Sega Sammy Holdings Inc. · TSE:6460

Sega Sammy — Q2 FY2022/3 Earnings Presentation

56 slides from Sega Sammy's earnings presentation, Nov 8, 2021

  1. Slide 1: Results Presentation

    Fiscal Year Ending March 2022 Results Presentation 2021/11/8 Market forecasts, operating results forecast and other information contained in this material are based on judgements and projections of the Company‘s managements Disclaimer based on currently available information. Therefore, please under

  2. Slide 2: FY2022/3 Q2 Results / Full Year Forecast

    01 FY2022/3 Q2 Results / Full Year Forecast -2-

  3. Slide 3: Topics

    Topics FY2022/3 Q2 Results Forecast  Strong performance centered  Revise full-year operating results Consolidated on the Entertainment Contents forecast Business  Announce share buyback  Strong performance in the  New titles increase Entertainment Consumer and Amusement  Operating expenses inc

  4. Slide 4: Results Highlights

    Results Highlights (Billion yen) 2021/3 2022/3 Full Year Revised Full Year FY2022/3 Q2 Results Through Through Through Forecast Forecast Q2 Q4 Q2 (announced on May 13) (announced on Nov 8)  Performance in the Entertainment Contents Sales 110.2 277.7 134.8 312.0 305.0 Business went strong which sign

  5. Slide 5: Revision of Operating Results Forecast

    Revision of Operating Results Forecast  The decline in the Pachislot and Pachinko Machines Business is expected to be covered by the strong performance of the Entertainment Contents Business, and consolidated income is expected to exceed the initial plan. [Difference in operating income by segment

  6. Slide 6: Acquisition of Treasury Stock (share buyback)

    Acquisition of Treasury Stock (share buyback)  Acquisition of treasury stock to improve shareholder returns and capital efficiency Up to 24,000 thousand shares • Total No. of shares to (10.19% of the total No. of shares outstanding (excluding treasury be acquired stocks)) • Total amount of Up to 30

  7. Slide 7: Approach to Growth Investment and Shareholder Returns (to FY2026/3)

    Approach to Growth Investment and Shareholder Returns (to FY2026/3) Utilizing interest-bearing debt to Balancing proactive improve capital efficiency and investment in growth reduce capital costs through with shareholder optimal capital structure return <Procurement> <Allocation> Fundraising D/E rat

  8. Slide 8: Breakdown of Income (FY2022/3 Q2 results)

    Breakdown of Income (FY2022/3 Q2 results) (Unit: billion yen) Operating 14.6 Breakdown of non-operating income/expenses income and extraordinary income/losses Non-operating 2.6 income Non-operating income 2.6 Non-operating 2.6 Gain on investments in partnership 1.8 expenses Ordinary income 14.7 Non-

  9. Slide 9: Costs and Expenses

    Costs and Expenses ■Entertainment Contents (Billion yen) 2020/3 2021/3 2022/3 2022/3 Revised Full Year Full Year Forecast Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (announced Forecast (announced on May 13) on Nov 8) R&D / Content production expenses 12.8 11.9 17.6 16.3 9.2 9.8 11.8 14.7 9.9 13.5 57.9 55.8 Adver

  10. Slide 10: Costs and Expenses

    Costs and Expenses ■Resort (Billion yen) 2020/3 2021/3 2022/3 2022/3 Revised Full Year Full Year Forecast Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (announced Forecast (announced on May 13) on Nov 8) R&D / Content production expenses 0.0 0.0 0.1 0.0 0.0 0.0 0.1 0.1 0.0 0.0 0.0 0.1 Advertising expenses 0.1 0.1 0

  11. Slide 11: Reference: Trend of balance of content production expenses in B/S

    Reference: Trend of balance of content production expenses in B/S (Consumer area) (Unit: billion yen) *Balance of work in progress R&D expenses of titles before release + Balance of unamortized R&D expenses of released titles -11-

  12. Slide 12: Reference: Trend of No. of Employees by Segment

    Reference: Trend of No. of Employees by Segment (Unit: Employees) *No. of employees are the No. of full-time employees and permanent contract employees, and excludes the No. of temporary employees. -12-

  13. Slide 13: Consolidated Balance Sheet Summary

    Consolidated Balance Sheet Summary (Billion yen) 【Assets】 【Liabilities and Net Assets】 As of end of As of end of As of end of As of end of Account Change Account Change March 2021 Sep 2021 March 2021 Sep 2021 Cash and Deposits 154.9 113.5 -41.4 Accounts Payable 16.9 19.3 +2.4 Accounts Receivable 38.

  14. Slide 14: Entertainment Contents Business

    02 Entertainment Contents Business -14-

  15. Slide 15: Entertainment Contents Business

    Entertainment Contents Business (Billion yen) 2021/3 2022/3 Revised FY2022/3 Q2 Results Full Year Full Year Through Through Through Forecast Forecast Q2 Q4 Q2 (announced (announced  Strong performance in each business area on May 13) on Nov 8) • Exceeded the expectation due to steady Sales 97.0 217

  16. Slide 16: Entertainment Contents Business (Per subsegment)

    Entertainment Contents Business (Per subsegment) FY2022/3 Q2 Results Forecast • Launch of new titles increase • Steady performance of new titles and • Operating expenses increase due to an increase in Full game repeat sales new title launches • Recorded royalty income • Plan to record royalty income

  17. Slide 17: Consumer area (Full Game's sales trend)

    Consumer area (Full Game’s sales trend) (Unit: billion yen) 新作・リピートの数字の表はナシ 新作・リピートの数字の表はナシ -17-

  18. Slide 18: Consumer area (F2P's sales trend)

    Consumer area (F2P’s sales trend) “HATSUNE MIKU: COLORFUL STAGE!” “PHANTASY STAR (Unit: billion yen) “PHANTASY STAR ONLINE 2” ONLINE 2 NEW (From Jul. 2012) GENESIS” “FIST OF THE NORTH STAR LEGENDS ReVIVE” [Top 3 titles in sales (Jul.-Sep. 2021)] (No. 1) (No. 2) (No. 3) “PHANTASY STAR ONLINE 2 “HATSU

  19. Slide 19: Reference: Consumer area (Major examples of new titles roll-out)

    Reference: Consumer area (Major examples of new titles roll-out) (Timing of Release) FY19/3 FY20/3 FY21/3 FY22/3 Platforms Regions Original Epic Xbox Release Classifi- Nintendo Xbox Xbox Windows/ NA/ Title name Release PS4 PS5 Steam Games Game Stadia Japan Asia (plan) cation Switch One X/S cloud EU

  20. Slide 20: Pachislot and Pachinko Machines Business

    03 Pachislot and Pachinko Machines Business -20-

  21. Slide 21: Pachislot and Pachinko Machines Business

    Pachislot and Pachinko Machines Business (Billion yen) 2021/3 2022/3 Revised FY2022/3 Q2 Results Full Year Full Year Through Through Through Forecast Forecast Q2 Q4 Q2 (announced (announced  Unit sales were generally as expected on May 13) on Nov 8)  Fixed expenses remained at a low level due to S

  22. Slide 22: Resort Business

    04 Resort Business SEGASammny

  23. Slide 23: Resort Business

    Resort Business (Billion yen) 2021/3 2022/3 Revised FY2022/3 Q2 Results Full Year Full Year Through Q2 Through Q4 Through Q2 Forecast (announced Forecast  PHOENIX RESORT: Facility users decreased due (announced on May 13) on Nov 8) to the continued impact of COVID-19 Sales 2.2 6.3 3.8 9.5 9.5  PAR

  24. Slide 24: Future Initiatives

    05 Future Initiatives SEGASammny -24-

  25. Slide 25: Pachislot and Pachinko Machines Business

    Future Initiatives Pachislot and Pachinko Machines Business Pachislot and Pachinko Machines Business -25-

  26. Slide 26: Revision of Operating Results Forecast

    Revision of Operating Results Forecast Revised unit sales plan downward due to effects of component shortage 【Unit Sales】 Pachislot 101,000 units 67,000 units (-34,000 units) Pachinko 103,000 units 77,000 units (-26,000 units) Net Sales 89.0 billion yen 65.0 billion yen (-24.0 billion yen) Operating

  27. Slide 27: Component Shortage

    Component Shortage Promoting measures to solve shortages in the supply of components Types of components Semiconductors, resistors, connectors, etc. in shortage Short term measures Mid to long-term measures • Expansion of Measures procurement route • Promote standardizing • Use alternative of compon

  28. Slide 28: Medium-term Plan: Progress of Each Measure

    Medium-term Plan: Progress of Each Measure Medium-term Strategy Create hits × Improve business efficiency Revising the product lineup  Confirmed the demand of past IP revival through the Sammy CLASSIC Series  Optimizing the product lineup 2nd series “Pachislot GAMERA” (Jun.)  Rigorous screening a

  29. Slide 29: Revival of Past IP: GAMERA

    Revival of Past IP: GAMERA “GAMERA" “Pachislot GAMERA” (2000) (2021) • 2nd series of Sammy CLASSIC Series • Contributing to utilization of Pachinko halls • Succession of game elements and reel combination rules © Daiei／Kikaku Takara Co., Ltd. ©KADOKAWA ©Sammy -29-

  30. Slide 30: Revival of Past IP: ALADDIN

    Revival of Past IP: ALADDIN "ALADDIN A" "Pachislot ALADDIN A CLASSIC" (2002) (2022) • 3rd series of Sammy CLASSIC Series • Type 6.2 regulation machine • Succession of ALADDIN’s unique lottery system and directing element rules ©Sammy ©Sammy -30-

  31. Slide 31: Reduction of Fixed Cost

    Reduction of Fixed Cost Significant improvement in cost structure due to structural reforms Level of fixed cost Approx. 14% reduction (*1) (Compared to pre-structural reforms) Break-even point Pre-structural reforms After Structural Reforms (Net Sales) Approx. 75.0 billion yen (*2) Approx. 60.0 bill

  32. Slide 32: Market Environment

    Market Environment Pachislot: Replacement progress remains sluggish Pachinko: Replacement proceeds smoothly due to appearance of several popular titles Pachislot Pachinko ※Company estimates based on P-WORLD machine installation data -32-

  33. Slide 33: Pachislot: User Evaluation of New Regulation Machines

    Pachislot: User Evaluation of New Regulation Machines Over 70~80% of current players are dissatisfied about the upper limit of payout and number of games (Factors behind dissatisfaction) Reasons why the uppler limit of payout and Applies (*1) advantageous section are "unconvincing" (%) ・There is an

  34. Slide 34: Pachislot: Progress in Relaxing of Regulation

    Pachislot: Progress in Relaxing of Regulation Relaxing of regulation is continuing, and the upper limit of number of games has been abolished Apr. 2018 Dec. 2019 May 2021 Oct. 2021 Upper limit of 2,400 2,400 2,400 2,400 payout medals medals medals medals Related to 1,500 1,500 3,000 advantageous sec

  35. Slide 35: Pachislot: Past Trend after Relaxing of Regulation

    Pachislot: Past Trend after Relaxing of Regulation In the past, unit sales and turnover recovered due to appearance of hit titles after the relaxing of regulation Previous regulation Launch of Regulatory revision machines Relaxing of “Pachislot Psalms (tighter regulations) Deadline for removal regul

  36. Slide 36: Entertainment Contents Business Consumer area

    Future Initiatives Entertainment Contents Business Consumer area Entertainment Contents Business -36-

  37. Slide 37: Revision of Operating Results Forecast

    Revision of Operating Results Forecast [Difference in operating income by sub-segment from initial plan] （Unit: Billion yen) +2.0 ＋0.8 ＋0.2 ＋5.5 31.5 23.0 Steady performance of new titles and repeat sales, Consumer area increase in royalty income due to business diversification Amusement Machine Str

  38. Slide 38: Medium-term Plan: Progress of Each Measure

    Medium-term Plan: Progress of Each Measure Medium-term Strategy Strengthen the global branding of existing IPs Expanding touch points with users  “LOST JUDGMENT” (Released on Sep.)  Strengthening global roll-out Simultaneous global release, multiplatform support  Multiplatform support  Initial s

  39. Slide 39: Major Title: LOST JUDGMENT

    Major Title: “LOST JUDGMENT” © SEGA -39-

  40. Slide 40: Major Title: HUMANKIND

    Major Title: “HUMANKIND™” © Amplitude Studios 2021. © SEGA. -40-

  41. Slide 41: SONIC 30th Anniversary Campaign

    SONIC 30th Anniversary Campaign Examples of external collaboration (partial) Minecraft x Sonic DLC Fall Guys x Sonic Twitter Takeover Sonic Symphony © SEGA -41-

  42. Slide 42: Major Titles in and after Q3 (Full Game)

    Major Titles in and after Q3 (Full Game) “Football Manager 2022” “Shin Megami Tensei Ⅴ” “Total War: WARHAMMER III” • PC + Game Pass • Simultaneous global release • PC + Game Pass (Scheduled to be released on Nov. 9) (Scheduled to be released on Nov. 11) (Scheduled to be released on Feb. 17) © Sports

  43. Slide 43: Major Titles in and after Q3 (F2P)

    Major Titles in and after Q3 (F2P) “PHANTASY STAR ONLINE 2 “HATSUNE MIKU: COLORFUL “Sin Chronicle” NEW GENESIS” STAGE!” • Record-high monthly sales on the 1st anniversary • Launch of new RPG • Major update • Launch of Global version (Scheduled to be released in 2021) (Scheduled on Dec 15, 2021) (Sch

  44. Slide 44: Long-term Strategy: Create Super Games

    Long-term Strategy Long-term Strategy Create “Super Games”  Started exploring strategic alliance with Microsoft towards creation of “Super Game” (Major areas to consider) • Develop games utilizing technologies of Microsoft in Microsoft’s Azure cloud platform. • Technical collaboration to turn SEGA’

  45. Slide 45: Concept of Investment in Growth

    Future Initiatives Concept of Investment in Growth Financial Strategy and others -45-

  46. Slide 46: Concept of Investment in Growth (to FY2026/3)

    Concept of Investment in Growth (to FY2026/3) Accelerate growth trough proactive investment (Area of consideration for investment)  Strengthen development • Expansion of organic development pipeline Consumer area resources • Strengthen global mobile and online games Approx. (Area of consideration f

  47. Slide 47: Appendix

    Appendix SEGASammny -47-

  48. Slide 48: Reference: Consumer Area (Sales trend)

    Reference: Consumer Area (Sales trend) (Billion yen) 2021/3 2022/3 Revised Full Year Full Year Through Through Through Through Forecast Q1 Q1 Forecast Q2 Q3 Q4 2Q (announced (announced on May 13) on Nov 8) Sales 32.4 61.4 102.4 135.7 29.5 71.2 140.0 152.5 Domestic 12.4 27.9 48.7 64.6 13.0 30.9 65.0

  49. Slide 49: Reference: Consumer Area (Full Game's unit sales trend)

    Reference: Consumer Area (Full Game’s unit sales trend) 2021/3 2022/3 Revised Full Year Full Year Through Through Through Through Forecast Q1 Q1 Forecast Q2 Q3 Q4 2Q (announced (announced on May 13) on Nov 8) Full Game: Number of Titles Japan 0 title 0 title 2 titles 2 titles 0 title 3 titles 5 titl

  50. Slide 50: Reference: Entertainment Contents Business (Sales Schedule)

    Reference: Entertainment Contents Business (Sales Schedule) ～FY2022/3 Q2 In or after Q3 (plan) JUDGMENT (Remaster ver.) HUMANKIND™ Shin Megami Tensei Ⅴ Shin Megami Tensei III Nocturne HD Remaster LOST JUDGMENT Football Manager 2022 (Western ver.) New titles Full game Olympic Games Tokyo 2020 - The O

  51. Slide 51: Reference: Entertainment Contents Business (Sales Schedule)

    Reference: Entertainment Contents Business (Sales Schedule) ～FY2022/3 Q2 In or after Q3 (plan) <Major titles in operation> KanColle Arcade / StarHorse4 / Fate Grand Order Arcade / SANGOKUSHI TAISEN Series / maimai DX / O・N・G・E・K・I / CHUNITHM / fiz2 Amusement Machine Sales <Major regular sales titles

  52. Slide 52: Reference: Pachislot and Pachinko Machines Business (Sales Schedule)

    Reference: Pachislot and Pachinko Machines Business (Sales Schedule) New series Specification changed title ～FY2022/3 Q2 In or after Q3 (plan) Pachislot CODE GEASS Pachislot Twin Angel PARTY Pachislot Pachislot Angel Beats! Pachislot DISC UP 2 Lelouch of the Rebellion 3 Pachislot ANEMONE Pachislot R

  53. Slide 53: Reference: Resort Business (PARADISE SEGASAMMY)

    Reference: Resort Business (PARADISE SEGASAMMY) 2021/3 2022/3 FY2022/3 Q2 Results (KRW Billion) Results Results Through Q2 Through Q4 Through Q2  The number of casino users fell sharply due to Sales 115.7 177.5 74.2 the restriction of foreign visitors. Casino 91.8 126.8 44.1 YoY comparison: 58.4% H

  54. Slide 54: Reference: Resort Business (PARADISE SEGASAMMY)

    Reference: Resort Business (PARADISE SEGASAMMY)  Trend of Drop amounts* at PARADISE CITY (KRW Million) Apr. 2017 Opening of PARADISE CITY *Drop amounts: Purchased amount of chips by customers at the table *Calculation method was changed after Jan. 2018 -54-

  55. Slide 55: Reference: Shareholder Returns

    Reference: Shareholder Returns  Dividend Results and Plan From FY2022/3, introduced the following return policies while being conscious of past dividend amount results. • Dividend Policy: DOE (Dividend on Equity Ratio) 3% or more • Total return ratio: 50% or more • Regarding share buybacks, make fl

  56. Slide 56: https://www.segasammy.co.jp/

    https://www.segasammy.co.jp/ Cautionary Statement for Investors and Shareholders with Respect to Nevada Gaming Statutes and Please visit below website for more information of products and services of Regulations SEGASAMMY. SEGA SAMMY HOLDINGS INC. (“the Company”) is registered with the Nevada Commis

Sega Sammy Holdings — Q2 FY2022/3 Earnings Presentation on 6ix