CyberAgent (4751) FY17 Q3 Results Comment
Key Points
- CyberAgent’s Q3 FY17 results failed to meet consensus expectations (NI ¥4.9bil / OP ¥8.4bil / revenue ¥88.8bil), mainly due to the underperformance of the Game Business.
- In particular, while Game sales increased 9.2% YoY, the segment’s OP declined 17.1% YoY. CyberAgent’s seven major titles didn’t trend very well in Q2. However, as we have noted, their rankings have been improving since July and they are frequently seen in the top 20 overall grossing charts. In addition, the company has a promising pipeline. PRINCESS CONNECT! Re:Dive and LOST ORDER – both developed by CyberAgent’s subsidiary Cygames, which has a proven track record in smartphone games – are among titles scheduled for release in H2 2017. Nevertheless, the launch timing suggests that contributions from these new titles are unlikely until Q4 and onwards.
- Meanwhile, the Internet Advertisement Business continued to grow healthily but there were higher costs associated with the many graduates joining in Q3 (+169 new hires QoQ and +272 YoY).
- The existing Media Business (which includes online dating and blog services) continues to recover and the upfront investment business, AbemaTV, is making good progress. The AbemaTV app will soon reach 20mil downloads and with increased user engagement (9.16mil MAUs and 5.68mil WAUs) despite no TV commercials aired during the quarter. This demonstrates the service’s high quality and reinforces our belief in its potential.
- At this rate, the company seems to be able to reach our full-year sales forecast of ¥365.7bil. However, our profit targets might prove challenging. We are, therefore, in the process of updating our forecasts.
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