CyberAgent Inc

TSE:4751

Earnings Call Transcript 2021-Q4

[Unknown Executive]

So we would like to begin CyberAgent's FY 2021 Full Year Earnings Briefing. Today's briefing will be livestreamed. Please refer to the disclaimer as indicated on the presentation material for today. President Susumu Fujita will take us through the briefing.

[Susumu Fujita, executive]

This is Fujita, the President. So we would like to give you a briefing of the full 2021 fiscal year. We will give you an overview of the full year results.

First of all, we made 2 rather large upward revisions this fiscal year. However, we marked record-high sales as well as operating profit.

With respect to each segment, we have the Media Business. ABEMA and the related business within the Media business increased revenue, so we were able to improve operating losses this fiscal year. And the Advertising Business is doing very well overall. And the Game Business new titles, and Uma Musume included, have done excellently. So we have significantly increased sales and OP here as well.

So this is a graph for the full year results. So the consolidated sales is JPY 666.4 billion, up by 39.3% year-on-year. This is a significant jump.

And the OP. Over the last couple of years, we have invested in new businesses, namely ABEMA. And so our OP was around JPY 30 billion, but it has jumped significantly to this level.

In terms of SG&A. It didn't increase as much as the sales or OP. It was JPY 127.6 billion for this fiscal year. We have a little bit more than 6,000 employees at the moment.

And this is the P&L. So the net profits increased by 6.3x year-over-year, up by 528.8%. So this is a significant increase.

And this is the balance sheet. The cash deposit is now JPY 181 billion. So we want to invest in developing new businesses and new games and M&A if pertinent. So we would like to use our cash for those purposes.

In terms of the forecast for FY 2022, at the moment, we would like to refrain from disclosing the forecast for the following fiscal year because we do not know where the new games impact will settle. It's hard for us to forecast as well. So we could probably give you a large range, but it will be rather large. So we don't want to mislead the shareholders, and that is why we have refrained from sharing any forecast at this time. As well, we would like to offer a forecast at a later time once we know what -- have a better idea of what is happening.

Now I would like to take you through the different segments. For the Internet Ad Business, it is doing well. The sales went up by 19.3% year-on-year, so this is a significant increase in comparison to the past couple of years. And this is the sales by quarter. And you can see from the last couple of quarters, we have marked record-high sales.

On the other hand, we have been investing in AI and DX and developing technology as well. So we're putting a lot of effort into developing AI and DX. So that is why the OP at this -- for this fiscal year is at this level.

And the competitive advantage of our Ad Business, Internet Ad Business, maybe you might think that Advertising Business is a little bit glamorous, but it basically boils down to operational capabilities and technical capabilities. This is our competitive edge.

Also, we do have a dedicated B2B team. This is the only team dedicated to B2B. But we are offering and fortifying a wide range of DX businesses at the moment. Of course, we're providing different technologies, but for retail, for example, we've already announced these kind of partnerships and these alliances. But for the most part, we will create Advertising Business together. And through the sales promotion, we will expand the businesses.

So that's basically a lot of the DX projects that we have begun. But we -- it's only been -- we've started this quite recently, so next fiscal year onwards, we will see some results from these new projects, new endeavors.

And this is the Game Business. We have significantly increased sales and OP. So both the sales and OP has dramatically increased.

This is by -- sales by quarter. Uma Musume Pretty Derby launched in the second quarter. So in the first quarter, it's usually not that high in the first quarter. And many people may have wondered that the Game Business was a little bit sluggish. But after the Uma Musume was released, we're doing very well. And this is the OP by quarter. So we're giving you a full year earnings briefing today, but the last 3 quarters, Uma Musume performed excellently over the last 3 quarters. And this is record high OP and sales. So we want to see how that will trend next fiscal year onwards. Of course, it's doing well still. But if we look at the 12 months' time, we still need to wait and see.

And it's been 7 months since the Uma Musume Pretty Derby has been launched. And we have exceeded 10 million downloads already in 7 months. And this is a very large IP as well for us, so we want to make sure that it will become an IP that will be loved for a long time to come. So we want to cherish and make sure we're nurturing it to the best of our ability.

And the competitive edge -- advantage of our Game Business is that the game business is becoming a large industry, so we have the necessary organization, technological capabilities as well as the operational capability and know-how as well. Also, we can invest and inject the necessary investments, funds as well. If you don't have all of those parts, it's very difficult to produce hits, but we have, we're well positioned to deliver all of those parts. And so we hope to continue to make sure that our Game Business does well.

We want to launch 4 to 5 titles every year -- new titles every year. To make sure that they're all solid, good titles, so we will only release when we're ready. So this is what we have announced already, but we can expect quite a lot from these titles, I believe.

And this is the Media Business. ABEMA over the last year has increased in revenues. So this segment has also -- the sales for this segment has also increased. And of course, over the last couple of years, we have been investing in this business, but we are entering a new phase where we're improving our operational losses.

If you look by quarter, this is the result. So in the fourth quarter, this significantly grew.

And the number of downloads at the moment had -- has continued to come up. And at the moment, it's more than 73 million downloads.

And the weekly active user over the last quarter was the highest ever, 18.25 million. We broadcasted MLB, and Shohei Ohtani did very well. And we did a lot of -- we had a lot of younger fans watching Girls Planet as well. So that's why we have seen these results over the last -- especially the last quarter.

And this is the devices that people are using to watch AbemaTV. Of course, we still have a lot of users who are using smartphones. But over the last couple of years, many people have started to watch on TV. So compared to a year ago, the percentage has doubled. Of course, this is also due to COVID, but new TVs are equipped with -- most of the new TVs are equipped with remote controllers with AbemaTV buttons. So this has also helped the TV viewership grow.

ABEMA is going to create innovation by taking advantage of what's great about TV. So we want to bring the best of TV to the Internet and become the new TV for the future. So it's free. Anybody can watch. It's very easy, accessible. And so news, TV, sports, drama, variety programs, everybody can watch at the same time as well. So we want to keep those great characteristics of TV, but we want to be able to offer that on-demand and enable time shifts as well. People can watch it from anywhere, whenever, wherever, on the move as well from home or where they're still on the move. So we want to combine the best of TV with what we can offer that -- and to become the TV for the future.

Of course, we're trying to create and offer better content in all different genres, but we have original programs, also variety programs as well as drama. For example, A Company is not a School is title one. But we want to continue to make great titles and content.

And this is by -- sales by segment. So each segment is growing, however, the related business grew significantly this fiscal year. The related business, if we break that down, WINTICKET sales as well as ABEMA Shopping, those contributed significantly to the related business. And also, Pay-Per-View grew as well. Sorry, this is by quarter.

WINTICKET has grown dramatically. Especially 2.5 years ago, we started from 0, so this was new business that we started. So we developed the service from scratch and then created the AbemaTV program, created its channel. So we combined Internet betting with broadcasting as well as streaming. And this is growing significantly dramatically.

So Keirin as well, we have MIDNIGHT KEIRIN, which is being broadcast in the middle of the night, but that's also expanding. But WINTICKET is growing much more than the rest of the market, faster than the rest of the market.

So we have AbemaTV, we have our own channel, we can always air, and we can air for a long time. So the programs are longer. We can create any kind of content we want. That's a great thing about Internet TV. We have a lot of freedom, so we created our own channels. And we are using our technical capability, marketing capability as well to launch this new business. And 2.5 -- in the 2.5 years, we've proved all of this, so we believe that it was a very good fit.

And we've been saying this from the very beginning when we launched the service, but we are on track. So we are working on creating -- we have created a foundation with advertising and subscription. And we're trying to grow the related business portion.

And mid- to long-term strategy. We always bear the mid- to long term in mind, and we ask our investors to do the same, to have a mid- to long-term vision. But our strategy hasn't changed. We need to make sure that ABEMA becomes a success and offer a stable media platform business. So that is the foundation of our strategy. And also to make sure that we're continuing to increase the market share by maximizing advertising effectiveness for the Ad Business. And for the Game Business, we want to make successful games and enhance the operational capability to make sure that they become long-run hits.

So if we describe a little about it as a diagram, this is what it looks like. But over the mid- to long term, Media Business is going to become a very key pillar of our business. So we are going to have -- continue to invest in this business.

And the other day, we defined the purpose and introduced that both internally and externally. So we want to break through stagnation with new power and the Internet. That's our purpose.

The closed-offness or sadness in Japan, I think a lot of us feel that. But the Internet generation, we created our company with the onset of Internet. And we want to innovate using Internet and revitalize Japan. So that's what it -- that phrase embodies.

So we hope that you will support us mid- to long term as well, so we continue to ask you for your kind support. This is it for myself. Thank you very much for today.

[Unknown Executive]

This concludes our FY 2021 full year earnings briefing. Should you have any questions, please reach out to our IR contact. Thank you very much for watching us today.

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