CyberAgent Inc
TSE:4751
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CyberAgent Inc
Earnings Call Analysis
Q3-2024 Analysis
CyberAgent Inc
CyberAgent's third-quarter results for FY 2024 reveal exceptional growth across all divisions. The company's overall operating profit (OP) surged nearly 500% year-on-year, a remarkable increase that signifies strong operational execution. Digital media has been a key driver of success, with both the advertising and gaming sectors showing robust performance. The media business has also seen increased profitability, reflecting the company’s adept management and strategic positioning.
For the fiscal year, CyberAgent has revised its guidance upward significantly. Target figures now include sales expected to reach JPY 790 billion, with operating income projected at JPY 41 billion and net income at JPY 16.5 billion. This upward revision indicates that the company has not only met but exceeded expectations and is on track to maintain this momentum in the upcoming quarters.
The internet advertisement segment marked record high sales during this quarter. Despite an increase in operating costs due to recruiting, the year-on-year comparisons show marked improvements, indicating efficient cost control. CyberAgent's media platform, particularly the ABEMA streaming service, has benefited from a diverse range of content including sports events like Euro football and MLB coverage, contributing to stable growth in its revenue.
The company’s game division has thrived with notable releases, particularly the ‘Gakuen iDOLM@STER’. This title has not only captured significant player interest but is expected to continue performing strongly due to its collaboration with Bandai Namco. Additionally, upcoming titles like ‘Uma Musume Pretty Derby’ for console are anticipated to further bolster revenues, with the launch set for August 30.
CyberAgent is focusing on strengthening and expanding its intellectual properties (IPs). The acquisition of Nitroplus, known for popular franchises like 'Touken Ranbu', aims to enhance IP development and create globally recognized content. Furthermore, plans to support emerging manga artists through initiatives such as Manga Apartments reflect a long-term vision of nurturing creativity and driving future growth.
The management remains committed to increasing sales and profits over the medium to long term, emphasizing sustainable business strategies that have shown successful execution in the past year. The emphasis on expanding its IP portfolio alongside successful digital content suggests a forward-looking approach that aims to capitalize on growth opportunities within the entertainment industry.
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[Interpreted] We'd like to begin CyberAgent's FY 2024 Q3 Earnings Briefing. We're live streaming this earnings briefing.
With respect to the content we'll be sharing with you today, please refer to the disclaimer included in the presentation material. Our CEO, Fujita, will take you through the earnings results.
[Interpreted] So my name is Fujita, I'm the President. I'd like to take you through the 2024 third quarter, April to June earnings results.
Overall, it was a great quarter. So in all aspects, we were able to increase sales and profits. The overall OP performed twice the target that we had -- twice or 3x of the target that we had. So it was a great quarter. Media business continues to be profitable and Advertising business recorded -- marked a record high sales and Games as well. The new title that we released became a pretty big hit. So this resulted in increased sales and OP.
In terms of overall sales, year-on-year, we saw double-digit growth. The consolidated OP year-on-year went up by nearly 500%. So the third quarter tends to be a more difficult period, but we did perform well this quarter.
This is the number of employees every April, we welcome a lot of new graduates. This year, we welcomed 500 new graduates as a group.
And this is SG&A. We controlled the operating costs appropriately and here are the results for this quarter.
And this is a PL. And no major changes to the balance sheet either.
In terms of our forecast for this fiscal year, we'd like to up -- revise the forecast upward. So sales operating income, ordinary income at the -- sorry, operating income, ordinary income and net income, we've overachieved our annual target already at the -- as of the end of the third quarter. So we'd like to revise the target to JPY 790 billion, JPY 41 billion operating income, ordinary income and JPY 16.5 billion net income.
So July to September, the current quarter, of course, we'll see a sales revenue from [indiscernible] sales. But we're going to -- that will be offset. So the forecast does not include the sales from [indiscernible].
This is the mid- to long-term graph. We announced that we're committed to increasing sales and profits and it's only been 1 fiscal year. But as you can see, we're delivering on our promise and increasing sales and profits.
This is a summary in terms of dividends, no change has been made.
Moving on to the individual businesses. First, starting with Internet Advertisement. We marked record high sales this quarter. Over the mid- to long term, we -- it has been growing steadily. So we -- this is an area that has been growing steadily.
If we look at the OP, especially, we welcome a lot of new graduates in April. And so this business, the cost increased in this quarter. But year-on-year, we've made great improvements.
This -- we show this every time, but Japanese LLM, we actually issued -- released a new LLM. The accuracy has improved and technology has continued to be our competitive edge or strength.
Moving on to the Game business. May 16, we released in the middle of the quarter, Gakuen iDOLM@STER, and it became a huge hit. Year-on-year, we've been able to increase sales. Especially anniversary campaigns tends to fall in January to March. So the other quarters tend to be tough without the anniversary events. But in the third quarter, we've been able to release a new game and it became a huge hit. So it's going to be positive for the Game business. And year-on-year, we've also improved our operating profit.
This is the Gakuen iDOLM@STER. This is a joint title with Bandai Namco, and we believe that this will become a long seller. It has great momentum at the moment. So we're seeing great trends for this game.
With respect to UMA MUSUME, we'll -- we released the movie, and it was -- it has been doing very well. As the people who have seen this movie, we were able to actually communicate the UMA MUSUME's appeal to those who saw the movie as well. This quarter, we had Granblue Relink and Gakuen iDOLM@STER. So we've a couple of smash hits, and we'll have Uma Musume Pretty Derby [indiscernible]. And that will also -- that will be the first console game, and that will be released on August 30. So please look forward to the new console game as well.
And we issued a press release yesterday about project SEKAI game. We already have the game and the new movie will come out in the future. And this is a movie that we're creating as well, and it will be released January 17 next year.
Moving on to the Media business. Media business overall is doing well as well, especially ABEMA-related business. It has -- they've performed well.
And in terms of the operating profit, we're seeing continuous trends, profitability trends.
And sales of ABEMA & Related businesses overall has grown steadily, especially Ads and ABEMA-related business, we saw stable growth this quarter.
This is the WAU. It's doing extremely well. Especially recently, we had a Euro football games and also MLB, where we've Ohtani doing well and anime, variety TV shows and original shows as well and news. Overall, all of these programs are doing well. We're seeing great viewership.
And we're also strengthening our partnership with external partner, DAZN, WOWSPO, and J SPORTS are some. So for people who are used to ABEMA UI, it's a very convenient service. And I also like the service as well, but we'd like for you to definitely try this service. You might be familiar with this page as well. We're going to enhance our monetization by strengthening our peripheral businesses around ABEMA.
Moving on to the medium- to long-term strategy. In principle, as I say this every time, but we're still focusing on sales, increasing sales and profitability. The entire company is committed to doing so. And that is why we haven't really communicated this externally, but over the mid- to long term, we're already working on the mid-to-long-term strategy.
And in principle, we'll strengthen our IPs. So UMA MUSUME, we developed the IP, created animation and created the game and that became a huge success. So the direction that we want to head has become clear, so we want to replicate the success. So we've added BABEL LABEL and other animation companies to our group. Nitroplus has joined us this quarter. So we're making preparations to continue to create original IPs.
With respect to Nitroplus, Touken Ranbu is a very famous animation, but they've numerous other hits as well. So they've -- and they can create these kind of IPs and Nitroplus joining the group, we believe that they'll help us in creating IPs that will become globally renowned. So we're working closely at the moment. Before Dolls Nest was something that we worked on before they joined the group. The game will be released this year, and I'm very much looking forward to this new game as well.
Lastly, we're going to create a Manga Apartment, this is something like Tokiwa-so. So we want to nurture young manga artists here in this apartment. So we'd like to help manga artists grow and capture IPs that way. So that concludes our third quarter announcement. Thank you very much.
We would like to conclude CyberAgent's FY 2024 Third Quarter Earnings Briefing. If you've any questions, please feel free to contact the IR division. Thank you for watching the briefing session today. Thank you.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]