Drecom Co., Ltd. · TSE:3793
Drecom — Q3 FY2023 Earnings Presentation
34 slides from Drecom's earnings presentation, Jan 30, 2024
Slide 1: Third quarter fiscal year ending March 31, 2024 Financial results presentation
Third quarter fiscal year ending March 31, 2024 Financial results presentation Drecom Co., Ltd. January 30, 2024 Please refer to the Fact Sheet on our website for trends in consolidated financial results, cost of sales, SG&A expenses, and billing sales in the game business. https://drecom.co.jp/ir/f
Slide 2: Summary
Summary Q3 FY2023 Existing operational titles continue to generate stable revenues (Apr-Dec) • Q3 Actual Sales: 7,637 million yen (-8.9% YoY) Operating income: 789 million yen (-62.4% YoY) Actual *1 Ordinary income 729 million yen (-64.0% YoY) Net income 97 million yen (-91.7% YoY) Revised full-year
Slide 3: Agenda
1. Review of Q3 (Oct-Dec) FY2023 2. Forecast for FY2023 3. Medium-term goals 4. Appendix Copyright Drecom Co., Ltd. All Rights Reserved. 3
Slide 4: Summary of business results third quarter of FY2023
1. Review of Q3 (Oct-Dec) FY2023 Summary of business results third quarter of FY2023 Existing titles in operation continue to perform well FY2023 FY2022 Q1 Q2 Q3 Q3 Total Q3 Q3 Total YoY (Millions of yen) QoQ YoY (Apr-Jun) (Jul-Sep) (Oct-Dec) (Apr-Dec) (Oct-Dec) (Apr-Dec) (Total) Net sales 2,346 2,7
Slide 5: Q3 FY2023 Operating income (QoQ comparison)
1. Review of Q3 (Oct-Dec) FY2023 Q3 FY2023 Operating income (QoQ comparison) Fixed costs decreased due to closure of unprofitable titles, despite lower sales compared to the previous quarter, which was strong. (Millions of yen) Decrease in revenues (Increase in expenses) Increase in revenues (decrea
Slide 6: Q3 FY2023 Revenue from operational game titles
1. Review of Q3 (Oct-Dec) FY2023 Q3 FY2023 Revenue from operational game titles Improved profitability by closing unprofitable titles 1H Profit/loss of operational 10 titles* (Q3 Oct-Dec 2023) Loss Profit * Series titles and titles developed for overseas are counted as one title. Number of titles in
Slide 7: Topics of each business
1. Review of Q3 (Oct-Dec) FY2023 Topics of each business Existing operational titles continue to generate stable revenues Game • The flagship IP titles that performed well in Q2 experienced subdued trend in Q3 but it continues to make steady progress. business User testing conducted for two titles c
Slide 8: Agenda
1. Review of Q3 (Oct-Dec) FY2023 2. Forecast for FY2023 3. Medium-term goals 4. Appendix Copyright Drecom Co., Ltd. All Rights Reserved. 8
Slide 9: Progress on future measures
2. Forecast for FY2023 Progress on future measures Reinforcement of measures for newly released titles and review of investment plans, as a year of rebuilding for next fiscal year Future measures (reiterated) State of progress • “Wizardry Variants Daphne” has been tested twice. To ensure game is in
Slide 10: Revision: Summary of full-year forecasts for FY2023
2. Forecast for FY2023 Revision : Summary of full-year forecasts for FY2023 Revised full-year forecasts due to upswings in existing titles and changes in forecasts for two new titles Previous Revised Change from Forecast Forecast (Announced on (Announced on previous Main Factors forecast (Millions o
Slide 11: Revision: Summary of full-year forecasts for FY2023
2. Forecast for FY2023 Revision : Summary of full-year forecasts for FY2023 Decrease in Net sales / Operating income Increase in Net sales / Operating income Upswing in Net sales Operating income existing game (Millions of yen) business Revised outlook Revised forecast for Upswing in for new titles
Slide 12: Summary: FY2023 full-year forecasts
2. Forecast for FY2023 Summary: FY2023 full-year forecasts FY2023 FY2022 Total Rate of Q4 Forecast Full Year Q1(Apr-Jun) Q2(Jul-Sep) Q3(Oct-Dec) Actual (Millions of yen) (Apr-Dec) progress (Jan-Mar) Forecast Net sales 2,346 2,745 2,546 7,637 76.4% 2,362 10,000 10,800 Variable cost 351 340 506 1,197
Slide 13: Three years to scale up
2. Forecast for FY2023 Three years to scale up Finish rebuilding by end FY March 2024; aim for growth in FY March 2025 and beyond. FY2023 FY2024 – FY2025 Sales: 10 billion yen Sales: CAGR over 20% Operating income: 0.8 billion yen Operating margin: Maintain 15% Growth Growth Game Rebuilding for Publ
Slide 14: Agenda
1. Review of Q3 (Oct-Dec) FY2023 2. Forecast for FY2023 3. Medium-term goals 4. Appendix Copyright Drecom Co., Ltd. All Rights Reserved. 14
Slide 15: Transformation into comprehensive entertainment company
3. Medium-term goals Transformation into comprehensive entertainment company Current Medium-term goal Original IP Original Increase in-house IP by development and nurturing of original IP Diversification Entertainment Diversifying development in Comprehensive Mobile game entertainment business Enter
Slide 16: Strengthen IP production capabilities
3. Medium-term goals Strengthen IP production capabilities Elevate IP production capabilities by embracing "our strength" with support of "investment areas - publishing, video business and Web3 area." IP Producing Capability × × IP development Diversification of IP IP development and acquisition mon
Slide 17: Status of in-house IP development and nurturing: Wizardry
3. Medium-term goals Status of in-house IP development and nurturing: Wizardry Acquire copyrights and trademarks of a popular IP and make them our own IP, and then enhance IP value through multimedia development From 2022 onward - • Novelization and comic book adaptation by Drecom Media Blade & Bast
Slide 18: Wizardry Variants Daphne, the latest in the series
3. Medium-term goals "Wizardry": "Wizardry Variants Daphne," the latest in the series Closed beta test in October 2023. Survey report available on official website. Conducted closed beta test (October 10-19, 2023) • More applications received than initially expected, with approximately 5,000 people
Slide 19: Wizardry novel and comic Blade & Bastard
3. Medium-term goals "Wizardry": novel and comic "Blade & Bastard" First volume of comics published in October, followed by second volume in December. Cumulative circulation of series exceeded 100,000 copies. Series has sold over 100,000 copies Display contest held • Mainstay products of publishing
Slide 20: Blockchain game Eternal Crypt - Wizardry BC-
3. Medium-term goals "Wizardry": blockchain game "Eternal Crypt - Wizardry BC-" Preparations for official release of this title, being developed in collaboration with Turingum K.K., including additional development, are in progress. 2nd and 3rd phases of pre-release period will begin Feb 2024. After
Slide 21: Wizardry: New goods on sale at online store
3. Medium-term goals Wizardry": New goods on sale at online store Official online store "DRECOM SHOP" opened January 2024. Started selling new "Wizardry" goods. We plan to continue to handle a variety of goods from our own IP and other content. ■DRECOM SHOP：https://drecomshop.com/ • Positioned as im
Slide 22: In-house IP: Evil Prince and the Puppet
3. Medium-term goals Status of in-house IP development and nurturing: Evil Prince and the Puppet Initiatives to create fan communities from SNS operations, nurture IP, and develop it in multiple areas, including goods creation and game development Under development for mobile game release by end of
Slide 23: Drecom Media, a publishing and video brand
3. Medium-term goals Status of development, acquisition and nurturing of in-house IP: Drecom Media, a publishing and video brand Comic book label began publishing October 2023, with cumulative total of more than 50 titles published. Steadily cultivating the seeds of our own IP Number of series Publi
Slide 24: Agenda
1. Review of Q3 (Oct-Dec) FY2023 2. Forecast for FY2023 3. Medium-term goals 4. Appendix Copyright Drecom Co., Ltd. All Rights Reserved. 24
Slide 25: Game business: Market overview and business strategy
4. Appendix Game business: Market overview and business strategy As domestic mobile game market matures, we will make investments that are not an extension of past to further strengthen our business foundation Maturation of domestic mobile game market Strategy of our game business Smartphone-ownin
Slide 26: Game business: Pipeline of operational and development titles
4. Appendix Game business: Pipeline of operational and development titles Secure long-term earnings by making additional investments for existing titles Aim for diversification with release of new titles with different initiatives 2011 - 2023 After 2024 Titles in Additional investment operation and
Slide 27: Game business: Pipeline of operational and under development titles
4. Appendix Game business: Pipeline of operational and under development titles Business Status Definition Number of projects Details 10 * Other company distribution: 5 titles Operation Titles in operation In-house distribution: 5 titles Titles under • Wizardry Variants Daphne development with -
Slide 28: Title for PC and consoles: Tokyo Stories
4. Appendix Title for PC and consoles: Tokyo Stories An initiative to develop original titles for PCs and consoles on outright purchase basis Highly regarded internationally, X has over 100,000 followers Tokyo Stories -working title- • Genre: Adventure • Compatibility: PC (Steam) / Console (platform
Slide 29: Revenue status of titles in operation (by release date)
4. Appendix Revenue status of titles in operation (by release date) Total sales of titles under operation Total business profit transition of titles under management 2011 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2011 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 FY2021 FY2022 FY2023 FY2
Slide 30: Game titles in operation
4. Appendix Game titles in operation Game title Distributor Service start date Chokotto Farm Drecom Co., Ltd. Jan 2011 ONE PIECE Treasure Cruise BANDAI NAMCO Entertainment Inc. May 2014 BOKU & DRAGONS studiorex Co., Ltd. *1 Feb 2015 Derby Stallion: Masters Drecom Co., Ltd. Nov 2016 Everybody's Golf
Slide 31: Purpose of entry into entertainment x Web3
4. Appendix Purpose of entry into entertainment x Web3 Aim to create system that benefits both users and management by combining FT/NFT and existing digital entertainment content to form secondary distribution market Example: Online game x Web3 Web 2.0 System that benefits both users and General onl
Slide 32: Purpose of entry into entertainment x Web3
4. Appendix Purpose of entry into entertainment x Web3 Web3 creates highly engaged fan community where users are part of project Old Entertainment (Web 2.0) Entertainment x Web3 Management Management Contents a consideration Contents Offer User and User token holder Relationship with management is
Slide 33: Glossary
4. Appendix Glossary Terminology Meaning Games for which Drecom is distributor. We are in charge of game planning, development, advertising, Games distributed in-house and sales. Games distributed by other The game is distributed by another company, and Drecom is in charge of development as a partne
Slide 34: Fact sheet reference and forward-looking statements
For trends in consolidated financial results, cost of sales/ SG&A expenses, and sales of game business billing, Please see the fact sheet posted on our website. https://drecom.co.jp/ir/factsheet_202403Q3.pdf Among the perceptions, strategies, plans, described in this document, the outlook is not a h