DeNA’s Q2 revenues hit yet another record high, climbing 45% Y-o-Y to $627M

By Kathleen De Vere Comment

Japanese mobile social giant DeNA has proved it doesn’t need kompu gacha to be profitable — the company has reported its highest ever revenues, seeing sales of 50.3 billion yen ($627 million) and operating profit of 20.4 billion ($254 million) during the quarter ending on Sept. 30.

The company’s revenues are up 45 percent year-over-year and 3 percent quarter-over-quarter. Operating profit is up 38 percent year-over-year and 10.8 percent quarter-over-quarter.

DeNA’s record sales came in spite of the Japanese ban on the kompu gacha monetization tactic. A practice that heavily incentivized the purchase of randomly generated virtual goods, the crackdown on kompu gacha saw smaller Japanese mobile social gaming companies like CyberAgent and Konami report noticeably lower sales after it came into affect.  DeNA gradually phased out kompu gacha from its first and third party games during May and June, so today’s earning report covers the make-or-break period where DeNA had no games using the tactic.

The results are a big win for the company and should help the company’s battered share price. Although DeNA’s shares are still down 37.4 percent from their all-time high of 4,150 yen ($51.73), prices have risen by 43.3 percent since August. The company’s shares are currently trading at 2,594 yen ($32.34), giving the company a market capitalization of 387.4 billion yen ($4.8 billion).

Japanese sales of moba-coins hit 56.2 billion during Q2 and earned the company almost $700 million during the period. The figures were above the company’s previous estimates of 55 billion moba-coin sales for Q2. DeNA credited the increase in coin consumption to mobile social monetization tactics like raid-bosses, limited time campaigns, continuous in-game events, real time battles and well modulated marketing. Mobage Japan now has 45.03 million registered users, meaning on average, each user spent about $15 on moba-coins during Q2.

Smartphone moba-coin sales also exceed feature phone moba-coin sales in September, a first for the company. DeNA also revealed it spent about $1 billion yen ($12.4 million) setting up its new free voice calling smaprtphone app Comm. Seen as a competitor to NHN’s ultra-popular Line service, DeNA is billing Comm as a strategic bid to expand its smartphone user-base.

On the international front, DeNA sold almost 30 million moba-coins during the quarter, most of which came from Mobage West. The company is predicting international moba-coin sales will hit 60 million during the third quarter. DeNA also reported four international titles: Chains of Durandal, Rage of Bahamut, Ninja Royale and Blood Brothers are all seeing average revenue per daily active user (ARPDAU) higher than $1.

The company’s operating profit margin was 40.6 percent for the quarter, up from Q!’s 38.6 percent. Overall, DeNA’s social media business — which includes its gaming division and the Mobage mobile social gaming network — accounted for 42.2 billion yen ($526.1 million) of sales, making it 95.4 percent of the company’s business. DeNA spent 4.7 billion yen ($58.5 million) on sales and promotion during the quarter, a decrease of 13 percent quarter-over-quarter.

The company is forecasting a revenue of 150 billion yen ($1.8 billion) for the first nine months of the year, an increase of 45 percent year-over-year. Operating profit is expected to hit 58 billion yen ($723.1 million), good for a net income of 33.5 billion yen ($417.6 million).