SONY's Q4 Earnings and Revenues Up Y/Y, 2024 Outlook Issued

Sony Group Corporation SONY reported fiscal fourth-quarter 2023 net income per share (on a GAAP basis) of ¥153.60, which increased from ¥113.89 a year ago. Adjusted net income came in at ¥175.1 billion compared with ¥141 billion in the prior-year quarter.

Quarterly total revenues increased 14% year over year to ¥3,481 billion. The uptick was driven by an increase in revenues in the Game & Network Services (G&NS), Music, Pictures and Imaging & Sensing Solutions (I&SS) segments' sales.

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Segmental Results

In the quarter under review, G&NS sales were up 2.2% year over year to ¥1097.3 billion. Segmental sales increased on the back of positive impacts of the forex movement and higher sales of non-first-party titles. Operating income rose to ¥106 billion from ¥38.9 billion in the prior-year quarter.

Music sales improved 23% year over year to ¥429.9 billion in the fiscal fourth quarter on the back of higher revenues from streaming services, primarily from paid subscriptions, in recorded music and music publishing. Operating income was ¥71.2 billion, up from ¥60.4 billion in the prior-year quarter.

Pictures sales increased 13.3% year over year to ¥406.7 billion, mainly due to an increase in theatrical releases and higher revenues for Crunchyroll. Operating income was ¥30.7 billion compared with ¥15.5 billion a year ago.

ET&S sales totaled ¥532.7 billion, up 7.8% year over year. The top-line performance increased on the back of positive impacts of the forex movement. Operating loss was ¥6.4 billion compared with ¥33 billion in the year-ago quarter.

I&SS sales rose 14.3% year over year to ¥398.5 billion, owing to an increase in sales of image sensors for mobile products. Operating income was ¥34.7 billion compared with ¥31.7 billion in the year-ago quarter owing to favorable forex impact.

Financial Services sales were ¥672.9 billion compared with ¥470.6 billion a year ago. The uptick was caused by a significant revenue increase at Sony Life. Also, there is an improvement in net gains and losses on investments related to market fluctuations for separate accounts. Operating income came in at ¥26.1 billion compared with ¥51.9 billion in the year-ago quarter.

All Other sales were down 3.1% to ¥21.8 billion in the fiscal fourth quarter. Operating loss was ¥5.5 billion against operating income of ¥0.1 billion in the year-ago quarter.

Other Details

For the quarter under review, total costs and expenses were ¥3,251.1 billion, up 12.1% year over year. Operating income was ¥229.4 billion, up 57% year over year.

Cash Flow & Liquidity

For the twelve months ended on Mar 31, 2024, Sony generated ¥1,373.2 billion of cash from operating activities compared with ¥314.6 billion in the prior-year period.

As of Mar 31, 2024, the company had ¥1,907.1 billion in cash and cash equivalents with ¥2,058.1 billion of long-term debt.

Fiscal 2024 Outlook

Sony has provided its outlook for the fiscal year ending Mar 31, 2025. It expects sales of ¥12,310 billion, down 5% year over year. The top-line performance is likely to be driven by strengthening momentum in the I&SS and Music segments' sales.

Net income is estimated to be ¥925 billion. The metric is expected to decrease year over year, mainly due to an expected increase in income taxes resulting from a decrease in tax credits in Japan and the United States. Operating income is expected to be ¥1,1275 billion.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks from the broader technology space are Woodward WWD, Arista Networks ANET and Super Micro Computer SMCI. Woodward and Super Micro Computer sport a Zacks Rank #1 (Strong Buy), whereas Arista Networks carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Woodward's fiscal 2024 earnings per share has moved up 9.3% in the past 60 days to $5.76. WWD's long-term earnings growth rate is 16.3%.

Woodward's earnings beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 26.1%. WWD shares have risen 62.3% in the past year.

The Zacks Consensus Estimate for ANET's 2024 EPS has increased 0.9% in the past 60 days to $7.53. ANET's long-term earnings growth rate is 17.5%.

Arista Networks' earnings beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average earnings surprise of 13.3%. Shares of ANET have gained 62.2% in the past year.

The Zacks Consensus Estimate for Super Micro Computer's fiscal 2024 EPS has improved 8.3% in the past 60 days to $23.51. SMCI's long-term earnings growth rate is 52.3%.

SMCI's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.9%. Shares of SMCI have risen 479.3% in the past year.

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