Kadokawa Dwango Financial Results for the First Quarter Ended June 30, 2018

Key insights

7 takeaways

01
Kadokawa Dwango reported Q1 revenue of 49.6 billion yen and operating income of 399 million yen for the period ending June 30, 2018, representing a year-on-year decline in both metrics.See it on page 19
02
The niconico platform saw its premium membership base drop to 2 million users, though the company noted that both the scale of the decline and the resulting operating losses were smaller than anticipated.See it on page 5
03
The Publication segment maintained profitability by offsetting a decline in printed book sales with growth in e-books and e-magazines, keeping performance steady compared to the previous year.See it on page 17
04
The Video and Game segment benefited from strong overseas licensing for titles like 'Steins;Gate 0' and 'Full Metal Panic! Invisible Victory,' alongside robust royalty revenue from 'Dark Souls III,' 'Bloodborne,' and 'Dark Souls Remastered.'See it on page 19
05
Niconico Channel reached 760,000 dues-paying members, with approximately 20 channels generating annual revenues exceeding 100 million yen.See it on page 16
06
On July 27, 2018, the company established a joint venture, Virtual Cast, Inc., to develop a comprehensive VR platform and ecosystem for 3D modeling and Vtuber support.See it on page 13
07
The company is investing in infrastructure, including a new manufacturing and distribution center scheduled for April 2020 and a bandwidth upgrade for niconico from 730Gbps to 1,400Gbps.See it on page 11

Summary

Kadokawa Dwango’s financial results for the first quarter ended June 30, 2018, reflect a period of mixed performance characterized by a slight year-on-year decline in total revenue and operating income. The company reported total revenue of 49.6 billion yen and operating income of 399 million yen, compared to 49.9 billion yen and 790 million yen, respectively, in the same period of the previous year. Despite these decreases, the company achieved a profit attributable to owners of the parent of 368 million yen, marking an improvement over the 23 million yen loss recorded in the first quarter of 2017.

The performance across business segments varied significantly. The Video and Game segment served as a primary growth driver, recording year-on-year increases in both revenue and profit, bolstered by strong overseas licensing for animation and robust royalty payments from game titles such as Dark Souls. Conversely, the Web Services segment, specifically the niconico platform, faced challenges with a declining number of premium members, resulting in an operating loss. However, the company noted that these losses were smaller than anticipated and emphasized ongoing efforts to improve service functionality, including the launch of the new "Niconico (Crescendo)" version. The Publication segment remained stable, as growth in e-books and e-magazines helped offset a lower volume of new printed publications.

The company maintains a focus on long-term infrastructure and innovation, evidenced by ongoing investments in a new manufacturing and distribution center and the establishment of Virtual Cast, Inc. to explore VR and 3D modeling opportunities. As of June 30, 2018, the company reported total assets of 232.3 billion yen and an improved equity ratio of 45.7%.