Presenter: Shingo Okamura, President & CEO
I would like to present our financial results for the first quarter of FY2025.
I would like to start with the highlights of the first quarter of this fiscal year.
As you can see, in the first quarter, revenue was 41.7 billion yen, IFRS operating profit was
13.8 billion yen, and Non-GAAP operating profit was 12.5 billion yen.
While there was a short-term reaction to the initial performance of Pokémon Trading Card Game Pocket, which launched in the second half of the previous fiscal year, the Game Business continued to make significant contributions. The Sports Business also maintained strong performance, primarily driven by professional baseball.
In the Live Streaming Business, we have focused on improving profitability since the second half of the previous fiscal year and have achieved steady results.
In the Healthcare & Medical Business, as we have communicated previously, we are continuing to thoroughly review and promote initiatives toward future growth.
Furthermore, as we have also mentioned, to achieve mid- to long-term growth and improve capital efficiency, we are fully accelerating our AI-leveraged initiatives in line with the
AI-ALL-IN strategy.
Please see the financial results summary.
Let's look at the revenue by segment.
This is the profit and loss by segment.
I would like to explain it in a little more detail for each business later.
Regarding the cost breakdown, there were no one-off factors in this quarter, and the movements were in line with the business trends as before, so there is nothing special to mention.
Now, let's look at the progress of each individual business.
First, let's discuss the Game Business.
The virtual currency consumption, revenue, and profit/loss of the Game Business are as shown.
You can see that the results have improved significantly compared to the first quarter of the previous fiscal year.
However, quarter-on-quarter, there was a reaction from the initial performance of Pokémon Trading Card Game Pocket, and seasonality in other titles also had an impact with the first quarter being weaker than the fourth quarter.
For FY2025, we are planning to launch approximately two new titles from the second quarter onwards, which we will announce as details become available.
For the time being, our future pipeline will primarily focus on new approaches, including the soft launch strategy, which differs from conventional development methods.
Under this soft launch strategy, we are conducting initial KPI validations in specific regions, such as North America, with an eye on the global mobile game market.
Multiple titles have passed these validations, and we are now in the process of refining their key KPIs.
Now, I would like to talk a little more about Pokémon Trading Card Game Pocket.
First, the average MAU for the first quarter was approximately 39 million, and about 60% of virtual currency consumption came from international. Subscriptions continue to see steady demand. We believe this shows that the game is being enjoyed by a wide global audience.
On the other hand, by carefully reviewing user feedback and various data, we also recognize that we need to address certain tasks.
New user acquisition remains steady, which we are very grateful for. However, compared to the initial launch period, the retention rate of existing users has declined. Therefore, we believe that maintaining the MAU is a priority.
As I mentioned in our previous presentation, we believe our strength lies in live operations, so we are already working on these initiatives. Specifically, we recognize that initiatives to improve retention rate and login frequency, such as enhancing the collection experience, are key objectives. Based on this understanding, we have already begun planning and development for a major update, targeting a release within this calendar year.
The specific details of these updates will be announced to users later. In any case, we will continue to leverage our strength in operations, and in close collaboration with The Pokémon Company and Creatures Inc., we will address these objectives and work to make this a crucial title that contributes to our success over the mid to long term.
Now, moving on to the Live Streaming Business.
As I have mentioned before, we have been focusing on business operations that prioritize improving profitability since the second half of the previous fiscal year, and we have been achieving steady results.
If you look at the business profit/loss on the right, you can see that we have been consistently generating a solid profit.
The Live Streaming Business is largely divided into two services: Pococha and IRIAM.
Regarding Pococha, we are strategically promoting measures to maintain and improve the excitement of the community on the service, like we do in the Game Business. These include initiatives to retain and enhance the usage of both new and core users.
While the number of monthly unique paying users for Pococha has slightly decreased quarter-on-quarter, the number and activity of core users remain stable.
In parallel with these efforts, we will continue to thoroughly control costs to improve profitability this fiscal year.
As for IRIAM, thanks to a strong long-term user retention rate, and a stable growth quarter-on-quarter, the DAU of the quarterly average has reached a record high. We will continue to aim for increased revenue and early profitability.
Next, let's discuss the Sports Business.
Compared to the same quarter last fiscal year, we have seen an increase in both revenue and profit. Fortunately, for the official games hosted by the Yokohama DeNA BayStars up until June of this year, the average attendance exceeded 33,000, which is an even better trend than last year. As such, we can say that the professional baseball business is performing very well.
However, we are not only focused on the Sports business centered on games. We are also steadily moving forward with smart city-related initiatives that have a broader mid- to
long-term reach.
I would like to explain this further on the next page.
Specifically, in the smart city initiatives, we are promoting core projects in both Yokohama and Kawasaki. The one I want to talk about today is the City of Yokohama old city hall district development project in front of JR Kannai Station, which is adjacent to Yokohama Stadium.
This project, now named BASEGATE YOKOHAMA KANNAI, is scheduled for a grand opening in the spring of 2026. The DeNA Group will directly operate two facilities: the edutainment facility Wonderia and the live viewing arena THE LIVE. Our Group has cultivated knowhow in the Sports Business. In addition to this, the Group has been involved in entertainment for many years. We will leverage this knowledge, knowhow, and technology to operate the two facilities.
We are accelerating various preparations for the opening, and we will share more details with you as soon as they are ready.
Furthermore, even in the sports field, as a tech company, we want to strengthen our business by utilizing digital technology and building a solid customer data infrastructure.
In particular, we have officially started operating the DeNA Account platform. As the first step, we have introduced it into the Yokohama DeNA BayStars' app services, as you can see. We expect these services to generate synergies not only within the Yokohama DeNA BayStars but also with various other businesses and services within the group, including collaboration with our smart city initiatives.
Next, let's move on to the Healthcare and Medical Business. As I have mentioned, we are continuing to carefully review and promote initiatives toward future growth in each area, so I'd like to explain them one by one, starting with healthcare on the next page.
First, the healthcare area is broadly divided into two parts: Data Use and Data Health. We recommend looking at both the healthcare and medical businesses on an annual basis rather than a quarterly one.
Regarding Data Use, we are working to enhance our operational structure to meet diversifying and deepening customer needs and aim for a further step in our growth. As you can see, we had a solid start in the first quarter to achieve year-on-year growth. This trend of Data Use revenue growing year by year remains unchanged.
The Data Health business, which targets local governments, has some fluctuations due to the years when local governments formulate their data health plans. However, we are aiming for stable growth by leveraging the customer base built during the data health plan formulation year, while also promoting cost efficiency. This fiscal year, as you can see, the number of orders from municipal national health insurance for the FY2025 business has already surpassed the previous year's total. This is a good start for the healthcare area.
Next, let's discuss the Medical area. As I mentioned in previous explanations, this area is showing potential beyond what we initially expected. Given the evolution of business models that we had not originally anticipated, it may take some time, but we are proceeding with careful verification.
Specifically, there are three key points.
First is the domestic expansion of Join, our core communication platform for healthcare professionals. We are proceeding cautiously and flexibly to maximize its growth potential, which includes verifying the development of new business models. The number of facilities using Join in Japan is progressing smoothly.
Next, I'd like to draw your attention to the global expansion of Join. Allm has provided solutions in over 30 countries to date. We are currently focusing on Brazil, where needs have become quite apparent. In the first quarter, a new remote medical care network project utilizing Join was launched with state governments there. We are keeping a close eye on this gradual expansion overseas.
Lastly, there is an evolution of Join that goes beyond a communication platform. For example, IoT. By connecting with Join medical devices, it can create a remote, portable clinic, which we call Join Mobile Clinic. This system allows for a remote medical care system to be established in areas without medical facilities, such as in disaster or conflict zones, using a compact package of medical devices. Although there were no major projects that contributed significantly to earnings in the first quarter, interest in Join Mobile Clinic continues for various use cases both in Japan and globally. We will continue to explore services and products that can be scaled up by leveraging the Join platform to achieve further growth.
Furthermore, as I have mentioned, AI is a crucial factor for us. We are working on mid- to long-term growth centered on AI across the entire company, and we are advancing this from three perspectives.
First, improving company-wide productivity. Second, strengthening the competitiveness of our existing businesses. And third, creating and growing new AI businesses.
From the perspective of improving company-wide productivity, we have created an environment where engineers can effectively utilize the tools, and we have also established a system to properly evaluate their skills.
In terms of creating and growing new AI businesses, we are working on both to businesses and to consumers. However, we want to accelerate investment in and support for startups to build our power to create and grow new businesses. This is the third point, at the bottom of the slide. It is about accelerating growth by fully leveraging the power of startups and external partners.
For example, DeNA AI Link, which we recently announced, has formed a strategic partnership with Cognition AI, Inc., the company that developed the AI software engineer Devin. We have also started a program for startups.
Including these initiatives, we are aiming for a mid- to long-term strategy centered on AI, encompassing existing businesses, new businesses, and improving company-wide productivity.
Next, I have mainly talked about the trends of each business, but our group has various business developments, including group companies. I would like to supplement this as well.
While launching various businesses, we are also flexibly changing our portfolio. In this fiscal year, we transferred all of our shares in Mobaoku Co., Ltd.
We also have a number of equity-method affiliates, but among the major companies, I would particularly like to draw your attention to GO. GO is deployed in 46 prefectures and has 30 million app downloads.
As per the securities report published in June, the business is making steady progress, including becoming profitable for the 12 months from April 2024 to March 2025. We will continue to explain and report on these matters as appropriate.
Now, moving on to our guidance.
Previously, we announced that we would resume disclosing our financial results forecast starting from FY2025, to assist investment decisions and reduce the cost of capital. We announced our guidance today, and the details are as follows.
Now, for our guidance for FY2025.
Mainly due to the volatility of the reaction from a hit in the Game Business and our growth investment areas, we have disclosed our guidance in the form of a range. Specifically, we are expecting a revenue range of 146.0 to 154.0 billion yen, IFRS operating profit of 20.0 to
25.0 billion yen, and a Non-GAAP operating profit of 19.3 to 24.3 billion yen.
I will briefly explain the details behind this for each business.
For the Game Business, we expect a year-on-year decrease in revenue and profit. Also, we anticipate a quarter-on-quarter decrease in revenue and profit for the second quarter. Our forecast is calculated based on trends from the fourth quarter of FY2024 to the first quarter of FY2025. We have made conservative assumptions regarding the impact of in-game measures, as a reasonable outlook is difficult to make.
For Pokémon Trading Card Game Pocket, we are taking into account the short-term reaction from its initial performance, and we have considered this volatility on both revenue and operating profit when setting the range. The lower limit of our forecast assumes that the trends from the fourth quarter of FY2024 to the first quarter of FY2025 will continue.
However, as I mentioned earlier, we will operate the game with the aim of long-term contribution, implementing updates throughout the period.
For the Live Streaming Business, we will continue to prioritize profitability and aim for a year-on-year increase in profit.
The Sports Business will steadily promote its existing businesses, centered on games.
In the Healthcare & Medical Business, while carefully reviewing and promoting initiatives for future growth, we will strive for a year-on-year increase in revenue and improved profit.
For New Businesses and Others, we are proactively and flexibly considering investments required for mid- to long-term growth, such as strengthening AI-related initiatives and the full-scale deployment of smart cities as I explained earlier. Therefore, we expect a
year-on-year increase in losses.
Lastly, in conclusion.
This slide is the same as the one we presented in May, but I would like to briefly touch upon it. While short-term results may show an upside from a major hit and the subsequent reaction, as we have explained before, we believe it is crucial to form a portfolio of businesses that can achieve structural and continued growth. To achieve this, we will appropriately allocate our management resources to the necessary initiatives. We will also be mindful to take measures to enhance our mid- to long-term growth and competitiveness, especially at a time like this.
Regarding our approach to the cost of capital, as I just explained, the first step is the resumption of disclosing our financial results forecast. We will continue to listen carefully to the feedback from the capital market. We will manage the company with an awareness of capital costs, prioritizing the improvement of capital efficiency and ROE, and we appreciate your support.
That concludes my explanation. Thank you.