Investor Relations

Summary of Operating Results

  • 2Q FY15
  • 3Q FY15
  • 4Q FY15
  • 1Q FY16
  • 2Q FY16
  • 3Q FY16
  • 4Q FY16
  • 1Q FY17
  • 2Q FY17
  • 3Q FY17
  • 4Q FY17

  • Results of Operations
  • Balance Sheets
  • Profit and Loss
  • Cash Flows

Results of Operations

(cumulative total:October 1, 2014 - March 31, 2015)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

On April 30th, COLOPL announced financial results for its fiscal 2015 second quarter ended March 31, 2015.

Even with the difficult quarter due to backlash from year end special demand as seen in the past, the company posted record high sales and operating profit. This performance resulted in "Organic" state where none of the new apps contributed to the performance and TV advertisement for White Cat Project ended in January 4th. 3 new apps were launched from March through April and growth driver after 3Q are now present.

Overseas sales increased remarkably with growth of 1.6-fold QoQ. The OPM is at 55% which is extremely high compared to other industry competitors. The White Cat Project for mainland China is to be launched in 3Q. The closed beta test in the region resulted in high expectation and this holds the possibility of large growth of overseas expansion.
The advertisement cost decreased dramatically in terms of cost. The cost in 2Q was 1.0B compared to 1.8B in 1Q. This is due to delay in launch of new apps. We expect the advertisement cost to be back on the 1.8B level in 3Q. In another words, we do not plan to pile up the advertisement cost not used in 2Q on top of 3Q cost.
In terms of services, White Cat Project performed extremely well within our app portfolio. Active users decreased due to end of TV advertisement but the pay ratio and ARPPU increased for high engagement of the existing users. The pay ratio and ARPPU both decreased for Quiz RPG. The active users resulted in slight decrease due to TV advertisement in March.
All 3 new apps are starting off with a good performance. Within the 3 new apps, Battle Girl High School is performing well in terms of sales with amount next to Sanguozhi. The other 2 titles have high retention rate and we expect them to perform even better after the start of in-game events.

Even with the expected difficult 2Q, we expect the stock market to have a high expectation of further growth after 3Q with the record high sales and operating profit in 2Q. The growth driver will be the newly launched 3 apps and White Cat Project in mainland China. We assume the above 2 factors will be watched closely in the stock market as a catalyst.

Balance Sheets

(Unit: ¥Thousand)
FY2014
(As of September 30, 2014)
2Q of FY2015
(As of March 31, 2015)
Assets
Current assets
Cash Equivalent 35,584,220 31,944,047
Accounts receivable 8,639,115 8,911,962
Inventories 3,949 3,787
Other 1,120,450 1,080,908
Allowance for doubtful accounts △1,243 △505
Total current assets 45,346,492 41,940,200
Non-Current assets
Property, plant and equipment 553,864 776,809
Intangible assets 33,258 40,049
Investments and other assets 2,078,959 3,083,890
Total non-Current assets 2,666,082 3,900,750
Total assets 48,012,575 45,840,951
Liabilities
Current liabilities
Accounts payable 4,702,115 4,108,750
Income taxes payable 9,907,561 6,286,485
Other 2,888,585 1,931,381
Total current liabilities 17,498,262 12,326,616
Non-current liabilities
Asset retirement obligation 229,788 348,199
Total non-current liabilities 229,788 348,199
Total liabilities 17,728,050 12,674,816
Net assets
Shareholders' equity
Capital stock 6,274,196 6,321,263
Capital surplus 6,270,997 6,318,064
Retained earnings 17,738,877 25,526,690
Treasury shares △521 △5,000,453
Total shareholders' equity 30,283,551 33,165,565
Valuation and translation adjustments
Valuation difference on available-for-sale securities 38 △353
Total Valuation and translation adjustments 38 △353
Subscription rights to shares 935 922
Total net assets 30,284,524 33,166,134
Total liabilities and net assets 48,012,575 45,840,951

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

Profit and Loss

(Unit: ¥Thousand)
2Q of FY2014
(Oct. 1, 2013 to Mar.31, 2014)
2Q of FY2015
(Oct. 1, 2014 to Mar.31, 2015)
Sales 23,433,779 33,005,799
Cost of sales 9,905,940 13,627,396
Gross profit 13,527,839 19,378,403
Selling, general and administrative expenses 3,314,575 4,267,043
Operating profit 10,213,263 15,111,360
Non-operating profit
Interest profit 943 8,998
Foreign exchange gains 804 155,129
Miscellaneous profit 370 476
Total non-operating profit 2,118 164,604
Current profit 10,215,382 15,275,964
Pre-tax profit 10,215,382 15,275,964
Profit taxes 4,431,989 6,252,449
Net profit 5,783,392 9,023,515

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

Cash Flows

(Unit: ¥Thousand)
2Q of FY2014
(Oct. 1, 2013 to Mar.31, 2014)
2Q of FY2015
(Oct. 1, 2014 to Mar.31, 2015)
Cash flows from operating activities
Pre-tax profit 10,215,382 15,275,964
Depreciation 30,216 56,775
Foreign exchange gain or loss △1,604 △194,046
Amortization of goodwill 61,490 -
Increase (decrease) in allowance for doubtful accounts △86 △737
Interest and dividend profit △943 △8,998
Decrease (increase) in notes and accounts receivable-trade △2,149,971 △272,847
Decrease (increase) in inventories 2,394 162
Increase (decrease) in advances received 415,350 △40,760
Increase (decrease) in accounts payable-other 904,116 △283,817
Increase (decrease) in accrued consumption taxes 249,115 △952,009
Increase (decrease) in profit taxes payable △14,419 △56,864
Other △103,744 66,888
Sub-total 9,607,296 13,589,617
Interest profit received 925 8,870
Profit taxes paid △2,623,316 △9,772,151
Net cash provided by (used in) operating activities 6,984,904 3,826,337
Cash flows from investing activities
Purchase of property, plant and equipment △888 △466,979
Purchase of intangible assets △3,654 △12,954
Purchase of investment securities - △375,463
Purchase of shares of subsidiaries - △602,818
Payments for lease and guarantee deposits △1,372,464 △27,357
Other - △40,000
Net cash provided by (used in) investing activities △1,377,006 △1,525,573
Cash flows from financing activities
Proceeds from issuances of shares 25,479 94,134
Cash dividends paid - △1,229,184
Payment for repurchase of treasury stock △341 △4,999,932
Other 948 -
Net cash provided by (used in) financing activities 26,085 △6,134,982
Effect of exchange rate change on cash and cash equivalents 1,604 194,046
Increase (decrease) in cash and cash equivalents 5,635,588 △3,640,172
Cash and cash equivalents at beginning of period 8,317,259 35,584,220
Cash and cash equivalents at end of period 13,952,847 31,944,047

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

  • Results of Operations
  • Balance Sheets
  • Profit and Loss

Results of Operations

(cumulative total:October 1, 2014 - June 30, 2015)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

On July 29th, COLOPL announced financial results for its fiscal 2015 third quarter ended June 30, 2015.

Sales increased largely in 3Q by 9.7% QoQ. The strong performance in sales for White Cat Project since May and 3 new FY15 apps launched are major factors.

Advertisement cost was controlled in 2Q but 3Q was returned to ordinary scale. Due to this, although with increase of ¥1.1B QoQ, operating profit remained at approximately the same amount as 2Q. OPM was also back to our ordinary rate of 43%.

Reorganization of marketing department was executed in April. Advertisement was highly depended on TVCM previously. But by mixing live videos with our game producer, digital signage, official site for an app, and others created a structure to value high user engagement.

As a result, we believe the reorganization contributed to the large increase in sales for White Cat Project and bottom out of Quiz RPG. For Battle Girl High School, we were able to reach high rank within short period of time by successfully mixing more than 10 different media methods for high engagement between users.

QAU which is one of the major KPI resulted in record high for the first time in 9 months. The increase of approximately 1M QoQ resulted in total of 7.8M QAU. The continuous growth of White Cat Project and new FY15 apps contributed.

Overseas expansion also performed strong. The start of White Cat Project for mainland China was great and we expected highly but it slowed down from June. The continuous growth of White Cat Project for Korea was highly evaluated.

In the pipeline, 10 apps are approved for development. The pipeline is in good condition. But the development time is increasing within the industry and the shortage of resource is becoming an issue throughout the industry including us. For us to achieve this as well, we will continue to expand group companies actively with the M&A of Japanese developers.

We expect for the stock market to focus on our continuous growth of White Cat Project and FY15 apps in 4Q.

Balance Sheets

(Unit: ¥Thousand)
FY2014
(As of September 30, 2014)
3Q of FY2015
(As of June 30, 2015)
Assets
Current assets
Cash Equivalent 35,584,220 33,617,437
Accounts receivable 8,639,115 10,370,590
Inventories 3,949 3,449
Other 1,120,450 1,258,089
Allowance for doubtful accounts △1,243 △817
Total current assets 45,346,492 45,248,749
Non-Current assets
Property, plant and equipment 553,864 778,223
Intangible assets 33,258 46,273
Investments and other assets 2,078,959 4,063,097
Total non-Current assets 2,666,082 4,887,594
Total assets 48,012,575 50,136,343
Liabilities
Current liabilities
Accounts payable 4,702,115 4,958,569
Income taxes payable 9,907,561 4,474,667
Provision for bonuses - 101,177
Other 2,888,585 2,393,265
Total current liabilities 17,498,262 11,927,680
Non-current liabilities
Asset retirement obligation 229,788 356,807
Total non-current liabilities 229,788 356,807
Total liabilities 17,728,050 12,284,487
Net assets
Shareholders' equity
Capital stock 6,274,196 6,326,846
Capital surplus 6,270,997 6,323,647
Retained earnings 17,738,877 30,201,138
Treasury shares △521 △5,000,453
Total shareholders' equity 30,283,551 37,851,179
Valuation and translation adjustments
Valuation difference on available-for-sale securities 38 △218
Total Valuation and translation adjustments 38 △218
Subscription rights to shares 935 895
Total net assets 30,284,524 37,851,855
Total liabilities and net assets 48,012,575 50,136,343

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

Profit and Loss

(Unit: ¥Thousand)
3Q of FY2014
(Oct. 1, 2013 to Jun.30, 2014)
3Q of FY2015
(Oct. 1, 2014 to Jun.30, 2015)
Sales 37,731,126 51,182,410
Cost of sales 15,597,270 20,928,696
Gross profit 22,133,856 30,253,713
Selling, general and administrative expenses 5,170,047 7,274,505
Operating profit 16,963,809 22,979,208
Non-operating profit
Interest profit 2,114 11,380
Foreign exchange gains - 160,044
Miscellaneous profit 653 1,050
Total non-operating profit 2,768 172,475
Non-operating expenses
Foreign exchange losses 1,312 -
Share issuance cost 36,793 -
Going public expenses 21,011 -
Total non-operating expenses 59,117 -
Current profit 16,907,459 23,151,684
Pre-tax profit 16,907,459 23,151,684
Profit taxes 7,334,839 9,453,720
Net profit 9,572,620 13,697,963

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

  • Results of Operations
  • Balance Sheets
  • Profit and Loss
  • Cash Flows

Results of Operations

(cumulative total:October 1, 2014 - September 30, 2015)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

On November 11, 2015, Colopl announced its fourth quarter and full-year operating results for the fiscal year ended September 30, 2015.

Sales and operating profit for the fiscal year totaled 72.3 billion yen and 32.3 billion yen respectively, exceeding our sales and operating profit targets of 70.0 billion yen and 30.0 billion yen.
One of the factors that drove full-year performance up was a huge boost in sales during the fourth quarter. The fourth quarter sales, totaling 21.2 billion yen, rose 33% year on year and a more than 3.0 billion yen increase over the previous quarter. Operating profit also climbed a significant 40% year on year to reach 9.3 billion yen.
There are two factors behind the surge in sales. First, declining sales of Quiz RPG leveled off. Secondly there was a dramatic uptick in White Cat Project sales. As sales of Quiz RPG ceased falling, surging White Cat sales helped drive overall earnings up.
On top of its growing QAU, White Cat saw a sharp increase in its DAU, which provides a more accurate picture of the number of active users. Today the DAU figure is more than double what it was in the spring. This means the number of loyal users who play the game every day is increasing.
Since ARPU normally tends to climb sometime after the DAU has risen, we can look forward to seeing even better sales of White Cat Project.
Thanks to the favorable conditions of White Cat Project, we see that sales drove both domestic QAU and ARPQU up quarter on quarter. These are important KPIs and it was the first time in a year and half that we saw both of them improve.
We also announced our business plan for the fiscal year ending September 30, 2016. We are aiming for 85.0 billion yen in sales and 36.0 billion yen in operating profit and plan to release six new titles this fiscal year. Last fiscal year we were only able to release three new titles due to insufficient human resources. After learning our lesson from this experience, we are working to boost the Colopl Group's ranks through multiple M&As. This fiscal year we expect to see a 55% year-on-year jump in the total number of people employed Group-wide.
We look forward to moving ahead in the ever-changing game market with an eye to enhancing performance and building a stable operating foundation.

Balance Sheets

(Unit: ¥Thousand)
FY2014
(As of September 30, 2014)
FY2015
(As of September 30, 2015)
Assets
Current assets
Cash Equivalent 35,584,220 42,638,757
Accounts receivable 8,639,115 10,096,025
Merchandise - 4,074
Supplies 3,949 3,284
Advance payments-other 268,462 364,149
Prepaid expenses 118,468 90,741
Deferred tax assets 728,361 638,589
Other 5,157 102,849
Allowance for doubtful accounts △1,243 △521
Total current assets 45,346,492 53,937,951
Non-Current assets
Property, plant and equipment
Buildings 678,019 642,516
 Accumulated depreciation △211,358 △75,939
 Buildings, net 466,660 566,577
Tools, furniture and fixtures 207,356 216,180
 Accumulated depreciation △120,151 △118,065
 Tools, furniture and fixtures, net 87,204 98,115
Land - 113,633
Construction in progress - 52,704
Total property, plant and equipment 553,864 831,029
Intangible assets
Software 33,258 64,575
Total intangible assets 33,258 64,575
Investments and other assets
Investment securities 315,983 556,213
Shares of subsidiaries and associates 48,800 1,420,851
Bonds of subsidiaries and associates - 191,100
Investments in capital of subsidiaries and associates - 185,000
Long-term loans receivable from subsidiaries and associates - 498,084
Lease and guarantee deposits 1,052,077 1,084,538
Deferred tax assets 662,097 490,985
Total investments and other assets 2,078,959 4,426,773
Total non-Current assets 2,666,082 5,322,378
Total assets 48,012,575 59,260,329
Liabilities
Current liabilities
Accounts payable - trade 7,478
Accounts payable - other 4,702,115 4,794,889
Accrued expenses 81,593 143,768
Income taxes payable 9,907,561 7,795,681
Accrued consumption taxes 1,906,984 1,570,004
Advances received 881,147 953,069
Deposits received 18,620 28,164
Other 237 5,256
Total current liabilities 17,498,262 15,298,312
Non-current liabilities
Asset retirement obligation 229,788 367,682
Total non-current liabilities 229,788 367,682
Total liabilities 17,728,050 15,665,995
Net assets
Shareholders' equity
Capital stock 6,274,196 6,328,780
Legal capital surplus 6,270,997 6,325,581
Total capital surpluses 6,270,997 6,325,581
Retained earnings
Other retained earnings
 Retained earnings brought forward 17,738,877 35,939,644
Total retained earnings 17,738,877 35,939,644
Treasury shares △521 △5,000,453
Total shareholders' equity 30,283,551 43,593,552
Valuation and translation adjustments
Valuation difference on available-for-sale securities 38 △103
Total Valuation and translation adjustments 38 △103
Subscription rights to shares 935 884
Total net assets 30,284,524 43,594,333
Total liabilities and net assets 48,012,575 59,260,329

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

Profit and Loss

(Unit: ¥Thousand)
4Q of FY2014
(Oct. 1, 2013 to Jun.30, 2014)
4Q of FY2015
(Oct. 1, 2014 to Jun.30, 2015)
Sales 53,575,065 72,395,855
Cost of sales 22,160,365 29,609,455
Gross profit 31,414,699 42,786,399
Selling, general and administrative expenses 7,811,016 10,468,709
Operating profit 23,603,683 32,317,690
Non-operating profit
Interest profit 4,189 17,107
Foreign exchange gains 5,205 24,659
Miscellaneous profit 896 3,609
Total non-operating income 10,291 45,376
Non-operating expenses
Share issuance cost 36,563 -
Going public expenses 21,011 -
Total non-operating expenses 57,575 -
Current profit 23,556,399 32,363,066
Pre-tax profit 23,556,399 32,363,066
profit taxes - current 11,214,580 12,665,641
profit taxes - deferred △682,871 260,955
Profit taxes 10,531,708 12,926,596
Net profit 13,024,690 19,436,469

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

Cash Flows

(Unit: ¥Thousand)
4Q of FY2014
(Oct. 1, 2013 to Mar.31, 2014)
4Q of FY2015
(Oct. 1, 2014 to Mar.31, 2015)
Cash flows from operating activities
Pre-tax profit 23,556,399 32,363,066
Depreciation 150,705 119,694
Amortization of goodwill 92,235 -
Share issuance cost 36,563 -
Foreign exchange losses (gains) △7,263 11,741
Increase (decrease) in allowance for doubtful accounts △206 △721
Interest and dividend income △4,189 △17,107
Decrease (increase) in notes and accounts receivable - trade △4,747,254 △1,456,910
Decrease (increase) in inventories 3,901 △3,409
Increase (decrease) in notes and accounts payable - trade - 7,478
Increase (decrease) in accounts payable - other 2,013,993 395,870
Increase (decrease) in accrued consumption taxes 1,550,427 △336,980
Increase (decrease) in income taxes payable - factor based tax 98,623 △52,006
Increase (decrease) in advances received 621,465 71,921
Increase (decrease) in advance payments - other △166,808 △95,686
Other △116,945 5,666
Subtotal 23,081,647 31,012,616
Interest income received 4,176 18,982
Income taxes paid △4,063,862 △14,725,514
Net cash provided by (used in) operating activities 19,021,961 16,306,084
Cash flows from investing activities
Purchase of property, plant and equipment △34,470 △553,206
Purchase of intangible assets △17,653 △46,283
Purchase of investment securities △300,885 △240,443
Purchase of shares of subsidiaries and associates - △1,372,051
Purchase of bonds of subsidiaries and associates - △191,100
Payments for investments in capital of subsidiaries and associates - △185,000
Payments of loans receivable from subsidiaries and associates - △498,084
Payments for lease and guarantee deposits △1,634,475 △32,814
Proceeds from collection of lease and guarantee deposits 899,533 390
Net cash provided by (used in) investing activities △1,087,950 △3,118,593
Cash flows from financing activities
Proceeds from issuance of bonds
Proceeds from issuance of common shares 9,325,260 109,167
Cash dividends paid - △1,230,446
Purchase of treasury shares △521 △4,999,932
Other 948 -
Net cash provided by (used in) financing activities 9,325,687 △6,121,212
Effect of exchange rate change on cash and cash equivalents 7,263 △11,741
Net increase (decrease) in cash and cash equivalents 27,266,961 7,054,537
Cash and cash equivalents at beginning of period 8,317,259 35,584,220
Cash and cash equivalents at end of period 35,584,220 42,638,757

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

Results of Operations

(cumulative total:October 1, 2015 - December 31, 2015)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

For details on each data item contained in the financial statements, please refer to Financial Data.

On January 27, we announced our financial results for the first quarter (October-December) of the fiscal year ending September 30, 2016.
We recorded sales of 23.2 billion yen and an operating profit of 10.4 billion yen, increasing 41% and 46% year-on-year, respectively, continuing to show solid growth.
The strong performance can be attributed to two factors. One is the high growth this quarter in the number of active users of White Cat Project, continuing the trend seen in the fourth quarter (July-September) of the previous fiscal year. The other factor is the quarter-on-quarter growth seen for Quiz RPG: The World of Mystic Wiz, whose sales had been decreasing for a while.
In the third quarter (April-June) of last year, we changed our approach to the promotion of White Cat Project. While we previously channeled our entire promotion resources to TV commercials, our new approach aimed at enhancing user engagement by combining various promotion strategies, including providing video programs featuring game producers, utilizing Twitter, Facebook, and other social media, opening cafes themed on the game, and selling character-themed merchandise online. Ever since this change in approach, the number of active users has been steadily increasing.
As for Quiz RPG, we have been actively promoting collaborative projects with other companies since 2014, which helped slow the downward trend in sales. Our collaboration with the popular animation series Detective Conan which we launched last December was particularly well-received, driving the quarter-on-quarter growth.
It should be noted that there has not been a significant change in costs. Although we aired a TV commercial for Quiz RPG in addition to White Cat Project, advertising costs were 11.0% of sales, which is 0.1 point below the figure a year ago.
While no new titles were released in the first quarter, we presented our new soccer game "Gekitotsu!! J-League Punicon Soccer" to the media. Being the first authentic sports game that can be played on a smartphone, it earned excellent reviews.

We are currently enhancing measures in the area of VR (virtual reality). In this effort, we take a three-pronged approach, namely, (1) VR gaming, (2) 360-degree videos, and (3) all other efforts related to VR. As for VR gaming, we established a new department specialized in this field in 2014, and we have already released two VR games. Two additional titles are scheduled for release this spring. As for 360-degree videos, we founded a wholly-owned subsidiary 360Channel, Inc. in November of last year. The company is now working to develop 360-degree video contents. With respect to all other efforts related to VR, we of course cannot expect to cover all the relevant areas. Therefore, we decided to support these efforts indirectly through a fund. In January, our subsidiary COLOPL NEXT, Inc. established a fund specialized in the area of VR. Despite a cap of 50 million dollars, the fund has already made a decision to invest 11 million dollars. The fund is now attracting considerable attention. US Fortune magazine introduced it as "the largest VR fund out there."

Going forward, we will work to further reinforce our revenue-generating structure through White Cat Project and other exiting apps, while pursuing a short-term plan to enhance business performance with a focus on new titles, including our new soccer game. As we seek to nurture leading apps of the future through these efforts, we will secure long-term growth by becoming a frontrunner in the area of VR, which should become a new platform in the medium to long term.

Results of Operations

(cumulative total: October 1, 2015 - March 31, 2016)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

For details on each data item contained in the financial statements, please refer to Financial Data.

On April 27, we announced our financial results for the second quarter (January - March) of the fiscal year ending September 30, 2016.
We recorded sales of 22.1 billion yen (33% YoY increase) and an operating profit of 9.9 billion yen (25% YoY increase), demonstrating continued solid growth. Sales decreased slightly QoQ, partly due to the seasonality.

The strong performance is driven by an ever-increasing number of active users. Number of quarterly active users (QAU) renewed its record-high with 8.729 million (339 thousand QoQ increase), thanks to the favorable QAU trend for our key products - White Cat Project and Quiz RPG: The World of Mystic Wiz.
For White Cat Project, we utilized TV commercials in combination with our own programs via video streaming site to get new users, while activating existing users. With the fourth anniversary since its release, Quiz RPG: The World of Mystic Wiz saw QAU growth by co-featuring popular cartoon characters. Its QAU turned positive for the first time in two years.
As the year-end is the peak season for Japanese mobile game market, many mobile game providers start preparations around November for game-specific events and promotions to capture this special demand. As a result, large number of them tend to see significant sales drop in Jan-March quarter compared to Oct-Dec quarter. However, our sales only decreased by 4.6% QoQ, thanks to the QAU growth.
Of all the KPIs, Pay Ratio had the biggest decrease in 2Q. We analyze that it is because many users paid and got items during the year-end peak season, they remain satisfied. Pay Ratio for White Cat Project has gradually recovered since March. It is back to the normal level in April.

There are three topics in 2Q. First topic is our TOB announcement against Eighting Co. Ltd. (TSE MOTHERS listed company), whose main business is a consigned development for large game developers, with lots of track records for well-known, popular titles. It is a game developer with excellent capability in high-end technology, with 24 years' history which is long for the gaming industry. TOB shall be executed in two steps, and the settlement for the second round is scheduled to be completed by July. We expect a significant enhancement of our development resources by adding 200+ employees from Eighting.
The second topic is about the release of new title. On April 21, we launched Gekitotsu!! J. League Punicon Soccer. This is the first sport game empowered with Punicon, which is a well-received UI also being used for White Cat Project. We are proud of the completion of smartphone-based sport game with exciting 'operability' which is rare in the industry. Number of pre-launch registration exceeded 350,000 as a result of cross-promotions to the users of existing games. We expect sales expansion through massive promotions.
Finally, the third topic is the release of VR games. With the launch of Oculus Rift, thirty new game titles were released by developers around the world. Colopl is the only Japanese developer among them (if you include publisher, there is one). Furthermore, we are the sole company in the world who launched two titles at the same. We plan to roll out new VR game titles for different types of HMD (such as PlayStation VR) besides Oculus Rift.

Results of Operations

(cumulative total: October 1, 2015 - June 31, 2016)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

*This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

*As the consolidation started from this quarter, we do not present the YoY comparison.

For details on each data item contained in the financial statements, please refer to Financial Data.

On July 27, Colopl announced its financial results for the third quarter (April-June) of the fiscal year ending September 30, 2016.

Highlight
・Started to apply consolidated financial reporting, with the disclosure of consolidated full-year earnings forecast for the first time.
・Non-consolidated sales/operating profit plan remains unchanged.
・Consolidated earnings performance for 3Q (April-June) was sluggish, with 14% QonQ decrease (vs. non-consolidated 2Q results).
・This is primarily caused by the significant drop of our flagship White Cat Project in May (newly introduced items were highly unpopular).
・Revenue of White Cat Project has recovered in June and July. We expect it to come back close to the 2Q level in 4Q (July-September).
・Downward revision of the number of new apps to be launched in this FY, from six to three. Punicon Soccer and Dragon Project have already been released. The remaining one, White Cat Tennis, will be launched within this FY.
・With the release of two new titles, advertising costs increased to 2.7 billion yen. Another burden was the labor cost of subsidiaries due to the commencement of consolidated reporting. As a result, OP margin was 30.2%.

Colopl started disclosing its consolidated performance from this quarter. Series of acquisitions and establishment of new subsidiaries in the last two years led the total number of our subsidiaries as ten. Of them, we decided to newly consolidate the six companies (Indigo Game Studios, Colopl Next, RealStyle, Pyramid, 360Channel and Eighting) and Colopl VR fund (operated by Colopl Next), based on the principle of materiality.

Non-consolidated revenue was 18. 8 billion yen, and operating profit was 6.3 billion yen. Consolidated revenue was 19 billion yen, with 5.7 billion yen OP. The sole cause behind the unsatisfactory performance was the sluggish sales of White Cat Project in May, which we came to rely on too much. Its May sales dropped almost 50% compared to the monthly average sales in 2Q. More specifically, assuming that its 2Q monthly average sales as 100, April sales level was 90, May as 50, and June as 80. This indicates that the trough in May was mostly accountable for the negative QoQ results. Meanwhile, we see solid recovery trend. Sales are picking up faster in July compared to June. We aim to recover the sales close to the 2Q level in 4Q (July-September).

We started distribution of Dragon Project as of June 3rd, which made a good start. With its full three-month contribution in 4Q (July-September), we are excited about significant earnings boost. We are also pleased to announce the upcoming release of White Cat Tennis, the last new title in this FY. Number of pre-launch registration is unprecedentedly big with 600,000, which is also encouraging for the contribution in 4Q.

We make steady progress for VR-readiness as well. Our subsidiary in the US has released new app for HTC's Vive, while 360Channel (another subsidiary) launched 360-degree video distribution platforms. With the planned launch of "PSVR" in October, we expect rapid penetration of VR users. We plan to introduce more services targeting that momentum.

Finally, Colopl disclosed its full-year earnings forecast along with the consolidated financial reporting. For the non-consolidated revenue and operating profit, initial guidance remains unchanged. Consolidated figures are added to make up the consolidated forecast: 85.5 billion yen revenue and 33.5 billion yen operating profit, variance of +0.5 billion yen and -2.5 billion yen respectively, compared to the non-consolidated forecast.

Results of Operations

(cumulative total: October 1, 2015 - September 30, 2016)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

*This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

*As the consolidation began in Sep.2016 3Q, we do not release the YoY comparison.

For details on each data item contained in the financial statements, please refer to Financial Data.

On November 9th, Colopl announced its full-year and the fourth-quarter (July-Sep) financial results

Highlight
- For FY Sep/2016, results were mostly in line with the company forecast.
- Guidance for FY Sep/2017: significant YoY decrease.
- The new title White Cat Tennis, although performing well, will not likely to grow as big as our historical blockbuster titles (Quiz RPG, White Cat Project).
- Since August, we saw further drop of White Cat Project.
- In FY Sep/2017, we plan to release more than three new titles, exceeding the level of the previous fiscal year.
- Steady progress of VR related business. In FY Sep/2016, we have released seven new titles. In FY Sep/2017, we plan to launch diverse range of titles, from more hard-core type to casual games. Our VR fund is also diversifying its investment targets, and planning to launch 'COLOPL VR Fund 2', with the size of 50 million USD, same as 'VR Fund 1'.

Here are the consolidated financial results for FY Sep/2016: 84.7 billion yen revenue, 31.8 billion yen operating profit, and 20.7 billion yen net income. The results were mostly in line with the company forecast (85.5 billion yen revenue, 33.5 billion yen operating profit, and 18 billion yen net income).

4Q consolidated results consist of 20.1 billion yen revenue with 6.2 billion yen operating profit, demonstrating steady QoQ growth with 11.3% topline increase and 8.4% OP increase. Operating profit margin slightly improved to 30.9% from 30.2% in 3Q, thanks to the mostly flat increase of major cost items (labor, advertising costs, etc.) compared to revenue growth. White Cat Tennis, released on July 31, made a good start and offset the sluggish performance of other existing apps such as White Cat Project (suffering continued sales drop).

As for our core title White Cat Project, it showed some recovery in July with the second anniversary event, after failed initiatives in May. However, downward revenue trend continues to date since August, with a declining number of active users. There is an obvious cannibalization due to the identical characters used for White Cat Tennis. We believe it is important to develop inhouse IP. Therefore it is 'acceptable' if the combined sales from both apps featuring White Cat IP can exceed the conventional sales of White Cat Project.

Guidance for this fiscal year consists of 55 billion yen revenue and 11 billion yen operating profit, a significant decrease of both sales and operating profit (35% YoY topline decrease and 65% OP decrease). In addition to the current weakness of White Cat Project, White Cat Tennis (released in July) has mostly low-spender paid users. Therefore it is unlikely to grow the title to the level of our historical blockbusters (such as Quiz RPG and White Cat Project). With that view, the company concluded that the current downward revenue trend should be incorporated into the budget plan until we see contribution from new titles to be launched in FY Sep/2017. This is the thought-process behind above projections.

For this fiscal year, Colopl will review its rapidly-growing headcount since IPO and inefficiencies at each business in order to enhance the organization to become a healthier/more efficient corporate group. With the outcome of above, we aim at making a V-shaped earnings recovery in FY Sep/2018 where we expect full-fledged development of the VR market.

Results of Operations

(cumulative total: October 1, 2016 - December 31, 2016)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

※This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

※As the consolidation began in Sep.2016 3Q, we do not release the YoY comparison.

For details on each data item contained in the financial statements, please refer to Financial Data.

On February 1, we announced our financial results for the first quarter (October-December) of the fiscal year ending September 30, 2017.

Highlight
- The fiscal year ending September 30, 2017 is to all intents and purposes a new start, when, among other things, we have been fundamentally restructuring our organization since listing.
- In 1Q (October-December) we made a good start, with results showing progress against the full-year forecasts of 26.2% for net sales and 33.3% for operating profit.
- In particular, our year-end events were a success and we managed to significantly increase December sales of White Cat Project, White Cat Tennis and Black Cat.
- We implemented the largest restructuring of our organization since listing, adopting the style of separating the business units that allocate and manage engineers, etc. and the business units that execute game business.
- We are continuing to steadily expand in the three areas under our VR strategy.

1Q consolidated results were net sales of 14.4 billion yen, operating profit of 3.6 billion yen, and an operating margin of 25.4%. Costs were down overall, and advertising expenses also decreased by 1.1 billion yen to 1.6 billion yen, compared to 2.7 billion yen in 4Q of the previous fiscal year. However, our operating leverage is high and the operating margin fell 5.5 pts due to decreased sales. This was a good start, with progress against the full-year forecasts of 26.2% for net sales and 33.2% for operating profit.

Sales of our core title White Cat Project (FY14 app) slumped, reflecting lackluster sales in October and November despite recovery in December due to the success of year-end promotions. Similarly, sales of Black Cat (FY13 app) continued to fall despite recovery in December. 1Q sales of White Cat Tennis (FY16 app) cooled down compared to the upsurge directly after release, making the transition to stable sales. Consequently, the sales ratios of FY13 apps, FY14 apps and FY16 apps were similar.

We implemented the largest restructuring of our organization since listing. Previously, recruitment plans for engineers, etc. and staffing were left to each game development business unit, but last December we set up a new section specifically for this purpose and this section is now responsible for recruitment plans and staffing for all teams. We expect that this will result in the optimal allocation of human resources, thus improving hourly workforce productivity.

Under our VR strategy, we continue to strengthen our foothold in the three areas of investment, VR Game and 360o movie as before: (i) On the investment front, we announced the establishment of Colopl VR Fund 2, which was established on January 31. (ii) Regarding VR games, we are rolling out titles for newly launched HMDs including PSVR. (iii) In the 360o movie area, we have significantly expanded contents since the launch of the service in May 2016. A system for mass production is also in place.

In 1Q, we made a good start, with both net sales and operating profit exceeding one quarter of the full-year forecast. Our 2Q forecast is based on the assumption that, as every year, the environment will be tough due to seasonal factors. New titles will start to contribute to results from 3Q. Our aim is to maintain the current level and release new titles to plan, and we would like to achieve the figures given as guidance initially.

Results of Operations

(cumulative total: October 1, 2016 - March 31, 2017)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

※This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

※As the consolidation began in Sep.2016 3Q, we do not release the YoY comparison.

For details on each data item contained in the financial statements, please refer to Financial Data.

On May 10, we announced our financial results for the second quarter (January-March) of the fiscal year ending September 30, 2017.

Highlights
- Profitability improved substantially. The operating margin for 2Q improved by 3.3 pt to 28.8% due to the effect of reforming the business organization from November.
- In 1H (October-March) we made good progress, with results showing progress against the full-year forecasts of 49% for net sales and 67% for operating profit. There is no change to the full-year forecasts.
- Sales of the existing titles were stable, with remarkable tenacity. In particular, k Cat, which celebrated its fourth anniversary in March, showed good performance.
- In 2H, the sports game "Pro Baseball Versus" and action RPG "Project:Pani Pani" are scheduled to be released.

2Q consolidated results were net sales of 12.8 billion yen, operating profit of 3.7 billion yen and an operating margin of 28.8%. Partly owing to the usual seasonal factors, net sales decreased from the previous quarter. On the other hand, operating margin improved 3.3 pt quarter on quarter. The biggest factor for the improved margin is the reduction of outsourcing expenses. As part of the efforts to reform the business organization from the end of the previous year, we made efforts to strengthen the control of outsourcing expenses. As a result, the area in which development can be completed within the Group has expanded. The second biggest factor is the control of advertisement expenses. Because there will be more new titles in 2H, the budget for advertisement expenses is transferred to 2H. On the other hand, the good results of Quiz RPG for 2Q are considerably attributable to the TV commercial. Despite its low budget, the advertisement worked well.

New titles will contribute to sales in 2H. Given that, the fact that sales in 1H reached about 50% of the full-year target without the contribution of new titles reflects the strength of the existing titles. Looking at the KPIs of all the domestic applications, ARPQU improved from the previous quarter for the first time in five quarters. Although the core title White Cat Project continued to show decreases in QAU and ARPQU, the difference has narrowed. We expect that the title will also improve soon, the same as Quiz RPG.

In future, we will continue to proceed steadily with the development of new titles for smartphones and VR. We also announced the release of two new smartphone game titles.
(1) "Pro Baseball Versus" is a title reflecting know-how in the development and operation of sports games that our company has worked on, including "Pro Baseball Versus" and "White Cat Tennis." Its most remarkable aspect is the real-time battles involving throwing and hitting with players around Japan.
(2) "Project:Pani Pani" is a game in the RPG genre in which we specialize, like Quiz RPG and White Cat Project. The highly profitable game genre in Japan is RPG, so we strongly anticipate that this game will contribute to profits.
As for VR games, "TITAN SLAYER" was released for HTC VIVE on April 28. This title was displayed at the VRLA Expo, the world's largest-scale exhibition for VR/AR, gaining high recognition. We have continued to develop VR games directed mainly at major HMDs.

The focus for 2H is the smooth release of the new titles "Pro Baseball Versus," "Project:Pani Pani" and others that are yet to be announced. For the existing titles, anniversary events will be held for White Cat Project and White Cat Tennis in July. Backed by the stable results for 2Q, we intend to ensure the success of these events.

Results of Operations

(cumulative total: October 1, 2016 - June 30, 2017)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

※This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

※As the consolidation began in Sep.2016 3Q, we do not release the YoY comparison.

For details on each data item contained in the financial statements, please refer to Financial Data.

On August 2, we announced our financial results for the third quarter (April-June) of the fiscal year ending September 30, 2017.

Highlights
・The business performance itself for 3Q (April-June) was sluggish due to the delay in new titles, but the roadmap toward improvement from 4Q (July-September) has been put in place.
・There are two reasons for this: (1) DAU of "White Cat Project" has recovered significantly, starting from late June (approximately doubled in one month). Other KPIs also showed a significant improvement, as if tuned to this recovery. (2) The operating leverage is expected to work strongly when sales recover, reflecting further progress in the streamlining of operations, including a further reduction in outsourcing expenses.
・A new charging system alternative to Gacha has been introduced in the new title "Pro Baseball Versus." The charging rate rose to a level three times higher than the existing Gacha .
・At the analyst meeting, we explained our future IP strategies. We believe that analysts gained an understanding of the strategies as we explained that we would promote close joint planning and development of operations in tandem with companies that have IP from the beginning of the next fiscal year (October-December, 2017).

3Q consolidated results included net sales of 10.9 billion yen, operating profit of 2.4 billion yen and an operating margin of 22.7%. Sales and profits declined on a quarter-on-quarter basis due to the poor performance of "White Cap Project" and the delay in new titles. We were able to reduce almost all expense items, including outsourcing expenses, to a level lower than the budget, thanks to the Group-wide streamlining of operations which we have been carrying out since the beginning of the period. However, this was not enough to offset the negative effect of lower sales, and the operating margin fell 6.1 pt quarter on quarter, to 22.7%. Once sales recover, the effect of the cost savings we have been achieving on will become effective with leverage.

White Cat Project," which was sluggish in 3Q, has been on the road to recovery since late June. It held an event marking its third anniversary in July with a good trend, and a range of KPIs show a rapid recovery. Black Cat, which has now entered the fifth year since its release, remains stable with little backlash from the anniversary in the previous quarter. In 4Q, we will bolster these core titles and add new titles at the same time.

In May, we began delivering "Pro Baseball Versus." In this title, a "time shortening charging system" for efficient game play, instead of existing Gacha , has been introduced for the first time. In the new charging system, the charging rate is high while ARPPU is low, evidence that wide and light charging has been realized. In particular, the charging rate is more than three times higher than our two most recent new titles, suggesting that the new system is accepted by broad-based users.

We will explain our IP strategies once again. We will step up the use of IP in roughly three stages.
(1) Maximize collaboration between the IP of other companies and our titles. We have already advanced this strategy actively.
(2) Develop and provide new game applications that use the IP of other companies as their main characters. We will probably be able launch them at the beginning of the next fiscal year.
(3) Provide entirely new game applications in close collaboration with partner companies that have IP. We expect that the launch will be around the end of the next fiscal year.

The progress rates up to 3Q are 69% in net sales and 89% in operating profit. Although the results were poor due to the delay in new titles, we are fully ready for an improvement from 4Q. In 4Q, we will regain strength not only in operating profit but also in net sales with the White Cat Project, which has been recovering since late June, the success of the anniversary of White Cat Tennis, the full-quarter contribution of the new title Pro Baseball Versus, and the addition of more new titles.

Results of Operations

(cumulative total: October 1, 2016 - September 30, 2017)

(Amounts less than ¥ million are rounded down.)
(The percentage indicates the change from the same quarter of the previous year)

※This chart is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shall prevail.

For details on each data item contained in the financial statements, please refer to Financial Data.

On November 8, we announced our financial results for the full year and fourth quarter (July-September) of the fiscal year ended September 30, 2017.

Highlights
・In the fiscal year ended September 30, 2017, the operating margin exceeded the initial forecast by 17%, mainly reflecting the effect of organizational reform, although sales fell short by 5%.
・We consider the fiscal year ending September 30, 2018 as a preparatory period for regrowth.
・To achieve regrowth, we will implement two measures: (1) Strengthening recruitment activities to take advantage of employee number leverage with operations streamlined and (2) posting an increase in royalty expenses arising from sales of more applications that utilize the IP of other companies. We expect that the operating margin will fall about 9 pt, although this forecast may be conservative.
・One of the effects of organizational reform in the previous year is a significant improvement in the system for developing new titles. The number of new titles under development that are in pipeline has reached 9 so far.
・To rephrase, we will increase the number of new titles more significantly than ever by increasing the number of employees and utilizing the IP of other companies, and we will provide games to platforms other than smartphones. In so doing, we will aim to improve the probability that we will create hit titles, thereby generating a growth trend again.
・We will raise the payout ratio from the previous 10% to 30%.

The full year business performance for fiscal 2017 included net sales of 52.2 billion yen, operating profit of 12.9 billion yen and an operating margin of 24.8%. Existing titles contributed significantly throughout the year, such as Black Cat in the first half and White Cat Project in the second half.

Net sales were 95% of the forecast at the beginning of the period. The shortfall was mainly attributable to the delayed release of new titles, which offset the better-than-expected contribution to business of existing titles. However, the operating margin was 117% of the forecast, exceeding the plan significantly. Continuous efforts to streamline operations contributed.

4Q results showed net sales of 14.0 billion yen and operating profit of 3.0 billion yen. The White Cat Project drew a lot of attention thanks to the anniversary event and recorded an increase in both sales and profit on a quarter-on-quarter basis. In terms of KPIs for applications for Japan as a whole, both QAU and ARPQU increased for the first time in almost two years, reflecting the acquisition of seasoned game users who came back.

Full-year business forecasts for fiscal 2018 include net sales of 50.0 billion yen, operating profit of 8.0 billion yen, net profit of 5.1 billion yen and an operating margin of 16%, showing a decline of 8.8 pt year on year. This is attributable to investments that we will make proactively for the re-growth of business in and after fiscal 2019. Specifically, we first have royalty expenses. We will utilize the IP of other companies more proactively than before. Consequently, we will post a large amount of royalty expenses. Next, with regard to personnel expenses, we have achieved concrete results in the organizational reform that we were undertaking over one year to ensure that such results can be verified through improvements in the business of existing applications in 4Q. We therefore consider that there is a stronger probability of leverage from an increase in the number of employees working more effectively for sales, and will change gears to increase the number of employees, although the increase is not so significant.

With respect to new items in the pipeline, we have begun the development of a record high nine applications because we are able to assign personnel flexibly to new titles thanks to organizational reform. On a medium- to long-term basis, we will seek to create an entertainment company that owns competitive IP by nurturing our own IP through the creation of original titles. On the other hand, we will also aim to achieve short-term sales targets by proactively using other companies' IP that works immediately. Our policy is to create well-balanced application portfolios on the merits and demerits identified in our own IP and other companies' IP, respectively.

Regarding our dividend policy, we aim to achieve a payout ratio of approximately 30% starting from fiscal 2017. As a result, the dividend per share will be 21 yen, exceeding the plan. In consideration of the size of our company as well as the maturity of the industry, we will increase the payout ratio by a factor of three, from the current 10% to 30%. This reflects our policy of allocating one third of residual profit to investments in existing businesses such as the development of smartphone applications, investments in new platforms and businesses other than games, and returns to shareholders, respectively.

As mentioned earlier, we will also work to improve DOE significantly from fiscal 2019 through the completion of investments that we will make proactively in fiscal 2018.