Mixi Inc

TSE:2121

Earnings Call Transcript 2022-Q1

[Hiroyuki Ohsawa, executive]

Thank you very much for taking time out of the busy schedule to participate in today's earnings result briefing session. I am Hiroyuki Ohsawa, Director and CFO.

Today, I'd like to explain the financial and business status for the first quarter of fiscal year 2022.

Please turn to Page 3. This is the executive summary. First quarter results are progressing in line with our full year forecast. I will explain the status of each segment later.

First of all, I'd like to explain the financial status. Please turn to Page 5. This is the quarterly consolidated income statement.

Net sales were JPY 28.3 billion. EBITDA was JPY 6.9 billion, and operating income was JPY 6 billion. These results are in line with our full year forecast.

Please turn to Page 6. This is the quarterly performance trend. I will explain the segment sales later.

Please turn to Page 7 for the quarterly sales costs.

Outsourcing decreased year-on-year. This is because in the same period of the previous fiscal year, the development cost of TIPSTAR and the production cost of Monster Strike The Movie were posted.

Please turn to Page 8. This shows the quarterly SG&A expenses.

Advertising expenses increased year-on-year. This was due to the planned year-round advertising spending for Monster Strike to enhance recognition and also the addition of marketing expense for TIPSTAR.

Next, I will explain the status of each business. Please turn to Page 10.

This is a review of the Sports segment. Net sales totaled JPY 4 billion, an increase of 69.7% year-on-year. This was mainly due to the sales growth of Chariloto and the addition of sales from TIPSTAR, which was launched on June 30, 2020.

Please turn to Page 11. GMV of Chariloto and TIPSTAR are shown.

The total GMV increased by 160% compared to the same period last year. Chariloto GMV increased significantly due to the growth of Internet sales and as a result of marketing activities. On the other hand, TIPSTAR's GMV remained almost flat compared to the previous quarter as we held back marketing activities.

Please turn to Page 12. I'd like to explain the details of the TIPSTAR update that was implemented in July. In this update, we have added multiplayer features that realizes the socialization strategy, making it more fun when played with friends. From the situation at hand, we are growing more confident that the multiplayer feature will be a success, but we will make further improvements to the feature and begin proactive marketing going forward.

Please turn to Page 13. I would like to explain the status of Chariloto.

We implemented aggressive marketing measures and started airing our first TV commercial in April. As a result of these efforts, the number of users has been steadily increasing, contributing to the performance of the Sports segment. While steadily increasing the sales of Chariloto in line with the growth of the overall market, we will aim for further growth by cultivating new customer segments with TIPSTAR.

Please turn to Page 14. I'd like to explain the situation of the Chiba Jets.

In the 2020/'21 season, the club won its first B League championship. We'd like to express our sincere gratitude to all the boosters, partners and everyone involved who provided flaming hot support to the Chiba Jets. In July, the Jets underwent a rebranding. With the new logo and slogan, we will work together with our boosters, partners and the local community to create a club that thrives beyond the foreseeable future.

Next, I'd like to explain the Lifestyle segment. Please turn to Page 16. This is a review of the Lifestyle segment.

Net sales increased 76.1% year-on-year to JPY 1.7 billion. This was mainly due to strong sales of Mother's Day and Father's Day gifts from FamilyAlbum as well as a large increase in sales of minimo, which had suffered from COVID-19 the year before. In the current quarter, there is a one-off sales of approximately JPY 200 million recorded for the SNS mixi. Even after excluding these nonrecurring gains, sales were approximately 1.5x higher year-on-year.

Please turn to Page 17. This is a situation of FamilyAlbum and Romi.

Sales of FamilyAlbum rose dramatically year-on-year as Mother's Day and Father's Day Gifts became a staple products. We focus on photo-based gifts, utilizing FamilyAlbum's assets and offered many original gift choices, which were well received.

For Romi, we opened the first pop-up store for a limited time, creating an opportunity for customers to actually interact with Romi. Romi has also been featured in multiple media and is gaining name recognition, and the retention rate of users is high. So we are feeling positive about this.

Next, I will explain the Digital Entertainment segment. Please turn to Page 19. This is a review of the Digital Entertainment segment.

Net sales were JPY 22.5 billion, a 13.1% decrease from the same period last year. Sales of Monster Strike was generally in line with the plan due to the implementation of collaborations with popular IP. Sales of Kotodaman increased year-on-year due to IP collaborations and updates.

Please turn to Page 20. This is the situation of Monster Strike and Kotodaman.

Monster Strike sales remained strong due to collaboration with popular IPs. In addition, XFLAG PARK was held online in July. In this maximum simultaneous connections by 340,000, many people enjoyed the event.

Sales of Kotodaman increased due to collaborations with various popular IPs and the implementation of updates.

Please turn to Page 21. This is the progress of the full year earnings forecast.

We are generally in line with the plan, although for stage profits, we have made more than 40% progress. Going forward, expenses are expected to increase due to the planned aggressive marketing for TIPSTAR, and we are going to aim for continued sales growth.

This concludes my presentation. Thank you very much for your attention.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]