Sony has signed an NDA with Paramount Global, a move that will give it access to the books and allow deal talks to move ahead, Deadline hears. Sony and private equity giant Apollo kicked things off previously with a preliminary bid of $26 billion, but what's being contemplated now is not that, but something narrower. A look at the books is necessary to move forward in any case. The non-disclosure agreement comes two weeks after a Paramount's monthlong exclusive negotiating window with David Ellison's Skydan ...

Financial Data and Key Metrics Changes - For FY '23, consolidated sales reached JPY 13,020.8 billion, a record high, with operating income at JPY 1,208.8 billion and net income at JPY 970.6 billion [76] - The forecast for FY '24 includes sales of JPY 2,310 billion, operating income of JPY 1,275 billion, and net income of JPY 925 billion [73] - Operating cash flow is expected to increase by 19% year-on-year to JPY 1,400 billion [73] Business Line Data and Key Metrics Changes - The G&NS segment saw a 17% year-on-year sales increase to JPY 4,267.7 billion, with operating income rising to JPY 290.2 billion [78] - The Music segment's sales increased by 17% year-on-year to JPY 1,690 billion, with operating income at JPY 301.7 billion [85] - The Pictures segment's sales rose by 9% year-on-year to JPY 1,493.1 billion, while operating income remained flat at JPY 177 billion [89] - The I&SS segment's sales increased by 14% year-on-year to JPY 1,602.7 billion, but operating income decreased to JPY 103.5 billion [96] Market Data and Key Metrics Changes - Monthly active users on the PlayStation platform reached 180 million accounts, a 9% increase year-on-year, with total playtime increasing by 15% [81] - The smartphone market is expected to recover slowly, impacting the I&SS segment, but demand for larger die-sized sensors is anticipated to drive growth [52][97] Company Strategy and Development Direction - The fifth midrange plan focuses on maximizing synergies across the group and enhancing corporate value through continuous growth [111] - The strategy includes expanding the PlayStation console base and enhancing first-party software titles [115] - The company aims to grow faster than the market in the Music segment by increasing monetization opportunities and expanding into emerging markets [116] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the uncertain and volatile business environment but aims to strengthen the earnings base and improve investment efficiency [112] - The company expects to harvest the benefits of investments made in the previous midrange plan during the current period [25] Other Important Information - The company plans to maintain a total payout ratio of 40% by FY '26, with a focus on balanced capital allocation and strengthening returns to shareholders [55][57] - The impact of foreign exchange rates resulted in a positive JPY 140 billion effect on income for FY '23 [51] Q&A Session All Questions and Answers Question: What is the company's view on enhancing enterprise value and capital allocation? - The company plans to reduce investment and increase returns to shareholders compared to the previous midrange plan, focusing on sustainable enterprise value growth [22][24] Question: How does the company view the impact of the weaker yen on overseas M&A? - The company believes that while the weaker yen presents challenges, it does not significantly hinder overseas M&A opportunities as returns are evaluated against hurdle rates [34] Question: What is the expected timeline for returns on studio acquisitions? - The company expects returns from studio acquisitions to be realized over the next three to five years, with a focus on effective portfolio management [39][59] Question: What is the forecast for the image sensor business amid a shrinking smartphone market? - The company anticipates growth in the image sensor business due to increased demand for larger die-sized sensors, despite a slow recovery in the smartphone market [52][97]

Financial Performance - For the fiscal year ended March 31, 2024, Sony Group Corporation reported total sales and financial services revenue of ¥13,020,768 million, an increase of ¥2,046,395 million or 18.6% compared to the previous year[8]. - The net income attributable to Sony Group Corporation's stockholders for the fiscal year was ¥970,573 million, a decrease of ¥34,704 million or 3.5% from the prior year[8]. - Operating income for the fiscal year was reported at ¥1,208,831 million, a decline of ¥93,558 million or 7.8% from the previous year[8]. - Total sales and financial services revenue increased by 14.5% from ¥3,040,845 million in Q1 2023 to ¥3,480,966 million in Q1 2024, with a change of ¥440,121 million[10]. - Net income attributable to Sony Group Corporation's stockholders increased by 34.1% from ¥140,981 million in Q1 2023 to ¥189,005 million in Q1 2024, a change of ¥48,024 million[10]. - For the fiscal year 2024, net income attributable to Sony Group Corporation's stockholders was ¥1,005,277 million, up from ¥970,573 million in 2023, indicating a growth of approximately 3.6%[28]. - Operating income for the fiscal year 2024 was ¥1,035,271 million, compared to ¥983,321 million in 2023, reflecting an increase of about 5.3%[28]. Assets and Liabilities - Total assets as of March 31, 2024, reached ¥34,107,490 million, reflecting an increase of ¥2,953,395 million or 9.5% from the previous year[7]. - Sony's total liabilities rose to ¥26,351,385 million, an increase of ¥1,854,440 million or 7.6% compared to March 31, 2023[7]. - The company's retained earnings increased to ¥6,002,407 million, up by ¥909,965 million or 17.9% year-over-year[7]. - Sony's total equity increased to ¥7,756,105 million, up by ¥1,098,955 million or 16.5% year-over-year[7]. Cash Flow - Cash flows from operating activities improved dramatically, increasing from ¥314,691 million in FY 2023 to ¥1,373,213 million in FY 2024[13]. - Cash and cash equivalents at the end of FY 2024 were ¥1,907,113 million, up from ¥1,480,900 million at the end of FY 2023, reflecting a net increase of ¥426,213 million[14]. - The company reported a net cash used in investing activities of ¥818,886 million for the fiscal year 2024, compared to ¥1,052,664 million in 2023, indicating a decrease in cash outflow[30]. - The net cash provided by financing activities for the fiscal year 2024 was ¥84,300 million, a decrease from ¥261,969 million in 2023, indicating a reduction in financing inflows[30]. Segment Performance - Game & Network Services segment saw a revenue increase of ¥634,461 million, totaling ¥4,172,994 million in 2024, up from ¥3,538,533 million in 2023, a growth of about 17.9%[15]. - Financial Services segment revenue surged by ¥882,199 million, reaching ¥1,760,731 million in 2024, compared to ¥878,532 million in 2023, marking an increase of over 100%[15]. - Digital Software and Add-on Content within the Game & Network Services segment increased by ¥411,541 million, totaling ¥1,934,586 million in 2024, compared to ¥1,523,045 million in 2023, a growth of about 27%[24]. - Recorded Music - Streaming revenue in the Music segment increased by ¥110,585 million, reaching ¥709,453 million in 2024, compared to ¥598,868 million in 2023, an increase of approximately 18.5%[24]. - Sales in the Imaging & Sensing Solutions segment increased by 200.6 billion yen (14%) year-on-year to 1 trillion 602.7 billion yen, driven by higher sales of image sensors for mobile products[94]. Future Outlook - The company plans to continue expanding its market presence and investing in new technologies for the fiscal year ending March 31, 2025[4]. - For the fiscal year ending March 31, 2025, consolidated sales are forecasted to decrease by 5.5% to 12,310 billion yen[67]. - Operating income is expected to increase by 5.5% to 1,275 billion yen for the fiscal year ending March 31, 2025[67]. - Net cash provided by operating activities is expected to increase by 18.9% to 1,400 billion yen for the fiscal year ending March 31, 2025[67]. Shareholder Returns - The company declared dividends of ¥98,685 million in FY 2024, compared to ¥86,635 million in FY 2023, reflecting an increase of 13.5%[14]. - Sony's total dividend per share for the fiscal year ending March 31, 2024, is 85 Yen, an increase from 75 Yen in the previous year[114]. - Sony plans to repurchase up to 30 million shares at a maximum total purchase price of ¥250 billion, effective from May 15, 2024, to May 14, 2025[40]. - A stock split will occur on October 1, 2024, with each share split into five shares, increasing the total number of issued shares from approximately 4.99 billion to 6.24 billion[42][43].

Financial Data and Key Metrics Changes - Consolidated sales for Q3 FY 2023 reached ¥3,747.5 billion, a significant increase of 22% year-on-year, marking a record high for the quarter [5] - Consolidated operating income increased by ¥41.8 billion year-on-year to ¥463.3 billion, the second highest quarterly level [5] - Net income rose by ¥42.4 billion year-on-year to ¥363.9 billion, while adjusted EBITDA increased by ¥75.5 billion to ¥605 billion [5][6] - The nine-month cumulative consolidated operating cash flow, excluding the Financial Services segment, was ¥618.5 billion [6] Business Segment Data and Key Metrics Changes Game & Network Services (G&NS) - Q3 sales increased by 16% year-on-year to ¥1,444.4 billion, driven by higher third-party software sales and favorable foreign exchange rates [8] - Operating income decreased by ¥30.1 billion year-on-year to ¥86.1 billion due to lower profitability of PlayStation 5 hardware [10] - PS5 hardware unit sales reached 8.2 million units in the quarter, falling short of the annual target of 25 million units but achieving record quarterly sales [12] Music Segment - Q3 sales increased by 16% year-on-year to ¥422.1 billion, with operating income rising by ¥13.1 billion to ¥76.1 billion [20] - Streaming revenue grew by 12% for Recorded Music and 17% for Music Publishing [21] Pictures Segment - Q3 sales increased by 10% year-on-year to ¥366.3 billion, with operating income rising significantly by ¥16.2 billion to ¥41.6 billion [26] - The impact of Hollywood strikes is expected to peak next fiscal year, affecting profits [29] Entertainment, Technology & Services Segment - Q3 sales decreased by 2% year-on-year to ¥735.7 billion, with operating income down by ¥3.9 billion to ¥77.2 billion [32] Imaging & Sensing Solutions Segment - Q3 sales increased by 21% year-on-year to ¥505.2 billion, with operating income rising by ¥14.9 billion to ¥99.7 billion, both record highs for the segment [37] Financial Services Segment - Q3 revenue increased by ¥287.3 billion year-on-year to ¥311.7 billion, with operating income rising by ¥30.2 billion to ¥77.3 billion [44] Market Data and Key Metrics Changes - Monthly active users (MAU) for gaming reached a record high of 120 million accounts, with total gameplay time increasing by 13% year-on-year [13] - The cumulative sales of Marvel's Spider-Man 2 exceeded 10 million copies, contributing significantly to profits [14] Company Strategy and Development Direction - The company aims to optimize sales of PS5 hardware while balancing profitability, anticipating a gradual decline in unit sales from the next fiscal year [16] - Focus on producing high-quality first-party software and developing live service games, with no major franchise titles planned for next fiscal year [18] - The company plans to expand opportunities in the music business through strategic acquisitions and collaborations [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving stable revenue growth in the Music segment due to the expansion of the streaming market [22] - The company expects operating income for the next fiscal year to slightly increase in the G&NS segment, despite anticipated declines in first-party software profits [48] - The impact of Hollywood strikes on profits is expected to peak next fiscal year, but the company aims for operating income to exceed the current fiscal year [49] Other Important Information - The company is preparing for a spinoff and listing of shares for Sony Financial Group, Inc. in October 2025 [51] Q&A Session Summary Question: Strategic investment and CapEx for the current mid-range plan - The cumulative CapEx for FY '21 to FY '23 is expected to be about ¥1.9 trillion, with M&A and strategic investments at ¥1.8 trillion [56] Question: Spin-off purpose and relationship with business improvement - The spin-off aims to streamline capital allocation and allow both companies to grow independently [62] Question: Market trends for cameras in different regions - Sales in North America and Europe are performing relatively well, with no significant inventory issues reported [79] Question: Expectations for MAU growth and profitability - MAU growth is attributed to seasonality and successful free-to-play titles, with a profit shift of approximately ¥30 billion expected to the fourth quarter [94] Question: Future profitability and margin improvement strategies - The company aims to balance hardware pricing and profitability while focusing on strong first-party content to enhance margins [109]

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]

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of November 2023 Commission File Number: 001-06439 SONY GROUP CORPORATION (Translation of registrant's name into English) 1-7-1 KONAN, MINATO-KU, TOKYO, 108-0075, JAPAN (Address of principal executive offices) The registrant files annual reports under cover of Form 20-F. Indicate by check mark whether the registrant files ...

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].