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Preface: News articles & forum discussion about the Q3 results (March - May 2024) have already taken place but the Japanese language Q&A is OP worthy as it contains valuable information. Now that TOSE has published the Q3 results in English last week I have posted a summary of the report below. Plus my previous comments on Q2 in the spoiler tag. As for why this OP is a couple weeks late, please understand. It's because I have been waiting for this moment.gif when TOSE IR department would reply to my query for an English language translation of the Q&A. TOSE Computer said 'hahaha...no'. Although it did leave open to the possibility of providing more English language coverage, for now I'll make do with auto-translation with the usual disclaimer its neither official or accurate.
Corporate philosophy:
Building a "company for the ages"
Mission:
Offer Better Products and Services to Contribute to a Sound, Enriched Society
Slogan:
Generate excitement for the world
The concept behind the Tose brand logo
The design of the Tose corporate brand logo depicts a large tree in full and verdant leaf with its roots grounded firmly in the earth.
It expresses our vision: to grow alongside our partners while supporting them from the ground up. The red curve added as a visual accent expresses self-governance and moderation.
Financial Results
Briefing Materials
July 10, 2024
Earnings Highlights
Cancellation of multiple development projects led to major losses in the Digital Entertainment Business. This, combined with the effects of two projects that became unprofitable during the first half, resulted in higher operating loss, ordinary loss, and net loss than in 2Q.
*Several large projects launched around the end of the previous fiscal year are increasingly contributing to sales. However, sales fell sharply year on year due to the cancellation of multiple development projects and the effects of the project that became unprofitable during the first half.
**Sales of the ongoing mobile content operation business showed an increase year on year. At the same time, sales fell year on year due to the extended development timeline of an ongoing smartphone game project that required server expansion and reworking.
Both sales and profits were revised downward.
Both sales and profits were revised downward due to the cancellation of multiple development projects in 3Q and the postponement of the start of certain projects to FY 2025 and beyond. We will strive to achieve restored earnings in FY2025.
*I just want to remind normal, innocent people that, like Naughty NJ Holdings, this chart entry only shows the latest downward revision. It's actually the second in one financial year! Read pages 11-12 here.
We Avoiding unprofitable projects and losses arising from cancelled projects or lost orders
✓ will strengthen restrictions on costs and timeframes allowed for sales activities for specific projects.
✓ We will strengthen management rules to ensure the prompt finalization of contracts and order confirmations.
✓ We will strengthen rules that govern how we respond to customer requests for changes in requirements and in other aspects of ongoing projects.
Promoting risk diversification
✓ We will seek to increase transactions with new customers while continuing to build on our relations of trust with existing customers.
✓ We will expand development projects in non-game fields, thereby broadening our business domains and reducing our exposure to fluctuations within the game industry.
Specific business prospects
✓ Three major game software-related development projects are currently underway. Each is proceeding smoothly and has won high marks in interim evaluations.
✓ We plan to launch major game software development projects in the span from roughly the end of FY2024 through the start of FY2025.
✓ We expect continuing positive performance for the smartphone game projects currently underway.
✓ Of our other businesses, the home karaoke music distribution business is expected to remain stable, including anticipated contributions resulting from measures being implemented for future business, and we plan to launch development projects based on orders from new customers in the SI business.
Corporate Profile
Number of employees (consolidated): 657
...it is I, Starfy! I'm here today on behalf of TOSE to present a TED TALK on why why God why our Legend of Mana tree roots have gotten rotten all of a sudden. But I'm primarily a Japan only Starfish series meaning that my Q&A is for Japanese people only. Filthy barbarians, keep out of my Endless Ocean! Unless you work for TOSE SOFTWARE (HANGZHOU) CO., LTD., or TOSE PHILIPPINES, INC., in which case you're mine kind of foreign starfish! But get back to work! Right let's begin. I've auto-translated each question & answer then post brief thoughts .gifs on what it the ruckus is all about. Cause I'm tired & need a starfish-nap. Hopefully it'll prove of interest & I can return to discuss the subject further with you all but if not, then I'll show you the double barrelled middle fish finger fuck faces!
この質疑応答集は、2024 年 7月4 日の決算発表後、アナリストや機関投資家等の皆様から
いただいた主なご質問をまとめたものです。ご理解いただきやすいよう、一部内容の加筆・
修正を行っております。
Q1: 2025 年 8 月期以降の業績回復に向けて、どのような対策を講じていらっしゃるのか 具体的に教えてください。
後者についての見通しは、現在の主軸であるゲームソフト関連の開発では、進行中 の大型案件 3 件は中間評価良好で順調に進んでおり、2025 年 8 月期初頭頃までに 新たに大型案件の立ち上げを予定しています。運営中のスマートフォンゲーム及び 家庭用カラオケ楽曲配信事業は今後も安定した推移が見込まれ、SI 事業では新規顧 客との開発案件の開始を予定しています。それぞれの案件を品質高く着実に進めて まいります。
Q2: 通期業績予想の修正について、主な要因である開発案件の中止や延期は、新規の顧 客であったのかなど、どのような顧客の案件か教えてください。
Q3: 第 3 四半期に発生した開発案件の中止は顧客都合であるとのことですが、顧客都合 である場合、顧客からトーセへの補償はないのでしょうか。
Q4: 第 3 四半期に明らかとなった開発案件の中止や延期が、2025 年 8 月期に及ぼす影 響の現時点での見通しを、具体的にお聞きできますか。
また A1 で述べた通り、個別案件の営業活動に関する費用や期間の制限強化、契約 や正式受注の早期化、開発中に変更があった際の対応ルール厳格化等の取り組みを 進めることで、今後案件の中止や延期が避けられなかった場合にも、大きな損失を 発生させないようにしてまいります。
Q5: 他のゲーム関連企業でも、業績不振やレイオフ等の報告が相次いでいるように見受 けられますが、ゲーム業界全体が停滞している状況とお考えでしょうか。
TOSE got shanked in the back by an unknown assailant in a cowardly shark-suit attack. But it'll take more than that to stop me cause I've been making bank since 1979! There are multiple suspects in this Murder Mashtooth Mystery, it could be anyone, was it you BAMCO? Based on A2, my inference is that it was a Square Enix Shark! in causing problems for contract developers. It goes to show how too much consolidation in the past two decades has left the myriad of small, medium enterprises (SMEs) both private & publicly owned too reliant on a very small number of big publishers. All it takes is a change in one or two of them & the knock on effects are being felt by the likes of NJ Holdings & TOSE. However in the case of TOSE it still has 3 major projects & plans for another lined up to begin post August 2024. As if to prove a point, TOSE posted the following (it also has two open positions in Taguig). So take that you Octo-Ogura Fiend!
I think we all can agree the time has come & so have I, Starfy to embark upon a new, next gen Accident Adventure! Maybe one is already in the waters...now if you don't mind imma go hang with Mermaid_chan.
Building a "company for the ages"
Mission:
Offer Better Products and Services to Contribute to a Sound, Enriched Society
Slogan:
Generate excitement for the world
The concept behind the Tose brand logo
The design of the Tose corporate brand logo depicts a large tree in full and verdant leaf with its roots grounded firmly in the earth.
It expresses our vision: to grow alongside our partners while supporting them from the ground up. The red curve added as a visual accent expresses self-governance and moderation.
3rd Quarter of Fiscal Year Ending August 31, 2024Financial Results
Briefing Materials
July 10, 2024
Earnings Highlights
Cancellation of multiple development projects led to major losses in the Digital Entertainment Business. This, combined with the effects of two projects that became unprofitable during the first half, resulted in higher operating loss, ordinary loss, and net loss than in 2Q.
(Units: millions of Yen)
FY 2023 Q1 - Q3 Actual | FY 2024 Q1 - Q3 Actual | YoY Change (Amount) | YoY Change (%) | |
|---|---|---|---|---|
| Sales | 4,478 | 3,243 | (1,235) | (27.6%) |
| Gross Profit | 1,246 | 174 | (1,071) | (86.0%) |
| SGA expenses | 798 | 774 | (24) | (3.0%) |
| Operating income | 447 | (599) | (1,046) | -- |
| Ordinary income | 464 | (580) | (1,044) | -- |
| Net income attributable to owners of the parent | 403 | (367) | (770) | -- |
(page 2)
Digital Entertainment Business (Sales Composition)(Units: millions of Yen)
| FY2023 Q1 - Q3 Actual | FY2024 Q1 - Q3 Actual | YoY Change (%) |
|---|---|---|---|
Game Software - related sales* | 2,828 (67.2%) | 1,877 (63.1%) | (33.6%) |
Mobile Content - related sales** | 1,378 (32.8%) | 1,100 (36.9%) | (20.2%) |
Combined Total | 4,206 | 2,978 | (29.2%) |
*Several large projects launched around the end of the previous fiscal year are increasingly contributing to sales. However, sales fell sharply year on year due to the cancellation of multiple development projects and the effects of the project that became unprofitable during the first half.
**Sales of the ongoing mobile content operation business showed an increase year on year. At the same time, sales fell year on year due to the extended development timeline of an ongoing smartphone game project that required server expansion and reworking.
(page 3)
Earnings Forecast for Fiscal Year Ending August 31, 2024Both sales and profits were revised downward.
FY 2023 Actual | FY 2024 Revised Forecast | YoY Change (Amount) | YoY Change (%) | FY2024 Initial Forecast* | Difference | |
|---|---|---|---|---|---|---|
| Sales | 5,783 | 4,830 | (953) | (16.5%) | 5,520 | (690) |
| Operating income | 488 | (450) | (938) | -- | 20 | (470) |
| Ordinary income | 531 | (445) | (976) | -- | 20 | (465) |
| Net income attributable to owners of the parent | 499 | (296) | (795) | -- | 54 | (350) |
(page 7)
*I just want to remind normal, innocent people that, like Naughty NJ Holdings, this chart entry only shows the latest downward revision. It's actually the second in one financial year! Read pages 11-12 here.
We Avoiding unprofitable projects and losses arising from cancelled projects or lost orders
✓ will strengthen restrictions on costs and timeframes allowed for sales activities for specific projects.
✓ We will strengthen management rules to ensure the prompt finalization of contracts and order confirmations.
✓ We will strengthen rules that govern how we respond to customer requests for changes in requirements and in other aspects of ongoing projects.
Promoting risk diversification
✓ We will seek to increase transactions with new customers while continuing to build on our relations of trust with existing customers.
✓ We will expand development projects in non-game fields, thereby broadening our business domains and reducing our exposure to fluctuations within the game industry.
Specific business prospects
✓ Three major game software-related development projects are currently underway. Each is proceeding smoothly and has won high marks in interim evaluations.
✓ We plan to launch major game software development projects in the span from roughly the end of FY2024 through the start of FY2025.
✓ We expect continuing positive performance for the smartphone game projects currently underway.
✓ Of our other businesses, the home karaoke music distribution business is expected to remain stable, including anticipated contributions resulting from measures being implemented for future business, and we plan to launch development projects based on orders from new customers in the SI business.
(page 9)
Corporate Profile
(As of May 31, 2024)
Representatives: Shigeru Saito: Chairman and CEO Yasuhito Watanabe: President and COONumber of employees (consolidated): 657
(page 13)
Below is a copy of my comments that I made back on July 4, 2024 which review the 1H report for added context - now let's swim onto the main event...the Q&A presented by our very special star(fish) guest!
Interviews: Nintendo/TOSE - The Legendary Starfy
The Legendary Starfy developers talk about their upcoming DS platformer.by Corbie Dillard way back (but not waybackmachine) in May 2009
Behind on the Japanese industry & TOSE discussion from the previous thread so will park the weekly sales results to follow up. Heads up that, TOSE does post English language versions for (some) of its Financial Reports after a few days so we can look at the 3rd quarter results when it does. In the meantime it is worth looks back at the previous results (first quarter here reported similar losses to the second quarter but did not change the annual forecast) ending August 31, 2024 as it went into some detail to help explain why TOSE not the client is on the hook for it.
You can see on page 11-12 this led to a downward revision from 550 to 20 million yen operating income, projecting its Digital Entertainment Business (videogames) will post a loss of 57 million yen. Worth pointing out that on page 18, TOSE employed 631 staff as of February 29, 2024 but this had increased to 657 as per its Corporate information as of May 31, 2024. In other words, the latest downward revision issues today (通期業績予想の修正に関するお知らせ Notice regarding revision of full-year earnings forecast) is the second in the financial year.
TOSE is now expecting a post an operating loss of 450 million yen due to cancelled & delayed projects. The note underneath does reinforce the Bloomberg editorial as it mentions that TOSE expects this current situation to continue in the next financial year & beyond. Japanese publishers uses sub-contractors to minimise exposure to economic downturns but the pain is still felt by the contractors as shown above. Most are privately owned but some are publicly listed so it is worth paying attention to the likes of TOSE, NJ Holdings & YUKE'S CO., Ltd. as they will publish regular updates. NJ Holdings downgraded its forecast due to delays in securing new orders & reduced staff at Wit One Okinawa significantly over the past year. Yuke's reported a 36 million yen profit in the first quarter of the financial year having previously secured funding with the Notice of Conclusion of Commitment Line Contract (May 17, 2024).
I don't think the Bloomberg editorial had enough substance (a single analyst quote) to be taken at face value. Nor do I understand the reference to Acquire when it was sold by Gungho Online Entertainment to Kadokawa Corporation (further details can be found in my post here). But combined with other sources it does line up with my recent posts on how the contracted studios are in a weaker position so publishers can request they accept worse terms, delay or cancel projects altogether. This is why I made a point of asking NJ Holdings about its plan to self-publish to be less reliant on publishing deals. On that note, Game Studio Inc., is confirmed to be present at both Bit Summit Drift & TGS 2024 with UNDERGROUNDED set to fucking return at the former event.
That being said, a breakdown in communication between TOSE & the client over compensation is surprising to read about from a contracted studio with decades or experience. Personal reasons meant I've not been able to keep track of financial reports but once the 3rd quarter English translation is available, might send a query to its investor relations (IR) department to learn more.
First Half of Fiscal Year Ending August 31, 2024
Financial Results
Briefing Materials
April 18, 2024
Financial Results
Briefing Materials
April 18, 2024
(page 3)
(page 4)
(page 5)
You can see on page 11-12 this led to a downward revision from 550 to 20 million yen operating income, projecting its Digital Entertainment Business (videogames) will post a loss of 57 million yen. Worth pointing out that on page 18, TOSE employed 631 staff as of February 29, 2024 but this had increased to 657 as per its Corporate information as of May 31, 2024. In other words, the latest downward revision issues today (通期業績予想の修正に関するお知らせ Notice regarding revision of full-year earnings forecast) is the second in the financial year.
(Google Translate)
TOSE is now expecting a post an operating loss of 450 million yen due to cancelled & delayed projects. The note underneath does reinforce the Bloomberg editorial as it mentions that TOSE expects this current situation to continue in the next financial year & beyond. Japanese publishers uses sub-contractors to minimise exposure to economic downturns but the pain is still felt by the contractors as shown above. Most are privately owned but some are publicly listed so it is worth paying attention to the likes of TOSE, NJ Holdings & YUKE'S CO., Ltd. as they will publish regular updates. NJ Holdings downgraded its forecast due to delays in securing new orders & reduced staff at Wit One Okinawa significantly over the past year. Yuke's reported a 36 million yen profit in the first quarter of the financial year having previously secured funding with the Notice of Conclusion of Commitment Line Contract (May 17, 2024).
I don't think the Bloomberg editorial had enough substance (a single analyst quote) to be taken at face value. Nor do I understand the reference to Acquire when it was sold by Gungho Online Entertainment to Kadokawa Corporation (further details can be found in my post here). But combined with other sources it does line up with my recent posts on how the contracted studios are in a weaker position so publishers can request they accept worse terms, delay or cancel projects altogether. This is why I made a point of asking NJ Holdings about its plan to self-publish to be less reliant on publishing deals. On that note, Game Studio Inc., is confirmed to be present at both Bit Summit Drift & TGS 2024 with UNDERGROUNDED set to fucking return at the former event.
That being said, a breakdown in communication between TOSE & the client over compensation is surprising to read about from a contracted studio with decades or experience. Personal reasons meant I've not been able to keep track of financial reports but once the 3rd quarter English translation is available, might send a query to its investor relations (IR) department to learn more.
この質疑応答集は、2024 年 7月4 日の決算発表後、アナリストや機関投資家等の皆様から
いただいた主なご質問をまとめたものです。ご理解いただきやすいよう、一部内容の加筆・
修正を行っております。
A1: 業績回復に向けては、当第 3 四半期までに発生したような想定外の不採算案件や案 件の中止・失注・延期等による損失の発生を防止すること、また付加価値の高い開 発案件を進行させ、売上・利益を積み上げることの両面が不可欠です。 前者については、個別案件の営業活動に関する費用や期間の制限強化、契約や正式 受注の早期化、開発中に変更があった際の対応ルール厳格化を進め、損失の発生防 止を徹底してまいります。
後者についての見通しは、現在の主軸であるゲームソフト関連の開発では、進行中 の大型案件 3 件は中間評価良好で順調に進んでおり、2025 年 8 月期初頭頃までに 新たに大型案件の立ち上げを予定しています。運営中のスマートフォンゲーム及び 家庭用カラオケ楽曲配信事業は今後も安定した推移が見込まれ、SI 事業では新規顧 客との開発案件の開始を予定しています。それぞれの案件を品質高く着実に進めて まいります。
A2: 第 3 四半期に中止や延期が発生した開発案件は、当社の以前からの主要な顧客との ものです。顧客にて中長期的な事業成長のための方針見直しや組織再編がなされ、 それに伴ってゲームソフトの開発計画が変更となったため、当社と開発を予定して いた複数のゲームソフトにも一部中止や開発延期の影響がありました。当該顧客か らの開発案件は現在進んでいるものもありますので、今後はこれまで以上に顧客の 方針に寄り添った付加価値の高いご提案に努め、パートナー企業としてより良い関 係の構築を続けていけるよう働きかけてまいります。
A3: 当第 3 四半期に発生した開発案件の中止は、まだ企画立案段階であったことなどか ら、顧客からの補償は見込んでおりません。 トレンドや技術が目まぐるしく変化する近年、大型化・複雑化しているゲーム開発 では開発途中で計画に見直しを余儀なくされることも増えています。そのため当社 では、日頃から顧客との情報交換を密にし慎重に進行することはもちろん、開発段 階を細分化し段階毎に契約を締結することによって開発が進行したところまでは対 価が保証されるよう対策しております。顧客側の都合で進行中の開発案件が中止と なった場合、開発が終わっているところまでは対価が支払われる契約とするケース がほとんどですが、今後は取りこぼしがないよう従来からの取引の慣例を見直し、 管理の強化を進めております。
A4: 当連結会計年度中に進行・開始を予定していた複数の開発案件が中止・着手延期と なりましたが、2025 年 8 月期初頭頃までにゲームソフト関連の新しい大型案件が立 ち上がることを予定しています。このことから、2025年8月期前半の稼働低下は最 小限に抑えていけると考えております。
また A1 で述べた通り、個別案件の営業活動に関する費用や期間の制限強化、契約 や正式受注の早期化、開発中に変更があった際の対応ルール厳格化等の取り組みを 進めることで、今後案件の中止や延期が避けられなかった場合にも、大きな損失を 発生させないようにしてまいります。
A5: コロナ禍の巣ごもり需要の反動もあり一時的に少し停滞している感じはあるかもし れませんが、ゲーム業界はまた盛り上がりを見せ活性化していくものと考えていま す。任天堂社の次世代ゲーム機の発表時期が明言され期待は一段と高まっており、 またグローバルのデジタルエンタテインメント市場は拡大を続けています。テクノ ロジーの進歩によりデジタルエンタテインメントの多様化も進むと考えられます。 当社では先進技術の研究開発を含め開発力と品質の向上に努め、今後もユーザーの 皆様に楽しんでいただけるデジタルエンタテインメントコンテンツを企画・開発し、 業績を回復、拡大させてまいります。
[Additional recruitment decided] Pre-applications are now being accepted for additional recruitment of new graduates for 2025!
2024年8月1日(木)より、以下の職種で新卒採用を追加募集いたします。
募集職種別の「あさがくナビ2025」のページより、ぜひプレエントリーをお願いいたします。プレエントリーいただくと、エントリー受付開始日にご案内を差し上げます。
※2025年度前期選考の内容を記載しております。
詳細は決定次第更新いたしますので、少々お待ちください。
・ゲームプログラマー／サーバーエンジニア／WEBエンジニア
プレエントリーはこちらから。
・プランナー
プレエントリーはこちらから。
・アーティスト
プレエントリーはこちらから。
・サウンドクリエーター
プレエントリーはこちらから。
・ビジネスプランナー
プレエントリーはこちらから。
募集職種別の「あさがくナビ2025」のページより、ぜひプレエントリーをお願いいたします。プレエントリーいただくと、エントリー受付開始日にご案内を差し上げます。
■募集職種：
※2025年度前期選考の内容を記載しております。
詳細は決定次第更新いたしますので、少々お待ちください。
・ゲームプログラマー／サーバーエンジニア／WEBエンジニア
プレエントリーはこちらから。
・プランナー
プレエントリーはこちらから。
・アーティスト
プレエントリーはこちらから。
・サウンドクリエーター
プレエントリーはこちらから。
・ビジネスプランナー
プレエントリーはこちらから。
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