Earnings Call: Q3 2021

Jul 28, 2021

This time, so we would like to begin the FY 2021 Third Quarter Results Presentation for Cyber Agent. This session is being live streamed. Our CEO, based on notes, the disclaimer, forward looking statements, the disclaimer about the forward looking statements. And then our CEO, Wichita, will take you through the results. This is Wichita, the CEO. So this is the Q3, April to June. I would like to take you through the results for the Q3. As earlier, we announced a significant upward revision of our forecast. The game and ad business overall was much performed much better than our expectations. So we have made an upward revision of the forecast. Media business year on year, the sales expanded by 1.5 times and the ad business usually is lower in the Q3, but we did set a new record, record high. And with the game business, Imamos met pretty derby became a huge hit. So this has contributed to the results for the full quarter. So these are some of the key reasons why we have made the upward revisions this quarter. And this is the quarterly results. We actually went public in the March of 2000. And of course, we have continued to increase our sales and profitability. But as you can see, we've actually significantly accelerated our growth. And in terms of the quarterly LPs, So the $25,800,000 was the record high, which was in the 2nd quarter and we did even better than the $44,500,000 this quarter. However, the SG and A actually remained around the same. So as an Internet business, our performance has been quite ideal and this is why we have been able to improve our profitability significantly. Every year in April, we do welcome many new graduates. So we do increase the headcount increases this quarter. And then for the following couple of quarters, it will be around the same level. And this is the P and L. And this is the balance sheet. And we did make an upward revision 2021 September. So we are going to plan to do CNY 650 1,000,000,000 in sales, CNY100 1,000,000,000 in OP. So this is the upward revision we have just announced. So as we started to wrap about CNY30 1,000,000,000 in OP, of course, Abema, we have been making upfront investment in Abema and Umamu Smith has significantly contributed to our favorable performance. So that is why we have made a significant revision and forecast. 3 months ago, we did make an upward revision as well from about OP was around RMB30 1,000,000,000 to around RMB60 1,000,000,000. And in 3 months' time, we had made another upward revision to RMB100 1,000,000,000 in OP. And if you look at the achievement rates up to the end of the third quarter, we've done more than 3 quarters. So we believe that the upper revision is within reach. Now going into the specific businesses starting with the Internet ad business. As I mentioned earlier, usually January to March, especially March when many of our customers' fiscal year end, we tend to grow significantly during the period. And the Q2, it's usually we see the Q3, we usually see a drop in our sales. But the fact that we've actually were able to do higher in the Q3 proves that it was a very favorable quarter for us. And with COVID and the state of emergency announcement, many companies, clients decided not to advertise so much, but this is on the recovery path now. And the OP, however, has come down a little bit. And if you have covered us for a long time, you know that this doesn't really change. It hasn't changed over the years. So it's just temporary. So the reason why our Internet app is just doing so well is that the Kiwami prediction AI as well as other innovative technologies and products and 80% of our advertisers have implemented these technologies. So QAMI, YOSU prediction AI and Qami, Projection TD, they have they are using these technologies to improve their advertising effectiveness. And we have released new services as well. So in this field, we believe that other companies will find it quite difficult to catch up to us. Moving on to the game console. Momus McPherdie Derby was released previous quarter and our growth has changed significantly since then. So we did CNY92.3 billion in sales in the last quarter and the OP also was nearly around half, dollars 44,200,000,000. So with respect to Momus MaPrix Derby, I would like to have Mr. Chibaishi talk about the game in more detail. Thank you. From Cygames. My name is Kai Xia, Director of Hygames, and let me tell you a little bit about the announcement of the free delivery. First of all, since we released the game in February 24, 2021, numerous keywords related to the game has ranked high and many people have shown great interest for the game. We have fans that we cultivate by promoting the content in various media as well as new users from among horse racing fans. And we recorded in approximately 5 months over 9,000,000 downloads. We have continued to promote the game on various media platforms, including anime and manga. And in June July, we have streamed the TV anime series for the Umamu Senpre! Derp yet on Ademans and Blu ray Discard the 2nd series of the TV anime ranking, 3rd in the Oricon rankings. And as of the end of June, we have sold 170,000 copies. And the manga, Mamma's Messenger of Grey has also sold more than 1,000,000 copies. So the use of cross media has produced a synergy effect, and the wide range of content has been very well received. Also on August 2829, we will have an online live event using of MS Pb's pay per view function. So we will continue to focus on our efforts on cross media promotions, keeping the balance of our group synergy. In the game, NUMA has led pretty Derby. We have characters that are named after real race forces. Now we have Phase 3 reproduced the characteristics and history of each race force. We started with 25 characters, but now we have 36 characters that fans can raise and train, and we will continue to add new characters so the users can continue to enjoy the game. And we will continue to add new functions. In June, we added a new rematch function, which allows players to go up against other players and this has been well received by our users as well. We will continue to add new training scenarios and update the game so that it will become a long run hit. We will continue to provide content that we hope will be loved for a long time to come, so we hope to have your continued support. So we released Momoosemen became a big hit within our group. Usually, we release about 1 or 2 new game titles that become very popular. And as you can see here, group overall, we are utilizing our group know how and our resources, talents and also capital to invest efficiently in their development, and we hope to continue to do so to create great titles going forward. And these are some of the titles that we are planning to release within the year or this fiscal year and some have already been announced. And this is a very popular global game, Final Fantasy smartphone game, will also be released. Our group is going to be releasing that. And this will be available globally. So we have high expectations for this title. And after the demon player, there's another popular anime called Jesus Christ and Phantom Parade. So we are going to develop a new game for that and we have high expectations for this new title as well. And we have some console games that we are developing at the moment. So we have a very we have great top class game creators and so we hope to release very high quality games in the near future. Moving on to the media business. It may seem like we haven't grown in the Q3, but you will see the breakdown later. Last year, we had a pay per view group over 1 quarter and that didn't happen this quarter. But if you take that into consideration, we have grown considerably well. Now the number of other McDonald's has exceeded 68,000,000 and so we have continued to increase the number of dialogues. And with respect to WAEU, after we went over RMB10 1,000,000, it seemed like we didn't break through. But in July, we had a lot of programs, very good lineup. So for the recent period, we have seen very good WAU trends. And one of the reasons why we're seeing such great WAU is the MLB games, 166 games that we're broadcasting live, especially with Shohei Ohtani. So this is actually helping promote Abema. And we also exclusively live streamed Copa America as well as the open British Open with together with TV Asahi and also very important shoki games as well as Japanese chess games. So we there is one more game left I believe, but we basically live stream all of the Japanese chess major competitions. And we're very good at variety drama. And we also have more drama that depicts the Dark Side of Motor Society as well. So the lineup of our drama is expanding as well. We are working with TV Asahi collaborating our great content with their great content as well and also working together with their popular news program as well. So we're working even more closely with TV asahi. And I mentioned pay per view and how last year many artists, we aired their live events and it was a trend, it was a boom and it started to settle down. But in July, we have actually added more to the lineup. The state of emergency has been in place for a very long time. So many of the artists have started to have online live events. So we're having many of the live events in July onwards. And as you can see from this graph, this week grew last year, last fiscal year because of pay per view and you can see how pay per view contribution has decreased. But in the Q4, we should see pay per view contributing once again more significantly and growing in the Q4. And wind ticket is also doing well as well. This is for Kain cycling. So this is a resale of wind tickets. And we're actually the latest comer to this industry. And then we created our own service, acquired the rights and worked with ADEMA to try to grow this business. And it's only been 2 years since we released this service, but we're actually already catching up to the industry's top class, top players. And if we proceed at this stage, we'll probably take them over. So we have Avima's actually, this is a very good match with Avima as well. We've proven that. So this is the mid to long term sales pipeline or plan. So we have advertising care subscription and related business as well and these are areas that we will be monetizing Avima's business and we are actually having a lot of these things are becoming more transparent and visible now. So this hasn't changed our mid term and long term pillar, but we want to make sure that the algorithm is not going to be volatile and we want to make sure that it becomes larger and we can increase monetization. And the app business has been our main business since we went public since we were founded. So we will in fact increase sales and maximizing advertising effectiveness. And Uma and Uma and Uma has been a very great hit, but we hope to stably develop these hit titles. We already have the structure in place to do so, so we hope to continue to lead successful games. That is it from myself. Thank you very much for listening. This concludes the FY 2021 3rd quarter results presentation. Should you have any questions, please contact our IR team. Thank you for joining us today.