Business Performance (Japan GAAP)

Here we breakdown our consolidated business results for the three months ended June 30, 2024 with graphs and diagrams.

In the three months ended June 30, 2024, Capcom Co., Ltd. (the "Company," together with its subsidiaries, the "Group") actively pursued investments for growth focused on the continued enhancement of digital sales in order to further evolve and expand within the global market. In addition, as part of its human resources investment strategy, which is one of the Company’s top priorities, it continued to invest in human capital with the aim of stable and sustainable growth, including by increasing remuneration levels linked to business performance and providing a special payment to employees, in order to secure and develop human resources to support the future. Furthermore, with regard to the remuneration system for directors, in order to link remuneration for directors more closely to business performance and further align incentives with shareholders, the Company implemented measures aimed at increasing corporate value over the medium to long term, such as by introducing a performance-linked stock remuneration system. With these kind of management policies, the Company has been working to continue strengthening its development and technological capabilities, including through the acquisition in July of a 3DCG production company with strengths in animation production for home video game development.

Regarding business conditions during the three months ended June 30, 2024, in addition to the release of past titles on additional platforms, sales were dominated by catalog sales of major titles released in previous fiscal years in the core Digital Contents business due to the timing of new title sales in the fiscal year under review being weighted to the second half of the fiscal year. As a result of promoting digital sales and efforts to increase sales volumes globally, the Company sold 240 titles in 214 countries and regions, contributing to enhancing the value of the Company’s brands and achieving unit sales of 9.53 million units, down from 13.5 million units in the same period of the previous fiscal year when Street Fighter 6 was released.

The Company also worked to increase earnings through efficient operation of amusement arcades and the promotion of store openings in new store formats in Arcade Operations, as well as through the continued introduction of smart pachislo machines and the utilization of the Group’s popular intellectual properties (IPs) in Amusement Equipments. In addition to such activities, the Company further enhanced the brand of its content by utilizing its major IPs in film and television productions, licensed merchandise, and esports.

As a result, for the three months ended June 30, 2024, consolidated net sales were 29,597 million yen (down 32.5% year-over-year), operating income was 12,889 million yen (down 46.4% year-over-year), ordinary income was 13,487 million yen (down 47.9% year-over-year), and net income attributable to owners of the parent was 9,975 million yen (down 45.1% year-over-year), outperforming the Company’s plan for the period under review.

In the Digital Contents business, past titles Monster Hunter Stories and Monster Hunter Stories 2: Wings of Ruin were released on additional platforms in June, and thanks to support from a wide range of users, sales of Monster Hunter Stories 2: Wings of Ruin surpassed a cumulative total of 2 million units. In addition, sales of catalog titles Monster Hunter World: Iceborne and Monster Hunter Rise continued to grow, contributing to an improvement in the brand value of titles in the series, with cumulative sales now over 100 million units worldwide.

Regarding catalog titles, the Company continued working to enhance brand recognition and increase the number of users for Street Fighter 6, the major new title in this flagship series that was released in the previous fiscal year, by strengthening collaborations with esports activities. Sales of Dragon’s Dogma 2, released in March, progressed in line with expectations. In addition, the Company conducted proactive promotional campaigns to gain wider recognition of its IPs and acquire new fans, focusing primarily on series title sales, such as Resident Evil 4. As a result, sales of catalog titles got off to a solid start thanks to promoting pricing measures, amounting to 9.26 million units, compared to 9.8 million units in the same period of the previous fiscal year.

Consequently, progress toward achieving the full-year plan was generally in line with plans, though sales volume for the three months ended June 30, 2024, decreased compared with the same period of the previous fiscal year when Street Fighter 6 was released.

In Mobile Contents, cumulative downloads of Monster Hunter Now, which was released in the previous fiscal year, exceeded 15 million and continued to gain in popularity among many users. In addition, in the three months ended June 30, 2024, Monster Hunter Puzzles: Felyne Isles (for iOS and Android) was released globally in June.

As a result, segment net sales were 21,416 million yen (down 43.5% year-over-year), and operating income was 12,821 million yen (down 48.0% year-over-year).

In Arcade Operations, in addition to the recovery of tourism demand after the COVID-19 pandemic, consumer habits also continued to change. As such, the Company worked to increase earnings through the efficient operation of existing stores and store openings in new store formats. Moreover, the Company worked to maximize the appeal of our brick-and-mortar stores by holding events and creating synergies with other businesses.

During the three months ended June 30, 2024, the Company opened Plaza Capcom Oyabe (Toyama Prefecture) in April, and opened a new area at Plaza Capcom Ikebukuro (Tokyo) in May, bringing the total number of stores to 51.

As a result, segment net sales were 4,864 million yen (up 18.1% year-over-year), and operating income was 516 million yen (up 37.4% year-over-year).

In Amusement Equipments, the pachislo market remained solid, driven by smart pachislo machines. Sales of 5 thousand units of the new model Street Fighter V Chosensha no Michi, which was released in June, contributed to earnings. Sales of Strike the Blood, which was released in March, also contributed.

As a result, segment net sales were 2,220 million yen (up 147.2% year-over-year), and operating income was 1,083 million yen (up 59.7% year-over-year).

In Other Businesses, the Company bolstered its structure by integrating internal organizations to accelerate collaboration between esports and the licensing business, with the aim of improving the brand value of its titles.

In addition to taking measures to expand the esports user base on a global scale, the Company worked to further promote its various esports tournaments and announced that it will hold Capcom Cup 11, the championship tournament for the 2024 season, at the Ryogoku Kokugikan arena to contribute to the spread of esports in Japan. The Capcom Pro Tour 2024—which offers the right to compete in the Capcom Cup 11, the final tournament of the tour with a grand prize of $1 million USD—was kicked off in June, sparking heated competitions in various regions around the world.

Additionally, Street Fighter 6 has been selected as a competitive title for the Esports World Cup to be held in Saudi Arabia, thereby providing momentum for future expansion.

In addition, the Company focused on promoting various events and collaborations in conjunction with the 20th anniversary of the Monster Hunter series, as well as focusing on movie and television adaptations of its major IPs and developing character merchandise for its popular titles.

As a result, segment net sales were 1,097 million yen (up 13.3% year-over-year), and operating income was 664 million yen (up 34.3% year-over-year).

Total assets as of the end of the first quarter decreased by 2,681 million yen from the end of the previous fiscal year to 240,795 million yen. The primary increases were 5,886 million yen in work in progress for game software, 2,336 million yen in cash on hand and in banks, and 707 million yen in current assets, other, due to an increase in prepaid expenses, etc. The primary decrease was 11,763 million yen in accounts receivable – trade.

Total liabilities as of the end of the first quarter decreased by 6,209 million yen from the end of the previous fiscal year to 42,185 million yen. The primary decreases were 4,870 million yen in accrued bonuses and 1,601 million yen in accrued income taxes.

Net assets as of the end of the first quarter increased by 3,528 million yen from the end of the previous fiscal year to 198,610 million yen. The primary increases were 9,975 million yen in quarterly net income attributable to owners of the parent and 2,729 million yen in cumulative translation adjustments. The primary decrease was 9,163 million yen in dividends from retained earnings.

The forecast for the consolidated business results for the current fiscal year ending March 31, 2025, remains the same as what was projected at the financial results announcement on May 9, 2024.