WonderPlanet Inc. Q3 FY2025 earnings call

• Updated Corporate Strategy and Messaging • Management updated its top investor message to "Deliver THE JAPAN IP to the world", repositioning the company as a Japan-based mobile casual game developer trusted to bring leading Japanese IP content to global markets. • The update reflects growing global demand for Japanese IP content: Japanese content overseas sales reached 5.7 trillion yen in 2023, making it Japan's second largest industry by size after automobiles, and 7 of the top 17 global media franchises are Japanese IP. • The company aims to become the go-to development partner for leading Japanese IP holders looking to maximize IP value in the global mobile game market, which is one of Japan's core strategic national industries.

• Operational Updates for Live Titles • Kurafi: Held multiple high-profile collaboration events with popular anime IP (Re:Zero, Fire Force) through the quarter, and surpassed 15 million total global downloads. The 10th anniversary campaign is focused on maximizing engagement to drive re-growth of the title. • Pandorand: Launched globally in April after hitting pre-registration targets for the Traditional Chinese market, but user acquisition efficiency declined sharply post-launch, with user acquisition costs exceeding targets, and user retention also falling below projections. Management has already implemented cost cuts focused on advertising optimization, and does not expect large quarterly losses from the title starting in 4Q.

• New Development Pipeline • Two major IP titles are in active development, both progressing in line with original plans. • The first, Jump+ Jumble Rush, is produced and distributed by Bandai Namco Entertainment, with Wonderplanet leading development. It is scheduled to launch globally in fall 2025, and official details have been released publicly. • The company prioritizes project structures that limit upfront capital expenditure, allowing participation in larger-scale projects than its balance sheet would otherwise support, in exchange for slower profit growth. Management will evaluate project structures on a case-by-case basis going forward, leveraging improved development efficiency from its internal SEED platform.

• Development Platform and Capital Updates • The company's proprietary shared development base SEED is continuously updated, enabling low-cost, fast, high-quality game development and operation that is already used for all current in-development titles. • The company raised 300 million yen in new bank debt in June 2025, following a 500 million yen unsecured bond issuance in 2Q, to fund working capital for its growth pipeline. As of quarter-end, the company has 142 total employees, maintaining an appropriately sized operating structure aligned with business needs.

1. Live operated title segment: Total revenue from the segment was 223 million yen, 46.65% of total 3Q revenue. - Craft Fighter (Kurafi): Reported a year-over-year revenue increase, though a sequential revenue decrease from 2Q due to post-9.5th anniversary campaign pullback. The title's 10th anniversary event in July has been performing strongly so far. - Pandorand: Revenue came in below management expectations following its April global launch. This underperformance was the main driver of the wider-than-expected quarterly operating loss. 2. New title development segment: Development and operation revenue was 255 million yen, 53.35% of total 3Q revenue, which was in-line with expectations based on project progress. Two major IP titles are currently in active development.

• Management reaffirms that 2025 August full fiscal year is an investment-led phase, with priority placed on laying the groundwork for profit growth starting from the next fiscal year, rather than near-term profitability, while continuing to pursue full-year operating profit balance.
• 4Q is projected to deliver a large sequential increase in both revenue and profit, with an expected operating profit for the quarter, driven by the strong performance of Kurafi's 10th anniversary event. Pandorand is not expected to generate material losses starting in 4Q following implemented cost cuts.
• Full-year operating profitability is contingent on the progress of Pandorand's balance sheet improvement and the pace of growth investment; the company will continue to work toward full-year operating black ink, but remains committed to prioritizing the next fiscal year's profit growth phase if there is a tradeoff.
• Management may increase total investment spending in current in-development projects to improve their probability of success.
• Full-year 2025 August fiscal year earnings guidance remains non-public, and will be disclosed once a reasonable, accurate forecast can be produced.
• Dividend payout is planned to be zero, with priority given to rebuilding retained earnings.

• Pandorand underperformed expectations following its global launch, with higher-than-targeted user acquisition costs and lower-than-expected user retention, leading to a larger-than-projected operating deficit in 3Q.
• The company's current project-based development model, while reducing upfront capital risk and enabling participation in larger projects, leads to slower revenue and profit growth compared to traditional self-published models.
• Full-year 2025 operating profitability remains uncertain, dependent on unproven improvement progress for Pandorand and the pace of growth investment.

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