net sales of ¥25.4 billion and operating income of ¥6.4 billion, a decline in sales but a flat operating margin compared with the previous quarter due to a ¥1.4 billion cut in advertising costs. Net sales fell 9.9% year‑over‑year, driven by softer performance of existing titles in Japan and overseas markets. EBITDA rose modestly to ¥8.01 billion, while ordinary income increased by ¥2.27 billion largely from a ¥17.2 billion exchange gain on USD‑denominated loans. An extraordinary loss of ¥2.03 billion was recorded from write‑downs of assets related to discontinued titles, reducing net income to ¥3.48 billion.

Cost structure analysis indicates a 7% reduction in total costs to ¥19.0 billion, largely from advertising (down 13% QoQ) and commission fees. Variable costs fell by ¥1.19 billion, while fixed costs decreased marginally. The company’s strategy focuses on accelerating native game development, having shifted resources from web games and added 12 new production lines. Three first‑party native titles are slated for launch in the winter, and partnerships with LINE and KDDI aim to expand cross‑border reach.

For FY15 first half, the company forecasts net sales of ¥49.0 billion and operating income of ¥10.5 billion, assuming minimal seasonal impact and continued cost control. The outlook emphasizes native hit titles as the primary growth driver, with web games supporting earnings and new ventures in mobile video advertising and venture capital investments.