First quarter of fiscal year ending March 31, 2024
Financial results presentation materials

Drecom Co., Ltd.
July 27, 2023
Please refer to the Fact Sheet on our website for consolidated financial results, cost of sales, SG&A expenses, etc., andbilling sales in the game business. https://drecom.co.jp/ir/factsheet_202403Q1.pdf

Summary of this document•
Q1 FY2023

Decided to discontinue a subsidiary's new title due to lower-than-expected sales•

Sales: 2,346 million yen (-19.8% YoY) Operating income: 8 million yen (-99.0% YoY),
Ordinary income: 2 million yen (-99.7% YoY), Net loss*1: -441 million yen (vs. net income of 521 million yen in the same
period last year)•

The subsidiary’s new title was decided to be closed, and a one-time loss was incurred. Extraordinary loss of 416 million
yen was recorded.

(April-June)
Actual•Revised full-year forecast due to Q1 situation and release schedule of titles under development•

Forecast for

Revised forecast (announced on 07/27/2023):
Sales 15,000 million yen → 11,500 million yen (-23.3%) Operating income 2,000 million yen → 500 million yen (-75.0%)

FY2023

Ordinary income 1,900 million yen → 450 million yen (-76.3%) Net income*2 1,100 million yen → 0 million yen•

Promptly change future policies and take measures to improve the profit-and-loss situation assoon as possible

Future•Improve the quality of titles scheduled for release this fiscal year, and restore marketing plans.

measures•

For future development titles, we will improve probability of success and reduce risk by collaborating with multiple
companies and accepting investment on a project-by-project basis.

•

Implement company-wide cost reduction and investment plan review.

Copyright Drecom Co., Ltd. All Rights Reserved.

*1 Net loss attributable to owners of the parent *2 Net income attributable to owners of the parent

2

1. Review of Q1 (Apr-Jun) FY2023
2. Forecast for FY2023
3. Medium-term goals
4. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

31. Review of Q1 (Apr-Jun) FY2023

Summary of business results for the first quarter of FY2023
Decided to close a subsidiaryʻs new title due to lower-than-expected sales. Extraordinary loss of 416 million yen wasrecorded. Sales of some existing titles were also lower than expected.
(Millions of yen)

FY2023

FY2022
Q1(Apr-Jun)

Q1(Apr-Jun)

Q4(Jan-Mar)

YoY

QoQ

2,346

2,927

-19.8%

2,420

-3.1%

Operating income

8

817

-99%

180

-95.3%

Operating profit ratio

0.4%

27.9%

-

7.5%

-

82

909

-90.9%

209-60.6%

3.5%

31.1%

-

8.7%

-

2

810

-99.7%

167-98.6%

-441

521

-

-7

-

Net sales

EBITDAEBITDA Margin

Ordinary income
Net income (loss)
attributable toshareholders of theparent company*EBITDA = operating income + amortization of goodwill + depreciation
Copyright Drecom Co., Ltd. All Rights Reserved.

41. Review of Q1 (Apr-Jun) FY2023

1Q FY2023 Operating income (QoQ comparison)
Profit decreased due to the impact of lower sales of some existing titles and an increase in advertising andpromotional expenses associated with the release of new titles.
(Millions of yen)
Decrease in revenues (Increase in expenses)
Increase in revenues (decrease in expenses)
Labor cost
(-49)

180
Sales
decrease
Impact(-101)

Outsourcing
expenses(+41)

R&D expenses(-73)

Advertisingexpenses(+86)

Q4 FY2022
Operating
IncomeCopyright Drecom Co., Ltd. All Rights Reserved.

Postage(+18)

Gamedevelopment
Cost ofCosts
materials for Amount recorded
game
as assets*
development
(+6)
(-26)

Depreciation expense(+45)*Amount of development costs such as labor and subcontracting costs mainly related to pre-release games
deducted from manufacturing costs and transferred to assets as "Software in progress".

8
Other
(+35)

Q1 FY2023
Operating
Income5

1. Review of Q1 (Apr-Jun) FY2023

Q1 FY2023 Revenue from game titles under management
The costs of two new in-house distributed titles are larger than those of revenue. Decided to close one of them.
Profit/loss of 12 titles under management* (Q1 Apr-Jun 2024)

Loss

ProfitSeries titles and titles developed for overseas are counted as one title. Number of titles in operation as of June 30, 2023. Including two enza titles and BOKU & DRAGONS.
Copyright Drecom Co., Ltd. All Rights Reserved.

61. Review of Q1 (Apr-Jun) FY2023

Topics of each business for Q1 FY2023

Game
business•

Sales of DACHIMEN DENSETSU G released in Q1 fell short of expectations and we decided toclose it.

•

Sales of some existing titles under management also fell short of expectations.
→The impact of the severe market environment became apparent for the existing titles.

•

Wizardry Variants Daphne, scheduled for release within this fiscal year, has had its release datepushed back.
→Changed the expected degree of sales contribution to the forecast.
No change in planned release during this fiscal year.
→A second user test will be conducted in the fall of 2023.
Scheduled for release after positive feedback is confirmed.

•

In the publishing domain, the comic book label “DRE Comics” began publishing on the web.
→Publication of comic books in paperback and e-book format is scheduled to begin around October 2023.

Media
business•

Preparations for the release of Eternal Crypt -Wizardry BC- are progressing in the Web3 area.
→ Eternal Crypt -Wizardry BC- is a blockchain game using Wizardry IP→Unveiled game overview and future roadmap. Scheduled for release by the end of this fiscal year.

•

Continue to develop/provide new services utilizing know-hows from existing businesses→Operating fan community promotion services "Rooot" and "Fanflu", "load testing service", etc.

Copyright Drecom Co., Ltd. All Rights Reserved.

71. Review of Q1 (Apr-Jun) FY2023
2. Forecast for FY2023
3. Medium-term goals
4. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

8

2. Forecast for FY2023

Revision of full-year earnings forecasts for FY2023
Revised full-year forecast due to lower-than-expected sales of a subsidiary's new titles and some existing titles in Q1
In addition, the release timing of a title scheduled for release during the fiscal year ending March 31, 2024 has been
pushed back, resulting in a change in the expected contribution to earnings.

(Millions of yen)Compared to previous
time

Previous
Forecast

Revised
Forecast(Announced on
May 11, 2023)(Announced on
July 27, 2023)

Difference% change

Main Factors

Net sales

15,00011,500-3,500-23.3%

Operatingincome2,000

500-1,500-75.0%

Ordinary
income1,900

450-1,450-76.3%

1,100

0-1,100-•

New titles missing targets andthe expected release date being pushed back••Decrease in profits expected from new titles
Decrease in profits of some existing titles•

Extraordinary loss of 416 million yen forclosing DACHIMEN DENSETSU G

Net income
attributable toshareholders of
the parent
company

Copyright Drecom Co., Ltd. All Rights Reserved.

92. Forecast for FY2023

Revision of full-year earnings forecasts for FY2023
Mainly due to the revised forecast of contribution to earnings from new in-house distributed titles

Operating income

Net sales(Millions of yen)
Decrease in sales/profit

Impact ofexisting gamebusiness

Increase in sales/profit
Due to decreasein contributions
from new titles*

Due to decreasein contributions
Decrease infrom New titles* contribution fromnew businesses(Publication/Video,
Web3, Other)

Impact ofexisting gamebusiness

15,000-3,50011,5002,000
Impact of
new business(Publishing/Video,
Web3, Others)-1,500Previous Forecast
Copyright Drecom Co., Ltd. All Rights Reserved.

Revised forecast

Previous forecast

500
Revised forecast

New titles* includes new titles that have already been released and new titles scheduled for release during the fiscal year ending March 31, 2024.

102. Forecast for FY2023

Approach to full-year forecasts for FY2023
The date of the previous announcement of financial results,

The date of this earnings announcement

Assumption as of May 11, 2023

Assumptions as of July 27, 2023

Existing: Despite the impact of the termination of operations of some titles, stablerevenues were secured from multiple long-term titles.
New: Three new titles to be released for in-house distribution, two of them are
expected to contribute to earnings from this fiscal year.

Gamebusiness

Existing: Some titles fell short of expectations, and future outlook was revised.
New:• GGGGG is considering modifications, including making it a blockchain game.

• GGGGG released at the end of March 2023, is an experimental title that includes
new initiatives. Continuing with a medium-term perspective• Sales of DACHIMEN DENSETSU G (released in May 2023) fell short of
expectations, and we decided to close it.

• Scheduled for release this fiscal year:
DACHIMEN DENSETSU G (Developd by studiorex Co., Ltd.), Wizardry Variants
Daphne, Evil Prince and the Puppet (This title is expected to make a full-fledged
contribution to earnings in the next fiscal year.)• Wizardry Variants Daphne is scheduled for release during this fiscal year
and is expected to contribute to business performance.
(The release timing and contribution of this title to earnings are reviewed.)• All new titles are self-distributed titles that are recorded on a gross basis, so theimpact on sales is significant.
• Expect to see an increase in operational expenses, advertising, etc. due to therelease of new titles• Evil Prince and the Puppet is also scheduled for release during the current
fiscal year.
(This title is expected to make a full-fledged contribution to earnings in thenext fiscal year.)Mediabusiness

R&D and other expenses are expected to increase in line with the launchof new business areas
Publishing/Video:
Following on from the light novel label,
Comic/webtoon label to be launched
Web3:
Eternal Crypt -Wizardry BC- , NFT Project, etc.
Plans to release multiple projects
Other:
Plans to continue to develop/provide new services utilizing
existing business expertise• R&D expenses are expected to be lower than assumed at the beginningof the period.
• No other changes

Investment
policyInvest within the cash flow generated by operating activities to ensurethat we are in a position to continue to meet the challenge• Overall strategy review and investment plan revision in
unpublished/prototype mobile games and new business areas

Copyright Drecom Co., Ltd. All Rights Reserved.

*Supplemental/changed parts are underlined.

112. Forecast for FY2023

Our current status and future measures
Promptly change future policies and measures

Current Status•••

New mobile games performed worse than expected.
Impact of severe market conditions became apparent in existing titles.
Company-wide increase in costs, including R&D expenses, etc.

Future Measures
Ø Improve the quality of titles scheduled for release during the fiscal year ending March 31, 2024 and revise
marketing plans
Ø Greater emphasis on evaluation in pre-release game verification and user testing•

Decide whether or not to conduct additional development and whether or not to release the product according to the results of user testing.

•User testing dates: Wizardry Variants Daphne in Fall 2023, Evil Prince and the Puppet within the year 2023, and "Location-based IP
Titles" in Spring 2024.

Ø Review overall strategy for unannounced/prototype stage mobile game titles
Ø Aim to improve the probability of success and reduce risk by collaborating with multiple companies andaccepting investment on a project-by-project basis.
Ø Control/reduce R&D investment in new business areas such as publishing, video, and Web3
Ø Review of company-wide cost reduction and investment plans
Copyright Drecom Co., Ltd. All Rights Reserved.

122. Forecast for FY2023

Summary of full-year forecasts for FY2023
Aim to improve profit/loss situation as soon as possible and achieve full-year forecast through contributions
from new titles to be released in the latter part of second half of the fiscal year.
FY2023(Millions of yen)

Q1 (Apr-Jun)

FY2022Rate of progress

Full Year Forecast

Actual

2,346

20.4%

11,50010,800

Variable cost

351

16.0%

2,192

1,386

Fixed cost

1,987

22.6%

8,808

7,132

Advertising expenses

141

15.6%

906

208

R&Dexpenses

82

14.6%

567

354

-498

19.8%

-2,523-1,999

8

1.7%

500

2,281

0.4%

-

4.3%

21.1%

2

0.5%

450

2,192

-441

-

0

1,159

Net salesGame development costs
charged to assets*

Operating income
Operating profit ratio

Ordinary income
Net income attributable toshareholders of the parent
company
Copyright Drecom Co., Ltd. All Rights Reserved.

*Amount of development costs such as labor and subcontracting costs mainly related to pre-release games deducted frommanufacturing costs and transferred to assets as "software in progress".

13

2. Forecast for FY2023

Image of progress in the second quarter of FY2023
In Q2 (July-September), aim for early improvement in profit/loss situation through measures by each operational title
and company-wide cost reductions
Sales contribution from new titles and new business areas is expected mainly from the second half of the fiscal year.
n Progress Image for Q2
Net sales:
Expect to increase revenues from Q1 due to the change of one third-party distribution service in operation from Julyto in-house distribution (profit impact is expected to be minor)
Aim for Q/Q sales increase by implementing various measures such as seasonal events
Operating income: Expenses associated with the release of new titles (advertising, etc.), which incurred in Q1, are expected todecrease.
Reviewed company-wide cost reduction and investment plans

Net sales

Operating income

Full-year forecast:

11,500 million yen

Q2 Progress image
Full-year forecast:

500 million yen

Q2 Progress image
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14

2. Forecast for FY2023

Three years to scale up
Finish rebuilding by the end of FY March 2024, and aim for growth in the FY March 2025 and beyond.
FY2023

FY2024 ‒ FY2025

Sales: 11.5 billion yen
Operating income: 0.5 billion yen

Sales: CAGR over 20%
Operating margin: Maintain 15%
GrowthRebuilding fornext fiscal year•

Improve profitability ofexisting businesses•

Review investment plans•

Company-wide cost
reductions•

Collaborating with othercompanies involving
investment and acceptanceon a project-by-project basis

GrowthGame
Publication
Animation
Web3

Growth driver• New games• Light novels/Comics• Webtoon• Animation/Video

Investment• NFT• Blockchain game

Shareholder
returnCopyright Drecom Co., Ltd. All Rights Reserved.

Game
Publication
Animation
Copyright
acquisition
Web3

ProfitInvestment

Growth driver• New Games• Light novels/Comics• Webtoon• Animation/Video• NFT• Blockchain Games• Rights management• Global Expansion

ProfitShareholder
return15

1. Review of Q1 (Apr-Jun) FY2023
2. Forecast for FY2023
3. Medium-term goals
4. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

16

3. Medium-term goals

Medium-term goal

Current

Medium-term goal
Original IP

Original

Increase in in-house IP bydevelopment and nurturing oforiginal IP

Diversification

Mobile gamebusiness

Entertainment

Diversifying development in
the entertainment business

GlobalGlobalComprehensive
Entertainment
business

Expand content globally

Technology

Technology

Tacking new markets withadvanced technology

Copyright Drecom Co., Ltd. All Rights Reserved.

17

3. Medium-term goals

Status of in-house IP development and nurturing: Wizardry
Acquire copyrights and trademarks of a popular IP and make them our own IP, and then enhance the IP value
through multimedia development•

From 2022 onward - (planned)
Novelization and comic book adaptation by
Drecom Media

Blade & Bastard•

Mobile Gaming

Wizardry Variants Daphne
Wizardry•

Blade & Bastard

Blockchain Gaming

Eternal Crypt-Wizardry BC-

•
•

•
•

•
•

From 2020
Drecom acquired trademark rights.
Mobile Game Development Announcement

Wizardry Variants Daphne

From 2009
Gamepot, Inc. acquired trademark rights
Derivative Series Development

1981~.
First software released for PC.
Series development until about 2001

1981
Copyright Drecom Co., Ltd. All Rights Reserved.

Wizardry BCG (tentative)

2009

Year 2020

After 2022

Image of IP value enhancement183. Medium-term goals

Status of in-house IP development and nurturing: Evil Prince and the Puppet
Initiatives to create fan communities from SNS operations, nurture IP, and develop it in multiple areas, including
goods creation and game development.
Approx. 110,000 Twitter followers as of March 2023

From 2023 (planned)• Mobile gaming
•
•

•

•

November 2022
Game information released
Real Event Exhibit

Approx. 100,000
April 2021
Goods are now on sale at the official online store.

November 2019
Project Presentations

Approx. 60,000

SNS followers: approx. 10,000
2019

Copyright Drecom Co., Ltd. All Rights Reserved.

Year 2021

Year 2022

After 2023

Image of IP value enhancement193. Medium-term goals

Development and nurturing of in-house IP: Tokyo Stories
An initiative to develop original titles for PCs and consoles on a one-time purchase basis.
Already has more than 100,000 Twitter followers with high reputation overseas.
Tokyo Stories -working title-••

Genre: Adventure
Compatibility: PC (Steam) / Console (platform to be
determined)

•
•
•
•
•
•

Release date: Undecided
Price: Undecided
Planning/Development/Sales: Drecom Co., Ltd.
Country of distribution: Worldwide (Japan and overseas)
Language: Undecided
Copyright Notice: ©Drecom Co, Ltd.

Copyright Drecom Co., Ltd. All Rights Reserved.

20

3. Medium-term goals

Progress in publishing and video business
October 2022 Launch of publishing and video business, starting with the launch of a light novel label.
Aiming to acquire leading authors and works through newcomer awards, etc.
The 2nd Drecom Media Awards
Aiming to expand the scale and discoverleading artists and works

Four labels launched byformer publishers and filmmakers

DRE Novels.
A light novel label focusing on web-originated newly
written works. Launched in October 2022

Application Period : June 9, 2023 - September 8, 2023
DRE Comics.

Announcement of winning entries: Scheduled for February 9, 2024

A comic book label focusing on comic book adaptation of“DRE Novels”. To be launched in 2023

Award-winning works are assured of the following developments

DRE STUDIOS.

DRE STUDIOS Award winners are assured of the following
developments

A webtoon label that aims to createhigh-quality original works for the worldFirst issue scheduled in 2023

DRE PICTURES.
A label that do animation planning and production.

Copyright Drecom Co., Ltd. All Rights Reserved.

•••

Book publication in DRE Novels (paperback and e-book)
Comic book (paperback and e-book) in DRE Comics
PV and voice dramatization at DRE PICTURES•
Webtoonization at DRE STUDIOS•PV and voice dramatization at DRE PICTURES*All prizes are subject to selection by the judges in the case of no nomination.

The 2nd Drecom Media Awards" official website
https://drecom-media.jp/award21

3. Medium-term goals

Progress in publishing and video business
In June 2023, publication of the second volume of the novel "Blade & Bastard" and web serialization of the comic
label "DRE Comics" will begin.
Web manga site "DRE Comics" opens.
Started serialization of a total of five works
based on light novels

Volume 2 of the hit dark fantasy novel
Blade & Bastard is released!

•

The second volume of the Blade & Bastard series,
written by Kumo Kagyu (Goblin Slayer) and illustrated
by so-bin (Overlord).

•

Simultaneous release of English.

Copyright Drecom Co., Ltd. All Rights Reserved.

••

Web manga site by Drecom Media.
The latest episode is released the first and third Friday
of each month at 12:00 p.m. And the latest episode isfree to read.

22

3. Medium-term goals

Progress in the Web3 areas
Progress in the Web3 areas in several projects

Eternal Crypt -Wizardry BC-

GGGGG NFT•

NFTs will be sold in conjunction withthe game release (Minting is free)•

All planned numbers are sold out.
Ranked among top for transaction
volume in the secondary distribution
market•Discord community is about 20,000
members; NFT holders also play gameswith high enthusiasm

Copyright Drecom Co., Ltd. All Rights Reserved.

•

Blockchain game using the "Wizardry"
IP has signed a joint ventureagreement with Turingum K.K. as a
new production partner.

•

The official title, Eternal Crypt -WizardryBC- is announced.

•

Official website and roadmap released.

Sports3•

Project launched in February 2023.
Initiative aims to solve problems in the
sports industry with Web3.

•

Co-created with an Olympic silver
medalist Yuki Ota. NFT sold in late June.

233. Medium-term goals(Supplemental) Purpose of entry into the entertainment x Web3
Aim to create a system that benefits both users and management by combining FT/NFT and existing digital entertainment
content to form a secondary distribution market.
Example: Online game x Web3
Web 2.0
General online games
Diamond(In-gamecurrency)

Diamondsecondary distribution market(In-game currency)

A system that benefits both users andmanagement

×x-FT

Weapons andArmor(In-game item)

Cryptocurrency
exchange→

From the user's perspective,
Easy to buy because you can sell themwhen you no longer need them
New entertainments will be created from the price movements ofsecondary distribution, buying and selling.

XX Sword(In-game item)xNFT

Copyright Drecom Co., Ltd. All Rights Reserved.

NFT
marketplace

From the management perspective,
Primary sales will become more active.
Commission income from secondary distribution also
contributes earnings.

24

3. Medium-term goals(Supplemental) Purpose of entry into the entertainment x Web3
Web3 creates a highly engaged fan community where users are a part of the project

Old Entertainment (Web 2.0)

Management

Entertainment x Web3
Management

Contents
Offer

a consideration

User

Contents
User andtoken holder

Ø The relationship with the management is one-way.

Ø Users are also a part of the project as investors

Ø Community formation is spontaneousØ Highly engaging fan communities are formed.

Copyright Drecom Co., Ltd. All Rights Reserved.

25

1. Review of Q1 (Apr-Jun) FY2023
2. Forecast for FY2023
3. Medium-term goals
4. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

26

4. Appendix

Game business: Market overview and our business strategy
As the domestic mobile game market matures, we will make investments that are not an extension of the past inorder to further strengthen our business foundation.
Maturation of the domestic mobile game market

Strategy of our game businessü Smartphone-owning population reaching the ceiling.
ü Competition with other content such as videos, comics,social networking sites, etc.
ü Users are fixated by long hit titles■Additional investment in titles under operation•

Re-examine the development potential of each title
without assuming attenuation

Size of Japan's mobile game market and smartphone ownership•

Renovation and maintenance to withstand long-term
operation

100 Millions of yen

Maturation

14,000and strengthen the system

%

100
90

12,00080
10,000
8,000
6,000

70

■Diversification and layering of revenue sources

60•

Expansion into growing global markets.

50•

Deployment to other platforms such as PC/consoles.

•

Introduction of revenue models other than Free toPlay/Pay to Win type such as one-time purchase.

40
30

4,000

20
2,000

10

0

0

2012

2013

2014

2015

2016 2017

2018

2019

2020

2021 2022(Forecast)

Mobile Game Market Size
Source: Famitsu game white paper, ministry of internal affairs and communications white paper on information and communications
Copyright Drecom Co., Ltd. All Rights Reserved.

27

4. Appendix

Game business: Pipeline of operational and development titles
Secure long-term earnings by making additional investments for the existing titles.
Aim for diversification with the release of new titles with different initiatives.
2011 - 2022

After 2023

Titles inoperation
Additional
investment andsystemreinforcement→Securing long-term
stable earnings

12
Scheduled to be released in the fiscal year
ending March 31, 2024: 2

Titlesunderdevelopment• Wizardry Variants Daphne• Evil Prince and the Puppet

4

Scheduled to be released in the fiscal year
ending March 31, 2025 or later: 2• Location-based IP titles using “AROW”

New initiatives ineach title→Diversification andlayering• Unannounced title (developed by Drecom)
Series titles and titles developed overseas are counted as one title. Titles for PC and consoles are not included.
Copyright Drecom Co., Ltd. All Rights Reserved.

28

4. Appendix

Game business: Pipeline of operational and under development titles
Business

StatusDefinition

Number of projects

Operation

Titles in operation

12

Ø Other company distribution: 6 titles
Ø In-house distribution: 6 titles

Game

Development•

Titles underdevelopment with aprospect for
releaseCommercialized
development

Prototype

Copyright Drecom Co., Ltd. All Rights Reserved.

Details

Wizardry Variants Daphne→ 3D dungeon RPG

4

Titles for
Smartphones

Titles for PC andconsoles1

Titles at a stage
beforecommercialization
development

Several•Evil Prince and the Puppets→ Dark fantasy adventure•

Location-based IP titles using “AROW”•

Unannounced title (developed by Drecom Co., Ltd.)•Tokyo Stories -working title-

Ø Reviewed overall strategy.

29

4. Appendix

Revenue status of titles in operation (by release date)
Total sales of titles under operation
2011

2014

FY2021

2015

2016

2017

2018

2019

2020

FY2022

Total business profit transition of titles under management
2021

2022

2023

FY2023

2011

2014

FY2021

2015

2016

2017

2018

2019

FY2022

2020

2021

2022

2023

FY2023*Please refer to the fact sheet posted on our website for consolidated business performance trends, cost of sales, SG&A expenses, etc., and game business billing sales trends.
https://drecom.co.jp/ir/factsheet_202403Q1.pdf
Copyright Drecom Co., Ltd. All Rights Reserved.

30

4. Appendix

List of game titles in operationGame title

Distributor

Service start date

Chokotto Farm

Drecom Co., Ltd.

Jan 2011

ONE PIECE Treasure Cruise

BANDAI NAMCO Entertainment Inc.

May 2014

BOKU & DRAGONS

studiorex Co., Ltd.*Feb 2015

Derby Stallion: Masters

Drecom Co., Ltd.

Nov 2016

Everybody's Golf

Forward Works Corporation

Jul 2017

THE IDOLM@STER SHINY COLORSBANDAI NAMCO Entertainment Inc.

Apr 2018

NEKO & DRAGONS

studiorex Co., Ltd.*Apr 2019

Super Robot Wars DD

BANDAI NAMCO Entertainment Inc.

Aug 2019

Disgaea: Hour of Darkness RPG

Forward Works Corporation(changed to Drecom on July 3, 2023)

Nov 2019

New Japan Pro-Wrestling Strong Spirits

Bushiroad Inc.

Feb 2022

GGGGG

Drecom Co., Ltd.

Mar 2023

DACHIMEN DENSETSU G

studiorex Co., Ltd.*May 2023*studiorex, Co., Ltd. joined our group in March 2020.
Copyright Drecom Co., Ltd. All Rights Reserved.

31

4. Appendix

Glossary
Terminology

Meaning

Games distributed in-house

Games for which Drecom is the distributor. We are in charge of game planning, development, advertising,and sales.

Games distributed by othercompanies

The game is distributed by another company, and Drecom is in charge of development as a partnering company.

Platformer

Apple, Google, and other companies that provide service infrastructure systems to users and third parties.

Gross sales

The amount of money paid by the user to the distributor, Drecom.

Net sales

The amount of money distributed from the distributor to the developer, Drecom.

Developer

A company responsible for the development of games.

Amount of game development costs
charged to assets

Amount of development costs, such as labor and subcontracting costs, mainly related to pre-release games,
deducted from manufacturing costs and transferred to assets as "Software in progress".

R&D expenses

Costs associated with planning and creating prototypes for new games and services.

IP

Abbreviation for Intellectual Property.

Commercialized development

Game development is in full swing.

Anniversary Events

Every six months and a year, an event is held that boosts the game. The number of active users and sales often
rise compared to normal times due to the introduction of many new measures and contents

Copyright Drecom Co., Ltd. All Rights Reserved.

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For trends in consolidated financial results, cost of sales/ SG&A expenses, etc., and sales of game business billing,
Please see the fact sheet posted on our website.
https://drecom.co.jp/ir/factsheet_202403Q1.pdf

Among the perceptions, strategies, plans, etc., described in this document, the outlook is not a historical fact but contains uncertain elements.
Actual results may differ materially from those in the forward-looking statements for a number of reasons. Important factors that may affectactual business results include, but are not limited to, economic conditions surrounding our business, social trends, and changes in relativecompetitiveness due to demand trends for the services we provide.