DeNA Co., Ltd. (TYO:2432)
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May 7, 2026, 2:35 PM JST
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Earnings Call: Q4 2022

May 10, 2022

Shingo Okamura
CEO, DeNa

First, our financial results summary and review of our mid- to long-term strategy. First, we have the financial results summary. The revenue was JPY 130.9 billion, and the IFRS operating profit was JPY 11.5 billion. The non-GAAP operating profit was JPY 7.5 billion. For fiscal year 2021, in the game business, existing titles were the main contributors. In the live streaming business, we enhanced the Pococha Japan growth and conducted proactive growth investment in the global version and new genres. In the sports business, we saw a year-over-year recovery despite impact from COVID-19. Overall, I think we can say that progress was in line with our expectations laid out in the view for fiscal year 2021 from the beginning of the fiscal year. As you can see, here are the financial results summary by segment.

I will share some more detail later, but you can see the impact of existing titles being the main contributors to the game business. The live streaming business, sports business, and healthcare business are all growing as we expected. Here is the cost and expense breakdown. I have no further comment that I would like to make at this point. Since I became CEO, I have shown this multiple times. At DeNA, we aim to form our long-term portfolio and corporate value creation based on our new mission, vision, and value, and pursuing our entertain and serve approaches. We have an existing core competence in the entertain area. We aim to secure a good level of profit going forward, despite some volatility. We are also looking to build up our performance in the serve approach.

I have now been CEO for a year, and here are our focus initiatives for fiscal year 2021 to 2023. Under Entertain, we of course, have the game business and live streaming business. Under Serve, we have the sports business and healthcare business. We have set major goals for each of these businesses and are moving forward toward those goals. I will share some more detail later, but for the game business under Entertain and the healthcare business under Serve, we will be making some updates to our approach. Now, I would like to share some more detail about our business strategy, starting with Entertain. I'll start with the game business. As I have explained over the past year, during this time, our performance has been mainly driven by existing titles with limited contribution from new title launches.

We had 11 new titles come out in fiscal year 2020, but from then on, we had few new titles, so we need to work on getting more new titles. Meanwhile, we are continuing to work on our earnings structure that is made up mainly of existing titles and enhancing the earnings base, including cost optimization and streamlining. We also continue to work on launching and building up new titles. Here we have our approach for fiscal year 2022 onward. We will continue to work on our fundamental structure while updating our mid-to long-term strategy. Of course, the game business is important. We aim to launch about five new titles in fiscal year 2022 and build up performance. These new titles will be coming through our pipeline centered on major IP for the global market.

We will also work to further optimize our structure and streamline related costs for new title development. Another part of our strategy update is creating business opportunities in the broader entertainment space, making use of our partnerships and technology, et cetera. First, I would like to share an update about Nintendo. We are moving to the next stage for the Nintendo Alliance. Our business and capital relationship has been in place since March 2015, and we have built a solid relationship of trust while jointly working on various projects. Going forward, we will move to the next stage in enhancing the relationship between our two companies, focusing on business initiatives, building on the foundation established over the past seven years. I also want to mention that we decided to sell a portion of DeNA-held shares in Nintendo. I will share more detail later.

I would also like to discuss Shueisha, who, like Nintendo, is another important partner. As you can see on the left, we are engaged in collaborations with them making use of technology. This includes things like the AI Luffy and IoT vending machine. For games, we are partnering with Shueisha Games to jointly develop and invest in content. Also, in 2019, Shueisha and DeNA jointly founded Shueisha DeNA Projects, a planning company. Going forward, we will explore making further investments in stages and continue operating this company with a focus on business initiatives. We are working on a joint business between Shueisha, who boast many popular works and related businesses and assets, and DeNA, who boast internet and technology know-how. We will combine our core competencies in our joint business. In particular, we want to become more proactive in initiatives to maximize IP value.

In May 2022, SDP and multiple other companies invested in a company called REMOW, who aim to deliver Japanese content to the world. This is an example of our business enhancement initiatives. As I have explained, we aim to expand our approach to not just be on games, but also creating business opportunities in the broader entertainment space. Within our entertainment approach, the live streaming business has seen steady growth. As you can see, we had JPY 34.7 billion in revenue. We achieved a 1.4x increase in revenue for the full fiscal year compared to the previous year, which is steady growth. For fiscal year 2022, we plan to secure operating profit for the segment while pursuing sustained growth for Pococha Japan and continuing investment in initiatives for leaps in growth, specifically growth investment in the global version and new genres.

I will now share updates on each service. First, Pococha Japan. I think there is some impact from COVID-19 here. We are accumulating highly active users despite the short-term impact on performance from the degree of openness of social activities. We will continue various growth measures, such as creative marketing measures to capture new users while considering ROI. We aim to enhance Pococha Japan. Meanwhile, we are pursuing both the global version and new genres as initiatives to achieve leaps in growth. We have already launched in the U.S. We are seeing good user engagement in all services, which is important for mid to long-term business growth. The service is in a good place. Pococha U.S. is a particular focus, with growth investment planned in fiscal year 2022 to drive it onto a growth track. In new genres, IRIAM became a subsidiary for us during fiscal year 2021.

As you can see, it is seeing steady growth. We will continue to work to grow these services during fiscal year 2022. Now I will move on from our entertainment approach, and next, I will share the updates for service. I would like to share some important updates about the healthcare business, which we consider to be representative of our efforts in this approach. Looking at the financial results for the fiscal year, the healthcare business has reached good scale. Revenue in the healthcare business grew significantly year-over-year, and we are seeing quantitative and qualitative progress towards achieving meaningful profit for the business overall in three years, which is our goal. We are working on further enhancing this business. As a part of that, we are accelerating our growth strategy, including our health big data strategy, such as our partnership with Data Horizon.

This is part of the update for our approach in this business. I'll share some more detail. At the core of our healthcare business is the company DeSC Healthcare. We provide the service kencom, that I have mentioned before, to health insurance societies and local municipalities. It is used by approximately 100 organizations and 4.8 million people. In fiscal year 2021, the revenue grew 2.5x year over year, and we achieved our first full-year operating profit. From DeSC Healthcare, we are partnering with a variety of companies active in the space. First, Data Horizon. Data Horizon has been number one recommended by local municipality national health insurance programs for five years running and provides its services to over 600 local municipalities. We also partner with Houken Corporation. Finally, we just today announced our partnership with Medical Data Vision, or MDV.

MDV provides management support systems for hospitals and has accumulated medical data for 40 million people as a result. They have advanced initiatives in data use. Through our partnerships with these companies, I intend to further promote our health big data strategy. Here, I would like to share where we are now. Today, in May 2022, we announced our partnership with MDV. This is another partnership in addition to our alliance with Data Horizon. In addition to the 8.08 million people's data we have through health insurance societies and local municipalities, we have added 7.71 million people's data from health insurance societies. With the two sets of data from the two partnerships, we cover over 15 million insured people from the healthy to high risk, which is the largest scale in Japan.

With our partnership with MDV, we also gain access to hospital data, which has other strengths. Here, MDV has almost 40 million people's data. By running analyses in conjunction with the hospital data usage becomes even more meaningful for society and customers. Using this data, as shown on the right, we aim to become the number one in data use business. This data could be useful in initiatives to encourage behavior change in insured people or in our relationships with academia, or for pharmaceutical companies, we could see how people are obtaining pharmaceutical drugs. This data is essential for these types of initiatives. We will be able to make use of the largest data set in Japan for our industry use. I think our health big data strategy is very promising. Next is the sports business, which we categorize into our service approach.

Here are our results for fiscal year 2021. Fiscal year 2019 was from before COVID-19, and as you can see, this business, which was previously solid, was significantly impacted by COVID-19. However, compared with fiscal year 2020, this fiscal year, we saw an increase in revenue of JPY 1.9 billion and an operating loss improvement of JPY 1.0 billion. What is really symbolic is that we had a record high attendance for the opener in Yokohama Stadium, which we had expanded to 32,436 people. I believe this business will continue to gradually recover. For our sports business, we do not just look to sports. We consider sports and the community. Under our mission, delighting people and the community through sports, we are pursuing growth in the following three approaches.

Of course, we will work to maximize sports content value. We have Yokohama Stadium and other locations, and we will pursue real business expansion using these locations. This includes our participation in the City of Yokohama Old City Hall District Redevelopment Project, planned for opening in 2025, which I've mentioned before. As a part of our CSR approach, we look to solve social problems, and when thinking about communities, smart city becomes a key word. We have set up a business unit to pursue this area. We think about our vision for a smart city as being a delightful city. We provide not only content, but also draw out the appeal of the community to increase the fun, and thereby the fans of the community.

We will aim to contribute to both entertain and serve, including making use of synergies in our machizukuri and create vibrancy and sustainability in the long term. Of course, to achieve this growth strategy, we will make maximum use of DeNA's core competencies, such as technology and monozukuri. We will work to increase both real and digital added value. Recently, Web 3.0 has been a trend, and we aim to make use of it. We already have a video service that makes good use of NFTs for the BayStars and a live streaming service. We will continue enhancing our offerings in this area to deliver even more delight. We also have our home base in Kanagawa, a prefecture of over 9.1 million people. With the professional baseball team, the Yokohama DeNA BayStars, the basketball team, the Kawasaki Brave Thunders, and the soccer team, SC Sagamihara.

We will not look at these teams individually. Rather, we will share experience and know-how across all three teams and establish the DeNA Sports Group brand to create business opportunities and synergies. Specifically, this includes initiatives with Maruha Nichiro, who I've mentioned before, and NEC, which are already underway. That is our three-year plan. We have just entered the second year. We are working to establish a foundation for our long-term portfolio. Under Entertain, we have games and live streaming. Under Serve, we have healthcare and sports. In fiscal year 2022, we will do some updates for games and healthcare, but continue aiming to achieve organic growth. In live streaming, we are also conducting growth investment to achieve leaps in growth in our global version and new genres. We will also look at M&A opportunities and aim to grow the business.

Finally, I would like to share our financial highlights and view. First, the financial highlights. We have a healthy financial base, and we will use that healthy financial base for new growth investment opportunities to grow corporate value. While also considering the non-GAAP operating profit, business growth and ROE. We will also make use of our balance sheet, including debt, to capture mid- to long-term growth opportunities. That hasn't changed. During fiscal year 2021, we made IRIAM a subsidiary in the live streaming space. In the healthcare space, we made Nippontect Systems a subsidiary. Those are our investments in new growth and initiatives. I also want to share more detail about what I mentioned on the previous slide about the Nintendo alliance. We updated our shareholdings for policy purposes. With this update, we today announced the sale of approximately half of DeNA-held Nintendo shares.

For shareholder returns, we repurchased JPY 10.9 billion of our own shares during fiscal year 2021. In accordance with our dividend policy, our dividend for fiscal year 2021 is expected to be JPY 39 per share of DeNA common stock. This is a consolidated payout ratio of 15% and a total dividend amount of JPY 4.6 billion. Finally, we have the view for fiscal year 2022. The consolidated financial results forecast for fiscal year 2022 cannot be provided due to the difficulty of reasonably and accurately estimating the figures. However, we aim to increase revenue and non-GAAP operating profit in fiscal year 2022. We aim to grow our business. I would also like to share the major change factors for non-GAAP operating profit in fiscal year 2022.

For the game business, approximately five titles are planned for fiscal year 2022, mostly in the second half, and the performance of these titles are potential upside factors for overall performance. However, considering the structure of the business overall, among other factors, existing titles are expected to be the main contributors to overall performance for the fiscal year. For the live streaming business, for Japan, the U.S., and also India, where we just launched, we will prioritize revenue growth and positioning in each market. While securing profit for the full fiscal year, we also plan to invest for growth in an agile and disciplined manner, including in initiatives to achieve leaps in growth. For the sports business, the potential impact of COVID-19 continues to require attention. However, fortunately, as of today, May 10th, 2022, professional baseball games are being held without attendance restrictions.

If this continues for the full fiscal year and the number of games, et cetera, are consistent with a typical year, then we expect improvement in the operating profit or loss year over year. This area will require careful attention. Finally, the healthcare business. As I mentioned, we now have the largest scale health big data in Japan. We need to further enhance the promotion of our strategy for mid to long-term growth, including our health big data strategy, et cetera. Growth investment will be conducted in an agile manner, including use of the balance sheet. This concludes my presentation for the fiscal year 2021.

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