Sony Group Corp

Today I will explain the content shown here. Sales of continuing operations in FY25 Q3 increased 1% compared to the same quarter of the previous fiscal year to 3,713.7 billion yen, and operating income increased 22% to 515 billion yen. Both were record highs for the third quarter. Net income increased 11% to 377.3 billion yen, The financial results by segment are shown here. We upwardly revised our 4-year sales forecast from the previous forecast 3% to 12,300,000,000 yen, operating income 8% to 1,540,000,000 yen, and net income 8% to 1,130,000,000 yen. we increased our forecast for operating cash flow 9% to 1,630,000,000 Yen. The forecast for each segment is shown here. Now I will turn to an overview of each business. First is the GNNS segment. FY25 Q3 sales decreased 4% year-on-year, primarily due to lower hardware unit sales. Operating income increased 19% year-on-year primarily due to the positive impact of foreign exchange rates and the impact of increased sales and network services and first-party software, setting a record for the third quarter in this segment. We upwardly revised our FY25 sales forecast 4% from the previous forecast to ¥4,630,000,000 and our operating income forecast 2% to ¥510,000,000. User engagement trended well during the quarter, with the number of monthly active users across all of the PlayStation in December increasing 2% compared to the last December to a record high of 132 million accounts, and total playtime for the quarter increased 0.4% year-on-year. Although conditions in the console hardware market during year-end selling season were more challenging than expected, we were able to steadily expand our PS5 install base in line with our original plan and exceeded 92 million units on a cumulative selling basis. While PS5 hardware unit sales have decreased moderately in latter half of the console cycle, software revenue from the PlayStation Store reached a record high during the quarter, primarily driven by the contribution of major third-party franchise titles and new hit releases. PlayStation Plus significantly contributed to the results of the quarter as the shift to higher tiers of the service continued. As for securing a supply of memory, we are already in a position to secure the minimum quantity necessary to manage the year-end selling season of next fiscal year. Going forward, we intend to further negotiate with various suppliers to secure enough supply to meet the demand of our customers. Given the stage of our console cycle, our hardware sales strategy can be adjusted flexibly, and we intend to minimize the impact of the increased memory cost on this segment going forward by prioritizing monetization of the install base to date and striving to further expand our software and network service revenue. In the studio business, Ghost of Yotei, a tentpole title we released in October, exceeded the sales of the previous title in the same period of time and significantly contributed to the financial results of the quarter. Our established live service titles like Helldivers 2 and MLB The Show also contributed stable recurring revenue. We expect that Marathon, which is scheduled to be released on March 5th, will be enjoyed by many users thanks to Bungie having strengthened the gaming experience. Next fiscal year, we plan to release new titles such as Seros and Marvel's Wolverine, and we intend to enhance our effort to increase the revenue of our studio business. Next is music segment. primarily due to an increase in live events, sales, and streaming revenue in recorded music. FY25 Q3 sales increased 13% year-on-year. Operating income increased 9%, reaching a record high for the third quarter, excluding one-time items. On a US dollar basis, streaming revenues for the quarter increased 5% year-on-year in recorded music and 13% in music publishing. We upwardly revised our sales forecast 4% from the previous forecast to 2 trillion 50 billion yen and our operating income forecast 16% to 445 billion yen. We incorporated a re-measurement gain of approximately 45 billion yen from the acquisition of an additional equity interest in Peanuts Holdings in the forecast for operating income. SMG artists delivered hits during the quarter, and the sales of SMG continued to increase by double digits year on year, like in the previous quarter. Rosalia's new album, Lux, reached number one globally in its first week on Spotify, and Peso Pluma's collaborative album, Disnasia, is one of the most streamed on Spotify. These global successes and global hit artists are the result of SMG's strategic focus on discovering local artists and supporting their musical endeavors. Many SMG artists and songwriters received accolades and nominations at the 68th Annual Grammy Awards held in the U.S. earlier this month. with Bad Bunny winning Album of the Year for Debi dirás más fotos, as Beyonce did last year. In visual media and platform, the theatrical release of Demon Slayer, Kimetsu no Yaiba, the movie Infinity's Castle, which has exceeded 100 billion yen in global box office revenue, continued to contribute, and the mobile game Fate Grand Order, which celebrated its 10th anniversary in July 2025, contributed more to our results than expected. Next is the picture segment. FY25 Q3 sales decreased 11% year-on-year and operating income decreased 9%, primarily because the same quarter of the previous fiscal year benefited from the contribution of the blockbuster film Venom the Last Dance and licensing revenue from other theatrical released films. Our forecast is unchanged from the previous forecast. In January, SPE signed a new payone licensing agreement with Netflix. Through this agreement, Netflix will stream on a global basis, SP's future theatrical films and the pay one window, the initial window within long TV licensing period that follows the theatrical and home entertainment periods. This agreement is an industry first global licensing deal that will enable SPE to secure an even more stable revenue base during the period of the deal. Furthermore, the signing of this agreement is proof of SPE's excellent production capabilities and the power of its appealing IP. As an independent production company, we will continue to pursue other licensing opportunities with a wide range of distribution partners beyond the payone window. Now, I will explain our additional investment in Peanuts IP, which we announced in December as an initiative that spans our music and picture segments. Through this transaction, Sony will gain ownership of 80% of Peanuts worldwide, which owns the rights and manages the business of Peanuts IP, one of the world's leading evergreen IPs. While closely collaborating with the family of Mr. Schwartz, the creator of Peanuts, which owns the remaining 20%, we aim to further grow the scale of the business and further increase the value of the brand over the long term by leveraging the strengths of the Sony Group. Specifically, we aim to enhance SMEJ's music, video, and event business by leveraging Peanuts IP and collaborating with SMEJ's artists and content. Furthermore, by utilizing SPE's production capabilities and distribution network, we aim to make Peanuts IP more accessible to a wider audience and share its charm with people all over the world. The transaction is expected to close during the current fiscal year, subject to certain closing conditions, including regulatory approvals by the relevant authorities. Next is the ET&S segment. FY25 Q3 sales decreased 7% year-on-year and operating income decreased 23% year-on-year, primarily due to the impact of lower sales partially offset by an improvement in operating expenses. Our full-year forecast remains unchanged from the previous forecast. Despite a continued decline in sales in China due to reduced government subsidies and weakness in the overall market during the shopping season for Singles Day, demand in the global interchangeable lens camera market during the quarter remains strong year on year, mainly in Asia. The Alpha 7 Mark V, released in December, has been selling well as a new product for the volume zone of the full-frame mirrorless single-lens reflex camera market, and we expect it will continue to contribute to sales in the fourth quarter ending March 31, 2026. Regarding the impact of the situation in the market for memory, we are almost in a position to secure the quantity we need through the year-end selling season for next fiscal year. We will continue to monitor the situation while working to minimize the impact on profitability. On January 20th, Sony signed an MOU with TCL aimed at forming a strategic partnership in the home entertainment field. In the MOU, both companies agreed that a joint venture between the two companies would operate Sony's home entertainment business, and we are negotiating the details with the intention of executing a definitive agreement by the end of March. By leveraging Sony's high-definition and high-fidelity technology, brand strength, and operational management capability while utilizing TCL's advanced display technology, cost competitiveness, and vertical supply chain strength, the joint venture aims to further strengthen the competitiveness of this business and realize sustainable growth. Last is the INSS segment. FY25 Q3 sales increased 21% year-on-year and operating income increased 35%, both of which were record highs for the third quarter for the segment. These are primarily due to an increase in sales volume and unit prices of mobile image sensors. We upwardly revised our sales forecast 5% to 2 trillion 80 billion yen and operating income forecast 13% to 350 billion yen, primarily driven by the increase in sales volume and sensors for mobile devices and the impact of foreign exchange rates. Mobile image sensor sales during the quarter increased significantly year on year due to a gradual recovery in the smartphone market, strong shipments for new products from our major customer, and a higher die-sized sensor. Because recent orders are stable, we believe that the supply chain concerns we mentioned at the previous earnings announcement have receded. and we have upwardly revised our annual shipment forecast for mobile image sensors. Going forward, we think that the impact of the situation in the memory market will become more apparent, mainly in the form of fewer smartphone made, primarily for the low-end market. Since Sony's image sensors are primarily for the high-end market, at this time, we think the impact will be relatively small. We will continue to monitor the situation while keeping in close contact with our customers. In addition, we are continuing to take action to address low margin business as we mentioned at the previous earning announcement. As a part of that, we have incorporated additional expenses for resource and assets optimization of the relevant business in our forecast for FY25 Q4. We will continue to focus on improving our business portfolio and raise our profitability. To summarize, the GNNS Music and INSS segment achieved record high operating income and are driving the profit growth of the Sony Group overall this quarter. We believe that the structural profitability of the Group is further improving. Given the continued uncertain business environment, we plan to carefully manage our business and consistently produce results as we approach the fiscal year end. We intend to take actions this fiscal year to get off to a good start next fiscal year. As for shareholders' returns, today we increased the maximum of our share repurchase facility established in November 2025 from 100 billion yen to 150 billion yen. This concludes my remarks.

That was Ms. Dao. Following the presentation, we will have a Q&A session for the media at 4.20 PM and for investors and analysis at 4.45 PM. Each Q&A session is scheduled to last approximately 20 minutes. For those who have pre-registered to ask questions, please click the Join Webinar link and stay online while you wait. Regarding the procedure and precautions for asking questions, please refer to the invitation sent to you in advance. Please wait. The session will resume shortly.

Thank you for waiting. We'd like to begin the media Q&A session shortly. Please wait a few moments. Thank you for meeting. We'll start the Q&A session. First, we'll introduce you to today's speakers. Chief Financial Officer, CFO, Corporate Executive Officer, Lin Tao. Senior Vice President in Charge of Accounting, Hirotoshi Korenaga. Senior Vice President in Charge of Corporate Planning and Control, Naoya Horii. We'll take questions from the media. Keep questions up to two per person. Please click Raise Hand button on the WebEx screen if you have questions. The first question is from Toyo Keizai, Umegaki-san. Yes, I'm Umegaki from Toyo Keizai. Can you hear me? Yes. All right. So I'd like to ask two questions. The first question is about Marathon. And it's going to be released on March 5, I understand. And it has been delayed. And what kind of considerations did you have until you decided to have this? And in the past, there were several cases that has been stop short, but what kind of learning did you have? And for the live service game, and what is the strategic significance of having that? And this kind of a platform, I think, but to have quite a number of platforms, what is the significance for the group to have such platforms? Yes, thank you for your question. And as for the marathon, well, it has the user tests and then from the users had feedback for marathon and in the game. So what was a good point and not good point and such kind of a feedback we had taken into consideration and we had modified. And this time around, so after the modification, we are very confident to release it on March 5th. And live service, the games are significant, you ask. But here, what is most important for us is that the live service is a recurring revenue. And recurring revenue means that the hit driven. And if it comes a hit, then for a year, it can bring revenue. If not become a hit, then no revenue. So it's such a volatility high studio, but it's going to give us a constant amount of revenue every year. So that's the merit of having a hit live service. But, well, it's not that we want to have too many of them. It's not what we want to have. So the ideal is that so-called AAA and live service game would become integrated into portfolio management style. That's it for me. And the second question is about your stock price. And you had announced your earnings results, and it was 3 yen. but it's almost flat, so that the market valuation is quite severe, I think, and the stock performance is not good because the memory had risen. But it's rather the Sony Group, it seems that there has been a harsher view on the Sony Group. So what do you think as a CEO? And you have announced the share buyback, but the the market capitalization, in order to raise the market capitalization, do you have any continuous way to keep that going up? All right, thank you for your question. And about the stock price, so we had several information revisions, but it's not performing well. So I think you have various thoughts about that. But one thing is that memory, the concerns for the memory, supply and as the industry yes that is one concern and the other is the entertainment stock generally speaking is because the capital AI related would go to the AI related so I think that's why and then for us what we can do is that As a business, we look at the fundamentals to make it even stronger and the profitability we would improve so that the portfolio can be optimized. And for us, the Sony long-term strategy, we would believe in that so that we would implement that so that the business performance can be improved, and such measures would be communicated message to the stock market so that the stock market would value our approach. And we are going to put our efforts into it. That's all for me. The AI, well, excuse me, but that's the end of your two questions.