Sega Sammy Holdings Inc. · TSE:6460
Sega Sammy — Q2 FY2024/3 Earnings Presentation
58 slides from Sega Sammy's earnings presentation, Nov 8, 2023
Slide 1: Q2 FY Ending March 2024 Results Presentation
Q2 for the Fiscal Year Ending March 2024 Results Presentation 2023/11/8 Market forecasts, operating results forecast, and other information contained in this material are based on judgements and projections of the Company‘s managements based on currently available information. Therefore, please unde
Slide 2: FY2024/3 Q2 Results / Forecast
01 FY2024/3 Q2 Results / Forecast -2-
Slide 3: Q2 Topics (Affecting Business Performance)
Q2 Topics (Affecting Business Performance) ➢ Revision of full-year forecasts (see page 5 for details) ➢ Commencement of structural reform in the Consumer area (CS) (announced on September 28, 2023) Plan to review title portfolio and reduce fixed expenses, mainly at European bases Losses of approx. 1
Slide 4: Results Highlights
Results Highlights (Billion yen) FY2023/3 FY2024/3 Full Year Revised FY2024/3 Q2 Results Full Year Through Full Year Through Forecast Forecast Q2 Results Q2 (announced on Apr 28) (announced ➢ Significant increase in sales and profit YoY due to on Nov 8) Sales 150.0 389.6 221.1 433.0 474.0 strong per
Slide 5: Revision of Operating Results Forecast
Revision of Operating Results Forecast [Ordinary Income by Segment: Change from Initial Forecast] (Unit: billion yen) +14.5 0.0 -1.0 ➢ Entertainment Contents Business -8.5 • While sales of repeat titles of Full Game performed steady, some new titles in Full Game and new title in F2P went below expec
Slide 6: Breakdown of Income (FY2024/3 Q2 Results)
Breakdown of Income (FY2024/3 Q2 Results) (Unit: billion yen) Operating income 39.5 Breakdown of non-operating income/expenses and extraordinary income/losses Non-operating income 3.6 Non-operating income 3.6 Equity in earnings of affiliates 1.1 Non-operating expenses 1.1 Gain on investments in part
Slide 7: Impact of Exchange Rate Fluctuations
Impact of Exchange Rate Fluctuations [Impact of foreign exchange on Q2 results] ➢ Positive impact of approx. 3.5 billion yen for sales and approx. 0.5 billion yen for operating income in Entertainment Contents business thru Q2 (Billion yen) Q1 Q2 Sales +1.4 +2.5 CS* Operating Income +0.6 +0.5 Sales
Slide 8: Costs and Expenses, etc.
Costs and Expenses, etc. ■Entertainment Contents (Billion yen) FY2022/3 FY2023/3 FY2024/3 FY2024/3 Revised Full Year Full Year Forecast Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (announced Forecast (announced on Apr 28) on Nov 8) R&D / Content production expenses 9.9 13.5 12.7 18.3 11.9 14.8 16.4 22.9 12.5 17.5
Slide 9: Costs and Expenses, etc.
Costs and Expenses, etc. ■Resort (Billion yen) FY2022/3 FY2023/3 FY2024/3 FY2024/3 Revised Full Year Full Year Forecast Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (announced Forecast (announced on Apr 28) on Nov 8) R&D / Content production expenses 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 Advertising expe
Slide 10: Consolidated Balance Sheet Summary
Consolidated Balance Sheet Summary (Billion yen) 【Assets】 【Liabilities and Net Assets】 As of end of As of end of Increase As of end of As of end of Increase Account Account Mar. 2023 Sep. 2023 /Decrease Mar. 2023 Sep. 2023 /Decrease Cash and Deposits 179.5 186.5 +7.0 Accounts Payable 30.5 28.3 -2.2
Slide 11: Q2 Topics (Others)
Q2 Topics (Others) ➢ Status of share buybacks (announced on April 28 and August 31, 2023) • Plan to acquire treasury stocks based on our return policy *No progress has been made at this time due to procedural reasons (as of October 31, 2023) (Reference) Details of the resolution regarding the acquis
Slide 12: Per Segments Results / Forecast
02 Per Segments Results / Forecast -12-
Slide 13: Entertainment Contents Business
Entertainment Contents Business (Billion yen) FY2023/3 FY2024/3 Revised FY2024/3 Q2 Results Full Year Full Year Through Full Year Through Forecast Q2 Results Q2 (announced Forecast (announced ➢ Sales increased and profits decreased YoY on Apr 28) on Nov 8) Sales 116.6 282.8 121.0 305.0 327.0 • Full
Slide 14: Entertainment Content Business Sub-segment
Entertainment Content Business Sub-segment FY2024/3 Q2 Results Forecast • New titles went weak, sales and profit of repeat • Launch new mainstay titles Full Game titles went steady Sonic, Like a Dragon, Persona series, etc. • Released two new titles • Strengthen operation of existing titles Consumer
Slide 15: Consumer Area / Full Game: Sales Trend
Consumer Area / Full Game: Sales Trend (Unit: billion yen) -15-
Slide 16: Consumer Area / F2P: Sales Trend
Consumer Area / F2P: Sales Trend Project SEKAI COLORFUL STAGE feat. Hatsune Miku PHANTASY STAR ONLINE 2 (2012/7～) (Unit: billion yen) SEGA NET MAHJONG MJ (2013/7～) PHANTASY STAR ONLINE 2 NEW GENESIS [Top 3 titles in sales from July to September 2023] (No. 1) (No. 2) (No. 3) Project SEKAI COLORFUL ST
Slide 17: (Reference) Consumer Area: Sales Trend
(Reference) Consumer Area: Sales Trend (Billion yen) FY2023/3 FY2024/3 Revised Full Year Full Year Through Through Through Through Forecast Q1 Q1 Forecast Q2 Q3 Q4 Q2 (announced (announced on Apr 28) on Nov 8) Sales 34.7 75.0 142.5 187.9 33.7 77.9 205.0 227.5 Domestic 15.7 33.8 52.4 71.4 14.5 32.2 7
Slide 18: (Reference) Consumer Area / Full Game: Unit Sales Trend
(Reference) Consumer Area / Full Game: Unit Sales Trend FY2023/3 FY2024/3 Revised Full Year Full Year Through Through Through Through Forecast Q1 Q1 Forecast Q2 Q3 Q4 Q2 (announced (announced on Apr 28) on Nov 8) Full Game: Number of Titles Japan 3 titles 7 titles 11 titles 15 titles 2 titles 3 titl
Slide 19: (Reference) Consumer Area / Full Game: Major New Titles
(Reference) Consumer Area / Full Game: Major New Titles [Titles released in Q2, FY2024/3] *Figures in () to the right of the titles are actual release dates Samba de Amigo: Party Central (Aug. 30) HUMANKIND™ （for Console） (Aug. 22) ©SEGA ©Amplitude Studios SAS. ©SEGA -19-
Slide 20: Entertainment Contents Business: Sales Schedule (Consumer)
(Reference) Entertainment Contents Business: Sales Schedule ～FY2024/3 Q2 In or after FY2024/3 Q3 (Plan) Company of Heroes 3 HUMANKIND™ Like a Dragon Gaiden: The Total War: PHARAOH – Console Edition （for Console） Man Who Erased His Name Etrian Odyssey Origins Samba de Amigo: Sonic Superstars Persona
Slide 21: Entertainment Contents Business: Sales Schedule (Amusement Machine)
(Reference) Entertainment Contents Business: Sales Schedule ～FY2024/3 Q2 In or after FY2024/3 Q3 (Plan) StarHorse4 / EIKETSU TAISEN / maimai DX / CHUNITHM / O.N.G.E.K.I. / MJ ARCADE <Major titles in operation> INITIAL D THE ARCADE / KanColle Arcade / Fate Grand Order Arcade / HORI A TALE / romakyun
Slide 22: Pachislot and Pachinko Machines Business
Pachislot and Pachinko Machines Business (Billion yen) FY2023/3 FY2024/3 Revised FY2024/3 Q2 Results Full Year Full Year Through Full Year Through Forecast Forecast Q2 Results Q2 (announced on Apr 28) (announced ➢ Significant increase in sales and profit YoY on Nov 8) Sales 27.5 94.2 93.4 115.0 134.
Slide 23: Pachislot and Pachinko Machines: New series Sales Schedule
(Reference) Pachislot and Pachinko Machines Business: New series Titles which installation Sales Schedule started from previous FY / Specification changed title ～FY2024/3 Q2 In or after FY2024/3 Q3 (Plan) Pachislot Kabaneri of the Pachislot Psalms of Planets Smart Pachislot Pachislot Iron Fortress E
Slide 24: Resort Business
Resort Business (Billion yen) FY2023/3 FY2024/3 FY2024/3 Q2 Results Revised Full Year Full Year Through Q2 Full Year Results Through Q2 Forecast (announced Forecast ➢ Performed strongly (announced on Apr 28) on Nov 8) • PHOENIX RESORT: In addition to the steady Sales 5.6 11.5 6.0 12.0 12.0 performan
Slide 25: (Reference) Resort Business/PARADISE SEGASAMMY
(Reference) Resort Business/PARADISE SEGASAMMY (KRW Billion) FY2023/3 FY2024/3 Full year FY2024/3 Q2 Results Through Q2 Through Q2 Results ➢ Recovery progressed, centered on Japanese VIP Sales 90.8 270.5 200.6 Casino 41.1 157.5 145.5 customers Hotel 43.0 95.9 46.5 • Recovery of casino sales progress
Slide 26: Future Initiatives
03 05 Future Initiatives -26-
Slide 27: Consumer Area, Entertainment Contents Business
Consumer Area, Entertainment Contents Business -27-
Slide 28: Structural Reform in the Consumer Area (CS)
Structural Reform in the Consumer Area (CS) Decided to implement structural reform to the CS business in European region Background ➢ Profitability has been rapidly lowered due to sudden changes in the business environment surrounding the European CS business (sluggish sales and increased costs) ➢ A
Slide 29: Structural Reform in the Consumer Area (CS)
Structural Reform in the Consumer Area (CS) Future Direction of European Business ➢ For CS business in Europe, we see potential for re-growth from the perspective of owned IPs and development capabilities for specific genres, and we will improve our earnings structure through structural reform • Foc
Slide 30: Incorporation of Rovio Entertainment into SEGA SAMMY Group
Incorporation of Rovio Entertainment into SEGA SAMMY Group Goodwill ➢ Goodwill 71.7 billion yen (reference value) ➢ Amortization period 15 years ➢ Amortization method Straight-line method *Provisional accounting treatment based on reasonable information available at the end of the Q2 of this FY. *Th
Slide 31: (Reference) Results of Rovio Entertainment
(Reference) Results of Rovio Entertainment EURO million 2022 2023 Jan. to Sep., 2023 Results Full Year Jan.-Sep. Jan.-Sep. Results ➢ Sales and profits declined YoY Revenue 240.8 317.7 221.8 • Sales of mainstay title was sluggish, and EBITDA 37.6 43.3 32.0 sales of some titles were declined Adjusted
Slide 32: Rovio Entertainment: Sales by Titles
Rovio Entertainment: Sales by Titles (€M) *Excerpt from “Q3 2023 Result Presentation” of Rovio Entertainment Corporation -32-
Slide 33: Progress in Global Branding of IPs: Sonic Series
Progress in Global Branding of IPs Sonic Series Released two titles this FY ➢ Sonic Superstars • Completely new title in series, simultaneous global launch on multiple platforms ➢ Sonic Origins Plus • Expanded version of title released in FY2023/3 • Released simultaneous globally and is performing s
Slide 34: Progress in Global Branding of IPs: Persona Series
Progress in Global Branding of IPs Persona Series Release two new titles this FY, titles released in previous FY also performing well ➢ Persona 5 Tactica • Spin-off of the Persona 5 series which recorded a total sales of over 9 million units • Simultaneous global launch on multiple platforms Persona
Slide 35: Progress in Global Branding of IPs: Like a Dragon series
Progress in Global Branding of IPs Like a Dragon series Release two titles this FY ➢ Like a Dragon Gaiden: The Man Who Erased His Name • New title connecting the latest mainstream title and Yakuza: Like a Dragon, which was the turning point of series • Simultaneous global launch on multiple platform
Slide 36: Pachislot and Pachinko Machines Business
Pachislot and Pachinko Machines Business -36-
Slide 37: Revision of Forecast
Revision of Forecast ◼ Revised the forecast upward due to strong performance mainly in pachislot Initial full-year Revised full-year forecast [Unit sales forecast of our Group (thousand unit)] forecast (Nov. 8, 2023) Pachislot Pachinko Sales ¥115.0 billion ¥134.0 billion (+¥19.0 billion) 178 （+32） O
Slide 38: Market Trends (Utilization trend)
Market Trends (Utilization trend) ◼ Utilization of pachislot remains strong 【Pachislot & Pachinko Utilization Trend】 Beginning of installation of （Out*1） Smart Pachislot Hokuto No Ken （Out*1） Removal deadline Beginning of installation of ・Pachislot of old smart pachislot regulation models Utilizatio
Slide 39: Market Trends (Penetration of Smart Machine)
Market Trends (Penetration of Smart Machine) ◼ While smart pachislot is becoming more widespread, smart pachinko is still weak Unit sales of smart pachislot/pachinko and installation ratio (Unit) (Installation ratio) ➢ Smart pachinko is not as differentiated from conventional models in terms of game
Slide 40: Market Trends (Regulatory Status)
Market Trends (Regulatory Status) ◼ Regulatory environment remains favorable Following revisions will expand the range of gameplay of pachinko machine ➢ Addition of new feature • Overview: Installation of “Lucky Trigger” becomes possible, where large payout can be expected • Applicable machines: Mai
Slide 41: Summary
Summary ◼ Market environment ➢ Regulatory environment remains favorable ➢ Parts procurement status is also improving ◼ Approach for FY2025/3 ➢ Move the launch timing of some titles to FY2025/3 with consideration of current sales status of FY2024/3 ➢ To further increase the share of "utilization, ins
Slide 42: Investment in Growth: Investment Strategy
Investment in Growth Investment Strategy -42-
Slide 43: Concept of Investment in Growth (~FY2026/3)
Concept of Investment in Growth (～FY2026/3) ◼ Implemented investment in the following growth area Area of consideration for investment Progress ⚫ Expansion of organic development Strengthen pipeline development resources ⚫ Strengthen global mobile and online ⚫ Establishment of SEGA Sapporo Studio ga
Slide 44: Overview of Acquisition of GAN Limited
Overview of Acquisition of GAN Limited Overview of transaction • SEGA SAMMY HOLDINGS INC. (the “Company”) and SSC*, at the meeting of the Company’s and SSC’s Board of Directors held on November 8, 2023 (JST), resolved to acquire GAN Limited (“GAN”), a Nasdaq listed and Bermuda organized SaaS provide
Slide 45: Overview of GAN Limited
Overview of GAN Limited Overview of company (As of June 30, 2023) Business trend Name GAN Limited (Unit: million USD) Establishment* December 13, 2019 Consolidated net sales, operating income (losses) trend Bermuda Location of head office Irvine, CA USA SaaS supplier for U.S. casino operators and B2
Slide 46: Growth Potential of Market
Growth Potential of Market ◼ The U.S. online gaming market is expected to reach approximately $27.1 billion in 2027, with its growth driven by increased transparency on regulation and a shift of customers from retail to online Online gaming market in U.S. (Unit: billion USD) ✓ Online sport betting h
Slide 47: Business Overview of GAN Limited (B2B business)
Business Overview of GAN Limited (B2B business) ◼ Mainly providing iGaming/Online & Retail Sports Betting/Social Casino Gaming solutions, Remote Gaming Sever services, and a platform that contains these solutions/services for land casino operators and online casino operators in U.S. and developing o
Slide 48: Business Overview of GAN Limited (B2C business)
Business Overview of GAN Limited (B2C business) ◼ Development of iGaming and Online Sports Betting Business through Coolbet planform operated by Vincent Group p.l.c., GAN has acquired in 2021 B2C iGaming Business Online Sports Betting Business • Distribute iGaming (including poker) and OSB for Europ
Slide 49: Expected Synergy
Expected Synergy ◼ To enter into online gaming market which is expected to grow in the future in U.S. and expand Gaming business through the collaboration of the two companies' technological capabilities, customer base and content B2B solutions iGaming Sports Online/mobile (Online casino) betting sp
Slide 50: (Reference) Comparison of Medium-term Plan and Results
(Reference) Comparison of Medium-term Plan and Results Sales exceeded the medium-term plan in all businesses and ordinary income exceeded the medium-term plan in all three businesses in total Sales Ordinary Income (Billion yen) (Billion yen) *The figures in forecast for all periods are those at the
Slide 51: Appendix
O04 Appendix SEGASammny
Slide 52: Trend of Balance of Content Production Expenses in B/S (Consumer area)
Trend of Balance of Content Production Expenses in B/S (Consumer area) (Unit: billion yen) Q2 • Revised the portfolio of titles developed at each European base associated with the structural reform. Balance decreased due to the cancellation of some titles under development FY2024/3 Forecast • Expens
Slide 53: Content Production Expenses: Revision of Amortization Rule
Content Production Expenses: Revision of Amortization Rule （Consumer area – Full Game) (Unit: billion yen) ＜Increase / decrease of R&D and content production expenses＞ • Revised the amortization rule of content production expenses due to lengthening of product lifecycles • Due to this revision, cont
Slide 54: Trend of No. of Employees by Segment
Trend of No. of Employees by Segment (full-time and permanent contract employees, excluding temporary employees) (Unit: employees) *R&D personnel ratio of FY24/3 Q2 doesn’t reflect the change associated with the incorporation of Rovio into the Group -54-
Slide 55: Status of each facility: PHOENIX RESORT
Status of each facility: PHOENIX RESORT ◼ PHOENIX RESORT: Sales by type of facility users FY2024/3 Q2 Results • Recovery of group customers progressed associated with the holding of large MICE events such as international conferences and corporate events Forecast • In addition to capturing steady in
Slide 56: Status of each facility: PARADISE SEGASAMMY
Status of each facility: PARADISE SEGASAMMY ◼ Trend of Drop amounts* at PARADISE CITY (Unit: KRW million) *Drop amounts = Purchased amount of chips -56-
Slide 57: Repost: Shareholder Returns
Repost: Shareholder Returns (Process of Determining the Amount of Return and Methods) *announced on April 28, 2023 FY2024/3 FY2025/3 Q1 Q2 Q3 Q4 Q1 FY2023/3 Q1 Q2 Q3 FY2024/3 Results Results Results Results Results Announcement Announcement Announcement Announcement Announcement Share buybacks (if i
Slide 58: https://www.segasammy.co.jp/en/ir/
https://www.segasammy.co.jp/en/ir/ Cautionary Statement for Investors and Shareholders with Respect to Gaming Statutes and Regulations Please visit below website for more information of products and services of SEGASAMMY. SEGA SAMMY HOLDINGS INC. ("the Company") is registered with the Nevada Commiss
Sega Sammy Holdings — Q2 FY2024/3 Earnings Presentation on 6ix