Presenter: Shingo Okamura, President & CEO
I would like to explain the financial results for the second quarter of FY2025. The presentation will be divided into three parts.
The first part is the highlights of the second quarter of FY2025.
As you can see, revenue was 41.4 billion yen, IFRS operating profit was 11.1 billion yen, and Non-GAAP operating profit was 11.3 billion yen.
Despite the short-term reaction following the initial boost from Pokémon Trading Card Game Pocket, which we launched in the second half of the previous fiscal year, the Game Business continues to be a major contributor.
And the Sports Business, particularly the professional baseball operations, continues to perform strongly.
Also, today, I would like to outline our policy for initiatives aimed at improving action to implement management that is conscious of our cost of capital and stock price, based on the voices and requests from the capital market. This includes setting an ROE target in addition to our conventional commitments.
Regarding the financial results summary, there's nothing specific to highlight here.
As for the revenue by segment, we will provide a detailed explanation later in the section dedicated to each business.
The same applies to the profit/loss by segment.
The cost and expense breakdown is as shown. It reflects the trends of each business, so we have no particular comments to make this time.
The full-year outlook and its underlying assumptions, which we announced in August, are detailed on the slide.
We'll touch upon the progress of each business shortly, but the first half has been strong. We plan to carefully monitor and review future trends.
Now, let's move on to a detailed explanation of each business.
First, the Game Business.
The virtual currency consumption, and Game Business segment profit/loss are as displayed.
The primary factor here is the performance of Pokémon Trading Card Game Pocket, which was launched in the second half of the previous fiscal year.
Regarding this title, volatility was considered as a range for both revenue and operating profit in the Guidance. Second quarter progressed steadily toward the upper end of this range.
Let me elaborate a bit more on Pokémon Trading Card Game Pocket.
First, the average MAU in the second quarter was approximately 30 million. About 60% of virtual currency consumption came from global, and we continue to confirm a steady demand for our subscriptions.
We are continuously carrying out in-game events, adding new booster packs, and other updates are continuously released, providing enjoyment to a wide global audience.
While new user acquisition remains steady, we acknowledged the retention rate of existing users as a key objective in our previous presentation.
Please see the lower half for the details here.
Our key focus is to enhance the card collection experience for more users.
Since the game celebrated its first anniversary at the end of October 2025, an update has been implemented under the theme of making card collecting more accessible and enjoyable for even more players.
We are also actively running initiatives including in-game events and promotions.
By executing these various measures, we are working to improve login frequency and user retention rates, thereby maintaining and increasing MAU.
In any case, this game is extremely important and is being enjoyed by many, so we intend to strengthen our collaboration with The Pokémon Company and Creatures Inc., working together as three companies.
I believe I mentioned in the last presentation that we have about two new titles planned for the current fiscal year in the Game Business.
I would like to give you the specifics on those.
First, we launched Fire Emblem Shadows on September 25, 2025, in collaboration with Nintendo.
Nintendo is the publisher, and we provided development partnership. It's available in over 70 countries and regions worldwide, including Japan and the United States.
We are also planning a release for Edge Poker this winter, a smartphone poker game app developed in partnership with POKER ROOM Inc. Pre-registration for this title is now open. It utilizes AI to implement features that allow users to safely and enjoyably improve their skills, along with new ways to enjoy poker.
Also, we are focusing on a Soft Launch Strategy. Historically, the game business inherently has volatility. To mitigate this risk, we are deploying a soft launch strategy, which differs from our conventional development methods, aiming for a more robust structure for the Game Business.
We expect the future pipeline will primarily focus on this new approach. Under this strategy, we are conducting initial KPI verification, keeping the global mobile game market in mind. Multiple titles have successfully passed this verification, and we are currently fine-tuning their key KPIs and proceeding smoothly with their rollout.
Now, let's move on to the Live Streaming Business.
As we've communicated previously, since the second half of the previous fiscal year, our business operations have prioritized improving profitability.
As you can see, we recognize that this strategy is steadily yielding results, both in the first quarter of this fiscal year and in this second quarter.
Let me provide more details.
First, for Pococha, we are focusing on driving measures to maintain and improve excitement of the community, such as promoting initiatives to retain and enhance the usage of both new and core users.
Monthly unique paying users have slightly decreased, but in the second quarter, multiple large-scale events, such as the Pococha Koshien, were successful, leading to a stable increase in the number and activity of our core users.
We intend to continue our strong efforts in this manner, including cost control.
For IRIAM, the long-term user retention rate has been favorable, and the DAU is at an all-time high. We will continue aiming to increase revenue and achieve early profitability.
Next is the Sports Business.
We recognize that performance remains strong, following the first quarter.
By updating the spectator experience and other initiatives, we achieved a team record-high attendance of 2.36 million for our home games during the 2025 baseball season.
The year-on-year revenue growth was a comprehensive contribution from various elements of the baseball business, including ticket sales, merchandise/food & beverage sales, and sponsorship revenue.
On the other hand, we have also made progress in our Smart City initiatives, through which we aim for mid term growth by creating a community for the town that goes beyond just sports games.
As you can see, BASEGATE YOKOHAMA KANNAI is scheduled for its grand opening on March 19, 2026. We plan to open two directly-managed facilities there.
One is Wonderia Yokohama.
This will be an immersive experience facility that integrates the expertise, know-how, and technology DeNA has cultivated in the entertainment field. A dedicated app that utilizes the gamification concept fostered in our Game Business is also under development.
Through these elements, we aim to develop a new form of entertainment. We hope you look forward to it.
The other is THE LIVE Supported by Daiwa Jisho.
This facility will host large-scale live viewings not only for our team's home games but also visior games,as well as basketball, soccer, and music live events. By fusing live viewing with food & beverage and merchandise, we hope to contribute to generating excitement at BASEGATE YOKOHAMA KANNAI, located near Yokohama Stadium, throughout the year.
We plan to share further details in the future.
Next, let me touch upon the Healthcare & Medical Business.
In this area, we are reviewing and promoting initiatives for future growth.
Within this, for Healthcare, Data Health is in a period of off-demand for Data Health Plans, but for Data Use Business increases, we are also making progress in improving cost efficiency.
As for the Medical Business, we are centering on 'prioritization & focus' of our initiatives and optimizing our structure to improve profitability.
We are also working to reduce fixed costs and believe we are on track for a meaningful year-on-year profit improvement for FY2025.
First, the Healthcare area.
For the Healthcare area, looking at the left side-and while it's best viewed on an annual basis-our data use business is progressing well, with both revenue and KPIs in the first half of FY2025 exceeding the figures from the same period last year.
On the right, as mentioned, the Data Health Business is not in a data health plan formulation year, but we are leveraging the customer base built up during those periods to pursue stable growth while promoting cost efficiency.
This fiscal year, as shown in the chart below, the number of orders for municipal national health insurance for FY2025 has surpassed the previous year's total, indicating that we are clearly capturing the needs of the market.
Now, let me provide a little more detail on the Medical area.
As explained previously, this area has seen an evolution in its business model from our initial assumptions, as well as changes in the business environment.
Therefore, while promoting verification of various initiatives, we plan to focus on three key areas.
We are also optimizing our organizational and management structure to align with this prioritization and focus strategy.
As you can see on the left chart, it's broadly divided into four areas, but please consider the three main ones to be our core focus.
First, Join in Japan.
Join is a communication platform for medical professionals, and its domestic expansion is progressing well.
It is being used by over half of the advanced treatment hospitals and approximately 30% of the regional medical care support hospitals, maintaining a high retention rate.
However, what's important is not only promoting adoption and usage penetration of Join within individual hospitals, but also leveraging Join's features to support stronger
inter-hospital collaboration. Furthermore, we aim to structurally strengthen this for future growth by focusing on maximizing business opportunities highly compatible with Join-such as healthcare digital transformation strongly correlates with core hospital systems, a concept we already have planned-by capturing the needs of our hospital clients.
In other words, in addition to Join, we will provide solutions that address the specific challenges faced by each medical institution.
This is our area of expertise, and we see business expansion there.
The second important area is global. The global expansion of Join is progressing.
For example, in Brazil, a country with a large land mass, we are advancing the deployment of remote medical care centered on Join in regions where there is a strong need to expand medical resources for remote areas within state governments.
Specifically, in Brazil, we've seen revenue double year-on-year in the first half of FY2025, and we are gaining traction, including being profitable as a regional base.
We believe the success we've achieved in Brazil can be applied to other areas, including other regions in Central and South America, allowing us to focus on regional support for growth.
And the third area is Join Mobile Clinic.
This is an integrated remote medical support solution that provides remote care by specialists to areas lacking sufficient medical resources.
Although it did not have a major contribution in the first half of this fiscal year, we have seen a noticeable increase in inquiries since the first case with a significant contribution emerged in the fourth quarter of the previous fiscal year.
The formation pipeline is progressing, extending from the second half of this fiscal year into the next fiscal year.
Specifically, this involves situations where medical resources are scarce during emergencies like disasters, or cases in remote areas where there are existing challenges in building a regional healthcare system, such as a lack of doctors or the absence of clinics. Join Mobile Clinic acts as a remote medical tool to supplement these gaps.
We are seeing diverse needs in these areas.
The target customers, business models, and business opportunities are varied. For instance, we already have a track record of initiatives in various foreign countries based on our partnership agreement with the International Medical Volunteers Japan Heart.
Thus, while focusing on these three areas, for other activities, such as spot contracts and research activities, we are implementing 'selection and focus' to specialize in areas that will contribute to the enhancement of these three core strategies.
Furthermore, while continually reviewing our service and product portfolio, and as I mentioned, the growth overseas, we initially had over 10 subsidiaries both domestically and globally, but we've strategically narrowed down and focused on areas where we have a competitive advantage. This approach is successfully coordinating cost control with revenue growth.
That was a somewhat lengthy explanation, but the strategic refinement in the Medical area is progressing as described, and we intend to maximize its growth potential.
We also touch upon AI in every presentation.
A mid to long term strategy centered on AI is extremely important to us.
We are advancing these efforts across three areas. Regarding the first two-All-company productivity enhancement and Enhancement of competitiveness in existing businesses-for the all-company initiative, which we started with our engineers, we have launched the framework to assess AI skill called DARS (DeNA AI Readiness Score.) This framework is rapidly making all employees AI-native by providing a foundation for skill assessment.
Concrete initiatives are also underway in each business to enhance the competitiveness of our existing businesses.
And for the third area-AI new business creation & growth-I believe there are two key points.
First, we have about 20 AI native products to consumers, several of which are already undergoing closed beta testing.
We expect these to be deployed as products and services in the near future.
Furthermore, regarding accelerating growth by fully leveraging startups and external partners, we have established and invested in the new Delight Ventures Builder III Investment Limited Partnership to promote a venture builder business specialized in the AI domain.
We are committed to further accelerating our growth by integrating AI in this manner.
We are also closely monitoring and managing the trends of our group companies, as we did previously.
Finally, I would like to provide an update on our actions to implement management that is conscious of our cost of capital and stock price.
The slide should be familiar to you, as we have shown it since we first presented it at the May 2024 earnings briefing, at the start of our current three-year mid term strategy.
At this midpoint of the three-year strategic period, we have thoroughly reviewed the strategy and, after intensive discussions among management, have formulated the outline of our policy for improvement-aimed at implementing management that is conscious of the cost of capital and stock price-which we announced today.
Specifically, our efforts to date have been as follows.
First, in the previous mid term strategy period-from FY2021 to FY2023-we focused on strengthening our business portfolio and structural transformation, and particularly grew the revenue scale of businesses other than the Game Business.
In addition to the business side, on the financial side, while investing for new growth and initiatives, in terms of increasing capital efficiency and shareholder returns, we halved our shareholdings for policy purposes and implemented share buybacks totaling 25.9 billion yen over three fiscal years.
Building on those results, during the current mid term strategy period, we set a Non-GAAP operating profit commitment of 15.0 billion yen for FY2026. Furthermore, due to the significant upside results, such as the major hit of Pokémon Trading Card Game Pocket, we were able to implement special cash dividends in addition to regular cash dividends.
However, based on the voices and requests of the capital market, we believe we still have more to do regarding topics like clarifying our capital policy and business strategy for long term corporate value enhancement.
We are committed to addressing issues like business volatility and ensuring a structure that can stably secure ROE above a certain level. Specifically, on the next page, which outlines the framework, we have set the following target.
Specifically, we aim for a phased increase of the ROE target.
Based on this premise, we will take a comprehensive approach from both the business and financial perspectives. Our immediate goal is to strengthen our balance sheet management during the current mid term strategy period-from FY2024 to FY2026-and to agilely establish a structure capable of consistently achieving ROE of 8% or more.
On the business front, we are fully committed to achieving our commitments, while positioning big game hits as upside potential. We aim for a further enhancement of long term profit levels beyond FY2026, continuing to emphasize the formation of structural strength in each business. Furthermore, as I just explained, we want to accelerate initiatives for business development by clearly capturing significant changes in the business environment, such as the trend of AI.
Simultaneously, we will specify plans for our business portfolio and business creation for mid to long term sustainable growth.
On the finance side, we will strengthen balance sheet management to improve capital efficiency. We will also re-examine our policy and level of shareholder returns, including share buybacks.
Finally, we will scrutinize growth investments from the profitability perspective and allocate our investment, based on our business strategy and portfolio strategy.
As outlined, we have updated our direction regarding the action to implement management that is conscious of cost of capital and stock price. We intend to continuously disclose and report on specific measures and progress in a timely and appropriate manner leading up to the full-year announcement for FY2025.
Thank you for your continued support. That concludes my explanation.