Sony Group Corp Q3 FY2024 earnings call

• New management structure announced with Hiroki Totoki to become CEO effective April 1. - Games and Network Services: MAUs on PlayStation platforms in December reached 129 million, highest in PS history; PlayStation Plus revenue increased 20% year-on-year in USD; major titles won awards. - Music: Streaming revenues increased, Sony Music Group enhancing local repertoire in emerging markets. - Pictures: Collaborated with Kadokawa, becoming its largest shareholder; Crunchyroll's Anime streaming successful. - ET&S: Year-end selling season trends generally as expected; imaging market relatively stable. - I&SS: Mobile sensor sales impacted, but automotive sensor business expanding. - Financial Services: New policy amount for Sony Life increasing smoothly; working to mitigate overhead situation from bond holdings

1. Games and Network Services: Sales for the quarter increased 16% year-on-year to ¥1,682.3 billion, operating income increased 37% year-on-year to ¥118.1 billion. Full year forecast for sales revised upward by 3% to ¥4.610 trillion and operating income by 7% to ¥380 billion. 2. Music: Sales for the quarter increased 14% year-on-year to ¥481.7 billion, operating income increased 28% year-on-year to ¥97.4 billion. Full year forecast for sales revised upward by 3% to ¥1.790 trillion and operating income by 3% to ¥340 billion. 3. Pictures: Sales for the quarter increased 9% year-on-year to ¥398.2 billion, operating income decreased 18% year-on-year to ¥34 billion. Full year forecast unchanged. 4. ET&S: Sales for the quarter decreased 4% year-on-year to ¥704.5 billion, operating income remained essentially flat at ¥77.1 billion. Full year forecast unchanged. 5. I&SS: Sales for the quarter were essentially flat year-on-year at ¥500.9 billion, operating income decreased 2% year-on-year to ¥97.5 billion. Full year sales forecast slightly increased, operating income forecast unchanged. 6. Financial Services: Revenue for the quarter increased to ¥718.5 billion, operating income decreased to ¥46.4 billion. Full fiscal year forecast for financial services revenue increased to ¥1.300 billion

• Consolidated sales (including financial services) for FY 2024 slightly upwardly revised to ¥11.900 trillion, operating income upwardly revised 2% to ¥1.180 trillion, operating cash flow upwardly revised 50% to ¥1.660 trillion. - Full year forecast for consolidated sales (including financial services) revised upward 4% to ¥13.200 trillion, operating income upwardly revised 2% to ¥335 billion, net income upwardly revised 10% to ¥1.80 trillion. - Games and Network Services full year sales and operating income forecast upwardly revised. - Music full year sales and operating income forecast upwardly revised. - Pictures, ET&S, I&SS full year forecasts unchanged. - Financial Services full fiscal year revenue forecast increased

• Tariff policy impact on hardware businesses, with potential minor impact on financial performance this year. - Market challenges for various segments such as slowdown concerns in imaging market in China for ET&S, and mobile sensor sales decline for I&SS

Q: Evaluate progress state of business portfolio structure and future role as Chairman for Yoshida, and ambition for Sony as CEO for Totoki?

A: Yoshida evaluates portfolio management progress, will support Totoki's team; Totoki aims to further expand Sony's value and nurture it into a global company with diverse human resources and businesses Q: Difference in role as Totoki moves from execution to management?

A: Totoki feels big responsibility to further expand the value created by Yoshida and Hirai, and aims for a transparent, open, efficient, and lean head office Q: Challenge still ahead for Totoki and investment policy?

A: Challenge is to reach top global level in scale and profitability; investment policy focuses on acquiring companies that can further add value Q: Responding to tariffs and headquarters outside Japan idea?

A: Making preparations for tariffs but no drastic changes yet; no idea of moving headquarters outside Japan Q: Evaluation of investment plan and bold decisions for restructuring?

A: Appreciates EMI Music Publishing acquisition; spin-off of financial segment was proactive decision; will continue to make proactive restructuring decisions Q: Tariff response measures and headquarters outside Japan idea?

A: Making preparations for tariffs, no change yet; no idea of moving headquarters outside Japan Q: Reflection on past reforms and future management focus?

A: Mr. Hirai launched KANDO approach, Yoshida focused on creation shift; future focus on technology like computing and sensing under Totoki's accretive entertainment vision Q: Sustainability of growth in Games and I&SS and expectation for next generation management?

A: Games growth has seasonality but momentum continues; I&SS will continue due to larger sensors and AI impact on smartphone market; expects next generation to handle technology easily and change management style Q: Overachievement of profit and mid-range plan update?

A: Mid-range plan is three-year, so premature to update; will make use of tailwinds and cope with risks for stable growth Q: M&A and internal issue resolution for global competition?

A: Will seek appropriate M&A opportunities meeting criteria; will iteratively work to bring businesses closer to ideal profitability and growth