DeNA : FY2023 Consolidated Financial Results

The following information was originally prepared and published by the Company in Japanese as it contains timely disclosure materials to be submitted to the Tokyo Stock Exchange. This English translation is for your convenience only. To the extent there is any discrepancy between this English translation and the original Japanese version, please refer to the Japanese version.

Consolidated Financial Results

for the Fiscal Year Ended March 31, 2024

[IFRS]

May 8, 2024

Company name: DeNA Co., Ltd.

Stock exchange listing: Tokyo Stock Exchange

Code number: 2432

URL: https://dena.com/intl/

Representative: Shingo Okamura, President & CEO

Contact: Takaaki Otani, Head of the Corporate Unit

Phone: [phone]

Scheduled date of Ordinary General Meeting of Shareholders: June 23, 2024

Scheduled date of commencing dividend payments: June 24, 2024

Scheduled date of filing securities report: June 24, 2024

Availability of supplementary briefing material on financial results: Yes

Schedule of financial results briefing session: Yes (for institutional investors, analysts and the press)

(Amounts are rounded to the nearest million yen.)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2024 (from April 1, 2023 to March 31, 2024)

(1) Consolidated Operating Results

Revenue

Fiscal year ended	Millions of yen
136,733
March 31, 2024
Fiscal year ended	134,914
March 31, 2023

		(% changes from the previous corresponding period)
	Operating profit	Profit before tax	Profit for the period
%	Millions of yen	%	Millions of yen	%	Millions of yen	%
1.3	(28,270)	－	(28,130)	－	(30,187)	－
3.1	4,202	(63.3)	13,595	(53.8)	8,661	(71.7)

Profit for the period	Total comprehensive	Basic earnings	Diluted earnings
attributable to
income for the period	per share	per share
owners of the parent

Fiscal year ended March 31, 2024 Fiscal year ended March 31, 2023

Millions of yen	%	Millions of yen	%
(28,682)	－	(11,870)	－
8,857	(71.0)	(754)	－

Ratio of profit to	Profit before tax to
equity attributable to
total assets
owners of the parent

YenYen

(257.60)(257.60)

76.7876.70

Operating profit to

revenue

Fiscal year ended	%	%
(13.3)	(8.2)
March 31, 2024
Fiscal year ended	3.8	3.9
March 31, 2023

(For reference) Equity in earnings (losses) of affiliates:

Fiscal year ended March 31, 2024: ¥(2,992) million

Fiscal year ended March 31, 2023: ¥1,770 million

%

(20.7)

3.1

(2) Consolidated Financial Position		Total equity	Ratio of equity	Equity per share
	Total assets	Total equity	attributable to	attributable to	attributable to
	owners of the	owners of the	owners of the
			parent	parent	parent
As of March 31,	Millions of yen	Millions of yen	Millions of yen	%	Yen
335,708	220,025		209,204	62.3	1,871.47
2024
As of March 31,	348,942	233,993		221,626	63.5	1,983.78
2023
(3) Consolidated CashFlows					Cash and cash
	Operating activities	Investing activities	Financing activities
	equivalents at end
						of period

Fiscal year ended March 31, 2024 Fiscal year ended March 31, 2023

2. Dividends

Millions of yen	Millions of yen	Millions of yen	Millions of yen
(10,839)	(12,629)	(4,102)	71,396
10,808	12,451	(4,930)	97,732

	Dividends per share				Dividends
				on equity
					Total	Payout
					attributable
End of	End of	End of	End of		dividends	ratio	to owners
	paid	(consoli-	of the
1st	2nd	3rd	Total
year	(annual)	dated)	parent
quarter	quarter	quarter
				(consoli-

dated)

	Yen	Yen	Yen	Yen	Yen	Millions of	%	%
	yen
Fiscal year ended
－	0.00	－	20.00	20.00	2,227	26.0	1.0
March 31, 2023
Fiscal year ended	－	0.00	－	20.00	20.00	2,227	－	1.0
March 31, 2024
Fiscal year ending
March 31, 2025	－	－	－	－	－		－
(Forecast)

(Notes) 1. The total dividends paid do not include dividends for stocks provided for the Stock Grant ESOP (Employee Stock Ownership Plan) Trust account.

2. The dividend forecast for the fiscal year ending March 31, 2025 has not been determined at this time.

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2025 (from April 1, 2024 to March 31, 2025)

The consolidated financial results forecast for the fiscal year ending March 31, 2025 cannot be provided due to the

difficulty of reasonably and accurately estimating the figures. However, the Company expects to report a year-on-year increase in revenue and operating profit with the exception of one-off gains and losses. Although the Company reported one-off gains and losses including impairment losses in the fiscal year ended March 31, 2024, at present, there are no items to be disclosed that could be construed as one-off factors impacting business performance for the fiscal year ending March 31, 2025. For details, please refer to "1. Overview of Operating Results and Financial Position

(1) Overview of Operating Results for Fiscal 2023 (Outlook for Fiscal 2024)" of the Appendix.

* Notes

1. Changes in Significant Subsidiaries during the Period under Review (changes in specified subsidiaries accompanying changes in scope of consolidation): No

Added:

Excluded:

1. Changes in Accounting Policies and Changes in Accounting Estimates
2. 1. Changes in accounting policies required by IFRS: Yes
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
3. Number of Shares Issued (common stock)
4. 1. Total number of shares issued at the end of the period (including treasury stock):

As of March 31, 2024	122,145,545 shares
As of March 31, 2023	122,145,545 shares

1. Total number of shares of treasury stock at the end of the period:

As of March 31, 2024	10,794,938 shares
As of March 31, 2023	10,805,997 shares

1. Average number of shares during the period:

Fiscal year ended March 31, 2024	111,346,008 shares
Fiscal year ended March 31, 2023	115,364,837 shares

(Note) The 167,812 shares of the Company's stock owned by the Stock Grant ESOP Trust account are included in the "Total number of shares of treasury stock at the end of the period" as of March 31, 2024, and the 178,871 shares of the Company's stock owned by the same trust account are included in the "Total number of shares of treasury stock at the end of the period" as of March 31, 2023.

(For Reference) Summary of Non-consolidated Financial Results

1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2024 (from April 1, 2023 to March 31, 2024)

(1) Non-consolidatedOperating Results			(% changes from the previous corresponding period)
Net sales		Operating income	Ordinary income		Net income
Millions of	%	Millions of	%	Millions of	%	Millions of	%
yen	yen	yen	yen

Fiscal year ended March 31, 2024 Fiscal year ended March 31, 2023

83,405	(5.8)	3,898	10.5	4,453	(40.7)	(16,996)	－
88,530	(4.8)	3,529	(30.6)	7,509	(26.1)	33,988	156.5
Basic earnings per	Diluted earnings per
share	Yen	share	Yen

Fiscal year ended	(152.64)
March 31, 2024
Fiscal year ended	294.61
March 31, 2023

(2) Non-consolidatedFinancial Position

Total assets

Millions of yen

－
294.34
Net assets	Equity ratio	Net assets per share
Millions of yen	%	Yen

As of March 31,	227,492	157,119	68.7	1,403.71
2024
As of March 31,	231,794	158,113	67.9	1,413.33
2023

(For reference) Equity:	As of March 31, 2024: ¥156,304 million
	As of March 31, 2023: ¥157,360 million

• This report of consolidated financial results is outside the scope of audit by a certified public accountant or accounting auditor.
• Explanation of the Proper Use of Financial Results Forecast and Other Notes

(1) Consolidated Financial Results Forecast

The forward-looking statements herein are based on information available to the Company and certain assumptions deemed reasonable as of the date of publication of this document. They are not intended as the Company's commitment to achieve such forecasts, and actual results may differ significantly from these forecasts due to a wide range of factors.

(2) Method of Obtaining Supplementary Briefing Material on Financial Results

The Company is planning to hold a briefing session for institutional investors, analysts and the press on May 8, 2024. The briefing materials for this session are scheduled to be posted on the Company's website after the timely disclosure of the Consolidated Financial Results for the Fiscal Year Ended March 31, 2024 on the same date. In addition, videos and primary Q&A of the briefing session are scheduled to be posted on the Company's website at a later date shortly thereafter.

Appendix
1. Overview of Operating Results and Financial Position	2
(1)	Overview of Operating Results for Fiscal 2023	2
(2)	Overview of Financial Position and Cash Flows for Fiscal 2023	4
(3)	Basic Policy for Distribution of Profit and Dividends for Fiscal 2023 and 2024	4
(4)	Risk Factors	5
2. Basic Stance Regarding Selection of Accounting Standards	17
3. Consolidated Financial Statements and Principal Notes	18
(1)	Consolidated Statement of Financial Position	18
(2)	Consolidated Income Statement	20
(3)	Consolidated Statement of Comprehensive Income	21
(4)	Consolidated Statement of Changes in Equity	22
(5)	Consolidated Statement of Cash Flows	23
(6)	Notes on Going Concern Assumption	24
(7)	Notes to Consolidated Financial Statements	24
	1.	Segment information	24
	2.	Earnings per share	27
	3.	Impairment of assets	28
	4.	Investments accounted for using the equity method	29
	5.	Significant subsequent events	30

- 1 -

1. Overview of Operating Results and Financial Position

(1) Overview of Operating Results for Fiscal 2023

The Group has made efforts to enhance corporate value over the mid to long term by working to form an earnings base on the two approaches of working to entertain and to serve and by evolving into a new kind of tech company, including encouraging synergy between the two approaches. The Group has also been working to establish an even stronger business portfolio.

During the fiscal year ended March 31, 2024 (from April 1, 2023 to March 31, 2024), revenue was ¥136,733 million, up 1.3% year-on-year. While revenue decreased year-on-year in the Game Business, revenue in all other business divisions increased.

Cost of sales was ¥75,743 million, up 6.9% year-on-year. Outsourcing expenses increased mainly due to new consolidations conducted in the Healthcare & Medical Business during the fiscal year ended March 31, 2023, while expenses associated with the growth of the Sports Business increased, and amortization also increased due to the release of new game titles in the Game Business.

Selling, general and administrative expenses were ¥60,648 million, up 1.2% year-on-year. While there was an increase in personnel expenses due to new consolidations in the Healthcare & Medical Business, commission fees declined, reflecting the performance of the Game Business.

In terms of other income (expenses), impairment losses on assets including software in the Game Business and goodwill totaling ¥28,764 million were recorded under other expenses. For details, please refer to "3. Condensed Consolidated Financial Statements and Principal Notes, (7) Notes to Condensed Consolidated Financial Statements, 3. Impairment of assets."

Finance income was ¥3,956 million, down 49.3% year-on-year.

Share of loss of associates accounted for using the equity method was ¥2,992 million, compared with share of profit of associates accounted for using the equity method of ¥1,770 million in the previous fiscal year. The main factors of the year-on-year fluctuation included the performance trends of Cygames, Inc. and GO Inc., both major associates accounted for using the equity method, as well as one-off gains and losses. For details, please refer to "3. Condensed Consolidated Financial Statements and Principal Notes, (7) Notes to Condensed Consolidated Financial Statements, 4. Investments accounted for using the equity method."

As a result, revenue of the DeNA Group was ¥136,733 million, up 1.3% year-on-year, operating loss was ¥28,270 million, compared with operating profit of ¥4,202 million in the previous fiscal year, loss before tax was ¥28,130 million, compared with profit before tax of ¥13,595 million in the previous fiscal year, and loss for the period attributable to owners of the parent was ¥28,682 million, compared with profit for the period attributable to owners of the parent of ¥8,857 million in the previous fiscal year.

Business performance by segment is as follows.

1. Game Business
   Revenue of the Game Business was ¥54,004 million, down 15.6% year-on-year, and segment profit was ¥3,456 million, down 63.9% year-on-year.
   Despite the release of new titles, operations were centered on existing titles. Both revenue and profit decreased year-on-year, due to the year-on-year decrease in virtual currency consumption and the effects of amortization associated with the release of new game titles, as well as marketing and other related expenses.
2. Live Streaming Business
   Revenue of the Live Streaming Business was ¥42,579 million, up 6.2% year-on-year, and segment profit was ¥339 million, compared with segment loss of ¥572 million for the previous fiscal year.
   During the fiscal year ended March 31, 2024, the Live Streaming Business continued to grow thanks to Pococha in Japan and IRIAM. In the global Pococha service, the Group verified appropriate operations for each region and continued to optimize its investments.
3. • 2 -

1. Sports Business
   Revenue of the Sports Business was ¥27,271 million, up 30.1% year-on-year, and segment profit was ¥2,125 million, compared with segment loss of ¥23 million for the previous fiscal year.
   The performance of the Sports Business grew relative to the fiscal year ended March 31, 2020, which was before the number of spectators, etc., were restricted due to COVID-19.
2. Healthcare & Medical Business
   Revenue of the Healthcare & Medical Business was ¥9,963 million, up 42.6% year-on-year, and segment loss was ¥3,640 million, compared to segment loss of ¥2,202 million for the previous fiscal year.
   In order to actively take advantage of medium to long-term growth opportunities, the Company has promoted M&A and other activities aimed at new growth and challenges. In the Healthcare & Medical Business, significant progress was made toward strengthening the business portfolio during the fiscal year ended March 31, 2023. DATA HORIZON CO., LTD. and Allm Inc. became consolidated subsidiaries of the Company on August 3, 2022 and on October 3, 2022, respectively. From those points onward, the results of each company are included in the results of the Business.
3. New Businesses and Others
   Revenue of the New Businesses and Others was ¥3,054 million, up 4.3% year-on-year, and segment loss was ¥1,303 million, compared to segment loss of ¥882 million for the previous fiscal year.
   This section comprises various initiatives that aim to reinforce the Group's business portfolio over the mid to long term as well as services of the E-commerce Business.

(Outlook for Fiscal 2024)

The consolidated financial results forecast for the fiscal year ending March 31, 2025 cannot be provided due to the difficulty of reasonably and accurately estimating the figures. However, the Company expects to report a year-on- year increase in revenue and operating profit with the exception of one-off gains and losses.

In the Game Business, while the Company expects to be affected by the trends in existing titles and the significant downsizing of its office in China, it plans to release about three new titles. However, the Company believes that it is difficult to reasonably calculate and provide a concrete outlook at the present time.

In addition, with regard to the Live Streaming Business, the Sports Business, and the Healthcare & Medical Business, the Company will aim to increase both revenue and profit while continuing to invest for growth.

Although the Company reported one-off gains and losses including impairment losses in the fiscal year ended March 31, 2024, at present, there are no items to be disclosed that could be construed as one-off factors impacting business performance for the fiscal year ending March 31, 2025.

- 3 -

1. Overview of Financial Position and Cash Flows for Fiscal 2023
2. 1. Financial Position
      Total assets at the end of the fiscal year ended March 31, 2024 decreased by ¥13,234 compared to the end of the previous fiscal year to ¥335,708 million.
      Total current assets decreased by ¥19,282 million compared to the end of the previous fiscal year to ¥114,060 million. This was due mainly to a decrease in cash and cash equivalents by ¥26,336 million.
      Total non-current assets increased by ¥6,047 million compared to the end of the previous fiscal year to ¥221,648 million. This was due mainly to an increase in other non-current financial assets by ¥27,964 million, despite a decrease in goodwill by ¥15,525 million and a decrease in intangible assets by ¥5,233 million.
      Total liabilities at the end of the fiscal year ended March 31, 2024 increased by ¥734 million compared to the end of the previous fiscal year to ¥115,638 million.
      Total current liabilities decreased by ¥1,435 million compared to the end of the previous fiscal year to ¥49,213 million. This was due mainly to a decrease in income tax payables by ¥10,568 million.
      Total non-current liabilities increased by ¥2,169 million compared to the end of the previous fiscal year to ¥66,470 million. This was due mainly to an increase in deferred tax liabilities by ¥8,782 million.
      Total equity at the end of the fiscal year ended March 31, 2024 decreased by ¥13,968 million compared to the end of the previous fiscal year to ¥220,025 million. This was primarily attributable to a decrease in retained earnings by ¥31,008 million.
      In terms of liquidity, the liquidity ratio and ratio of equity attributable to owners of the parent were 231.8% and 62.3%, respectively, at the end of the fiscal year ended March 31, 2024.
   2. Cash Flows
      Cash and cash equivalents (collectively, "cash") at the end of the fiscal year ended March 31, 2024 decreased by ¥26,336 million to ¥71,396 million compared to the end of the previous fiscal year. Cash flows in each area of activity and their respective contributing factors are as follows.
      (Operating activities)
      Net cash used in operating activities for the fiscal year ended March 31, 2024 was ¥10,839 million, compared to a cash inflow of ¥10,808 million in the previous fiscal year. The principal cash outflow factor was ¥18,691 million in income tax paid.
      (Investing activities)
      Net cash used in investing activities for the fiscal year ended March 31, 2024 was ¥12,629 million, compared to a cash inflow of ¥12,451 million in the previous fiscal year. The principal cash outflow factor was ¥7,010 million in acquisition of intangible assets.
      (Financing activities)
      Net cash used in financing activities for the fiscal year ended March 31, 2024 was ¥4,102 million, compared to a cash outflow of ¥4,930 million in the previous fiscal year. The principal cash outflow factors were ¥2,229 million in cash dividends paid and ¥1,911 million in repayments of lease liabilities.
3. Basic Policy for Distribution of Profit and Dividends for Fiscal 2023 and 2024

The Company regards continuing enhancement of its corporate value through business growth and strengthening of the management structure and contributing to shareholders' interest to be important management priorities.

With respect to allocating profit to shareholders through dividends, while considering the performance of each fiscal year, the Company, as a basic principle, sets as a minimum whichever is higher, a consolidated payout ratio of 15% or an annual dividend of ¥20 per share of the Company's common stock, and plans to continue paying a dividend with the aim of a consolidated payout ratio of 30% in the future.

As one approach to capital management policy is to respond flexibly to changes in the Company's stock price and conditions in the operating environment and return a portion of the profit for the period to shareholders, the Company appropriately considers purchases of its own shares from the market.

- 4 -

Regarding retained earnings, the Company's objective is to make effective investments in the establishment of a business portfolio that realizes medium- to long-term growth, while making aggressive investments to strengthen the earnings base of its principal businesses in order to maximize corporate value.

Based on the basic principle described above, the Company is scheduled to pay a regular cash dividend for its common stock of ¥20 per share for the fiscal year ended March 31, 2024, having taken into account performance, the future business environment, and internal reserves for the continued growth of business.

The basic policy regarding the payment of dividends from surplus is to pay a year-end dividend once a year.

(4) Risk Factors

This section reviews the matters among the various items related to the business and accounting situation that management recognizes as major risks that may potentially have a material effect on the financial position, business performance, and the status of cash flows (collectively "business performance, etc.") of the DeNA Group (matters that may have a material effect on the decisions of investors). The policy of the Group, after these matters are recognized as risks that may occur, is to work to prevent their occurrence and develop countermeasures in the event of an occurrence. However, the Company believes that the judgments of investors regarding the Company's stock must be made after the careful consideration of these matters and other factors that are not covered here.

Unless otherwise indicated, matters related to future developments that are mentioned in this section are judgments of the Group that were made as of the date of the issuance of this report. Since these matters have inherent uncertainties, the actual results and outcomes may differ from these judgments.

1. Business Environment Risk
2. 1. Responding to Changes in the Internet and AI (Artificial Intelligence)-related Industries and New Technologies
      Internet usage continues to expand, particularly usage by mobile devices, and every day new Internet services are created in a diverse variety of fields. In addition, increased utilization of AI technologies in business is gaining attention in society.
      The Group is capitalizing on its strengths in Internet services for mobile devices, such as smartphones, with the provision of games and all types of services, and working on initiatives aimed at boosting the value of its services through the utilization of AI technologies. However, in the markets associated with the services that the Group provides, sudden changes in market share owing to new entrants into the industry and structural changes in the market in association with the emergence of new business models may have an adverse impact on the Group's business performance, etc.
      With the development of new Internet and AI-related technologies and the constant introduction of new services based on these technologies in society at large, in the event that the Group lags behind new technologies due in part to its inability to promote research and development as well as alliances with other companies, retain engineers, or develop personnel, its competitiveness may decline. Furthermore, in the event that large expenditures are necessary for responding to new technologies, this may have an adverse impact on the Group's business performance, etc.
      Moreover, with regard to AI technologies, the reliability, accuracy, and usability, etc. of services that use AI technologies in general can become an issue, and ethical problems related to matters such as human dignity, privacy, fairness, and transparency may arise depending on how AI technologies are used. If such issues or problems have an impact on provision of services, it may adversely affect the Group's business performance, etc.
      Due to the nature of technological innovations and changes in business structure related to the Internet and AI, it is difficult to reasonably predict when and how much of an impact there will be on the business environment. However, the Group recognizes that there will definitely be an impact considering the history of development of information technologies and changes in business structure. The Group stipulates in its vision that it engages in business while fully leveraging the Internet and AI. The DeNA Promise, which is part of the Group value and is our social promise, as well as the DeNA Group AI Policy, states the Group's commitment to challenge ourselves to develop new technology and services while overcoming any issues that may arise.
   2. • 5 -

As such, the Group recognizes that responding to such technological innovation and changes in business structure related to the Internet and AI is an important issue. At the same time, with the aim of reducing these risks, the Group has established a management system, which includes compliance and risk management departments, that conducts multifaceted business reviews, when planning and implementing services that utilize the Internet and AI. By creating this system, the Group is promoting initiatives aimed at improving service value through further utilization of the Internet and AI, and is working to secure business opportunities and enhance its competitiveness. However, due to the nature of technological innovation and business structure related to the Internet and AI, these measures may not be able to prevent the above risks from materializing, which could in turn have an adverse impact on the Group's business performance, etc.

1. Responding to OS Providers for Mobile Devices
   The Group operates its business aimed at mobile devices equipped with operating systems (OS) such as Android or iOS. Accordingly, in the event that the Group is unable to provide its services due to accidents or other problems related to these OSs, or if the Group is unable to provide its services due to measures introduced by the OS providers that are difficult to predict, if the Group is unable to provide the same services as in the past because of major or unforeseeable changes in existing conditions, rules and their application, or the establishment of new conditions and rules imposed by the OS providers for providing services on these OSs, if responding to such changes in or the new establishment of the conditions, rules and their application requires large expenditures, if the conditions, rules and their application are changed to those disadvantageous to the Group, or if the Group is unable to meet the changed or newly established conditions, rules and their application, leading to the suspension of services provided by the OS providers or account usage, there may be an adverse impact on the Group's business and business performance, etc.
   It is difficult to foresee the timing of major or unforeseeable changes in existing conditions, rules and their application, or the establishment of new conditions and rules imposed by the OS providers, and it is also difficult to reasonably predict the impact they will have. The Group is working to control the possibility of these risks materializing and affecting its business performance, etc., as much as possible, by establishing a development system to build services that are compatible with the latest OSs. At the same time, the Group is keeping up with the latest conditions and rules imposed by the OS providers and establishing management and coordination systems in the administrative and business divisions to apply any changes to its services. Nevertheless, in keeping with the Group's relationships with the OS providers, these measures may not be able to prevent the above risks from materializing, which could in turn have an adverse impact on the Group's business performance, etc.
2. Competition and Consumer Trends
   The Group faces intense competition with other companies in all of its business fields, including the Internet- and AI-related industries. The Group strives to increase its competitiveness by creating and offering distinctive services capturing the needs of the times, taking on measures for improving users' environment and security, and initiatives to ensure improved customer support. However, intensifying competition from companies or new market entrants offering similar services, or changes in trends of consumer demand may have an adverse impact on the Group's business performance, etc.
   It is difficult to reasonably estimate the possibility, timing, and degree of impact of risks related to intensifying competition and changes in trends of consumer demand materializing. However, the Group recognizes that these risks constantly exist in its business operations, as the future potential of services with distinctive features that meet the needs of the times will inherently cause competition to intensify through the business development of new entrants. The Group is working to develop the internal environment and cultivate human resources for providing even more attractive and competitive services, based on the Company vision, which reads in part "We seek to entertain and enrich lives, and to serve and make the world a better place. Each of us harnesses our individual strengths to make our unique business succeed." Nevertheless, due to the characteristics of the Group's business, these measures may not be able to prevent the above risks from materializing, which could in turn have an adverse impact on the Group's business performance, etc.
3. • 6 -