Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023

(Under Japanese GAAP)
July 28, 2022
Listed company name:

Drecom Co., Ltd.

Listing

Tokyo Stock Exchange

Code number

3793

URL:

https://drecom.co.jp/

Representative

President and Representative Director: Yuki Naito

Contact person

Board of Directors, Hideki Goto (TEL) +81 (0)50-3101-9977

Scheduled date to file quarterly securities report: August 10, 2022
Scheduled start date to commence dividend payments: －Preparation of supplementary materials on quarterly financial results: Yes
Holding of quarterly financial results briefings: Yes(Yen amounts are rounded down to millions, unless otherwise noted.)
1. Consolidated Financial Results for the three months ended June 30, 2022 (From April1, 2022 to June 30, 2022)(1) Consolidated financial results (cumulative)

Net sales
Three months ended

Operating Income

Million yen%

Million yen

%

2,927

10.0

817

62.1

810

64.6

521

73.5

2,661

-19.4

504

-19.2

492

-19.1

300

-35.6

June 30, 2022
June 30, 2021
Note: Comprehensive income(% is Year-on-year rate of increase / decrease)
Attributable to owners
Ordinary incomeof parent
quarterly net income%%

For the three months ended June 30, 2022 ¥522 million yen (73.4%)
For the three months ended June 30, 2021 ¥301 million yen (-35.6%)

Quarterly
Quarterly
Diluted net earnings per
Net earnings per share
share
Three months ended

Yen

Yen

June 30, 2022

18.35

18.34

10.53

10.51

June 30, 2021
(2) Consolidated financial Condition
Total Assets
Three months ended

Net Assets

Equity-to-asset ratio

Net assets per share

Million yen

Million yen

%

Yen

9,894

4,949

49.5

172.30

4,574

46.9

159.06

June 30, 2022
Fiscal year ended

9,653

March 31, 2022
Reference: Equity capital As of June 30, 2022
As of March 31, 2022

¥4,899 million¥4,522 million

2. Cash dividends

Annual dividends
First quarter-end Second quarter-end Third quarter-end
Fiscal year ended

March 31, 2022
March 31, 2023
March 31, 2023
(Forecast)Fiscal year-end

Total

JPY

JPY

JPY

JPY

JPY

―

0.00

―

5.00

5.00

0.00

―

5.00

5.00

―

Note: Revision to the forecast of cash dividends most recently announced: None

1/11

3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)(% increase or decrease from the previous year)

Net sales
Fiscal year ending

Million yen

March 31, 2023

13,000Ordinary income

Profit attributable toEarnings per shareowners of parent%

Million yen%

Million yen

%

Yen

25.7

1,900

23.2

1,200

48.6

42.20

Operating income% Million yen

23.5

2,000

Note: Revisions to the most recently announced earnings forecasts:

None*Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change inscope of consolidation): None
New ―, (Company name) ―,Exclusion ― , (Company name) ―(2) Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
(3) Changes in accounting policies, changes in accounting estimates, and re-display of amendments(i) Changes in accounting policies due to revisions to accounting standards: Yes(ii) Changes in accounting policies due to other reasons: None(iii) Changes in accounting estimates: None(iv) Retrospective restatement: None
(Note) For details, please refer to "2. Quarterly Consolidated Financial Statements and Key Notes (3) Notes onquarterly consolidated financial statements (Change in accounting policy)" on page 10 of the attached materials.
(4) Number of issued shares (common shares)(i) Total number of issued shares at the end of the period (including treasury shares)
As of June 30, 2022

29,072,696 shares

As of March 30, 2022

29,072,696 shares(ii) Number of treasury shares at the end of the period
As of June 30, 2022

637,366 shares

As of March 30, 2022

637,366 shares(iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)
Three months ended June 30, 2022

28,435,330 shares

Three months ended June 30, 2021

28,550,949 shares(Note) 613,300 shares of the Company (6,133 voting rights) owned by Custody Bank of Japan, Ltd. (hereinafter referred toas “ESOP Trust Unit”) are included in the number of treasury stock at the end of the above period.
*Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit
corporation.
*Proper use of earnings forecasts, and other special matters(Notes on future descriptions)
The forecasts above are based on information currently available and certain assumptions deemed reasonable by theCompany as of the date of release of this document. Actual future results may differ from forecasts figures due to various
factors(How to obtain supplementary explanatory materials for financial results)
The Company is scheduled to hold a financial results briefing for institutional investors and analysts on July 28, 2022. The
financial results presentation materials to be distributed at this briefing will be posted on the Company's website
immediately after the briefing.
2/11

Drecom Co., Ltd.(3793) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)

Table of Contents
1. Qualitative Information on Consolidated Financial Results for the First Quarter Ended June 30, 2022

4(1) Explanation of Operating Results ········································································································· 4(2) Explanation of Financial Position ·········································································································· 5
2. Quarterly Consolidated Financial Statements and Key Notes

6(1) Quarterly Consolidated Balance Sheet ·································································································· 6(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Comprehensive Income Statements··· 8
Quarterly Consolidated Statement of Income ........................................................................................................ 8(Cumulative period for consolidated first quarter, three months ended June 30, 2022)

8

Consolidated quarterly statements of comprehensive income ................................................................................ 9(Cumulative period for consolidated first quarter, three months ended June 30, 2022)

9(3) Notes on quarterly consolidated financial statements··············································································· 10(Notes on going concern assumptions) ............................................................................................................... 10(Notes on significant changes in the amount of shareholders' equity) .................................................................. 10(Change in accounting policy) ............................................................................................................................. 10(Information by Segment).................................................................................................................................... 11(Significant subsequent events) .......................................................................................................................... 11

3/11

Drecom Co., Ltd.(3793) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)

1. Qualitative Information on Consolidated Financial Results for the First Quarter Ended June 30, 2022
(1) Explanation of Operating Results
The Group's raison d'etre is "with entertainment" and our goal is to continue to create services that exceed people's
expectations. We also strive to create unprecedented value and deliver experiences that captivate users. In the medium
term, we aim to become a comprehensive entertainment company that provides a variety of digital entertainment content
globally, centered on our IP, and to achieve sustainable growth and increase our corporate value.
In the mainstay game business, our main business is the development and operation of games, and we develop andoperate third-party IP games, game platforms, and original games. In the media business, we are engaged in businessdevelopment with the aim of creating the next generation of core businesses. We have launched new services on a trial
basis, utilizing our knowledge of Internet services, and are conducting a series of trials for commercialization.
In the first quarter of the current consolidated cumulative period, net sales were 2,927,195 thousand yen (up 10.0%
year-on-year), operating income was 817,189 thousand yen (up 62.1% year-on-year), ordinary income was 810,539
thousand yen (up 64.6% year-on-year), and net income attributable to shareholders of the parent company amounted to521,831 thousand yen (up 73.5% from the same period of the previous year), reaching a record high.
The results for each segment for the first quarter of the consolidated fiscal year under review are as follows.

Game BusinessIn the game business, one of our mainstay IP game titles, which celebrated its 8th anniversary, performed well globallyand contributed to earnings.
Net sales increased year-on-year thanks to strong global sales of our mainstay IP titles, the release of new titles in thelast fiscal year, and strong performances of other titles in operation even in the face of tough competition from competing
titles.
Profits increased from the same period of the previous fiscal year due to the impact of increased sales of mainstay
titles as well as the closure of some unprofitable titles.
As a result, segment sales amounted to 2,852,416 thousand yen (up 8.0% year-on-year) and segment income
amounted to 892,398 thousand yen (up 52.1% year-on-year). This segment is our core business, and we will continue
to strive to maintain stable earnings from titles in operation and aim to increase sales and profits through the success ofseveral new titles under development.

Media BusinessIn the media business, "Rooot," a Twitter-based fan community promotion service, steadily expanded its businessscale and contributed to earnings. In addition, in order to focus on the development, acquisition, and nurturing of IP anddiversification of monetization channels, we are focusing on new businesses in the entertainment domain other thangames, namely publishing and video business. We are also focusing on new business development in the Web3 domain.
Net sales increased year-on-year as "Rooot" steadily expanded its services.
Regarding profit, the company continues to incur expenses in advance due to aggressive investment in new businessareas. However, it sees as a great opportunity to expand its business performance, and the amount of loss decreased
from the same period of the previous year due to the effect of increased revenue.
As a result, segment sales amounted to 74,778 thousand yen (up 252.7% year-on-year) and segment loss amounted
to 75,209 thousand yen (segment loss of 82,698 thousand yen in the same period last year). In this segment, theCompany will continue to promote aggressive R&D investment with the aim of achieving medium- to long-term businessgrowth.
Looking ahead, we will work to further improve profitability in our mainstay game business and aim to grow sales
through the release of new titles. In addition, we will focus on business development in entertainment areas other thangames to grow into a comprehensive entertainment company centered on IP. Furthermore, we will promote our growthstrategy by integrating our existing businesses with the Web3 domains.

4/11

Drecom Co., Ltd.(3793) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(2) Explanation of Financial Position(Assets)
Current assets at the end of the first quarter of the current consolidated fiscal year totaled 6,617,684 thousand yen, adecrease of 148,324 thousand yen from the end of the previous consolidated fiscal year. This was mainly due to adecrease of 523,488 thousand yen in cash and deposits. Noncurrent assets totaled 3,276,847 thousand yen, an increaseof 389,385 thousand yen from the end of the previous fiscal year. This was mainly due to an increase of 465,613 thousand
yen in software temporary account, despite a decrease of 84,402 thousand yen in software.
As a result, total assets amounted to 9,894,532 thousand yen.

(Liabilities)
Current liabilities at the end of the first quarter of the current consolidated fiscal year totaled 2,752,689 thousand yen,
an increase of 42,772 thousand yen from the end of the previous consolidated fiscal year. This was mainly due toincreases of 66,500 thousand yen in short-term loans payable and 44,921 thousand yen in income taxes payable,
respectively, despite a decrease of 82,810 thousand yen in provision for bonuses. Noncurrent liabilities amounted to2,192,151 thousand yen, down 177,327 thousand yen from the end of the previous fiscal year. This was mainly due to a
175,750 thousand yen decrease in long-term loans payable.
As a result, total liabilities amounted to 4,944,841 thousand yen.

(Net assets)
Total net assets as of June 30, 2022 amounted to 4,949,691 thousand yen, an increase of 375,616 thousand yen fromthe end of the previous fiscal year. This was mainly due to the recording of 521,831 thousand yen in net income
attributable to parent company shareholders for the quarter.
As a result, the equity ratio was 49.5% (46.9% at the end of the previous fiscal year).

5/11

Drecom Co., Ltd.(3793) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)

2. Quarterly Consolidated Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheet(Unit: thousand yen)Previous consolidated fiscal year
(March 31, 2022)

Three months ended June 30, 2022
(June 30, 2022)

ASSETS
Current assets
Cash and deposits

4,737,225

4,213,736

Accounts receivable

1,485,317

2,054,364

Work in progress

10,144

9,553

Prepaid expenses

157,555

141,781Other375,766

198,247

Total current assets

6,766,009

6,617,684

Fixed assets
Tangible Fixed Asset
Buildings

184,236

189,829

Accumulated depreciation-13,603-17,787

Buildings (net)170,632

172,041

Tools, furniture & fixtures

69,03073,424

Accumulated depreciation-33,995-39,431

Tools, furniture & fixtures (net)35,03433,993

7,232

7,232

Accumulated depreciation-2,007-2,282

Lease assets (net)

5,225

4,950

Total tangible fixed assets

210,891

210,985

Lease assets

Intangible assets
Software557,325

473,922

Software in progress

1,333,425

1,799,039

Total intangible assets

1,890,751

2,272,962

7

59,926

Deferred tax assets

465,737

385,390

Deposit

199,404

199,404

Other

120,668

148,178

Investments and other assets
Investment securities

Investments and other assets
Total fixed assets
Total assets

6/11

785,818

792,899

2,887,461

3,276,847

9,653,470

9,894,532

Drecom Co., Ltd.(3793) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(Unit: thousand yen)Previous consolidated fiscal year
(March 31, 2022)

Three months ended June 30, 2022
(June 30, 2022)

LIABILITIESCurrent liabilities
Accounts payable

357,864

380,149

Short-term debit
Long-term debt due within one year

146,000
808,000

212,500
803,000

Lease obligations
Accounts payable

1,281
579,036

1,281
497,878

Income taxes payable
Bonus payment reserve

142,079
138,497

187,000
55,687

Other537,158

615,192

Total current liabilities

2,709,917

2,752,689

2,014,000

1,838,250

4,806
100,000

4,486
100,000

Fixed liabilities
Long-term debt
Lease obligations
Asset retirement obligation
Other

250,671249,415

Total fixed liabilities

2,369,478

2,192,151

5,079,395

4,944,841

Shareholders' equity
Capital

1,792,991

1,792,991

Capital surplus
Retained earnings

2,050,152
953,6812,050,152
1,330,270

Total liabilities
Net assets

Treasury stock-274,029-274,029

Total shareholders' equity

4,522,796

4,899,385

7

7

7

7

Subscription rights to shares

49,06749,067

Non-controlling interests

2,203

1,230

4,574,075

4,949,691

9,653,470

9,894,532

Accumulated other comprehensive income(loss)
Valuation difference on available-for-salesecurities
Total accumulated other comprehensive
income (loss)

Total net assets
Total liabilities and net assets

7/11

Drecom Co., Ltd.(3793) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Comprehensive Income
Statements
Quarterly Consolidated Statement of Income(Cumulative period for consolidated first quarter, three months ended June 30, 2022)(Unit: Thousand yen)Three months ended
June 30, 2021
(April 1, 2021 to June 30, 2021)

Three months ended
June 30, 2022
(April 1, 2022 to June 30, 2022)

Net sales
Cost of sales

2,661,328
1,621,178

2,927,195
1,618,881

Gross profit

1,040,149

1,308,314

Selling, general and administrative expenses

535,996

491,125

Operating income

504,153

817,189

0
98

0
4,106

Non-operating revenue
Interest received
Gain on investments in capital

3

524

102

4,631

Non-operating expenses
Interest expense

11,03910,051

Commission fee
Foreign exchange loss

250
524

729
-

-

500

11,814

11,281

492,441

810,539

492,441

810,539

Other
Total non-operating income

Other
Total non-operating expenses
Ordinary income
Net income before income taxes and minority
interests
Corporate, inhabitant and enterprise taxes

67,379207,758

Income taxes-deferred

123,768

80,346

Total income taxes

191,147

288,105

Quarterly net income

301,293

522,433

Net income attributable to noncontrolling interests
Net income attributable to owners of the parent

8/11

580

601

300,713521,831

Drecom Co., Ltd.(3793) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)

Consolidated quarterly statements of comprehensive income(Cumulative period for consolidated first quarter, three months ended June 30, 2022)(Unit: Thousand yen)Three months ended
June 30, 2021
(April 1, 2021 to June 30, 2021)

Three months ended
June 30, 2022
(April 1, 2021 to June 30, 2022)

Quarterly net income or loss

301,293

522,433

Quarterly comprehensive income

301,293

522,433

300,713521,831580

601(Breakdown)
Quarterly comprehensive income for ownersof parent company
Quarterly comprehensive income fornon-controlling shareholders

9/11

Drecom Co., Ltd.(3793) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(3) Notes on quarterly consolidated financial statements(Notes on going concern assumptions)
Nothing applicable.

(Notes on significant changes in the amount of shareholders' equity)
Nothing applicable.

(Change in accounting policy)(Application of Accounting Standard for Revenue Recognition)
The "Guidance on Accounting Standard for Measurement of Fair Value" (ASBJ Guidance No. 31, June 17, 2021,
hereinafter referred to as "Guidance on Accounting Standard for Measurement of Fair Value") is applied from the
beginning of the first quarter of the current fiscal year. The new accounting policy stipulated in the Guidance on
Accounting Standard for Fair Value Estimation will be applied prospectively in accordance with the transitional
treatment stipulated in Paragraph 27-2 of the Guidance. The new accounting policy is applied prospectively. Thereis no impact from this change.

10/11

Drecom Co., Ltd.(3793) Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023
(Under Japanese GAAP)(Information by Segment)
Segment Information
I. Previous three months ended, from April 30, 2021 to June 30, 2021, consolidated period
Information on the sales, profits or losses per reporting segment(Unit: Thousand yen)

Reporting Segment
Gamebusiness

Media
Business

Adjustment

Total

Quarterly
consolidated
incomestatement
amount

Sales
Sales to externalcustomers

2,640,125

21,202

2,661,328－

2,661,328

Sales or transfers
inside or between
segments

－

－

－

－

－

Total

2,640,125

21,202

2,661,328－

2,661,328

Segment profit or Loss

586,851-82,698

504,153－

504,153

Note: Segment income or loss (-) is the same as operating income in the quarterly consolidated statements of income.

II. Three months ended, from April 1, 2022 to June 30, 2022, consolidated period
Information on the sales, profits or losses per reporting segment(Unit: Thousand yen)

Reporting Segment
Gamebusiness

Media
Business

Adjustment

Total

Quarterly
consolidated
incomestatement
amount

Sales
Sales to externalcustomers

2,852,416

74,7782,927,195－

2,927,195

Sales or transfers
inside or between
segments

－

－

－

－

－

Total

2,852,416

74,7782,927,195－

2,927,195

Segment profit or Loss

892,398-75,209817,189－

817,189

Note: Segment income or loss (-) is the same as operating income in the quarterly consolidated statements of income.

(Significant subsequent events)
Not applicable

11/11