Fiscal Year Ended Mar. 31, 2022
Financial Results Presentation Materials

Drecom Co., Ltd.
May 12, 2022

Summary of this document
Review of
FY2022
financialresults

Forecast for
FY2023•

Net sales were 10,528 million yen (down 11.1% YoY), operating income was 1,591 million yen (down 22.5% YoY), ordinary income
was 1,541 million yen (down 23.6% YoY), and net income attributable to owners of the parent was 807 million yen (down 50.3%
YoY) due to extraordinary losses. The company also reported a downward revision to its earnings forecast.

•

In Q4, early impairment of two newly released game titles resulted in a one-time loss.

•

Net sales of 13,000 million yen (up 23.5% YoY) and operating income of 2,000 million yen (up 25.7% YoY) are projected.

•

Plans to release three new titles during the fiscal year ending March 2023. Plans to invest aggressively in publishing, video
business, and Web3 business•Change from quarterly forecast to full-year forecast announcement

Shareholder•

Decided to pay a year-end dividend (first dividend) of 5.00 yen per share (Record date: March 31, 2022)

returns•

Aiming to increase corporate value over medium to long-term through both investment in growth and shareholder returns

Copyright Drecom Co., Ltd. All Rights Reserved.

2

1. Review of FY2022 Financial Results
2. Forecast for FY2023
3. Shareholder Returns
4. Medium-Term Goals
5. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

31. Review of FY2022 Financial Results

Summary of Financial Results for the Fiscal Year Ending March 31, 2022
Three titles released in FY03/2022 performed below expectations. Impairment losses were recorded on some titles
after reevaluating future earnings.

(Unit: million yen)

FY2021Results

FY2022
Results

Q4 FY2021(Jan-Mar)YoY

Q4 FY2022(Jan-Mar)Q3 FY2022(Oct-Dec)

YoY

QoQ

Net sales

11,84010,528-1,312

2,684

2,450

-234

2,893

-442

Operating income

2,052

1,591

-461

368

171

-197

452

-281

Operating profit ratio

17.3%

15.1%

ー

13.7

7.0%

ー

15.6%

ー

EBITDA*

2,705

2,127

-577

564

304

-260

554

-250

EBITDA Margin

22.8

20.2%

ー

21.0%

12.4%

ー

19.2%

ー

Ordinary income

2,019

1,541

-477

365

160

-204

439

-278

Net income
attributable toshareholders of theparent company

1,624

807

-817

325

-45

-371

241

-287

*EBITDA = operating income + amortization of goodwill + depreciation
Copyright Drecom Co., Ltd. All Rights Reserved.

41. Review of FY2022 Financial Results

Q4 Results for FY 2022 (Operating Income QoQ Comparison)
Sales decreased from the previous quarter due to the repercussion from holding fewer events
58 million yen was recorded as a one-time expense to account for inevitable future costs for titles for which
impairment losses were recognized.
(Unit: million yen)
Decrease in revenues (Increase in expenses)
Increase in revenues (decrease in expenses)

452
Other
(+153)Q3 FY2022
Operating Income

Decrease
Impact(-403)

Outsourcing
expenses(+10)
labor cost(-16)

Depreciation
expense(-31)
Advertisingexpenses(-30)

Postage(-1)

Materials for
Game
Development
(-5)

Game
Development
Costs
Amountrecorded asassets*.
(+73)

R&D
expenses(+26)

One-time
cost
(-58)

171

Q4 FY2022
Operating Income*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".
Copyright Drecom Co., Ltd. All Rights Reserved.

51. Review of FY2022 Financial Results

Game Business: Earnings from Titles in Operation
Two new titles were released in Q4 of FY2022, bringing the number of titles under management to 13
Two titles were unprofitable
Profit/loss of 13 titles under management※(Q4, Mar 2022)

Loss

ProfitNumber of titles in operation as of March 31, 2022. Including two enza titles and BOKU & DRAGONS .
Copyright Drecom Co., Ltd. All Rights Reserved.

61. Review of FY2022 Financial Results

Contrasting Forecast and Actual Results
New titles were below expectations. The company posted an extraordinary loss of 305 million yen for impairment
loss and other factors, and fell short of its earnings forecast.

(Unit: million yen)

FY2022
Forecast
Official

announcement
January 27, 2022

Compared to forecast
FY2022
Cumulative total
Difference

Change (%)

Net sales

10,90010,528

-371

-3.4%

Operating income

1,700

1,591

-108

-6.4%

Ordinary income

1,650

1,541

-108

-6.6%

Net income
attributable toshareholders of theparent company

1,000

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807

-192

-19.3%<Factors for the difference>■ Net Sales• Impact from lower-than-expected sales of new titles■ Operating Income and Ordinary Income• Decrease in revenue and repercussion of one-timecharges of 58 million yen for expenses that will inevitably
arise in the future .
■ Net income attributable to owners of the parent• Effect of extraordinary loss of 305 million yen••

208 million yen due to impairment loss on two titles
96 million yen due to loss from devaluation of
investment securities resulting from impairment

71. Review of FY2022 Financial Results

Fiscal Year Ending March 31, 2022 Results by Segment
Accelerate the development of services in new areas in the media business, with the game business as a pillar of
earnings
1.6%Media BusinessGame Business

FY 3/2022

Focus on popular IP titles
Currently 13 titles under operation※

Net sales:

10,358million yen

Operating income: 1,871

million yen(FY2022)Net sales: 10,528 million
yen
Operating income: 1,591
million yen

Web3
To create future corebusinesses
utilizing advanced technology

98.4% (%)
Game BusinessMedia Business
メディア事業

Actively invest in the creationof new businesses
Net sales: 169 million yen
Operating loss: -280 million yen(Fiscal year ending March 31, 2022)

As of March 31, 2010. Series titles and titles distributed overseas are counted as one title.
Copyright Drecom Co., Ltd. All Rights Reserved.

8

1. Review of FY2022 Financial Results
2. Forecast for FY2023
3. Shareholder Returns
4. Medium-Term Goals
5. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

92. Forecast for FY2023

Summary of Consolidated Full-Year Earnings Forecasts
Despite an expected increase in advertising expenses associated with releases and an increase in R&D expenses for the publishingand Web3 businesses, sales and income are expected to increase aided by three new releases.
FY2022(Unit: million yen)

Q1
(Apr-Jun)
ActualQ2(Jul-Sep)
ActualQ3(Oct-Dec)
ActualForecast for FY2023
Q4(Jan-Mar)
ActualFull Year
Actual

YoY

%

2,661

2,523

2,893

2,450

10,52813,000+2,471+23.5%

Variable cost

394

380

391

365

1,630

1,860

+229

+14.1%

Fixed cost

1,762

1,680

2,048

1,913

7,306

9,139

+1,833+25.1%.

Advertising expenses

16

21

88

117

243

725

+481 +197.5%

R&D expenses

117

91

80

54

345

737

+392 +113.7%

Game Development Costs
Amount recorded as assets*.

-496

-692

-485

-558

-2,233-2,040+192-

Operating income

504

463

452

171

1,591

2,000

+408

+25.7

Ordinary income

492

448

439

160

1,541

1,900

+358

+23.2%

300

311

241

-45

807

1,200

+392

+48.6%Net sales

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

102. Forecast for FY2023

Summary of Consolidated Full-Year Forecasts
Recognized a great opportunity for business growth. Aggressive investment while expecting to secure profits.
Growth of Gamebusiness
2,211

261

13,000Growth of
New business(Unit: million yen)

Variable cost
Investment Portfolio

1,860

10,528725

Advertising expenses

Game

Publishing

Web3 and other

Other fixed costs
9,718

Investment
Gamesdevelopment costs
charged to assets *737-2,040

FY2022
Net sales
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FY2023
Net sales

2,000

Depreciation andamortization

Tax

Researchdevelopment
cost
FY2023Operating income

Investable
cash*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".

11

2. Forecast for FY2023

Fiscal Year Ending March 31, 2023 Full-Year Results Approach•Gamebusiness

New
Business
Development

Q1 (Apr-Jun) FY2023 is expected to show similar trends as the previous year's Q1 FY2022,
contributed by coinciding anniversary events of mainstay titles.

•

Contribution of three newly released titles is expected in the second half of the fiscal year.

•

Operational and advertising costs are expected to increase with the release•

In the publishing business, more than 10 new titles are scheduled for sequential release in thesecond half of the year and beyond.

•In the Web3 business, in addition to blockchain game development, several projects are underway,
including the NFT project for IP creation.

•“Rooot" a Twitter-based fan community promotion service, is expected to continue to expect
steady sales growth.

Investment
policy•Actively invest cash generated from operations in the game business and new business areas(publishing, Web3) where growth is expected

Copyright Drecom Co., Ltd. All Rights Reserved.

121. Review of FY2022 Financial Results
2. Forecast for FY2023
3. Shareholder Returns
4. Medium-Term Goals
5. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

13

3. Shareholder Returns

Dividend (first dividend)
After careful consideration of operating results and financial condition, distribution of dividend was decided

Determined amount

Most Recent
Dividend Forecast(January 27, 2022)

Actual results for the previous
period(Year ending March 31, 2021)

Reference Date

March 31, 2022

same as on the left

March 31, 2021

Dividend per share

5.00 yen

0.00 yen

0.00 yen

Total dividends

145 million yen

ーー

Effective dateJune 10, 2022

ーーdividend resource

Retained earningsーー Decided on dividend payments after careful consideration of trends in operating results and financial position,
investment in research and development, and future plans.
 Aiming to increase corporate value over the medium to long-term through both investment in growth andshareholder returns
 The dividend forecast for the fiscal year ending March 31, 2023 is a year-end dividend of 5.00 yen per share.
Copyright Drecom Co., Ltd. All Rights Reserved.

141. Review of FY2022 Financial Results
2. Forecast for FY2023
3. Shareholder Returns
4. Medium-Term Goals
5. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

15

4. Medium-Term Goals

Medium-Term goals
A comprehensive entertainment company that provides a variety of digital entertainment content based on IP.

(1) New game hits
Main Initiatives• Six new titles under development hit
the market(1) Expansion of game business(2) Acquisition, development andcultivationof IP
Main Initiatives

Main Initiatives• Improve profitability of titles inoperation(2) Breaking away from dependence
on the F2P* model

Stability
Stability

Main Initiatives• webtoon, light novel, comics• “AROW" AR application building
platform• Fan community promotion service"Rooot”• Load testing service, vulnerability
assessment
F2P: Abbreviation for Free to Play. Online games that can be played basically free of charge.

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Promotionof growthpotential• Wizardry VA (tentative)• Evil Prince and the Puppets• Publishing and Video• NFT Project(3) Global expansion of existing/new titles(4) Business development in new businessareas
Main Initiatives• Webtoon, light novels, comics (publishing)• Blockchain Game Development (Web3)• “AROW" AR application building platform• Fan community promotion service "Rooot”• Load testing service, vulnerability
assessment

164. Medium-Term Goals

Strengthen IP production capabilities
Focus on IP development, acquisition, advancement, and diversification of monetization channels to strengthen IP
production capabilities

IP Producing Capability

IP development andacquisition

Policy• Focus on quality of IP to be
developed and acquired• Aiming for controllable IP
ownership×

IP development

×

IP Monetization Channel
Diversification of• Expanding the fan base throughcross-media development• IP development based on fan
community• Breaking away from dependence on
the F2P model• Multi-layered revenue portfolio basedon diverse monetization channels

Utilizing SNS
IP Fan Community
Management

IP gamedevelopment/distribution

Our
Strengths

Game
Development/
Distribution

Investment
Areas

Webtoonyoung-adult fiction
comics

Cross-media development
Animation/Video etc.

Book and e-book sales
Animation/FilmRights management
Overseas expansion, etc.

NFT

NFT/Community
Management

Blockchain game

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17

4. Medium-Term Goals

Publishing and Video Business
Aiming to maximize IP value by building a system that enables all-round media mix development. IP creation
through the management of the Rookie Award
Four labels have been launched,
led by people from publishing houses
and film makers.
“DRE STUDIOS”
High-quality original works for the world
A webtoon label that aims to create“DRE Novels"
Focusing on web-based novel and newly
written novels
Fiction Labels“DRE Comics"
Comic book label focusing on the comic bookversion of "DRE Novels".
“DRE PICTURES”
Planning and production of in-house IP
animation
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As a first step in IP development
Large-scale novel contest for newcomer

Application Period : May 10, 2022 (Tuesday) - July 9, 2022
(Saturday) 23:59
Final selection: Late August 2022
Announcement of winning entries: Scheduled for September 9,2022 (Friday)
Award-winning works are assured of the following developments• Book publication in DRE Novels (paperback and e-book)• Comic book (paperback and e-book) in DRE Comics• Voice dramatization at DRE PICTURES
The webtoon award winners are awarded the following
developments• Webtoonization at DRE STUDIOS• Voice dramatization at DRE PICTURES*All prizes are subject to selection by the judges.
DRECOM MEDIA: https://drecom-media.jp/

18

4. Medium-Term Goals

Web3 BusinessAnnounced business entry on Mar 18, 2020. In addition to blockchain game development, several other projects
are underway, including the NFT project for IP creation.

Web3
Business

Blockchain game
Development
Projects

Plans to produce two IP-based blockchain games incollaboration with Thirdverse GroupThe first Wizardry blockchain game is being developedwith the aim of releasing an alpha version by spring 2023

NFT ProjectPlans to develop several NFT projects for IP creationProjects for overseas expansion are also being plannedCreation of development/production support services
for blockchain-related businesses and community
activation support services for NFT creators/collectors

Other

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19

4. Medium-Term Goals

Entering Performance Expansion Phase
Aiming to enter a phase for a virtuous cycle of earnings expansion by aggressively investing cash generated fromthe game business.

FY2024FY2023
Sales: 13 billion yen (forecast)
Operating income: 2 billion yen (forecast)

Sales: +20% or more YoY
Operating margin: Maintain 15%

FY2025

Sales: +20% or more YoY
Operating margin: Maintain 15%
GrowthGrowthGrowthGame
Publication
Web3

Investment

Growth driver• Three new games• Light novels/Comics• webtoon• NFT• Blockchain game

Game
Publication
animation
Web3

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

Game
Publication
animation
copyright
acquisition
Web3

Growth driver• Three new games• Light novels/Comics• webtoon

Investment• Animation/Video• NFT• Blockchain game

Shareholder
returnProfitInvestment

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

Shareholder
returnProfit20

1. Review of FY2022 Financial Results
2. Forecast for FY2023
3. Shareholder Returns
4. Medium-Term Goals
5. Appendix

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21

5. Appendix

Project Summary (1)Six development projects underway as of March 31, 2022
StatusDefinition

Number of projects

Operation

Titles in operation

13

Commercialized
development

Game
Business

Development

Business

Titles underdevelopment witha prospect for
releasePrototypePre-development
stage title in works

6

Details Other company distribution: 8 titles
 In-house distribution: 5 titles•

Wizardry VA (tentative)•

Evil Prince and the Puppets•

Location-based IP titles using AROW•

Unannounced title (developed by Drecom)•

Unannounced title (developed by Drecom)•

Unannounced title (developed by Studio Rex)

*Separate title from the Blockchain Game Development Project─ Multiple candidate projects in progress.

Series titles and titles developed overseas are counted as one title.
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22

5. Appendix

Project Summary (2)Released 3 new titles in FY3/2010, bringing the number of titles in operation to 13. 3 new titles are scheduled forrelease in FY3/2011.

FY2012-FY2022

BeyondFY2023

Title underoperating13*• Wizardry VA (tentative)• Unannounced title (developed by Drecom)• Unannounced title (developed by Studio Rex)

Scheduled to be released during FY2023: 3
Title underdevelopment

6• Evil Prince and the Puppets• Location-based IP titles using AROW
• Unannounced title (developed by Drecom)

Scheduled to be released during FY2024: 3*Series titles and titles developed overseas are counted as one title.
Copyright Drecom Co., Ltd. All Rights Reserved.

23

5. Appendix

Revenue status of titles in operation (by release date)
Shifting revenue generation model of game business from dependence on a small number of hit titles to but
accumulation of revenue from multiple titles.
Total sales trend of titles underoperation
2011

2014

FY2020

2015

2016

2017

FY2021

Copyright Drecom Co., Ltd. All Rights Reserved.

2018

2019

Total business profit trend of titles under management2020

FY2022

2021

2022

2011

2014

FY2020

2015

2016

2017

FY2021

2018

2019

2020

2021

2022

FY202224

5. Appendix

ESG Initiatives
1) Establish a working environment that takes into account human rights,

In order to achieve sustainable growth and maximize
shareholder value, and to ensure sound andappropriate management, Drecom is focusing onstrengthening governance, especially the appointmentof female directors, the appointment of many
independent outside directors with different
professional backgrounds, and active discussions.

diversity, and flexibility
In addition to prohibiting discrimination in the workplace and implementing
appropriate labor management, we are focusing on maintaining the health of
our employees and creating a working environment that considers andrespects the life events and life stages of our employees by introducing
remote work and encouraging male employees to take childcare leave.
2) Support for employees' health promotion and skill development
We are taking the following measures to create anenvironment where employees can exercise their fullpotential in good health.
-Installation of massage rooms-Cafe space in partnership with a popular cafe
-Support for holding knowledge-sharing events

1) Actively appoint female directors

As of July 2021, the ratio of female directors is 20%.
2) Balance between internal directors and independent outside directors

As of May 2022, the ratio of independent outside directors to all directors is60%.

and dissemination of technology-related information

3) Diversity of Independent Outside Directors3) Support for entrepreneurial communities

The Company appoints experts in various fields, such as certified public
accountants, lawyers, and university professors, as independent outside

As a pioneer in the field of IT venture and student entrepreneurship, we are undertaking thefollowing initiatives to contribute to the development of future entrepreneurs andthe further revitalization of entrepreneurship in Japan.
-Holding programming classes for junior and senior high school students-Speaking at and supporting various entrepreneurship-related events-Support students by sponsoring programming classes-Providing office space for study groups and seminars

Copyright Drecom Co., Ltd. All Rights Reserved.

directors.
4) Regular Board of Directors meetings and high attendance rate

The Board of Directors meets regularly on a monthly basis to share
information on business conditions and management issues in a timely
manner and engage in active discussions. 19 Board of Directors meetings areheld annually for FY2022 and 24 meetings are held annually for FY2021.

25

5. Appendix

List of game titles in operation
Title NameDistributor

Service start date

Chokotto Farm

Drecom Co, Ltd.

Jan 2011

ONE PIECE Treasure Cruise

BANDAI NAMCOEntertainment Inc.

May 2014

BOKU & DRAGONS

Studio Rex Co.

Feb 2015

Derby Stallion: Masters

Drecom Co., Ltd

Nov 2016

Everybody's Golf

Forward Works Co.

Jul 2017

Kirara Fantasia

Aniplex Corporation

Dec 2017

THE IDOLM@STER SHINY COLORSBANDAI NAMCO Entertainment Inc.

Apr 2018

NEKO & DRAGONS

Studio Rex Co.

Apr 2019

Super Robot Wars DD

BANDAI NAMCO Entertainment Inc.

Aug 2019

Disgaea: Hour of Darkness RPG

Forward Works Co.

Nov 2019

D_CIDE TRAUMEREISamzap Corporation

Sep 2021

mikonote Hare Tokidoki Kegare

Drecom Co., Ltd

Feb 2022

New Japan Pro-Wrestling Strong Spirits

Bushiroad Inc.

Feb 2022

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26

5. Appendix

Glossary
Terminology

Meaning

Games distributed in-house

Games distributed by Drecom. Drecom takes the lead in game planning, development, advertising, sales, etc.

Games distributed by othercompanies

Games distributed by other companies and developed by Dorcom as a cooperative company

Platformer

Businesses that provide service infrastructure systems, such as Apple and Google, to users or third parties, etc.

Gross sales

Amount paid by the user to the distributor, Drecom

Net sales

Amount distributed from the distributor to the developer, Drecom

Developer

Companies 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 prototyping new games and services

IP

Abbreviation for Intellectual Property. Intellectual Property

this development

Game development must be in full swing.

Anniversary Events

Every six months or 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.

27

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 affect actual business results include economic conditions surrounding our business, social trends,
and changes in relative competitiveness due to demand trends for the services we provide. Important factors that may affect ourbusiness performance include, but are not limited to, the following.