The 11th Term Second Quarter
Financial Results Presentation
CROOZ, Inc.
JASDAQ Standard; Code 2138
The 11th Term Second Quarter Financial Results Presentation
A g end a
Part 1 Overall Profile Part 2 The Future Part 3 Policies
This quarter’ s good news What are the business strategies for 11th term? What is the policy on return to shareholders?
An important message Any plans for new titles? What are the trends in regard to dividends and payout ratios?
What does CROOZ, Inc. do? What is our competitive edge going forward? A special notice
What are social games? What will drive further growth in social games? Frequently asked questions
What are our main services? What plans do we have to maintain our lead in the long term? Supplementary materials
What are our major social game titles? Compass – Marketing database Points to note
What’ s Nekketsu Kouha Kunio-Kun (RENEGADE)? Venus – Accelerated development framework
What’ s Shounan Bakusou-Zoku (Bike Bombers of Shounan)? Zeus – Common infrastructure base
What is our business model? Does your system beat other companies’ ? Prove it.
How does CROOZ make profit? What drives medium-term growth?
How large is the game software market?
What is the future outlook on market size?
Are social games really profitable?
What kinds of trends exist for CROOZ?
What kinds of trends exist for ordinary income?
How were the operating results?
How is business progressing?
We have a very special announcement on the last page.
Please look forward to it.
Before that, we have an important message for you.
This quarter’ s good news
An important message
The 11th Term Second Quarter Financial Results Presentation
T hi s q u a r te r ’ s g o o d n e w s
A flood of social games!
This quarter saw the release of our 4 greatest titles.
During the 3rd quarter,we pushed our Good News even further,
revising the number of new titles.
3-5 games 5-7 games!
This quarter’ s good news
An important message
Part 2
The 11th Term Second Quarter Financial Results Presentation
T hi s q u a r te r ’ s g o o d n e w s
Along with Nekketsu Kouha Kunio Battle and Shounan Bakusou-Zoku,
Tenchi wo Kurau is a hit,
with over 100 million yen in sales for September alone!
Plus, Sengoku Battle! Kunio-Kun
went over 120 million yen in sales for the same month!
Thanks to the Good News above, we can announce
that performance in the 2nd quarter was even better than the 1st.
Sales: 1,774 million yen 2,089 million yen (up 17%)
Operating profits: 483 million yen 510 million yen (up 5%)
An important message regarding
good news planned for next quarter
The 11th Term Second Quarter Financial Results Presentation
An important message regarding
g o o d ne ws p l a n n e d fo r n e x t q u a r te r
1. This will be an aggressive year for us. We refuse to be satisfied with
our current situation and are pushing toward new opportunities.
2. In addition to our social games using already popular characters, we
plan to release original titles. We have the knowhow and technology to
turn any release starring a popular character into a million-seller over
time. Now we plan to make a fully-original game that can become a
million-seller on its own.
3. We will hire 30 more people. We will increase the staff on our social
game lines, and create an organization that will become the nation’ s
greatest social application provider. The personnel expenses incurred
by this increase in staff will be easily covered by the increase in sales
mentioned in our earnings forecast.
?
What does CROOZ, Inc. do
CROOZ provides Internet-based services.
Current services are centered on social games.
What are social games ?
Packaged games Social games
Desktop game consoles Mobile phones, PC
The 11th Term Second Quarter Financial Results Presentation
W ha t a r e s o c i a l g a m es ?
Packaged games Social games
One-time sale model Continuous revenue generating model
Basically played by 1 or 2 players with limited Basically played by multiple players; abundant
communication communication and highly entertaining
There is great risk in relation to the profitability Stable revenue generation as user inputs can
of these games as they cannot be modified after be reflected instantly and improvements can
they are put on the market. be made
Game machine manufacturers: Nintendo, Sony, etc.
Game software developers: Capcom, Sega, etc.
Desktop game consoles Mobile phones, PC
Wii PS3 Xbox360 (Cell phone and Smartphone, PC)
Glossary “Social games”
Games offered as social applications via SNS (social networking services).
*Wii screens and game software pictures in this material have been extracted from the website of Nintendo.
Playstation 3 screens have been extracted from the website of Sony Computer Entertainment Inc. Mobage screens have been extracted from the website of DeNA Co., Ltd.
Facebook images have been extracted from the Facebook website. Images of notebook computers have been extracted from the Hewlett-Packard Japan website.
What are our main services
Social games
? Blog site
Mini game site Online mall
Other 80sites Mail order site
Mainly social games and sites aimed at a female audience
The 11th Term Second Quarter Financial Results Presentation
W h a t a r e o ur m a i n s er v i c es ?
CROOZ provide a large number of social games as the main pillar of
our current services.
In addition, CROOZ offers as many as 80 sites including blog sites
aimed at women, online sales services and mini game sites.
What are our major social game titles ?
Nekketsu Kouha Shounan Sengoku Battle!
Tenchi wo Kurau
Kunio Battle Bakusou-Zoku Kunio-Kun
Fighting-based social games
The 11th Term Second Quarter Financial Results Presentation
W h a t a re ou r m a jo r s o c i a l g a m e t i t l es ?
Among social games, our main service, four titles stand out as our major
strength: Nekketsu Kouha Kunio Battle, Shounan Bakusou-Zoku, Sengoku
Battle! Kunio-Kun and Tenchi wo Kurau.
We provide several titles featuring popular characters on Mobage: Nekketsu
Kouha Kunio Battle, Shounan Bakusou-Zoku, Sengoku Battle! Kunio-Kun,
Tenchi wo Kurau, Super Wars Robot Battle, Team and Resistance! Gang King
as well as CROOZ original titles Treasure and Conquest! Dragon Battle and
Ultimate Evolution! Sengoku Break.
What’s Nekketsu Kouha Kunio-Kun (RENEGADE) ?
Final Fantasy Series 97 million units
Dragon Quest Series 54 million units
Monster Hunter Series 13 million units
10
Nekketsu Kouha Kunio-Kun
(RENEGADE) Series million units
Bomber Man Series 10 million units
Gyakuten Saiban Series
(Phoenix Wright: Ace Attorney)
3.9 million units
Final Fight Series 3.2 million units
The 11th Term Second Quarter Financial Results Presentation
What’s Nekketsu Kouha Kunio-Kun ( RENEGADE ) ?
Nekketsu Kouha Kunio-Kun (RENEGADE) is the game title that made a huge
hit in the 1980’ s and 1990’ s, selling over 10 million units primarily for the
Nintendo Entertainment System.
A popular, leading Japanese game series that created a major gaming boom in the 80’ s and 90’ s
Final Fantasy Series 97 million units
Dragon Quest Series 54 million units
Monster Hunter Series 13 million units
Nekketsu Kouha Kunio-Kun (RENEGADE) Series 10 million units
Bomber Man Series 10 million units
Gyakuten Saiban Series(Phoenix Wright: Ace Attorney) 3.9 million units
Final Fight Series 3.2 million units
* Source for number of units sold: For Final Fantasy and Dragon Quest, the website of Square Enix Co., Ltd.; for Monster Hunter,
Gyakuten Saiban and Final Fight, the website of Capcom Co., Ltd.; for Bomber Man, the website of Hudson Soft.
What’s Shounan Bakusou-Zoku (Bike Bombers of Shounan) ?
Dragon Ball 152 million units
Kinnikuman
(M.U.S.C.L.E.) 53 million units
Saint Seiya 25 million units
Shounan
Bakusou-Zoku 20 million units
ROOKIES 20 million units
Cat’ s Eye 18 million units
Ring ni Kakero 13 million units
The 11th Term Second Quarter Financial Results Presentation
W h a t ’ s Sh ouna n B a k us o u- Z o k u?
( Bik e B o m b er s o f S ho una n)
Shounan Bakusou-Zoku was a hit comic book that was popular enough to
move over 20 million units and be made into a cartoon and a live-action
movie.
A selection of major comic titles and units sold (within Japan)
Dragon Ball 152 million units
Kinnikuman (M.U.S.C.L.E.) 53 million units
Saint Seiya 25 million units
Shounan Bakusou-Zoku 20 million units
ROOKIES 20 million units
Cat’ s Eye 18 million units
Ring ni Kakero 13 million units
What is our business model ?
Approximately 119,550 thousand users in total
Approximately 58,990 thousand users Approximately 33,650 thousand users Approximately 26,890 thousand users
Fee income
Approximately 29,710 thousand users
Fees paid by each and every mobile phone user contribute to earnings
The 11th Term Second Quarter Financial Results Presentation
W h a t is o ur b us i nes s m o d el ?
Docomo, au, and Softbank
All users of mobile phones are our customers
CROOZ provides social games e.g. Nekketsu Kouha Kunio-Kun Series on the
“Mobage” game platform from DeNA Co., Ltd.
Mobage services approximately 29,710 thousand users (as of June 30 2011)
CROOZ earns revenue from fees paid by users that access Mobage via
mobile phone networks.
*Number of users: Extracted from the website of the Telecommunications Carriers Association
*Logos images have been extracted from the websites of NTT DOCOMO, Inc., KDDI CORPORATION, SOFTBANK MOBILE Corp., and DeNA Co., Ltd. respectively.
How does CROOZ make profit ?
We sell incredibly powerful weapons for only 500 yen.
The 11th Term Second Quarter Financial Results Presentation
How does CROOZ make profit?
In the case of Nekketsu Kouha Kunio-Kun (RENEGADE):
An action game in which the player trains and strengthens the character
to fight against enemies cooperatively with friends
“With this weapon,
“I could have won “I’ ll go to the item shop I have become more
if I had this weapon.” and buy this weapon.” powerful. I can now
play more effectively!”
Fee income
Revenue from
selling items
To start
“By introducing this game
“I could have won with
to a friend and having
this weapon, but I am not
them register, I was
sure I want to pay for it.”
rewarded with the item!”
“With this weapon,
User loses against
the opponent
Increase in users I have become more
powerful. I can now
Users solicit
play more effectively!”
friends to join
Point! CROOZ earns revenue from selling weapons that strengthen the character,
and the reduction in the required training time of character, as well as other features
How large is the game software market ?
Mobile games Wii
Playstation3
JPY 82.2 million JPY 80.1 million
JPY 46.6
million
Social games
Online games JPY 138.9 billion
JPY 132.9 billion 2010
The 11th Term Second Quarter Financial Results Presentation
How large is the game software market?
The social game market has grown to account for JPY 138.9 billion in 2010.
This means the market has grown far beyond that of Wii and PlayStation 3
software seen in TV commercials.
*The market sizes of the Wii and the PlayStation3 were derived by applying the ratio of sales volumes of software against the size of the household game console market.
?
2,642
What is the future
2,391
outlook on market size
(100s of million yen) 1,974
1,389
Online games
1,329
Mobile games
822
Wii
801
Playstation3
466
447
157
0 5 60
2005 2006 2007 2008 2009 2010 2011 2012 2013
Social games have finally surpassed online games
The 11th Term Second Quarter Financial Results Presentation
What is the future outlook on market size?
Social games play leading roles in the game software market.
Social games have grown to account for JPY138.9 billion in 2010 and
form the top segment in the game software market.
The social games market will continue to expand and top JPY250
billion within the next three years.
Source: White paper on games issued by Enterbrain Inc. and materials issued by the MCF for market size. Market size for 2011 and beyond is estimated by CROOZ based on past growth rate.
Are social games really profitable ?
Brand Ranking: Number of times aired on TV commercials
1st place Mobage 1,969 times
2nd place GREE 1,616 times
3rd place NTT East 1,053 times (B FLET’ S)
4th place Lawson 847 times
5th place Toshiba 809 times (REGZA Blu-ray)
6th place Seven-Eleven 698 times
7th place Uniqlo 609 times
8th place Fujitsu 600 times (PRIME F-01C)
9th place Unilever 555 times (LUX Super Damage Repair Treatment)
10th place JAL 504 times
The 11th Term Second Quarter Financial Results Presentation
Are social games really profitable?
In terms of the number of times TV commercials have aired, Mobage is
ranked first, followed by GREE. This reflects the fact in Japan today;
companies focusing on social games such as Mobage and GREE are
highly vigorous and most aggressive in respect to their presence on TV
commercials.
Today, social game providers are comparable to firms such as NTT East
and Seven-Eleven, firms that represent companies that provide common
services available anywhere. Such are services society cannot do without.
Source: Data for the Kanto area in November 2010, extracted from the website of Video Research Comhouse Ltd.
What kind of trends exists for CROOZ
Internet contents
?
Internet commerce
Internet solutions
(Millions of yen)
8th term 9th term 10th term (Last term) 11th term (This tern )
The 11th Term Second Quarter Financial Results Presentation
W h a t k in ds o f t re nd s ex i s t f o r C R O O Z ?
Because of the continued high growth of social games, this quarter’ s sales were JPY 2,089
million, our highest ever.The increase was JPY 314 million (+17%) compared to the first
quarter.
At that time, we had just stepped into the social game market with Nekketsu Kouha
Kunio-Kun, and have been met with explosive growth since. Fourth quarter sales last year
dipped slightly, but we are back on the upswing thanks to Shounan Bakusou-Zoku being
such a hit.
In this term, Sengoku Battle! Kunio-Kun and Tenchi wo Kurau were our main titles,
each breaking 100 million yen in sales for September alone, spurring the biggest growth
in company history. In addition, two new titles were released in September to good starts:
Team and Resistance! Gang King and Ultimate Evolution! Sengoku Break.
These titles are expected to make contributions to greater growth in the 3rd quarter of this
term.
Sales from the 9th term and earlier were easily generated by our mobile advertising business.
?
Full-term forecast
What kinds of trends 2,000
exist for ordinary income
Ordinary income (millions of yen)
Ordinary income ratio (%)
1,129
253
4Q
406 510
3Q 2Q
21.4
443 25.7
239
196 2Q 483
12.1 231 1Q
6.1 1Q
8th term 9th term 10th term 11th term
(Last term) (This term)
The 11th Term Second Quarter Financial Results Presentation
What kin ds of t re n ds e xist f o r o r d i na r y i nc o m e?
High profit ratios from social games have earned ordinary profits of
JPY510 million over the quarter, our highest ever.
Compared to the first quarter, they have increased JPY 27 million (+5%).
This term, we will be actively hiring technical staff as part of our plan to
greatly expand our social game development line, but increased personnel
costs will be easily absorbed by the growth in profits from social games.
Plus, our newly-enhanced development line will be releasing one
promising new title after another.
Operating profit from the 8th term was easily generated by our mobile advertising business.
How were the operating results ?
Same quarter Change from
Previous quarter Current quarter
(Millions of yen) in previous term same quarter
(July – September) (April – June) (July – September) previous term
Net sales
Operating income
Quarter net
income
Current accounts
Loans payable
The 11th Term Second Quarter Financial Results Presentation
How w e re the o p er a t i ng r es ul t s ?
Because of the aforementioned rush of income from social games,
net sales from this quarter were JPY 2,089 million and operating
income was JPY 510 million, both record highs for this company.
How is business progressing ?
11th term forecasts Progress rate
(Millions of yen) 1st 6 mos. against
Interim Full-term interim forecasts
Net sales 3,864 3,600 7,800 107
Operating
income 994 900 2,000 110
Quarterly net
income
583 500 1,200 116
All indices have exceeded interim forecast comparisons.
The 11th Term Second Quarter Financial Results Presentation
Ho w is bu s i nes s p r o g r es s i ng ?
Progress at the end of the 2nd quarter was above interim forecasts, with
net sales at 107%, operating income at 110% and quarterly net income at
116%.
In addition to our main social game titles, Nekketsu Kouha Kunio Battle
and Shounan Bakusou-Zoku, Sengoku Battle! Kunio-Kun and Tenchi wo
Kurau have seen huge growth, creating profits that exceeded our
expectations. September saw the release of Team and Resistance! Gang
King, Treasure and Conquest! Dragon Battle and Ultimate Evolution!
Sengoku Break, all of which have had smooth starts.
We plan continue to bolster our development line and maintain a good
pace of new releases.
What are the business strategies for the 11th term ?
Social games Smartphone launch
Selection and concentration Global operation
Focus destined strategy
Com 1 4
plete
Information
Systematization
Structuring of know-how to
Comp2 3
lete
Nekketsu Kouha Kunio-Kun
Shounan Bakusou-Zoku
Tenchi wo Kurau
Mazinger Z
Gang King
Etc.
Securing of killer contents
succeed in the social games business
The 11th Term Second Quarter Financial Results Presentation
What are the business strategies for the 11th term?
Selection and concentration; Ensuring a focus destined strategy
1
Complete Selection and concentration are necessary in developing a business. Concentrating the business focus only on profitable
products leads to generating the best results from limited resources.
Solution Focusing on the social game service is the most profitable
Structuring of know-how to succeed in the social games business
C2
omplete
Quick execution of PDCA
Solution
without dependency on others is necessary in being a winner in the business
(user trend analysis, development & offering, validation of effects)
Systematization: In-house development of Compass, an analysis system, and Venus, a programming acceleration framework
Infrastructure to ensure flawless traffic is required as success in business promotes greater access
Solution Systematization: In-house operation of Zeus, a common infrastructure base
Securing of killer contents
3 In a market where products increase recklessly, contents with distinguished appeal are required in order to stay ahead of competitors even when
having the know-how required in providing good services. There is a need to reserve unrivaled rights. Such rights, in to be killer contents, must
not only be attractive but also offer elements that promote communication with friends and emphasis the real charm of social games and
higher-the-better gaming features.
Solution Reserve rights for the Nekketsu Kouha Kunio-Kun (RENEGADE) Series that offers high communication features
Global operation
4 Participate in the X-border strategy announced by DeNA Co., Ltd. and expand the business globally, including promotion via Smartphone.
Simultaneously, as the primary partner, establish a global presence ahead of others by leveraging the Nekketsu Kouha Kunio-Kun (RENEGADE) Series
Solution Challenge the global market
Any plans for new titles
112 253
? 448
554
701
Last term 344 This term
first quarter 2 3 4 first quarter 2Q 3Q
4/20 9/30 11/10 2/1 4/11 8/1
6/10 3/4 4/18 9/6
Members (10s of thousand persons)
6/13 9/26
9/27
Add 5 to 7 new titles every quarter
The 11th Term Second Quarter Financial Results Presentation
A n y p l a ns f o r new t i t l es ?
Our current game titles use characters of unrivaled popularity,
but we will soon create our own original titles to go along with
these products.
We had planned to release 2-3 new games in the 1st quarter and
upped that to 3-5 games in the 2nd quarter.
However,
for the 3rd quarter and beyond,
we will revise our plans again and aim for 5-7 new games.
Numbers on the graph represent members as of the end of each quarter.
What is our competitive edge going forward ?
Males in their Males in their
30’s and 40’s 30’s and 40’s
Biggest user segment for
A user group accounting for the highest Nekketsu Kouha Kunio-Kun
level of paid fees for social games Shounan Bakusou-Zoku,
Tenchi wo Kurau, and Mazinger Z
Highly popular among males in their 30’ s and 40’ s
The 11th Term Second Quarter Financial Results Presentation
What is our competitive edge going forward?
One of the keys to success in social games is a high unit price paid per
customer.
Fans of Nekketsu Kouha Kunio-Kun and Tenchi wo Kurau played
Nintendo Entertainment System games in the 80s and 90s, Shounan
Bakusou-Zoku fans read comics in the 80s and Mazinger Z players
watched cartoons in the 70s. In other words, these titles are popular
among people in their 30s and 40s, and this age group is our biggest
contributor. CROOZ have a large customer base in this age group, so
it will be easy to earn continued revenue from it.
What will drive further growth in social games?
G l o b a l Op e r a t io n
Android × iPhone
The 11th Term Second Quarter Financial Results Presentation
What will drive further growth in social games?
Multiplatform compatibility Android
Market
Mobage FACEBOOK Android Market App Store
Multidevice compatibility
Smartphone Smartphone lapag
lapa
pag
Galapagos PC
Android iPhone
Social games used to be available only on the traditional Galapagos
handsets and hence could be provided only to domestic users.
With Android and other Smartphone handsets being used overseas, social
games can be distributed globally going forward.
Android screens have been extracted from the Android website of Google Inc. iPhone screens have been extracted from the website of Apple Inc.
What plans do we have to
maintain our lead in the long term ?
Marketing database Accelerated development framework
Compass Venus
Zeus
Common infrastructure base
Composing our business around three core systems
These three core systems are eternal and indispensible for providing any sort of network
service and are the supports that hold up CROOZ.
The 11th Term Second Quarter Financial Results Presentation
What plans do we have to maintain our lead in the long term?
As previously described, quick execution of PDCA (user trend analysis,
development & offering, validation of effects) without dependency on
others is necessary in being a winner in the highly competitive social
games market.
Infrastructure to ensure flawless traffic is required as success in business
promotes greater access.
Considering the above, CROOZ has implemented a structure based on
in-house development and the operation of three core systems in order to
stay ahead of competitors.
These three core systems are eternal and indispensible for providing any
sort of network service and are the supports that hold up CROOZ.
Compass
An instrument with a magnetic pointer to navigate the
user to the destination
Marketing database
Analysis of elements for fine-tuning
Schedule for future enhancements
Obtain more detailed quantitative data
in order to forecast demand
The 11th Term Second Quarter Financial Results Presentation
Co m pa ss - M a r k et i ng D a t a b a s e
At which points during service do users pay additional fees?
At which points during service do users walk away?
Getting hold of detailed marketing data in order to make objective
judgments without dependency on subjective views can be a great
advantage in service planning.
Going forward, CROOZ will obtain more detailed quantitative information
in order to forecast demand.
Venus
A goddess of beauty & love, symbolic of Venus
Accelerated development framework
Swift fine-tuning operation supported
by component-based development
Schedule for future enhancements
Multiplatform compatibility for Facebook,
Android Market, the App Store and others
The 11th Term Second Quarter Financial Results Presentation
Venus-Accelerated development framework
Promptly reflecting marketing data on services is important in the social
games business.
CROOZ maintains a component-based development mechanism, which
not only enables shorter, less costly development, but also allows
creators other than specialized engineers to undertake development.
In addition, CROOZ will implement compatibility not only for Galapagos,
but for Android, iPhone and other smartphones.
CROOZ will also push beyond Mobage and reach across multiple
platforms to Facebook, Android Market, the App Store and others.
Zeus
The guardian of mankind, the ruling god
and the king of gods
Common infrastructure base
Flexibly deploy networks that can
withstand heavy traffic
Schedule for future enhancements
Integrate data centers
and cut costs by 50%
The 11th Term Second Quarter Financial Results Presentation
Zeus-Common infrastructure base
CROOZ has the advantage of maintaining in-house operation of an
infrastructure that accommodates increased access as business
flourishes and ensures flawless traffic.
CROOZ can definitely heighten its performance and scalability by
operating its infrastructure base rather than by using a cloud-type ASP
services or by outsourcing the entire infrastructure.
Going forward, CROOZ plans on integrating its data centers and
further cutting costs by 50%.
Does your system beat other companies’ ?
Maximum number of requests per second
Newly developed high-speed framework
Venus Version2.0.0.8 1,301
CodeIgniter Version2.0.2 322
ZendFramework Version1.11.10 278
Symfony Version2.0.0 271
4-5 times the capability of competitors
The 11th Term Second Quarter Financial Results Presentation
Do e s y ou r sy st e m be at o t her c o m p a ni es ’ ?
The Venus framework developed and operated by CROOZ is capable of
4-5 times the requests per second of competitor frameworks
(CodeIgniter, ZendFramework and Symfony.)
Plus, the number of requests per second that can be handled by Venus
is just the beginning. Every day we work on improving critical systems
to improve development productivity and efficiency.
*Testing done on a like-for-like basis with a multiplicity 20 and 200 accesses in venusDev02.
What drives medium-term growth ?
ervices
cial ga ming s
Gl obal so
Social games
Worldwide expansion of social games
The 11th Term Second Quarter Financial Results Presentation
What drives medium-term growth?
Continue to focus our management resources on the rapid growth of
social games and aim at staying a top player in the Japanese market.
Press into the global market by joining in DeNA’ s X-border strategy,
including smartphone development, and expand our presence not only
domestically, but internationally.
What is the policy on return to shareholders ?
As a general rule, aim to distribute dividends every term
Aim to achieve a payout ratio of 30% or higher
Recognition among all employees of the importance of dividends
Recognition among all employees of the importance of
operating income
Aim to heighten mid-term stock prices by achieving
our corporate vision
Consider various methods to improve liquidity of shares
Consider an investment unit price which will encourage
more investors
Boost internal reserves and create a term where investment
plays a bigger role than dividends
The 11th Term Second Quarter Financial Results Presentation
What is the policy on return to shareholders?
Once per quarter, CROOZ officers and executives take a retreat together and review
the return policy to shareholders based on stock prices and financial conditions.
As a general rule, we seek to ensure income that will allow us to pay dividends to shareholders each
term. CROOZ has paid dividends since the term following listing.
We aim to achieve a payout ratio of 30% so we can make returns to as many investors as possible.
We are creating an environment where all employees, not just officers and managers, recognize the
importance of dividends. As a concrete example of our policy, employee bonuses are calculated based on
the source of dividends to shareholders.
We are creating an environment where all employees, not just officers and managers, recognize the
importance of operating income. As a concrete example of our policy, officer remuneration and manager
salaries are calculated based on the operating income of the previous term.
We do not aim for short-term increases in stock prices, but increases in the mid-term based on achieving
our corporate vision.
We are considering various methods to improve the liquidity of our shares, aiming to secure 2,200 or
more shareholders in the mid-term. (As of March 31, 2011, we have 2,892 shareholders.)
We are considering an investment unit price which will encourage a large number of investors. In the
previous year, we split our stock twice because of rising stock prices.
We will boost internal reserves and create a term where investment which makes a good profit in the
long term plays a bigger role than dividends
What are the trends in regard
to dividends and payout ratios ?
7th term 8th term 9th term 10th term 11th term
(Previous) (Current)
Dividend per share
(JPY) 450 225 562 1,500 1,500
Total dividends
(millions of yen)
60 24 61 189 190
Dividend payout
ratio (%) 36.5 28.0 22.5 28.9 15.9
CROOZ has been paying dividends each term since the term after listing
The 11th Term Second Quarter Financial Results Presentation
What are the trends in regard to dividends and payout ratios?
CROOZ has succeeded in paying dividends each term since the term
after listing.
In addition, performance at the company has been excellent,
pushing total dividends every skyward.
This term, we predict total dividends equal levels to last term, but
we will observe our performance and financial conditions so that we
can increase dividends and dividend payout ratios even higher.
Stock splits were performed on October 1, 2010 and March 1, 2011. Figures calculated prior to these have been adjusted to reflect the splits.
The 7th term dividend includes the portion commemorating the first anniversary of the company’ s listing worth JPY 225.
The dividend payout ratio for the 9th term is a theoretical figure that assumes deductions of irregular factors such as extraordinary losses.
The dividend payout ratio for the 10th term was calculated based on the number of shares at the end of the 10th term.
Figures for the 11th term represent forecasts made by CROOZ as of the date of preparation of this material.
That ends the explanation of the
second quarter earnings announcement.
Hold on. What about that bit you were supposed to look forward to?
And at last
a final, special notice
A title that boasts over 6 million software units sold and
a Hollywood adaptation...
We are bringing Double Dragon to smartphones!
This winter will see the start of a new,
original social game developed for the global market.
The Double Dragon series is incredibly popular outside of Japan, with over 6 million
units sold in the 80s and 90s and a Hollywood adaptation to its name.
Frequently asked questions
Including short, Twitter-like comments from Obuchi
The 11th Term Second Quarter Financial Results Presentation
FAQ
We have gathered commonly-asked questions into this FAQ.
Q: How many employees work at CROOZ?
A: 125.
Q: Why have you hired 20 new employees in the past three months?
A: Most were mid-career employment as developers for social games.
We will hire an additional 30 new employees. Development capability is an investment for the future.
Q: What is the ratio of genders at CROOZ?
A: About 80 percent male, 20 percent female.
Q: What is the average age at CROOZ?
A: 29.
Q: What is the job distribution like at CROOZ?
A: About 90% of the staff works in a technical or creative position. The remaining 10% works in the back office.
This ratio is unlikely to change. We are a technological company, and most of our employees are technical workers.
Q: How many new employees will CROOZ hire over the next year?
A: If the people in question prove themselves capable, there is no limit to how many people we will hire and then challenge in a
number of different ways. Again, this is investment in our future.
Q: What is the average length of service for employees at CROOZ?
A: 3.5 years.
Q: What is the turnover rate?
A: Around 8%. This is reasonable at an IT company. That rate won’ t go up or down.
Q: What is the average salary at CROOZ?
A: 5.8 million yen. With an average age of 29, this puts us among the top in the industry. And it’ ll go up a bit more, too.
*Twitter images extracted from the Twitter website.
The 11th Term Second Quarter Financial Results Presentation
FAQ
Q: How many employees are working on social game development?
A: Outside of infrastructure and our design team, we have about 60 people on our specialist teams, including creators.
This number will be doubled.
Q: Do you believe the growth of social games will continue?
A: Yes.
Q: What are the strengths of CROOZ social games?
A: In addition to killer content unavailable from competitors, we have created and systemized our core systems like development
framework, marketing database, network infrastructure, etc.
Q: Can you tell us the status of social games based on title?
A: That information is not made public.
Q: Can you tell us detailed KPI on social games?
A: That information is not made public.
Q: Are you considering the release of social games on platforms other than Mobage?
A: Yes. However, content titles currently provided by CROOZ such as the Kunio-Kun series and Shounan Bakusou-Zoku are
thought to match Mobage users best. Future titles will be released based on how easily they can generate profit.
Q: Do you plan to improve profits with official content other than social games?
A: Releasing smartphone versions of different titles will expand profits.
Q: What are CROOZ’ s strengths?
A: Systemized core systems for our development framework, marketing database, network infrastructure, etc. In addition, killer
content like Kunio-Kun is our biggest strength.
The 11th Term Second Quarter Financial Results Presentation
FAQ
Q: Will you tell us mid-term business plan at CROOZ?
A: Not at this time. Just as the fact that no one predicted that Mobage would become a huge media entity five years ago taught,
the changes in this industry come hard and fast, which means that quick, flexible reactions to the environment are more
important that solid planning.
In the IT business, speed is king. Thinking five years ahead is good, but looking right ahead is better. Rather than thinking of
profits planned for five years from now, creating a system and corporate culture that can handle change seems wiser.
Q: What are CROOZ’ s major projects in the near future?
A: We plan to deepen our presence in the social games and actively expand into the global market over the next year or two.
Q: What efforts is CROOZ making in the smartphone field?
A: We are not looking to profit immediately, but are working to actively provide products and keep ourselves abreast of the latest
trends.
We are considering many things.
Q: CROOZ donated 5 million yen in the wake of the earthquake and tsunami. How else does CROOZ plan to contribute to society?
A: We try not to be a company that contributes only in the wake of the earthquake, but one that naturally contributes through
everyday activity.
CROOZ donates 100,000 yen to a guide dog fund with every new social game title released, taking profit generated by sighted
users who enjoy our games, and trying to help those with visual impairments enjoy life more.
Q: The dividend ratio at CROOZ is low this term. Will dividends increase in the future?
A: We are not sure yet. We plan to look over our policy on returns to shareholders in the near future and make a decision.
The 11th Term Second Quarter Financial Results Presentation
FAQ
Q: CROOZ released a new social game in June called Tenchi wo Kurau. How is it performing?
A: It went over 100 million yen in sales for September.
Q: What is your current business scheme?
A: There is still plenty of room for growth in social games. We aim to multiply the scope of our sales. In the future we will
release many original titles instead of using licensed titles.
We believe we can be the top SAP.
Q: What is your current target demographic?
A: Males ages 30 and over. This group is our biggest payer.
Q: They say your officers are on average the second youngest of all listed companies. Tell us more about that.
A: Every July, Toyo Keizai issues a report on officers for all listed companies and our company’ s officers ranked the second
youngest out of 3,595. The total average for officers was 59.6 years old and our average was 36 years old.
Q: You released Super Wars Robot Battle in August. How is it faring?
A: Hard numbers are not currently being made public.
Q: CROOZ had the second highest rate of stock price increases in 2011. Tell us more about that.
A: For the year-to-date (January 2011 to late August 2011) CROOZ is number two in the rate of stock price increases for
major IT companies, even against famous names like Rakuten and Cyber Agent. In addition, as of October 3, CROOZ is
now part of the ranking companies of JASDAQ because it has been selected by the J-Stock Index for their industrial
average (71 companies out of the 971 listed on JASDAQ).
Further, as of October 21, CROOZ is now part of the major representatives of JASDAQ on the JASDAQ-TOP 20
(a list of the top 20 companies out of the 971 listed on JASDAQ).
The 11th Term Second Quarter Financial Results Presentation
Supplementary materials
(Now content development/exit rules: the 4C Program)
The 4C Program (CROOZ Concentration in Core Competence Program) is a set of newly
formulated internal rules aimed at managing the selection and concentration of core competence
in CROOZ contents in order to heighten the company’ s competitiveness in the market.
The Program was launched for the purpose of maximizing development speed, quality and strength
by grouping CROOZ contents into three categories – C1 (action), C2 (preservation), C3 (investment
suspension) – based on predefined rules, and focusing the company’ s human resources and assets
on leading content (C1) that supports prompt revenue generation and high growth. While pursuing
the focus-destined strategy of placing emphasis on leading content (C1), CROOZ aims at maximizing
operating income by using a certain set of criteria to quickly and openly reach decisions internally to
terminate any site that lacks potential for prompt growth and by controlling expenditures such as
outsourcing fees, advertising expenses and internal development costs.
Supplementary information: The 4C Program
Under the 4C Program, all directors, executive officers and internal audit staff take part in a detailed, quarterly examination of the company’ s business activities
and content in order to determine the approach toward actions or exits. The Program aims to achieve the following primary objectives:
- Conducting an internal audit to assess the appropriateness of investments made for new business activities, the state of earnings, and the state of collection
and the level of financial soundness.
- Pursuit of a key policy of ensuring strict selection and concentration in core competence, restraining unnecessary investment in order to maximize profits.
- Pursuit of a key policy of exercising a focus-destined approach and investing management resources in growth services in order to maximize sales.
- Aggressive pursuit of new services and swift decision-making toward exiting if necessary and to keep unpromising investments to a minimum.
- Working toward securing a management position with sound financial conditions and favorable cash flow.
The 11th Term Second Quarter Financial Results Presentation
Points to note
The material herein contains mid-to-long-term plans and
forecasts made by CROOZ.
The information contained in these pages is not
intended to guarantee the future business results of the
company and bears certain risks and uncertainties. As
business forecasts are affected by various factors and
prone to change, we ask the reader to refrain from
relying solely on the information presented herein.