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Business Performance (Japan GAAP)

Here we breakdown our consolidated business results for the three months ended June 30, 2022 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
25,232
million yen
( 47.9%
decrease YoY)
12,061
million yen
( 48.9%
decrease YoY )
12,803
million yen
( 46.4%
decrease YoY )
9,007
million yen
( 48.1%
decrease YoY )
42.19 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 three months ended June 30, 2022, the Company actively pursued growth investments focused on enhancing digital sales to respond to the ever evolving and expanding global market. Moreover, with the aim of enhancing corporate value, the Company implemented specific policies for its Human Resources investment strategy, which is one of management’s priorities, such as reorganizing its Human Resources operations, establishing the new post of Chief Human Resources Officer (CHO), and revising its compensation system in order to further the steady, sustainable growth of the Company.

Guided by this management policy, the Company increased its sales volume in the global market through the launch of a major new title in its flagship series and the continued pursuit of digital catalog titles sales, focusing on enhancing the value of its content in its core Digital Contents business. The Company also made efforts to steadily increase earnings by reinforcing the use of these major brands in films, licensed products and in eSports, as well as in its Arcade Operations and Amusement Equipments businesses.

As a result, although there was a year-over-year decline due to sales of multiple major titles in the Digital Contents business in the same period of the previous fiscal year, for the three months ended June 30, 2022, consolidated net sales were 25,232 million yen (down 47.9% year-over-year). In terms of profitability, operating income was 12,061 million yen (down 48.9% year-over-year), ordinary income was 12,803 million yen (down 46.4% year-over-year), and net income attributable to the owners of the parent was 9,007 million yen (down 48.1% year-over-year).

Status of business by operating segment

1. Digital Contents business

  • Net sales (cumulative)

    Plan

  • Operating income (cumulative)

    Plan

  • Operating margins (cumulative)

    Plan

In this business segment, Monster Hunter Rise: Sunbreak (for Nintendo Switch, PC), a massive premium expansion for Monster Hunter Rise, was released at the end of June. Its quicker action and unique new monsters and environments garnered positive reviews and steady, global popularity, leading the game to make a strong start with sales of 2 million units, which contributed significantly to earnings. Additionally, sales of Monster Hunter Rise (released in March 2021) have exceeded 10 million units worldwide, which was achieved through a variety of measures including ongoing free content updates, the launch of a PC version, as well as the release of a set that includes Monster Hunter Rise: Sunbreak.

Moreover, in June the Company held the "Capcom Showcase"—a global livestream digital event during which it introduced the latest information on its major titles for this fiscal year as well as upcoming new titles—to gain wider recognition for its brands and acquire new fans. This, in conjunction with the synergetic effects of discount selling, helped boost profits with expanded catalog title sales, mainly for past series titles.

As a result, although there was a year-over-year decline due to sales of multiple major titles in the same period of the previous fiscal year, net sales were 19,860 million yen (down 54.8% year-over-year) and operating income was 12,541 million yen (down 48.7% year-over-year).

2. Arcade Operations business

  • Net sales (cumulative)

    Plan

  • Operating income (cumulative)

    Plan

  • Operating margins (cumulative)

    Plan

In this business segment, both sales and profits increased compared to the same quarter of the previous fiscal year. This was due to a recovery in the number of customers visiting stores following the complete lifting of the semi-state of emergency COVID-19 measures in March this year, as well as the effect of efficient operations at existing stores and the opening of new stores in new business categories in an effort to expand earnings.

The Crazy Banet store opened at Aeon Mall in Tokoname (Aichi Prefecture) in April of the first quarter of this fiscal year, taking the number of stores to 43.

The resulting net sales were 3,286 million yen (up 37.5% year-over-year) and operating income was 186 million yen (operating loss in the same term of the previous fiscal year was 63 million yen).

3. Amusement Equipments business

  • Net sales (cumulative)

    Plan

  • Operating income (cumulative)

    Plan

  • Operating margins (cumulative)

    Plan

In this business segment, a new model titled Gekka Miyabi was launched in April and performed well despite the challenging market environment. In addition, Resident Evil 7 biohazard, which was released in February 2021, continued to enjoy a long run in the market, contributing via catalog sales.

The resulting net sales were 649 million yen (down 49.3% year-over-year) and operating income was 270 million yen (up 11.1% 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 IP and developing character merchandise to increase the brand value of its titles.

The Company has also been pursuing the expansion of the global esports fan base. Fierce competitions unfolded in 124 countries across 19 regions worldwide following the May launch of CAPCOM Pro Tour 2022, an online esports competition.

The resulting net sales were 1,435 million yen (up 72.5% year-over-year) and operating income was 818 million yen (up 69.7% year-over-year).

2. Financial position overview for the period under review

Assets

Total assets as of the end of the first quarter increased by 7,403 million yen from the end of the previous fiscal year to 194,768 million yen. The primary increases were 10,259 million yen in accounts receivable – trade and 4,697 million yen in work in progress for game software. The primary decrease was 9,163 million yen in cash on hand and in banks.

Liabilities

Total liabilities as of the end of the first quarter increased by 1,417 million yen from the end of the previous fiscal year to 42,307 million yen. The primary increase was 4,129 million yen in deferred revenue. The primary decrease was 2,603 million yen in accrued income taxes.

Net assets

Net assets as of the end of the first quarter increased by 5,985 million yen from the end of the previous fiscal year to 152,461 million yen. The primary increases were 9,007 million yen in quarterly net income attributable to owners of the parent and 2,996 million yen in cumulative translation adjustments. The primary decrease was 5,977 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, 2023 remains the same as what was projected at the financial results announcement on May 11, 2022.

Earnings forecast for the fiscal year ending March 31, 2023
(From April 1, 2022 to March 31, 2023)

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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, 2023 120,000 million yen
( 9.0% increase YoY )
48,000 million yen
( 11.9% increase YoY )
48,000 million yen
( 8.3% increase YoY )
34,500 million yen
( 6.0% increase YoY )
165.21 yen
  • Note: The Company discloses a full year business forecast, as it manages its business performance on an annual basis.

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 game content, diversification of devices and the expansion of the global gaming user base. In such an environment, the Company recognizes the important management challenge of establishing a corporate structure that enables us to secure stable profit.

In order to respond to a market where the business environment is continually changing, the Company has actively worked to improve its earnings and financial structures. It has done this through the promotion of its digital strategy and evolution of how it manages development progress and costs, such as collecting and analyzing user trend data, and the steady hiring of new people and training them as quickly as possible.

Furthermore, in order to make certain steady, sustainable growth, the Company has made the issue of human resources investment a top priority and will work to enhance corporate value through the following measures.

A. Enhancing the structure by which management approaches personnel issues

  • Streamlining of human resources operations
  • Creation of Chief Human Resources Officer (CHO) position

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

  • Review of the compensation system
  • Increase in average base salary
  • Payment of bonuses more closely tied to performance
  • Enhancing employee welfare and benefits program

C. Stronger management capabilities

  • Diversity of Board of Directors and stronger effectiveness

The Company will continue to work on further enhancement and expansion of its brand value and user base on a global basis, strengthening its personnel activities while actively creating and leveraging its intellectual property.

With these efforts, the Company will aim to achieve growth in its core Digital Contents business and thereby to achieve 10% growth in operating income consistently every year, which is our medium-term management target.

As the driving force to achieve this, the Company will reinforce its development workforce, improve its development workplace environment, and strive to enhance the pipeline by creating new intellectual property and leveraging its major intellectual property. The Company will also focus on increasing the total unit sales by continuing to launching new titles and strengthening the digital sales of catalog titles.