Press Releases

Earnings Results Briefing for the third Quarter Ended Dec. 31, 2009

01/26/2010

For the current third quarter consolidated cumulative period (April 1, 2009, to December 31, 2009), the Group recorded operating revenues of 2,729,418,000 yen, up 7.4% from the previous third quarter consolidated cumulative period. (April 1, 2008, to December 31, 2008, hereinafter called the “same period of the previous year”)

As for profits, the Group earned operating income of 264,565,000 yen, up 949.4% from the same period of the previous year and about 10.5 times growth, and ordinary profit of 283,120,000 yen, up 682.5 % from the same period of the previous year and about 8 times growth, due to the contribution from non-operating revenue of 18,727,000 yen. Therefore, net income before income taxes reached 281,188,000 yen (net loss before income taxes of 86,556,000 yen for the same period of the previous year).

As a result, net income after income taxes was 215,752,000 yen for the current third quarter consolidated cumulative period (net loss after income taxes of 125,334,000 yen for the same period of the previous year).

As for sales by business segment for the current third quarter consolidated cumulative period, the core internet sales business decreased sales to 1,470,169,000 yen, down 18.9% from the same period of the previous year, which was mainly attributable to the software package and hardware distributor ValuMore Corporation’s exclusion from the scope of consolidation starting in the current third quarter consolidated cumulative period (from October 1, 2009, to December 31, 2009).

The internet sales business is related to private consumption and is dependent on economic conditions, and the interest in PC software declined. In the software download distribution area, sales dropped for the Pro-Regi service to 952,131,000 yen, down 15.8% from the same period of the previous year, and sales dropped for the Share-Regi service to 19,627,000 yen, down 16.3%, respectively, despite the effect of a sales promotion campaign.

As mentioned above, sales of software packages/hardware distribution decreased by 24.3% from the same period of the previous year to 498,410,000 yen. This was because the contribution of consolidated subsidiaries to sales was limited until the interim period.

Note: As for the method of recording operating revenues from software download distribution, the Share-Regi service records only commissions from users and developers (collect a certain commission per use from users and the selling price of the software multiplied by a certain commission rate from developers) while the Pro-Regi service posts the selling price of software as sales.

Meanwhile, the online game business, which the Group focuses on as a management pillar, doubled sales to 1,010,775,000 yen for the current period, up 111.8% from the same period of the previous year. This was attributable to traditional online games (games downloading client software), as well as the start of operations for browser games (online games running on browsers and unnecessary to download) on the specialized portal site Browser Game Time of which started operation during the current period.

In the online game business, six titles are offered as traditional online games, including Sangoku-Heroes, which was officially started in April 2009, while four titles are provided with browser games, including Dragon Crusade.

The services for cell phones, which were launched in August 2009, contributed to the online game business. After the start of distribution at mixi appli mobile on October 27, 2009, the number of users rapidly increased and maintained momentum for new mobile games playable without applications.

As a result, the online game business accounted for 37% of operating revenues for the current period, compared with 18.8% for the same period of the previous year. In terms of profits, a large sales increase absorbing an increase in the allocated portion of fixed costs enabled the business to return to profitability.

In addition, sales for the website advertising business decreased by 10.8% from the same period of the previous year to 149,852,000 yen due to the weak economy. Web advertising on the site operated by the Company, in particular keyword advertising, had driven the website advertising business; however, sales peaked two years ago and then rapidly declined by 27.8% from the same period of the previous year. Keyword advertising accounted for 27.5% of sales from the website advertising business (34.0% for the same period of the previous year)

Finally, sales in the other business category increased by 18.7% from the same period of the previous year to 98,621,000 yen. This was driven by download distribution total support services for soft house, which accounts for 82% of sales for other business, increasing sales by 39.0% from the same period of the previous year.

Press Releases » 2010

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