Top Management Interview

December 2020,
Taro Hashimoto, CEO

Financial results for the first half of FY2020 and full-year financial results forecast for FY2020

During the first half of the fiscal year ending March 31, 2021, the Company posted a decline in both revenue and income year on year partly due to the impacts of the COVID-19 pandemic.

Looking at the results by segment, in the “Education” segment, both revenue and income increased as the number of new students in the Renaissance High School Group reached a record high as in the previous fiscal year, and this segment was a driver of overall financial results. In the “Studio & Content” segment, loss expanded due to the COVID-19 pandemic. The “Broadcast” segment saw an overall decline in revenue, but operating income remained at the same level as the same period of the previous fiscal year due to the curbing of expenses. In the “Technology” segment, CDN (Akamai) services remained favorable, but the segment saw a year-on-year decline in both revenue and income due to the fact that the 10-year planned period for providing VPF services in digital cinema services expired.

Both ordinary income and net income declined significantly. These declines were caused by the drop in operating income as well as the non-recurrence of special factors that boosted profit in the previous fiscal year, including insurance proceeds received, lump-sum settlement proceeds for damage suits and a corporate tax refund for previous years.

For full-year forecast for the fiscal year ending March 31, 2021, we are currently forecasting a decline in both revenue and income, but we will continue to pursue improvements in our financial results.

Executing shareholder returns

We have been aiming to realize shareholder returns as soon as possible, and this period we were able to implement shareholder returns due to the fact that we posted retained earnings in conjunction with extraordinary income (gain on extinguishment of tie-in shares) resulting from the mergers with six subsidiaries, and the capital reduction without compensation resolved at the general meeting of shareholders taking effect. With this, in November we carried out a treasury stock acquisition with a total share acquisition value of 200 million yen (upper limit) and total number of acquirable shares of 1,600,000 shares (upper limit). The treasury stock acquisition resulted in the acquisition of 1,600,000 shares with a total share acquisition value of 153,650,900 yen.

Going forward, we will continue to proactively consider shareholder returns, taking into consideration the balance with investment necessary for growth.

Group consolidation and introduction of restricted stock compensation plan

This April, the absorption-type mergers with six subsidiaries resulted in many employees of these former subsidiaries becoming directly employed by the Company. On the occasion of this group consolidation, we decided to introduce a restricted stock compensation plan for employees as a new incentive system. Going forward, we will aim to develop a sense of unity among employees and enhance motivation for improving corporate value, as we pursue significant growth.

Future business development

While developing and rolling out new businesses during the COVID-19 pandemic is challenging, I would like to discuss a few of the initiatives we are currently working on.

First of all, in the education business, I have once again sensed our strength in the online remote education. The Renaissance High School Group has been working to provide education through broadband and mobile devices since its founding in 2006. The group adopted tablets and smartphones as learning tools from an early stage, and has been providing digital education, centered on adaptive learning. The group is currently leveraging this know-how to develop its own original teaching and learning materials, eyeing the government curriculum guidelines which will be revised in FY2022.

The eSports course is extremely popular, and in October we launched “Renaissance Junior High,” an eSports and programming course for junior high students. The school utilizes the Renaissance High School Group’s expertise in learning instruction for the eSports course, and aims to help junior high students who like video games develop digital skills while also gaining social skills.

We position the eSports course as one of our proprietary project-based learning (PBL) programs. With the cooperation of CYCLOPS athlete gaming, the Company’s professional eSports team and one of the leading eSports teams in Japan, we will work to evolve this program at an even faster pace.

In terms of the cloud gaming business, in November we began providing our cloud gaming technology (G-cluster) to “7 (Nana) Stream,” CommSeed Corporation’s cloud-based pachinko and pachislot game for Amazon Fire TV. Going forward, we will continue to create and provide services utilizing the unique features of our cloud gaming technologies.

Our Mission

To our shareholders

Our results had been indisputably recovering over the four years through last year. However, partly due to the impact of COVID-19, at the current point in time we are unfortunately forecasting a decline in revenue and income for the full-year financial results forecast. However, over the medium- to long-term, there is ample room for the Company’s innovative “education” and “technologies” to grow, and I am certain that the Company will make a leap forward.

In FY2020, we were able to implement shareholder returns for the first time in quite some time through the acquisition of treasury stock. I get the sense that we have finally returned to the start line. I would be most grateful to our shareholders for their continuing support.