DeNA Co Ltd

TSE:2432

Earnings Call Transcript 2025-Q2

[Shingo Okamura, executive]

Hello, everyone. Thank you for joining us for our presentation of the operating results briefing for the second quarter of fiscal year 2024.

First, I will start with our financial results summary. Revenue was JPY 36.3 billion. We had an IFRS operating profit of JPY 3.6 billion. We had a non-GAAP operating profit of JPY 4.0 billion. For non-GAAP operating profit, in particular, which is a key metric for us, we saw growth quarter-over-quarter as well as year-over-year. That's a positive takeaway.

Next are the financial results by segment. Sports in particular, has been going well. But rather than going into detail now, I'll explain further during the individual business sections later. And here is the cost and expense breakdown. I have no particular comments to share about this today.

Now I would like to discuss our progress for each of our businesses. First, in the Game business, our first half profit increased year-over-year. Please take a look at the graphs below. In the first half, we have been making sure to control our costs and secure profit. I want to mention that we are making steady progress in the significant downsizing of the game business in China that was announced in February 2024.

To give an example, we made our decision about Takt Ops. And in general, we review the operations of each title and are ensuring that we have good control in place.

One particular update I would like to share is about Pokémon Trading Card Game Pocket, a Pokémon card game for smartphones. This is an app that lets you casually collect globally beloved Pokémon cards. The service was launched on October 30, 2024, in 150 countries and regions, and we're off to a good start, having quickly achieved 10 million downloads globally, which was announced on November 1. We are planning various measures to ensure the game is enjoyed long term, including in-game events and various updates such as implementing the trading function.

Next is the Live Streaming business. In Pococha Japan, we enhanced marketing, including TV commercials in the first half of fiscal year 2024. Towards the second half, we are placing a greater focus on profitability and aim for a buildup of profit. A key takeaway here is that our first half performance was impacted by our marketing efforts.

I'll start with Pococha Japan. Again, we strengthened TV and other marketing with the aim to spread awareness of Pococha and downloads in Japan reached 6.32 million as of September 30, 2024. However, we have been carefully running analysis and revenue contribution was limited. So we are reviewing the cost of marketing initiatives, et cetera, from the second half and focusing on maintaining and enhancing user engagement and securing profitability.

Another important business here is IRIAM. IRIAM achieved 3.91 million downloads as of September 30, 2024, and continues to see active use. I've mentioned a few times how we are prioritizing sound community development, while also aiming to achieve revenue growth and early profitability. You can see for yourselves how well we are doing by looking at the graphs on this slide.

Next is the Sports business. We had solid performance for the first half, especially if you see the number of games per quarter at the bottom of the slide, we had fewer games this Q1 and Q2 than last fiscal year. But despite that, our performance reached higher levels. To mention a little about Q3, as you may know, we had some regular season games slide into October. And we were able to have some of the Japan series games in our home stadium.

For the Climax series, we did not have games in our home stadium since we were ranked third, but we had public viewing set up in Yokohama Stadium, where we welcomed many fans. Of course, we are cognizant of the need to be careful with costs. But the takeaway here is that we are improving our performance for the sports business year-over-year. More specifically, just in the past few days, we progressed all the way through the Climax series and on to win the Japan Series. Everyone in Yokohama is thrilled. Thanks to the support of our fans, our stadium attendance for the 2024 season home games reached a record high for the team at 2.36 million.

In terms of capacity for the stadium, we were running at about 96%. I should also mention that the record high of 2.36 million is for the regular season. This does not include the Japan Series. For the 3 games that were home games, total attendance was about 100,000 people. That's a plus. There was a lot of excitement at Yokohama Stadium.

Next is the Healthcare & Medical business. The first half is a time when we are working on preparations for the second half. In each area, we are making progress towards a year-over-year increase in full year revenue and profit. We aim to share good results in the second half. I'll start with the Healthcare area.

In the Data Use business, we are making progress in building pipeline towards the demand period in the second half. Achieving good growth here is important. If you look at the KPI on the bottom right, the number of transactions is steadily growing, showing the increasing needs for our data. Meanwhile, for Data Health, which is targeting local municipalities, it's important to point out that this year is not a Japanese government data health plan formulation year. Last fiscal year was.

So during that year, local municipalities had to set their data health plan, which drove demand. But this fiscal year is just a regular year. So we expect the number of orders to not be at the level of last fiscal year, but instead to decline to a level similar to fiscal year 2022. Of course, we are proceeding with cost efficiency efforts to achieve growth in the next fiscal year onward.

We also have the medical area. We expect acceleration in individual facility deployment in each region this fiscal year through various efforts, including support from the national government's medical digital transformation and working style reform initiatives. The number of facilities using Join in Japan grew to 523 as of September 30, 2024, and examples of deployment through local municipality subsidies, et cetera, expanded into 16 prefectures. This shows how well Join, which is a communication platform for medical practitioners, is spreading into medical facilities in Japan.

But beyond that, we are also making progress in detailed discussions for projects leveraging Join Mobile Care, which combines portable medical devices and Join, which I introduced last time, to address regional medical resource shortages with the aim to achieve contribution this fiscal year. We aim to share more updates on our progress in the second half.

This concludes my brief presentation for the second quarter of fiscal year 2024. Thank you for your attention.

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