CyberAgent, Inc.

So we would like to begin CyberAgent FY 2021 second quarter financial results briefing session.

This session is being live streamed.

Please note that the disclaimer included in the presentation materials applies to our announcement today.

Our CEO Fujita will take us through the financial results. This is Sushita, the president and CEO.

Our financial year ends at the end of September. So this is a second quarter from January to March. So we just announced a significant upward revision of our target. There is a lot of focus on the games performing well, but the advertising business is doing well.

So overall our business, all of our businesses are doing well.

So first of all, starting with a summary, the sales and OP were both record high. So we're doing well. And with respect to the media business, Of course, this is an area we're still making upfront investments, but the sales went up 43.6% year-on-year, so a significant increase. The ad business, with respect to both sales and OP, we hit a new record high for both. And with respect to the game business, we released two big titles, Umamusme and Nia. and both are off to a rocket start. So sales and OP significantly increased as well. This is the quarterly consolidated sales. The game business and advertising business are both doing well. So these are, and we had record high sales. And this is the consolidated OP. So it was 25.8 billion. This is also significantly higher than what we have achieved in the past. It's a record high as well. And SG&A is as usual. And the number of employees is, Doing well as well, it's the same as every year, but April, we welcome new graduates, 300 new graduates. And this is the P&L. And this is our balance sheet.

Cash deposits are currently about 100 billion. Now moving on to our forecast.

This is the first time we're experiencing this as well since we went public, but the profits have already achieved our annual targets already, and it's only the second quarter. That is why we have Revised significantly the sales and OP upward. So sales is now 600 billion yen and OP is somewhere between 57.5 to 62.5 billion yen. Games are becoming quite popular as an industry. So it's hard to say how that will progress going forward. But our management, as far as we know, we've made these revisions with the information that we currently have. And this is the achievement after revision. So as of the second quarter, the operating profits or profits are around 53 to 57%. So we believe that this upward revision is achievable. Moving on to the individual segments. First, the internet advertising business. This has been a key pillar of business for us over the years. We recorded record high sales in this quarter and OP as well. It's a new record high. Last year, third quarter and fourth quarter, we were hit by, we were impacted by COVID. So we had a tough time. but we recovered in the first quarter and currently we've completely recovered and we are not being affected so much by the state of emergency. With this business, we are focusing on AI and ad technologies and digital transformation support. So these are all about technology. And of course, this is our forte, what we excel at. So this is continuing to be, this is going to continue to be our growth driver.

Moving on to the game business.

In the first quarter, the game sales dipped but the existing titles recovered, and also the new titles significantly grew. So we have achieved this target, this level of sales, especially Umamisme and Nia, these two titles have significantly contributed, but Umamisme Pretty Derby is our original IP, so... This becoming a great hit is quite significant for us. And that is why our OP, of course, the profitability of our own original IP is higher. So this has contributed significantly to the OP in the second quarter. The existent titles also from January to March celebrated anniversary. So they are doing very well as well. Also, with respect to NIA, this is going to be a title that's going to be popular globally. So we are going to be releasing an English version going forward. So we think that this is an area that we can have high expectations for. Today, we would like to invite Chikaishi, director of Cygames, to explain about the umamisme today. Thank you. Please look at the video first.

I'm Chikaishi, the director of PSY Games.

I would like to give you more details about the Uma Musume Pretty Derby. First of all, Uma Musume Pretty Derby features Uma Musume, who are named after real race heroes. And it's a cross-media content that has become a game, manga, and anime. Characteristic about this game is that we try to be as faithful as possible to the racehorses, the drama they created, their history, and their personalities as well. So the game players, in order to win in the races, they train the Umamusume as trainers, and they're going to attempt to win at the Twinkle Series. It's a training simulation game. This project actually started in 2016 and it took us five years to develop this game. In the beginning, we planned to release this game in 2018, but we wanted to spend more time to improve quality and perfect the game. So we pushed back the release and we appreciate for being patient and waiting, but we believe we're quite confident in the game that we have created. Since the project began in 2016, in addition to developing the game, we've released manga, organized live events. And in 2018, we launched the first series of the TV anime series. And in the beginning of 2021, we released a second season. So we have applied the Umama's Mapredi Derby.

We have introduced content to various people. in different ways and if we can go back one page.

So these are the number of downloads as of on the February 24th, we have many people playing the game already and we hit 1 million downloads in five days and it's doing well still. So as of April 8th, we've had 5 million downloads. The reason why we've been enjoying the situation is that before the game was released, we actually released manga, and we have many Uma Musume fans as well, and we also have a lot of racing fans as well, horse racing fans as well, and they're playing the game. And not stopping there, we have more users playing this game, so we hope to continue continue to introduce the allure of the game so that more people will play the game going forward. We want this game to become a long run hit that's In the short term, we will improve, add new features to the game, and also release Korean and simplified Chinese versions to introduce this game overseas. And this is going to, as part of our cross-media efforts, we want to have live events, have streaming programs, and also release merchandise and CDs as well. We hope that this will become a content that will be loved for a long time. So we hope to have your continued support.

Thank you very much. Other than that, these are some of the games that have been or will be released this year.

These four titles will be released within 2021. The Promised Neverland, which is a very strong IP, we just released this recently. And next year as well, we have a large title coming up and we announced this and it created quite a buzz, but Final Fantasy is another game that we will be co-developing and releasing next year. Moving on to the media business. If you look at quarter on quarter, it seems like we're slowing down, but the pay-per-view grew significantly amid COVID, but now it's bounced back, but If you look at the fiscal year, we're still progressing at a very high rate level. And ABEMA spent five years since it's been launched, and we've exceeded 65 million downloads already. And with respect to the WAU, we're currently surpassed 10 million. We're at 12 million now. And we want to continue to add programs to Breakthrough. I will introduce a couple of programs now. So we just released or launched the first episode, and this is a title for a young audience of Black Cinderella. Cinderella, it's been well-made. So we think that it will resonate with not only the young audience, but with the older audience as well. And also, these nizu, is actually very popular among the young audience as well. So we have a special program with them. This is actually, and the next one is a new variety documentary program, but we want to, this actually features the willingness of the young audience to create their desire to create their own content. And also the Mama's My Pretty Derby, we air season one and we air that in Abema and we'll be airing season two as well in Abema. With respect to Abema. In related businesses, the second quarter sales was 10.4 billion yen. Pay-per-view was slightly lower, but overall, we've been expanding the business, especially wind circuits. It's doing quite well. And quarter-on-quarter has grown significantly. And Abimai is celebrating its 6th anniversary this year. And every year before or after the Golden Weeks, we have a celebration. But with COVID, we're going to actually extend this 5th anniversary period. and introducing various programs over a longer duration of time. And the user interface is going to be improved We allow channels acting as TV when we first released Abema, and then we also focused on on-demand, and we provided a UI which enabled users to switch between TV and video, but we will be updating the UI, so to integrate TV and video on the same screen, and we want to actually help the TV reach a new level. And I introduce this every time, but we want to continue to grow with advertising subscription and related businesses. Lastly, this is also a page that we share every time. The direction is still the same, but game is becoming popular once again. So this fiscal year, It's only been 1.5 months since we started, but we believe that we will have a lot of room for growth, but we want to continue to make investments so we can actually solidify our foothold. That's it from myself. Thank you very much. We would like to conclude CyberAgent's FY 2021 second quarter financial results briefing session. If you have any questions, please contact the IR division. Thank you very much for joining us today.