Kadokawa Dwango Financial Results for the First Quarter Ended June 30, 2015

Key insights

7 takeaways

01
Kadokawa Dwango reported revenue of 46,906 million yen and an operating income of 1,145 million yen for the first quarter ended June 30, 2015.See it on page 3
02
The Game business returned to profitability with 535 million yen in operating income, driven by titles such as 'The Witcher: Wild Hunt', 'The Legend of Heroes -Sora no Kiseki-', 'Furai-no-Shiren 5 plus', and contingency fees from 'Bloodborne'.See it on page 15
03
Profit attributable to owners of the parent fell to a loss of 220 million yen, primarily due to increased corporate taxes following the reversal of deferred tax assets related to previous restructuring expenses.See it on page 2
04
The Portal business maintained steady growth with 2.48 million premium members as of June 30, 2015, though operating income slightly declined to 610 million yen due to increased engineering labor costs.See it on page 11
05
The Books and IP business, the company's largest revenue segment at 17,515 million yen, faced challenges including an increased allowance for doubtful accounts from smaller subscription agents and a return rate for books rising to 38.0%.See it on page 6
06
The Information Media business continued to struggle with a 615 million yen operating loss as magazine revenue declined due to the shift toward digital formats.See it on page 8
07
The Mobile business saw a revenue decline as both smartphone and feature phone memberships decreased, though operating income rose to 956 million yen through strict cost control and reduced promotion spending.See it on page 14

Summary

Kadokawa Dwango’s financial results for the first quarter ending June 30, 2015, reflect a period of mixed performance across its diversified business segments. The company reported total revenue of 46.9 billion yen and an operating income of 1.1 billion yen. This performance marks a recovery in operating profitability compared to the previous quarter, which saw an operating loss of 460 million yen. However, the profit attributable to owners of the parent remained negative at 220 million yen, largely due to increased corporate tax expenses stemming from the reversal of deferred tax assets related to prior restructuring costs.

The company’s business segments experienced varying degrees of success. The Game business demonstrated a significant turnaround, returning to profitability with 535 million yen in operating income, driven by the release of titles such as The Witcher 3: Wild Hunt and The Legend of Heroes: Sora no Kiseki. Conversely, the Books and IP business, while still profitable, faced headwinds from declining sales in light novels and comics, alongside a 700 million yen increase in allowances for doubtful accounts from smaller subscription agents. The Portal business remained a stable contributor, supported by a growing base of 2.48 million premium members on the niconico platform.

Geographically focused on the Japanese market, the company’s operational strategy during this period emphasized cost control and digital expansion. While the Information Media business continued to struggle with the transition from print to digital, the company successfully managed SG&A expenses, which decreased to 12.6 billion yen from 13.9 billion yen in the preceding quarter. Looking ahead, Kadokawa Dwango maintains a full-year revenue forecast of 200.5 billion yen and an operating income target of 7 billion yen, signaling confidence in its ongoing restructuring efforts and the continued monetization of its digital and gaming assets.