Third Quarter of Fiscal Year Ending March 31, 2023
Financial Results Presentation Materials

Drecom Co., Ltd.
January 30, 2023
Please refer to the Fact sheet on our website for consolidated financial results, cost of sales, SG&A expenses, etc.,
and billing sales in the game business.
https://drecom.co.jp/ir/factsheet_202303Q3.pdf

Summary of this document• Q3 results: Stable revenue from existing long-term titles
Q3
FY03/2023(Oct-Dec)
Actual・Sales: 2,579 million yen (-10.8% YoY), Operating income: 492 million yen (+8.9% YoY)

• Q3 cumulative results: Sales and income up YoY due to strong sales of mainstay IP titlesin 1H, etc.
・Net sales: 8,380 million yen (+3.7% YoY), Operating income: 2,100 million yen (+47.9% YoY)
Ordinary income: 2,025 million yen (+46.7% YoY), Net income*1: 1,166 million yen (+36.7% YoY)
・Impairment loss of 336 million yen was recorded for one of the titles in operation.
An extraordinary loss of 336 million yen was recorded.

• Revised full-year forecasts based on the timing of new titles’ release and the status ofexisting titles
Forecast for
FY03/2023

Business
Progress

・Revised forecast (1/30/2023 announcement):
Sales 13,000 million yen → 10,700 million yen (17.7% decrease)
Operating income 2,000 million yen → 2,200 million yen (10.0% increase)
Ordinary income 1,900 million yen → 2,100 million yen (10.5% increase)
Net income *2 1,200 million yen → 1,100 million yen (8.3% decrease)• Steady progress in content development and IP nurturing initiatives
・ DRE Novels' December publication, Blade & Bastard - Ashes are Warm, Labyrinths are Dark –has received a great response and will be reprinted.

Copyright Drecom Co., Ltd. All Rights Reserved.

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

2

１. Review of Q3 (Oct-Dec) FY03/2023
２. Forecast for FY03/2023
３. Medium-term goals and progress of each business
４. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

3１. Review of Q3 (Oct-Dec) FY03/2023

Summary of Q3 FY03/2023 results
Existing long-term titles secured stable earnings. An extraordinary loss of 336 million yen was recorded after
revaluating future earnings from one of the titles in operation, which resulted in impairment loss in software.
(Millions of yen)

YoY
(Increase/
Decrease)

FY03/2023
Q3 (Oct-Dec)

FY03/2022
Q3 (Oct-Dec)

Net sales

2,579

2,893

-313

2,873

-293

Operating income

492

452

+40

790

-297

Operating profit ratio

19.1%

15.6%

-

27.5%

-

EBITDA*

556

554

+1

875

-319

EBITDA Margin

21.6%

19.2%

-

30.5%

-

Ordinary income

477

439

+38

737

-259

110

241

-131

534

-424

Net income

attributable to shareholders of
the parent company

FY03/2023
Q2 (Jul-Sep)

QoQ(Increase/
Decrease)*EBITDA = operating income + amortization of goodwill + depreciation
Copyright Drecom Co., Ltd. All Rights Reserved.

4１. Review of Q3 (Oct-Dec) FY03/2023

Q3 Results for FY03/2023 (Operating income QoQ comparison)
The 307 million yen decrease in net sales versus the previous quarter was mainly due to the slowdown insales of mainstay IP titles.
Decrease in revenues (Increase in expenses)(Millions of yen)

Increase in revenues (decrease in expenses)

Llabor cost
(+26)

790

Decrease
Impact(-307)

Outsourcing
expenses(-33)

Postage(+1)
Advertisingexpenses(-49)

Depreciation
expense(+21)

Game
Development
Costs
Amount recorded
as Assets*(+127)
R&D
expenses
(-5)

Other
（-0）

Materials for gamedevelopment(-78)

Q2 FY2023
Operating Income492

Q3 2023
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 Q3 (Oct-Dec) FY03/2023

Game business earnings of titles in operation
Long-term titles in operation maintained stable earnings. The number of titles in the red decreased to one.
Profit/loss of 11 titles under management* (Q3 Oct-Dec 2023)

Loss

Profit*Number of titles in operation as of December 31, 2022. Series titles and titles developed for overseas are counted as one title. Including two enza titles and BOKU & DRAGONS.
Copyright Drecom Co., Ltd. All Rights Reserved.

6１. Review of Q3 (Oct-Dec) FY03/2023

Topics of each business•

Mainstay IP titles were more subdued compared to Q1 and Q2.
→Various KPIs, such as number of users, remained strong.

Gamebusiness•

Existing long-term investment titles secured stable income.
→ Earned revenues from accumulation of multiple titles amid a difficult market environment•

Release dates have been changed for three new in-house distribution titles that wereoriginally scheduled for release during the fiscal year ending March 31, 2023.
→ GGGGG, Wizardry Variants Daphne, and an unannounced title.
→ Sales and advertising expenses assumed for FY03/2023 have been pushed into FY03/2024.

•

NewbusinessMonthly publication begins on DRE Novels, Drecom Media's light novel label.
→ Novel inspired by the world of Wizardry Blade & Bastard - Ashes are Warm, Labyrinths are Dark- hasbeen so well received that it has been reprinted.

•

Business activities in the Web3 area have several projects in progress.
→ NFT project for IP creation as well as blockchain game development.

Copyright Drecom Co., Ltd. All Rights Reserved.

7１. Review of Q3 (Oct-Dec) FY03/2023
２. Forecast for FY 03/2023
３. Medium-term goals and progress of each business
４. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

8

2. Forecast for FY 03/2023

Full-year consolidated earnings for FY03/2023 assumptions
As of Q2 earnings announcement Assumption as of Oct. 27, 2010
• Q1 (Apr-Jun) is expected to show the same trend as Q1 of the previous
year due to the anniversary events of mainstay titles.
1H mainstay IP titles outperformed initial forecasts.
• Contribution of 3 newly released titles is expected in 2H.

Gamebusiness• Operating and advertising expenses are expected to increase with therelease of new titles.
Timing of new titles release will be determined based on their quality
readiness
All new titles are gross billings for in-house distribution, so their impact on
net sales will be significant.
••New
Business
Development

Investme
nt Policy••

In the publishing business, more than 10 new titles are scheduled forsequential release in the second 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 see steady sales growth.
• New business revenue growth is expected to come mainly from thepublishing business and "Rooot"; sales in the Web3 domains are notexpected.
Aggressively invest cash generated from operations in the gamebusiness into new business areas where growth is expected(publishing, web3)

Copyright Drecom Co., Ltd. All Rights Reserved.

As of Q3 earnings announcement Assumption as of January 30, 2011•

Q4 (Jan-Mar): Expect sales and profits will be smaller than otherquarters due to fewer events for mainstay titles.

•

Contribution of three newly released titles to the financial results ismore likely to be pushed back to FY03/2024•

Therefore, sales of three newly released titles are not included in therevised forecast for FY03/2023.
•
For new titles, release dates are determined based on quality
readiness.

•

Unchanged•

R&D expenses are expected to be lower than the assumption made at
the beginning of the period. (No major changes in investment policy)*Supplemental/changed parts are underlined.

92. Forecast for FY 03/2023

Revision of full-year earnings forecasts
Revised full-year forecasts due to changes in the release dates of three in-house distributed titles; originally scheduled for releaseduring the FY03/2023. Operating income and ordinary income revised upward due to strong performance of mainstay IP titles, etc.
Previous Forecast Revised Forecast
for FY03/2023
for FY03/2023(Millions of yen)

May 12, 2022

January 30, 2023

Change fromlast timevs. previous forecast

Difference % change

Driving factor

Lagging factor•

Net sales

13,000Operatingincome2,000

Ordinary
income

1,900

10,7002,200•-2,300-17.7%•+200+10.0%
•

2,100

+200

+10.5%

Strong performance ofmainstay IP titles(net sales)

Highly profitable mainstay
IP titles
Decrease in R&D expenses

1,200

Copyright Drecom Co., Ltd. All Rights Reserved.

1,100

-100

-8.3%

・ Omission of profit expectedfrom three new titles

ー

ー

ー

・ Extraordinary loss of 336 million
yen due to impairment loss on
one title

Net income

attributable toshareholders of
the parent
company•

Change in release timing of
three new in-house distributed
titles (gross sales)
Missed target for some existing
titles10

2. Forecast for FY 03/2023

Revision of full-year earnings forecasts (Net Sales and Operating Income)Decrease in revenues (Increase in expenses)
Increase in revenues (decrease in expenses)(Millions of yen)

Net sales

Operating income
Strongperformance ofMain IP Titles

Strongperformance ofMain IP Titles

With three newtitlesexpected sales

Other

Other

13,00010,7002,000-2,300Previous
Forecast
Copyright Drecom Co., Ltd. All Rights Reserved.

Decrease in R&D
expenses

With three newtitlesexpected profits

2,200

＋200

Revised
Forecast

Previous
Forecast

Revised
Forecast

11

2. Forecast for FY 03/2023

Progress towards Full-year Forecasts and outlook for the fourth quarter
Q4 (Jan-Mar): We expect that sales and profits will be smaller than previous quarters due to fewer events for mainstay titles.
FY03/2023
Q1(AprJun)ActualQ2(JulSep)
ActualQ3(OctDec)
Actual

2,927

2,873

2,579

Variable cost

356

346

Fixed cost

1,753

Advertising expenses
R&D expenses

Q3(Reference) Fiscal year ending March 31, 2022

Rate ofprogress

Q4
Forecast(Jan-Mar)

8,380

78.3%

2,319

360

1,062

76.5%

1,736

1,726

5,216

24

40

89

55

68

Game Development
Costs
Amount recorded asassets*-465

Operating income
Ordinary income(Millions of yen)

Net sales

Q1(Apr-Jun)
ActualQ2(Jul-Sep)
ActualQ3(Oct-Dec)
ActualQ4(Jan-Mar)
ActualFull year
Actual

10,700

2,661

2,523

2,893

2,450

10,528

326

1,389

394

380

391

365

1,630

73.4%

1,893

7,110

1,762

1,680

2,048

1,913

7,306

154

60.3%

101

255

16

21

88

117

243

74

198

54.1%

168

366

117

91

80

54

345

-457

-584

-1,507

69.0%

-677

-2,185

-496

-692

-485

-558

-2,233

817

790

492

2,100

95.5%

99

2,200

504

463

452

171

1,591

810

737

477

2,025

96.4%

74

2,100

492

448

439

160

1,541

521

534

110

1,166

106.1%

-66

1,100

300

311

241

-45

807

Cumulative
total(Apr-Dec)

Revisedforecast

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 from manufacturing costs and transferred to assets as "Software in progress".

12

１. Review of Q3 (Oct-Dec) FY03/2023
２. Forecast for FY 03/2023
３. Medium-term goals and progress of each business
４. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

13

３. Medium-term goals and progress of each businessMedium-term goal
A comprehensive entertainment company that provides a variety of digital entertainment content
globally based on IP(1) New game hits
Main Initiatives•

Six new titles under development hit themarket(2) Acquisition, development andcultivation of IP(1) Expansion of game business
Main Initiatives• Improve profitability of titles in operation(2) Breaking away from dependence
on the F2P* model

Securing
Stability

Main Initiatives• Webtoon, light novel, comics

Promotion of
growthpotential

Main Initiatives•

Wizardry•

Evil Prince and the Puppets•

Publishing/ Video•

NFT Project(3) Global expansion of existing/new titles
4) Business development in new
business areas•“AROW” AR application building platform•"Rooot” Fan community promotion service•

Load testing service, vulnerability

Main Initiatives

assessment•

Webtoon, light novels, comics (publishing)•

Blockchain Game Development (Web3)•“AROW" AR application building platform•"Rooot” Fan community promotion service•

Load testing service, vulnerability assessment*F2P: Abbreviation for free to play. An online game that can be played basically for free.
Copyright Drecom Co., Ltd. All Rights Reserved.

14

３. Medium-term goals and progress of each businessGame business overview
7 development projects underway as of December 31, 2022
Business

StatusDefinition

Number of projects

Operation

Titles in operation11

Ø Other company distribution: 7 titles
Ø In-house distribution: 4 titles

Game
Business

Development•

Titles underdevelopment with aprospect for
releaseCommercialized
development

Prototype

Details

GGGGG→ Cooperative and competitive action game. Release in 2023•

6

Titles for
Smartphones

Wizardry Variants Daphne→ 3D dungeon RPG. Release in 2023•

Evil Prince and the Puppet→ Dark fantasy adventure. Release in 2023

Location-based IP titles using “AROW”• Unannounced title (developed by studiorex)•

Titles for PC andconsoles1

Titles in thedevelopment stageprior to production

Several•Unannounced title (developed by Drecom)•

Tokyo Stories -working title→ 3D Adventure. Scheduled for release in 2023

Ø Multiple projects in progress

Series titles and titles developed for overseas are counted as one title.
Copyright Drecom Co., Ltd. All Rights Reserved.

15

３. Medium-term goals and progress of each businessGame business overview(continued)
There are 11 titles in operation. Six more titles are under development.
2011 – 2022

2023 and
thereafter

Titlesunderoperation

11*

Smartphone titles under development : 6• GGGGG→ Cooperative and competitive action game, release in 2023

• Wizardry Variants Daphne

Titlesunderdevelopment

6→ 3D dungeon RPG, release in 2023

• Evil Prince and the Puppet→ Dark fantasy adventure, release in 2023

• Location-based IP titles using “AROW”• Unannounced title (developed by studiorex)• Unannounced title (developed by Drecom)*Series titles and titles developed for overseas are counted as one title.
*Projects classified as "Prototype" or "PC/Console Titles" on the previous page are not included above.
Copyright Drecom Co., Ltd. All Rights Reserved.

16

３. Medium-term goals and progress of each businessGame business progress: GGGGG open beta test conducted
An experimental title that pursues a new experience on mobile devices as the next-generation "5G" communication
standard begins service. Action-oriented blockchain game with NFT skin.
GGGGG(read: g-g-g-g-g-)

•
•
•
•
•
•
•
•

Genre: Cooperative and competitive action game
Release date: Year 2023
Supported platforms: iOS/Android
Price: Free for basic play (with in-game purchases)
Development/Distribution/Operation: Drecom Inc.
Countries of distribution: 172 countries and regions
worldwide, including Japan
Copyright Notice: © Drecom Co., Ltd.
NFT skins that can be changed in-game will also be
available

Copyright Drecom Co., Ltd. All Rights Reserved.

Battle royal

Battle royal against 100
participants

Dungeon strategy

Private match17

３. Medium-term goals and progress of each businessGame business progress: Wizardry Variants Daphne
An initiative to acquire copyrights and trademarks of popular IPs and develop original titles after making them
controllable in-house IP.

Wizardry Variants Daphne

•
•
•
•
•
•
•
•

Genre: 3D dungeon RPG
Release date: During 2023
Supported platforms: iOS/Android
Price: Free for basic play (with in-game purchases)
Developer/Distributor/Operator: Drecom, Inc.
Country of distribution: Worldwide (Japan and overseas)
Supported languages: Japanese/English *At the time of distribution
Copyright Notice: © Drecom Co.

Copyright Drecom Co., Ltd. All Rights Reserved.

18

３. Medium-term goals and progress of each businessGame business progress: Evil Prince and the Puppet
Initiative to develop game content together with the follower-based community through the operation of SNS tofoster IP assets. The number of SNS followers exceeds 100,000. Official announcement of game information made inOct, 2022. Game development partner is Liber Entertainment, Inc.
Evil Prince and the Puppet

•
•
•
•
•
•
•
•

Genre: Dark fantasy adventure
Release date: 2023
Supported platforms: iOS/Android
Price: Free for basic play (with in-game purchases)
Planning and development:
Drecom Co., Ltd and Liber Entertainment Inc.
Main scenario writer: Takumi Miyajima
Character Design: Domino Ozaki
Copyright Notice: ©Drecom Co.

Copyright Drecom Co., Ltd. All Rights Reserved.

■ Press Release (October 28, 2022)
https://drecom.co.jp/news/2022/10/20221028-01.php
19３. Medium-term goals and progress of each businessGame business progress: Tokyo Stories
An initiative to develop original titles for PCs and consoles on an one-time purchase basis.
Highly acclaimed overseas, exhibited at the Taipei International Game Show 2023 in February.
Tokyo Stories -working title-•••

Genre: Adventure
Release date: 2023 (scheduled)Compatibility: PC (Steam) / Console (platform to be
determined)

•
•
•
•
•

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

Copyright Drecom Co., Ltd. All Rights Reserved.

■Press Releases (Jan. 16, 2023 and Jan. 27, 2023)
https://drecom.co.jp/news/2023/01/20230116-01.php
https://drecom.co.jp/news/2023/01/20230127-01.php

20３. Medium-term goals and progress of each businessAccelerate growth potential: Acquire, develop, and nurture IP
Aiming to create and nurture IP from the original content development and expand into adjacent industries by way ofout-licensing.

Borrowed IPs＜ Current ＞
ü Develop and operate non inhouse IP games.

＜ Hereafter ＞
ü New/In-development IP games byother companies
ü Comic and webtoon adaptationfrom other companies’ IPs
ü NFT, BCG, etc. using othercompanies’ IPs

Copyright Drecom Co., Ltd. All Rights Reserved.

Grow this ratio and make it our strength

Create and nurture IP＜ Current＞
ü Operate In-house IP games.
ü Original titles in publishingbusiness.
＜ Hereafter ＞
ü New/In-house IP games indevelopment
ü IP creation in publishing andvideo business

Lend IPs＜ Current＞
ü Converting our own IP to BCG(Wizardry)＜ Hereafter ＞
ü Cross-media development of inhouse IPs(Animation, merchandising, live
performances, games, etc.)
ü Overseas deployment

ü IP development in Web3 domainü Acquisition of IPs
21

３. Medium-term goals and progress of each businessIP development and cultivation initiatives: Publishing business
New work published around the 10th of each month by the light novel label "DRE Novels".

Blade & Bastard–Ashes are Warm, Labyrinths are Dark –,published in December is going to be reprinted
due to the great response.

••

Release date: December 9, 2022
List price: 1,430 yen

Troubles with exorcist daughter Nicola,
winner of the Drecom Media Grand Prize《Gold Prize》, will be published in February.

••

Author：Kumo Kagyu
Illustration: so-bin

List price: 1,430 yen(1,300 yen + tax)

(1,300 yen + tax)••

Release date: February 10, 2023•

Author: Ito Iino
Illustration: Kinoko Princess■ DRE Novels’ official website:. https://drecom-media.jp/drenovels
Copyright Drecom Co., Ltd. All Rights Reserved.

22

３. Medium-term goals and progress of each business

IP Development and cultivation initiatives: Wizardry
Acquire copyrights and trademarks of a popular IP and make them controllable IP of the company’s own,
and increase IP value
From 2022 (scheduled)
Novelization and comic book adaptation of
Blade & Bastard by the Publishing and Video
Division•
Wizardry••

Mobile game releases
Wizardry Variants Daphne

2020〜
Drecom acquired trademark rights
Mobile Game Development Announced

2009〜
Gamepot Inc. acquired trademark rights
Derivative Series Development

•
•

•
•
1981〜
Release of the first software for PC
Developed the series until around 2001

1981

Copyright Drecom Co., Ltd. All Rights Reserved.

2009

2020

After 2022

*Image of IP value enhancement23

３. Medium-term goals and progress of each business

IP Dev. and cultivation initiatives: Evil Prince and the Puppet
Initiatives to form fan-based communities from SNS operations, nurture IP, and grow it in multiple areas, including
game development.

From 2023 (scheduled)・ Mobile game releases
November 2022
・Game Information Release・ Real Event Exhibit
April 2021
・ Merchandise are now on saleat the official online store.

November 2019
・ Project Announcement

Approx. 100,000

Approx. 60,000

SNS followers: approx. 10,000
2019

Copyright Drecom Co., Ltd. All Rights Reserved.

2021

2022

After 2023

*Image of IP value enhancement24

３. Medium-term goals and progress of each business

Promote growth potential: Business development in
new business areas (Web3 domains)Started initiatives in areas with high affinity to existing businesses. Aiming to promote growth strategies throughEntertainment x Web3
Initiatives in the Web3 domains
Existing Initiatives

Game Business

Mobile game
Development and Operation

Publishing andVideo Business

Webtoon, animation
Light Novels, Comics

BtoB Business

Fan Community Promotion
Services

M&A, Investment
Copyright Drecom Co., Ltd. All Rights Reserved.

Load Testing Services

M&A of game development
companies
IP Acquisition Investment

Blockchain game
・FT+NFT × Game(e.g. Wizardry BCG (tentative)
・NFT × Game(e.g., GGGGG)

×Web3

NFT

Business support in the
Web3 areas

Investment in Web3 areas25

３. Medium-term goals and progress of each businessEntering performance expansion phase
Aiming to enter a phase for a virtuous cycle of earnings expansion by aggressively investing the cash generated from the gamebusiness.
Contribution of three new titles scheduled for release in FY03/23 will be delayed to FY03/24.

Sales: 13 billion yen → 10.7 billion yen (revised forecast)
Operating income: 2 billion yen → 2.2 billion yen(revised forecast)

Net sales: +20% or more YoY
Operating margin: maintain 15%

Net sales: +20% or more YoY
Operating margin: maintain 15%

GrowthGrowthGrowthGame
Publication
Web3

FY03/2025

FY03/2024

FY03/2023

Game
Publication
Animation
Web3

Growth driver••

Light novels
NFT

Investment

Game
Publication
Animation
Copyright
acquisition
Web3

Growth driver• Three new games• Light novels• Comics/Webtoon• NFT

ProfitShare-holder
returnCopyright Drecom Co., Ltd. All Rights Reserved.

Investment• Blockchain game
• Global expansion

Share-holder
returnProfitInvestment

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

ProfitShare-holder
return26

１. Review of Q3 (Oct-Dec) FY03/2023
２. Forecast for FY03/2023
３. Medium-term goals and progress of each business
４. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

27

4. Appendix

Revenue status of titles in operation (by release date)
The game business is not dependent on a small number of hit titles, but rather on the accumulation of multiple
titles to generate revenue.
Total sales of titles under operation
2011

2014

FY03/2021

2015

2016

2017

2018

FY03/2022

2019

2020

Total business profit of titles under management
2021

2022

FY03/2023

2011

2014

FY03/2021

2015

2016

2017

2018

FY03/2022

2019

2020

2021

2022

FY03/2023*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_202303Q3.pdf
Copyright Drecom Co., Ltd. All Rights Reserved.

28

4. 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 and appropriate
management, Drecom is focusing on strengthening
governance, especially the appointment of 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 eventsand dissemination of technology-related information
3) Support for entrepreneurial communities

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.

1) Actively appoint female directors

As of May 2022, 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 is
60%.
3) Diversity of Independent Outside Directors

The Company appoints experts in various fields, such as certified public
accountants, lawyers, and university professors, as independent outside
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 were
held annually for FY03/2022 and 24 meetings were held annually for FY03/2021.

29

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. *2

Feb 2015

Derby Stallion: Masters

Drecom Co., Ltd.

Nov 2016

Everybody's Golf

Forward Works Corporation

Jul 2017

Kirara Fantasia*1

Aniplex Corporation

Dec 2017

THE IDOLM@STER SHINY COLORSBANDAI NAMCO Entertainment Inc.

Apr 2018

NEKO & DRAGONS

studiorex Co., Ltd.*2

Apr 2019

Super Robot Wars DD

BANDAI NAMCO Entertainment Inc.

Aug 2019

Disgaea: Hour of Darkness RPG

Forward Works Corporation

Nov 2019

New Japan Pro-Wrestling Strong Spirits

Bushiroad Inc.

Feb 2022*1: Kirara Fantasia service is scheduled to end on February 28, 2023
*2: studiorex, Co., Ltd. will join our group in March 2020.
Copyright Drecom Co., Ltd. All Rights Reserved.

30

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 other companies

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".

Research and development 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.

31

Please refer to the Fact Sheet on our website for consolidated financial results, cost of sales, SG&A expenses, etc.,
and billing sales in the game business. https://drecom.co.jp/ir/factsheet_202303Q3.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 factorsthat may affect actual business results include, but are not limited to, economic conditions surrounding our business, social trends,
and changes in relative competitiveness due to demand trends for the services we provide.