Sony Clocks Strong Q4 Revenue Despite Falling PS5 Sales, Plans Stock Split And Stock Buyback

Zinger Key Points
  • Sony Q4 sales surge 14% to $23.49B, crushing estimates; adjusted EPS of $1.04 beats expectations, shares rise.
  • Sony announces buyback and 5-for-1 stock split; forecasts $84.9B in sales for FY 2024, driven by music and tech growth.

Sony Group Corp (NYSE: SONY) reported fiscal fourth-quarter 2023 sales growth of 14% year-on-year to $23.49 billion (3.48 trillion Japanese yen), beating the analyst consensus estimate of $19.20 billion. 

EPS of $1.04 (153.60 yen) beat the analyst consensus estimate of $0.79. The stock price climbed after the print.

Segments & Profits: Game & Network Services (G&NS) revenue increased 2.2% Y/Y to ¥1.1 trillion, and operating income climbed 172.5% Y/Y to ¥106 billion.

Music revenue rose 23% Y/Y to ¥429.9 billion, and operating income increased by 17.9% Y/Y to ¥71.2 billion. Pictures revenue increased by 13.3% Y/Y to ¥406.7 billion, and operating income improved by 98% Y/Y to ¥30.7 billion.

Entertainment, Technology & Services (ET&S) revenue grew by 7.9% Y/Y to ¥532.7 billion, and operating income loss was ¥(6.4) billion versus ¥(33.0) billion Y/Y. 

Imaging & Sensing Solutions revenue (I&SS) increased by 14.2% Y/Y to ¥398.5 billion, and operating income climbed by 9.5% Y/Y to ¥34.7 billion.

Financial Services revenue improved from ¥470.6 billion to ¥672.9 billion, and operating income decreased by 49.6% Y/Y to ¥26.1 billion. Consolidated operating income rose by 57% Y/Y to ¥229.4 billion. 

Sony sold 4.5 million PS5 units in the quarter versus 6.3 million a year ago. Sony has indicated a slowdown in PlayStation 5 hardware sales and does not plan to release major titles from its leading franchises within the fiscal year, Bloomberg reports

It held ¥2.31 trillion in cash and equivalents as of March 31, 2024.

Buyback and Stock Split: Sony said it will buy back up to 2.46% of its shares for ¥250 billion and will implement a five-for-one stock split effective October 1.

Outlook: Sony expects fiscal 2024 sales of $84.9 billion ( ¥12.31 trillion) versus the $80.93 billion consensus

The company anticipates growth in the current fiscal year, driven by its music publishing and smartphone image sensor units, benefiting from the weaker yen. Streaming services, including content from Lil Nas X and Michael Jackson bolster Sony’s music revenues, the report added. 

Additionally, the smartphone market’s growth, particularly in China, has prompted increased investment in new hardware and components.

Sony expects PS5 sales for this fiscal year to be approximately 18 million units.

Sony’s shares have faced pressure due to concerns over its potential $26 billion bid for Paramount Global PARA PARAA, raising investor concerns about the cost and integration challenges.

Price Action: SONY shares traded higher by 3.28% at $78.65 premarket at the last check Tuesday.

Image Source – Shutterstock

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