Dena Results Material

8/3/2019 Dena Results Material

1/22

FY 2011 Q2Operating Results

DeNA Co., Ltd.

Q2: Three months ended September 30, 2011


2/22

FY 2011 Q2 Highlights

There was steady growth in Moba-coin consumption (Mobage's virtual currency) onthe Mobage platform.

For Android, we released a beta version of Mobage Global in English-speakingterritories and Mobage China in China. We began to introduce social games usingthe ngCore game engine.

Progress continues in porting Mobage games for feature phones to smartphonebrowser version.

We also released an iOS Mobage app.

1

We strengthened our smartphone development capabilities through ourestablishment of a game development studio in Sweden and acquisition of PunchEntertainment in Vietnam.

A new net sales record was set for the eighth consecutive quarters.

- Net sales: JPY 34,689 million (+28% YoY)

- Operating income: JPY 15,407 million (+13% YoY)

We set up a subsidiary in Singapore and began cultivating new local developers.


3/22

Item Q2 FY2011 Q2 FY2010Y on Y

change

Q1 FY2011Q on Q

change

Net sales 34,689 27,085 +28% 34,649 +0%

Operating

income 15,407 13,624 +13% 15,809 -3%

Ordinaryincome

14,725 13,410 +10% 15,757 -7%

Net income 8,190 7,638 +7% 9,456 -13%

Overview of Financial Results

Unit: Millions of yen

2


4/22

Net Sales by Segment

3

4,9377,711

14,883

20,37523,203

25,41128,203

31,067 30,971

3,175

3,529

3,495

3,396

3,391

3,666

3,133

3,130 3,163

452

414

695

421

490

417

619

451 554

0

10,000

20,000

30,000

40,000

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

Others

E-commerce

Social media

34 ,689

FY 2009 FY 2010

(Millions of yen)

8,565

11,655

19,073

29,494

24,193

27,085

31,955

FY 2011

34,649

Note :Above segment sales numbers are after consolidation and eliminations.


5/22

ItemQ2

FY2011

Q2

FY2010

Y on Ychange

Q1

FY2011

Q on Q

change

Cost of sales 6,290 3,314 +90% 5,959 +6%

Labor costs 676 175 +286% 608 +11%Expanding game development capabilities

at overseas subsidiaries

Depreciation andamortization

650 409 +59% 543 +20%Increasing server numbers, etc. as part ofdisaster recovery measures

Advertising mediaexpenses

312 643 -51% 387 -19% Linked to Pocket Affiliates sales

Outsourcing expenses 924 553 +67% 787 +17%Expanding game development capabilitiesat overseas subsidiaries

Commission fees 3,293 907 +263% 3,220 +2% Increase in game revenue share

Others 432 625 -31% 412 +5%

Selling, general, andadministrative expenses

12,991 10,146 +28% 12,880 +1%

Personnel expenses 2,253 1,522 +48% 2,075 +9%

Number of consolidated employees at the

end of September: 1,604(1,282 at the end of June)

Sales promotion &advertising expenses

4,684 5,077 -8% 5,043 -7%Decrease in sales promotion expensessuch as TV commercials

Outsourcing expenses

Commissions fees3,848 2,614 +47% 3,547 +8%

Increase commission fees for agencysettlement of items billings with Moba-coins

Others 2,205 931 +137% 2,215 -0% Amortization of goodwill for foreign subs

Breakdown of Expenses

4

Unit: Millions of yen


6/22

(%)

(Operating income:Millions of yen)

FY2010FY2009

Operating Income

5

FY2011

3,083

5,224

9,819

11,989

13,624

14,745 15,736 15,809 15,407

36.0

44.8

51.5 49.6 50.3

50.0 49.4

45.6 44.4

0

10

20

30

40

50

60

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

Operating income

% of Net Sales


7/22

Item Q2 FY2011 Q2 FY2010 Y on Ychange

Q1 FY2011 Q on Qchange

Cash flow fromoperating activities

18,018 14,292 +3,726 -4,295 +22,313

Cash flow from

investing activities -1,643 -4,095 +2,452 -2,498 +854

Cash flow fromfinancing activities

-137 -1 -135 -4,913 +4,775

Cash and cashequivalents at the

end of quarter

66,455 46,472 +19,982 50,861 +15,594

Cash Flows

6

(Millions of yen)


8/22

Note :The above figures are prior to consolidation eliminations.:Starting in the current fiscal year, overseas net sales were transferred from Others to Game-related.Figures have been revised retroactively to the second quarter of 2010.

Banner ads, tie-up ads, adsmatched to content/search,affiliate advertising (othercompanies media), etc.

Everystar, etc.

Item billing, in-game ads(CPA/CPC), developeradvertising, mixi mobileapplications (ad/paymentprograms), affiliate programs(users gain Moba-coins forbuying goods, etc.), overseasbusiness, etc.

Social Media Business

Advertising

Others

Avatar-related

Game-related18,737

20,856

24,149

27,448 27,800

2,669

2,615

2,015

1,819 1,385

1,696

1,779

1,774

1,527 1,374

223

261

368

367 503

2Q 3Q 4Q 1Q 2Q

(Millions of yen)

FY 2010

Net sales

23,325

25,511

28,306

FY 2011

31,161 31,062

7


9/22

0

10,000

20,000

30,000

40,000

1Q 2Q 3Q 4Q 1Q 2Q

First-party games and collaboration gamesThird-party

Mobage Platform Expansion

16,721

20,28823,357

28,178

Trends in Moba-coin consumption*(Millions of yen)

FY 2010

33,437

FY 2011

37,034

Continued steady growth in Moba-coin consumption, driven by third-party games

- In contrast, there has been decrease in Moba-coin consumption in first-party games, due to (1) delayon releasing major IP titles and (2) our lack of timely response in addressing the popular card-battlecategory.

- Third-party card battle games have been driving Moba-coin consumption.

- Moba-coin consumption for first-party games and third-party games becameapproximately same level.

* Includes consumption of Moba-coins, monthly membership service fees for social games and ticket sales. 8


10/22

Growth of Mobage Japan

Although Mobage has 32 million users (an increase of 11 million users YoY) as of the end of

September 2011, there is still high growth potential with regard to users in their 30s and older, agroup with a high ARPU, meaning that there remains good opportunity for further expansion ofARPU.

Breakdown by active userage group %

ARPU*by user age group

Active users of Mobage Japan:penetration by age

above

30

20-29

10-19

Sep

2009

Sep

2010

Sep

2011

3124 20

4341

37

2635

43

* ARPU: Average revenue per user (computed as coin consumption/MAU**). The figures are as of September 2011.** MAU: Number of users who have used the site at least once a month.

The index below have been adjustedso that the number of users in the

10-19 age group equals 100.

0

10,000

20,000

30,000

40,000

50,000

60,000

Mobageusers

(Unit: 1,000 people)

10-19 20-29 30-59

9

100

360

648

0

200

400

600

800

10-19 20-29 above 30

Total populationin age group

Further potentialfor expansion


11/22

Status of Mobage for Smartphones

Moba-coin consumption on Mobage for Smartphones (SP) also is steadily growing

10

Steady expansion of smartphone content lineup

- A steady stream of new game releases,including third-party titles

Trends in Moba-coin consumption

- Although SP ARPU is also steadilyexpanding, the majority of it is driven by

browser-based games.

FY 2009 FY 2010 FY 2011

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

FP 97 153 357 577 774 879 904 991

SP 20 49 163

Trends in number of game titles

Trends in Mobage FP*/SP ARPU**

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

FY 2011FY 2010FY 2009

SP

FP

- Number of titles as of end of Sep 2011Browser-based games: 145 titlesApplication-based games: 18 titles

* FP: Feature phones** ARPU: Average revenue per user (computed as coin consumption/MAU**). The figures are as of September 2011.*** MAU: Number of users who have used the site at least once a month.


12/22

1,222 1,399 1,236 1,268

1,0331,070

1,091 1,041

709

835897 985

147

166146 153469

400

1,262

1,026

1,098

143

2Q 3Q 4Q 1Q 2Q

(Millions of yen)

FY 2010

Net sales

Scale of payment processing continues

to steadily grow

At the end of Nov. 2010, all shares inMobacolle Co., Ltd, were transferred toSENSHUKAI Co., Ltd.(Sales up to Nov. 2010 are consolidated)

Paying members: 1.19 million(as of end of Sep 2011)

Transactions handled: 10,011 million yen(+7.7% YoY)

Shops 4,033 (as of end of Sep 2011)

3,580

E-commerce Business

3,870

3,370

11

FY 2011

3,5293,447

Note :The above figures are prior to consolidation eliminations.

bidders

PAYGENT

Others

MOBAOKU

Mobacolle


13/22

Key Focus Areas for 3Q Onward

(1) Expansion of game lineup

Mobage Japan (FP/SP browser-based games)

- Strengthening of lineup of first party and collaborative developmenttitles

Mobage Global (SP application-based games):

- Strengthen the lineup of first-party games and popular iOS titles

(2) Strengthening of social game development capabilities

(3) Quick full-scale rollout of Mobage Global

12


14/22

Title

(1)-1 Expansion of Game Lineup (Mobage Japan)

Plan: Successive releases of games developed by the first party and collaborative development

teams for FP/SP browsers based on major IPs and card-battle games

3QFY

2011

4QFY

2011

FY2012

GenrePlanned

release date

Gundam Card Collection(Bandai Namco Games)

Professor Layton Royale

Chronicles of Horse Racing

Final Fantasy New Social Game

Card battle

Puzzle RPG

Card battle

RPG

Mid Oct

Late Oct

Early Nov

This winter

Successive releases ofgames featuring major IPs and card-battle games

We plan to raise thepercentage of card-battle titles at least up to50% of all new releases.

Identify new trends early and create new game design patterns based on new trends

13


15/22

(1)-2 Expansion of Game Lineup (Mobage Global)

Strengthen the SP app lineup with first-party titles and popular iOS titles

Turn flagship first-party titles into major hits Secure a wide-range of key & popular titles

* : As these are new titles, there is no past ranking information that could be used as reference.** : Top Free Ranking,Top Grossing Ranking columns respectively indicate the highest position reached in the Top Free and Top Sales rankings on the US App

Store. Pocket God and Fragger are Paid applications. As such, we used the Top Paid and Top Sales rankings.Source : appannie.com, topappcharts.com, AppStore 14

Title Developer Type Release dateTop FreeRanking**

Top GrossingRanking**

Ninja Royale * DeNA 1st party Released

We rule ngmoco 1st party Released 1 1

Haypi Kingdom Haypi Inc. 3rd party Released 5 4Pocket Frogs NimbleBit 3rd party Released 3 12

Paper Toss Backflip Studios 3rd party Released 1

Paradise Island Series Game Insight 3rd party Released 12

Zombie Farm The Playforge 3rd party Released 4 2

Dragon Craft * ngmoco 1st party December

Skyfall RPG * ngmoco 1st party November

Icee Maker Sunstorm 3rd party November 1 13Pocket God Bolt Creative 3rd party November 3 10

Texas Poker KAMAGAMES 3rd party November 2 1

Tiny Tower NimbleBit 3rd party November 5 3

Tiny Chef Tiny Co 3rd party November 2 4

Monster Rancher for Everyone Tecmo Koei Games 3rd party November

MapleStory NEXON 3rd party December

Tap Fish series Gameview Studios 1st party Jan.Mar. 2012 1 1Tap Ranch 2 Gameview Studios 1st party Jan.Mar. 2012 4 11

Fragger Harold Brenes 3rd party Jan.Mar. 2012 1 3

Mystery Dungeon:Shiren the Wanderer

CHUNSOFT 3rd party Jan.Mar. 2012

No More Heroes for Mobage(Tentative name)

Grasshopper Manufacture 3rd party TBA


16/22

(2) Strengthening of Social Game Development Capabilities

The steady expansion of development capabilities to support strategy 1,

Expansion of Game LineupIn addition to M&A strategy, we are actively engaged in joint ventures and capital

tie-ups to rapidly build a 1000-people game development organization.

15

Development of app-based

smartphone games, mainly forcasual and light gamers

Development of the above games andmass-creation of excellent games underexisting game design patterns

Recruitment and training ofengineers with low costs

Development of high-quality app-basedsmartphone games Creation of new game design

patterns Recruitment of high spec talents

and foster excellent creativityJoint ventures andbusiness/capital tie-ups

High-qualitydevelopment site

Development subs

Core development base


17/22

(3) Quick Full-scale Rollout of Mobage Global

Roadmap

Initial & current status

Tune-up focus: sign-up and game launching process, start-up time and stability

After making necessary tunings, the rating and ranking* for our key titles have beenincreased rapidly.

- Rating: Zombie Farm/We Rule/Pocket frogs 4.6/5.0

- Ranking: Zombie Farm 9th Place / We Rule 40th Place

Future objectives

Rapidly acquire users through continue improvements in software, aggressivemarketing program and the continued release of new titles.

Focusing on reaching $100 million Moba-coin consumption per quarter, with$50 million in Moba-coin consumption during the Jan-Mar 2012 quarter as an initial

target.

16* Rating and Ranking as of Oct. 31st on US Android Market

Jul Aug Oct Nov ~ Dec

Global service

beta in English-speaking

territories

Global service beta with

language localization(non-English-speaking

territories)

The migration from the

beta version to the fullrelease and started to

acquire users

Release of an

iOS version


18/22

Consolidated Performance Forecast for Q3 FY 2011

ItemQ3 FY 2011

(Forecast)

Q3 FY 2010

(Actual)

Y o Y

Change

Net sales 105,000 80,772 +30%

Operatingincome

46,000 40,359 +14%

Ordinaryincome 44,400 40,147 +11%

Net income 24,500 22,328 +10%

Policy for Announcement of Performance ForecastsForecasting the speed of growth in the social gaming market (where the Companys principal businessresides) is difficult as the market is very new and there is an increasing diversity of devices being used inplaying games. Furthermore, profitability in the market is greatly affected by many uncertain factors, suchas users preferences and whether new titles become hits or not. In addition, it is difficult for reasonssimilar to those mentioned above to forecast the profitability of our global business, which commenced

during current fiscal year. Accordingly, we only announce our performance forecast for next quarterduring announcement of each quarters operating results.

17

(Millions of yen)


19/22

Entry to Japanese

Professional BaseballBusiness

18


20/22

Main Objectives

Corporate Branding & Visibility

Contribution to the local community

Contribution to the development of Japanese

Professional Baseball League

19


21/22

20

Business Synergy

Baseball x Mobage will provide new entertainment potential

- Collaboration with Professional Baseball Business will promote mid to long termgrowth of our business Maximize the business synergy by fully utilizing Mobage community functions

Combining Professional Baseball, a Japanese national sports, and our socialgaming capabilities will create tremendous entertainment opportunities

We can attract lots of new users over 30s to Mobage

Favorite Sports by Japanese

Baseball

Soccer

Golf

Sumo

Boxing010

20

30

40

50

60

04 05 06 07 08 09 10

Data source Favorite Sports Research by Chuo Research Company in Japan

010

20

30

40

5060

70

80

20-29 30-39 40-49 50-59 60-

Male

Female

Professional Baseball Popularity by Age & Sex *

* From Favorite Professional Sports (Professional Baseball) by Age & Sex ( Favorite Sports Research in 2007)


22/22

DeNA Co., Ltd.

The forecast data contained within this presentation and thesepresentation materials have been determined based on informationavailable to date, but may contain an element of uncertainty.Please be aware that the actual performance data and similarinformation are subject to influence from diverse factors, and may

differ from the forecasts presented herein.

Dena Results Material

Documents

Transcript of Dena Results Material