Slide 1: FY03/2025 Q2 Financial Results Presentation
FY03/2025 Q2 Financial Results Presentation Drecom Co., Ltd. October 29, 2024 Please refer to the Fact Sheet on our website for detailed information on consolidated financial results, cost of sales, SG&A expenses, and billing revenue in the game business: https://drecom.co.jp/ir/factsheet_202503Q2.
Slide 2: Overview of This Document
Overview of This Document FY03/2025 • Existing titles showed weak performance - Events for some titles fell short of expectations First Half - Impairment loss was recognized for one new title released in Q1, resulting in an extraordinary loss of 601 million yen Results - Sales 4,018 million yen (-2
Slide 3: Agenda
1. Review of Q2 (Jul-Sep) FY03/2025 2. Forecast for FY03/2025 3. Medium-Term Goals 4. Appendix Copyright Drecom Co., Ltd. All Rights Reserved. 3
Slide 4: Summary of Business Results for Q2 FY03/2025
1. Review of Q2 (Jul-Sep) FY03/2025 Summary of Business Results for Q2 FY03/2025 In the game business, new titles from Q1 faced ongoing challenges, and existing titles continued to underperform. In the content business, investments for launching new business areas remained underway. FY03/2025 FY03/2
Slide 5: Q2 FY03/2025 Overview of Each Business Segment
1. Review of Q2 (Jul-Sep) FY03/2025 Q2 FY03/2025 Overview of Each Business Segment • Existing titles are trending downwards - Some title events did not meet expectations • Q1's new work, Evil Prince and the Puppet, continues to face a challenging operating Game environment despite improvement effor
Slide 6: Q2 FY03/2025 Operating Income (QoQ comparison, by expense)
1. Review of Q2 (Jul-Sep) FY03/2025 Q2 FY03/2025 Operating Income (QoQ comparison, by expense) Compared to the previous quarter, profits declined primarily due to decreased revenue from existing titles. Decline in revenue (Increase in expenses) (Millions of yen) Increase in revenue (decrease in ex
Slide 7: 1H FY03/2025 Results (YoY by segment)
1. Review of Q2 (Jul-Sep) FY03/2025 1H FY03/2025 Results (YoY by segment) Compared to the same period last year, profits declined due to reduced revenue from existing titles and operating losses from new titles. Net sales Operating income (Millions of yen) Decrease in Net sales / Operating income
Slide 8: Revenue Status of Titles in Operation (by release period)
1. Review of Q2 (Jul-Sep) FY03/2025 Revenue Status of Titles in Operation (by release period) Sales of some existing titles were lower than expected, resulting in a weak performance. Operating title release dates by quarterly business profit/loss 2010 2011 2014 2015 2016 2017 2018 2019 2020 2021 202
Slide 9: Agenda
1. Review of Q2 (Jul-Sep) FY03/2025 2. Forecast for FY03/2025 3. Medium-Term Goals 4. Appendix Copyright Drecom Co., Ltd. All Rights Reserved. 9
Slide 10: Revision/Withdrawal of FY03/2025 Full-Year Earnings Forecast
2. Forecast for FY03/2025 Revision/Withdrawal of FY03/2025 Full-Year Earnings Forecast • For the first half, significant losses were recorded due to the performance of new titles released in Q1 and existing titles • On the other hand, the new title Wizardry Variants Daphne, released on October 15, h
Slide 11: FY03/2025 Full-Year Performance Progress
2. Forecast for FY03/2025 FY03/2025 Full-Year Performance Progress A year focused on strengthening the revenue and profit base. Fixed costs, including advertising expenses, are expected to rise with new releases in the second half. FY03/2025 FY03/2024 (Millions of yen) Q1(Apr-Jun) Actual Q2(Jul-Sep
Slide 12: Game Business: Progress on Two Titles Releasing in the Second Half (1)
2. Forecast for FY03/2025 Game Business: Progress on Two Titles Releasing in the Second Half (1) Wizardry Variants Daphne was released in Q3 FY03/2025 (15th October 2024). Wizardry Variants Daphne Game Overview • Genre: 3D dungeon RPG • Supported platforms: iOS/Android *Steam version also planned •
Slide 13: Game Business: Progress on Two Titles Releasing in the Second Half (2)
2. Forecast for FY03/2025 Game Business: Progress on Two Titles Releasing in the Second Half (2) We plan to release 'Disney STEP' in Q4 of FY03/2025, with the preview experience concluding in early October. Disney STEP Game Overview • Title: Disney STEP • Genre: Real-life treasure hunting game • Rel
Slide 14: A Three-Year Plan to Scale Up
2. Forecast for FY03/2025 A Three-Year Plan to Scale Up For FY03/2025, we anticipate a low profit margin due to costs associated with new releases. Starting in FY03/2026, we aim to achieve both growth and profitability. FY03/2024 FY03/2025 FY03/2026 – FY03/2027 Sales: 9.7 billion yen Sales: - Sales
Slide 15: Agenda
1. Review of Q2 (Jul-Sep) FY03/2025 2. Forecast for FY03/2025 3. Medium-Term Goals 4. Appendix Copyright Drecom Co., Ltd. All Rights Reserved. 15
Slide 16: Medium-Term Goals
3. Medium-Term Goals Medium-Term Goals Aiming to become a company that provides entertainment content globally, centered around IP and technology. Current Medium-Term Goals Entertainment Game (Mobile and PC consoles) content business Publication Mobile game IP (Novels, comics, webtoons) business
Slide 17: Our Market: Entertainment and Content Industry
3. Medium-Term Goals Our Market: Entertainment and Content Industry With the rise of video streaming services and digital sales, the popularity of Japanese content, particularly anime and PC/console games, is gaining significant traction worldwide. The overseas export of Japanese content has reached
Slide 18: Our Strengths and Competitive Advantages
3. Medium-Term Goals Our Strengths and Competitive Advantages Opportunities in the entertainment content market are expanding. As a latecomer, we will capitalize on this momentum by leveraging our strengths to enter the market, aiming for sustainable growth and enhanced corporate value. Strength ◼ U
Slide 19: Business Model of Entertainment Content Market and Objectives of Each Business
3. Medium-Term Goals Business Model of Entertainment Content Market and Objectives of Each Business As we own, nurture, and monetize IPs, we will clarify the positioning of each area based on the unique characteristics of our businesses. This will enable us to identify the business domains to priori
Slide 20: IP-Centered Multimedia Development: Wizardry
3. Medium-Term Goals IP-Centered Multimedia Development: Wizardry Efforts to acquire copyrights and trademarks for popular IPs, converting them into in-house IP and enhancing their value through multimedia development. The latest series installment, Wizard Daphne, has been released, and BlaBas has b
Slide 21: Status of In-House IP Development: 'Drecom Media'
3. Medium-Term Goals Status of In-House IP Development: 'Drecom Media' Efforts to enhance and monetize IP through web novel publications, comic adaptations, and original works. In about two years since launching, we have produced four titles with a cumulative total exceeding 100,000 copies, and two
Slide 22: About the Video (Anime) Business
3. Medium-Term Goals About the Video (Anime) Business In addition to publishing, we have launched a comprehensive initiative in the anime business, expanding its global market. We are engaged in anime production projects to develop and monetize our own IP, while also investing in production committe
Slide 23: Entertainment x Technology Area: Web3 and Generative AI
3. Medium-Term Goals Entertainment x Technology Area: Web3 and Generative AI Initiatives aimed at leveraging technologies that have a high affinity with entertainment content and help advance each business. Further progress is being made in Web3, blockchain, and generative AI initiatives. Web3 - Blo
Slide 24: Agenda
1. Review of Q2 (Jul-Sep) FY03/2025 2. Forecast for FY03/2025 3. Medium-Term Goals 4. Appendix Copyright Drecom Co., Ltd. All Rights Reserved. 24
Slide 25: FY03/2025 Full-Year Performance Outlook (announced on May 13, 2024)
4. Appendix FY03/2025 Full-Year Performance Outlook (announced on May 13, 2024) Existing: • Unprofitable titles were withdrawn during the fiscal year ending March 31, 2024. Sales decreased due to the closure of anothe r title and the termination of a contracted development project • For long-term o
Slide 26: Financing Agreement with DBJ for Profit Sharing Rights
4. Appendix Financing Agreement with DBJ for Profit Sharing Rights To mitigate the risks associated with highly volatile businesses and to continue embracing challenges, we accept investments on a project-by-project basis. Item Details Procurement source Development Bank of Japan Inc. We have establ
Slide 27: Game Business: Pipeline of Operational and Development Titles
4. Appendix Game Business: Pipeline of Operational and Development Titles Operational titles will receive additional investments and system enhancements to secure long-term revenue. We aim to diversify and layer our offerings through the release of new titles. 2011 – 2023 After 2024 Titles in opera
Slide 28: Game Business: Pipeline of Operational and Development Titles
4. Appendix Game Business: Pipeline of Operational and Development Titles Business Status Definition Number of projects Details Titles in ➢ Other company distribution: 4 titles Operation operation 10* ➢ In-house distribution: 6 titles Development is • Wizardry Variants Daphne underway with a
Slide 29: Q2 FY03/2025 Revenue from Titles in Operation
4. Appendix Q2 FY03/2025 Revenue from Titles in Operation Profit and loss for 10 titles in operation* (Q2 FY03/2025, Jul-Sep) Loss Profit * Number of active titles as of the end of September 2024, including two enza titles and Boku to Dragon. 'Blockchain games' are not included. * For information
Slide 30: Status of Development of In-House IP: Evil Prince and the Puppet
4. Appendix Status of Development of In-House IP: Evil Prince and the Puppet The company is focused on developing a fan community through social media operations, nurturing IP, and expanding into various areas, including game development. The game is set to be released on June 3, 2024, with real eve
Slide 31: Status of In-House IP Development: Tokyo Stories
4. Appendix Status of In-House IP Development: Tokyo Stories Launched via social media, this project aims to develop IP through buy-to-own games for PC and console. It has garnered strong international recognition, with over 100,000 followers on X. Own IP Growing IP Monetize IP PC and console games
Slide 32: List of Operational Game Titles (As of September 2024)
4. Appendix List of Operational Game Titles (As of September 2024) Game title Distributor Service start date Chocotto Farm Drecom Co., Ltd. Jan 2011 ONE PIECE Treasure Cruise Bandai Namco Entertainment Inc May 2014 BOKU & DRAGONS studiorex Co., Ltd.*1 Feb 2015 (March 2020) Derby Stallion: Masters
Slide 33: For details on trends in consolidated performance, cost and SG&A expenses
For details on trends in consolidated performance, cost and SG&A expenses, and billing revenue for the game business, please refer to the fact sheet available on our website https://drecom.co.jp/ir/factsheet_202503Q2.pdf Among the perceptions, strategies, plans, described in this document, the outlo