FinancialGREE Inc.
FY2019 First Quarter Financial Results
1 Oct 201830 pages~11 min full read
Net sales for Q1 FY2019 declined to ¥18.2 billion from ¥21.6 billion year-over-year, though operating income remained stable at ¥1.6 billion due to reduced advertising and commission costs.
The operating income margin improved to 8.9% on a quarter-over-quarter basis through strategic cost efficiencies.
The company is diversifying its platform strategy by developing titles for the Nintendo Switch and LINE QUICK GAME, alongside the release of 'Wild Arms: Million Memories' and the regional expansion of 'Danmachi: Memoria Freese'.
A new growth pillar is the live entertainment sector, marked by the launch of the VTuber livestreaming platform 'REALITY' in partnership with King Records and Idea Factory.
Q2 FY2019 earnings forecasts project net sales between ¥17 billion and ¥18 billion, with operating income expected to range from ¥1 billion to ¥1.5 billion.
Total headcount reached 1,604 employees by the end of Q1, reflecting continued investment in development and new business segments.
The financial results for the first quarter of fiscal year 2019 detail a period of strategic transition characterized by steady operating income despite a year-over-year decline in net sales. Net sales reached ¥18.2 billion, a decrease from ¥21.6 billion in the same period the previous year, while operating income remained stable at ¥1.6 billion. This stability was achieved by offsetting declining revenue with a reduction in variable costs, specifically through more efficient advertising spend and lower commission fees. The operating income margin improved slightly to 8.9% on a quarter-over-quarter basis.
The business strategy focuses on three primary pillars: mobile game engines, intellectual property (IP) development, and global expansion. Key operational highlights include the release of Wild Arms: Million Memories and the expansion of Danmachi: Memoria Freese into South Korea and Taiwan. The company is also diversifying its platform reach by developing titles for the Nintendo Switch and the LINE QUICK GAME platform. Furthermore, there is a significant push into the live entertainment sector with the launch of REALITY, a dedicated livestreaming platform for VTubers, supported by joint ventures with King Records and Idea Factory.
Geographically, the focus remains on the Japanese market while aggressively pursuing growth in North America, Europe, and Greater China through both self-distribution and partnerships. For the second quarter of fiscal 2019, the earnings forecast anticipates net sales between ¥17 billion and ¥18 billion, with operating income projected between ¥1 billion and ¥1.5 billion. This outlook reflects the expected performance of existing titles and the continued rollout of newly developed overseas projects. The consolidated headcount grew to 1,604 employees by the end of the first quarter, reflecting ongoing investment in development and new business segments.
