Note: This document is a translation from the Japanese original for reference purposes only. In the event of any discrepancy between this translation and the Japanese original, the Japanese original shall prevail.

COLOPL, Inc. assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

2

FY2020 2Q

01

Overview of Results

02

Status of Services

Jan2020-Mar2020

03

Topics

Views and forecasts contained in this document are based on COLOPL's assessment as of the time this document was created, and do not in any way guarantee the

accuracy of the information.

Please be advised that the actual results or outcome may significantly differ from the views and forecasts expressed herein due to changes in various factors. Data for 2Q ended September 30, 2012 and earlier consist of figures managed internally by COLOPL.

3

Overview of Results

Highlights

4

Implemented two M&A deals. We plan to accelerate creation of new entertainment and strengthening of IP!

Business

Results

Cost

KPI

■ Sales were basically unchanged QoQ at ¥11.1 billion.

  • Operating profit declined slightly to ¥3.5 billion in the previous quarter due to the recovery of "Quiz RPG" and "Shironeko Project".
  • Overall expenses increased by about ¥300 million to ¥7.6 billion compared to the previous quarter.
  • Increased mainly due to the impact of PF & Payments and Others costs.
  • QAU decreased due to stable FY19 after release.
  • ARPU increased due to the 7th anniversary of the "Quiz PRG" and "Shironeko Project" that hosted a popular event.

TOPICs

■ MAGES.inc and the gaming businesses of Coreedge Inc. have been included in the

COLOPL Group.

■ The impact of the COVID-19 at this stage is minimal.

※The English translation of titles has been partially changed from this quarter.

※QAU is obtained by combining the number of users who launched the title at least once after 7 days of its DL date within this quarter. ※ARPU is obtained by dividing the quarterly sales by QAU. Please be cautious that the sales disclosed is quarterly sales, not monthly sales. ※Group company means a company where COLOPL holds more than 50% of outstanding shares.

Revenue Transition

5

Sales ¥11.1B (QoQ: ▲0.3%), Operating profit ¥3.5B (QoQ: ▲7.9%)

(,000,000)

Sales

Operating Profit

OpM

47.2%

48.0%

44.1%

44.9%

43.5%

44.0%

36.3%

37.8%

43.1%

41.9%

43.3%

31.4%

36.0%

23.0%

29.0%

27.3%

22.9%

45.0%

34.5%

30.2%30.9%

31.9%

28.8%

25.4%

22.0%

17.8%

21.7%

17.7%

22.7%

14.9%

623

764

1,515

2,168

143

175

550

628

9.2%

7.1%

2,755

2,872

4,887

5,326

6,750

6,639

7,154

7,956

7,867

9,338

9,986

5,749

6,233

3,666

3,700

2,477

3,087

2,197

1,982

9,491

12,726

9,848 199- 9,774

7,956

11,341

3,862

11,159

864

784

4,628 1,749

6,510 2,345

11,073

12,360

14,297

15,843

16,445

16,560

18,176

21,213

23,270 10,456

22,181

19,019

20,150

14,410

12,856

10,933

14,046

12,370

11,187

876

1,895

692

0

2,459

11,194

3,559

-2.0%

0.0%

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q[Cons]

4Q[Cons]

1Q[Cons]

2Q[Cons]

3Q[Cons]

4Q[Cons]

1Q[Cons]

2Q[Cons]

3Q[Cons]

4Q[Cons]

1Q[Cons]

2Q[Cons]

3Q[Cons]

4Q[Cons]

1Q[Cons]

2Q[Cons]

FY2012

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

FY19

FY20

Profit and Loss

6

Revenue and profits increased year on year due to "DRAGON QUEST WALK".

【Cons】

【Cons】

【Cons】

(,000,000)

2Q FY Sep. 2020

2Q FY Sep. 2019

YoY

1Q FY Sep. 2020

QoQ

（Jan-Mar 2020）

（Jan-Mar 2019）

（Oct-Dec 2019）

Sales

11,159

9,774

+14.2%

11,194

-0.3%

Gross Profit

5,295

2,890

+83.2%

5,764

-8.2%

Margin

47.5%

29.6%

+17.9pt

51.5%

-4.0pt

SGA

1,735

2,198

-21.0%

1,901

-8.7%

Operating Profit

3,559

692

+414.2%

3,862

-7.9%

Margin

31.9%

7.1%

+24.8pt

34.5%

-2.6pt

Current Profit

3,601

468

+669.4%

3,804

-5.3%

Pre-Tax Profit

3,601

468

+669.4%

3,804

-5.3%

Net Profit

2,597

308

+741.3%

2,699

-3.8%

※The English translation of titles has been partially changed from this quarter.

※There are some differences in calculation due to rounding down of less than one million yen and rounding off. ※Net sales (shared revenue portion) from '' DRAGON QUEST WALK'' is used.

Expense Transition

7

Up approximately ¥300 million quarter on quarter to ¥7.6 billion due to an increase in PF & Payments and Others.

【Cons】

【Cons】

【Cons】

Cost（,000,000）

2Q FY Sep. 2020

2Q FY Sep. 2019

YoY

1Q FY Sep. 2020

QoQ

Comments

Sales ratio（％）

（Jan-Mar 2020）

（Jan-Mar 2019）

（Oct-Dec 2019）

PF & Payments

1,858

2,671

-30.4%

1,720

+8.0%

They increased QoQ due to an increase in

sales of titles other than "DRAGON QUEST

16.7%

27.3%

-10.6pt

15.4%

+1.3pt

WALK" of net revenue.

Royalties

214

271

-20.8%

243

-11.9%

They were due to changes in sales of

1.9%

2.8%

-0.9pt

2.2%

-0.3pt

related titles.

Employment

2,373

2,257

+5.1%

2,368

+0.2%

It remained nearly flat in QoQ

21.3%

23.1%

-1.8pt

21.2%

+0.1pt

Office

366

412

-11.3%

371

-1.5%

It remained nearly flat in QoQ

3.3%

4.2%

-0.9pt

3.3%

-0.0pt

iDC related

323

334

-3.3%

417

-22.7%

It declined QoQ due to lower traffic and

2.9%

3.4%

-0.5pt

3.7%

-0.8pt

more efficient servers.

Advertisement

571

774

-26.1%

571

-0.0%

It was less than the initial forecast of ¥900

million due to delays in the release of new

5.1%

7.9%

-2.8pt

5.1%

+0.0pt

products and other factors.

Outsourcing

676

912

-25.9%

651

+3.9%

Despite a slight increase in QoQ, the grip

6.1%

9.3%

-3.2pt

5.8%

+0.3pt

continues to take effect.

Recruitment

48

85

-43.7%

35

+34.5%

Slight increase in QoQ. Continuing to make

0.4%

0.9%

-0.5pt

0.3%

+0.1pt

effective use of in-house resources.

Others

1,167

1,366

-14.6%

951

+22.8%

They increased in QoQ due to the delivery of

10.5%

14.0%

-3.5pt

8.5%

+2.0pt

consigned projects by Group company.

※The English translation of titles has been partially changed from this quarter.

※There are some differences in calculation due to rounding down of less than one million yen and rounding off.

Workforce Transition

8

There was a slight decline compared with the previous quarter. Approximately 250 employees are scheduled to join in 3Q. The main reasons are the hiring of new graduates and an increase in the number of employees through M&A.

Amount of each group company

COLOPL

402

408

399

398

413

405

390

414

418

431

440

452

450

433

436

432

69

133

155

156

461 7

481 8

589

620

640

670

790

796

803

779

863

848

847

817

862

852

860

836

945

941

914

905

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

FY Sep. 2015

FY Sep. 2016

FY Sep. 2017

FY Sep. 2018

FY Sep. 2019

FY Sep. 2020

※Executives and temporary employees are not included.

※Group company means a company where COLOPL holds more than 50% of outstanding shares.

Balance Sheet

9

Maintaining a Solid Financial Base

【Cons】

【Cons】

【Cons】

(,000,000)

Mar-2020

Mar-2019

YoY

Dec-2019

QoQ

Current Assets

72,148

65,018

+11.0%

68,424

+5.4%

Cash Equivalent

63,547

57,740

+10.1%

59,900

+6.1%

Non-Current assets

8,587

9,327

-7.9%

8,792

-2.3%

Gross Assets

80,736

74,345

+8.6%

77,217

+4.6%

Current Liability

7,541

5,424

+39.0%

6,534

+15.4%

Fixed Liability

525

525

+0.1%

524

+0.2%

Net Asssets

72,669

68,396

+6.2%

70,157

+3.6%

Capital

6,536

6,510

+0.4%

6,511

+0.4%

※There are some differences in calculation due to rounding down of less than one million yen and rounding off.

10

Status of Services

Sales Model

11

We focus on consecutively launching new titles and operating existing titles on a long-term basis. This approach enables us to accumulate sales for each release year like the stack of layers in a 'mille-feuille'.

Sales are

stacked one year on top of another.

Sales Transition by Release Period (Cons)

12

Sales of FY13 products, including "Quiz RPG", and FY14 products, including "Shironeko Project", recovered.

Others（Entrusted development・VR・Outing Lab etc）

Our IP operation and merchandise

Overseas

FY2019: Project Babel, DRAGON QUEST WALK

FY2018: Disney TSUMTSUM LAND, Alice Gear Aegis, DREAM!ing

FY2017: Pro Baseball VS

FY2016: Shironeko Tennis

FY2015: Tokyo Casino Project

FY2014: Meow Meow Star Acres, Shironeko Project

FY2013: Quiz RPG, The Blue Sky of Sanguozhi

FY2012: Treasure Detective CARRIE, Pro Baseball PRIDE

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

[Cons]

FY Sep. 2015

FY Sep. 2016

FY Sep. 2017

FY Sep. 2018

FY Sep. 2019

FY Sep. 2020

※The English translation of titles has been partially changed from this quarter.

※There are some differences in calculation due to rounding down of less than one million yen and rounding off. ※Some collaboration projects with other companies are calculated in net revenue (shared revenue portion).

※Sales of smartphone app titles operated by COLOPL's group companies under outsourcing contracts from COLOPL are divided among fiscal years.

Sales Transition by Release Period (Cons)

13

Others' sales increased due to consignment projects at Group company and other factors.

(,000,000)

FY Sep. 2019

FY Sep. 2020

2Q

3Q

4Q

1Q

2Q

FY Sep. 2012 Online Titles

353

252

318

211

223

FY Sep. 2013 Online Titles

2,100

1,549

1,460

1,055

1,389

FY Sep. 2014 Online Titles

3,223

2,417

4,324

1,777

2,180

FY Sep. 2015 Online Titles

134

45

30

24

23

FY Sep. 2016 Online Titles

926

400

566

421

470

FY Sep. 2017 Online Titles

285

299

263

238

171

FY Sep. 2018 Online Titles

1,514

1,259

1,188

1,286

1,443

FY Sep. 2019 Online Titles

211

369

2,200

5,272

3,580

Overseas

145

112

42

69

44

Our IP operation and merchandise

129

158

302

263

240

Others（Entrusted development・

748

1,093

643

574

1,391

VR・Outing Lab etc）

Total（Cons）

9,774

7,956

11,341

11,194

11,159

◼ FY2012：Treasure Detective CARRIE, Pro Baseball PRIDE (discontinued:1)

◼

FY2015：Tokyo Casino Project (discontinued:2)

◼

FY2018：Disney TSUMTSUM LAND, Alice Gear Aegis, DREAM!ing

◼ FY2013：Quiz RPG, The Blue Sky of Sanguozhi (discontinued:3)

◼

FY2016：Shironeko Tennis (discontinued:2)

◼

FY2019：Project Babel, DRAGON QUEST WALK (discontinued:1)

◼ FY2014：Meow Meow Star Acres, Shironeko Project (discontinued:4)

◼ FY2017：Pro Baseball VS (discontinued:1)

※The English translation of titles has been partially changed from this quarter.

※There are some differences in calculation due to rounding down of less than one million yen and rounding off. ※Some collaboration projects with other companies are calculated in net revenue (shared revenue portion).

※Sales of smartphone app titles operated by COLOPL's group companies under outsourcing contracts from COLOPL are divided among fiscal years.

KPI Transition for Domestic Titles QAU×ARPU

14

QAU decreased and ARPU increased.

ARPU（Yen）

QAU

¥2,187

¥2,235

¥2,208

¥2,419

¥2,656

¥2,421

¥1,880

¥1,412

¥1,297

¥1,491

ARPU

¥1,518

¥1,752

¥1,195

¥1,173

¥1,171

¥1,467

¥1,215

QAU

（,000）

¥1,315

¥1,108

¥1,170

¥1,117

¥1,201

7,125

6,963

7,804

8,374

1Q

2Q

3Q

4Q

FY Sep. 2015

8,391

1Q

8,710

9,579

2Q

3Q

FY Sep. 2016

13,371

4Q

10,358

1Q

7,642

6,538

2Q

3Q

FY Sep. 2017

7,285

4Q

9,368

1Q

8,530

7,457

2Q

3Q

FY Sep. 2018

7,733

4Q

7,289

1Q

6,653

5,953

2Q

3Q

FY Sep. 2019

8,852

4Q

9,202

7,898

1Q

2Q

FY Sep.

2020

※There are some differences in calculation due to rounding down of less than one million yen and rounding off.

※QAU is obtained by combining the number of users who launched the title at least once after 7 days of its DL date within this quarter. ※ARPU is obtained by dividing the quarterly sales by QAU. Please be cautious that the sales disclosed is quarterly sales, not monthly sales.

QAU×ARPU Transition by Release Period

15

QAU of FY19 decreased and ARPU decreased slightly.

QAU_FY12

QAU_FY13

QAU_FY14

QAU_FY15

QAU_FY16

QAU_FY17

QAU_FY18

QAU_FY19

ARPU_FY12

ARPU_FY13

ARPU_FY14

ARPU_FY15

ARPU_FY16

ARPU_FY17

ARPU_FY18

ARPU_FY19

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

FY Sep. 2016

FY Sep. 2017

FY Sep. 2018

FY Sep. 2019

FY Sep. 2020

※QAU is obtained by combining the number of users who launched the title at least once after 7 days of its DL date within this quarter. ※ARPU is obtained by dividing the quarterly sales by QAU. Please be cautious that the sales disclosed is quarterly sales, not monthly sales.

Oversea Expansion

16

Due to the impact of the COVID-19, a new initiative for overseas expansion has been temporarily suspended.

500

400

300

200

100

0

(100)

In-house distribution mainly in North America

Partner distribution mainly in Asia

(,000,000 JPY)

Sales

Operation Profit

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

FY Sep. 2015

FY Sep. 2016

FY Sep. 2017

FY Sep. 2018

FY Sep. 2019

FY Sep.

2020

※ For overseas, sales are calculated in gross revenue (includes PF fee) for direct operation and net revenue (R/S fee) for local partner business model.

17

Topics

Implementation of M&A

18

We conducted two M＆A deals aimed at enhancing our competitiveness with an eye on the future.

▼ Acquisition of Shares

The aim is to strengthen businesses other than smartphone games. MAGES.inc, a comprehensive entertainment company, joined the COLOPL group.

MAGES.inc

  • Strengths lie in the development of original IP and new entertainment, in addition to the diversification of business operations.
  • We plan to improve competitiveness as the COLOPL Group and accelerate "proposing new ways of playing".

▼ Acquisition of Business

The aim is to further strengthen the smartphone games business, which is our core. We took over the planning, operation and consulting business for online games.

Coreedge Inc.

  • Strengths lie in marketing domains, such as planning and operation of online games and ability to attract users.
  • We plan to further strengthen IP capabilities centered on the smartphone games business by combining with our game development capabilities.

※Group company means a company where COLOPL holds more than 50% of outstanding shares.

Strengthening Other Than Smartphone Games

19

Enhancing Business Diversity and Sustainability as the COLOPL Group.

※Group company means a company where COLOPL holds more than 50% of outstanding shares.

Strengthening Other Than Smartphone Games

20

Along with the further development of the IP and business owned by MAGES.inc, we will accelerate "proposing new ways of playing" by leveraging MAGES.inc's strengths in creating original IP and new entertainment.

▼ MAGES.inc

  • Developing a diverse range of businesses, including Game Business, Music Business, Talent Business, and Program Production Business.
  • A major strength is the ability to create new entertainment, in addition to original IP such as "STEINS;GATE", which is demonstrated by Hollywood, and "B-PROJECT".
  • Chiyomaru Shikura, a leading businessman, plans and writes original works as well as lyrics and compositions of music. He is also a multi-creator who works as a voice actor and novelist.

▲"STEINS;GATE" sells more than

▲"B-PROJECT" used luxurious voice actors.

▲CEO Chiyomaru Shikura

1 million units of series.

※Group company means a company where COLOPL holds more than 50% of outstanding shares.

Measures and Impacts of the COVID-19

21

▼ Previous Measures

  • In order to ensure the safety of all employees, we have introduced systems such as super- free address system in which employees can choose their work place on a daily basis from either at home or at the company.
  • In order to prevent the spread of infections, location game "DRAGON QUEST WALK" has been changed to one that can be played at home. In addition, we have decided to postpone real events and sales of goods at stores by the end of June.

▼ Major impacts on business

Current Situation

  • There is no significant impact on existing titles. DAU, play time, and persistence rate are trending upward due to self-restraint on going out.
  • We are temporarily postponing a new initiative for overseas expansion.

Going forward

  • If the COVID-19 is prolonged, it may be affected by delays or cancellations of internal and external events for existing titles, delays in releasing new titles, and reviews of overseas expansion.

※The English translation of titles has been partially changed from this quarter.

Status of IP deployment / utilization

22

While steadily nurturing medium-tolong-term sources of competitiveness, we aim to simultaneously assure immediate and effective sales.

Promotion of in-house IP

Animation

  • From April 6, 2020, "Shironeko Project ZERO CHRONICLE"

has been broadcasting in favour of TV animation.

Goods

  • Commemorating the 7th anniversary of "Quiz RPG" in
    March, we commercialized collaborative watches and sound trucks' CD containing more than 200 songs.
  • In commemoration of the second anniversary of the "Alice" in January, we sell a collection of official setup materials with setting pictures and other features.
  • We plan to release two single CDs for "DREAM!ing", the sixth and seventh.

Use of other companies' IP

"Disney TSUMTSUM LAND" has been played by 10 million users!

Cumulative users have exceeded 10 million since the launch of the service on October 31, 2017.

String of collaborations involving various titles

In addition to increasing the number of new inflows, we aim to increase royalties by responding to requests from existing users.

※The English translation of titles has been partially changed from this quarter.

Pipeline（Online Titles）

23

▼ Development policy for new titles

  • Our policy is to develop well-balanced our original IP, our original IP derivatives, and other companies' IPs according to the market environment. In the short term, we will leverage the profitability of other companies' IP to create and cultivate our original IP that will become a source of competitiveness over the medium to long term, with the aim of achieving sustainable growth.
  • We plan to release about three to four new titles annually.
  • The president reports directly on "Live Entertainment PJ" for "proposing new ways of playing". This is a new product that is expected to be released in the current fiscal year.

our original IP

other

Total

our original IP

companies' IP

derivatives

11titles

7titles

4titles

3Q Outlook

24

▼ Sales

  • As usual, the 3Q will be a time to prepare for the 4Q.
  • "Shironeko Project" is collaborating with other popular IP "Demon Slayer" from late April.
  • "DRAGON QUEST WALK" is holding an event for "DRAGON QUEST III" from late March.
  • We will continue to focus on "proposing new ways of playing" in new titles.

▼ Expenses

  • Advertising expenses are expected to be approximately ¥700 million, but may vary depending on the new product.
  • Outsourcing costs are expected to increase as the new release approaches.

※The English translation of titles has been partially changed from this quarter.

Thank you!

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Colopl Inc. published this content on 14 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 May 2020 06:39:08 UTC