KLab Q3 2019 Financial Results

Key insights

6 takeaways

01
KLab experienced a significant Q3 2019 downturn, with consolidated revenue falling 9.3% quarter-over-quarter to 7,565 million yen and operating profit dropping 55.5% to 406 million yen.See it on page 4
02
The company revised its full-year 2019 guidance downward to 31,500 million yen in revenue and 1,750 million yen in operating profit due to the underperformance of Magatsu Wahrheit and the delay of Tales of Crestoria.See it on page 13
03
Financial results were negatively impacted by the underperformance of key titles including Love Live! School Idol Festival, Captain Tsubasa: Dream Team, and Magatsu Wahrheit, though BLEACH Brave Souls maintained solid growth.See it on page 5
04
KLab is shifting its strategic focus toward long-term sustainability, prioritizing the leveraging of Japanese IP, global expansion, and the development of original titles.See it on page 28
05
The company is diversifying its ecosystem through a strategic investment in Ichikara, the operator of the Nijisanji virtual YouTuber group, and the late-September launch of Love Live! School Idol Festival ALL STARS.See it on page 23
06
As of Q3 2019, KLab’s portfolio reached a cumulative 150 million downloads across 155 countries and regions.See it on page 22

Summary

KLab’s financial results for the third quarter of 2019 reflect a period of contraction, characterized by a 9.3% quarter-over-quarter decline in consolidated revenue to 7,565 million yen and a 55.5% decrease in operating profit to 406 million yen. This downturn was primarily driven by underperformance in key titles, including Love Live! School Idol Festival, Captain Tsubasa: Dream Team, and Magatsu Wahrheit, which failed to meet previous performance levels. While BLEACH Brave Souls maintained solid growth, the overall revenue decline led to a corresponding reduction in variable costs, such as royalties and commissions.

In response to these results, the company revised its full-year 2019 guidance downward, projecting revenue of 31,500 million yen and an operating profit of 1,750 million yen. The revision stems from the weaker-than-expected performance of Magatsu Wahrheit and delays in the launch of Tales of Crestoria. Despite these challenges, the company remains focused on its long-term strategy, which centers on three pillars: leveraging Japanese intellectual property, maximizing revenue through global expansion, and developing original game titles.

The company continues to invest in its future pipeline and ecosystem, notably through the late-September launch of Love Live! School Idol Festival ALL STARS and a strategic investment in Ichikara, the operator of the Nijisanji virtual YouTuber group. As of the third quarter, KLab reported a global reach of 155 countries and regions, with 150 million total worldwide downloads across its portfolio. Moving forward, the company intends to prioritize the sustainability of its existing titles, enhance its global marketing and operational capabilities, and explore new entertainment technologies to stabilize and grow its market position.