NJ Holdings (they own tri-Ace y'know) 1H FY6/24 presented by Sōta Fujii. Net Sales 5,170. Operating Profit +234. Game Business +351 (million yen)

[KR_EP]

Previously on InstallBaseZ...
NJ Holdings (they own tri-Ace y'know) FY6/23 presented by Sōta Fujii. Net Sales 10,131, Operating Profit -239, Game Business +43 (million yen)​

NJ Holdings (they own tri-Ace y'know) Q1 FY6/24 presented by Sōta Fujii. Net Sales 2,767. Operating Profit +148. Game Business +210 (million yen)​

NJ Holdings Inc.
Tokyo Stock Exchange Standard Market Code number: 9421.T
Supplemental Material For FY2024 First Half Financial Results
February 09, 2024​

Investor Relations (IR) (ENG)
Financial Year (FY)
July 1, 2023 - June 30, 2024​

Spoiler: FOXDAI

NOT GONNA LIE WE HAD 'EM IN THE FIRST HALF
[NSW/PS4/PS5/XBS/Steam] Infinity Strash: Dragon Quest The Adventure of Dai <RPG> (Game Studio/Kai Graphics/Square Enix) {2023.09.28}

Spoiler: Gacha Studio

RIP ADULT PRANK RPG
[iOS/Android] Dachimen Densetsu G (Studio Rex Co./Game Studio) {2023.05.16 - 2023.08.28}
NOT BAD FOR A LITTLE ROOKIE
[iOS/Android] Is It Wrong to Try to Pick Up Girls in a Dungeon?: Battle Chronicle (Aiming Inc./Game Studio) {2023.08.24}

Spoiler: Download Milestones

01/09/23 - Announcement of Reaching the Top Sales No. 13
04/09/23 - Announcement of Over 1 Million Downloads Worldwide - plus announcement of PS4/PS5 versions, due in 2024. (NJ Holdings IR advised these aren't developed by Game Studio)
12/09/23 - Announcement of Over 2 Million Downloads Worldwide
10/10/23 - 3 Million Downloads Celebration Gacha is Live!
Sensor Tower Monthly Revenue Report (Sep 2023)

(Direct link to Reddit image)
Sensor Tower Monthly Revenue Report (Oct 2023)

(Direct link to Reddit image)
Sensor Tower Monthly Revenue Report (Nov 2023)

Damachi Battle Chronicle (direct image link here)
Japan: Oct. - $900,000 Nov. - $600,000
WW: Oct. - $300,000 Nov. - $130,000
Sensor Tower Monthly Revenue Report (Dec 2023)

Thanks to @Vena for using your new & improved CLAMPS to post the above.

Spoiler: DanChro PSA

31/12/23 - “DanChro” Director's Letter Vol. 1.5

• “Implementation of New Character Training Content” ⇒ Planned for implementation in February 2024.
• “Familia Improvement” ⇒ Planned for implementation in March to May 2024.

07/02/24 - Regarding Changes to the Sale of Paid Selas

Spoiler: CY2023 Sales Data Recap now with Hot of the Famitsu Press Top 100 sales material!

Famitsu Sales: Week 40, 2023 (Sep 25 - Oct 01)
02./00. [NSW] Infinity Strash: Dragon Quest the Adventure of Dai <RPG> (Square Enix) {2023.09.28} (¥6.800) - 24.367 / NEW <40-60%>
13./00. [PS5] Infinity Strash: Dragon Quest the Adventure of Dai <RPG> (Square Enix) {2023.09.28} (¥6.800) - 9.222 / NEW <40-60%>
19./00. [PS4] Infinity Strash: Dragon Quest the Adventure of Dai <RPG> (Square Enix) {2023.09.28} (¥6.800) - 5.255 / NEW <20-40%>

Platform	FW	Sell-through	Estimated shipmets	Estimated stock
Switch	24,367	40-60%	40,612~60,918	16,245~36,551
PS5	9,222	40-60%	15,370~23,055	6,148~13,833
PS4	5,255	20-40%	13,138~26,275	7,883~21,020
Total	38,844		69,119~110,248	30,275~71,404

Thanks @Hartmann for doing the DAI DECENT thing & putting together these opening week sales & shipment charts.

Famitsu Sales: Week 41, 2023 (Oct 02 - Oct 08)
15./02. [NSW] Infinity Strash: Dragon Quest the Adventure of Dai <RPG> (Square Enix) {2023.09.28} (¥6.800) - 4.573 / 28.940 <40-60%> (-81%)
30./04. [PS5] Ys X: Nordics # <RPG> (Nihon Falcom) {2023.09.28} (¥7.800) - 2.148 / 20.711 <80-100%> (-88%)
00./13. [PS5] Infinity Strash: Dragon Quest the Adventure of Dai <RPG> (Square Enix) {2023.09.28} (¥6.800) ????<2,148
00./19. [PS4] Infinity Strash: Dragon Quest the Adventure of Dai <RPG> (Square Enix) {2023.09.28} (¥6.800) ????<2,148

First Shipment Estimate: 48,233 - 60,918
Estimated Unsold Stock: 19,273 - 31,978
[NSW] 28,940 + [PS5] 9,222 + [PS4] 5,255 = 43,417 Total (it can be done, but only I can sell through it)

Famitsu Sales: Week 42, 2023 (Oct 09 - Oct 15)
24./15. [NSW] Infinity Strash: Dragon Quest the Adventure of Dai <RPG> (Square Enix) {2023.09.28} (¥6.800) - 2.070 / 31.010 <40-60%> (-55%)

First Shipment Estimate: 51,683 - 60,918
Estimated Unsold Stock: 20,673 - 29,908
[NSW] 31,010 + [PS5] 9,222 + [PS4] 5,255 = 45,487 Total (so far, so good...stay on target.gif)

Famitsu Sales: Week 43, 2023 (Oct 16 - Oct 22)
28./24. [NSW] Infinity Strash: Dragon Quest the Adventure of Dai <RPG> (Square Enix) {2023.09.28} (¥6.800) - 1.388 / 32.398 <40-60%> (-33%)

First Shipment Estimate: 53.997 - 60.918
Estimated Unsold Stock: 21,599 - 29,908
[NSW] 32,398 + [PS5] 9,222 + [PS4] 5,255 = 46,875 Total (I can't shake 'em....yaaaaah.gif)
Famitsu Top 100 CY2023
82./00. [NSW] Infinity Strash: Dragon Quest the Adventure of Dai <RPG> (Square Enix) {2023.09.28} (¥6.800) - 41.982 / NEW
41,982 - 32,398 = 9,584 means that many additional Dragon Quest Adventurers climbed aboard the Infinity Train between Weeks 44 - 53.
First Shipment Estimate: 53.997 - 60.918
Estimated Unsold Stock: 21,599 - 29,908 - 9,584 = 12,015 - 20,324
[NSW] 41,982 + [PS5] 9,222 + [PS4] 5,255 = 56,459 Total (we doin' it.gif)

Thanks to @Chris1964 for the Famitsu Sales Data.

Spoiler: It Still Counts.gif

Oricon Sales: Week 40 (Sep. 25 - Oct. 01)
03./00. - Infinity Strash: DRAGON QUEST The Adventure of Dai Aban-ryuu Gokui no Sho (Shueisha) {09.2023} [1,650 Yen] - 2,447 / NEW

Oricon Sales: Week 41 (Oct. 02 - Oct. 08)
06./03. - Infinity Strash: DRAGON QUEST The Adventure of Dai Aban-ryuu Gokui no Sho (Shueisha) {09.2023} [1,650 Yen] - 933 / 3,380

Oricon Sales: Week 42, 2023 (Oct. 09 - Oct. 15, 2023)
12./06. – Infinity Strash: DRAGON QUEST The Adventure of Dai Aban-ryuu Gokui no Sho (Shueisha) {09.2023} [1,650 Yen] – 441 / 3,821

Oricon Sales (Guide Books): Week 43, 2023 (Oct. 16 - Oct. 22, 2023)
16./12. – Infinity Strash: DRAGON QUEST The Adventure of Dai Aban-ryuu Gokui no Sho (Shueisha) {09.2023} [1,650 Yen] – 252 / 4,073

Thanks @Lite_Agent & @Rouk' for doing the DAI DIABOLIK ting & making these cool strategy charts sing.

NJ Holdings // Game Studio // tri-Ace // Wit One // Xevious Program Star Output Ocean Strategy: Integrity & Nappy Timelessness. Consider It More!​

Sōta Fujii here, not so humble bragging that I made a record breaking ¥186.34 million in 2023, building a Super ShogiBowl Dynasty with all my NJ Mahomies...​

1. Consolidated Financial Results
(1)Results Summary for the first half of the fiscal year ending June 30, 2024
Net income returned to the black mainly due to reinforcement of order acquisition and transitory profit factors in the game business.
(Millions of Yen)

	Net Sales	Operating Profit	Ordinary Profit
1H FY6/23 (July 1, 2022 - December 31, 2022)	4,955	-237	-243
1H FY6/24 (July 1, 2023 - December 31, 2023)	5,170	234	237
Total Change (FY23 - FY24)	214	472	480

Source: Financial Results for the 1H Fiscal Year Ending June 30, 2024 (February 09, 2024) page 5

'Check out the segment breakdowns. Net income before income taxes was 452 million yen, up YoY by a whopping 695 million yen due to in large part to 214 million yen Extraordinary income for this first half.'
(2)Results by Segment
Game business increased both sales and profit. Mobile business turned to (the Men in) Black 2.
(Millions of Yen)

	Net Sales 1H FY6/23	Net Sales 1H FY6/24	Change	Operating Profit 1H FY6/23	Operating Profit 1H FY6/24	Change
Game	3,913	4,115	202	-94	351	445
Mobile	1,009	1,026	27	-4	27	32
Other*1	36	35	-2	17	19	1
Inter-segment Eliminations & Corporate Expenses*2	-2	-7	-4	-116	-123	-6
Goodwill Amortisation	--	--	--	-39	-39	0
Consolidated Total	4,955	5,170	214	-237	234	472

※1 The Other segment is a business segment not included in the reportable segments.
※2 Corporate expenses are general and administrative expenses that do not belong to any reportable segment.

Source: Financial Results for the 1H Fiscal Year Ending June 30, 2024 (February 09, 2024) page 6

2. Game Business
(1)Overview
Summary of MD&A

• In addition to firm orders in the operation support field, sales increased due to the transfer of rights to a game title that had been under in-house development and the posting of sales associated with progress in the development of an existing project.
• Operating income increased due to transitory profit factors, including the transfer of game title rights as mentioned above and a decrease in development costs.

Source: Financial Results for the 1H Fiscal Year Ending June 30, 2024 (February 09, 2024) page 9

'Management Discussion & Analysis is what MD&A stands for just in case you never went to Business school cause you were too busy learning to kick Shogi ass by playing my Sweet Badass Switch game.'
4)Quarterly Operating Profit
In the development field, one-time factors continued to drive profits in 2Q. Operating income declined slightly due to a reduction in titles in the operational support field.

Source: Financial Results for the 1H Fiscal Year Ending June 30, 2024 (February 09, 2024) page 12

'A surprise to be sure but a welcome one. Temporary plus game title rights transfer plus reduction in operating income begs the question...
Is it Ok to Carry Out Open Source Intelligence (OSINT) in a Dungeon?: Battle Chronicle 2 find out how many games are in development by how many people?

Number of projects currently under development ※1
Package type ※2 ※3 (Main platforms: consoles, PCs):
5 (+1 change from Nov. 10, 2023)

Smartphone type ※2 ※4 (Main platforms: mobile phone, PC):
0 (0 change from Nov. 10, 2023)

employees ※5
834 (-1 from Jun. 30, 2023) (-6 from Sep. 30, 2023)

※1 as of February 09, 2024. It does not indicate the number of titles that will be completed within this fiscal year.
※2 Multi-platform title counts as one. Small titles are not counted.
※3 Download sales and additional content are also included in the console type.
※4 including the free-to-play type.
※5 as of December 31, 2023 (including some fixed-term contract workers.)

Number of Employees: consolidated 998 (as of December 31, 2023. It includes 81 average temporary employees)

Source: Financial Results for the 1H Fiscal Year Ending June 30, 2024 (February 09, 2024) pages 13 & 25

'The company doesn't give detailed breakdowns of group companies however we know Synduality: Echo of Ada is one of them. What could the other 4 games be you wonder? No idea but I'm feeling hyped!
Previous Employee Totals
Number of Employees: consolidated 996 (as of June 30, 2023. It includes 74 average temporary employees)

Source: Financial Results for the Fiscal Year Ending June 30, 2023 (August 14, 2023) page 26

Number of Employees: consolidated 1,006 (as of September 30, 2023. It includes 82 average temporary employees)

Source: Financial Results for the Q1 Fiscal Year Ending June 30, 2024 (November 10, 2023) page 25

'An overall reduction of 8 since September 30, 2023 (down 1 on average temporary employees), as for the group company staff numbers, latest from the official pages, Wit One Okinawa being most up to date:

Game Studio
270 (September 2023)
tri-Ace*
182 (as of July 1, 2022)
Wit One
304 (as of June 30, 2022)
Wit One Okinawa
99 (as of January, 2024)
- 6 from 105 (as of September 30, 2023)
Tech Flag
18 (as of January, 2023)​

1. Forecasts for FY2024
(1)Full Year Consolidated Earnings Forecast
We have revised our full-year earnings forecasts as follows in the "Notice of Revision of Earnings Forecasts" dated February 9, 2024.
Millions of Yen

	Net Sales	Operating Profit	Ordinary Profit
FY6/24 (July 1, 2023 - June 30, 2024) PREVIOUS FORECAST	10,370	200	180
FY6/24 (July 1, 2023 - June 30, 2024) NEW FORECAST	9,950	200	180
FY6/23 (July 1, 2022 - June 30, 2023) [Reference]	10.131	-239	-260

(2)Projections for each business segment
Game
Operating income and other profit figures for the first half of the current fiscal year exceeded the previous forecast, but this is mainly due to transitory profit factors such as the posting of sales associated with the transfer of the rights to game titles that had been developed in-house in the game business and a decrease in development costs.

For the second half of the fiscal year, net sales are expected to be lower than the previous forecast, mainly due to the trend toward downsizing of the operation- related team and the continued trend toward short-term and small-scale orders. Operating income is expected to be at the same level as the previous forecast, as the impact of the above-mentioned decrease in sales on profits is expected to be limited due to cost controls such as outsourcing expenses.

Mobile
The mobile business is generally progressing as planned. There are no changes in the forecast of the mobile segment as of this moment.

Source: Financial Results for the 1H Fiscal Year Ending June 30, 2024 (February 09, 2024) pages 20-21

'A downward revision of 420 million yen in net sales does raise eyebrows. However the annual forecast remains the same in both Operating & Ordinary Profit due to the reasons mentioned in the Business Outlook on page 21 (second paragraph quoted above). The key takeaway for me is that NJ Holdings now has a total of 5, count 'em console/PC games in the works. Synduality: Echo of Ada had a new trailer drop with a preview event set for February 18. But that still poses the question what could the remaining 4 be? They won't be on fingger as that service is gone, taking a tri-Ace title with them (boo!). But who knows, maybe a certain someone will ask if they can submit queries to the Q&A taking place on February 26...'

What's that, ya want me to lend you a few million yen from my Shogi Shogunate Warchest? Get outta here Square Enix ya bum, I'm busy planning my next 101 moves!

 

[Celestial]

Thanks again for the wonderful summary, KR-EP! I'm wondering, what does this mean? They got more money from selling rights to game titles that had been developed in-house?

"the posting of sales associated with the transfer of the rights to game titles that had been developed in-house in the game business"

 

[KR_EP]

Been through the Securities Quarterly Report using DeepL Translation before responding to @Celestial here is the latest on the Major Shareholders. Even less of an idea than usual why NJ Holdings issued a press statement on a temporary change in shares owned by Hideo Nakamura when they reverted back a day later. Main change from June 30 - December 31, 2023 is a reduction in shares owned by Hiroshi Kotani from 85,400 to 58,000, with SBI Securities entering the (hopefully non-inflated) fray causing Meng Kanai to be relegated out of the Top 10.

Spoiler: Major Shareholders (as of June 30, 2023)

大株主（2023年6月30日基準日現在）
Major Shareholders (as of June 30, 2023 record date)​

1. 有限会社リーコム (Reekom Ltd) *Affiliated company of the founder (1,592,400 shares / 30.09%)
2. 滝西　竜子 (Ryuko Takinishi) *Founding family members (1,008,600 / 19.06%)
3. 中村　英生 (Hideo Nakamura) *General Investors & International Investor Man of Mystery (808,700 / 15.28%)
4. 小野　昭 (Akira Ono) *General Investors (141,300 / 2.67%)
5. 宮本　浩次 (Koji Miyamoto) *General Investors (100,300 / 1.90%)
6. 小谷　寛 (Hiroshi Kotani) *General Investors (85,400 / 1.61%)
7. 五島　賢次 (Kenji Goshima) *Director of tri-Ace (44,400 / 0.84%)
7. 五反田　義治 (Yoshiharu Gotanda) *Director of tri-Ace aka STRAIGHT aka the GOAT (44,400 / 0.84%)
7. 則本　真樹 (Maki Norimoto) *Director of tri-Ace aka MASAKING (44,400 / 0.84%)
8. 金井　孟 (Meng Kanai) *Founding family members and Former Representative Director (41,000 / 0.77%)

四半期報告書
Quarterly Report
(第33期第2四半期)
(33rd 2nd quarterly installment)
自 2023年10月1日 至 2023年12月31日
October 1, 2023 - December 31, 2023​

(5)【大株主の状況】
(5) [Status of Major Shareholders]

2023年12月31日現在
As of December 31, 2023​

氏名又は名称 (Name or Designation) // 住所 (Address) // 所有株式数 (株) (Number of Shared Owned)
発行済株式 (自己株式を除く。)の総数 に対する所有 株式数の割合 (%) Ratio of shares held to total number of shares issued and outstanding (excluding treasury stock) (%)

(有)リ-コム // Re-Com Inc.​	京都府京都市左京区上高野仲町58-1 // 58-1, Kamitakano Nakamachi, Sakyo-ku, Kyoto-shi, Kyoto​	1,592,400​	30.09%​
滝西 竜子// Ryuko Takinishi​	京都府京都市左京区 // Sakyo-ku, Kyoto City, Kyoto Prefecture​	1,008,600​	19.06%​
中村 英生 // Hideo Nakamura​	東京都台東区 // Taito Ward, Tokyo​	808,700​	15.28%​
小野 昭 // Akira Ono​	京都府向日市 // Muko City, Kyoto​	141,300​	2.67%​
宮本 浩次 // Koji Miyamoto​	東京都練馬区 // Nerima Ward, Tokyo​	100,300​	1.90%​
小谷 寛 // Hiroshi Kotani​	鳥取県鳥取市 // Tottori City, Tottori Prefecture​	58,000​	1.10%​
(株)SBI証券 // SBI Securities Co.​	東京都港区六本木1丁目6番1号 // 1-6-1 Roppongi, Minato-ku, Tokyo​	44,596​	0.84%​
五島 賢次 // Kenji Goshima​	埼玉県川口市 // Kawaguchi City, Saitama Prefecture​	44,400​	0.84%​
五反田 義治 // Yoshiharu Gotanda​	東京都大田区 // Ota Ward, Tokyo​	44,400​	0.84%​
則本 真樹 // Maki Norimoto​	東京都江東区 // Koto-Ku, Tokyo​	44,400​	0.84%​

Total Shares 3,887,096 // 73.44 %​

(注)上記のほか当社所有の自己株式57,550株があります。
Note: In addition to the above, the Company owns 57,550 shares of treasury stock. (Securities Quarterly Report, page 9)

Thanks again for the wonderful summary, KR-EP! I'm wondering, what does this mean? They got more money from selling rights to game titles that had been developed in-house?
...
"the posting of sales associated with the transfer of the rights to game titles that had been developed in-house in the game business"

It covers the first 6 months of the year, so it is the same title mentioned in the first quarter sale of rights that I posted here, re-quoted the passage from the Financial Report plus the response from Soichi Nozawa for anyone else following our discussion. Note the mention of 'not the title disclosed as under development' so it wasn't one of the 4 games in the Q1 report.

Regarding assets in Kamigyō-ku ward, Kyoto, This property is where NJ holdings Inc. was founded and where it operated a store (docomo shop) for its mobile business. However, the docomo Shop operation business was transferred in 2014, the store became a tenant and the property was being leased to the transferee company. It has nothing to do with the Kyoto office of Game Studio and does not affect the development of Undergrounded.

The title transferred is not the title disclosed as under development in the financial results supplemental material. It is an undisclosed title that was developed as an internal project. It is not IP from the back catalogue, nor is it Undergrounded.

2. Game Business
(1)Overview
Summary of MD&A

• In addition to firm orders in the operation support field, sales increased due to the transfer of rights to a game title that had been under in-house development and the posting of sales associated with progress in the development of an existing project.
• Operating income increased due to transitory profit factors, including the transfer of game title rights as mentioned above and a decrease in development costs.

Source: Financial Results for the 1H Fiscal Year Ending June 30, 2024 (February 09, 2024) page 9

As to whether or not it is now included as one of the 5 console/PC games would depend on if a development team at NJ Holdings are still working on the game for the new rights owners (ie. publisher owns the IP with studio working under contract). I also think its worth pointing out the 'posting of sales associated with progress in the development of an existing project'. Could that mean a 'Content Rider' for meeting a milestone for Synduality: Echo of Ada or another unannounced title? No idea Part II! Summary of tri-Ace R&D plus DeepL highlights:

(3)研究開発活動 ゲーム事業において、主に(株)トライエースでゲームエンジンの研究開発活動などを行っており、当第1四半期 連結累計期間の研究開発費の総額は32百万円であります。
(In the game business, tri-Ace Inc. is mainly engaged in R&D activities for game engines, etc. Total R&D expenses for the first quarter of the fiscal year under review amounted to 32 million yen. (page 4)

(4)研究開発活動 ゲーム事業において、主に(株)トライエースでゲームエンジンの研究開発活動などを行っており、当第2四半期 連結累計期間の研究開発費の総額は62百万円であります。
(In the game business, tri-Ace, Inc. conducts research and development activities mainly for game engines, and total research and development expenses for the first half of the current fiscal year amounted to 62 million yen.* (page 6)

*62 - 32 = 30 million yen for the period covering October - December 2023​

Spoiler: Quarterly Report Highlights

四半期報告書
Quarterly Report
(第33期第2四半期)
(33rd 2nd quarterly installment)
自 2023年10月1日 至 2023年12月31日
From October 1, 2023 to December 31, 2023​

(その他事業) 第1四半期連結会計期間において、当社の持分法適用会社である(株)デルタエンジニアリングの全株式を譲渡した ことにより、持分法適用の範囲から除外しております。
(Other Businesses) In the first quarter of the consolidated fiscal year under review, the Company sold all shares of Delta Engineering Co. (page 3)

(投資活動によるキャッシュ・フロー) 当第2四半期連結累計期間における投資活動による資金の増加は、470百万円となりました。主なプラス要因 は、投資不動産の売却による収入281百万円、差入保証金の回収による収入156百万円であります。
(Net cash provided by investing activities amounted to 470 million yen. The main cash inflows were 281 million yen from sales of investment properties and 156 million yen from collection of guarantee deposits. (page 5)

特別利益
Extraordinary income
投資不動産売却益
Gain on sales of investment real estate
179,491 million yen
関係会社株式売却益
Gain on sales of subsidiaries and affiliates' stocks
34,966 million yen
特別利益合計
Total extraordinary income
214,457 million yen (page 14)

Investor Q&A is taking place February 26, 2024 while the 3rd quarter Financial Results will be published in early May. Will ask if I can submit questions (including on if the game title rights sold is now one of the 5 console/PC games in development) but there's no guarantee they will respond. My (very) limited understanding of the situation is the company front loaded profits in the first half of the year, so the ability to post a 200 million yen profit (despite the reduction in forecast net sales) will depend on minimising losses in the second half of the FY.

 

[KR_EP]

Shareholder Mystery Solved. Kinda. Sorta. Maybe. It was a Tokyo Stock Exchange requirement to publish. 'The disclosure of the change in major shareholder is, in effect, a self-relative trading transaction in which Mr. Nakamura is dealing with himself.' Butt Dialling Aliens. Got it. Anyone that disagrees can ring 911 by kissing the phone in my ass pocket while I kick yours.

When an extended answer is delivered straight from the Kisser of the King General but the English translation is short & to the Point Man you gotta ask yourself? How did I get here. I know its a Summary but after two of these Zoom calls its fair the say Till the End of Time has Come & So Have I to learn the language of Muv-Luv. If people reading this have some useful pointers for learning Japanese, please let me know. Anyway its been real & real useful to field questions even if the full answers went over my Baka Gaijin head haven't been published. But here's a trio of questions from an unknown Landing Hero, plus you can read the other 4 queries in the link provided (note the admission its current business model peaks at 5% profit margin).

“When the questions are dangerous, the answers can be deadly.”​

February 26, 2024
NJ Holdings Inc.
Financial Results Briefing for the First Half of the Fiscal Year Ending June 30, 2024
Summary of Key Questions and Answers​

“From now on, for all intents and purposes,
the Q&A defines what really happened.
If it's not in the Q&A...
...it didn't happen.”

​

Q.3) Regarding 'the posting of sales associated with progress in the development of an existing project' (page 9) please can you provide additional detail on what this means & how much it contributed towards the 1H Financial Results?

When compared to the same period of the previous year, this means that for titles that have continued to be developed both in the previous year and in the current year, sales are greater in the current year. It contributes about half of the increase in development sales.

“This case is dirty, I feel it in the cojones you know?”​

Q.4) What other small, medium publicly listed Japanese video game companies does NJ Holdings look towards when planning the future of its Game Business. Those primarily involved in contract work like 株式会社トーセ (TOSE) & 株式会社ユーク ス (Yuke's) or companies that develop & publish games based on their own IP such as 日本ファルコム株式会社 (Nihon Falcom) & 株式会社日本一ソフトウェア (Nippon Ichi Software)?

The most similar company in terms of contract development that we are concerned about is TOSE. But it is not the same [same, but different.gif]. we are also looking at small publishers. In any case, we believe it is important to acquire the disposition of a publisher.

“He's pretty impressive, isn't he?
As Durante used to say,
You ain't seen nothing yet”​

Q.5) NJ Holdings outline page lists BANDAI NAMCO Entertainment Inc. & SQUARE ENIX CO., LTD as two of its main clients. Yet both have been cancelling titles & signalled they intend to reduce the number of titles going forward. What impact does this have on NJ Holdings current plans & will it be looking to be less dependent on contract work from these two companies in the next NJ Holdings mid-term plan?

We are moving forward with the completion of the projects we are currently accepting. There is no possibility of cancellation currently. The trend toward narrowing down the number of projects has been emerging for several years, and we have mentioned this as an industry environment in the past. One of the reasons for the losses in the past two fiscal years is that we have already been affected by this trend. Therefore, we are taking a variety of measures in the current period. We are working to detect future risks in advance and to strengthen our proactive sales activities.

“You fuck with me, better you piss a kidney stone through your hard-on.”​

 

[Celestial]

How would you interpret that final answer, @KR_EP? That they are working on something with major publishers that they are working on finishing and that they haven't received any cancellations of these projects despite the statements that Square Enix et al are moving away from AA??

We are moving forward with the completion of the projects we are currently accepting. There is no possibility of cancellation currently. The trend toward narrowing down the number of projects has been emerging for several years, and we have mentioned this as an industry environment in the past. One of the reasons for the losses in the past two fiscal years is that we have already been affected by this trend. Therefore, we are taking a variety of measures in the current period. We are working to detect future risks in advance and to strengthen our proactive sales activities.

 

[KR_EP]

I should've made clear in my last post that even though both summaries do not cover the entire back & forth exchanges they do contain valuable information that I'm glad is now being made available publicly. Also to pull back the curtain both last August & again in February I sent a whole bunch of questions of which only a few were answered...until now-ish! But first...

How would you interpret that final answer, @KR_EP? That they are working on something with major publishers that they are working on finishing and that they haven't received any cancellations of these projects despite the statements that Square Enix et al are moving away from AA??

Good question. I should start by posting the full query I submitted in advance so people know I did reference the financial reports of Bandai Namco & Square Enix. As for the official reply...

NJ Holdings outline page lists BANDAI NAMCO Entertainment Inc. & SQUARE ENIX CO., LTD as two of its main clients. Yet both have been cancelling titles & signalled they intend to reduce the number of titles going forward (Bandai Namco in its most recent Financial Report for its next mid-term period beginning April 2025, Square Enix as part of an ongoing strategic review by its new CEO to focus more on in-house projects). What impact does this have on NJ Holdings current plans & will it be looking to be less dependent on contract work from these two companies in the next NJ Holdings mid-term plan?

We are moving forward with the completion of the projects we are currently accepting. There is no possibility of cancellation currently. The trend toward narrowing down the number of projects has been emerging for several years, and we have mentioned this as an industry environment in the past. One of the reasons for the losses in the past two fiscal years is that we have already been affected by this trend. Therefore, we are taking a variety of measures in the current period. We are working to detect future risks in advance and to strengthen our proactive sales activities.

I think if you break it down, it means the following, they have reason to be confident that all 5 console/PC titles in development (more on that in a moment) will be not be cancelled. That is because they've already had multiple projects cancelled in the recent past, including in late June which led to a second year of losses. Bear in mind this is without knowing what project(s) were cancelled, by which group company (Game Studio, tri-Ace or Wit One) & by which publisher it is impossible to know for certain if for example Square Enix already cancelled a title under its new CEO. Still if we go by the previous Q&A & combine it with the latest one we can enter Detective Mode & piece together the evidence to gain some idea of what they mean by the above response:

Financial Results Briefing for the Fiscal Year Ended June 30, 2023 Summary of Key Questions and Answers​

Q.1) To what extent do you have a reasonable prospect of returning to profitability?

In FY6/2023, the company revised its earnings forecast in the second quarter, resulting in a small operating profit, and with no buffer to maintain profitability, the company was unable to recover from the cancellation of several development projects in the fourth quarter. This is due to the delay in detecting loss risk amidst the rapidly changing business environment. In the current progress period, the company is strengthening its grasp of the outlook. If a risk of loss is anticipated, such as prolonged deliberations or the cancellation of a project, the company will make an early decision and take recovery measures, such as increasing the number of prospective projects or picking up other project opportunities within the group, even if the profit margin declines slightly.

Q.2) What is different in the situation [that] means a 200 million yen profit forecast for the current Financial Year 2024 will be met without one or more downward revisions?

First, we have strengthened our system for understanding the situation so that we can take action as soon as possible. We feel that this has already improved our grasp of the outlook by about one month. Next is a change in the sales structure. Until now, each company had solely worked on sales and personnel assignment, and the person in charge of a project was also responsible for new prospective projects. From this fiscal year, a dedicated sales manager has been assigned to the group so that he can monitor the status of projects and utilization of the entire group and conduct sales activities. Although a certain amount of unavoidable losses can occur due to uncontrollable cancellations and delays in order timing, we believe that the scope of losses can be reduced by working together as a group to pick up opportunities that could not be handled by individual companies.

Financial Results Briefing for the First Half of the Fiscal Year Ending June 30, 2024 Summary of Key Questions and Answers​

Q.2) What has changed compared to six months or a year ago?

This was a review of the structure of the game business. First, the Investment Management Committee was established to deliberate on orders for major projects and to strengthen ongoing checks on the status of development. Second, a system was established to improve the collection of information. We have improved our ability and accuracy to collect information on the status and outlook of existing and new projects and personnel utilisation status for the entire group. Information on the status of personnel is collected twice a month and shared with the entire group. As a result, decisions can be made more quickly than before.

Emphasis mine. Even without knowing the full details, the overall impression I got is that because NJ Holdings has already gone through that difficult process before other many parts of the industry they're better prepared for any changes at the likes of Bandai Namco & Square Enix. In other words, the worst is behind them & reforms implemented mean they expect to avoid a similar problem happening again so it is more likely to avoid last minute cancellations that would cause it not to meet the end of year target of a 200 million yen operating profit. A really good indicator of this is the fact the CEO & Board of Directors are not taking a 20% pay cut as they did in years past. Right so about those 5 console/PC games, what are they? No idea-ish!

NJ Holdings advised that is currently has 5 console/PC titles in development (page 13). If one of these is Synduality: Echo of Ada, are the remainder contract work based on IP owned by a publisher? Can you advise if Undergrounded & the 'game title that had been under in-house development' (page 9) the rights to which have been transferred are included in the remaining 4 titles?

1) Titles to which rights were transferred are included in the four titles. Undergrounded is not included in the four titles.

1. [PS5/XBS/Steam] Synduality: Echo of Ada <ACT> (Game Studio/Bandai Namco Entertainment) {2024.xx.xx}
2. Unannounced 'title(s) to which rights were transferred'
3. TBC
4. TBC
5. TBC

Undergrounded not being one of them is either because it is classified as a small title (fewer staff plus freelancers) or it is not currently in active development (see my recent post in the Output Strategy thread). No idea which group company is working on the rest, if they are the lead developer or a support team. But they are contracted works with a publisher, including that title rights being sold - that could be a reason why they're confident titles won't be cancelled. Synduality: Echo of Ada is a multi-media project with the anime series on-air while the sale of title rights means the purchaser has invested in its completion. Why else go to the trouble of having a series or buying the rights if you intend to shelf games? The lesson from both could be the key to securing reliable contract work going forward is identifying projects the publisher is fully committed to as a way to avoid or reduce the risk of games being cancelled.

This post is getting a little long already so I'll save the other (very interesting, honest!) I received for either responding to any follow ups from you @Celestial if you wish to continue our conversation or for the Q3 report in early May. Note: I haven't signed an NDA & the replies are not off-the-record comments but I want to respectful of the fact NJ Holdings has gone to the trouble of responding so not going to post everything (not claiming to be an insider, just an enthusiast like you). Otherwise I'll wait for new information to be announced so I can update the Output Strategy thread later. *Oi, where's my Synduality: Echo of Ada event media blowout!* Don't forget that June 2024 is the end of the current mid-term strategy (3 1/2 year period due to the change in the cut off point) so we can expect a new mid-term strategy report late August. That should give us plenty to discuss & any insight into a new business strategy.