© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you very much for taking time out of your busy schedules to view our financial results briefing for the first quarter of fiscal year 2023. Let me go straight into my presentation.
This is the agenda for today's briefing. First, I will cover the notice regarding change in segmentation classification. The company has decided to reclassify cosmetics, health care and brand management, which were previously included in the Lifestyle Support segment under Other Business subsegment. It is now included in the EC business segment. Going forward, the EC business segment will include online bicycle store, pet food brand and cosmetic and health care brands as shown on the right-hand side table of Slide 4.
Next slide shows a summary of consolidated financial results for the first quarter. First, the numbers are as shown here. Operating income increased year-over-year due to fixed cost reduction and loss reduction in the Entertainment business, as well as an increase in revenue in the Lifestyle Support business. Revenue was JPY 7,134 million, operating income was JPY 213 million, and the net income was JPY 120 million.
Next slide shows progress against the full year forecast. Revenue is 23%, operating income is 42.7% and net income is 30% of the full year forecast. That's the progress so far as of the end of Q1.
Next slide shows a summary of Q1 financial results. In the Lifestyle Support business, the car service business and the human resources-related media business continued to perform well. Nevertheless, changes in the business environment of PPS or electric utility companies resulted in suspended or restricted customer referrals and had a significant impact on revenue growth.
In the Entertainment business, losses narrowed year-over-year as the scale of investment was reduced from the previous year, although the efficient operation of existing titles and the investment in new titles continued.
In E-Commerce, losses increased year-over-year compared to the last year due to investments in Obremo pet food brand as well as the cosmetics brand. As a result, the revenue breakdown is shown in the chart on the right, with Lifestyle Support business shown in blue accounting for 63.7%; Entertainment, 18.1% and E-Commerce, 18.2%.
Next page shows consolidated quarterly financial trends.
We will now move on to a detailed explanation for Q1 by business segment. Fumio Mase will explain about the Lifestyle Support business.
Thank you. I will start my presentation on the Lifestyle Support business. The car service business and the human resources media business continued to perform well and drove revenue. However, as explained earlier, referral of customers to electric utility companies was suspended due to the continued rise in electricity prices from the previous quarter. As a result, overall revenue decreased compared to the previous year.
Profit increased significantly year-on-year due to higher revenues in the car service business and an increase in the number of customers acquired in the financial media business.
This chart shows year-on-year and quarter-on-quarter revenue trends for the Digital Marketing Support business and the Platform business. As I mentioned earlier, the Digital Marketing Support business was significantly affected by the electricity market and both Y-o-Y and Q-on-Q sales were down. I will explain about the Platform business later.
Next slide shows the Y-o-Y revenue trend of the Digital Marketing Support business. Revenue is down 2.5% year-on-year. As I mentioned earlier, the 2 segments performed well. However, due to a major change in the electric utility business environment, revenue was down year-over-year.
This chart shows the user count, ARPU and CPA. The user count grew sharply, mainly in the human resources media business and the insurance agency business. However, due to restricted number of customer referrals to electric utility companies, the overall user count decreased year-over-year. ARPU also declined due to the absence of ARPU from new electric power companies.
In the Platform business, Lalune app revenue declined significantly from the previous year due to an intensified competitive environment and the changes in the advertising environment. Qiita sales grew but not enough to make up for the decline in Lalune resulting in a decline in overall revenue.
Next, I will discuss our business topic for the Lifestyle Support business. We have launched a new information medium under an integrated brand name of E-DESU. The purpose is to give customers comfort by helping them solve problems that arise in daily life by the power of information technology.
What we are trying to do by launching the E-DESU brand in the Lifestyle Support business is as follows: Until now, we have focused on encouraging customers of our search services to use various services. Going forward, once we have acquired new customers based on brand awareness, we will then encourage cross-selling by maintaining and taking care of the customer base.
This concludes my explanation of the Lifestyle Support business. Next, Mr. Nakauchi will explain about the Entertainment business.
Thank you. I will now begin my presentation on the Entertainment business. First, the table shows segment revenue and operating profit. As you can see, profit improved year-on-year as investment in new game titles was less than in Q1 2022. Revenue for Q1 is smaller due to seasonality. We would like to increase revenues from Q2 onward. The overseas revenue ratio was 41%, partly affected by the weaker yen.
The slide shows the new game title pipeline. We are continuously developing 4 titles.
That is all for the Entertainment presentation. The next presentation is from the EC business.
Thank you. I would like to start my presentation. First of all, there was a segment reclassification as mentioned at the beginning of the briefing. We will be reclassifying those brands listed on the slide to the EC business.
This slide shows the performance trends of the EC business. First, revenue increased year-on-year due to an increase in the number of new customers for the cosmetics brand, although Cyma continued to struggle with sales due to changes in the market environment, such as the rising cost of raw materials and the lockdown in China. Profit losses increased year-on-year due to continued investments in the pet food and cosmetics brands. Thank you.
Thank you. Finally, I will discuss our full year earnings and dividends forecast for FY 2023. First, revenue forecast is JPY 31 billion. By segment, JPY 18.5 billion for Lifestyle Support; JPY 6 billion for Entertainment; and JPY 6.5 billion for E-Commerce. Operating income is projected at JPY 500 million. As you can see at the bottom, net income is projected at JPY 400 million.
The annual dividend is expected to be JPY 16 per share, maintaining stable shareholder returns as in previous years.
Next slide shows major initiatives for FY 2023. For Lifestyle Support shown in the second panel, we will strengthen the foundation for medium-term profit improvement. For existing services, we will focus on building the E-DESU brand and investing in DX, as explained earlier, in order to improve future profit margins. For existing services, we will focus on further growth on the top line to improve future profitability. In the Entertainment business, we will allocate resources to pipeline projects through efficient operation of existing titles, as mentioned earlier, and we'll enter into new areas such as NFT.
In E-Commerce, we will continue to invest in the pet food brand, Obremo, which we launched last year to expand its business. We also plan to launch new cosmetic products under the lujo brand. Overall, we will improve the overall profitability while continuing to invest by making our existing businesses and organizations more lean. We will focus on higher value-added services and the business operations to improve the profitability of the entire company.
These are our initiatives for the remainder of this fiscal year. That concludes my presentation. Thank you.