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Business Performance (Japan GAAP)

Here we breakdown our consolidated business results for the nine months ended December 31, 2023 with graphs and diagrams.

1. Operating results overview

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Net sales Operating income Ordinary income Net income attributable to owners of the parent Earnings per
share
106,179
million yen
( 33.3%
increase YoY)
47,704
million yen
( 43.1%
increase YoY )
49,460
million yen
( 47.4%
increase YoY )
34,636
million yen
( 46.7%
increase YoY )
165.63 yen
  • Net sales (cumulative)

    Plan

  • Operating income (cumulative)

    Plan

  • Ordinary income (cumulative)

    Plan

  • Net income attributable
    to owners of the parent (cumulative)

    Plan

During the nine months ended December 31, 2023, Capcom Co., Ltd. and its affiliates (hereinafter, the Company) continued to actively pursue growth investments focused on enhancing digital sales to respond to the continuously evolving and expanding global market. Moreover, the Company implemented measures to improve its work environment as part of its Human Resources investment strategy, which is one of management’s priorities. These included strengthening its personnel organization, establishing the new Creative Studio, adopting a system with a more inclusive definition for spouses and partners, and enhancing employee welfare and benefits programs in order to further the steady, sustainable growth of the Company. Additionally, the Company strove to enhance corporate value by reinforcing its development and technological strengths, which included acquiring as a wholly-owned subsidiary a development company whose strength lies in 3D CG production technologies applicable to consumer game development.

With this management policy, the Company increased its sales volume in the global market through the launch of major new titles in its flagship series and the active promotion of digital catalog title sales in its core Digital Contents business. As a result, the sales volume of the Digital Contents business in the nine months ended December 31, 2023, was 32.6 million units, exceeding the 29.1 million units in the same period of the previous fiscal year, and significantly contributing to enhancing the value of the Company. The Company also leveraged the use of its major brands in films, licensed products, and esports to enhance the brand strength of its intellectual property. Additionally, the Company worked to boost revenues by promoting efficient store operations and opening stores in new formats in the Arcade Operations business, and with the introduction of smart pachislo machines and sales of existing machines that effectively used the Company’s popular intellectual property in the Amusement Equipments business.

As a result, for the nine months ended December 31, 2023, consolidated net sales were 106,179 million yen (up 33.3% year-over-year). In terms of profitability, operating income was 47,704 million yen (up 43.1% year-over-year), ordinary income was 49,460 million yen (up 47.4% year-over-year), and net income attributable to the owners of the parent was 34,636 million yen (up 46.7 year-over-year).

Thanks to the ongoing support from all stakeholders, the Company celebrated the 40th anniversary of its founding in June 2023. To mark this occasion, in addition to opening Capcom Town, a dedicated anniversary website and online destination, the Company is carrying out a variety of celebratory activities, including activities to further enhance its brand recognition.

Status of business by operating segment

1. Digital Contents business

  • Net sales (cumulative)

    Plan

  • Operating income (cumulative)

    Plan

  • Operating margins (cumulative)

    Plan

In June 2023, the Company released Street Fighter 6 (for PlayStation 5, PlayStation 4, Xbox Series X|S, PC), the latest title in the series that leads the Company’s esports activities, to global acclaim. As a result, the game achieved sales of 2.98 million units, which contributed to earnings.

In addition, Street Fighter 6 was recognized as the year’s top fighting game, winning the Best Fighting Game Award at the Game Awards 2023, one of the largest game award ceremonies globally that was held in the U.S.A. in December 2023. Further, the Company also won Best VR / AR for Resident Evil Village VR Mode, which is free downloadable content that allows players to experience Resident Evil Village on PlayStation VR2. These awards worked to bring global acclaim to the Company’s intellectual property, giving momentum to the sales of its titles.

Regarding catalog title sales, the Monster Hunter series delivered solid sales, driven by the announcement of Monster Hunter Wilds, an all-new addition to the series. Further, Resident Evil 4, launched in March 2023, contributed to sales growth, reaching 6.48 million units cumulatively, supported by ongoing promotional measures including free title updates for PlayStation VR2. Additionally, the Company conducted proactive promotional campaigns to gain wide recognition for its intellectual property and acquire new fans, focusing primarily on series title sales, such as Resident Evil 2. As a result, catalog title sales reached 26.7 million units, exceeding 22 million units in the same period of the previous fiscal year and boosting sales.

In Mobile Contents, Monster Hunter Now (for iOS, Android) was released in September, representing the latest mobile game in the Monster Hunter series. The number of worldwide downloads of the title exceeded 10 million, driving wider recognition of the brand.

The resulting net sales were 81,436 million yen (up 33.0% year-over-year) and operating income was 47,361 million yen (up 36.8% year-over-year).

2. Arcade Operations business

  • Net sales (cumulative)

    Plan

  • Operating income (cumulative)

    Plan

  • Operating margins (cumulative)

    Plan

In this business segment, economic activities recovered due to the Japanese government reclassifying COVID-19 as a Class 5 infectious disease (a category that includes the seasonal flu). As such, the Company strived to increase revenues through efficient operations at existing stores and by opening new stores in new business categories.

In April 2023, the Company opened a Kids Banet store in Shizuoka, a facility featuring playground equipment for kids, while it opened a Crazy Banet interactive amusement facility at Aeon Mall in Niihama (Ehime Prefecture) in June 2023 and a capsule toy shop Capsule Lab Harajuku Takeshita Street (Tokyo) in December 2023, bringing the total number of stores to 48 during the first nine months of this fiscal year.

The Company also worked to boost synergies with other businesses by, for example, securing a space for visitors to enjoy Monster Hunter Now at stores.

The resulting net sales were 13,847 million yen (up 21.9% year-over-year) and operating income was 1,547 million yen (up 52.6% year-over-year).

3. Amusement Equipments business

  • Net sales (cumulative)

    Plan

  • Operating income (cumulative)

    Plan

  • Operating margins (cumulative)

    Plan

In this business segment, as the market remains strong driven by smart pachinko and pachislo machines, the Company launched its first smart pachislo machine in August 2023, Sengoku BASARA GIGA, which sold 15,000 units. In addition, the Company boosted sales by shipping 10,400 units of Resident Evil Village in December 2023, its second smart pachislo machine, which is scheduled to start operating in halls in January 2024.

The Company also achieved healthy catalog sales due to ongoing demand for Shin Onimusha 2, launched in August 2022, and Monster Hunter World: Iceborne, launched in January 2023, driven by their strong performance in the market.

The resulting net sales were 8,020 million yen (up 116.8% year-over-year) and operating income was 4,560 million yen (up 120.5% year-over-year).

4. Other Businesses

  • Net sales (cumulative)

    Plan

  • Operating income (cumulative)

    Plan

  • Operating margins (cumulative)

    Plan

In Other Businesses, the Company continued to focus on pursuing movie and television adaptations of its major intellectual properties and developing character merchandise to increase the brand value of its titles, as exemplified by the worldwide release of the feature-length CG-animated movie Resident Evil: Death Island in July 2023 and the worldwide release of the animated Onimusha series on Netflix in November 2023.

The Company has also been pursuing the expansion of the global esports fan base. In Street Fighter League: Pro-JP 2023, a Japan-based team league that started in July 2023, the Company featured Street Fighter 6, the latest title in the series. Competitions for this league also kicked off in North America in October 2023 and in Europe in November 2023. Further, in addition to holding events in Singapore and other areas, the Capcom Pro Tour 2023 got running worldwide in August 2023. The Company is offering its highest-ever prize pool for this tournament, totaling over 2 million US dollars.

The resulting net sales were 2,875 million yen (down 14.7% year-over-year) and operating income was 642 million yen (down 47.4% year-over-year).

2. Financial position overview for the period under review

Assets

Total assets as of the end of the third quarter increased by 5,559 million yen from the end of the previous fiscal year to 222,925 million yen. The primary increases were 7,646 million yen in work in progress for game software, 6,612 million yen in current assets, other due to an increase in accrued revenue, etc., and 5,892 million yen in cash on hand and in banks. The primary decrease was 13,288 million yen in accounts receivable – trade.

Liabilities

Total liabilities as of the end of the third quarter decreased by 17,057 million yen from the end of the previous fiscal year to 39,179 million yen. The primary decreases were 10,725 million yen in accrued income taxes, 4,399 million yen in deferred income, and 3,307 million yen in accrued bonuses.

Net assets

Net assets as of the end of the third quarter increased by 22,616 million yen from the end of the previous fiscal year to 183,745 million yen. The primary increases were 34,636 million yen in quarterly net income attributable to owners of the parent, and 2,352 million yen in cumulative translation adjustments. The primary decrease was 14,278 million yen in dividends from retained earnings.

3. Forecast and Outlook

The forecast for the consolidated business results for the current fiscal year ending March 31, 2024, remains the same as what was projected at the financial results announcement on May 10, 2023.

Earnings forecast for the fiscal year ending March 31, 2024 (From April 1, 2023 to March 31, 2024)

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Net sales Operating income Ordinary income Net income attributable to owners of the parent Earnings per share
Year ending March 31, 2024 140,000 million yen
( 11.2% increase YoY )
56,000 million yen
( 10.2% increase YoY )
56,000 million yen
( 9.0% increase YoY )
40,000 million yen
( 8.9% increase YoY )
191.28 yen
  • Note: Capcom discloses a full year business forecast, as it manages its business performance on an annual basis.

This fiscal year, we aim to achieve 7 consecutive years of record profit at all levels and to achieve our 11th consecutive year of operating profit growth by focusing on new major title releases and enhanced digital sales.

We expect to achieve record-high sales volume for the year with major new releases, including Street Fighter 6, while also expanding digital sales of catalog titles globally.

Additionally, we anticipate increased sales and profit across all business segments. In the Arcade Operations business, this will be due to contributions from new and existing stores, and in the Amusement Equipments business it will be driven by the launch of new titles. In Other Businesses, while we will continue to promote investment in eSports, we expect this increase to be achieved by strengthening activities in the Character Contents and Media businesses.

Outlook

Regarding the outlook going forward, the business environment is undergoing great change: the transition to high-speed, high-capacity new mobile communication-standards, an increased number of distribution channels for content, diversification of devices and the expansion of the global video game user base. In such an environment, the Capcom Group recognizes the important management challenge of establishing a corporate structure that enables it to secure stable profit for enhancing corporate value over the medium- to long-term.

The Group has therefore made achieving 10% annual growth in operating income its medium-term management goal. The Group will make efforts to further increase brand value globally while endeavoring to better understand user needs and expand the user base, leading to growth for its core Digital Contents business. In order to achieve this sustainable growth, the Group will continue to promote its personnel investment strategy, which is its driving force.

Further, thanks to the ongoing support from all stakeholders, the Company will celebrate the 40th anniversary of its founding in June of this year. To mark this occasion, the Company will carry out a variety of celebratory activities, including the creation of a dedicated website and online destination, Capcom Town.

The Group will further work to make strides forward, aiming to achieve sustainable growth and enhance its corporate value over the long term.

(1) Personnel investment strategy

The Capcom Group positions initiatives regarding human capital, which is the source of corporate value creation, as a priority issue.

In order to enhance its development system—the source of its core competitiveness—and achieve its medium-term management goals, the Group recognizes the importance of bolstering its development workforce and enhancing productivity as it pertains to the investment and effective use of human capital in the areas of research and development and contents production.

As such, the Group has recruited more than 100 developers every year. At the end of the fiscal year ended March 2023, the Group has secured approximately 2,460 developers in its workforce.

In addition, to respond to changes in the business environment, the Group is investing in securing and developing diverse human resources through recruitment and evaluation, regardless of their gender, nationality, age, and so on.

The Group currently has 29 female managers (11.6% of all managers), 3 managers of foreign nationality (1.2% of all managers), and 140 managers who are midcareer hires (56.0% of all managers). Note that from the fiscal year under review, the Group changed the way it aggregates these figures in accordance with related laws and regulations.

In order to further promote its personnel investment strategy, the Group will enhance its corporate value in tandem with improving employee engagement by implementing the following measures:

A. Management support for personnel issues

  • Continuing an open dialogue between management and employees, such as with employee briefings

B. Acquiring and cultivating the talent to support the future, and improving the work environment

  • Promoting a corporate culture of respect for human rights
  • Reviewing the personnel evaluation systems
  • Reconstructing the recruitment strategy
  • Enhancing employee welfare and benefits programs, such as introducing a progressive program with a more inclusive definition for spouses/partners

C. Improving the office environment to support development activities and upgrading development facilities

  • Improving development studios with expanded offices
  • Establishing the new "Creative Studio," outfitted with one of the largest motion capture studios in Japan