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Sony Group Corporation (SONY - Free Report) reported second-quarter fiscal 2023 net income per share (on a GAAP basis) of ¥161.74, which decreased from ¥226.54 a year ago. Adjusted net income came in at ¥200.1 billion compared with ¥281.7 billion in the prior-year quarter.
Quarterly total revenues increased 8% year over year to ¥2,828.6 billion. The uptick was driven by an increase in revenues in the Game & Network Services (G&NS), Music, Pictures and Imaging & Sensing Solutions (I&SS) segments’ sales.
The company has adopted IFRS 17 “Insurance Contracts” from the first quarter of fiscal 2023. As a result, figures for second-quarter fiscal 2022 and fiscal 2022 are restated in accordance with IFRS 17.
Sony Corporation Price, Consensus and EPS Surprise
In the quarter under review, G&NS sales were up 32% year over year to ¥954.1 billion. Segmental sales increased on the back of positive impacts of forex movement, higher sales of first-party titles and improving hardware sales. Operating income rose to ¥48.9 billion from ¥42.1 billion in the prior-year quarter. The upside was mainly due to a rise in sales of non-first-party titles, including add-on content, which offset an increase in losses from hardware.
Music sales improved 14% year over year to ¥408.7 billion in the fiscal second quarter on the back of higher recorded music and music publishing sales from paid-subscription streaming services. Operating income was ¥81 billion, up from ¥78.7 billion in the prior-year quarter.
Pictures sales increased 18% year over year to ¥399.6 billion mainly due to increase in series deliveries in Television Production. Operating income was ¥29.4 billion compared with ¥27.6 billion a year ago.
ET&S sales totaled ¥613.5 billion, down 9% year over year. The top-line performance was affected by lower sales of televisions due to a decrease in unit sales. Operating income was ¥61 billion compared with ¥77.8 billion in the year-ago quarter.
I&SS sales rose 2% year over year to ¥406.3 billion owing to favorable forex impact. Operating income was ¥46.4 billion compared with ¥74 billion in the year-earlier quarter. Operating income was affected by higher manufacturing expenses, depreciation and amortization, and costs associated with the launch of mass production of a new image sensor for mobile products.
Financial Services sales fell 42% year over year to ¥103.9 billion. The downside was attributable to lower revenues at Sony Life, and deterioration in net gains and losses related to market fluctuations for minimum guarantees for variable life insurance in the general account. Operating income came in at ¥15.7 billion from ¥80 billion in the previous-year quarter.
All Other sales were up 16.9% to ¥24.2 billion in the fiscal second quarter. Operating income was ¥2.1 billion compared with ¥4.8 billion in the year-ago quarter.
Other Details
For the quarter under review, total costs and expenses were ¥2,568.6 billion, up 13.6% year over year. Operating income was ¥263 billion, down 29%.
Cash Flow & Liquidity
For the six months ended on Sep 30, 2023, Sony generated ¥115 billion of cash from operating activities against ¥383.3 billion used in operating activities in the prior-year period.
As of Sep 30, 2023, the company had ¥1,626.5 billion in cash and cash equivalents with ¥1,838 billion of long-term debt.
Fiscal 2023 Outlook
Sony has revised its outlook for the fiscal year ending Mar 31, 2024. It now expects sales of ¥12,400 billion compared with the earlier guidance of ¥12,200 billion. The top-line performance is likely to be driven by strengthening momentum in the GN&S, Music, and ET&S segments’ sales. It continues to expect to sell 25 million units of PlayStation 5 in fiscal 2023. The I&SS segment’s revenue forecast has been revised upward owing to favorable forex impact.
However, SONY has lowered its revenue guidance for the Pictures segment mainly due to negative impacts of the strike conducted by WGA and SAG-AFTRA. This is expected to delay release dates for some theatrical releases in Motion Pictures and deliveries of television series in Television Productions. Financial Services’ revenue forecast is revised downward due to a decrease in net gains on investments in both the general account and the separate accounts at Sony Life.
Net income is now estimated to be ¥880 billion compared with the prior prediction of ¥860 billion. Operating income is suggested to be ¥1,170 billion. Operating cash flow is envisioned to be ¥1,160 billion compared with ¥1,250 billion projected earlier.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 5.9% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 676.4%. Shares of ASUR have climbed 23.5% in the past year.
The Zacks Consensus Estimate for Synopsys’ fiscal 2023 EPS has remained flat in the past 60 days at $11.09. SNPS’ long-term earnings growth rate is 16.7%. Shares of SNPS have surged 58.9% in the past year.
The Zacks Consensus Estimate for Cadence 2023 EPS has improved 1 cent in the past 60 days to $5.10.
Cadence’s earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 4.1%. Shares of CDNS have jumped 58.4% in the past year.
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SONY's Q2 Earnings Decline Y/Y, Revenue Guidance Raised
Sony Group Corporation (SONY - Free Report) reported second-quarter fiscal 2023 net income per share (on a GAAP basis) of ¥161.74, which decreased from ¥226.54 a year ago. Adjusted net income came in at ¥200.1 billion compared with ¥281.7 billion in the prior-year quarter.
Quarterly total revenues increased 8% year over year to ¥2,828.6 billion. The uptick was driven by an increase in revenues in the Game & Network Services (G&NS), Music, Pictures and Imaging & Sensing Solutions (I&SS) segments’ sales.
The company has adopted IFRS 17 “Insurance Contracts” from the first quarter of fiscal 2023. As a result, figures for second-quarter fiscal 2022 and fiscal 2022 are restated in accordance with IFRS 17.
Sony Corporation Price, Consensus and EPS Surprise
Sony Corporation price-consensus-eps-surprise-chart | Sony Corporation Quote
Segmental Results
In the quarter under review, G&NS sales were up 32% year over year to ¥954.1 billion. Segmental sales increased on the back of positive impacts of forex movement, higher sales of first-party titles and improving hardware sales. Operating income rose to ¥48.9 billion from ¥42.1 billion in the prior-year quarter. The upside was mainly due to a rise in sales of non-first-party titles, including add-on content, which offset an increase in losses from hardware.
Music sales improved 14% year over year to ¥408.7 billion in the fiscal second quarter on the back of higher recorded music and music publishing sales from paid-subscription streaming services. Operating income was ¥81 billion, up from ¥78.7 billion in the prior-year quarter.
Pictures sales increased 18% year over year to ¥399.6 billion mainly due to increase in series deliveries in Television Production. Operating income was ¥29.4 billion compared with ¥27.6 billion a year ago.
ET&S sales totaled ¥613.5 billion, down 9% year over year. The top-line performance was affected by lower sales of televisions due to a decrease in unit sales. Operating income was ¥61 billion compared with ¥77.8 billion in the year-ago quarter.
I&SS sales rose 2% year over year to ¥406.3 billion owing to favorable forex impact. Operating income was ¥46.4 billion compared with ¥74 billion in the year-earlier quarter. Operating income was affected by higher manufacturing expenses, depreciation and amortization, and costs associated with the launch of mass production of a new image sensor for mobile products.
Financial Services sales fell 42% year over year to ¥103.9 billion. The downside was attributable to lower revenues at Sony Life, and deterioration in net gains and losses related to market fluctuations for minimum guarantees for variable life insurance in the general account. Operating income came in at ¥15.7 billion from ¥80 billion in the previous-year quarter.
All Other sales were up 16.9% to ¥24.2 billion in the fiscal second quarter. Operating income was ¥2.1 billion compared with ¥4.8 billion in the year-ago quarter.
Other Details
For the quarter under review, total costs and expenses were ¥2,568.6 billion, up 13.6% year over year. Operating income was ¥263 billion, down 29%.
Cash Flow & Liquidity
For the six months ended on Sep 30, 2023, Sony generated ¥115 billion of cash from operating activities against ¥383.3 billion used in operating activities in the prior-year period.
As of Sep 30, 2023, the company had ¥1,626.5 billion in cash and cash equivalents with ¥1,838 billion of long-term debt.
Fiscal 2023 Outlook
Sony has revised its outlook for the fiscal year ending Mar 31, 2024. It now expects sales of ¥12,400 billion compared with the earlier guidance of ¥12,200 billion. The top-line performance is likely to be driven by strengthening momentum in the GN&S, Music, and ET&S segments’ sales. It continues to expect to sell 25 million units of PlayStation 5 in fiscal 2023. The I&SS segment’s revenue forecast has been revised upward owing to favorable forex impact.
However, SONY has lowered its revenue guidance for the Pictures segment mainly due to negative impacts of the strike conducted by WGA and SAG-AFTRA. This is expected to delay release dates for some theatrical releases in Motion Pictures and deliveries of television series in Television Productions. Financial Services’ revenue forecast is revised downward due to a decrease in net gains on investments in both the general account and the separate accounts at Sony Life.
Net income is now estimated to be ¥880 billion compared with the prior prediction of ¥860 billion. Operating income is suggested to be ¥1,170 billion. Operating cash flow is envisioned to be ¥1,160 billion compared with ¥1,250 billion projected earlier.
Sony currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Asure Software (ASUR - Free Report) , Synopsys (SNPS - Free Report) and Cadence Design Systems (CDNS - Free Report) . While Asure Software flaunts a Zacks Rank #1 (Strong Buy), Synopsys and Cadence carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 5.9% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 676.4%. Shares of ASUR have climbed 23.5% in the past year.
The Zacks Consensus Estimate for Synopsys’ fiscal 2023 EPS has remained flat in the past 60 days at $11.09. SNPS’ long-term earnings growth rate is 16.7%. Shares of SNPS have surged 58.9% in the past year.
The Zacks Consensus Estimate for Cadence 2023 EPS has improved 1 cent in the past 60 days to $5.10.
Cadence’s earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 4.1%. Shares of CDNS have jumped 58.4% in the past year.