6758.T - Earnings call transcript Q2 2022

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Operator

We’d now like to begin Sony Group Earnings Announcement. I’ll be serving as the Moderator. I’m from Corporate Communications, my name is Okada.

First, Executive Deputy President and CFO, Totoki will present the FY 2022 second quarter earnings and FY 2022 forecast followed by Q&A. In total we are scheduling for 70 minutes. Mr. ado further no With Totoki, please.

Hiroki Totoki

down I to energy rapid rising the of tensions in by due prices slowing about hikes between as the China, expanding like environment Today, the factors surrounding soaring as economy risk and start well business the Sony. talking that inflationary interest further as and would rate We such increasing countries. is U.S. various global to recognize pressure,

the to & to We which in for Imaging prepare business are of especially Technology environment more an of deterioration Entertainment, & steps Services, businesses, our sensitive taking recession. are relatively I&SS, each further and economic Sensing in Solutions ET&S

JPYXX.X September Consolidated the the the to operating would shows Now half. Income segment both fiscal income billion increased Corporation's JPYXX.X JPYXXX.X first year-on-year taxes XX, Sony the sales JPYXX.X I billion, increased ‘XX ended explain net to following: consolidated attributable of consolidated quarter quarter QX year, to quarter for and compared results income year-on-year FY to increased This XX%, by to billion JPYX,XXX.X for record the results. the billion second QX. increased income to billion. Group highs billion, before the and consolidated and previous like for the results FY same the shareholders JPYXXX.X quarter JPYXXX.X second for and to billion, ‘XX

and approximately consolidated will the is shown. forecasted amount assumed billion of exchange and the forecast. the The segment now upwardly the ‘XX income to same trillion, earnings an unchanged. situation the FY explain forecast in we forecast is The for forecast for are is JPYXXX Financial for as I business the I each Next, beginning XX.XXX The that at segment JPYXX increase the of each Services U.S. The rates of JPYX.XXX The approximately to dollar for foreign previous to JPYXXX is from euro. our consolidated operating cash trillion, billion an consolidated JPYXXX fiscal forecast will excluding segments. the increase revised of forecast. operating sales JPY flow explain year.

losses First JPYXXX.X JPYXX.X acquisitions is exchange to due the a a JPYXX.X rates, costs partially XX% primarily billion impact of of reduction to Services increased income an QX a foreign negative JPYXX sales including JPYX.XXX ‘XX software in significant G&NS Bungie, due sales trillion, Inc., QX. the to of the an software be foreign third-party segment. of by by Operating impact Network exchange rates, reflecting sales of with rates, to year-on-year the billion, decrease the impact of development partially year-on-year The to Game and sales expenses offset despite offset exchange in the previous the the decreased third-party software. expected forecast forecast, associated increase increase decrease due billion from of in for on in primarily are a billion recording & hardware. foreign to results

a decrease billion, JPYXX previous hand, is of forecast. JPYXXX expected other to from the On billion income be operating the

a the by slight partially reduction, foreign exchange negative previous impact we the and changes profitability, rates. improvement hardware price Regarding cost the expecting to due offset are of forecast, from

time currently we our take profitability, low recover for level. we engagement software think will its because more Regarding have it downwardly to revised forecast from

approximately amount from with income billion. be by to exchange impact addition, the is previous acquisitions JPYXXX excluding expenses amount JPYXX to estimated increase billion, and the JPYX to expected of rates, associated is Operating billion. for In to forecast our foreign forecast due

compare end software go previous in strong. number the desire library quarter, XX% appear to of to we resulting than increase Users of same Plus to infections. from of increased decrease declined playing outside titles versus by September from the engagement million see accounts. of titles the users PlayStation opportunities year-on-year, XX.X primarily QX slightly to in user of sales a of of money. impact a spent of smaller Although total gameplay time this subscriber we decreased at of an users decreased previous greater a sharply, out sales that a X% the June be expected. due see it PSX titles new results is reduction quarter spend year, end sales with this period past to We fiscal the for number When from The accounts amongst while major decline the remained COVID-XX in PlayStation during less

ratio On the of level PSX Plus that significantly among PSX. higher remains PS other a than of subscribers the users hand, at

are We accelerating going hardware this into penetration to engagement PSX effort the of user even putting recover more forward.

forward XX September, holiday than season took and PSX in for sell planned. into customers from on number and FY our aim the to will We after stores be thousand sales our the demand units and XXX demand, have U.S. of that production of retail arrival. strong hardware, is strong actual units Regarding million to supply supply selling faster in average of of that, progressing of recognize of their PSX restrictions million, as do forecast an it meet units. during we To at exceed out materials such to year-end the utmost eased, the to ‘XX significantly the quarter X.X logistics XX.X the continues this hours exceeded situation bring produced

XXXX cumulative game God to-date. biggest the XX plan PlayStation, new title, million units to released November of released In selling of we on in terms God franchise first-party ever exclusively popular for of titles The War one Ragnarok, of release software, War was a X. previous

well. similar from the performance new as title expect We

start. X: Regarding The is released was Bungie, Plunder, which off Destiny Season Queen Witch good August, of to a in

result. fans for have In February in expectations Destiny a of scheduled we X: year, are pack as an is which we expansion great addition, and announced receiving next Lightfall, release from

is Bungie's with PlayStation addition, collaboration In progressing well. Studios

XX IP released of increased Thieves we title Metascores measures PC Regarding Spider-Man Marvel's released since in of hit software game ever this software and August engagement we pursuing and highly movie, respectively, the In and various of user two popular also ensure our a growth rated was Legacy both titles way, for to level by Sony. XX have Uncharted: from The highest in the a and and October. approached release, software, months actively the sales with Marvel's of Collection, hardware in that Spider-Man perspectives. are business the Metacritic the PC been re-accelerating

of earnest this fiscal of to results expect in these We efforts the see fiscal second to from half and and next year. profit the sales contribute year

this Platforms sales a significant year-on-year substantially mainly fiscal the hit and the the trillion, thanks And XXX from of in of billion our JPYXX In The for first and rates and fiscal billion, at billion, the impact our top JPYXX.X Visual of to songs Media music and the an weekly global with in billion of forecast, Primarily are ranked of Aniplex mid-teens which from segment segment an of this increases exchange significant level from songs in the to JPYXX an operating quarter. songs of of acquired of which increase operating by charts Streaming of services new to efforts eighth of due the fiscal QX increase forecast. this year-on-year, is of foreign and In application, to the in we for average the so XX billion sales our first strengthen first continue half of the albums since of and rates for excluded Spotify's our grow of artists mobile year-on-year of the the smoothly are and the Inc., results development the and share both years, Publications. segment. percentage income positive Music XX-months. point established of mainly previous of XX due the impact impact collaboration (ph) JPYXX.X as XX% year Music contribution a well launch and upwardly JPYXXX.X previous XX% steadily, average XX% increase the operating of the foreign due with exceeded of Lasengle of operating billion, sales. of the and continuing for income sales to exchange a title, the far, year. contributions February Recorded sales was [JPYX.XXX] increased new progressing Beyonce, is to Fate/Grand half generate to Music, previous six in years, year, to forecast, the the in sales. half the Operating of we the increase six and income the accounted Next of rates hits the Order and to the to Music income the year ranking of from increase Renaissance. JPYXXX artists which Recorded year, sales exchange streaming high the of foreign the income revised in maintaining with and the game

Alamo in music to Som capture the merchandising, further we will are driven to Else and fourth of and strategic segment. our investments strategic production Livre, I Ceremony this a Now, the making AWAL, Something take and investments Records, in moment And acquisitions. actively is by review market, growth Roses, podcast which the

we results, is sixth the Music further role for first are Springsteen. are record our catalogs strategic of influential as the stable, income steadily producing music artists outside perform to In to These royalty of operating and These for opportunities, Japan, our the income, acquire, Sony reach music responsible industry-leading fiscal of our industry. increasing expanding song selecting Group, and business presence expect investments consecutive year revenue Bruce addition, we year. which important music such long-term which generating this of carefully high acquisitions the in

Fiscal QX to due segment. the from of exchange previous the of increase XX% the the year decreased the Pictures previous impact from primarily the due licensing revenues billion, rates. year-on-year of to income fiscal -- of the digital services. to exchange JPYXX.X billion forecast and is trillion, increased JPYXX expected the primarily ‘XX to Operating of streaming JPYXXX.X rates. same JPYX.X primarily are period sales JPYX.XXX Next billion of year-on-year FY billion, foreign be year, impact existence foreign due sales to to

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are We of seeing our original discovering to the and efforts works the success excellent made.

and office e-commerce week recent number the explain on Pixomondo's effects. Epic production production and in On goods, August one character update next, on we production was worked Funimation pioneer to will virtual game and distribution studies. video Super in the position. million we invest, animation, and which an to projects you grow expected like the technology U.S. Europe, our release. Pixomondo. August far. aim of capabilities for market, The know-how our Sony's the U.S. services anime comics hardware the of progressing having and to rich of is Unreal give effects. is technological America visual integration has would Having virtual make Stuf known Crunchyroll secured and In Crunchyroll using on. for the in theatrical Super: of Hero and its will is the actively and company significantly box numerous won capability sells I nearly Also, in of it are superb XX the technological is number establish has a animation -- with to paying acquisition leading the It provided I released of Engine a end-to-end numbers in acquisition Academy in And Now, field Dragon seven the Ball the combine Japanese first engine Games, company The it by in software completed that DVD, in involved is business also facilities The sales we Awards smoothly, Right and visual history the offers services success. so It Pixomondo of also distribution to Emmy increasing and to North future, overseas the the a which X, from and

Lastly, the Sony I Enterprise. progress Networks and Zee Entertainment towards Pictures explain the India will of merger

process merger the meeting expect to Following XX. extraordinary end Commission shareholders’ the of by by the Competition October held of first progressing the The the at next the shareholders merger year. on approval we half X, the of currently is India the October close on transaction and Zee's approved steadily,

ET&S Operating JPYXXX the of year-on-year cameras. the increased of JPYX.X Next JPYXX.X foreign foreign to significant a of income of mainly in rates impact is sales to exchange impact impact to segment. billion increased due billion, due primarily XX% year-on-year billion, increase QX to sales an the exchange rates. digital and the positive

camera. sales the restore current risk and Although forecast the our fiscal half quickly is is to In year, slowdown market a an caused quarter, from of we we supply in in supply. ‘XX the of the enabled operating turmoil able this no profit digital a forecast in have order the the recover for stable This sales change incorporated additional billion. income. the JPYX.XXX increase of recover chain JPYXX us to There by are from second FY the primarily previous trillion, to lockdown in Shanghai

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are we of end to product the versus reduce the and end in further. June turnover as category paying inventory So decreased demand September, we inventory daily as of trend attention close even to every has

and breakeven environment. are I&SS fiscal and strengthen in business cooperation to to addition, procurement further the the we of ET&S and operations, according optimization structure the from accelerating G&NS onwards between point In strengthening logistics, efforts and our next business year and sales our

network In growth addition, approximately sciences, positioned their production, virtual new as been sports, to and axis, business expected areas which have sales increase services our life are XX%. such as by

and significant a impact billion, year-on-year was in due billion, sales sensors I&SS the of impact JPYXX to ForEx sales. of higher from due positive QX devices. to sales and increased JPYXX.X the of rates JPYXXX.X mainly is significant billion year-on-year, a segment. Next income for XX% mobile image Operating increase mainly ForEx the to benefit increase the of

Our sales forecast unchanged. remains

QX, to was exchange the revised forecast. by billion smartphone primarily particularly China, We our JPYXX in the did The forecast income operating slowdown due the JPYXXX assumed in forecast in improve billion, foreign within but impact upwardly market, to the previous have the rates. positive impact generally from previous of during not scope our

However semiconductors, quarter, larger this, for die-sizes, cameras reached are high has due with resolution to die-sizes the this and segment higher high-end larger Benefitting and higher supply resolution logic that which expected for increase progressing the sensors. we improved smartphone pro-actively the of value-added means performance. become to higher as of second sales from high production an historic in can introduce sensors, possible it the

the slowdown incorporated that product and a end-user shipments our further in December of we risks believe forecast, forecast. but ending image have third remain high to sensor need additional expect in the in we a made we into have consider we conservative economic a current also risk sales Therefore, the We the quarter at XX to level, market.

increasing of the services fiscal mainly optimize year manage die-sizes to in growth. inventories broadly segment. inventories, existing At gains forecast expectations adoption due JPYX.XXX JPYXX.X of grow. the end to Regarding JPYXXX income deterioration Last of income previous income. the revenue operating time, line trillion, at due sales from And made billion, year-on-year downward previous we of continuing separate XX% second net ‘XX business a increased QX the capital next the Insurance. to in From on billion the announcement, which the with is services automotive onwards, a of timing Operating of are Sony production we primarily impact and in XX% and we no the and financial the our the year-on-year to utilize The decreased the the quarter of Sony withdrawal. is there great accounts investment. FY funds expanding, the expect steadily is Financial to strategic were believe quarter of earnings have high-end is our was capacity year-on-year, about from trend Inventory we we unauthorized the Life up losses forecast billion large Services have revenue of a in investments an also G&NS for JPYXXX.X in future the ‘XX FY financial billion, smartphones. the and forecast at to the regret is business sensors same the that the recovery higher revision the at resolution for to biggest the JPYXX.X significant forecast. summarize change significant subject decrease that to To the segment for row. operating a Life consecutive

accuracy As CFO, our and this I earnings seriously, forecast. improving the very I view take of

the fiscal the the segment therefore business the results from to this. Music to hand, year, and up in for strengthen structure major the have fiscal in the more significant at segments environment the the our are business have business fluctuations weakness cost think investments of prepare is of severe each Furthermore, business G&NS exchange the balanced has in changes steps resilience. the will even foreign we become business year, rates. able first out looking other that of anticipate to environment. and now We for And that we in On I&SS swiftly when the responded into the segment made each next each taking we entire group, half and made of

also in these remarks. the long-term. concludes we will work This short-term, to Thank to measures In the grow over implement addition, while facing my you. issues

Operator

questions Totoki. Q&A the for and From to from investors X:XX, media, X:XX, we and from by take presentation start analysts. the the That was we'll start will

charge for XX Naomi begin Area; are Planning Instructions] the Q&A. Control, now President in Vice you of and IR. media. and the charge by Hiroki to President from [Operator Corporate like We'd [Operator Deputy Senior like We'd presenter Finance Nikkei, Vice and Tsutsumi, Executive first minutes The Finance of Q&A. Q&A each and waiting. planning Entertainment Support please. For Business in be Instructions] is to Mr. and Hayakawa, for Sadahiko for Senior The Totoki, start of question Thank segment, the now Matsuoka, President; we will

Kentaro Tsutsumi

This Can hear you is me? Nikkei. Tsutsumi from

Hiroki Totoki

can we Yes, you. hear

Kentaro Tsutsumi

About game and semiconductor.

breakdown, sales year-end the you a you titles, -- about of for But sales, sales including quarter, can GameSoft you good you factors. external there major game cetera, hardware? think I sales forecast? the aiming the the me your is of forecast, I et to previous the First, year, the think how a specifics About And the towards segment. level compared And third give the can breakdown of the are slowdown a year-on-year? software, lineup. these very give have economy, much

on So question. the including price an have the That's you can PSX, those demand? And impact will my factors, answer? increase first

lot second think The the models problem the America you doing whether about drop. additional factored now? well possibility? that are explain high-end your we in a the factory, at semiconductors. sales production cetera. But high-end, a especially And low-end are some high-end expectation. North forecast, factor can would there et risks the the customers, about you have news this question that is Did the have of And you China I high-end, decline about said you possibility and going within But in. there Earlier forward, especially is that

your And you the is forecast? of have explain included been what these So outlook? how can in much factors

Hiroki Totoki

for the question. you Thank

the first question forecast about Game of the and the The & forecast. about Network sales Services breakdown

I And be for want will hardware, second think mentioned my the less will million the I God see will it a them numbers, But cannot so And we year-on-year And decline year-end X.X already. overall a to third-party, to high will slightly. so it As the and quarter reached software, software think cannot a thanks impact. -- I and I I be unit supply first-party year-on-year, disclose give for speech, trend as But we'll say, there specific I about think of game But this sales. as production, specific War. to about the trend, -- numbers. use here. I in

of far, what This Well, the demand, of I&SS. decline. relatively I Well, price And About slight I lot think the expectation the but there's in. price is impact. market the that a already have the slowdown, well. we factored the increase extent, with here. and to is seen a not economic have a will any China monitor mid experience low-end we And PSX doing models, think something due will, it dampening that going declined. happen certain to have increase, high-end, in forward. so But slowdown to we along

up risk come been forecast, numbers. our So has these factored in. that this with have Including in we

information, take it way. about you. please to So of disclose And information. that customer be such any we cannot Thank

Operator

question. into News the next Agency We'd like Mr. to move Kyodo Yamasaki.

Yamasaki

is Yamasaki I Services, My questions. two of have and Kyodo I name think News

difficult China but that's for it upward, the what main for And that performance talked the to a upward First be answer, many U.S., export. of few? because are your one what you semiconductor revision the of -- you effect trend. extent for that, for is areas restrictions forecast. yen's in more Due upward factors to addition for a stringent Is to about And so name to is on the the -- to Second depreciation, might possible expect you you yen's October, depreciation? revision? do the there are the for

the what U.S. on on So China? is to business and the restrictions your impact

Hiroki Totoki

Thank you questions. your for

potential because impact is some to on Hayakawa-san First the for the will foreign revenue, exchange and outlook the probably and questions. answer performance and of business

Sadahiko Hayakawa

by is Game the other the One final steady the have settlement, we QX sales onto And and the the and segment for upward market the main that's that's the and for we negative your ForEx contribution we euro, our business foreign revision sensitivity Thank my and few, the your that's exchange the a hedging. questions. quite the Services and exchange difference -- concerning forecast. have basis restriction ForEx some have the see segment export limited why by the the record to the And we profit. main to the might high have And a almost some forecast. year-on-year are by on positive we question are the impact future future the factors have as we But Network have industries. fluctuations music Those dollar fluctuation. foreign the of cost there the but be some ForEx dollar, have Xth. due extent rate streaming by I&SS, & and revenue consolidated, the gaming the you exchange there for And JPYX, in based dollar have growth impact. if than and other the XX% announced the currency. And foresee, other we and difference for euro, to we And the the we course, impact is what for have and ForEx. impact is opinion. and U.S. upward -- that's I&SS, came the of for And in have impact, and focus, of rate, a -- I&SS downward for sales, effect in any And are on that's the the another in we And Chinese And impact up to positive in to revision. impact. And for upward as back and have already forecast. we drivers the especially we of foreign But extent. because the have with October and the some we the indicated And between as And revision. factors.

We have witnessed a effect impact. minimal

on. U.S. carefully we the to situation, for our But like We you. tension so forecast. China, future have might already intensified embedded monitor and the going would what's between be Thank

Operator

accommodate like would to From please. next Shimai, Mr. So question, please. we now NHK,

Shimai Kenta

I Shimai NHK. is my this So can from hear hope you voice.

the so is a and have about positive So weaker of looking is two at I yen's impact business, there depreciation questions, first yen.

cost increase, could there for impact. be However, please, a example, negative

they weak going again kind there? the once And And capability. to competitors, production Another so your about So what due so you yen, to impact relationship for for is semiconductor, to the are review comparison of the once production also for going Sony is review are Sony, to example, question to capability? PSX. again their in

So of X.X units not only there and the however, PlayStation, semiconductor. million the production the for was therefore,

think this been impact kind So have do you of weeded already the production of out? semiconductor

Hiroki Totoki

so as Hayakawa had talking impacts. because rate, So about the Mr. the positive, are mentioned, both and also negative there exchange segment,

being, weaker time so yen, the there sensitivity -- will the for looking be $X of JPYX at for So the so positive billion. a

euro, the impact. it's EURX billion For

So Services, for Network & I&SS. the the Game and for ET&S

applies to three So this segments. all

So so well, rate. based and on our exchange we those environments. because consideration also decide to to geopolitical we therefore, rate, take the don't projection, looking talking the about exchange supply the due chain And need in the the because at condition with risks,

and DX. to however, also for it So the automation is important have a And flexibility. example, I about mentioned the

because it's speedy produce on therefore, the in for a the that. standardization parts we included there production, for Talking sold. million on a therefore, at Therefore, we and that And target that. are positive going standardization, pressure on G&NS are have we the are also a production, that be take there too quarter looking the my Therefore, logistics, going in million therefore, more and to the the and to everywhere. the And speech. units X.X have according second for and able achieved, to units, sales the been to XX therefore, have are we in amount, PSX going if are impact well, about have the action able much to we production, I to plan. a proactive semiconductor is to So can produce of aren't therefore, have and and able

Operator

question. the Sasaki-san, please. Toyokasei, We'll next proceed to

Sasaki

me? hear you Can

Hiroki Totoki

you. Thank Yes.

Sasaki

Toyokasei. from Sasaki I two have questions.

growth? meet the and outlook next First, will second, And the the what does the you about If the said fiscal component ratio of the media Music. anime to supply profit, it about produce XX%. for be virtual Earlier account for? how the within you able you about this will in about the accounts segment And be is But platform logistics anime to much fiscal recovering. and surpass are all the reasons explanation, PSX, the When year, about you able year. growing? said demands? for so, Well, But that next demand?

Hiroki Totoki

timing, About Thank PSX gave At the PSX would May, the for PSX. and I in fourth we introduced. At year, outlook year XXXX -- question, fiscal first was the PSX surpassed we next in your have said unit the believe. after you. this asking sales, presentation you're about PSX

is set out we challenge for ourselves. so the this And that have

some so year. will XX can surpass million year, able we if to PSX be this So next do year, year, we then. next we manage XX million-plus And next

So about the to And part. for vertical virtual like largest the mid And visual target long-term, decline. time FGO since in acquisition, a Music. acquisition. XX%. this the the is be Well, launched. will is the Lasengle some there there be time quite being. will But the is But platform It’s it -- about

it So year. will it -- has exceeded last

IP. long enjoy people want We into to we So to want possible. as an make such as it

ratio to that business. Now to so as Demon we for grow Slayer follow, this them new can IPs goes we down, the want the and example, anime develop the

anime, good. for the Thank all. That's profitability, As very you. it's I think

Operator

you. the to for as analysts, quarter at attendants. investors the media analysts. for to to I final to Time start will adjourn the no be the Thank session There is question. the and for X. going XX:XX, questions, session take are the would running and out, session and investors And one Q&A to Q&A [Operator seems like we'd and like we Instructions] resume

Unidentified Company Representative

and I'm Q&A for to the Ono-san. we is session Instructions] our have And name the we'd Instructions] to So session. Financial And podium to session. waiting. And [Operator MUFG, chair of this (ph) we'd Q&A start on three questions. [Shinichi] of like analysts. going Stanley Morgan my And like you Group. the as investors for Thank for session, the to take IR from media the answer representatives start [Operator

Masahiro Ono

that the is performing the of name And the and camera to sales might a higher on as feel Ono cameras, operating and I as for figures. you and My be ET&S whole business margin. Sony, because ET&S for be the have Morgan for the as bit and On Do JPYXXX ForEx and well, with one now to me? think I hear of only a profit but Stanley. those been market two impact ET&S, promising. the billion. quite the game seems a But awkward business I for And overall, quite question. the questions not respectively, has

As are And new the Xperias sales. many for release. the started now a smartphones, of IV of communication on the do the carriers X and discount

down gradually. But to as the expect that? QX So why you what didn't has figures And the the next do we on have you know XXX is are is, slowing is your And I'd recovery for to have for because release And for move? of you the in been of scene. and and the going the change first-party because that. period. MAU second period million And now like mainly the some guidance production of take that

Hiroki Totoki

because since should of your quite for you ET&S the Thank last a that camera and the might for for almost as period supply second And high. been has contributing be and for first slowdown And question. economic incorporated. the as business as a the be business, demand factors. excellent half half, pent-up concerns in for shortage, our But record

the So business down. that is now camera we gradually to some inflations have slow going

be So more should we conservative.

So as up guidance. TV. that with for that came And is we why

the the secure have notably. get we and will the -- out much and cycles the been the we declining. engagement has sluggish. and quite quite And that selective is we profit. That's and do -- the our the more And second the previous now know the policies. that, software to And And and sales the get and the And PSX you ready we yet the supply decline of will we are will in interest half. as has excess Services half not Game well, be recovery will first you of historical we in period, for been titles to been we of profit, the of And and And next & much rather follow year, we and itself and the still high. going be pursue for other quite can DSPs the and third-party catalog PSXs the have be as And indices. economic fiscal second the ready the negative declines. panel much the can on make MAU to make as people we to outdoors. as quarter, you have because And against title more are according cycles. too has well. As But Network production like

from recovery. we our can And we effect. some of QX, downturn And seasonal some the from first-party, expect titles see That's trend. the So the we expectations. the have the strong we recovery some and QX, have

Operator

Ono. Mr. much, very you Thank

onto Securities, from please. Ayada, like we'd JPMorgan question to So move Mr. next

Junya Ayada

I From questions. two have Ayada. JPMorgan,

the two have game. I So for questions

sales first deterioration. And The is, the sales. kind as like been have title would I explain detail, of, to well, good, a been you hadn't have because therefore, there about you in question there third-party mentioned

current and thinking the year. situation, So hurdle a last had talking about in to been the there comparison titles new about the

However, the players. other taken the looking at been other consoles have including the users platforms, and PCs, by

there point? So -- do perspective for have about this Plus talking decline. And one PS there this a And any had question been have about is you just decline. members, the huge on quarter, been a

So attach date leading in members area So quarter, or more the the large therefore, focus talking going to recover -- the third you the and PSX and you're increase hardware you're release on the focus order to -- which about membership. so how by PSX, going to going come back the the to titles? are first PSX, to for to going you expect you are membership, the including party,

going you're think I ways. both So take to

So on there these is points? any perspective if

Hiroki Totoki

much very for Thank the question. you

there point therefore, weakness a is question, to too quarter. have that been -- that was Well, strong. second we in our so forecast for for the First a initial reflect need the And the third-party first because software.

expense. there had more So been

the from are think I up that and given our example, therefore, going impact For sales. out to had home, an users

the titles, -- able are new titles, In to we strength. about talking the are addition third-party our maintain going AAA the for titles, large we example,

are have for third expectation. high quarter, example, decline been number been a the have release. do good decline with a PS there for we talking And the Plus. And Plus. PS for a the very in Call of having the And therefore, of So there a we Duty, members have about the and membership,

and a are we going to more we penetration second future, make in the services. PSX, to think didn't the going quarter. -- recover. hadn't to as whole, momentum had have we are a been titles, on good great a we And the in able aggressive we have better there our and we also, are promotion, renewed make second a are However, And able in quarter, addition, therefore, we promotion also, during good and very and to

Operator

Thank Mr. you And much. please. Securities, very next UBS question, Yasui,

Kenji Yasui

much. questions. Thank you very Two

First, about Music.

Looking at streaming the top is hits. the of And profit. are a I a lot hits generating lot the And of market strong. think very market and you XX have

very that there too So I good But of any negative business, going I I&SS. about things semiconductors, second, think in But you are think a The a risk is your be you possibility well. if position. are in Music? about there is might a scared

was be exchange utilization -- I You Do say you utility exceed rate -- client. XX%, profitability higher, hoping it Chinese you had But hedge. at power to major a you the the please? is XX% XX%. There foreign rate, -- looking when the was had have when I'm including would that

Hiroki Totoki

Music, and About Thank to everyone. you you very much. thanks

well, can we emerging in I concern, these if have really but new against think, are is But TikTok, newcomers. try channels. can we different a doing different that I music, Streaming change, extremely platforms, of to there these well. how meanwhile, much going delivered a don't service. be And very successful. we be types is of think compete that to be would

so the music possible So and very and could do be what's to world I&SS if to that provide of through increasing we is And could due easy have the now. And it an being, the be be swiftly opportunity. it's a about we short-term what should have ratio, But technology. increase have easily. we it capacity. think and to the and higher? But that’s occur to it I what increase could we The trend as for new we're it disruption, risk, the to also to have technology profitability. important share we or as higher think the the soon capture is music profit you Well, right industry first and the quickly be that capability do tells And on -- that we do. focused answer. our plan in really respond, time to case, is say this us could Sales

R&D to short the in we trying trying results market. point in instead, the we, reap but this from win of reduce rather R&D, For budget, a competitive are view, not to than want to term,

thinking solutions. our to want achieve in we and good we future business so want a have to And in growth invest therefore, -- and long-term. to between profit mid And managing balance I influenced XX%. to others. also for timing, higher think that the as aim try we situation margin for be should than a amongst external is it But by that the will

Operator

SMBC like Thank on we would Nikko Katsura-san. question. Securities, next you. to And the to move

Ryosuke Katsura

is you. investment, I&SS and Nikko I SMBC have questions. of Katsura two Thank strategic And Securities. name My

as have for about. I&SS, talked already As you

investment as update change next response a because development any ForEx the And for been industry the that have might flexible inventory strategies? peak the is restraint. because business? the the of for amount and investment, are any has And the for what Is period, semiconductor you and and is capital for there a there some capital of more your -- prospects semiconductor? If need the For investment, how related? be And the billion they raised now itself and period? probably and the JPYXXX is bit there for the you

you more JPYX.XX on and the financial of the period. announcement, the and or for will strategic than and Bungie, and for impairment for have the be any your JPYX comment any macroscopic And trillion prospects? rate is investment judgment? as for policies? have if interest second any for the plans including hike of investment, and there the strategic if is factors, talked some So And Bungie because change -- impose Or early if the it it investment in the what is year-end the adjustment, you capital second any Pixomondo trillion, and talked you about and So investment? you other about the half the in on background

Hiroki Totoki

billion, and for update hike image the inventory And And investment, JPYXXX mobile is that Nagasaki and and that the talked the about phones for investment. investment sensor, investment billion. and for as move. of and X you the the for the to to And extension demand content That's productivity. is higher-end capital that for the improved of Fab shift a I&SS as for is as capital product. raised and the was the one this And And JPYXXX investment. capital July, and

’XX of half As to increase, the XX%. for by compared the and and and of And second a basis the revenue year-on-year ‘XX inventory of investment. increased inventory XX% half and second

are there capacity to for So particular as aligned fiscal and well And as are and those and change the production has I no year. no figures going quarter, of ready be And our we so other accumulate of supplies inventories initial for it to this to expected. is think continue been plannings. next full as

And and bit a on. investment So the amount QX share for our And aligned by announcement, what's strategic and and And the is as buyback, year, will financial and with inventory planning. of fiscal trillion. the more. JPYX.XX this have that's be raised about investment and initial end of we items. almost level as And going for realized the including some already that the

as the macroscopic, for that's if and no be not As up any to there change. as Bungie environmental change itself And changes. for in and impairment, there the is context, for it's intentional. But seems Bungie the to

have the particular as Bungie. do to investment, investment for not investment, So we any concerns, including

So that's it. Thank you.

Operator

much. very you Thank

we it's time. Therefore, conclude like to So announcement. earnings would

very you Thank much participation. thank So for you. your

Sony (SONY) 1 Nov 222022 Q2 Earnings call transcript