Financial Performance - For the three months ended December 31, 2023, consolidated Adjusted OIBDA increased to ¥628.3 billion, up from ¥561.5 billion in the same period last year, representing a growth of 11.9%[6] - The nine months ended December 31, 2023, saw a consolidated Adjusted OIBDA of ¥1,450.3 billion, a decrease of 5.1% from ¥1,527.5 billion in the previous year[6] - The forecast for consolidated sales for the fiscal year ending March 31, 2024, has been revised to ¥12,300 billion, a decrease of ¥100 billion or 0.8% from the previous forecast[8] - Operating income for the fiscal year ending March 31, 2024, is expected to be ¥1,180 billion, an increase of ¥10 billion or 0.9% from the November forecast[8] - Net income attributable to Sony Group Corporation's stockholders is projected to be ¥920 billion, reflecting an increase of ¥40 billion or 4.5% from the previous forecast[8] - Adjusted EBITDA for the fiscal year is expected to be ¥1,770 billion, a decrease of ¥15 billion from the previous forecast[8] - Adjusted OIBDA for the three months ended December 31, 2023, was ¥628.3 billion, an increase of 11.9% from ¥561.5 billion in the same period of 2022[29] - Adjusted EBITDA for the three months ended December 31, 2023, reached ¥605.0 billion, up from ¥529.5 billion in 2022, reflecting a growth of 14.3%[31] - Net income attributable to Sony Group Corporation's stockholders for the three months ended December 31, 2023, was ¥363.9 billion, compared to ¥321.5 billion in 2022, an increase of 13.2%[31] - Net income attributable to Sony Group Corporation's stockholders for the fiscal year ended March 31, 2023, was ¥1,005.3 billion[42] - Adjusted EBITDA for the same fiscal year was ¥1,797.6 billion[42] Segment Performance - The Game & Network Services segment is expected to see sales of ¥4,150 billion, down from the November forecast of ¥4,360 billion, primarily due to lower hardware sales[14] - The Music segment's sales forecast has been increased to ¥1,570 billion, up from ¥1,560 billion, driven by favorable foreign exchange rates[14] - Financial services revenue is expected to rise to ¥1,300 billion, an increase from the November forecast of ¥1,210 billion, due to higher net gains on investments[14] - The Imaging & Sensing Solutions segment's sales are projected to remain unchanged from the November forecast, with expected sales of ¥1,590 billion[19] - The Game & Network Services segment reported an operating income of ¥86.1 billion for the three months ended December 31, 2023, down from ¥116.2 billion in 2022, a decline of 26%[29] - The Music segment's operating income increased to ¥76.1 billion in Q3 2023, compared to ¥63.0 billion in Q3 2022, representing a growth of 20.5%[29] - Imaging & Sensing Solutions segment's Adjusted OIBDA rose to ¥163.7 billion in Q3 2023, up 21.5% from ¥134.7 billion in Q3 2022[29] - The Financial Services segment's Adjusted OIBDA increased to ¥84.3 billion in Q3 2023, up from ¥53.8 billion in Q3 2022, a growth of 56.7%[29] - The Game & Network Services segment reported a total revenue of ¥1,444,427 million for the three months ended December 31, 2023, up by ¥197,878 million or 15.9% from ¥1,246,549 million in 2022[63] - The Imaging & Sensing Solutions segment achieved an operating income of ¥99,715 million for the three months ended December 31, 2023, an increase of ¥14,864 million or 17.5% compared to ¥84,851 million in 2022[65] - The Financial Services segment saw a substantial increase in customers' revenue, reaching ¥309,435 million for the three months ended December 31, 2023, up by ¥287,314 million or 129.9% from ¥22,121 million in 2022[63] Assets and Liabilities - Total current assets increased by ¥1,646.4 billion from March 31, 2023, to December 31, 2023, reaching ¥7,368.9 billion[52] - Total assets as of December 31, 2023, were ¥33,643.6 billion, an increase of ¥2,489.5 billion from March 31, 2023[54] - Total liabilities increased by ¥1,677.9 billion from March 31, 2023, to December 31, 2023, totaling ¥26,174.9 billion[54] - Sony's retained earnings rose by ¥682.9 billion from March 31, 2023, to December 31, 2023, reaching ¥5,775.4 billion[54] - Cash and cash equivalents decreased from ¥1,480.9 billion on March 31, 2023, to ¥2,019.1 billion on December 31, 2023, reflecting a change of ¥538.2 billion[52] - Total current liabilities rose from ¥5,290,837 million in March 2022 to ¥5,855,511 million in March 2023, an increase of about 10.7%[76] - Long-term debt increased from ¥470,498 million in March 2022 to ¥692,552 million in March 2023, a rise of about 47.0%[76] - Total liabilities increased from ¥19,053,619 million in March 2022 to ¥19,411,922 million in March 2023, reflecting a growth of about 1.9%[76] Cash Flow and Dividends - Net cash provided by operating activities for the nine months ended December 31, 2023, was ¥931,958 million, a significant increase from a net cash used of ¥81,623 million in the same period of 2022[61] - Cash flows from operating activities improved significantly, with net cash provided increasing from ¥(81,623) million in 2022 to ¥931,958 million in 2023[79] - The company declared dividends of ¥98,685 million for the nine months ended December 31, 2023, compared to ¥86,635 million in the same period of 2022, reflecting an increase of approximately 13.9%[62] - Dividends paid increased from ¥86,384 million in 2022 to ¥98,424 million in 2023, reflecting a commitment to returning value to shareholders[80] Future Outlook and Strategic Changes - Sony expects to record approximately 20 billion yen as operating income for the fiscal year ending March 31, 2024, following the transfer of shares of Sony Payment Services Inc.[87] - Sony has commenced preparations for a partial spin-off of Sony Financial Group Inc., which operates the Financial Services business, with plans for a share listing[88] - The Financial Services business will be presented separately as a discontinued operation prior to the execution of the spin-off, in accordance with IFRS 5[89] - The effect of the spin-off on Sony's results of operations and financial positions has not yet been determined[89] - Sony adopted IFRS 17 "Insurance Contracts" effective April 1, 2023, which will impact the recognition and measurement of insurance contracts going forward[81] Shareholder Information - Basic net income per share attributable to Sony Group Corporation's stockholders for the three months ended December 31, 2023, was ¥295.67, an increase of ¥35.39 or 13.5% from the previous year[55] - The weighted-average shares outstanding for diluted EPS computation for the three months ended December 31, 2023, was 1,234,358 thousand shares, a decrease from 1,238,413 thousand shares in the same period of 2022[84] - The weighted-average shares outstanding for basic EPS computation for the nine months ended December 31, 2023, was 1,232,879 thousand shares, a decrease from 1,236,176 thousand shares in the same period of 2022[84] - The effect of dilutive securities for the nine months ended December 31, 2023, included 3,922 thousand shares from stock options and other, compared to 3,632 thousand shares in the same period of 2022[84]

[Quarterly Financial Statements (Unaudited)](index=3&type=section&id=Quarterly%20Financial%20Statements%20(Unaudited)) This section presents Sony Group Corporation's unaudited condensed consolidated financial statements, including position, income, comprehensive income, equity changes, and cash flows [Condensed Consolidated Statements of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) Sony's financial position as of September 30, 2023, shows increased total assets, liabilities, and equity attributable to stockholders Consolidated Financial Position (Yen in millions) | Metric | March 31, 2023 (Restated) | September 30, 2023 | Change from March 31, 2023 | | :--------------------------------- | :------------------ | :----------------- | :------------------------- | | Total assets | 31,154,095 | 32,968,793 | 1,814,698 | | Total liabilities | 24,496,945 | 25,768,173 | 1,271,228 | | Equity attributable to Sony Group Corporation's stockholders | 6,598,537 | 7,122,456 | 523,919 | | Total equity | 6,657,150 | 7,200,620 | 543,470 | | **Key Asset Changes:** | | | | | Inventories | 1,468,042 | 2,067,624 | 599,582 | | Trade and other receivables, and contract assets | 1,770,948 | 2,168,756 | 397,808 | | Goodwill | 1,275,112 | 1,443,365 | 168,253 | | Content assets | 1,561,882 | 1,748,713 | 186,831 | | **Key Liability Changes:** | | | | | Short-term borrowings | 1,914,934 | 2,480,578 | 565,644 | | Trade and other payables | 1,866,101 | 2,314,691 | 448,590 | | Deposits from customers in the banking business | 3,163,237 | 3,429,123 | 265,886 | | **Key Equity Changes:** | | | | | Retained earnings | 5,092,442 | 5,461,664 | 369,222 | | Accumulated other comprehensive income | (614,570) | (448,712) | 165,858 | [Condensed Consolidated Statements of Income (Three months ended September 30)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Three%20months%20ended%20September%2030)) Three-month income statements show increased sales but significant decreases in operating and net income attributable to stockholders Consolidated Statements of Income (Three months ended September 30, Yen in millions) | Metric | 2022 (Restated) | 2023 | Change | | :------------------------------------------ | :-------------- | :--- | :----- | | Total sales and financial services revenue | 2,625,464 | 2,828,623 | 203,159 | | Operating income | 369,403 | 263,009 | (106,394) | | Net income | 285,389 | 201,156 | (84,233) | | Net income attributable to Sony Group Corporation's stockholders | 281,681 | 200,105 | (81,576) | | Basic EPS | 227.76 | 162.21 | (65.55) | | Diluted EPS | 226.54 | 161.74 | (64.80) | [Condensed Consolidated Statements of Comprehensive Income (Three months ended September 30)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Three%20months%20ended%20September%2030)) Three-month comprehensive income declined substantially due to decreased net income and negative shifts in other comprehensive income Consolidated Statements of Comprehensive Income (Three months ended September 30, Yen in millions) | Metric | 2022 (Restated) | 2023 | Change | | :------------------------------------------ | :-------------- | :--- | :------- | | Net income | 285,389 | 201,156 | (84,233) | | Total other comprehensive income, net of tax | 42,852 | (57,930) | (100,782) | | Comprehensive income | 328,241 | 143,226 | (185,015) | | Comprehensive income attributable to Sony Group Corporation's stockholders | 323,299 | 141,176 | (182,123) | [Condensed Consolidated Statements of Income (Six months ended September 30)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Six%20months%20ended%20September%2030)) Six-month income statements show increased sales but significant reductions in operating and net income attributable to stockholders Consolidated Statements of Income (Six months ended September 30, Yen in millions) | Metric | 2022 (Restated) | 2023 | Change | | :------------------------------------------ | :-------------- | :--- | :------- | | Total sales and financial services revenue | 4,855,224 | 5,792,275 | 937,051 | | Operating income | 734,268 | 516,051 | (218,217) | | Net income | 546,593 | 419,098 | (127,495) | | Net income attributable to Sony Group Corporation's stockholders | 542,775 | 417,650 | (125,125) | | Basic EPS | 438.92 | 338.48 | (100.44) | | Diluted EPS | 436.17 | 337.39 | (98.78) | [Condensed Consolidated Statements of Comprehensive Income (Six months ended September 30)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Six%20months%20ended%20September%2030)) Six-month comprehensive income decreased significantly, driven by lower net income, despite a smaller negative impact from other comprehensive income Consolidated Statements of Comprehensive Income (Six months ended September 30, Yen in millions) | Metric | 2022 (Restated) | 2023 | Change | | :------------------------------------------ | :-------------- | :--- | :------- | | Net income | 546,593 | 419,098 | (127,495) | | Total other comprehensive income, net of tax | 224,743 | 169,587 | (55,156) | | Comprehensive income | 771,336 | 588,685 | (182,651) | | Comprehensive income attributable to Sony Group Corporation's stockholders | 762,845 | 584,604 | (178,241) | [Condensed Consolidated Statements of Changes in Stockholders' Equity (Six months ended September 30)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Six%20months%20ended%20September%2030)) Stockholders' equity increased by **¥523,919 million**, driven by retained earnings and other comprehensive income, partially offset by treasury stock Changes in Stockholders' Equity (Six months ended September 30, Yen in millions) | Metric | March 31, 2023 (Restated) | September 30, 2023 | Change | | :------------------------------------------ | :------------------ | :----------------- | :----- | | Equity attributable to Sony Group Corporation's stockholders | 6,598,537 | 7,122,456 | 523,919 | | Retained earnings | 5,092,442 | 5,461,664 | 369,222 | | Accumulated other comprehensive income | (614,570) | (448,712) | 165,858 | | Treasury stock, at cost | (223,507) | (251,281) | (27,774) | | Total equity | 6,657,150 | 7,200,620 | 543,470 | [Condensed Consolidated Statements of Cash Flows (Six months ended September 30)](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Six%20months%20ended%20September%2030)) Six-month cash flows show a significant turnaround to operating cash inflow, continued investing outflow, and substantial financing inflow Consolidated Statements of Cash Flows (Six months ended September 30, Yen in millions) | Metric | 2022 (Restated) | 2023 | Change | | :------------------------------------------ | :-------------- | :--- | :------- | | Net cash provided by (used in) operating activities | (383,256) | 115,031 | 498,287 | | Net cash used in investing activities | (639,672) | (335,068) | 304,604 | | Net cash provided by financing activities | 56,357 | 301,820 | 245,463 | | Net increase (decrease) in cash and cash equivalents | (839,884) | 145,614 | 985,498 | | Cash and cash equivalents at end of the period | 1,209,752 | 1,626,514 | 416,762 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail segment information, product sales, Financial Services statements, and critical accounting policy changes, including IFRS 17 adoption [Business Segment Information](index=13&type=section&id=Business%20Segment%20Information) This section provides detailed sales and operating income breakdowns across Sony's various business segments and product categories for both three and six-month periods Segment Sales and Financial Services Revenue (Three months ended September 30, Yen in millions) | Segment | 2022 (Restated) | 2023 | Change | | :-------------------------------- | :-------------- | :--- | :----- | | Game & Network Services | 720,735 | 954,096 | 233,361 | | Music | 359,319 | 408,716 | 49,397 | | Pictures | 337,468 | 399,636 | 62,168 | | Entertainment, Technology & Services | 677,045 | 613,540 | (63,505) | | Imaging & Sensing Solutions | 398,366 | 406,316 | 7,950 | | Financial Services | 178,063 | 103,915 | (74,148) | | All Other | 20,732 | 24,225 | 3,493 | Segment Operating Income (Loss) (Three months ended September 30, Yen in millions) | Segment | 2022 (Restated) | 2023 | Change | | :-------------------------------- | :-------------- | :--- | :------- | | Game & Network Services | 42,132 | 48,902 | 6,770 | | Music | 78,733 | 80,997 | 2,264 | | Pictures | 27,620 | 29,438 | 1,818 | | Entertainment, Technology & Services | 77,840 | 61,033 | (16,807) | | Imaging & Sensing Solutions | 73,987 | 46,361 | (27,626) | | Financial Services | 79,989 | 15,681 | (64,308) | | All Other | 4,848 | 2,069 | (2,779) | Segment Sales and Financial Services Revenue (Six months ended September 30, Yen in millions) | Segment | 2022 (Restated) | 2023 | Change | | :-------------------------------- | :-------------- | :--- | :----- | | Game & Network Services | 1,324,851 | 1,725,976 | 401,125 | | Music | 667,389 | 766,945 | 99,556 | | Pictures | 678,845 | 720,002 | 41,157 | | Entertainment, Technology & Services | 1,229,355 | 1,185,323 | (44,032) | | Imaging & Sensing Solutions | 636,208 | 699,056 | 62,848 | | Financial Services | 394,085 | 785,326 | 391,241 | | All Other | 40,066 | 43,718 | 3,652 | Segment Operating Income (Loss) (Six months ended September 30, Yen in millions) | Segment | 2022 (Restated) | 2023 | Change | | :-------------------------------- | :-------------- | :--- | :------- | | Game & Network Services | 94,894 | 98,062 | 3,168 | | Music | 139,706 | 154,377 | 14,671 | | Pictures | 78,275 | 45,409 | (32,866) | | Entertainment, Technology & Services | 131,408 | 116,679 | (14,729) | | Imaging & Sensing Solutions | 95,676 | 59,092 | (36,584) | | Financial Services | 219,197 | 70,195 | (149,002) | | All Other | 7,713 | 4,544 | (3,169) | Sales to Customers by Product Category (Three months ended September 30, Yen in millions) | Product Category | 2022 (Restated) | 2023 | Change | | :-------------------------------- | :-------------- | :--- | :----- | | G&NS - Digital Software and Add-on Content | 332,859 | 423,096 | 90,237 | | G&NS - Hardware and Others | 252,853 | 373,154 | 120,301 | | Music - Recorded Music - Streaming | 151,930 | 173,858 | 21,928 | | Pictures - Television Productions | 114,586 | 173,385 | 58,799 | | ET&S - Televisions | 226,751 | 161,002 | (65,749) | | ET&S - Mobile Communications | 93,227 | 72,774 | (20,453) | Sales to Customers by Product Category (Six months ended September 30, Yen in millions) | Product Category | 2022 (Restated) | 2023 | Change | | :-------------------------------- | :-------------- | :--- | :----- | | G&NS - Digital Software and Add-on Content | 618,704 | 788,442 | 169,738 | | G&NS - Hardware and Others | 448,946 | 638,312 | 189,366 | | Music - Recorded Music - Streaming | 291,041 | 338,745 | 47,704 | | Pictures - Television Productions | 253,747 | 277,616 | 23,869 | | ET&S - Televisions | 368,544 | 296,984 | (71,560) | | ET&S - Mobile Communications | 192,257 | 160,136 | (32,121) | [Condensed Financial Services Financial Statements](index=19&type=section&id=Condensed%20Financial%20Services%20Financial%20Statements) This section presents separate condensed financial statements for the Financial Services segment, offering a distinct view from other Sony segments - Separate financial statements are provided for the Financial Services segment and all other segments combined, as the Financial Services segment differs in nature from Sony's other segments, offering useful comparative presentation for investors[35](index=35&type=chunk) Condensed Statements of Financial Position (September 30, 2023, Yen in millions) | Metric | Financial Services | Sony without Financial Services | Consolidated | | :------------------------------------------ | :----------------- | :------------------------------ | :----------- | | Total assets | 19,935,965 | 13,669,697 | 32,968,793 | | Total liabilities | 18,931,170 | 6,885,230 | 25,768,173 | | Total equity | 1,004,795 | 6,784,467 | 7,200,620 | Condensed Statements of Income (Three months ended September 30, 2023, Yen in millions) | Metric | Financial Services | Sony without Financial Services | Consolidated | | :------------------------------------------ | :----------------- | :------------------------------ | :----------- | | Total sales and financial services revenue | 103,915 | 2,728,907 | 2,828,623 | | Operating income | 15,681 | 247,334 | 263,009 | | Net income | 10,832 | 190,328 | 201,156 | Condensed Statements of Income (Six months ended September 30, 2023, Yen in millions) | Metric | Financial Services | Sony without Financial Services | Consolidated | | :------------------------------------------ | :----------------- | :------------------------------ | :----------- | | Total sales and financial services revenue | 785,326 | 5,014,696 | 5,792,275 | | Operating income | 70,195 | 445,865 | 516,051 | | Net income | 49,441 | 419,700 | 419,098 | Condensed Statements of Cash Flows (Six months ended September 30, 2023, Yen in millions) | Metric | Financial Services | Sony without Financial Services | Consolidated | | :------------------------------------------ | :----------------- | :------------------------------ | :----------- | | Net cash provided by (used in) operating activities | 238,753 | (73,745) | 115,031 | | Net cash used in investing activities | (9,531) | (325,547) | (335,068) | | Net cash provided by (used in) financing activities | (55,504) | 307,357 | 301,820 | [Going Concern Assumption](index=26&type=section&id=Going%20Concern%20Assumption) This section clarifies that the going concern assumption is not applicable to the presented financial statements - The **going concern assumption is not applicable**[44](index=44&type=chunk) [Accounting Policy and Other Information](index=26&type=section&id=Accounting%20Policy%20and%20Other%20Information) This section details accounting policy changes, including the adoption of IFRS 17, and provides computations for earnings per share - Sony adopted **IFRS 17 \"Insurance Contracts\"** starting in the three months ended June 30, 2023, and retrospectively applied it, restating comparative periods and the condensed consolidated statement of financial position as of April 1, 2022[44](index=44&type=chunk)[45](index=45&type=chunk) EPS Computation (Three months ended September 30) | Metric | 2022 (Restated) | 2023 | | :------------------------------------------ | :-------------- | :--- | | Net income attributable to Sony Group Corporation's stockholders | 281,681 | 200,105 | | Weighted-average shares outstanding for basic EPS computation (Thousands) | 1,236,755 | 1,233,588 | | Weighted-average shares for diluted EPS computation (Thousands) | 1,243,505 | 1,237,223 | EPS Computation (Six months ended September 30) | Metric | 2022 (Restated) | 2023 | | :------------------------------------------ | :-------------- | :--- | | Net income attributable to Sony Group Corporation's stockholders | 542,775 | 417,650 | | Weighted-average shares outstanding for basic EPS computation (Thousands) | 1,236,622 | 1,233,915 | | Weighted-average shares for diluted EPS computation (Thousands) | 1,244,528 | 1,237,874 | [Results for Adjusted OIBDA and Adjusted EBITDA](index=29&type=section&id=Results%20for%20Adjusted%20OIBDA%20and%20Adjusted%20EBITDA%20for%20the%20Three%20and%20Six%20Months%20Ended%20September%2030,%202023) This section presents Sony's Adjusted OIBDA and Adjusted EBITDA results for the three and six months ended September 30, 2023, by segment and consolidated - Sony uses **three-year cumulative Adjusted EBITDA** as the most important financial performance indicator (Group KPI) in its Fourth Mid-Range Plan[51](index=51&type=chunk) Segment Adjusted OIBDA and Consolidated Adjusted OIBDA/EBITDA (Three months ended September 30, Yen in billions) | Metric | 2022 (Restated) | 2023 | | :------------------------------------------ | :-------------- | :--- | | Game & Network Services (G&NS) | 64.2 | 83.1 | | Music | 87.5 | 97.0 | | Pictures | 40.4 | 42.6 | | Entertainment, Technology & Services (ET&S) | 102.6 | 87.6 | | Imaging & Sensing Solutions (I&SS) | 122.2 | 107.1 | | Financial Services | 64.4 | 22.7 | | All Other, Corporate and elimination | (4.1) | (14.1) | | Consolidated Adjusted OIBDA | 477.1 | 425.9 | | Consolidated Adjusted EBITDA | 487.2 | 426.4 | Segment Adjusted OIBDA and Consolidated Adjusted OIBDA/EBITDA (Six months ended September 30, Yen in billions) | Metric | 2022 (Restated) | 2023 | | :------------------------------------------ | :-------------- | :--- | | Game & Network Services (G&NS) | 134.4 | 158.9 | | Music | 162.3 | 180.0 | | Pictures | 102.2 | 71.0 | | Entertainment, Technology & Services (ET&S) | 179.5 | 168.4 | | Imaging & Sensing Solutions (I&SS) | 189.5 | 177.2 | | Financial Services | 210.0 | 84.1 | | All Other, Corporate and elimination | (11.9) | (17.6) | | Consolidated Adjusted OIBDA | 966.0 | 822.0 | | Consolidated Adjusted EBITDA | 984.0 | 832.6 | [Outlook for Fiscal Year Ending March 31, 2024](index=30&type=section&id=Outlook%20for%20the%20Fiscal%20Year%20Ending%20March%2031,%202024) This section provides Sony's revised consolidated and segment-specific financial forecasts for the fiscal year ending March 31, 2024 Revised Consolidated Forecast for FY2024 (Yen in billions) | Metric | August Forecast | November Forecast | Change from August Forecast | % Change | | :------------------------------------------ | :-------------- | :---------------- | :-------------------------- | :------- | | Sales | 12,200 | 12,400 | +200 | +1.6% | | Operating income | 1,170 | 1,170 | - | - | | Income before income taxes | 1,140 | 1,160 | +20 | +1.8% | | Net income attributable to Sony Group Corporation's stockholders | 860 | 880 | +20 | +2.3% | | Adjusted OIBDA | 1,770 | 1,785 | +15 | +0.8% | | Adjusted EBITDA | 1,750 | 1,785 | +35 | +2.0% | - Sales are expected to be **higher than the August forecast**, mainly due to higher-than-expected sales in the Game & Network Services, Music, and Imaging & Sensing Solutions segments, partially offset by lower-than-expected sales in the Financial Services segment[57](index=57&type=chunk) - Operating income is expected to **remain unchanged** due to expected increases in operating income in the Music and Imaging & Sensing Solutions segments, substantially offset by expected decreases in operating income in the Financial Services and Pictures segments[58](index=58&type=chunk) - Both income before income taxes and net income attributable to Sony Group Corporation's stockholders are expected to be **higher than the August forecast** due to an expected increase in financial income, net, primarily resulting from a decrease in net foreign exchange losses[58](index=58&type=chunk) Revised Segment Forecasts for FY2024 (Yen in billions) | Segment | Sales (Nov Forecast) | Operating Income (Nov Forecast) | Adjusted OIBDA (Nov Forecast) | | :------------------------------------------ | :------------------- | :------------------------------ | :---------------------------- | | Game & Network Services (G&NS) | 4,360 | 270 | 385 | | Music | 1,560 | 295 | 350 | | Pictures | 1,460 | 115 | 165 | | Entertainment, Technology & Services (ET&S) | 2,440 | 180 | 280 | | Imaging & Sensing Solutions (I&SS) | 1,590 | 195 | 440 | | Financial Services (Financial services revenue) | 1,210 | 155 | 180 | - Game & Network Services (G&NS) sales are expected to be **higher than the August forecast** primarily due to foreign exchange rates and increased sales of non-first-party titles, while operating income remains unchanged due to changes in launch dates for some first-party titles[62](index=62&type=chunk) - Music sales, operating income, and Adjusted OIBDA are expected to be **higher than the August forecast** due to positive foreign exchange impacts, higher sales in mobile game applications (Visual Media & Platform), and increased streaming revenues in Music Publishing[63](index=63&type=chunk) - Pictures sales and operating income are expected to be **lower than the August forecast**, primarily due to the impact of Hollywood strikes leading to release date changes and delays in series deliveries, partially offset by foreign exchange rates[64](index=64&type=chunk) - Financial Services revenue, operating income, and Adjusted OIBDA are expected to be **lower than the August forecast** primarily due to a decrease in net gains on investments and a deterioration in net gains and losses related to market fluctuations for variable life insurance products at Sony Life[67](index=67&type=chunk) [Supplemental Information](index=33&type=section&id=Supplemental%20Information) This section provides additional details on segment financial performance and comprehensive reconciliations for Adjusted OIBDA and EBITDA [Notes about Financial Performance of Segments](index=33&type=section&id=Notes%20about%20Financial%20Performance%20of%20the%20Music,%20Pictures%20and%20Financial%20Services%20segments) This section clarifies the reporting basis for the Music, Pictures, and Financial Services segments, noting their specific consolidation and translation methods - Music segment results include yen-based Sony Music Entertainment (Japan) Inc. and yen-translated results of Sony Music Entertainment and Sony Music Publishing LLC, which aggregate worldwide subsidiaries on a U.S. dollar basis[70](index=70&type=chunk) - Pictures segment results are the yen-translated results of Sony Pictures Entertainment Inc., which aggregates worldwide subsidiaries on a U.S. dollar basis[71](index=71&type=chunk) - Financial Services segment results include Sony Financial Group Inc. and its consolidated subsidiaries, which differ from their separate Japanese statutory disclosures[72](index=72&type=chunk) [Regarding Adjusted OIBDA and Adjusted EBITDA](index=33&type=section&id=Regarding%20Adjusted%20OIBDA%20and%20Adjusted%20EBITDA) This section defines Adjusted OIBDA and Adjusted EBITDA, explains their rationale as key performance indicators, and provides detailed reconciliations [Definitions and Rationale](index=33&type=section&id=Definitions%20and%20Rationale) This section defines Adjusted OIBDA and Adjusted EBITDA, outlining their calculation methods and strategic importance as long-term performance indicators - Adjusted OIBDA and Adjusted EBITDA are considered suitable for long-term management as they represent **sustainable earnings power**, confirm business expansion, and are often used to calculate corporate value[73](index=73&type=chunk) - Adjusted OIBDA is calculated as: Operating income + Depreciation and amortization expense (excluding amortization for film costs, broadcasting rights, internally developed game content, and master recordings) - non-recurring profit/loss[74](index=74&type=chunk) - Adjusted EBITDA is calculated as: Net income attributable to Sony Group Corporation's stockholders + Net income attributable to noncontrolling interests + Income taxes + Net interest expenses - Net gain on revaluation of equity instruments + Depreciation and amortization expense (excluding amortization for film costs, broadcasting rights, internally developed game content, and master recordings) - non-recurring profit/loss[74](index=74&type=chunk) [Reconciliation for Three Months Ended September 30](index=34&type=section&id=Reconciliation%20for%20Three%20Months%20Ended%20September%2030) This section provides detailed reconciliations of Adjusted OIBDA from operating income and Adjusted EBITDA from net income for the three-month period Reconciliation of Adjusted OIBDA from Operating Income (Three months ended September 30, Yen in billions) | Segment | Operating Income (2023) | Depreciation & Amortization (2023) | Non-recurring P/L (2023) | Adjusted OIBDA (2023) | | :------------------------------------------ | :---------------------- | :--------------------------------- | :----------------------- | :-------------------- | | Game & Network Services (G&NS) | 48.9 | 34.2 | - | 83.1 | | Music | 81.0 | 16.0 | - | 97.0 | | Pictures | 29.4 | 13.1 | - | 42.6 | | Entertainment, Technology & Services (ET&S) | 61.0 | 26.5 | - | 87.6 | | Imaging & Sensing Solutions (I&SS) | 46.4 | 60.8 | - | 107.1 | | Financial Services | 15.7 | 7.0 | - | 22.7 | | All Other, Corporate and elimination | (19.4) | 5.3 | - | (14.1) | | Consolidated | 263.0 | 162.9 | - | 425.9 | Reconciliation of Adjusted EBITDA from Net Income (Three months ended September 30, Yen in billions) | Metric | 2022 (Restated) | 2023 | | :------------------------------------------ | :-------------- | :--- | | Net income attributable to Sony Group Corporation's stockholders | 281.7 | 200.1 | | Net income attributable to noncontrolling interests | 3.7 | 1.1 | | Income taxes | 85.7 | 56.4 | | Interest expenses, net | 1.4 | 2.1 | | (Gain) / loss on revaluation of equity instruments, net | 6.9 | 3.7 | | Depreciation and amortization expense* | 135.5 | 162.9 | | (Profit) / loss amount that Sony deems non-recurring** | (27.8) | - | | Adjusted EBITDA | 487.2 | 426.4 | Details of Non-recurring Profit/Loss (Three months ended September 30, Yen in billions) | Item | 2022 (Restated) | 2023 | | :------------------------------------------ | :-------------- | :--- | | Impact of litigation settlements (Music segment) | (5.7) | - | | Recovery of unauthorized withdrawal (Financial Services segment) | (22.1) | - | | Total | (27.8) | - | [Reconciliation for Six Months Ended September 30](index=36&type=section&id=Reconciliation%20for%20Six%20Months%20Ended%20September%2030) This section provides detailed reconciliations of Adjusted OIBDA from operating income and Adjusted EBITDA from net income for the six-month period Reconciliation of Adjusted OIBDA from Operating Income (Six months ended September 30, Yen in billions) | Segment | Operating Income (2023) | Depreciation & Amortization (2023) | Non-recurring P/L (2023) | Adjusted OIBDA (2023) | | :------------------------------------------ | :---------------------- | :--------------------------------- | :----------------------- | :-------------------- | | Game & Network Services (G&NS) | 98.1 | 60.9 | - | 158.9 | | Music | 154.4 | 31.6 | (6.0) | 180.0 | | Pictures | 45.4 | 25.6 | - | 71.0 | | Entertainment, Technology & Services (ET&S) | 116.7 | 51.8 | - | 168.4 | | Imaging & Sensing Solutions (I&SS) | 59.1 | 118.1 | - | 177.2 | | Financial Services | 70.2 | 13.9 | - | 84.1 | | All Other, Corporate and elimination | (27.8) | 10.2 | - | (17.6) | | Consolidated | 516.1 | 312.0 | (6.0) | 822.0 | Reconciliation of Adjusted EBITDA from Net Income (Six months ended September 30, Yen in billions) | Metric | 2022 (Restated) | 2023 | | :------------------------------------------ | :-------------- | :--- | | Net income attributable to Sony Group Corporation's stockholders | 542.8 | 417.7 | | Net income attributable to noncontrolling interests | 3.8 | 1.4 | | Income taxes | 173.8 | 114.5 | | Interest expenses, net | 2.2 | 2.6 | | (Gain) / loss on revaluation of equity instruments, net | 29.7 | (9.6) | | Depreciation and amortization expense* | 259.5 | 312.0 | | (Profit) / loss amount that Sony deems non-recurring** | (27.8) | (6.0) | | Adjusted EBITDA | 984.0 | 832.6 | Details of Non-recurring Profit/Loss (Six months ended September 30, Yen in billions) | Item | 2022 (Restated) | 2023 | | :------------------------------------------ | :-------------- | :--- | | Impact of litigation settlements (Music segment) | (5.7) | - | | Recovery of unauthorized withdrawal (Financial Services segment) | (22.1) | - | | Remeasurement gain from consolidation (Music segment) | - | (6.0) | | Total | (27.8) | (6.0) | [Reconciliation for Fiscal Year Ended March 31, 2023](index=38&type=section&id=Reconciliation%20for%20Fiscal%20Year%20Ended%20March%2031,%202023) This section provides detailed reconciliations of Adjusted OIBDA from operating income and Adjusted EBITDA from net income for the fiscal year Reconciliation of Adjusted OIBDA from Operating Income (Fiscal Year Ended March 31, 2023, Yen in billions) | Segment | Operating Income | Depreciation & Amortization | Non-recurring P/L | Adjusted OIBDA | | :------------------------------------------ | :--------------- | :-------------------------- | :---------------- | :------------- | | Game & Network Services (G&NS) | 250.0 | 87.0 | - | 337.0 | | Music | 263.1 | 59.0 | (5.7) | 316.4 | | Pictures | 119.3 | 48.9 | - | 168.2 | | Entertainment, Technology & Services (ET&S) | 179.5 | 97.4 | - | 276.9 | | Imaging & Sensing Solutions (I&SS) | 212.2 | 196.7 | - | 408.9 | | Financial Services | 318.1 | 26.3 | (22.1) | 322.4 | | All Other, Corporate and elimination | (39.8) | 26.8 | - | (12.9) | | Consolidated | 1,302.4 | 542.2 | (27.8) | 1,816.9 | Reconciliation of Adjusted EBITDA from Net Income (Fiscal Year Ended March 31, 2023, Yen in billions) | Metric | Amount | | :------------------------------------------ | :----- | | Net income attributable to Sony Group Corporation's stockholders | 1,005.3 | | Net income attributable to noncontrolling interests | 6.5 | | Income taxes | 262.7 | | Interest expenses, net | 4.0 | | (Gain) / loss on revaluation of equity instruments, net | 4.6 | | Depreciation and amortization expense* | 542.2 | | (Profit) / loss amount that Sony deems non-recurring** | (27.8) | | Adjusted EBITDA | 1,797.6 | Details of Non-recurring Profit/Loss (Fiscal Year Ended March 31, 2023, Yen in billions) | Item | Amount | | :------------------------------------------ | :----- | | Impact of litigation settlements (Music segment) | (5.7) | | Recovery of unauthorized withdrawal (Financial Services segment) | (22.1) | | Total | (27.8) | [Cautionary Statement](index=40&type=section&id=Cautionary%20Statement) This statement highlights that future performance projections are subject to significant risks and uncertainties that could cause actual results to differ - Statements regarding Sony's future performance are **forward-looking** and subject to important risks and uncertainties that could cause actual results to differ materially[93](index=93&type=chunk) - Key risks include maintaining product quality and customer satisfaction, ability to design and develop new products in competitive markets, effectiveness of strategies (including acquisitions), changes in laws/regulations, reliance on external business partners, global economic and political environment, foreign exchange rates, cybersecurity risks, and geopolitical conflicts[93](index=93&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk)

Call Start: 03:00 January 1, 0000 4:13 AM ET Company Participants Conference Call Participants Unidentified Company Representative I would like to first introduce the speakers today, President, COO and CFO, Hiroki Totoki; and Senior Vice President in charge of the Corporate Planning Group DE&I promotion, also support Financial Service and Entertainment segment, Naomi Matsuoka; and then Senior Vice President in charge of Finance and IR, Sadahiko Hayakawa. So those 3 will present the Q1 FY 2023 consolidated f ...

307.0 364.9 253.0 +57.9 +2.1 +12.4 +5.6 -84.7 -34.7 -9.0 -3.6 (Reference) Q1 FY22 (IFRS 4) Q1 FY22 (IFRS 17) Financial Services Pictures I&SS G&NS ET&S Music Other* Q1 FY23 Impact of IFRS 17 Adoption (Financial Services) Significant decrease in OI at Sony Life ·(－) Recording of profit resulting from changes in interest rates related to variable life insurance in Q1 FY22 ·(－) Recording of gain from the sale of real estate in Q1 FY22 * Other: All other, corporate and elimination 2 | --- | --- | --- | |------- ...

[FORM 6-K Filing Details](index=1&type=section&id=FORM%206-K%20Filing%20Details) This section details Sony Group Corporation's Form 6-K submission, including its Q1 2023 financial statements and FY2024 outlook [Registrant Information](index=1&type=section&id=Registrant%20Information) This report is a Form 6-K filing by Sony Group Corporation, disclosing its first-quarter financial statements as of June 30, 2023, and the outlook for the fiscal year ending March 31, 2024 - Sony Group Corporation submitted a Form 6-K report, including Q1 2023 financial statements and FY2024 outlook[1](index=1&type=chunk)[3](index=3&type=chunk)[4](index=4&type=chunk) - Report signed by Hiroki Totoki, President, COO, and CFO, on August 9, 2023[3](index=3&type=chunk) [Quarterly Financial Statements (Unaudited)](index=2&type=section&id=Quarterly%20Financial%20Statements%20%28Unaudited%29) This section presents Sony Group's unaudited condensed consolidated financial statements for the first quarter ended June 30, 2023, prepared in accordance with IFRS [Overview and Accounting Policy](index=2&type=section&id=Overview%20and%20Accounting%20Policy) This section outlines Sony Group's first-quarter financial statements as of June 30, 2023, emphasizing IFRS compliance and the retrospective restatement for IFRS 17 adoption from April 1, 2023 - All financial information is presented in accordance with International Financial Reporting Standards (IFRS)[5](index=5&type=chunk) - Sony adopted IFRS 17 'Insurance Contracts' from April 1, 2023, and retrospectively restated comparative data for the fiscal years ended June 30, 2022, and March 31, 2023[7](index=7&type=chunk) [Condensed Consolidated Statements of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) As of June 30, 2023, Sony Group's total assets and liabilities significantly increased, driven by growth in inventories, goodwill, content assets, short-term borrowings, trade payables, and insurance contract liabilities Condensed Consolidated Statements of Financial Position Key Metrics (As of June 30, 2023) | Metric | March 31, 2023 (million JPY) | June 30, 2023 (million JPY) | Change (million JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Total Assets | 31,154,095 | 32,860,017 | 1,705,922 | 5.48% | | **Liabilities** | | | | | | Total Liabilities | 24,496,945 | 25,781,439 | 1,284,494 | 5.24% | | **Equity** | | | | | | Equity attributable to Sony Group Corporation stockholders | 6,598,537 | 7,002,988 | 404,451 | 6.13% | | Non-controlling interests | 58,613 | 75,590 | 16,977 | 28.96% | | Total Equity | 6,657,150 | 7,078,578 | 421,428 | 6.33% | - Inventories in current assets significantly increased by **361,468 million JPY**, reaching **1,829,510 million JPY**[8](index=8&type=chunk) - Goodwill and content assets in non-current assets increased by **124,995 million JPY** and **196,666 million JPY**, respectively[8](index=8&type=chunk) - Short-term borrowings and trade and other payables in current liabilities increased by **251,178 million JPY** and **255,956 million JPY**, respectively[9](index=9&type=chunk) - Insurance contract liabilities in non-current liabilities increased by **523,262 million JPY**, reaching **12,888,235 million JPY**[9](index=9&type=chunk) [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended June 30, 2023, Sony Group's total sales and financial services revenue increased by 32.9%, while operating profit and net profit declined due to a substantial rise in financial services expenses Condensed Consolidated Statements of Income Key Metrics (For the three months ended June 30, 2023) | Metric | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Total sales and financial services revenue | 2,229,760 | 2,963,652 | 733,892 | 32.91% | | Operating profit | 364,865 | 253,042 | (111,823) | -30.65% | | Net profit | 261,204 | 217,942 | (43,262) | -16.56% | | Net profit attributable to Sony Group Corporation stockholders | 261,094 | 217,545 | (43,549) | -16.68% | | Basic earnings per share (JPY) | 211.16 | 176.26 | (34.90) | -16.53% | | Diluted earnings per share (JPY) | 209.66 | 175.67 | (33.99) | -16.21% | - Financial services revenue significantly increased by **458,206 million JPY** to **536,359 million JPY**, primarily driven by other financial services revenue[11](index=11&type=chunk) - Financial services expenses surged by **550,079 million JPY** to **624,543 million JPY**, with insurance financial expenses (income) shifting from negative to positive, an increase of **527,537 million JPY**[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) For the three months ended June 30, 2023, Sony Group's comprehensive income slightly increased, primarily due to significant growth in other comprehensive income, offsetting a decline in net profit Condensed Consolidated Statements of Comprehensive Income Key Metrics (For the three months ended June 30, 2023) | Metric | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Net profit | 261,204 | 217,942 | (43,262) | -16.56% | | Other comprehensive income (net of tax) | 181,891 | 227,517 | 45,626 | 25.08% | | Comprehensive income | 443,095 | 445,459 | 2,364 | 0.53% | | Comprehensive income attributable to Sony Group Corporation stockholders | 439,546 | 443,428 | 3,882 | 0.88% | - Changes in financial assets measured at fair value through other comprehensive income significantly improved from negative **571,849 million JPY** to negative **72,542 million JPY**, an increase of **499,307 million JPY**[13](index=13&type=chunk) - Foreign currency translation adjustments increased by **38,438 million JPY** to **285,771 million JPY**[13](index=13&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) For the three months ended June 30, 2023, Sony Group's total stockholders' equity grew by 421,428 million JPY, mainly from increased retained earnings and accumulated other comprehensive income Condensed Consolidated Statements of Changes in Stockholders' Equity Key Metrics (As of June 30, 2023) | Metric | April 1, 2023 (million JPY) | June 30, 2023 (million JPY) | Change (million JPY) | | :--- | :--- | :--- | :--- | | Equity attributable to Sony Group Corporation stockholders | 6,598,537 | 7,002,988 | 404,451 | | Retained earnings | 5,092,442 | 5,261,615 | 169,173 | | Accumulated other comprehensive income | (614,570) | (389,839) | 224,731 | | Dividends paid | - | (49,380) | (49,380) | | Purchase of treasury stock | - | (10,150) | (10,150) | - Net profit of **217,545 million JPY** for the period was recognized in retained earnings[14](index=14&type=chunk) - Non-controlling interests increased by **16,977 million JPY** to **75,590 million JPY**[9](index=9&type=chunk)[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the three months ended June 30, 2023, Sony Group's operating cash outflow significantly decreased, and financing activities shifted to a net inflow, indicating an improved cash position Condensed Consolidated Statements of Cash Flows Key Metrics (For the three months ended June 30, 2023) | Metric | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | | :--- | :--- | :--- | :--- | | Net cash outflow from operating activities | (430,018) | (12,669) | 417,349 | | Net cash outflow from investing activities | (315,057) | (198,647) | 116,410 | | Net cash inflow (outflow) from financing activities | (29,977) | 213,867 | 243,844 | | Net increase (decrease) in cash and cash equivalents | (677,769) | 51,199 | 728,968 | | Cash and cash equivalents at end of period | 1,371,867 | 1,532,099 | 160,232 | - The improvement in operating cash outflow was primarily due to an increase in insurance contract liabilities (**561,732 million JPY**) and an increase in bank deposits (**144,119 million JPY**), partially offset by increases in inventories and investments and advances in the financial services segment[16](index=16&type=chunk) - Financing activities shifted to a net inflow, mainly due to a net increase in short-term borrowings of **294,039 million JPY**[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to Sony Group's condensed consolidated financial statements, including segment information, accounting policies, and other relevant disclosures [Business Segment Information](index=11&type=section&id=Business%20Segment%20Information) This section details Sony Group's business segment performance, highlighting significant revenue changes in financial services, game & network services, and music, alongside profit shifts across segments - Game & Network Services (G&NS) segment sales increased by **166,542 million JPY** year-on-year, reaching **755,003 million JPY**[18](index=18&type=chunk) - Financial Services segment revenue significantly increased by **465,386 million JPY** to **679,109 million JPY**[18](index=18&type=chunk) - Pictures segment sales decreased by **21,069 million JPY**, primarily due to a decline in television production revenue[18](index=18&type=chunk)[23](index=23&type=chunk) [Segment Sales and Financial Services Revenue](index=11&type=section&id=Segment%20Sales%20and%20Financial%20Services%20Revenue) For the three months ended June 30, 2023, financial services, game & network services, and music segments experienced substantial revenue growth, while the pictures segment saw a decline Segment Sales and Financial Services Revenue (For the three months ended June 30, 2023) | Segment | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Game & Network Services | 588,461 | 755,003 | 166,542 | 28.30% | | Music | 305,353 | 355,756 | 50,403 | 16.51% | | Pictures | 341,247 | 320,178 | (21,069) | -6.17% | | Entertainment, Technology & Services | 543,906 | 563,292 | 19,386 | 3.56% | | Imaging & Sensing Solutions | 219,223 | 270,476 | 51,253 | 23.38% | | Financial Services | 213,723 | 679,109 | 465,386 | 217.75% | | Consolidated Total | 2,229,760 | 2,963,652 | 733,892 | 32.91% | [Segment Profit (Loss)](index=12&type=section&id=Segment%20Profit%20%28Loss%29) For the three months ended June 30, 2023, financial services and pictures segments experienced significant operating profit declines, while the music segment showed growth Segment Operating Profit (Loss) (For the three months ended June 30, 2023) | Segment | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Game & Network Services | 52,762 | 49,160 | (3,602) | -6.83% | | Music | 60,973 | 73,380 | 12,407 | 20.35% | | Pictures | 50,655 | 15,971 | (34,684) | -68.47% | | Entertainment, Technology & Services | 53,568 | 55,646 | 2,078 | 3.88% | | Imaging & Sensing Solutions | 21,689 | 12,731 | (8,958) | -41.30% | | Financial Services | 139,208 | 54,514 | (84,694) | -60.84% | | Consolidated Operating Profit | 364,865 | 253,042 | (111,823) | -30.65% | [Sales to Customers by Product Category](index=13&type=section&id=Sales%20to%20Customers%20by%20Product%20Category) For the three months ended June 30, 2023, digital software and add-on content, along with hardware in game & network services, saw increased sales, while TV production in pictures declined Sales to Customers by Product Category (For the three months ended June 30, 2023) | Product Category | 2022 (million JPY) | 2023 (million JPY) | Change (million JPY) | | :--- | :--- | :--- | :--- | | **Game & Network Services** | | | | | Digital Software and Add-on Content | 285,845 | 365,346 | 79,501 | | Hardware and Other | 196,093 | 265,158 | 69,065 | | **Music** | | | | | Streaming Recorded Music | 139,111 | 164,887 | 25,776 | | **Pictures** | | | | | Television Productions | 139,161 | 104,231 | (34,930) | | **Entertainment, Technology & Services** | | | | | Still and Video Cameras | 139,703 | 161,874 | 22,171 | | Mobile Communications | 99,030 | 87,362 | (11,668) | - Imaging & Sensing Solutions segment sales increased by **51,253 million JPY**[23](index=23&type=chunk) [Condensed Financial Services Financial Statements](index=14&type=section&id=Condensed%20Financial%20Services%20Financial%20Statements) This section provides condensed financial statements for the financial services segment and other segments, offering a detailed view of their substantial assets, liabilities, and operational changes - Financial services segment and other Sony segments' financial statements are presented separately for clearer business analysis[24](index=24&type=chunk) - Investments and advances (non-current assets) in the financial services segment reached **18,669,354 million JPY** as of June 30, 2023[25](index=25&type=chunk) - Insurance contract liabilities in the financial services segment reached **12,888,235 million JPY** as of June 30, 2023[26](index=26&type=chunk) [Condensed Statements of Financial Position (Segment)](index=14&type=section&id=Condensed%20Statements%20of%20Financial%20Position%20%28Segment%29) As of June 30, 2023, the financial services segment reported total assets of 20,488,322 million JPY and total liabilities of 19,366,876 million JPY, with other segments also showing significant figures Segment Condensed Statements of Financial Position Key Metrics (As of June 30, 2023) | Metric | Financial Services Segment (million JPY) | Other Sony Segments (million JPY) | Consolidated Total (million JPY) | | :--- | :--- | :--- | :--- | | Total Assets | 20,488,322 | 13,067,682 | 32,860,017 | | Total Liabilities | 19,366,876 | 6,521,912 | 25,781,439 | | Total Equity | 1,121,446 | 6,545,770 | 7,078,578 | - Cash and cash equivalents in the financial services segment increased from **756,493 million JPY** on March 31, 2023, to **816,248 million JPY**[25](index=25&type=chunk) - Inventories in other Sony segments increased from **1,468,042 million JPY** on March 31, 2023, to **1,829,510 million JPY**[25](index=25&type=chunk) [Condensed Statements of Income (Segment)](index=17&type=section&id=Condensed%20Statements%20of%20Income%20%28Segment%29) For the three months ended June 30, 2023, the financial services segment saw substantial revenue growth but a decline in operating profit, while other segments reported increased sales and operating profit Segment Condensed Statements of Income Key Metrics (For the three months ended June 30, 2023) | Metric | Financial Services Segment (million JPY) | Other Sony Segments (million JPY) | Consolidated Total (million JPY) | | :--- | :--- | :--- | :--- | | Total sales and financial services revenue | 681,411 | 2,285,789 | 2,963,652 | | Operating profit | 54,514 | 198,531 | 253,042 | | Net profit | 38,609 | 229,372 | 217,942 | - Financial services expenses in the financial services segment significantly increased from **76,763 million JPY** to **626,846 million JPY**[28](index=28&type=chunk) - Cost of sales in other Sony segments increased from **1,394,565 million JPY** to **1,627,562 million JPY**[28](index=28&type=chunk) [Condensed Statements of Cash Flows (Segment)](index=18&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20%28Segment%29) For the three months ended June 30, 2023, the financial services segment's operating cash flow turned to a net inflow, primarily due to increased insurance contract liabilities, while other segments' operating cash outflow decreased Segment Condensed Statements of Cash Flows Key Metrics (For the three months ended June 30, 2023) | Metric | Financial Services Segment (million JPY) | Other Sony Segments (million JPY) | Consolidated Total (million JPY) | | :--- | :--- | :--- | :--- | | Net cash inflow (outflow) from operating activities | 118,065 | (80,669) | (12,669) | | Net cash outflow from investing activities | (5,601) | (193,076) | (198,647) | | Net cash inflow (outflow) from financing activities | (52,709) | 216,541 | 213,867 | | Cash and cash equivalents at end of period | 816,248 | 715,851 | 1,532,099 | - The increase in insurance contract liabilities of **561,732 million JPY** in the financial services segment was the primary reason for the positive operating cash flow[29](index=29&type=chunk) - Financing activities cash flow for other Sony segments shifted from outflow to an inflow of **216,541 million JPY**, mainly driven by a net increase in borrowings[29](index=29&type=chunk) [Going Concern Assumption](index=20&type=section&id=Going%20Concern%20Assumption) The applicability of the going concern assumption is not mentioned in this report - The going concern assumption is not applicable[31](index=31&type=chunk) [Accounting Policy and Other Information](index=20&type=section&id=Accounting%20Policy%20and%20Other%20Information) Sony adopted IFRS 17 "Insurance Contracts" from April 1, 2023, with retrospective restatement, and this section also provides key data for earnings per share calculation - Sony adopted IFRS 17 'Insurance Contracts' from April 1, 2023, and retrospectively restated financial statements for comparative periods[31](index=31&type=chunk)[32](index=32&type=chunk) - The retrospective application of IFRS 17 resulted in a change in Sony's total equity as of April 1, 2022, presented in the statements of changes in stockholders' equity[32](index=32&type=chunk) Earnings Per Share Calculation Key Data (For the three months ended June 30, 2023) | Metric | 2022 (million JPY/thousand shares) | 2023 (million JPY/thousand shares) | | :--- | :--- | :--- | | Net profit attributable to Sony Group Corporation stockholders | 261,094 | 217,545 | | Weighted average common shares outstanding for basic EPS | 1,236,489 | 1,234,242 | | Weighted average common shares outstanding for diluted EPS | 1,245,486 | 1,238,363 | [Business Segment Definition](index=21&type=section&id=Business%20Segment%20Definition) This section defines Sony Group's various business segments, including Game & Network Services, Music, Pictures, Entertainment, Technology & Services, Imaging & Sensing Solutions, and Financial Services, outlining their primary operations - The G&NS segment includes network services, manufacturing and sales of home gaming products, and software production and sales[34](index=34&type=chunk) - The Financial Services segment primarily includes individual life insurance, non-life insurance, and banking businesses in the Japanese market[34](index=34&type=chunk) - The I&SS segment primarily includes the image sensor business[34](index=34&type=chunk) [Change in Presentation](index=21&type=section&id=Change%20in%20Presentation) The condensed consolidated statements of cash flows for the three months ended June 30, 2022, were reclassified to align with the presentation for the period ended June 30, 2023 - The condensed consolidated statements of cash flows for the three months ended June 30, 2022, have been reclassified to align with the presentation for the same period in 2023[35](index=35&type=chunk) [Adjusted OIBDA and Adjusted EBITDA Results](index=22&type=section&id=Adjusted%20OIBDA%20and%20Adjusted%20EBITDA%20Results) Sony Group reported adjusted OIBDA and adjusted EBITDA results for the three months ended June 30, 2023, showing a decline in both metrics, primarily driven by the financial services segment - Sony considers three-year cumulative Adjusted EBITDA as the most important financial performance indicator (Group KPI) for its Fourth Mid-Range Plan (April 1, 2021, to March 31, 2024)[37](index=37&type=chunk) Segment Adjusted OIBDA and Consolidated Adjusted EBITDA (For the three months ended June 30, 2023) | Metric | 2022 (billion JPY) | 2023 (billion JPY) | Change (billion JPY) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | **Segment Adjusted OIBDA** | | | | | | Game & Network Services (G&NS) | 70.2 | 75.9 | 5.7 | 8.12% | | Music | 74.8 | 82.9 | 8.1 | 10.83% | | Pictures | 61.8 | 28.5 | (33.3) | -53.88% | | Entertainment, Technology & Services (ET&S) | 76.9 | 80.9 | 4.0 | 5.20% | | Imaging & Sensing Solutions (I&SS) | 67.3 | 70.0 | 2.7 | 4.01% | | Financial Services | 145.6 | 61.4 | (84.2) | -57.83% | | **Consolidated Adjusted OIBDA** | 488.9 | 396.1 | (92.8) | -18.98% | | **Consolidated Adjusted EBITDA** | 496.9 | 406.2 | (90.7) | -18.25% | - Adjusted OIBDA and Adjusted EBITDA are not IFRS measures, but Sony believes they are useful to investors[38](index=38&type=chunk) [Outlook for the Fiscal Year Ending March 31, 2024](index=23&type=section&id=Outlook%20for%20the%20Fiscal%20Year%20Ending%20March%2031%2C%202024) This section provides Sony Group's revised outlook for the fiscal year ending March 31, 2024, including consolidated and segment-specific performance expectations [Consolidated Outlook Revision](index=23&type=section&id=Consolidated%20Outlook%20Revision) Sony Group revised its FY2024 sales and net profit attributable to Sony Group Corporation stockholders upwards, while operating profit, pre-tax profit, adjusted OIBDA, and adjusted EBITDA forecasts remained unchanged FY2024 Consolidated Outlook Revision (billion JPY) | Metric | FY2023 Results | April Forecast | August Forecast | Change from April Forecast | | :--- | :--- | :--- | :--- | :--- | | Sales | 10,974.4 | 11,500 | 12,200 | +700 (+6.1%) | | Operating Profit | 1,302.4 | 1,170 | 1,170 | - | | Net Profit attributable to Sony Group Corporation stockholders | 1,005.3 | 840 | 860 | +20 (+2.4%) | | Adjusted OIBDA | 1,816.9 | 1,770 | 1,770 | - | | Adjusted EBITDA | 1,797.6 | 1,750 | 1,750 | - | - Sales forecast was revised upwards primarily due to higher-than-expected sales in the Financial Services, Game & Network Services, Music, and Entertainment, Technology & Services segments, partially offset by lower-than-expected sales in the Pictures and Imaging & Sensing Solutions segments[43](index=43&type=chunk) - Net profit attributable to Sony Group Corporation stockholders was revised upwards, mainly due to an expected decrease in income tax expenses[45](index=45&type=chunk) - Assumed foreign exchange rates: 1 USD to approximately **135 JPY** (previously 130 JPY), and 1 Euro to approximately **146 JPY** (previously 138 JPY)[43](index=43&type=chunk) [Segment-Specific Outlook Revision](index=24&type=section&id=Segment-Specific%20Outlook%20Revision) This section details the revised FY2024 sales, operating profit, and adjusted OIBDA forecasts for each business segment, reflecting specific business conditions and external factors FY2024 Segment-Specific Outlook Revision (billion JPY) | Segment | Metric | FY2023 Results | April Forecast | August Forecast | | :--- | :--- | :--- | :--- | :--- | | **Game & Network Services (G&NS)** | Sales | 3,644.6 | 3,900 | 4,170 | | | Operating Profit | 250.0 | 270 | 270 | | | Adjusted OIBDA | 337.0 | 365 | 375 | | **Music** | Sales | 1,380.6 | 1,410 | 1,490 | | | Operating Profit | 263.1 | 265 | 280 | | | Adjusted OIBDA | 316.4 | 325 | 335 | | **Pictures** | Sales | 1,369.4 | 1,520 | 1,470 | | | Operating Profit | 119.3 | 120 | 120 | | **Entertainment, Technology & Services (ET&S)** | Sales | 2,476.0 | 2,380 | 2,430 | | **Imaging & Sensing Solutions (I&SS)** | Sales | 1,402.2 | 1,600 | 1,560 | | | Operating Profit | 212.2 | 200 | 180 | | | Adjusted OIBDA | 408.9 | 445 | 425 | | **Financial Services** | Financial Services Revenue | 889.1 | 870 | 1,320 | | | Operating Profit | 318.1 | 180 | 180 | | | Adjusted OIBDA | 322.4 | 205 | 205 | [Game & Network Services (G&NS) Outlook](index=25&type=section&id=Game%20%26%20Network%20Services%20%28G%26NS%29%20Outlook) The G&NS segment's sales are projected to exceed the April forecast due to increased non-first-party game sales and foreign exchange impacts, while profit forecasts remain stable despite hardware profitability challenges - Sales are expected to be higher than the April forecast, mainly due to increased sales of non-first-party titles and add-on content, and foreign exchange impacts[49](index=49&type=chunk) - Operating profit and Adjusted OIBDA are expected to remain unchanged, primarily due to the offsetting effects of deteriorating PlayStation®5 hardware profitability from promotions and sales channel mix changes, and adjustments to some first-party game release dates[49](index=49&type=chunk) [Music Outlook](index=25&type=section&id=Music%20Outlook) The Music segment's sales and operating profit are expected to surpass April forecasts, primarily driven by favorable foreign exchange rates and a revaluation gain from consolidating a previously equity-accounted company - Sales are expected to be higher than the April forecast, mainly due to foreign exchange impacts[50](index=50&type=chunk) - Operating profit is expected to be higher than the April forecast, primarily due to positive foreign exchange impacts and a revaluation gain from consolidating a previously equity-accounted company in Q1 FY2023[50](index=50&type=chunk) [Pictures Outlook](index=25&type=section&id=Pictures%20Outlook) The Pictures segment's sales are projected to be lower than the April forecast due to WGA and SAG-AFTRA strikes causing production delays, though profit forecasts remain stable due to strong film performance and favorable exchange rates - Sales are expected to be lower than the April forecast, mainly due to the impact of WGA and SAG-AFTRA strikes, leading to delays in film releases and TV series deliveries[51](index=51&type=chunk) - Operating profit and Adjusted OIBDA forecasts remain unchanged, as the sales decline due to strikes is offset by strong performance of released films and positive foreign exchange impacts[51](index=51&type=chunk) [Entertainment, Technology & Services (ET&S) Outlook](index=25&type=section&id=Entertainment%2C%20Technology%20%26%20Services%20%28ET%26S%29%20Outlook) The ET&S segment's sales are expected to exceed the April forecast primarily due to foreign exchange impacts, with operating profit and adjusted OIBDA forecasts remaining unchanged - Sales are expected to be higher than the April forecast, mainly due to foreign exchange impacts[52](index=52&type=chunk) - Operating profit and Adjusted OIBDA forecasts remain unchanged[52](index=52&type=chunk) [Imaging & Sensing Solutions (I&SS) Outlook](index=25&type=section&id=Imaging%20%26%20Sensing%20Solutions%20%28I%26SS%29%20Outlook) The I&SS segment's sales, operating profit, and adjusted OIBDA are projected to be lower than April forecasts, mainly due to weaker-than-expected image sensor sales for mobile products and industrial applications - Sales are expected to be lower than the April forecast, mainly due to lower-than-expected sales volume of image sensors for mobile products, industrial, and social infrastructure applications[53](index=53&type=chunk) - Operating profit and Adjusted OIBDA are expected to be lower than the April forecast, primarily due to the sales decline, partially offset by positive foreign exchange impacts[53](index=53&type=chunk) [Financial Services Outlook](index=25&type=section&id=Financial%20Services%20Outlook) Financial services revenue is expected to exceed the April forecast due to increased net gains on investments in separate accounts at Sony Life, while operating profit and adjusted OIBDA forecasts remain unchanged - Financial services revenue is expected to be higher than the April forecast, mainly due to increased net gains on investments in separate accounts at Sony Life Insurance Inc[54](index=54&type=chunk) - Operating profit and Adjusted OIBDA forecasts remain unchanged[54](index=54&type=chunk) - The retrospective application of IFRS 17 resulted in a decrease in financial services revenue for FY2023, but an increase in operating profit and Adjusted OIBDA due to the revaluation of insurance contract liabilities[56](index=56&type=chunk) [All Other, Corporate and Elimination Outlook](index=24&type=section&id=All%20Other%2C%20Corporate%20and%20Elimination%20Outlook) The "All Other, Corporate and Elimination" segment's operating loss is projected to decrease from the April forecast, while the adjusted OIBDA loss forecast remains unchanged All Other, Corporate and Elimination Outlook (billion JPY) | Metric | FY2023 Results | April Forecast | August Forecast | | :--- | :--- | :--- | :--- | | Operating Loss | (39.8) | (45) | (40) | | Adjusted OIBDA | (12.9) | (15) | (15) | [Notes about Financial Performance of the Music, Pictures and Financial Services segments](index=26&type=section&id=Notes%20about%20Financial%20Performance%20of%20the%20Music%2C%20Pictures%20and%20Financial%20Services%20segments) This section clarifies the reporting methods for the Music, Pictures, and Financial Services segments, noting currency conversions and differences from Japanese statutory disclosures - Music segment results include JPY-denominated results of Sony Music Entertainment (Japan) Inc. and USD-denominated results of Sony Music Entertainment and Sony Music Publishing LLC global subsidiaries converted to JPY[58](index=58&type=chunk) - Pictures segment results are USD-denominated results of Sony Pictures Entertainment Inc. global subsidiaries converted to JPY[59](index=59&type=chunk) - Financial Services segment results include Sony Financial Group Inc. and its consolidated subsidiaries, differing from results disclosed on a Japanese statutory basis[60](index=60&type=chunk) [Supplemental Information Regarding Adjusted OIBDA and Adjusted EBITDA](index=26&type=section&id=Supplemental%20Information%20Regarding%20Adjusted%20OIBDA%20and%20Adjusted%20EBITDA) This section provides supplementary information on Adjusted OIBDA and Adjusted EBITDA, including their definitions, calculation methodologies, and reconciliation to IFRS metrics, highlighting their importance for long-term performance assessment - Adjusted OIBDA and Adjusted EBITDA are important financial performance indicators used by Sony for long-term management and assessing sustainable profitability[61](index=61&type=chunk) - Adjusted OIBDA = Operating profit + Depreciation and amortization expenses (excluding amortization of film costs, broadcast rights, internally developed game content, and master recordings) - Non-recurring gains or losses as deemed by Sony[62](index=62&type=chunk) - Adjusted EBITDA = Net profit attributable to Sony Group Corporation stockholders + Net profit attributable to non-controlling interests + Income tax + Net interest expense recorded in finance income and finance costs - Net revaluation gains or losses on equity instruments recorded in finance income and finance costs + Depreciation and amortization expenses (excluding amortization of film costs, broadcast rights, internally developed game content, and master recordings) - Non-recurring gains or losses as deemed by Sony[62](index=62&type=chunk) [Reconciliation of Adjusted OIBDA (Q1 FY2023)](index=27&type=section&id=Reconciliation%20of%20Adjusted%20OIBDA%20%28Q1%20FY2023%29) This reconciliation table shows the adjusted OIBDA for each business segment and the consolidated total for the three months ended June 30, 2023, highlighting a significant decline in financial services and a gain in music Q1 FY2023 Adjusted OIBDA Reconciliation Table (billion JPY) | Segment | Operating Profit (2023) | Depreciation and Amortization Expenses (2023) | Non-recurring Gains (Losses) (2023) | Adjusted OIBDA (2023) | | :--- | :--- | :--- | :--- | :--- | | Game & Network Services (G&NS) | 49.2 | 26.7 | - | 75.9 | | Music | 73.4 | 15.6 | (6.0) | 82.9 | | Pictures | 16.0 | 12.5 | - | 28.5 | | Entertainment, Technology & Services (ET&S) | 55.6 | 25.2 | - | 80.9 | | Imaging & Sensing Solutions (I&SS) | 12.7 | 57.3 | - | 70.0 | | Financial Services | 54.5 | 6.9 | - | 61.4 | | Consolidated Total | 253.0 | 149.1 | (6.0) | 396.1 | - The Music segment recognized **6.0 billion JPY** in non-recurring revaluation gains in Q1 FY2023[64](index=64&type=chunk)[68](index=68&type=chunk) [Reconciliation of Adjusted EBITDA (Q1 FY2023)](index=28&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%20%28Q1%20FY2023%29) This reconciliation table presents the consolidated adjusted EBITDA for the three months ended June 30, 2023, showing a decrease from the prior year, influenced by lower net profit and changes in equity instrument revaluation gains Q1 FY2023 Adjusted EBITDA Reconciliation Table (billion JPY) | Metric | 2022 (billion JPY) | 2023 (billion JPY) | | :--- | :--- | :--- | | Net profit attributable to Sony Group Corporation stockholders | 261.1 | 217.5 | | Income tax | 88.1 | 58.1 | | Net revaluation gains (losses) on equity instruments | 22.7 | (13.4) | | Depreciation and amortization expenses | 124.0 | 149.1 | | Non-recurring gains (losses) | - | (6.0) | | Adjusted EBITDA | 496.9 | 406.2 | - In Q1 FY2023, net revaluation gains on equity instruments were negative **13.4 billion JPY**, compared to positive **22.7 billion JPY** in the prior year period[66](index=66&type=chunk) [Reconciliation of Adjusted OIBDA (FY2023)](index=29&type=section&id=Reconciliation%20of%20Adjusted%20OIBDA%20%28FY2023%29) This reconciliation table details the adjusted OIBDA for each business segment and the consolidated total for the fiscal year ended March 31, 2023, including non-recurring gains in music and financial services FY2023 Adjusted OIBDA Reconciliation Table (billion JPY) | Segment | Operating Profit | Depreciation and Amortization Expenses | Non-recurring Gains (Losses) | Adjusted OIBDA | | :--- | :--- | :--- | :--- | :--- | | Game & Network Services (G&NS) | 250.0 | 87.0 | - | 337.0 | | Music | 263.1 | 59.0 | (5.7) | 316.4 | | Pictures | 119.3 | 48.9 | - | 168.2 | | Entertainment, Technology & Services (ET&S) | 179.5 | 97.4 | - | 276.9 | | Imaging & Sensing Solutions (I&SS) | 212.2 | 196.7 | - | 408.9 | | Financial Services | 318.1 | 26.3 | (22.1) | 322.4 | | Consolidated Total | 1,302.4 | 542.2 | (27.8) | 1,816.9 | - The Music segment includes **5.7 billion JPY** in non-recurring gains related to recorded music and music publishing litigation[70](index=70&type=chunk)[74](index=74&type=chunk) - The Financial Services segment includes **22.1 billion JPY** in recoveries from unauthorized withdrawals by a Sony Life subsidiary[70](index=70&type=chunk)[74](index=74&type=chunk) [Reconciliation of Adjusted EBITDA (FY2023)](index=30&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%20%28FY2023%29) This reconciliation table presents the consolidated adjusted EBITDA for the fiscal year ended March 31, 2023, totaling 1,797.6 billion JPY, which includes 27.8 billion JPY in non-recurring gains FY2023 Adjusted EBITDA Reconciliation Table (billion JPY) | Metric | Amount (billion JPY) | | :--- | :--- | | Net profit attributable to Sony Group Corporation stockholders | 1,005.3 | | Net profit attributable to non-controlling interests | 6.5 | | Income tax | 262.7 | | Net interest expense | 4.0 | | Net revaluation gains (losses) on equity instruments | 4.6 | | Depreciation and amortization expenses | 542.2 | | Non-recurring gains (losses) | (27.8) | | Adjusted EBITDA | 1,797.6 | - Total non-recurring gains (losses) for FY2023 amounted to negative **27.8 billion JPY**, primarily comprising litigation settlement gains in the Music segment and fund recoveries in the Financial Services segment[72](index=72&type=chunk)[74](index=74&type=chunk) [Cautionary Statement](index=31&type=section&id=Cautionary%20Statement) This section contains Sony's forward-looking statements and warns investors that actual results may differ significantly due to various risks and uncertainties, including market competition, economic conditions, and cybersecurity - Forward-looking statements are based on management's current assumptions, judgments, and beliefs, and actual results may differ materially due to various risks and uncertainties[75](index=75&type=chunk) - Key risks and uncertainties include product quality and customer satisfaction, market competition, technological developments, effectiveness of hardware, software, and content integration strategies, changes in laws and government policies, global economic and political conditions, foreign exchange rate fluctuations, cybersecurity risks, and outcomes of litigation and regulatory proceedings[76](index=76&type=chunk) - The ongoing situation in Ukraine and Russia may exacerbate many of the aforementioned risks and uncertainties[76](index=76&type=chunk)

Financial Performance - For the three months ended June 30, 2023, total sales and financial services revenue increased by 32.9% to ¥2,963,652 million, compared to ¥2,229,760 million in the same period of 2022[11]. - Net income attributable to Sony Group Corporation's stockholders for the same period decreased by 16.7% to ¥217,545 million, down from ¥261,094 million in the prior year[11]. - Operating income for the three months ended June 30, 2023, was ¥253,042 million, a decrease of 30.7% from ¥364,865 million in the same period of 2022[11]. - The company reported a total comprehensive income of ¥445,459 million for the three months ended June 30, 2023, compared to ¥439,546 million for the same period in 2022, reflecting a slight increase of approximately 1.0%[16]. - The company declared dividends of ¥49,380 million for the three months ended June 30, 2023, compared to ¥43,295 million in the same period of 2022, representing an increase of approximately 14.5%[17]. - The net income for the three months ended June 30, 2023, was ¥217,942 million, compared to ¥261,204 million for the same period in 2022, indicating a decrease of about 16.5%[16]. - The company reported a significant increase in other financial services revenue, which rose to ¥536,359 million, up from ¥78,153 million, marking a growth of 586.5%[11]. Assets and Liabilities - The total assets as of June 30, 2023, reached ¥32,860,017 million, reflecting an increase of 5.5% from ¥31,154,095 million as of March 31, 2023[9]. - Current liabilities increased by 6.8% to ¥9,954,419 million as of June 30, 2023, compared to ¥9,318,409 million as of March 31, 2023[9]. - Sony's cash and cash equivalents increased by 3.5% to ¥1,532,099 million as of June 30, 2023, compared to ¥1,480,900 million as of March 31, 2023[8]. - The company’s equity attributable to Sony Group Corporation's stockholders increased by 6.1% to ¥7,002,988 million as of June 30, 2023, compared to ¥6,598,537 million as of March 31, 2023[9]. - Total current assets for Sony without Financial Services increased to ¥5,096,511 million as of June 30, 2023, up from ¥4,032,200 million as of April 1, 2022, representing a growth of approximately 26.4%[25]. - Long-term debt increased to ¥1,807,171, up from ¥1,767,696, indicating a growth of 2.2%[26]. - Total non-current liabilities amounted to ¥15,827,020, reflecting a growth of 4.3% year-over-year[26]. Segment Performance - Game & Network Services segment reported a revenue increase of ¥166,542 million, totaling ¥755,003 million in Q2 2023, up from ¥588,461 million in Q2 2022, a growth of 28.3%[22]. - Financial Services segment saw a significant revenue increase of ¥465,386 million, reaching ¥679,109 million in Q2 2023, compared to ¥213,723 million in Q2 2022, marking a growth of 218.5%[22]. - The Music segment's operating income increased by ¥12,407 million, totaling ¥73,380 million in Q2 2023, compared to ¥60,973 million in Q2 2022, reflecting a growth of 20.3%[20]. - The Pictures segment reported a decline in revenue of ¥21,069 million, totaling ¥320,178 million in Q2 2023, down from ¥341,247 million in Q2 2022, a decrease of 6.2%[22]. - The total operating income for the Financial Services segment decreased by ¥84,694 million, resulting in ¥54,514 million in Q2 2023, down from ¥139,208 million in Q2 2022, a decline of 60.8%[20]. Cash Flow and Investments - Cash flows from operating activities for the three months ended June 30, 2023, showed a net cash used of ¥12,669 million, a significant improvement from ¥430,018 million used in the same period of 2022[16]. - Payments for property, plant, and equipment and other intangible assets for the three months ended June 30, 2023, were ¥130,501 million, an increase from ¥106,968 million in the same period of 2022, reflecting a growth of approximately 22.0%[17]. - The net cash provided by financing activities for the three months ended June 30, 2023, was ¥213,867 million, a significant turnaround from the net cash used of ¥29,977 million in the same period of 2022[17]. - Cash and cash equivalents at the end of the period on June 30, 2023, were ¥1,532,099 million, up from ¥1,371,867 million at the end of the previous fiscal year, marking an increase of about 11.7%[17]. Future Outlook - The company anticipates continued growth in financial services revenue for the fiscal year ending March 31, 2024, driven by strong performance in insurance and other financial services[4]. - The forecast for consolidated sales for the fiscal year ending March 31, 2024, has been revised to ¥12,200 billion, an increase of ¥700 billion or 6.1% from the previous forecast[42]. - Financial Services revenue is forecasted to increase to ¥1,320 billion, primarily due to net gains on investments at Sony Life Insurance[48]. - The Pictures segment is expected to see lower sales due to strikes affecting theatrical releases, with sales forecasted at ¥1,470 billion[48]. - The company emphasizes that actual results may differ materially from forecasts due to various uncertainties[57].

Financial Performance - Sony's total consolidated sales to external customers increased from ¥9,921,513 million in fiscal year 2022 to ¥11,539,837 million in fiscal year 2023, representing a growth of approximately 16.3%[165]. - Sales in the United States rose significantly from ¥2,766,021 million in 2022 to ¥3,401,402 million in 2023, marking an increase of about 22.9%[165]. - Sales in Europe also saw growth, increasing from ¥1,870,091 million in 2022 to ¥2,190,311 million in 2023, which is an increase of approximately 17.1%[165]. - The Asia-Pacific region experienced a notable increase in sales from ¥1,149,261 million in 2022 to ¥1,563,414 million in 2023, reflecting a growth of around 36.0%[165]. - For the fiscal year ended March 31, 2023, Sony's sales increased by ¥1,618.3 billion year-on-year to ¥11,539.8 billion, driven by significant growth in the G&NS, I&SS, Music, and Pictures segments[248][249]. - Operating income for the fiscal year ended March 31, 2023, was ¥1,208.2 billion, a slight increase from ¥1,202.3 billion in the previous year[248]. - Net income attributable to Sony Group Corporation's stockholders rose to ¥937.1 billion for the fiscal year ended March 31, 2023, compared to ¥882.2 billion in the prior year[248]. - Cost of sales increased by ¥1,328.9 billion year-on-year to ¥7,174.7 billion, with the ratio of cost of sales to sales deteriorating from 69.6% to 71.1%[251]. - R&D costs rose to ¥735.7 billion, representing 7.3% of sales, a slight decrease from 7.4% in the previous fiscal year[252]. - Selling, general and administrative (SGA) expenses increased by ¥380.7 billion year-on-year to ¥1,969.2 billion, with the ratio of SGA expenses to sales worsening from 18.9% to 19.5%[252]. Capital Expenditures and Investments - In the fiscal year ended March 31, 2023, Sony's capital expenditures were 809.6 billion yen, an increase from 697.2 billion yen in the previous fiscal year[120]. - Sony invested approximately 381.1 billion yen in the Imaging & Sensing Solutions segment, including 355.9 billion yen to increase image sensor production capacity[121]. - Sony's stake in the joint venture Sony Honda Mobility is 50%, established in September 2022[117]. - In July 2022, Sony Interactive Entertainment acquired Bungie, an independent video game developer[117]. - Sony plans to enhance its business structure focusing on profitability and growth, aiming to create new business models and expand into new markets[281]. - The company intends to invest in virtual production and software solutions to enable new creative expressions and enhance its entertainment offerings[282]. Business Segments - Sony Interactive Entertainment LLC is responsible for the development and marketing of PlayStation hardware, software, and network services[124]. - Sony Music Entertainment (SME) focuses on the development, production, and distribution of recorded music globally, excluding Japan[126]. - Sony Pictures Entertainment (SPE) includes production and distribution of live-action and animated motion pictures, with various production organizations under its umbrella[129]. - Sony's Media Networks segment operates television networks and direct-to-consumer streaming services, including Crunchyroll and SonyLIV[132]. - The Entertainment, Technology & Services (ET&S) segment was renamed from Electronics Products & Solutions effective April 2022, without reclassification of businesses[122]. Financial Services - Sony's financial services include life and non-life insurance operations through its Japanese subsidiaries[123]. - Sony's financial services segment includes life insurance, non-life insurance, and banking operations, contributing to its diversified revenue streams[137][161][162]. - Sony Life employed 5,402 Lifeplanner® sales specialists as of March 31, 2023, indicating a strong sales force for its life insurance products[159]. - Sony Assurance's direct marketing model has enabled it to lower costs and offer competitively priced premiums, enhancing its market position in Japan[161]. - Sony Bank focuses on asset management and borrowing needs, providing a range of products including yen and foreign currency deposits, investment trusts, and mortgages[162]. - Sony's Financial Services segment maintains a high solvency margin ratio, exceeding Japanese domestic minimum requirements[180]. - Sony Bank has sustained a sufficient capital adequacy ratio in line with Japanese domestic criteria, ensuring financial stability[180]. - The company faces significant competition in Japan's retail financial services market, including traditional banks and online financial institutions[179]. - Sony's insurance businesses are subject to the Insurance Business Act, which mandates maintaining specified reserves and a minimum solvency margin ratio[183]. Sustainability Initiatives - The Sustainability Department promotes initiatives across Sony's business units, focusing on sustainability KPIs that are integrated into performance evaluations[198]. - For the fiscal year ended March 31, 2023, Sony's sustainability KPIs included reducing virgin oil-based plastic use and implementing renewable energy at manufacturing facilities[200]. - Sony identified "Climate Change," "DE&I," "Respect for Human Rights," and "Technology for Sustainability" as priority topics for sustainability initiatives[204]. - The company acknowledges the critical issue of climate change and aims to reduce its environmental impact while leveraging its diverse technologies[207]. - Sony aims to achieve net-zero emissions across all scopes by 2040, with a target to reduce Scope 1 and 2 GHG emissions to net-zero by 2030 and Scope 3 emissions by 45% compared to FY 2019 by 2035[213]. - By 2030, Sony plans to use 100% renewable electricity at its business sites, with a target of 35% renewable energy usage by 2025[213]. - Sony's net-zero target for 2040 was approved by the Science Based Targets initiative (SBTi) in August 2022, reflecting its commitment to climate action[209]. - The company is exploring investments in start-ups focused on carbon removal and developing indices that integrate biodiversity and carbon fixation[213]. Employee Diversity and Inclusion - The ratio of employees with prior experience at other companies in Japan was 52.5% for the fiscal year ended March 31, 2023, indicating a strong focus on diverse talent acquisition[228]. - As of March 31, 2023, the ratio of women to men in the workforce at Sony Group was 34.0%, with 30.0% in management positions, highlighting ongoing efforts to improve gender diversity[230]. - Sony has committed to creating inclusive work environments, signing the Valuable 500 initiative focused on the inclusion of people with disabilities[236]. - The company has implemented various programs to foster employee diversity and inclusivity, aligning with its sustainable growth strategy[237]. - Sony's diverse businesses are supported by approximately 110,000 employees worldwide, emphasizing the importance of employee diversity for creative innovation[220]. Research and Development - Sony's imaging and sensing solutions segment primarily develops CMOS image sensors, which are widely used in smartphones and other applications[136]. - The company has established a strong competitive position through innovative product introductions and a focus on high-quality user experiences across its product lines[173]. - Sony's R&D includes the development of environmentally conscious materials and technologies aimed at reducing power consumption in products[216]. - Sony's initiatives for improving accessibility include employing inclusive design and participating in events like the CSUN Assistive Technology Conference[217]. - The company has established the Sony Group AI Ethics Committee to strengthen its framework for AI ethics and ensure responsible AI development[218].

Unidentified Analyst Unidentified Analyst Thank you very much for the question. So this is about the games. For this fiscal year, the target for PS5 is 25 million units. The reason is because compared to the past PS generations, compared to them, in a single fiscal year, 25 million units, if we can achieve that, it will be the highest level ever. The reason why we believe that this is possible, PS4, customers exist now and the PS4 usage use them and they switch to PS5. And we looked at how much would be swi ...

And we are in the middle of delivering this products. And in regards to the game and entertainment service, we are not worried about the inventory level actually, and the inventory level when we think about the sales momentum and also the PS4, so now the seasonality, now that it's in a fourth year in the past with the Now, anybody who has a question, please raise your question. Next, participant online [inaudible] from Reuters, Takinaka from Reuters. Yes, it is 19 million units. It was 18 million, and we ra ...

SONY Q2 FY2022 Consolidated Financial Results (Three months ended September 30, 2022) November 1, 2022 Sony Group Corporation | --- | --- | --- | --- | --- | --- | |-------------------------------------------------------------------------------------------------------|-------------|-------|-------------|---------------------------|-------| | Q2 FY2022 Consolidated Results | Q2 FY21 | | Q2 FY22 | Change | | | Sales* | 2,369.4 | | 2,751.9 | +382.5 bln yen （+16%） | | | Operating income | 318.5 | | 344.0 | +25. ...