Capcom Q1 2019-20 Earnings – Record Sales Despite Lack of Releases

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Towards the end of last week, Capcom published their earnings results for the first three months of the 2019-20 financial year and already, this is proving to be a very strong year for the company. Of particular note is that the year has been strong despite their being no major new releases within the quarter, showing the enduring strength of certain key releases.

Across the three months, from the 1st of April 2019 to the 30th of June, 2019, Capcom's consolidated financial results and quarterly report show that the company has brought in ¥17.93 billion, compared to last year’s ¥17.2bn, which was the companies best ever first-quarterly results at the time. The real bonus of the quarter is in operating income, where the company brought in ¥7.7bn compared to last year’s ¥5.1bn.

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Capcom and the Continuing Strength of Their Games Catalogue

Over the quarter, Capcom has brought in ¥13.97 billion in sales and ¥7.73 billion of operating income within their digital contents division. These figures are from previously released titles as the company is within what they call a transition period between major titles in their release cycle. As such, new launches were re-releases of older titles.

However, as previously stated, sales have been driven by the enduring strength of key titles. Resident Evil 2 and Devil May Cry have continued to sell well, with Monster Hunter: World also selling yet another 600 thousand units within the quarter. This has pushed sales to over 13 million units in total. In the case of Resident Evil 2, the title has sold over 4.2 million units since January, with Devil May Cry 5 having sold 2.1 million units since being released in May.

Sales continued to grow for Resident Evil 2 (for PlayStation 4, Xbox One and PC) and Devil May Cry 5 (for Xbox One, PlayStation 4, and PC), both of which are hit titles from the previous quarter. Flagship title Monster Hunter: World (for PlayStation 4, Xbox One and PC) has also continued to sell well over an extended period, supported by enduring popularity. These catalog titles boosted profit significantly by driving high-margin digital download sales.

With the performance of recent titles, it's easy to say that Capcom is back. Particularly so when considering the record year the company had last year. For the current year, the company isn't likely to have such a strong year due to a lack of upcoming titles. At the moment, the only upcoming title is Monster Hunter World: Iceborne expansion, which will limit revenue gained during the current year. However, this year will certainly give Capcom time to expand on their successful franchises.

Arcades, Amusements & Others

While video games are the core segment for Capcom, the company does also have a decently sized segment in arcade operations. The company manages thirty-seven stores. This segment generated ¥2.71 billion in revenue, with profits of ¥299 million.

In this business, the Company worked to secure a wide range of customers, including core users, repeat customers, and families through elaborately planned, community-based promotion activities, such as holding various events and conducting service day campaigns, under the banner of “the No. 1 arcade in the community.”

One area the company has been unprofitable in the past was Amusement Equipments. The company actually saw a year on year fall in revenue from ¥376 to ¥225 million. However, the company actually made a profit on this, turning around last year’s loss of ¥154 million to a profit of ¥133 million in the quarter. This was based on focusing on its licensing business area within amusements.

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Finally, the company has an 'other businesses' segment which consists of character merchandising. In addition to this, the company is pushing further into eSports with the Street Fighter League having started in May and will push further from there.

Over the current year, Capcom expects to see a year on year fall in revenue to ¥85bn from last year’s ¥100.03bn. However, expectations are for a larger profit margin, generating ¥20bn in operating income compared to last year’s ¥18.14bn last year.

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