Septeni Holdings Co Ltd
TSE:4293
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Septeni Holdings Co Ltd
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I am Sato. Thank you very much for taking time out of your busy schedule today to attend our business results briefing. I will proceed with the explanation. Today, I will be presenting our financial results for the second quarter of the fiscal year. The general flow of the presentation will be an overview of the financial results up to the end of the second quarter, and an overview of the second quarter. Next, I will explain each business segment, and its progress against the earnings forecast. For the earnings overview, let me start by explaining our group structure from January 2022 using this diagram. From January 2022, Septeni Holdings's shareholder composition has changed, and the group structure now includes the newly consolidated businesses. As you can see in the chart here, from the second quarter of 2022, the Dentsu Group Inc. holds 52% of Septeni Holdings, which is a change in shareholding ratio. Dentsu Direct Inc. and Dentsu Elfto Architect Inc. are newly included in our consolidated results as wholly-owned subsidiaries.
On the other hand, Dentsu Digital Inc. is now an affiliate company accounted for by the equity method, in which we have a 25% stake. The slide shows the change in structure since Q2 of this fiscal year. So the 100% subsidiaries are fully consolidated and Dentsu Digital is accounted for under the equity method of accounting. Please note that this changes the P&L structure. The next page, Page 5 and onwards are the highlights of the financial results for the first half of the fiscal year. The half year financial results show that we have achieved a year-on-year increase in revenue and a significant increase in profit, thanks to the solid growth of each business segment and the effect of the new consolidation that I mentioned earlier. In terms of numbers, revenue was about JPY 14.4 billion. Non-GAAP operating profit was over JPY 3.8 billion and earnings before -- earnings per share EPS was JPY 18.57. Both revenue and operating profit grew significantly, revenue by more than 35% year-on-year, operating profit by 63%, and EPS increased by JPY 6.08 from the same period of the previous year. This increase in EPS was achieved despite the effect of dilution, due to the increase in the number of shares issued since January of this year.
On Page 6 are the financial highlights by segment. First of all, in the Digital Marketing business, both revenue and profits increased due to organic growth and the newly consolidated companies, as well as progress in the alliance with the Dentsu Group. These are the numbers. In the Media Platform business, the deficit narrowed because of the growth in revenue coming from steady growth of the Manga Content Business. On Page 7 are the details of the consolidated income statement. As I mentioned earlier, this is characterized by a large increase in net income. In addition to the organic growth of the business and the effect of the new consolidations, the increase in earnings from equity in affiliates led to a 95% increase in net income, which is about double the half yearly figure for the previous year. I think you can see that the growth of net income is stronger than the growth in top line. Many new and various profit numbers showed strong growth. You can say half yearly results were very solid. On Page 8, you will see earnings trends by business segment, and the figures are color-coded by segment. As mentioned before, the Digital Marketing business is driving high growth, thanks to organic business growth and the effect of new consolidations. You can see that the blue area is growing very strongly.
From here on, I will talk about the quarterly consolidated earnings overview. On Page 10 is a summary of the quarterly consolidated income statement. The overall picture here is the same as the half year results, but the growth of the top line exceeded the increase in expenses, and each profit item grew significantly. If you look at the quarterly results, revenue grew by 46%, operating profit by 59%. Our profit for the period increased 153%, reaching 2.5x as high as last year, including profits from equity in affiliates. You can see that the effects of the new consolidations and other changes are more pronounced in a quarterly basis. On Page 11 is a graph of quarterly changes in consolidated earnings. Our revenue increased to reach a new record high, partly due to the seasonal effect of the -- a busy season from January to March. Non-GAAP operating profit margin also increased year-on-year, and the company now has an improved linear profit structure. Page 12 shows the breakdown of consolidated expenses. Expenses are increasing in tandem with the increase in revenue. The cost of sales is also growing in line with revenue growth. This graph shows the quarterly trend in SG&A costs. If you look at this quarterly graph, you can see that SG&A grew significantly from Q1 to Q2.
As I mentioned earlier, the expenses increased in line with the large new consolidations effect from Q2 onward. Now let me move on to business overview by segment, starting with the performance of the Digital Marketing Business. The trend in figures is similar to that for the consolidated group as a whole. As you can see, the figures are growing very strongly. While maintaining the strong momentum we have seen so far, the 2 companies have been fully consolidated from this quarter. The effect of this has contributed to the solid growth. The net sales of this segment has grown significantly by more than 48% compared to the same period last year. This is the quarterly trend of the Digital Marketing Business, showing steady progress. Page 17 shows the progress of the Business Alliance with the Dentsu Group. A similar slide was shown last quarter, and this is an update to that slide. The number of clients, and sales from the alliance with the Dentsu Group, both grew steadily. Next is the performance of the Media Platform business segment. As I mentioned in the highlights, the Manga Content business has contributed to the increase in revenue, which contributed to reduction of losses. On a year-on-year basis, there was a great improvement in profit in the form of smaller operating profit losses.
As we have been reporting for some time, new investments for the future expansion of business domains are included in the P&L of this segment. If you look at the Media Platform business profitability, excluding investments into new domains, the net operating loss goes down further. Page 21 shows the revenue trend of the Manga Content business within the Media Platform business. The breakdown for Q2 shows that both advertising and charge revenue are growing strongly. We are focusing on charge revenues in response to the changes in the environment after COVID-19. If you look at the graph, since the third quarter of 2020, which was the turning point from pre-COVID to post-COVID, we have changed our strategy to focus on the growth of charge revenue. In line with this change in strategy, we changed the allocation of resources. On the other hand, the pipeline for advertising revenue has been developed in conjunction with the growth of the Animation business. And as we just delivered an animation product, advertising revenues have also turned around. Page 22 shows the trend of subscription revenues in the Manga Content business, which we have been showing continuously. Subscription revenue was about 1.6x that of the same period of the previous year, showing strong linear growth. Page 23 is a summary of the Manga Content business, the commerce revenue, which is a [ choice ] revenue other than in the apps.
We had a series of original content IP that will be hit. The sales of e-books of popular works on GANMA! are growing steadily, and this is driving commerce revenue. Page 24 shows specific topics. GANMA! is a Manga business that focuses on unique in-house developed IP. The popular Manga series on GANMA, the hit romantic story, My Lv.999 Love for Yamada-kun is a very popular manga that is gaining in popularity and is supported by a large number of readers. The total number of copies sold of the book has recently exceeded 1 million. And the number of PVs in the app is JPY 3.9 billion. The title is a big hit with these huge numbers. We have created a business structure where an in-house developed big hit title drives the Manga Content business revenues. Furthermore, with the support of our readers, the users, we are winning various prizes in the Manga industry and our reputation is growing. That was the overview of each business segment. Now I will turn to our progress against earnings estimates. Please turn to Page 26. In terms of progress, we disclosed the full year earnings forecast at the previous earnings announcement. We have provided guidance for revenue of JPY 30 billion, non-GAAP operating profit of JPY 5.3 billion and net income of JPY 3.9 billion, respectively.
The results have just been updated to show the progress up to the second quarter. The progress against the forecast for the full year is very strong with 48% of revenue, 73% of operating income and 79% of net income. Furthermore, we have issued new shares, and yet our EPS as of the end of the first half of the current fiscal year is JPY 18.57 against the full year forecast of JPY 20.68. Again, a steady progress. For reference, we show a comparison between the first half of 2022 and first half of 2021 in EPS, profit for the period, and average number of shares outstanding during the period. As you see, the number of shares has increased significantly compared to the previous half year, but net income has increased more than that. So EPS has increased significantly compared to the previous period, which was before the increase in shares issued. As we explained to you when we decided upon this capital increase, we expect EPS to increase despite the dilution caused by the increase in the number of shares issued. And we are making good progress. On the other hand, we have decided to leave the forecast figures unchanged at this time. We are now at the halfway point of the fiscal year, and we are feeling a strong positive momentum towards meeting the earnings forecast.
On the other hand, the external environment is becoming increasingly uncertain, and the economic environment is likely to change in the future. We will examine these changes in the environment for a certain period of time as we check current numbers, and make revisions to the forecast if and when it is deemed necessary. Page 27 is the progress by segment numbers. This concludes the second quarter financial results briefing. Thank you very much for your participation and your attention today. We look forward to your continued support of the group. Thank you very much.