Falcom Q1 Report for 2016 – Total Sales Down 45.4% from 2015 Q1


Editor’s Note: This article looks bad. I was worried about writing it but glad I waited to let it process mentally before I actually wrote it, because there are some things from a bigger picture that are worth pointing out. I’ll do so at the end of the article to prevent confusion.

Today, Falcom revealed their Q1 financial information. This information runs from Oct 1, 2015 to Dec 31, 2015. (Editor’s note: Falcom’s ‘End of Year’ is Sept 30th.) Please see the table below for the numbers:

  Total Sales Operating Profit Current Profit QTR Net Income
Q1 2016 ¥340,000,000
? 45.4% ¥151,000,000
? 64.7% ¥152,000,000
? 64.4% ¥106,000,000
? 61.9%
Q1 2015 ¥623,000,000
? 97.5% ¥428,000,000
? 224.5% ¥426,000,000
? 221.7% ¥280,000,000
? 221.4%

All conversions are approximations, and have been rounded accordingly.
Conversion rates valid as of 2/10/2016 @ 1:00am Central Time

2016 Quarter 2 Forecast

(In million yen increments.)

  Total Sales Operating Profit Current Profit Share Price
Q2 2016 460 ? 40.2% 100 ? 75.8% 100 ? 75.6% 67 ? 76.5%
EOY 2016 1700 ? 7.9% 700 ? 1.0% 700 ? 1.4% 469 ? 2.8%

Quantitative Data Regarding Current Quarter

Operational Details

This company is a content maker that strives to reach out to customers across the world with its game contents and services filled with personality and character over multiple platforms.

For this quarter, manufactured goods from the company itself include Tokyo Xanadu (released on 9/27/2015), a new title which received the Future Class Award from the Japan Game Awards at Tokyo Game Show, competing alongside 473 exhibiting companies and 2004 titles.

Currently, the company is eagerly working on the upcoming Ys VIII -Lacrimosa of DANA-. With its first game released in 1987, the Ys series is an action RPG that has seen many titles on multiple platforms and localized into North America, Europe, and Asia. It stands alongside the ‘Kiseki’ series as one of the company’s masterpieces.

Licenses include Trails in the Sky SC Evolution, which was released on 12/27/2015. There have also been collaborative projects for Phantasy Star Online 2 (from Sega Games), and Taiko Master V (Bandai Namco Games).

Furthermore, along with currently available downloadable titles, North America saw the release of The Legend of Heroes Trails of Cold Steel for PS3 and PlayStation Vita, while Asia saw releases of Trails in the Sky FC Evolution and Ys Memories of Celceta. [Editor’s Note: European release of Cold Steel happens during Falcom’s Q2.]

Financially, licensing releases for this quarter reached 189 million yen (approx. $1,645,000), which is a 57.2% decrease from this quarter last year.

Detailed summaries and my observations can be found behind the cut….

Detailed Financial Summary

In thousand yen increments

  Prev. Year Current Year
Property Division    
     Current Assets    
          Cash on Hand 3,052,949 3,395,102
          Accounts Receivable 586,647 97,051
          Manufactured Goods 2,487 1,627
          Raw Materials 3,807 2,999
          Misc. 40,324 31,484
          Current Assets Sum 3,686,216 3,528,266
     Fixed Assets    
          Tangible Property 7,389 6,640
          Intangible Fixed Assets 5,374 4,742
          Misc. Fixed Assets 157,139 156,040
          Fixed Assets Sum 170,139 167,424
     Total Assets 3,856,356 3,695,690
Liabilities Division    
     Current Liabilities    
          Accounts Payable 107,330 9,585
          Unpaid Corp. Taxes 83,053 31,834
          Prize Reserves 20,250 3,750
          Misc. 120,383 90,322
          Current Liabilities Sum 331,017 135,492
     Total Liabilities 331,017 135,492
Net Worth Division    
     Shareholder Equity    
          Capital Stock 164,130 164,130
          Capital Surplus 319,363 319,363
          Profit Surplus 3,041,962 3,076,821
          Treasury Stock ?117 ?117
          Shareholder Equity Sum 3,525,338 3,560,197
     Net Worth Sum 3,525,338 3,560,197
Sum of Liabilities and Net Worth 3,856,356 3,695,690

Current Quarter Financial Statement

In thousand yen increments

  Q1 2015
10/1/2014 ~ 12/31/2014
Q1 2016
10/1/2015 ~ 12/31/2015
Total Sales 626,944 340,764
Cost of Goods Sold 52,955 44,396
Sales Profit 571,039 296,367
Sales and Administrative Costs 142,719 145,265
Operating Profit 428,319 151,102
Earnings Outside of Business    
     Profit from Unpaid Dividends 865 702
     Dividends Received 286
     Sum of Earnings Outside of Business 865 988
Costs Outside of Business    
     Exchange Loss 2,247
     Sum of Costs Outside of Business 2,247
Current Profits

426,937 152,090
Quarter Net Income Before Tax 426,937 152,090
Corporation, Municipal, and Enterprise Taxes 112,601 30,231
Corporation Tax Adjustment Sum 34,230 15,040
Sum of Misc. Corporation Taxes 143,832 45,271
Quarter Net Income 280,105 106,818


As promised, I’m adding in some observations of these numbers.

Like I said in my first line, the report itself looks awful, and I’m sorry for that headline, since it seems very alarmist. However, when you look at the numbers from 2014/2015, you can see that this quarter last year had a massive jump of over 200% from the year before. So this seems like they’re stabling out again, in a sense. When looking at the numbers above, you can see that they are still posting a profit- so there is no loss in this picture at all.

As a result, though these numbers seem scary, it looks like Falcom is kind of holding stable still and coming back off of the massive sales high that was Sen no Kiseki II- remember this game broke their sales records, too, and they kept the pace going for quite a bit, it seems.

In the forecast, Falcom has seemingly predicted this trend, so it’s not out of the blue for them at this point. If they keep on track, then they should be close to their predicted numbers at the end of the year, which would put them a little higher over the 2015 EOY numbers.

Overall, it doesn’t look too bad, health-wise for the company. In fact, they seem to still be healthy, financially… this just proves that the Kiseki/Trails games are monster sellers in Japan. However, their stock has taken a hit for the lower numbers. As of close today they are sitting at 640 points, which is a 8.18% decrease from yesterday.

[ Falcom IR Report (PDF) ]
[ GameBiz Report ]

5 Replies to “Falcom Q1 Report for 2016 – Total Sales Down 45.4% from 2015 Q1”

    1. There are no details on them in the financial report, unfortunately. Just some broad statements for licensed products.

        1. They don’t generally details the sales outside of Japan. All the licensed goods are lumped together in the report, and without details on what has caused the drop in the licensed numbers- Falcom will usually break them up in region in the EOY report, but not in the quarterly reports.

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