Q2 FY2016 Operating Results - IR Webcasting...Nov 04, 2016 · Sales promotion & Advertising expenses. 3.1 4.1 3.1 3.2 2.8 -8% -10%. Outsourcing expenses & Commission fees. 6.9 7.0

Copyright © DeNA Co., Ltd. All Rights Reserved.

DeNA Co., Ltd.

Q2 FY2016 Operating Results November 4, 2016


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1. Financial Results 2. Strategy and Initiatives 3. Guidance 4. Reference


(bil l ion yen)

Q2 Q3 Q4 Q1 Q2

Revenue (IFRS) 37.1 33.8 35.0 38.3 38.2QoQ -2% -9% 3% 9% -0%

YoY 3% -2% -3% 1% 3%

Revenue from Sports 4.0 0.7 1.5 5.5 6.3QoQ 7% -83% 123% 268% 15%

YoY 10% 13% 103% 46% 57%

Revenue excl. Sports 33.1 33.2 33.5 32.8 31.9QoQ -2% 0% 1% -2% -3%

YoY 2% -2% -5% -3% -4%

Operating profit (IFRS) 7.4 3.3 5.1 7.4 7.9QoQ 84% -55% 55% 43% 7%

YoY -8% -36% 11% 83% 7%

Non-GAAP operating profit 6.1 3.4 3.9 7.8 7.9QoQ -10% -45% 15% 101% 1%

YoY -21% -34% -20% 14% 28%

Operating profit from Sports 1.0 -1.8 -1.1 1.8 2.2QoQ 20% - - - 24%

YoY 25% - - 109% 115%

Operating profit excl. Sports 5.1 5.2 4.9 6.0 5.7QoQ -14% 1% -5% 21% -5%

YoY -27% -22% -13% 0% 11%

FY2016Item

FY2015

2 *For full reconciliation of GAAP to Non-GAAP metrics, please see the reference section

Both IFRS and non-GAAP operating profit grew YoY Sports business on track to contribute to profit on a full-year basis

Financial Results Summary


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*Includes non-extraordinary gains and losses under Japanese GAAP. (e.g. Loss on sales / retirement of tangible / intangible assets)

Consolidated Financial Results (IFRS)

Q2 Q3 Q4 Q1 Q2 YoYChange

QoQChange

Revenue 37.1 33.8 35.0 38.3 38.2 3% -0%

Game 27.5 27.3 26.6 26.1 24.3 -12% -7%

E-commerce 4.9 4.8 5.2 4.6 4.9 1% 7%

Sports 4.0 0.7 1.5 5.5 6.3 56% 15%

New Businesses and Others 1.2 1.4 2.0 2.3 3.0 147% 31%

Adjustments -0.4 -0.3 -0.2 -0.3 -0.2 - -

Operating profit 7.4 3.3 5.1 7.4 7.9 7% 7%

20% 10% 15% 19% 21% - -

Segment profit / loss 6.8 3.5 4.9 7.2 8.0 18% 11%

Game 6.4 6.0 6.6 6.7 6.1 -5% -8%

E-commerce 0.6 0.7 0.7 0.4 0.5 -13% 42%

Sports 1.0 -1.8 -1.1 1.8 2.2 114% 23%

New Businesses and Others -1.3 -1.3 -1.0 -1.3 -0.9 - -

Adjustments 0.0 -0.1 -0.4 -0.3 0.1 413% -

Other income * 1.3 0.1 2.3 0.1 0.1 -93% -34%

Other expenses* 0.8 0.3 2.1 0.0 0.2 -67% 807%

(billion yen)

Item

Operating profit margin

FY2015 FY2016


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*Includes non-extraordinary gains and losses under Japanese GAAP. (e.g. Loss on sales / retirement of tangible / intangible assets)

Cost and Expense Breakdown (IFRS)

Q2 Q3 Q4 Q1 Q2 YoYChange

QoQChange

Cost of Sales 15.2 14.0 14.3 14.9 14.8 -3% -1%Personnel Expenses 1.5 1.5 1.4 1.3 0.9 -37% -26%Depreciation and amortization 2.3 2.2 2.2 2.2 2.3 -2% 5%Outsourcing expenses 2.5 2.2 2.1 2.5 2.9 15% 15%Commission fees 6.4 6.2 6.2 6.1 5.8 -9% -5%Others 2.5 1.9 2.4 2.8 2.9 16% 2%

Selling, general, andadministrative expenses

15.1 16.3 15.8 16.2 15.4 2% -5%

Personnel Expenses 3.3 3.3 3.4 3.7 3.6 11% -2%Sales promotion & Advertisingexpenses 3.1 4.1 3.1 3.2 2.8 -8% -10%Outsourcing expenses& Commission fees 6.9 7.0 7.0 7.3 7.0 1% -5%

Others 1.9 1.9 2.4 2.0 2.0 7% 1%

Other income* 1.3 0.1 2.3 0.1 0.1 -93% -34%Other expenses* 0.8 0.3 2.1 0.0 0.2 -67% 807%Consolidated employeeheadcount

2,444 2,410 2,435 2,497 2,496 2% -0%

Item

(billion yen)FY2016FY2015


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Coin Consumption in Japan by Business Operating Profit from Japan Game Business*

*Figures are based on management accounting

Game Business (Japan Game Business) No new app launches in Q2, and browser coin consumption was in line with expectations Titles such as Super Gundam Royale* are starting to show results from strengthening of in-game

operations, and we will apply the same strategy to other titles *Game provided by: BANDAI NAMCO Entertainment Inc.


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International Coin Consumption International Operating Loss*

*Figures are based on management accounting Q2 Q3 Q4 Q1 Q2

1 USD 120 120 112 103 1011 RMB 19 19 17 15 15

(Unit:Yen)FY2015 FY2016

On track to improve the bottom line by one billion yen YoY for the international game business ⁃ China: Built a unique position that utilizes our strengths, and will continue with current strategy ⁃ West: Dissolution decision was made on October 18 to change our strategy towards collaborations with

external partners

Game Business (International Game Business)

Exchange rates at the end of each quarter:


Revenue**

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Shopping Gross Transaction Value**

Travel Gross Transaction Value

*Performance for FY2015: Revenue of 5.2 billion yen, operating profit of 580 million yen **See appendix for information regarding major services within the Shopping sub-segment. DeNA BtoB market figures are excluded beginning Q2 FY2015

E-commerce Business Travel business continued to perform well In the Shopping business, DeNA Shopping and au Shopping Mall are scheduled to be sold to KDDI on

December 28, 2016*


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FY2016 Update

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In order to achieve even greater success in native apps: • Revising regional studio strategy • Reallocating resources, with a focus on the Nintendo

partnership

Game Business

• Two media, in addition to MERY, have exceeded 20 million monthly users*

• Revenue for all media is growing exponentially

Curation Platform Business

• Sports business on track to be profitable for FY2016 • Continuing to explore other areas of long-term

growth, such as automotive and healthcare Others

*Source: Google Analytics. Refers to the total number of monthly users for each service. Figures include users who access the same service across multiple devices, including smartphones and PC


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Game Business (Nintendo Alliance) Super Mario Run (December 2016), Fire Emblem (during FY2016) and Animal Crossing (during FY2016)

are scheduled to launch (to be published by Nintendo) More updates on our mid to long-term partnership with Nintendo in FY2017 onward will be announced

as available

Super Mario Run A new kind of Mario game that you can play

with one hand Over 20 million people requested

notification Planned release in approximately 150

countries in December Free to download, some content available

for free (All of the game content can be enjoyed

after paying a set purchase price)

© 2016 Nintendo *Reference: Semi-Annual Financial Results Briefing material


Game Business (Approach to FY2016 2H) Progress in transition to native app, aiming to create lineup to achieve even greater global success

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Native app • Proactively allocate resources towards the Nintendo partnership • Try to capture the West market primarily through collaboration

with external partners • No change to strategy in China or planned enhancements of live

operations for existing titles in Japan • Aiming to launch approximately five new apps in 2H for both

Japan and China respectively, outside the Nintendo partnership

Browser Continue live operations to generate ongoing profit and cash long-term

FY2014 FY2015 FY2016

(billion yen)

■ Browser game coin consumption ■ Native app coin consumption (total of all regions)

*The arrows are meant to be illustrative and do not represent actual expected performance


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Total Monthly Users *

*Source: Google Analytics. Refers to the total number of monthly users for each service. Figures include users who access the same service across multiple devices, including smartphones and PC

Revenue

New Business Pillars (Curation Platform Business) Revenue and total monthly users* are growing exponentially Profitable on a monthly basis for September 2016, expecting to achieve quarterly profitability in Q3


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Aim to grow using both brand and performance-based advertising, leveraging the unique characteristics of each media

Brand Advertising Performance-Based Advertising Demand for brand advertising in genres such as fashion

and home decor is high Increasing ARPDAU by expanding advertising offerings

(ex: sponsored articles) and implementing other monetization methods Ample opportunity for ARPDAU growth

Revenue from network and affiliate ads has increased significantly as the user base grew exponentially

Expecting further expansion of user base and monetization

New Business Pillars (Curation Platform Business)

Home Decor Women’s Fashion Travel Healthcare


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Consolidated Financial Guidance for Q3 FY2016 Non-GAAP operating profit excluding Sports expected to be flat Additional information about Q3 guidance

⁃ No contribution factored in to guidance from Nintendo partnership titles not launched as of November 4, 2016 ⁃ Guidance for IFRS includes the gain from the sale of the Shopping Mall business (approx. 5.9 billion yen) and

expenses associated with the dissolution of the West subsidiaries (approx. 2.8 billion yen)

(bil l ion yen)

Q1 Q2 Q3 Q4 Q1 Q2 Q3e YoY QoQ

Revenue

Revenue (IFRS) 37.7 37.1 33.8 35.0 38.3 38.2 32.4 -4% -15%

Revenue from Sports 3.7 4.0 0.7 1.5 5.5 6.3 0.9 34% -86%

Revenue excl. Sports 34.0 33.1 33.2 33.5 32.8 31.9 31.5 -5% -1%

(bil l ion yen)

Q1 Q2 Q3 Q4 Q1 Q2 Q3e YoY QoQ

Reconciliation of operating profit to non-GAAP operating profit

Operating profit (IFRS) 4.0 7.4 3.3 5.1 7.4 7.9 7.1 114% -10%

Accounting adjustments related to seasonality, net +0.3 -0.2 -0.2 +0.1 +0.1 -0.2 -0.3 - -

Acquisition and restructuring related expenses +2.5 +0.2 +0.2 +0.6 +0.3 +0.2 +3.2 1283% 1224%

Sales and disposition related gains - -1.2 - -2.0 -0.0 - -5.9 - -

Non-GAAP operating profit 6.8 6.1 3.4 3.9 7.8 7.9 4.2 24% -47%

Profit (loss) from seasonal sports business -0.9 -1.0 +1.8 +1.1 -1.8 -2.2 +1.8 1% -

Non-GAAP operating profit excl. Sports 5.9 5.1 5.2 4.9 6.0 5.7 6.0 16% 6%

FY2016 FY2016

FY2015 FY2016


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*Please consult the Q4 FY2015 Operating Results for more information regarding our introduction of Non-GAAP disclosure

IFRS to Non-GAAP Reconciliation

(bil l ion yen)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Reconciliation of Operating profit to Non-GAAP operating profitOperating profit(IFRS) 7.0 8.0 5.2 4.6 4.0 7.4 3.3 5.1 7.4 7.9Accounting adjustments related to seasonality, net +0.3 -0.2 -0.2 +0.1 +0.3 -0.2 -0.2 +0.1 +0.1 -0.2Acquisition and restructuring related, net - +0.0 +0.1 +0.1 +2.5 +0.2 +0.2 +0.6 +0.3 +0.2Sales and disposition related gain (loss) - - - - - -1.2 - -2.0 -0.0 -

Non-GAAP operating profit 7.3 7.8 5.1 4.8 6.8 6.1 3.4 3.9 7.8 7.9Profit (loss) from seasonal sports business -0.2 -0.8 +1.6 +0.9 -0.9 -1.0 +1.8 +1.1 -1.8 -2.2

Non-GAAP operating profit excluding Sports 7.1 6.9 6.7 5.7 5.9 5.1 5.2 4.9 6.0 5.7

(bil l ion yen)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Reconciliation of Operating profit to Non-GAAP EBITDAOperating profit(IFRS) 7.0 8.0 5.2 4.6 4.0 7.4 3.3 5.1 7.4 7.9Accounting adjustments related to seasonality, net +0.3 -0.2 -0.2 +0.1 +0.3 -0.2 -0.2 +0.1 +0.1 -0.2Acquisition and restructuring related expenses - +0.0 +0.1 +0.1 +2.5 +0.2 +0.2 +0.6 +0.3 +0.2Sales and disposition related gains - - - - - -1.2 - -2.0 -0.0 - Depreciation and amortization +2.5 +2.6 +2.8 +2.9 +3.2 +2.8 +2.7 +2.6 +2.7 +2.8Retirement of fixed assets (excl. one-time factors) +1.0 +0.3 +0.3 +0.6 +0.4 +0.7 +0.2 +1.3 +0.0 +0.2

Non-GAAP EBITDA 10.8 10.7 8.2 8.3 10.4 9.7 6.3 7.8 10.5 10.9

FY 2016

FY 2016FY 2014 FY 2015

FY 2014 FY 2015


Consolidated Cash Flow Overview

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*Impact from the business and capital alliance with Nintendo is reflected to investing cash flow and disposition of treasury stock in financing cash flow by approximately 22 billion yen respectively in FY2015. Acquisition of Nintendo’s treasury shares and disposition of our treasury stock were both effective April 2, 2015.

(billion yen)

FY2015FY2015

Apr-SepFY2016

Apr-Sep

Operating cash flow (A) 26.7 16.5 14.8

Profit before tax 20.9 12.0 15.1

Depreciation and amortization 11.3 5.9 5.5

Income tax paid -7.8 -2.5 -5.1

Others 2.3 1.0 -0.7

Investing cash flow (B)* -40.0 -26.1 -6.5

Financing cash flow 20.1 19.7 -4.0

Cash dividends paid -2.6 -2.6 -2.9

Disposition of Treasury stock* 22.2 22.1 0.2

Others 0.6 0.2 -1.3

FCF ((A)+(B)) -13.3 -9.7 8.4

Cash and cash equivalents (Consolidated) 75.2 78.7 79.2

(Non-consolidated basis) 48.6 50.7 52.0


Game Business Revenue Recognition by Financial Accounting Rules

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Coin Consumption in Japan by Business Japan Game Business Revenue

Revenue recognition by game business segments in financial accounting • 1st- and 2nd-party browser titles: total coin consumption is recognized as revenue (i.e. gross revenue recognition) • 1st- and 2nd-party native app titles: revenue is recognized in one of two ways: gross revenue recognition, and net revenue recognition in

which the partners’ revenue is deducted from the gross revenue before being recognized. Net revenue recognition is expected to increase mainly among IP titles, but neither gross or net revenue recognition impacts profitability of the business.

• 3rd-party browser titles: net revenue recognition • 3rd-party native app titles: net revenue recognition


Segment Breakdown

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Segments Businesses

Game Business Japan and international game businesses

E-Commerce Business

Sub-segment names (Major service names in parenthesis) • Travel (DeNA Travel, Shumee-to Club) • Shopping (DeNA Shopping, au Shopping Mall, SEIYU.com) • Auction (Mobaoku) • Processing Settlement (Paygent)

Sports Business Baseball, Running Club, etc.

New Businesses and Others

Sub-segment names (major service names in parenthesis) • Curation platform (MERY, iemo, Find Travel) • IP-generating platform (Manga Box, Everystar, MyAnimeList) • Automotive • Healthcare (MYCODE, KenCom) • Mobile social incubation (SHOWROOM, Mirrativ)


DeNA Co., Ltd.

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The information and data contained within this presentation and these presentation materials have been determined based on information available as of November 4, 2016. The company disclaims any obligation to update or revise such information and data, whether as a result of new information, future events or otherwise. In addition, any forward-looking statements contained in this presentation or these presentation materials are based on our opinions and information available as of November 4, 2016, and involve uncertainty. Please be aware that the actual performance data and similar information are subject to influence from diverse factors and may differ from the forecasts presented herein.

Documents

Q2 FY2016 Operating Results - IR Webcasting...Nov 04, 2016 · Sales promotion & Advertising expenses. 3.1 4.1 3.1 3.2 2.8 -8% -10%. Outsourcing expenses & Commission fees. 6.9 7.0