Earnings Call: Q1 2021

Jan 27, 2021

It is time. So we would like to begin Cyber Agent's FY 2021 Q1 Results Briefing. This results briefing session is being live streamed. So with respect to the briefing content today, please refer to the disclaimer included in the presentation material. CEO, Susumu Fujita, will take you through the results. This is Fujita. We would like to go over the FY 2021 Q1 results. So our fiscal year ends at the end of September. So this quarter, it covers from October 1 to end of December. Overall, if you look at the results, we have done well. We have had a great start. But if we break that down, the advertising and media, as you can see, has done very well. However, game temporarily has not performed as well. Overall sales was a record high. And this is by quarter. As you can see, the Q1, we recorded we reached a record high. And the consolidated OP, as I mentioned before, games the game business, the profits decreased temporarily, but we were able to offset the decrease with the investment development business and the ad and media business did both, so we landed at JPY 7,000,000,000. In terms of SG and A, the Q1 winning ticket and game business, we spent marketing expenses on these 2 games and tickets. However, the expenses were basically flat, so no significant change since the last quarter. And in terms of the number of employees, this quarter was also flat as well, no major change. And this is the P and L, so it's quite straightforward. Downstream as well, there's nothing extraordinary worth mentioning. So the FY 2021 forecast, we just began this fiscal year, but this is the forecast that we have for our business performance. And against this forecast, we're off to a pretty good start. But the second quarter, we should be going back to our normal speed without the investment development business impact. And now moving on to the individual businesses, first starting with the Internet advertising. With this segment, we have performed well. Even amid COVID, we have reached a record high in the Q1. And the OP was JPY5.7 billion. So Kiyomi prediction AI, we released this service. So we have Kiyomi Kiyomi, Prediction AI, Prediction TD as well we released recently. And so this will this is going to be a strength for us in the advertising business. What this does is to measure the effective forecasting, and we can change the creative in real time to optimize its effectiveness, and COVID-nineteen proved to be a tailwind for this business as well. There are various elements, but we have the excel in operations and technologies, which are proving to be great weapons for maximizing advertising effectiveness. So we hope to continue to expand our market share in this area. Moving on to the game business. As I mentioned before, we are temporarily facing hardships mainly because in the Q1, there are some seasonal factors. So if you look at our track record, you can see that it tends to be lower our performance tends to be lower in the Q1. And we actually are facing challenges in operations and also the titles that we had expectations in, we didn't see the results that we had hoped for. But in January, we've seen all of this go back to normal. We're recovering. So also in addition, in February, we are going to be releasing a huge title for us. So we believe that this trend is temporary. This is the OP, so it has come down significantly. The big title that we will be releasing, we have invested quite a significant amount over the last couple of years, and we will be releasing a new game on February 18, NIA:A Reincarnation and also February 24, the long awaited Umamusume! Will also be released as well. So we have 2 major titles being released next month. So based on depending on how well these launch and trend, our game business performance should change significantly. And in terms of other upcoming titles, we have this kind of lineup at the moment. So, Ugly Pride, we released the animation the other day, and we've seen a great start. It's off to a good start. So we are going to be also releasing a game for the same content. Moving on to the media business. It has grown significantly. AVIMA related businesses performed well. So that's the key contribution to this business. And take per view, a win ticket, which is a bicycle racing automobile auto racing, they both performed well. So these contributed to the media business. In terms of the operating loss, we have significantly reduced this as well. And it's been 4 years 9 months since we launched ABIMPA, but we've seen a shift in downloads. We're doing well in terms of downloads. And the weekly active users is also increasing as well. The EWE right now is around 12,000,000, so it has remained around that level. So it's going steady. And in terms of the premium subscribers, we were trying to do 1,000,000 trying to reach 1,000,000, but it's slightly below this number, this target. But I will explain later how we will how we have changed the organization to enable us to do better. But in any case, we're growing well. Underdog is a movie that we it's our very first movie, and we've won 4 awards. And also, the hit content, you can't fool me, Mr. Wolf, but we have premium member only special content as well. So we weren't able to introduce many content exclusive to premium membership, but we will continue to we would like to continue to do so to increase our in force our efforts. And we also had many live concerts in December, LDH, EXCEIL and also Momokuro, Masaharu Fukuyama, Pornography, Southern All Stars. These are all very famous artists in Japan, but we had great live concerts on our platform, and it was within the year. And even after January, the artists and their management companies did not know how, what they would like to do in the 2021 onwards, but they decided to continue to offer concerts online because of the state of emergency that has now been issued again. So we believe that the online line concert should continue for some time. Win ticket has done very well in the recent months, And we're already in the block. We're already making profit. But in the Q1, we had lots of TV commercials and done a lot of promotions. So it's a little bit lower. But over the fiscal year, we believe that we launched it from scratch, but I think we believe that this will continue to contribute to our performance overall. And I mentioned about the organizational change because premium membership, we weren't able to hit the target by the end of December. So Abeema used to do TV and video, and it's free and also paid service as well. So we have both free users and premium users. So it's hard it was hard to categorize us were we TV or were we pay per view. So we decided to split the organization into 2. So the free business unit will focus on TV businesses and premium business unit will focus on the business model such as Netflix and Amazon Prime. So we divided our organization into 2, and the free business unit will continue to track WAU and to increase WAU and monetize ads. And premium business unit will focus on increasing premium users with exclusive content. So we have begun to run Abema with these 2 different business units. So I say this every time, but Abema, we started as a free service. We wanted to monetize after we hit 10,000,000 WU. Now we're at 12,000,000. So we have advertising, subscription and other services such as wind tickets. So these are related businesses that we want to continue to add and grow. So it's going to take some time, but we hope to continue to grow this into a key business pillar over the mid- to long term. So for FY 2021, we want to grow a large media business, while media and ad businesses do well. So this we will continue along this path and that is it for myself. Thank you very much for joining us today. So this concludes our FY 2020 1 Q1 results briefing. If you should have any questions, please contact the IR representative. Thank you for watching today.