Sony Group Corporation (NYSE:SONY) Q3 2022 Earnings Call Transcript

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Unidentified Analyst: That’s all.

Daisuke Ishii: Thank you very much. It is time. So then this concludes the question-and-answer session. And next, there will be a photo session for the meeting.

Unidentified CompanyRepresentative: Ladies and gentlemen, let us start Sony Group Companies and Consolidated Financial Results Announcement. My name is Shin Chi , from IR Group of Financial Department. I’m happy to serve as MC. And please, let me introduce, those who are on the podium. Hiroki Totoki, Executive Deputy President and CFO; and Ms. Naomi Matsuoka, Senior Vice President in Charge of Corporate Planning and Control, Support for Financial Business and Entertainment Areas; Sadahiko Hayakawa, Senior Vice President, In Charge of Finance and IR. Those three are on the podium. First Totoki San will have the floor to talk about the Q3 FY 2022 consolidated financial results, and then go down to the questions and answers. And as for the questions and answers, we will first entertain questions from investors and analysts.

Then to the separate sessions from media, and in total we are planning for 45 minutes. For the related documents, we have posted on the IR website, please refer to that. So Totoki San, you have the floor.

Hiroki Totoki: Today, I will explain the following. Consolidated sales for the quarter increased 13% compared to the same quarter of the previous fiscal year to ¥3.412 billion and consolidated operating income decreased by ¥36.4 billion to ¥428.7 billion. This operating income result was close to the record high reached in the same quarter of the previous fiscal year, which benefited from the recording of ¥70.2 billion gain on the transfer of a business in the picture segment. Income before income taxes decreased by ¥63 billion year-on-year to ¥398.6 billion. And net income attributable to Sony Group Corporation stockholders decreased mainly due to the impact of the increased sales of first party software, despite an increase in cost.

The focus for FY ’22 sales is unchanged from the previous forecast. We have upwardly revised our operating income forecast to Â¥240 billion, an increase of Â¥15 billion from the previous forecast. Expenses associated with acquisition for the current fiscal year are expected to be approximately Â¥57 billion. 7.1 million units of PS5 hardware were sold during the quarter, and the cumulative number of units sold by the end of December exceeded 32 million. Based upon this result, we have set our sales forecast for the fiscal year at 90 million units. By optimizing our operations, we are exerting every effort to sell as many units as possible to meet the strong demand. Due to the penetration of PS5, the percentage of PS5 users in the number of monthly active users in December increased to about 30%.

Engagement metrics to users who transitioned from PS5 to PS5, such as the PS Plus subscription rate game playtime and average is spending amount are significantly higher than those when they played on PS4. And we will continue to focus on accelerating transition of PS4 users to PS5. In addition, nearly 30% of PS5 users will never use PS4. So with the spread of PS5, the acquisition of new users is progressing. Although total game playtime of all PlayStation users during the quarter was down 3% year-on-year, it was up 6% compared to the prior quarter, and it was up 14% in December compared to the prior month. We believe that user engagement is on the recovery trend due to the penetration of PS5 and the contribution of hit titles in terms of software for PlayStations, the new title, God of War Ragnarök recorded sales of more than 11 million copies in the first 10 weeks after its release on November 9th, making — marking it the fastest selling first party title ever.

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