Q2 2017 Financial Report – Higher Numbers than Forecasted

Article Correction: I had previously posted this article with a misinterpreted counter word that messed up the translation of an entire sentence. Whereas I previously reported that the Ys series had 50,000,000 sales, it was actually in reference to the PS4 having had 50,000,000 sales worldwide. My attempts to validate the number and check my translation to make sure I was reading the number correctly never really clicked for me to look at the counter word.

As such, I’ve updated both the article and the headline to remove my mistake and add in the correct information.

Thank you all for your support and I’ll do my best to make sure this doesn’t happen again. orz.


On 11/10/2016, Falcom released a financial report with the earnings forecast for the rest of the 2016-2017 fiscal year. Along with this year’s Q2 report, Falcom has also released an explanation supplement, as they blew well over the expected earnings. This article will start with the supplementary info, then jump into the full financial report.

In 1,000,000 yen increments

  Total Sales Operating Profit Operating Income Q2 Net Profit Q2 Net Profit
per 1 Share
Forecast Data (A) 300 ?40 ?40 ?27 ?2.62
Q2 Results (B) 456 ?145 ?144 110 ?10.76
Fluctuation Sum (B – A) 156 185 184 137
Rate of Change ( % ) 52.0
Ref: Prev. Q2 Results 542 201 202 144 14.10

Reason of Change

The Asia release of Ys VIII -Lacrimosa of Dana- and Tokyo Xanadu for PlayStation®Vita and the Asia release of Tokyo Xanadu eX+ for PlayStation®4 saw extremely favorable sales, and as a result, the actual Q2 numbers for sales, operating profit, operating income, and net profits were much higher than originally forecast.

As a result, this will end up changing the full year’s forecast, and an amended forecast will quickly be drawn up and released in the near future.

Q2 2017 Data

Company Name: Nihon Falcom
Code Number: 3723
URL: http://www.falcom.co.jp
Representative (Title: ‘Board Selected President’) – Name: Toshihiro Kondo
Reference Manager: (Title: ‘Company Director’) – Name: Takashi Nakano
TEL: 042-527-0555
Planned Date for Report Presentation: 5/12/2017

2017 Q2 Financial Results

Q2 Period Dates: 10/1/2016 ~ 3/31/2017

Management Results (Total)

In 1 million yen increments

  Total Sales Operating Profit Operating Income Q2 Net Profit
9/2017 Q2 456 ?16.0% 145 ?28.1% 144 ?29.0% 110 ?23.7%
9/2016 Q2 542 ?29.5% 201 ?51.2% 202 ?50.6% 144 ?49.2%

In 1 yen increments

  Net Profit per 1 Share Potential Stock Adjustments
based on Profit per Share
9/2017 Term Q2 10.76
9/2016 Term Q2 14.10

Financial Condition

1 million yen increments

  Total Assets Net Worth Capital-to-Asset Ratio
(percentage)
Net Worth per Share
(1 yen increments)
9/2017 Term Q2 4,009 3,878 96.7% 377.34
9/2016 Term 4,155 3,840 92.4% 373.57

Reference: Owned Capital
9/2016 Term: 3,878 million yen
9/2015 Term: 3,840 million yen

State of Dividends

(1 yen increments)

  Year Dividends
Q1 End Q2 End Q3 End End of Year Total
9/2016 Term 0.00 7.00 7.00
9/2017 Term 0.00      
9/2017 Term (Forecast)     5.00 5.00

Note: Recent adjustments to share value estimations has not been factored in.
(Editor’s Note: Referring to the supplemental data at the start of this article.)

9/2017 Term Forecast

In million yen increments.

  Total Sales Operating Profit Current Profit EOY Net Income Net Profit per Share
Financial Year 1,800 22.9 750 28.4 750 28.3 500 29.2 48.64

Note: Recent adjustments to share value estimations has not been factored in.
(Editor’s Note: Referring to the supplemental data at the start of this article.)

Quarterly Summary Data

In this quarter’s report, Falcom first reaffirms that they specialize in originality in their game contents and services, and are seeking to reach out to customers across the world.

For the Q2 period, sales have remained strong as both Ys VIII -Lacrimosa of Dana- (released in 7/2016 for PS Vita) and Tokyo Xanadu eX+ (released on PS4 in 9/2016) have continued to show favorable responses from users. In May of 2017, Ys VIII -Lacrimosa of Dana- will release for the PlayStation 4, which has sold 50,000,000 units worldwide.

And now, with a cumulative total of 960,000 copies sold worldwide, Sen no Kiseki and Sen no Kiseki II (ed note: Trails of Cold Steel and Trails of Cold Steel II) has their followup title, The Legend of Heroes Sen no Kiseki III, eagerly being worked on for a PlayStation 4 release.

As a result, the manufactured goods section has a number of 39 million yen for this quarter. (A 79.5% reduction from this quarter last year.)

With regards to any licensing work, Ys VIII -Lacrimosa of Dana- saw its Korean release, and Gurumin 3D was released to the 3DS in both English speaking and Japanese regions. In Feb 2017, Ys Origin was released to the PlayStation 4 in Japanese and other languages. In March 2017, Tokyo Xanadu was released for PlayStation Vita, and Tokyo Xanadu eX+ was released for PlayStation 4 in Chinese speaking territories.

A variety of older PC games have been released as download only in English, the PC online story RPG Akatsuki no Kiseki continues, as well collaborations in other games, such as Hortensia Saga (Sega Games), Seven Nights (Net Marble Games), Taiko no Tatsujin (Bandai Namco Games).

In April 2017, Tokyo Xanadu and Tokyo Xanadu eX+ were released in Korea, and in May 2017, both the Chinese and Korean versions of Ys VIII -Lacrimosa of Dana- for PlayStation 4 will see simultaneous releases with Japanese release. (Ed Note: The Korean release info is additional, and the sales numbers are going to be in the Q3 report.)

As a result, the licensing section has a number of 416 million yen. (A 18.7% increase from this quarter last year.)

With all of this, the final results for the Q2 financials are a total sales of 456 million yen (a reduction of 16.0% from last year), an operating profit of 145 million yen (a 28.1% reduction), operating income of 144 million yen (a 29.0% reduction), and a quarterly net profit of 110 million yen. (A 23.7% reduction)

Detailed Financial Summary

Quarterly Balance Sheet

In thousand yen increments

  Prev. Year (2016) Current Year (2017)
Property Division
Current Assets
Cash on Hand 3,812,687 9,657,665
Accounts Receivable 137,653 133,881
Manufactured Goods 1,301 1,192
Raw Materials 1,994 1,370
Misc. 42,278 46,205
Current Assets Sum 3,995,916 3,840,315
Fixed Assets
Tangible Fixed Assets 4,564 9,347
Intangible Fixed Assets 3,210 2,130
Assets from Additional Investments 152,185 169,206
Sum of Fixed Assets 159,961 169,206
Total Assets 4,155,977 4,009,522
Debt Division
Current Liabilities
Accounts Payable 22,952 846
Unpaid Corporate Taxes 150,838 44,574
Reward Provisions 20,250 11,250
Miscellaneous 121,549 73,864
Sum of Current Liabilities 315,590 130,535
Total Debts 315,590 130,535
Net Worth Division
Shareholder Equity
Capital Stock 164,130 164,130
Capital Surplus 319,363 319,363
Profit Surplus 3,356,910 3,395,610
Treasury Stock ? 117 ? 117
Sum of Shareholder Equity 3,840,286 3,878,986
Sum of Net Worth 3,840,286 3,878,986
Liabilities and Net Worth Sum 4,115,887 4,009,522

Quarterly Profit and Loss Statement

In thousand yen increments

Prev. Year (2016) Current Year (2017)
Sales 542,977 456,242
Cost of Sales 69,317 11,809
Sales Expenses and Admin Costs 271,813 299,304
Operating Profit 201,846 145,128
Earnings Outside of Business
Received Interest 332 18
Received Dividends 286 577
Profits Excluded from Unpaid Dividends 702 1,046
Sum of Earnings Outside of Business 1,320 1,642
Expenses Outside of Business
Currency Exchange Losses 285 2,703
Sum of Expenses Outside of Business 285 2,703
Operating Income 202,882 144,068
Quarterly Income Before Taxes 202,882 144,068
Corporation, Municiple, and Other Enterprise Taxes 47,692 41,293
Taxes and Adjustments 10,218 ? 7,884
Sum of Corporate Taxes 57,911 33,403
Quarterly Net Profit 144,970 110,659

Cash Flow Statement

In thousand yen increments

Prev. Year (2016) Current Year (2017)
Cash Flow from Business Activities
Quarterly Net Income Before Taxes 202,882 144,068
Depreciation Repayment Costs 2,694 3,159
Reduction of Fluctuations of Reward Reserves
(? is decrease)
?9,000 ?9,000
Interest and Dividend Receipts ?618 ?595
Total Credit Fluctuation Amounts (? is increase) 547,240 3,772
Fluctuation Amount of Stockholder Assets(? is increase) 1,751 733
Fluctuation Amounts of Other Assets
(? is increase)
382 ?1,584
Reduction of Fluctuations in Purchased Debts
(? is decrease)
?102,836 ?22,105
Fluctuation Amounts of Arrears
(? is decrease)
?51,997 ?27,172
Fluctuation Amounts of Unpaid Taxes
(? is decrease)
?22,545 ?38,571
Fluctuation Amounts of Other Debts
(? is decrease)
?669 17,714
Subtotal 567,282 70,418
Amounts Received via Interests and Dividends 618 595
Amount Paid for Corporation Tax ?81,058 ?147,977
Cash Flow from Business Activities 486,843 ?76,962
Cash Flow from Investment Activities
Expenses from the Value of Tangible Assets ?6,862
Expenses from the Value of Intangible Assets ?387
Cash Flow from Investment Activities ?387 ?6,862
Cash Flow from Financial Activities
Dividend Payments ?71,378 ?71,196
Cash Flow from Financial Activities ?71,378 ?71,196
Increased Reduction in Cash and Cash Value Articles
(? is decrease)
415,078 ?155,021
Balance of Cash and Cash Value Articles at Start of Term 3,052,949 3,812,687
Balance of Cash and Cash Value Articles at End of Quarter 3,468,027 3,657,665

[ Falcom IR Report – Forecast Discrepancy Report ]
[ Falcom IR Report – Q2 Financial Results ]

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Kirsten Miller
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The webmaster, creator, and administrator of Endless History and all the sites located on esterior.net. Web developer and designer by day, translator, Kiseki crack theorist, and game streamer by night. Also, apparently a very floofy guy.

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