Mixi Inc

TSE:2121

Earnings Call Transcript 2021-Q3

[Koki Kimura, executive]

Thank you very much for taking time out of your busy schedule to join us for this earnings results briefing session. I am Kimura, President and Representative Director. I will present our earnings results for the third quarter of fiscal year 2021. I will explain about our financial and business status.

Please turn to Page 3. As an executive summary, I will explain the main topics of Q3. In the Sports segment, gross merchandise value of betting tickets for Chariloto and TIPSTAR grew by approximately 2.6x year-on-year. In the Lifestyle segment, we increased revenue due mainly to the success of FamilyAlbum New Year cards. In the Digital Entertainment segment, Monster Strike achieved the projected revenue increase, and we also continue to improve the cost effectiveness of advertising. As a result, we were able to achieve increase in both sales and profits for our 3 consecutive quarters. I will explain the details of each business later.

First, I'd like to explain our financial status. Please look at Page 5. This is a consolidated statement of income. Net sales were JPY 28.9 billion, an increase of 13.5% year-on-year. EBITDA was JPY 2.4 billion, operating income was JPY 1.4 billion and profit attributable to owners of parent was JPY 1.1 billion. In the previous term, expenses for the relocation of the head office were incurred, but if these expenses are deducted, operating income would have increased by 77.6% year-on-year.

Please turn to Page 6. This shows the progress towards the consolidated results forecast. We are progressing toward our projected results forecast that was revised upward.

Please refer to Page 7. This is a quarterly trend of consolidated results. I will explain the net sales by segment later.

Please turn to Page 8. This is a trend in sales cost. Outsourcing costs increased over the same period of the previous year. This is due to the cost of 2 newly consolidated companies as well as onetime costs due to the release of new games.

Please refer to Page 9 for trends in SG&A expenses. Advertising expenses increased slightly year-on-year. This was due to upfront investment for the new service, TIPSTAR. On the other hand, for smartphone games, which account for a large proportion of advertising expenses, we continue to optimize the advertising for Monster Strike and it has declined over the previous year.

Next, I will explain the status of each business. Please turn to Page 11. This is a review of the Sports segment. Net sales totaled JPY 3.4 billion, an increase of 108.8% from the previous year. This was mainly due to the addition of sales from Net Dreamers and TIPSTAR.

Please turn to Page 12. I would like to explain the changes in GMV for Chariloto and TIPSTAR. The total sales of GMV increased by 161.3% year-on-year, mainly due to the growth of Internet sales under the COVID pandemic. TIPSTAR in particular is attracting a new user base, such as younger generation and women, which is different from that of Chariloto. We will continue to work to grow both Chariloto and TIPSTAR and further expand GMV.

Please look at Page 13. In December, we have released Net Keirin from Net Dreamers. It is a sister site of netkeiba, which has over 10 million MAU. netkeirin is an all-in-one portal site for bicycle racing that offers use columns and race prediction sales. We will aim to make it profitable as a media, and we will also use it to direct customers to TIPSTAR and Chariloto. We will aim to strengthen interservice collaboration, taking advantage of our strength within the group to further expand the scale of the business.

Please look at Page 14. Here, we explain the other Sports Initiative segment. In December, we became a sales agent partner for the sports channel, DAZN. We aim to expand into commercial facilities such as restaurants and hotels to increase the number of places where people can enjoy watching sports with their friends. In addition to this, we are preparing new initiatives in the Sports segment. Please look forward to them.

Next, I will explain the Lifestyle segment. Please turn to Page 16. Net sales were JPY 2.9 billion, an increase of 30.3% year-on-year. This was mainly due to the strong performance of FamilyAlbum New Year cards and SFIDANTE's New Year card service.

Please look at Page 17. This is a situation for the FamilyAlbum. For FamilyAlbum, we will continue to work on strengthening monetization. In November, we released a new e-commerce service, FamilyAlbum Gifts. In addition to that, we have also released FamilyAlbum Anniversary Book, which is ideal for long-term photo storage. Also, we are planning to release FamilyAlbum GPS Guardian, a smartphone app to watch over your child. FamilyAlbum is currently being used by more than 8 million users of families with children. We will continue to expand products and service that will please families and aim to further increase our business performance in the future.

Next, I explain about the Digital Entertainment segment. Please refer to Page 19. Net sales increased by 4.4% year-on-year to JPY 22.5 billion. This was due to the growth in sales of both Monster Strike and Kotodaman.

Please turn to Page 20. This is a situation of Monster Strike. We were able to achieve our projected increase in revenue, thanks to higher ARPU resulting from collaborations with popular IPs during the New Year holidays. In addition, by focusing on effective promotion, we were able to improve cost efficiency, and the profit margin continues to improve. Currently, we are collaborating with the popular IP, World Trigger. We will continue to implement various measures so that many users would want to enjoy the game.

Please look at Page 21. I'd like to explain the status of Kotodaman and Star Smash. For Kotodaman, we have actively implemented New Year campaign and collaboration events with popular IPs. Since the beginning of this quarter, quarterly sales have been trending above JPY 1 billion. We are aiming to further growth in the future. For Star Smash, which was released in November last year, we are holding events featuring popular Disney characters as cars every month and working to quickly respond to user feedback and updating the app to make the game more enjoyable.

Please refer to Page 22. Once again, I'd like to look back on Q3. In the current quarter, we have been focusing on Monster Strike and government controlled competitive sports business, and they made steady progress in Q3. We will continue to invest aggressively in the Sports segment, which has high growth potential and develop it into a new pillar of earnings.

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