Mixi Inc

TSE:2121

Earnings Call Transcript

[Kohei Shimamura, executive]

I am Shimamura, CFO and Senior Corporate Officer. I will now explain the financial results for Q2. Today, I will explain the results according to the agenda on Page 3. Page 4, this is the executive summary. Page 5. First, I will explain the financial status. Please take a look at Page 6. This is the second quarter consolidated income statement.

Net sales, JPY 38.7 billion; EBITDA, JPY 7.1 billion; operating income, JPY 5.9 billion and profit attributable to owners of parent, JPY 2.9 billion. Thus, both sales and profits increased. As we disclosed in December last year, the main impact of the misconduct that occurred at one of the consolidated subsidiary was decrease in net income of JPY 500 million.

Please turn to Page 7, quarterly consolidated performance. Page 8. From here, I will explain the business status of each segment. Page 9. This is a review of the Sports segment. Net sales increased 28.6% year-on-year to JPY 9.6 billion. This was mainly due to growth in sales of TIPSTAR and FC Tokyo as well as the addition of arena sales. Excluding the impact of the arena opening, sales increased 22.3% year-on-year. EBITDA improved significantly and turned positive. This was due to the increased sales of TIPSTAR and others as well as the absence of onetime costs recorded in the previous fiscal year.

Page 10. This is the status of the Spectator Sports business. The Chiba Jets have been playing their home games at their new arena since this session. The capacity is about 10,000, which is double the size from the previous season, and every game is sold out with many fans coming to watch. In addition, the team has been strengthened by the addition of Yuta Watanabe, who has played many years in the NBA. For FC Tokyo, we are continuing to improve the spectator experience, including holding home games at the National Stadium and renewing the official app.

Page 11. This is a graph showing the trend in net sales of the main services in the betting business, TIPSTAR, Chariloto and Net Dreamers have continued to grow steadily and overall net sales increased by 18% year-on-year. Also, TIPSTAR is working on product improvements, and it continued to achieve a high growth rate of 37.1% year-on-year following the strong first quarter.

Page 12. This is the situation with TIPSTAR. TIPSTAR has improved the operability of its app and implemented a functional chat features during races. EBITDA has increased significantly year-on-year with appropriate cost controls also in place. We will continue to improve the social functions.

Please turn to Page 13. I will now explain the Lifestyle segment. Page 14. Sales increased 27.7% year-on-year to JPY 2.7 billion, thanks mainly to major FamilyAlbum products such as Premium and GPS Guardian. As for EBITDA, although we are continuing to invest in acquiring overseas users, sales growth has helped to reduce the size of the deficit year-on-year.

Please turn to Page 15. I will explain the status of the FamilyAlbum. We just put our press release today that the number of FamilyAlbum users has exceeded 25 million. The FamilyAlbum economic zone is steadily expanding with the addition of digital products such as sticker subscriptions and ads. We will continue to broaden our offerings and aim to expand the scale of sales. With regard to print service, we have launched a new service, allowing users to order more free prints more frequently.

Please turn to Page 16. I will explain the Digital Entertainment segment. Page 17. Sales were JPY 22 billion, down 9.1% year-on-year. Monster Strike saw MAU decline from last year when the 10th anniversary was underway, and it also slightly fell behind internal plans. EBITDA increased by 27.7% year-on-year to JPY 8.2 billion. Although there was a negative impact of lower Monster Strike revenue, cost reduction from business withdrawals led to this result. Kotodaman saw a decrease in both sales and profit. We will work to improve this in the future.

Please turn to Page 18. This is the status of Monster Strike in the second quarter. Although MAU in the second quarter was down year-on-year, ARPU increased due to collaborations with popular IPs. In addition, we are implementing various measures such as DREAMDAZE II and MONST FREAK. In the case of the online event, MONST FREAK, around 60% of the participants were aged 24 or under, indicating strong support from the younger generations.

Please turn to Page 19. The details of the third quarter will be explained at the Q3 earnings announcement, but let me briefly touch upon the third quarter and the current situation. Although the number of active users decreased due to the reaction from the 10th anniversary measures, ARPU increased due mainly to collaborations. The new character sales in the new year are also strong. The promotional anime has attracted attention for its theme song sung by the national famous Yuzu. It has been viewed over 1 million times in total for the first and second halves. We will continue to aim for an upside through collaborations and other measures.

Page 20, I will explain the investment segment. Page 21. Net sales were JPY 4.3 billion, and EBITDA was JPY 2.1 billion. This was mainly due to the sale of Timee shares. In addition, there were write-downs and other losses at some of the funds we invest in.

Please turn to Page 22. I will explain the results forecast progress. The consolidated second quarter results trended higher than internal plans for both sales and profits due partly to the sale of shares in Timee. Finally, Kimura will give a summary.

[Koki Kimura, executive]

I am Kimura, CEO and President. Please turn to Page 23. Allow me to apologize once again that misconduct at one of the consolidated subsidiaries has led to the postponement of our financial results announcement, causing great inconvenience and concern to all of you.

As was explained earlier, the new character sales for Monster Strike has been strong, and each of our businesses are progressing smoothly. In addition, we released a new SNS mixi2 in December last year. Led mainly through word of mouth, the number of registered users exceeded 1.2 million as of December last year, and many users are enjoying it. We hope to develop mixi2 into one of the service pillars of our company in the medium term.

We will continue to aim for an upside in our business performance by providing experiences that exceed user expectations. Thank you for your attention.