financial results · “boku & dragons” and “neko & dragons” smartphone games and...

Financial ResultsQ1 FY09/20IGNIS LTD. (Code: 3689)

F e b r u a r y 1 3 , 2 0 2 0

2Copyright © IGNIS LTD. All Rights Reserved.

01 Management Policy

02 Overview of Financial Results

03 Topics

INDEX

04 Appendix


Highlights

-Changed our reportable segments to “Matching,” “Enter-tech*,” and“Games.”-Recorded operating profit and ordinary profit mainly due to steady growth in “with”

Future topics -Transferred “BOKU & DRAGONS” and “NEKO & DRAGONS” to Drecom Co., Ltd.-Accelerated the development of INSPIX WORLD

-Implementated off-floor distribution of shares by the President andRepresentative Director-Financing (borrowing) from our two representative directors

Results in the current term

Financialaffairs

*Enter-tech: Entertainment + Technology


01Management Policy


Segment information

Enter-tech

Matching

Games

Other

Smartphone Apps

After Before

Online dating matchmaking service “with”

“BOKU & DRAGONS” and “NEKO & DRAGONS” smartphone games and browser games

Creating a new standard for music experience(1)Plan, develop and operation a virtual live platform “INSPIX LIVE” (2)Develop IP such as the “VOYZ BOY” and “GAKUGEIDAI JUNES” stars (discover, train and produce)

*We plan to transfer the business of “BOKU & DRAGONS” and “NEKO & DRAGONS” to Drecom Co., Ltd. on March 2, 2020.

We will change the reporting segment classifications due to a review of business management techniques to support changes in the business environment

Recruitment service “Jobgram”

SaaS for medical institutions “FOREST”

Medical VR system “URARAKA VR”

Other business segments not included in the reporting segments


Promotion of blockbuster businesses

Accumulated operating base with recurring revenue business

Business policy to 2020

Building a stable business portfolio


Enter-tech business for the foreseeable future

Growth strategy

Please attention to the growth of the Matching and the Enter-tech businesses

Corebusiness

Aim for growth and expansion by concentrating management resources

on the core businesses of theAccumulated model and Blockbuster model

Matching business for the foreseeable future

Corebusiness


Policies for outlook for each business

Enter-tech

Matching

Games

Others

Planning, development, and operation of platforms and own IPChange the music experience.Aim for vertical integrated business with both the content and system.

Online dating matchmaking services Launch a barrage of new original functions.

Smartphone games and browser gamesTo refrain from developing new games for a while and concentrate on other businesses.Decided to transfer “BOKU & DRAGONS” and “NEKO & DRAGONS” .(Scheduled for March 2, 2020)

Recruiting services, SaaS for medical institutions, medical VR system services, etc.Continue to create attractive new businesses by combining technological and capability andcreativity.


02 Overview of Financial Results


Continuing aggressive business investment.

Sales：Operating profit：

68 million yen-321 million yen

YoY：YoY：

531.8％-350 million yen

Mainly “BOKU &DRAGONS" contribute to sales and operating profit


513 million yen163 million yen

YoY：YoY：

78.8％3,200.4％

Sales and operating profit of “with” are steadily increasing.


897 million yen285 million yen

YoY：YoY：

139.2％211.8％

Consolidated business results

Games

Others

Q1 FY09/20 SummeryOperating profit turned positive

Sales： 1,496 million yen YoY： 111.4％Operating profit： 65 million yen YoY： -340 million yen

Recruiting services and other services contributed to sales, while investing in SaaS for medical institutions and other businesses


16 million yen-61 million yen

YoY：YoY：

48.6％-129 million yen

Matching

Enter-tech


Transition of consolidated sales (Accounting period)(Unit: million yen)

1,416 1,412

1,280

1,468

1,289

1,180 1,166 1,237

1,343 1,372 1,346

1,508 1,496

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2017.9 2018.9 2019.9 2020.9


148 47

-71 -40

-247

-419 -284

-1,581

-340 -174 -208

-21

65

Transition of consolidated operating profit(Accounting period)

(Unit: million yen)

1Q 2Q 3Q 4Q

2017.9

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2018.9 2019.9 2020.9Ef

fect

s of p

rovi

sion

of

allo

wan

ce fo

r dou

btfu

l acc

ount

s


Sales and operating profit of Matching business

645699

768

847897

0

200

400

600

800

1,000 Sales

134

160

200

240

285

20.9% 23.0% 26.0% 28.4%31.7%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0

50

100

150

200

250

300 Operating profit

1Q 2Q 3Q 4Q 1Q

2019.9 2020.9

(Unit: million yen)

Operating profit margin

*Quarterly sales and operating profit for FY09/19 have not been audited by an auditing firm.

1Q 2Q 3Q 4Q 1Q

2019.9 2020.9


Sales and operating profit of Enter-tech business

12 10

32

48

68

0

50

100

-350

-292 -303 -300

-321

-400

-300

-200

-100

0

1Q 2Q 3Q 4Q 1Q

2019.9 2020.9

1Q 2Q 3Q 4Q 1Q

2019.9 2020.9

Sales Operating profit(Unit: million yen)



Sales and operating profit of Games business

651628

519

583

513

100

300

500

700

5

71

36

129

163

0.8%

11.3%

7.0%

22.2%

31.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0

20

40

60

80

100

120

140

160

180

1Q 2Q 3Q 4Q 1Q

2019.9 2020.9

1Q 2Q 3Q 4Q 1Q

2019.9 2020.9

Sales Operating profit(Unit: million yen)


Operating profit margin


0

500

1,000

1,500

2,000

2,500

3,000

FY09/17 FY09/18 FY09/19 FY09/20

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

■Other *1 252 253 344 357 366 462 426 1,784 430 411 477 485 440

■R&D 95 101 97 124 212 101 155 188 166 74 33 48 30

■Commission 31 29 25 30 46 52 35 37 53 65 41 43 42

■Rent, etc. *2 55 58 77 91 58 68 73 65 89 103 90 99 98

■Platform charge *3 364 367 301 336 289 288 272 298 327 331 310 338 329

■Advertisement & Promotions

307 385 332 367 359 383 267 277 441 353 378 302 303

■Recruitment 20 17 10 18 14 12 10 3 10 9 13 7 2

■Personnel 141 152 161 181 190 229 209 162 164 195 209 203 183

Analysis on expensesChanges in of expenses

(Unit: million yen)

*1 "Others" includes provision for allowance for doubtful accounts*2 Include depreciation related to head office facilities*3 Platform-related fees for Apple,Google , etc.

Effe

cts o

f Pr

ovis

ion

of a

llow

ance

for

doub

tful a

ccou

nts

Main pointsAd cost: mainly due to the promotion of the Matching business “with”Costs for R&D, HR, etc.: mainly due to the investment in the Enter-tech business


Consolidated P/L (Cumulative Q1 Oct. 2019 – Dec. 2019)(Unit: million yen)

Cumulative Q1 FY09/19Oct. – Dec.

Ratio/Profit margin

Cumulative Q1 FY09/20Oct. – Dec.

Ratio/Profit margin YoY FY09/20 Full-

year forecast

Sales 1,343 100.0% 1,496 100.0% 111.4% 4,000Matching 645 48.0% 897 60.0% 139.2%

Enter-tech 12 1.0% 68 4.6% 531.8%

Games 651 48.5% 513 34.3% 78.8%

Others 33 2.5% 16 1.1% 48.6%

Operating profit (loss) -340 - 65 4.3% -Matching 134 20.9% 285 31.7% 211.8%

Enter-tech -350 - -321 - -

Games 5 0.8% 163 31.8% 3,200.4%

Others -129 - -61 - -

Non-operating profit (loss) -21 - -46 - -Ordinary profit (loss) -361 - 19 1.3% -

Extraordinary profit (loss) 1 -0 -Profit before profit taxes (loss) -360 18 -

Profit taxes 56 89 -Net profit (Loss) -416 - -71 - -

* From the Q1 FY09/20, the Company has changed the classification of its reportable segments.* Sales and operating profit by segments for FY09/19 have not been audited by an auditing firm.* In non-operating loss, equity in losses of affiliates of Robit Inc. and Mellow Inc. is recorded.* Extraordinary gains included gains on sales of investment securities, while extraordinary losses included mainly impairment losses.*The company that operates the Enter-tech business, in which we actively invest, is an affiliate outside the scope of consolidated tax payment, and the corporations within the scope of consolidated tax payment earned taxable income. Accordingly, there are significant income taxes.


03Topics


Main initiatives of each business

Enter-tech

Matching

Games

・ Number of “with” users exceeded 2.5 million・ Large contribution to profit

・ End of service for one title・ Decided to transfer “BOKU & DRAGONS” and

“NEKO & DRAGONS” to Drecom Co., Ltd.

・Accelerate INSPIX LIVE updates and developments(INSPIX WORLD)


Matching

“with”

Large contribution to profits

171YoY

Usersexceeded

2.5 million

+ ％


Strong promotion of virtual liveswith using vertically integrated operations (fortifying the platform)

Ideal business structureCreating a new standard for music experience

2D・3D production teamsCreative

Planning and production

Systems INSPIX (Virtual live platform)

Excellent creators

Ener-tech

VOYZ, iwamotocho gennosha inc., and Miracle Pro Inc.

Entertainer production

Training entertainer

Discover of entertainer(Scouts, Auditions)




Enter-techOperation of virtual live platform and IP-based business

Development updates for "INSPIX LIVE" → "INSPIX WORLD"

In March 2020, we plan to announce an outline of VR live for Hatsune Miku*

Preparing for VR live for "Hatsune Miku" using “INSPIX WORLD”

* The above forecasts are based on current plans and do not constitute any assurance about the content, timing, or other matters.The futures are subject to change for a variety of reasons.* Other IP information will be provided through the official SNS for each IP.


158,000

340,000

130,000

400,000471,000

2018End-Oct.

2019End-Jun.

2019End-Apr.

2019End-Jul.

2019End-Oct.

2020End-Jun.


Monitor the number of fans (followers) as KPI

Cumulative number of SNS followers related to our company-related IP*Exceed547,000

(116% compared to the last time)

The number of followers is steadily increasing.* Cumulative number of SNS followers: Twitter, the Instagram, the YouTube, fan clubs, and other followers + the number of registered followers* Cumulative number of SNS followers is as of the end of Jan. 2020.


Games

Demimen BOKU & DRAGONS NEKO & DRAGONS

Scheduled for transfer on March 2, 2020End of service in December 2019

Selection and concentration of projects


Games

Transfer of “BOKU & DRAGONS” and “NEKO & DRAGONS”

1.Established studiorex Co., Ltd. as a wholly owned subsidiary of studioking inc.

2.Transferred assets, liabilities, etc. of 2 titles to the newly established company

3.Transferred all shares of the newly established company from studioking inc.to Drecom Co., Ltd.

January 17, 2020: Signed a share transfer agreement with Drecom Co., Ltd.

The following will be implemented effective on March 2, 2020


Games

Transfer of “BOKU & DRAGONS” and “NEKO & DRAGONS”

Outline of Transfer

Transfer price (total): 520 million yen**Adjustments will be made to the payment amount after the transfer date.

Accountingtreatment

Plan to post extraordinary profit.Specific impact on profit will be announced as needed.

studiorex Co., Ltd. Drecom Co., Ltd.

"BOKU & DRAGONS"

“NEKO & DRAGONS”

All shares

IGNIS LTD.

SuccessionTransfer

Company splitEstablished through a simple incorporation-type company split

studioking inc.(100% owned subsidiary of IGNIS)

(Newly established company: wholly owned subsidiary of studioking inc.)

Payment of transfer price


Information onEquity Method Affiliates


AI fieldVisual inspection solutions utilizing AI technology

and picking solutionsOn-site introduction

Equity method

affiliates

*The photographs depict the new office and factory of ROBIT Inc.


0

10,000

20,000

30,000

40,000

50,000 Wholesale store

Amazon

IoT field

Total sales volume

Number of units

Exceeded

50,000 units

Steady increase in unit salesIntroduced by a variety of media

* Robit Inc. which develops "mornin'" is an affiliated company.* Variation in sales volume of "mornin'" + "mornin' plus" As of the end of January 2020.

Equity method

affiliates


Mobility service and platform

Financing totaled approximately 500 million yen through a third-party allotment of new shares

* Mellow Inc. which operates TLUNCH, is an equity-method affiliate.

Equity method

affiliates


Others, Financial, etc.


Borrowing of funds

・・・

・・・

・・・Funds procured through sales of

shares

Loan from own funds

Qian Kun, CEO

IGNIS LTD.

Potential shareholders

There is no dilution.

Takaaki Suzuki, CTO

350 million yen

150 million yen

Borrowed funds from two of our representative directors

Procured by off-floor distributionLend a portion of the funds

Implementation of off-floor distribution


Creating new standard, over and over again


04Appendix


Business development


0

50

100

150

200

250

300

2016 2017 2018 2019

iOS-General (Domestic)iOS-SNS (Domestic)

2016 2017 2018 2019 2020

Matching “with”

Number of Users Sales ranking

Changes in the number of users and sales ranking

1,200

0

400

600

800

200

1,000

Exceeded

2.5 million Maintain top

10 position

Unit: RankUnit: Ten thousand

Source: App Annie* Changes in the number of “with” users are as of the end of December 2019.* Changes in sales ranking of “with” are as of the end of January 2020.


Avatar function

Friend function

Specially builtworld

Talented initial development partners

Multi-functional Compatible with multiple devices

Combined with VR music live and VR social function, INSPIX WORLD will

Creating the new standard for music experience

Update version of the [INSPIX LIVE]



Competitiveness of virtual live platform ”INSPIX”

Number of concurrent connection users

530 thousand

Exceeded

+

Characteristics

UniqueUnique

Characteristics Characteristics

Enter-tech

Connectionwith companies having IP

Overwhelmingmaximum number

of connections

Real-timelives

Smartphone-compatibleEasy participation

from anywhere

Superior human resourcesEngineerProducer

Operation of virtual live platform and IP-based business

3 features and 2 uniqueness to resolve current virtual live issues


Enter-tech

Secure a solid position in the VR and entertainment markets as a complex entertainment platform

New music experience that enables simultaneous live broadcasting in a variety of environments.

Users’ advantage

Improve sales and profits

Low costReduction of live expedition costs, etc.

To create new salesopportunities

Advantage as a VR Platform

Platform value FinanceBusiness KPIs

Easy to experience the next-generation music live

With the effort of running a live gameReducing cost

Field and personnel costs are lower than real costs.

Creation of new marketsBe the next commonality

Driving Music Experiences

・ Number of fans・Average customer spend

・ Number of IP invitations・ Number of performances

Competitiveness of virtual live platform ”INSPIX”Operation of virtual live platform and IP-based business


Enter-techOperation of virtual live platform IP-based business

Enhance corporate value by investing in virtual live platform “INSPIX”Continue to invest to enhance platform value

by increasing market share with ease of use and uniqueness and maximizing profits

Current corporate value

Increase in the number of participants,the number of users and sales

Continuing to invest for growth

Enhancingcorporate value

On the monitor screen

On a smartphone (+VR-HMD)

At the event site


The most important market for “INSPIX WORLD” is China.

Development of the cutting-edgevirtual space SNS specializing inlive concerts

To attract Japanese IPs

-Chinese nationality -Grown with Japanese content-Strong connections with the domestic IP and content fields

Pulse Inc. has overwhelming competitiveness.

New market with high potential

Development of new IPs withtop Japanese creators

Extraordinary president



※ The number of downloads of BOKU&DORAGONS is as of the end of December 2019.※ Sales rankings of BOKU&DORAGONS are as of the end of January 2020.

0

50

100

150

200

250

300

350

400

450Android iOS

2016 2017 2018 2019 20200

100

200

300

400Both OS

20162015 2017 2018 2019

Number of downloads (Total) Sales ranking

Games “BOKU&DRAGONS”Changes in the number of downloads and sales ranking

微減傾向3.8million

downloads

Exceeded

Unit: Ten thousandSource: App Annie

Unit: Rank


Other business: SaaS for medical institutionsSaaS for medical institutions with online practice (telemedicine) system

The number of patients using "FOREST"* is steadily increasing

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

FY09/18 FY09/19 FY09/20

SaaS for medical institutions “FOREST”

*FOREST": SaaS services for medical institutions (details of clients are not be disclosed at this time).

Trends in the number of patients using online practice (telemedicine) in the medical

institutions introducing FOREST

Online practiceSystemsElectronic medical

recordSystems

Hospitaloperationsystems


VR Medical Business

Pulse Inc. and Juntendo University

Patent application for joint research with Juntendo University

Project on clinical studies of alleviation of chronic pain stimulus using VRstarted providing pilots of the medical VR system “URARAKA VR"


Various Market Information


Copyright ©MatchingAgent, Inc. All Rights Reserved.

Online dating matchmaking service market

Unit: 100 million yen

Various market information

258 392

510 620

753 841 927 1,012 1,060

2017 2018 2019 2020(Forecast)

2021(Forecast)

2022(Forecast)

2023(Forecast)

2024(Forecast)

2025(Forecast)


VR Live Market(Music)

Market size of music live in Japan Potential for VR music live market (Hypothesis)

*Vtuber：Virtual YouTuber*Source： Pia Research Institute & Live Entertainment White Paper Association(genre: Live market for music only)

1,525

3,776

Live market(Music)

(100 million yen)

Various market informationCreating a new music experience with VR (Market potential)

Sluggish market size despite the strong demand for real music lives Change the

Music experiencewith VR

Shortage of venues(aging, closure, etc.)

VR music liveswill be "the new standard"

(2018)Emerge of

Vtubers, etc.

The market will be establishedFrom the nearly zero-base

Plenty of room to expand the market


Consolidated B/S (FY09/17 – Q1 FY09/20)

(Unit: million yen) FY09/17 FY09/18 FY09/19 Q1 FY09/20

Current assets 4,736 1,901 1,715 2,069

Fixed assets 1,554 2,753 2,240 2,292

Total assets 6,291 4,654 3,956 4,362Current

liabilities 1,395 1,825 1,309 1,464

Fixed liabilities 760 556 380 701

Net assets 4,135 2,272 2,266 2,196Liabilities

and net assets 6,291 4,654 3,956 4,362


Consolidated P/L (Accounting period: FY09/17 – Q1 FY09-20)

FY09/17 FY09/18 FY09/19 FY09/20

(Unit: million yen) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

Sales 1,416 1,412 1,280 1,468 1,289 1,180 1,166 1,237 1,343 1,372 1,346 1,508 1,496

Operating profit (Loss) 148 47 -71 -40 -247 -419 -284 -1,581 -340 -174 -208 -21 65

Operating profit margin 10.5% 3.3% - - - - - - - - - ‐ 4.3％

Ordinary profit (Loss) 136 48 -72 -41 -250 -423 -305 -1,592 -361 -197 -248 -60 19

Ordinary profit margin 9.6% 3.4% - - - - - - - - - ‐ 1.3％

Net profit (Loss) 67 24 -81 -46 -233 -622 -228 -1,567 -416 -38 95 -272 -71

Net profit margin 4.8% 1.7% - - - - - - - - 7.1％ - -


0

50

100

150

200

250

IGNIS Except for IGNIS

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

FY09/16 FY09/17 FY09/18 FY09/19 FY09/20

Number of employees

*1: Since Q2 FY09/16, some employees (engineers, etc.) of IGNIS have been transferred to group companies due to changes in internal system.

*2: The main reason for the decrease in the number of employees from Q4 FY09/18 was the impact of the exemption from the scope of consolidation of Mellow Inc., which was a consolidated subsidiary.


GlossaryVR

（Virtual Reality）

IP（Intellectual Property）

AI（Artificial Intelligence）

Factory Automation

SaaS（Software as a Service）

HMD（Head Mounted Display）

IoT（Internet of Things）

A generic term for technology that artificially creates an environment that works on human sensory organs and that is not realistic but feels like real.With the effects of devices mounted on the body and images and sounds synthesized by computers, the body of the user is projected into the three-dimensional space, creating a sense of immersion in the space. (Source: IT dictionary e-words)

Proprietary intangibles, such as expressions created by human intellectual activities or information or signs that may be commercially useful. Legal protections include copyrighted works, patents, trademarks, designs, and portraits. (Source: IT dictionary e-words)

This system enables highly intelligent operations and judgments that could only be performed by human beings to be performed by an artificial system centered on computers.(Source: IT dictionary e-words)

A display device shaped like a goggle, helmet, or spectacle used by wearing on the head. Can see an image sent from such as a computer projected on a small display in front of one’s eyes when fixed to the head to cover the eyes.(Source: IT dictionary e-words)

To automatize various works and processes of factories using machines and information system. Also, equipment and system used for such purposes. (Source: IT dictionary e-words)

Utilization form by providing software such as through communication network and users use it by calling up necessary things when needed. Also called Software as a Service.(Source: IT dictionary e-words)

Automatic identification, automatic control, remote measurement, etc. are performed not only by computers and other information and communications equipment, but also by providing communication functions to various objects (objects) that exist in the world, and by connecting to the Internet and communicating with each other.(Source: IT dictionary e-words)


Forward-looking Statements and Precautions for investors and our shareholders

The data included in this presentation include what is known as “forward-looking statements.” These are based on estimates, forecasts and assumptions accompanied by risk made at the present date, which include uncertainty that means that actual future results may differ from the contents of the “forward-looking statements.”These risks and uncertainties include the general economic situation in Japan and overseas, including the market situation, interest rates, and currency fluctuations affecting the industry as a whole.IGNIS takes no responsibility for updating or revising these “forward-lookingstatements” in response to any future events or other new information that mayemerge in the future.

IGNIS basically refrains from responding individually to any inquiries other than those contained in our timely disclosures, press releases, financial results briefing materials and other public information.Except for the information on the timely disclosure through the Tokyo Stock Exchange, our official website, official SNS, and official videos, the contents written on the bulletin board, SNS and blogs on the Internet include information that is not our official announcement. Therefore, we basically refrain from responding to inquiries on these information as well.

financial results · “boku & dragons” and “neko & dragons” smartphone games and...

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