Crooz, Inc. · TSE:2138
Crooz — Q2 FY12 Earnings Presentation
69 slides from Crooz's earnings presentation, October 2012
Slide 1: The 12th Term Second Quarter Financial Results Presentation
The 12th Term Second Quarter Financial Results Presentation CROOZ, Inc. JASDAQ Standard; Code 2138
Slide 2: Agenda
The 12th Term Second Quarter Financial Results Presentation A g end a Starting off Strategy This quarter's good news What is our future business strategy? Where will we focus most of our energy overseas? Business What sort of games will we release overseas? How will we strengthen our presence overse
Slide 3: This quarter's good news
This quarter’ s good news An important message We have a very special announcement on the last page. Please look forward to it.
Slide 4: A new record in social game sales
A new record in social game sales With Supernatural Succession! RAGNABREAK as the driving force * The effects of TV commercials are not included in second quarter sales. TV commercial expenses will be factored into third quarter sales, so they will not be included this time.
Slide 5: RAGNABREAK is the driving force behind the new record
The 12th Term Second Quarter Financial Results Presentation Th is q ua r t er ’ s g o o d new s Our No. 1 title, Supernatural Succession! RAGNABREAK is the driving force behind the new record in social game sales.
Slide 6: Before we get into noteworthy achievements, introducing CROOZ
Before we get into noteworthy achievements and RAGNABREAK details... I'd like to introduce CROOZ to you.
Slide 7: What does CROOZ, Inc. do?
? What does CROOZ, Inc. do
Slide 8: CROOZ provides Internet-based services worldwide
CROOZ provides Internet-based services worldwide. Tokyo CROOZ,Inc. Headquarters ForGroove, Inc. Joint venture affiliated with Nippon Television NEW San Francisco CROOZ America, Inc. NEW Singapore Established August 1, 2012 CROOZ Asia Pte.Ltd. Established July 26, 2012 Current services are centered o
Slide 9: What sort of games do we provide?
What sort of games do we provide Users (10,000s) ? 10th term 11th term This term (12th term) 4/20/2010 3/4/2011 4/18/2011 8/1/2011 2/29/2012 Released by associated company ForGroove 5/2/2012 Released by associated company ForGroove 7/13/2012 Global release through Mobage 10/10/2012 6/13/2011 9/6/201
Slide 10: What sort of games do we provide?
The 12th Term Second Quarter Financial Results Presentation W h a t so rt of g a m es d o w e p r o v i d e? Year 1 - 10th term As our first title, we released Nekketsu Kouha Kunio Battle for Mobage. It became a hit, and next we released another licensed title, Shounan Bakusou-Zoku, which also sold
Slide 11: What are our major titles?
What are our major titles ? Card battle games using high-quality illustrations for appeal.
Slide 12: What are our major titles?
The 12th Term Second Quarter Financial Results Presentation W h a t a r e o ur m a j o r t i t l es ? Supernatural Succession! RAGNABREAK is our main title. Known for its high-quality card illustrations outmatching other card battle games, it exceeded one million users in its first 6 months, and has
Slide 13: What kind of trends exist?
What kind of trends exists Internet contents ? Internet commerce Internet solutions (Millions of yen) 12th term 8th term 9th term 10th term 11th term (Last term) (This term)
Slide 14: What kinds of trends exist for sales?
The 12th Term Second Quarter Financial Results Presentation W h a t k in ds of t r end s ex i s t f o r s a l es ? Our sales for the second quarter were 2.725 billion yen, for a 20% increase (+ 472 million) from the previous quarter total of 2.252 billion yen, setting a new sales record for social g
Slide 15: What kinds of trends exist for ordinary income?
What kinds of trends exist for ordinary income ? 1,955 290 4Q 2,000 (Full-year forecast) Ordinary income (millions of yen) Ordinary income ratio (%) 1,129 1,665 475 2Q 443 16.7 21.4 21.8 196 355 12.1 1Q 6.1 8th term 9th term 10th term 11th term 12th term (Last term) (This term)
Slide 16: What kinds of trends exist for ordinary income?
The 12th Term Second Quarter Financial Results Presentation What kin ds of t re n ds e xist f o r o r d i na r y i nc o m e? Our ordinary income for the second quarter was 475 million yen, a 34% increase (+120 million) from 355 million yen the previous quarter. This is due to an increase of 472 mill
Slide 17: How was our performance this quarter?
How was our performance this quarter ? (Millions of yen) Previous quarter This quarter Gain/Loss Apr. – Jun. Jul. - Sep. Net sales Personnel costs Subcontracting costs Advertising costs Operating profits Term net profit A 20% increase in income , and 34% increase in profit compared to last quarter.
Slide 18: How was our performance this quarter?
The 12th Term Second Quarter Financial Results Presentation How w a s o u r pe rf o r m a nc e t hi s q ua r t er ? We achieved an increase in income and profit , with 2.725 billion yen in sales (+20%), 472 million yen in operating income (+34%), and 302 million yen in term net profit (+47%).
Slide 19: What is our progress status?
What is our progress status ? Full-year (Millions of yen) 1Q + 2Q performance Progress rate estimate Sales Operating income Term net profit Progress is estimated to accelerate from the third quarter due profit increase.
Slide 20: What is our progress status?
The 12th Term Second Quarter Financial Results Presentation W h a t is o ur p r o g r es s s t a t us ? Our full-year performance estimate includes a rate of progress at 45% for sales, 41% for operating income, and 42% for term net profit. These numbers might appear a bit low, but we have recently a
Slide 21: What is our future business strategy?
What is our future business strategy ? Overseas title Deity Wars Overseas market Domestic market Work hard to succeed in the overseas market to increase the overseas sales ratio.
Slide 22: What is our future business strategy?
The 12th Term Second Quarter Financial Results Presentation W h a t is ou r f u t u r e b us i nes s s t r a t eg y ? We released Deity Wars , our first title for overseas users, on July 13, 2012. Deity Wars is an English localization of the Japanese hit title Supernatural Succession! RAGNABREAK, an
Slide 23: Where will we focus most of our energy overseas?
Where will we focus most of our energy overseas ? CROOZ America,Inc. CROOZ,Inc. CROOZ Asia Pte.Ltd. First we will set our sights on the wide-ranging North American market
Slide 24: Where will we focus most of our energy overseas?
The 12th Term Second Quarter Financial Results Presentation Where w ill w e f o c u s m ost o f o ur ener g y o v er s ea s ? First we plan to develop hit games for release in the wide-ranging North American market . We do not plan to release our original titles in Japan alone to reach hit status, b
Slide 25: What sort of games will we release overseas?
What sort of games will we release overseas ? The " culturalization" of hit games in Japan
Slide 26: What sort of games will we release overseas?
The 12th Term Second Quarter Financial Results Presentation What so rt of ga m e s w ill w e r el ea s e o v er s ea s ? We will continue to select and focus on high-quality, original titles such as Supernatural Succession! RAGNABREAK in Japan. And we will culturalize our high-quality Japanese title
Slide 27: How will we strengthen our presence overseas?
How will we strengthen our presence overseas ? Hire non-Japanese employees at a ratio of Plan for offshore Start to hire at least 15% development bases personnel locally CROOZ,Inc. CROOZ Asia Pte.Ltd. CROOZ America,Inc Expand global personnel , and improve culturalization
Slide 28: How will we strengthen our presence overseas?
The 12th Term Second Quarter Financial Results Presentation How w ill w e st re n gt h e n o ur p r es enc e o v er s ea s ? In order to produce hit games overseas, we will hire non-Japanese employees at CROOZ headquarters in Japan at a ratio of 15% in the second half of the year. Working with these
Slide 29: What devices will we focus on?
What devices will we focus on ? Japanese market Overseas market Planned value Sales Current value Focus efforts on smartphones and tablet devices
Slide 30: What devices will we focus on?
The 12th Term Second Quarter Financial Results Presentation W h a t de v ic es w i l l w e f o c us o n? For the time being, we will focus on releasing games for the constantly evolving smartphone . In addition, we will simultaneously release games for tablet devices such as the iPad, focusing our e
Slide 31: What percentage of our visitors use smartphones?
What percentage of our visitors use smartphones ? No. of monthly unique visitors (MAU) Percentage of smartphones users 10th term 11th term 12th term (This term) Roughly half of visitors have switched to smartphone
Slide 32: What percentage of our visitors use smartphones?
The 12th Term Second Quarter Financial Results Presentation What perc e n t a ge of o u r v isit o r s us e s m a r t p ho nes ? The percentage of smartphone users visiting our main titles has increased steadily each quarter, and today roughly half of our visitors have transitioned to smartphone.
Slide 33: What technologies are we improving?
What technologies are we improving ? Creative technology Development power Systemized through our Venus accelerated development framework Delivery technology Infrastructure power G4 Systemized through our Zeus common infrastructure base Communicative technology Marketing power Systemized through our
Slide 34: What technologies are we improving?
The 12th Term Second Quarter Financial Results Presentation What technologies are we improving? We are mainly focused on improving four technologies. We believe these four technologies, called G4 , are vital to long-term survival in any sort of network-based business. Development power Creative tech
Slide 35: What are the strengths of CROOZ?
What are the strengths of CROOZ ? Compass Marketing database Analysis of areas to be tuned up Venus Accelerated development framework S4 Agile tuning operations through piecemeal development Zeus Common infrastructure base A network capable of handling heavy loads on demand Four Systems Innovative t
Slide 36: What are the strengths of CROOZ?
The 12th Term Second Quarter Financial Results Presentation What are the strengths of CROOZ? CROOZ continually strives to be a technologically powerful company . In particular, we value systems that ensure high-quality, do not require special skills, and allow for effective and highly productive wor
Slide 37: What is the policy on return to shareholders?
What is the policy on return to shareholders ? As a general rule, aim to distribute dividends every term Aim to achieve a payout ratio of 30% or higher Recognition among all employees of the importance of dividends Recognition among all employees of the importance of operating income Aim to heighten
Slide 38: What is the policy on return to shareholders?
The 12th Term Second Quarter Financial Results Presentation What is the policy on return to shareholders? Once per quarter, CROOZ officers and executives take a retreat together and review the return policy to shareholders based on stock prices and financial conditions. (1) As a general rule, we see
Slide 39: What are the trends in regard to dividends and payout ratios?
What are the trends in regard to dividends and payout ratios ? 8th term 9th term 10th term 11th term 12th term (Last term)(Last term) Dividend per share (JPY) Total dividends (millions of yen) Dividend payout ratio (%) CROOZ has been paying dividends each term since the term after listing
Slide 40: What are the trends in regard to dividends and payout ratios?
The 12th Term Second Quarter Financial Results Presentation What are the trends in regard to dividends and payout ratios? CROOZ has succeeded in paying dividends each term since the term after listing. As explained earlier, in this term we are working on creating high-quality original games and acti
Slide 41: That is all for the second quarter earnings announcement
That is all for the second quarter earnings announcement, However...
Slide 42: To end our meeting today: a special announcement
To end our meeting today We have a special announcement As a sequel to our RAGNABREAK series, taking place in a parallel world 10 years after the events of RAGNABREAK,
Slide 43: The Knights of Avalon got off to a flying start
The Knights of Avalon got off to a flying start following on from RAGNABREAK. Featuring a non-card based engine, this is one to look forward to. It was released on October 10, so its contributions to performance will start in the third quarter.
Slide 44: A special notice
The 12th Term Second Quarter Financial Results Presentation A s p ec i a l no t i c e On October 10, distribution of The Knights of Avalon started through Mobage, and in 3 days time, membership registration exceeded 100,000 users. The Knights of Avalon features a universe consistent with that of Sup
Slide 45: An important message for all of you
An important message for all of you so that we can give more good news next quarter
Slide 46: Active advertising campaign and global hiring
We will invest in an active advertising campaign to promote RAGNABREAK and Avalon in Japan. To strengthen business overseas , we will actively invest in the hiring of personnel on a global scale.
Slide 47: An important message for all of you
The 12th Term Second Quarter Financial Results Presentation An important message for all of you so that we can give more good news next quarter To further boost the top line for our No. 1 Title Supernatural Succession! RAGNABREAK and The Knights of Avalon , we will carry out an active advertising ca
Slide 48: What is the mid-to-long-term vision (dream) at CROOZ?
? What is the mid-to-long-term vision (dream) at CROOZ
Slide 49: Example
Example Tech Hills The Knights of Avalon A technical study session held by CROOZ to pursue the possibilities of A real-time guild battle game, and sequel to RAGNABREAK next-gen technologies. More than 200 people attended our 3rd event, 100,000 users exceeded only 3 days after release and 750 people
Slide 50: FAQ and reference materials
That wraps up our earnings announcement. But from this point we'd like to list FAQ and reference materials, so please feel free to continue looking.
Slide 51: FAQ
FAQ Plus Twitter-like comments from Obuchi
Slide 52: FAQ
The 12th Term Second Quarter Financial Results Presentation FAQ We have gathered commonly-asked questions into this FAQ. Q: How many employees work at CROOZ? A: 267. (As of the end of this second quarter) Q: Why did you add 70+ employees in the first half year? A: Most were mid-career employment as
Slide 53: FAQ
The 12th Term Second Quarter Financial Results Presentation FAQ Q: What is the turnover rate? A: 9.5%. (As of the end of last term) This is reasonable at an IT company. That rate won’ t go up or down. Q: What is the average salary at CROOZ? A: 5.3 million yen. (As of the end of last term) With an av
Slide 54: FAQ
The 12th Term Second Quarter Financial Results Presentation FAQ Q: Will you tell us the mid-term business plan at CROOZ? A: We can't do that. Just as the fact that no one predicted that Mobage would become a huge media entity five years ago taught, the changes in this industry come hard and fast, wh
Slide 55: FAQ
The 12th Term Second Quarter Financial Results Presentation FAQ Q: What is your current business scheme? A: There is still plenty of room for growth in social games, using original titles as an axis. We aim to multiply the scope of our sales. In the near future we will actively work to obtain global
Slide 56: FAQ
The 12th Term Second Quarter Financial Results Presentation FAQ Q: Did the cancellation of “complete gacha” services affect profits or KPI? A: There was almost no effect. Q: I saw something about the Asia Diva Audition in a press release. What sort of event is it? A: It is an audition held sponsored
Slide 57: Reference: What are social games?
Reference: What are social games ? Packaged games Social games Desktop game consoles Mobile phones, PC
Slide 58: What are social games?
The 12th Term Second Quarter Financial Results Presentation W h a t a r e s o c i a l g a m es ? Packaged games Social games One-time sale model Continuous revenue generating model Basically played by 1 or 2 players with limited Basically played by multiple players; abundant communication communicat
Slide 59: What is our business model?
What is our business model ? Approximately 122,890 thousand users in total Approximately 59,870 thousand users Approximately 34,670 thousand users Approximately 28,340 thousand users Game Platforms
Slide 60: What is our business model?
The 12th Term Second Quarter Financial Results Presentation W h a t is o ur b us i nes s m o d el ? We can call all cell phone users from DoCoMo, au and Softbank our customers. We provide Nekketsu Kouha Kunio Battle and other social games through the Mobage game platform from DeNA Co., Ltd. We earn
Slide 61: How does CROOZ make profit?
How does CROOZ make profit ? We sell incredibly powerful weapons for only 500 yen.
Slide 62: How does CROOZ make profit?
The 12th Term Second Quarter Financial Results Presentation How does CROOZ make profit? In the case of Nekketsu Kouha Kunio-Kun (RENEGADE): An action game in which the player trains and strengthens the character to fight against enemies cooperatively with friends “With this weapon, “I could have won
Slide 63: How large is the game software market?
How large is the game software market ? Wii Nintendo DS JPY 51.9 JPY 44.2 billion billion Online games Playstation3 JPY 66.7 JPY 135.6 billion billion Social games JPY 265.0 billion PSP 2011 JPY 77.7 Mobile games billion JPY 75.6 billion
Slide 64: How large is the game software market?
The 12th Term Second Quarter Financial Results Presentation How large is the game software market? The social game market has grown to account for JPY 265 billion in 2011. This means the market has grown far beyond that of Wii and PlayStation 3 software seen in TV commercials. *The market sizes of t
Slide 65: What is the future outlook on market size?
What is the future outlook on market size ? 5,750 (100s of million yen) 4,650 Online games 1,356 PSP 777 2,650 Mobile games 756 Playstation3 667 Wii 519 1,389 Nintendo DS 442 447 60 157 0 5 2005 2006 2007 2008 2009 2010 2011 2012 2013 (Year)
Slide 66: What is the future outlook on market size?
The 12th Term Second Quarter Financial Results Presentation What is the future outlook on market size? Social games play leading roles in the game software market. Social games pulled in 265 billion yen in 2011, making them the undeniable kings of the game software market. The social game market is
Slide 67: Are social games really profitable?
Are social games really profitable ? Brand Ranking: Number of times aired on TV commercials 1st place GREE 3,040 times 2nd place SoftBank Mobile 1,225 times 3rd place Mobage 1,092 times 4th place NTT DOCOMO 967 times 5th place McDonald’ s 843 times 6th place Shiseido 726 times (Tsubaki Shining shamp
Slide 68: Are social games really profitable?
The 12th Term Second Quarter Financial Results Presentation Are social games really profitable? In terms of the number of times TV commercials have aired, GREE is ranked first and Mobage is ranked third. This reflects the fact in Japan today; companies focusing on social games such as GREE and Mobag
Slide 69: Points to note
The 12th Term Second Quarter Financial Results Presentation Points to note The material herein contains mid-to-long-term plans and forecasts made by CROOZ. The information contained in these pages is not intended to guarantee the future business results of the company and bears certain risks and unc