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Despite investing more than $120m in expansion, DeNA sees FY11 Q1 net income up 45% to $123m

Reckons its $12.06 p/m users are worth 18x Zynga's

Despite investing more than $120m in expansion, DeNA sees FY11 Q1 net income up 45% to $123m
DeNA (TYO:2432), the Japanese mobile social gaming company has announced its seventh consecutive set of record financial figures for its FY11 Q1, the three months ending June 30.

Net sales were up 43 percent to ¥34.6 billion ($449 million), compared to the same period in FY10.

Net income was up 45 percent to ¥9.46 billion ($123 million).

Spend to profit

With the company investing heavily in building out its Mobage platform globally, as well as on Android, cash flow from operations was strong negatively, down ¥9.3 billion ($120 million) year-on-year.

In addition, DeNA currently has 400 development staff, but says this number will soon be over 1,000, with a new offices set up in South Korea and Sweden, plus plans for centers in London and Singapore, and the acquisition of Dutch studio Rough Cookie

It ended the quarter with ¥50.9 billion ($660 million) in cash and cash equivalents, down ¥11.8 billion ($150 million) compared to three months ago. 

Core support

The Japanese Mobage platform continues to power DeNA's revenues. It has 29.7 million subscribers to the mobile and PC service, and there are now over 1,000 mobile games live, while use of its in-platform currency, Moba-coins is growing fast.

On Mobage, more than one billion Moba-coins are being used per month, while on DeNA's PC-based Yahoo! Mobage more than 100 million Moba-coins a month are being consumed.

During the quarter, ¥33.4 billion ($433 million) was spent on Moba-coins, monthly membership fees and ticket sales.

In terms of what DeNA labels its social media business, 88 percent of sales came from in-app purchases, in-game ads and affiliate advertising. Of the remainer, 6 percent was from avatar customisation and 5 percent from other advertising.

Getting smarter

Looking more closely at how DeNA is try to transition the Mobage's audience, since what it call 'Mobage for smartphone' launched in Japan in December 2010, the company says average revenue per user has risen over nine times, almost doubling since operator billing was added in April.



The smartphone platform now supports 13 native and 54 browser-based titles.

Looking toward future growth, DeNA predicts the Japanese social game market will grow from around ¥200 billion ($2.6 billion) in FY11 to around ¥300 billion ($3.9 billion) by FY13.

And continuing its positive comparations to US company Zynga, DeNa reckoned its users are worth 18 times more than Zynga's, in part because it thinks "profitability is much higher on virtual social graphs when comparing social games to real social graphs".

Mobage listed its monthly ARPU as $12.06 compared to Zynga's $0.66: obviously Zynga's Facebook titles have a lot more players than DeNA. 

Indeed, claiming it will be 'The world's top social gaming platform', it is predicting net half year sales of ¥71 billion ($920 million), with net income of ¥18.6 billion ($240 million).

[source: DeNA (PDF)]
Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.