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SONY's Q1 Earnings & Revenues Increase Y/Y, Tweaks Guidance

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Sony Group Corporation SONY reported first-quarter fiscal 2022 net income per share (on a GAAP basis) of ¥175.21 per share, increasing from ¥169.22 reported in the year-ago quarter. The Zacks Consensus Estimate stood at $1.15.

Adjusted net income came in at ¥218.2 billion compared with ¥220.4 billion in the prior-year quarter.

Quarterly total revenues inched up 2.4% year over year to ¥2,311.5 billion ($17842.4 million). The Zacks consensus estimate was $19,363.7 million.

However, due to weak macro-economic conditions, the company trimmed its operating income guidance. Operating income is now projected to be ¥1,110 billion, suggesting a decline of  8% year over year. Earlier, operating income was projected to be ¥1,160 billion. The entire impact comes from slashing of the operating income guidance for its Game & Network Services (G&NS) segment. The company now expects operating income to be to ¥255 billion as against earlier guided figure of ¥305 million for the segment.

Sony Corporation Price, Consensus and EPS Surprise

 

Sony Corporation Price, Consensus and EPS Surprise
Sony Corporation Price, Consensus and EPS Surprise

Sony Corporation price-consensus-eps-surprise-chart | Sony Corporation Quote

 

Following the announcement, shares of Sony are down 4.6% in premarket trading on Jul 29. In the past year, the company’s stock has lost 16% of its value compared with the industry’s decline of 18.2%.

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Zacks Investment Research


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Segment Results

In the quarter under review, Game & Network Services (G&NS) sales were down 1.9% year over year to ¥604.1 billion. Sales in the segment declined due to lower sales of non-first-party titles and add-on content and sales of first-party titles, which offset the positive impact of favorable forex movement. The segment’s operating income was ¥52.8 billion compared with ¥83.3 billion in the prior-year quarter, mainly due to higher costs, mainly for game software development at existing studios.

Music sales increased 21% year over year to ¥308.1 billion in the fiscal first quarter. Sales from the segment were driven by higher recorded music and music publishing sales, increased revenues from paid subscription streaming services and higher revenues for live performances and merchandise sales in recorded music. Operating income was ¥61 billion, up from ¥55.4 billion in the prior-year quarter.

Pictures sales surged 67% year over year to ¥341.4 billion. Sales were driven by an increase in series deliveries in television productions and higher television licensing and home entertainment revenues for titles released last year along with a positive impact from the acquisition of Industrial Media and Crunchyroll. Operating income was ¥50.7 billion compared with an operating income of ¥25.4 billion a year ago.

Entertainment, Technology & Services (ET&S) sales came in at ¥552.3 billion, down 4.2% year over year. Sales were affected due to a decline in sales of televisions which offset favorable foreign exchange rates. Operating loss was ¥53.6 billion compared with ¥71.8 billion in the year-ago quarter.

Imaging & Sensing Solutions sales were up 9% year over year to ¥237.8 billion. Sales from the segment were driven by favorable forex movement. Operating income was ¥21.7 billion compared with ¥30.5 billion in the prior-year quarter.

Financial Services sales were down 28% year over year to ¥297.8 billion. Sales were affected by a decline in revenues at Sony Life and a fall in net gains on investments in the separate accounts. Operating income was ¥81.3 billion compared with ¥24 billion in the year-ago quarter.

All Other sales were down 12.2% to ¥19.3 billion in the fiscal first quarter. Operating income was ¥2.9 billion compared with ¥4.2 billion in the year-ago quarter.

Other Details

For the quarter under review, total expenses were ¥2,009.8 billion, up 1.5% year over year. Operating income was ¥307 billion, up 10%.

Cash Flow & Liquidity

For the first quarter of fiscal 2022, Sony used ¥430 billion of cash in operating activities compared with ¥198.7 billion of cash from operating activities in the prior-year quarter.

As of Jun 30, 2022, the company had ¥1,371.9 billion in cash and cash equivalents with ¥1,198.1 billion of long-term debt.

FY22 Outlook

Sony has provided the outlook for the fiscal year ending Mar 31, 2023. It now expects sales of ¥11,500 billion, up 16% year over year compared with ¥11,400 billion guided earlier. The top-line performance is likely to be driven by improvement in GN&S, Music,  Pictures, and ET&S segment sales.

Net income is estimated to be ¥800 billion, declining 9% year over year. Earlier, net income was estimated to be ¥830 billion.

Operating Cash Flow is now expected to be ¥820 billion, up 0.8% from the prior fiscal year.

Operating Cash Flow was earlier expected to be ¥1,050 billion, up 29% from the prior fiscal year.

Zacks Rank & Stocks to Consider

Sony currently carries a Zacks Rank #3 (Hold).

Some other top-ranked stocks from the broader technology sector worth consideration are Synopsys SNPS, Aspen Technology AZPN and Badger Meter BMI. BMI sports a Zacks Rank #1 (Strong Buy) while Synopsys and Aspen carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 7% in the past 60 days. Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, with the average being 12.6%. Shares of BMI have lost 7.2% of their value in the past year.

The Zacks Consensus Estimate for Synopsys 2022 earnings is pegged at $8.67 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 19.6%.

Synopsys earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 2.7%. Shares of SNPS have increased 25.9% in the past year.

The Zacks Consensus Estimate for Aspen’s fiscal 2022 earnings is pegged at $5.49 per share, rising 0.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 16.3%.

Aspen’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 4%. Shares of AZPN have grown 33.4% in the past year.


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