Sony earnings report Q1 2023: PlayStation business boosts sales
PlayStation DualSense controller and PlayStation 5 console are seen in this illustration photo taken in Krakow, Poland on April 9, 2022.
Jakub Porzycki | Nurphoto | Getty Images
Sony on Wednesday reported a 31% fall in profit in the first fiscal quarter as its life insurance unit dragged on its bottom line, but the company raised full-year sales forecasts on the back of expected strength for its PlayStation gaming business.
Here’s how Sony did in the June quarter versus Refinitiv consensus estimates:
- Revenue: 3 trillion Japanese yen ($20.7 billion) versus 2.46 trillion yen expected. That represents a 33% year-on-year rise.
- Operating profit: 253 billion Japanese yen versus 251.24 billion yen expected. That marks a 31% year-on-year fall.
Sony said its operating income suffered from significant decreases in profit from its financial services and movies and pictures businesses. Profits from Sony’s financial services branch plunged by 61% in the fiscal first quarter — which the company attributed to changes in interest rates related to variable life insurance.
Movies-wise, Sony had a solid performer this year in the form of Spider-Man: Across the Spider Verse which grossed $633 million at the box office. There have been other, hotly-anticipated movies this year which performed better, such as Universal Pictures’ Oppenheimer and Warner Bros’ Barbie.
Sony reported a 6% decrease in revenue and a 68% slump in profit at its pictures division. The company blamed the disappointing performance on strikes carried out by the Writers Guild of America and other unions, in protest against using artificial intelligence to generate movie scripts.
Nevertheless, Sony raised its revenue forecast for the full year by 6% to 12.2 trillion yen, thanks to strength in its PlayStation gaming unit. Sony made a 7% upward revision to its sales forecast for games and network services to 4.2 trillion yen. Its forecast for profit remained unchanged at 270 billion yen.
Sony is anticipating a bumper year for its PlayStation gaming business. The company previously said it expects to sell a record 25 million PlayStation 5 units in the current financial year, which ends on March 2024 — compared with 19.1 million units in the previous year.
Sony sold 3.3 million units of the PlayStation 5 in its April-June quarter, up 38% year-over-year. The numbers are softer compared with the December quarter, when consumer electronics tend to do well thanks to the holiday shopping period. But it’s still a solid result, given macroeconomic weakness that has caused consumers to tighten their purse strings.
Piers Harding-Rolls, analyst at Ampere Analysis, told CNBC that Sony’s strong PlayStation results were a reflection of its “much healthier position with regards to console availability.”
“With impressive PS5 sales over the last three quarters, Sony is reaping the benefits of an engaged player base looking to spend on software and services,” Harding-Rolls told CNBC. “Major third-party releases such as Diablo IV and Final Fantasy XVI helped drive revenue forwards in the quarter.”
Sony is so far winning the latest round of the console wars — by a substantial margin. Microsoft’s Xbox Series X, which has been out since November 2020 along with the PS5, has sold far fewer units than Sony’s new PlayStation overall. The two mega gaming companies have been at loggerheads over Microsoft’s $69 billion acquisition of Activision Blizzard, which has been the subject of intense regulatory scrutiny.
Sony said it expects its imaging sensors business to perform weaker than previously anticipated, citing the impact of dwindling smartphone sales and a slow economic recovery in China. The Japanese tech giant is a major player in the market for imaging sensors, which are vital semiconductor components for smartphone photography and used by major companies like Apple. It said that sales at its imaging sensors unit would come in at 1.6 trillion yen for the full year, down from an April forecast of 1.6 trillion yen. Profit for the unit is expected at 180 billion yen, down from an earlier forecast of 200 billion yen.
Sony flagged that it expects profitability for its latest console to deteriorate in the full year due to changes in promotions in certain geographic regions. Sony, like many console makers, sells consoles at a discount or in bundles with other games to boost sales, particularly over busy shopping periods like Christmas and Black Friday.
Harding-Rolls suggested this means that “a lot of the pent up demand for the console has been satiated.”
“We’ll be watching closely how sales rates perform for the console in the second half of 2023 to better understand true demand for the platform and its potential to improve on PS4 performance,” he said.
Disclaimer: CNBC is a subsidiary of NBCUniversal, which is the parent company of Universal Pictures.