KLab Q3 2018 Financial Results

Key insights

7 takeaways

01
KLab achieved record quarterly revenue of 8,949 million yen in Q3 2018, an 11.0% increase over the previous quarter.See it on page 2
02
Operating profit grew 11.9% quarter-over-quarter to 1,396 million yen, the second-highest in company history.See it on page 4
03
International revenue exceeded 3 billion yen for the first time, bolstered by the localization of Captain Tsubasa: Dream Team into Arabic and Brazilian Portuguese.See it on page 7
04
Financial growth was primarily driven by record revenue from the Japanese version of BLEACH Brave Souls and the launch of YU☆YU☆HAKUSHO 100% Maji Battle.See it on page 5
05
Management revised full-year forecasts to 31,500 million yen in revenue and 4,000 million yen in operating profit, anticipating a Q4 decline due to the normalization of promotional activity.See it on page 13
06
The company is currently developing or prototyping five new titles, resulting in increased operational costs related to outsourcing and labor.See it on page 9
07
Corporate strategy remains focused on leveraging Japanese IP, expanding global reach, and strengthening publishing capabilities in markets such as China.See it on page 20

Summary

KLab’s financial results for the third quarter of 2018 demonstrate a period of record-breaking growth driven by the successful performance of its mobile game portfolio. The company achieved its highest quarterly revenue in history at 8,949 million yen, representing an 11.0% increase over the second quarter of 2018. Operating profit also saw significant growth, rising 11.9% quarter-over-quarter to 1,396 million yen, marking the second-highest operating profit in the company’s history.

The primary drivers of this financial success were the strong performance of established titles, specifically BLEACH Brave Souls, which saw record revenue in its Japanese version, and the successful launch of YU☆YU☆HAKUSHO 100% Maji Battle. Overseas expansion remained a critical component of the company’s strategy, with international revenue surpassing 3 billion yen for the first time. This growth was supported by the localization of titles like Captain Tsubasa: Dream Team into additional languages, including Arabic and Brazilian Portuguese.

Despite these gains, the company maintained a cautious outlook for the remainder of the fiscal year. Forecasts for the full year were revised to 31,500 million yen in revenue and 4,000 million yen in operating profit. Management anticipates a revenue decline in the fourth quarter, citing the normalization of performance following the high-intensity promotional campaigns and large-scale events that characterized the third quarter.

Operationally, the company continues to invest heavily in future growth through increased outsourcing, subcontracting, and labor costs associated with a pipeline of five titles currently in development or prototyping. The corporate strategy remains focused on three pillars: leveraging Japanese intellectual property, maximizing global reach through multi-language releases, and developing original content. KLab continues to prioritize long-term stability for existing titles while strengthening its publishing capabilities in key markets, particularly China.