Slide 1: FY2018 Fourth Quarter Financial Results
GREE, Inc. FY2018 Fourth Quarter Financial Results August 2, 2018 Copyright © GREE, Inc. All Rights Reserved.
Slide 2: Executive Summary
Executive Summary Net sales ¥77.9 billion, operating income ¥9.4 billion, achieved YoY growth in both sales and income Full- ⁃ Strengthened operations of existing titles and successfully developed titles for overseas year markets in the games business ⁃ Steadily expanded user base in advertising a
Slide 3: Contents
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 4: 1. Financial Results Overview
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 5: FY18 Full-Year and 4Q Financial Results Overview
1. Financial Results Overview (Consolidated) FY18 Full-Year and 4Q Financial Results Overview FY18 net sales of ¥77.9 billion, operating income of ¥9.4 billion Net sales and operating income rose YoY, net income showed reactive decline from impact of tax effects in FY17 Billions of yen FY18 FY18 4Q
Slide 6: Net Sales, EBITDA, and Operating Income
1. Financial Results Overview (Consolidated) Net Sales, EBITDA, and Operating Income Net sales rose by ¥1.1 billion QoQ Billions of yen 22.0 21.6 25.0% 19.2 19.5 19.0 17.9 15.6% 12.5% 12.5% 12.0% 11.0 12.5% 8.5% 3.1 3.1 3.2 2.7 2.7 2.8 2.4 2.3 1.9 1.6 0.0 0.0% 4Q 1Q 2Q 3Q 4Q FY17 FY18 Net Sales EBIT
Slide 7: Operating Income Analysis
1. Financial Results Overview (Consolidated) Operating Income Analysis Operating income decreased by ¥1.2 billion to ¥1.6 billion, mainly due to up-front investment in advertising Billions of yen 1.17bn decrease +1.11 -1.78 2.78 -0.50 1.61 Operating Increase in Increase in Increase in Operating inco
Slide 8: FY18 4Q Cost Structure
1. Financial Results Overview (Consolidated) FY18 4Q Cost Structure Total investment up ¥2.3 billion YoY to ¥17.4 billion Billions of yen FY18 FY18 FY17 Factors in change（QoQ） 4Q QoQ YoY 3Q 4Q Increase from investment in growth businesses Advertising 1.64 0.81 -0.12 (3Q: 4.6% → 4Q: 8.6%) 0.83 1.77 C
Slide 9: Fiscal Year-End Dividend
1. Financial Results Overview (Consolidated) Fiscal Year-End Dividend Plan to pay dividend of ¥14 per share Consolidated dividend payout ratio: 20%, regular dividend: ¥4 per share, commemorative dividend to celebrate 10 years since listing: ¥10 per share FY18 Forecast FY17 Actual Record date June 30
Slide 10: Difference between Results and Forecast
1. Financial Results Overview (Consolidated) Difference between Results and Forecast Net sales up ¥400 million, operating income down ¥600 million, net income down ¥2.3 billion Billions of yen FY18 Actual Forecast Difference Net sales 77.9 77.5 0.4 Operating income 9.4 10.0 -0.6 Ordinary income 10.3
Slide 11: Posting of extraordinary losses on impairment of goodwill
1. Financial Results Overview (Consolidated) Posting of extraordinary losses on impairment of goodwill Earnings growing steadily, but impairment losses posted because progress is lagging behind original targets We will continue to invest to accelerate the pace of further growth Company posting 3 Min
Slide 12: FY19 1Q Earnings Forecast
1. Financial Results Overview (Consolidated) FY19 1Q Earnings Forecast Net sales ¥18.5 billion, operating income ¥1.5 billion, EBITDA ¥1.7 billion Billions of yen FY18 4Q FY19 1Q Difference Actual Forecast Net sales 19.0 18.5 -0.5 Operating income 1.6 1.5 -0.1 Ordinary income 1.9 1.5 -0.4 Net income
Slide 13: 2. Operational Overview
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 14: Progress Made
2. Operational Overview: Game/entertainment business - Mobile 4Q Topics Progress Made Domestic Coin Consumption (Mobile) Topics Billions of coins Strengthened operation of titles 150 15.0 - Successfully strengthened operation 12.6 of Another Eden and SINoALICE 11.4 10.4 10.0 ■ Overseas development
Slide 15: Strengthened operation of SINoALICE
2. Operational Overview: Game/entertainment business - Mobile 4Q Topics Strengthened operation of SINoALICE Continuously added new content by increasing size of operations team, kept SINoALICE in top 10 Added 1 year Post-release Added GvG* Held/improved GvG Held seasonal events new after measures sy
Slide 16: Progress Made
2. Operational Overview: Game/entertainment business - Mobile 4Q Topics Progress Made By strengthening operations, we created system capable of continuously hosting large-scale events Another Eden: The Cat Who Goes Beyond Time DanMachi Memoria Freese* Held 1year anniversary events Released new conte
Slide 17: Progress Made
2. Operational Overview: Game/entertainment business - Mobile 4Q Topics Progress Made By strengthening operations, we created system capable of continuously hosting large-scale events Senki Zesshou SINoALICE SYMPHOGEAR XD Unlimited Conducted multiple 1st anniversary campaigns 1-year anniversary Unli
Slide 18: Review and Summary of FY18
2. Operational Overview: Review and Summary of FY18 FY18 Review Summary Business Plan FY18 Review Aggressive push - Achieved growth in sales and revenue for first time in six years on forward with contribution from mobile games Overall investment in - Established third earnings pillar as area for me
Slide 19: Growth in sales and income
2. Operational Overview: FY18 overall results FY18 results Growth in sales and income Strengthened operation of titles released in FY17, developed versions for overseas markets, earnings contribution from new titles launched in FY18 FY15～16 FY17 FY18 Strengthening ops Shift to native games Release b
Slide 20: Growth in mobile games
2. Operational Overview: FY18 results Game/entertainment business FY18 results Growth in mobile games Realized mobile game growth story envisioned at beginning of year Initial strong Temporary Strengthening of Overseas performance decline operations development The graphic below is meant to provide
Slide 21: Strengthened operations
2. Operational Overview: FY18 results Game/entertainment business FY18 results Strengthened operations Strengthened Ops, user base broadened on launch of higher volume/quality content Another Eden: The Cat Who Goes Beyond Time SINoALICE Before and after anniversary event Before and after anniversary
Slide 22: Development for Overseas
2. Operational Overview: FY18 results Game/entertainment business FY18 results Development for Overseast Worked with business partners to release first overseas title in North America DanMachi* Sales growth Up ×2 North American version Business Partners Japanese version 3Q 4Q *Abbreviation of full t
Slide 23: New titles
2. Operational Overview: FY18 results Game/entertainment business FY18 results New titles Well-received by users In Love with News Puchiguru Love Live! User reviews User reviews Google Play App Store Google Play App Store 4.5 4.6 4.2 4.5 Ranking Ranking 17 th 31 st Notes: Rankings indicate highest s
Slide 24: Entered new businesses
2. Operational Overview: FY18 results Game/entertainment business FY18 results Entered new businesses Entered live entertainment business Planned investment of roughly Established subsidiary ¥10 billion Wright Flyer Live Entertainment Vtuber Fund Project launched established in April • Business spec
Slide 25: Expanded user base
2. Operational Overview: FY18 results Advertising and media business FY18 results Expanded user base Increased page views for vertical media, strengthened media potential Growth in media page views LIMIA named app of the year Up 4.8x Awarded highest honor at 2017 App Ape Awards Up ×4.8 17/6月 June 20
Slide 26: Targeting Medium-Term Growth
2. Operational Overview: Medium-Term Plan Medium-Term Plan Targeting Medium-Term Growth Targeting sustainable growth from three earnings pillars Scale Third pillar: Live entertainment business Sowing the seeds of new business Second pillar: Advertising and media business Expanding scale of operation
Slide 27: FY19 Strategy Summary
2. Operational Overview: FY19 Business Strategy FY19 Strategy Summary Business Plan Summary Strengthen 3 - Conduct aggressive investment aimed at strengthening three Overall earnings pillars earnings pillars - Invest in improving existing engines and developing new engines “Game engine, - Invest in
Slide 28: Development pipeline
2. Operational Overview: FY19 Business Strategy Game/entertainment business FY19 Strategy Development pipeline 5 titles approved for development/currently under development; overseas titles also to be released consecutively in FY19; starting in FY20, we will release an average of 4-5 titles each yea
Slide 29: Improvement/development of game engines
2. Operational Overview: FY19 Business Strategy Game/entertainment business FY19 Strategy Improvement/development of game engines Invest for game engines and broaden our sustainable competitive advantage Already released FY19 FY20 and onward 3rd –party 3rd –party Under 3D RPG IP IP consideration tit
Slide 30: Nurturing first-party IP over long term
2. Operational Overview: FY19 Business Strategy Game/entertainment business FY19 Strategy Nurturing first-party IP over long term Create more fan contact points with multichannel distribution, thereby increasing value of first-party IP Release of all -new 3D title TV anime production Real-world debu
Slide 31: Expansion of fan community
2. Operational Overview: FY19 Business Strategy Game/entertainment business FY19 Strategy Expansion of fan community Launched first major promotion for SINoALICE, expanding fan communities for first- party IP First TV advertisement Events tied in to TV ad Aired nationwide starting July 20 In-game su
Slide 32: Full-scale overseas development
2. Operational Overview: FY19 Business Strategy Game/entertainment business FY19 Strategy Full-scale overseas development Continuous releases planned starting in 2018, profit margins on titles expected to rise Distribution region North Partnership America/ agreement Japan Europe East Asia China stau
Slide 33: Multiplatform development
2. Operational Overview: FY19 Business Strategy Game/entertainment business FY19 Strategy Multiplatform development Development of first-party IP for platforms and services with growth potential 4 titles in development, including unannounced titles Google Play, App Store Daydream（VR） Began distribut
Slide 34: Live entertainment business
2. Operational Overview: FY19 Business Strategy Game/entertainment business FY19 Strategy Live entertainment business Accelerate business growth by leveraging accumulated knowhow in games and VR businesses and large-scale investment capabilities We will announce plans/forecast on August 7 Talent Dis
Slide 35: Building one of the largest vertical media portfolios in Japan
2. Operational Overview: FY19 Business Strategy Advertising and media business FY19 Strategy Construction of vertical media portfolio Continued investment aimed at increasing media capabilities Building the one of the largest vertical media portfolios in Japan Housing & Outing & Fashion travel Beaut
Slide 36: 3. Appendix
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 37: Coin Consumption (1)
3. Appendix Coin Consumption (1) Overall coin consumption (1) Overall coin consumption (2) Billions of coins Billions of coins 25.0 250 25.0 250 22.9 22.9 21.5 21.5 1.9 20.0 20.0 2.2 19.1 5.3 19.1 1.7 17.6 17.6 1.3 5.8 7.1 5.0 1.5 4.4 7.7 5.7 4.5 6.8 125 12.5 6.2 125 12.5 17.7 15.7 15.0 14.8 13.9 13
Slide 38: Coin Consumption (2)
3. Appendix Coin Consumption (2) Mobile games Web games Billions of coins Billions of coins 150 15.0 150 15.0 13.9 1.3 12.2 11.5 11.5 0.8 1.5 1.1 9.9 9.8 9.0 0.8 8.5 7.7 7.0 75 7.575 5.2 7.5 4.7 12.6 4.5 11.4 3.8 10.0 10.4 3.4 9.0 4.7 4.3 4.0 3.9 3.5 0 0 4Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q 3Q 4Q FY17 FY18 FY17
Slide 39: 4Q FY18 Cost Structure
3. Appendix 4Q FY18 Cost Structure Millions of yen FY18 4Q FY18 3Q FY17 4Q QoQ YoY Rental charges 693 7 -196 686 889 Labor costs 2,099 125 -184 1,974 2,283 Others 5,156 809 1,767 4,346 3,389 Cost of sales 7,948 941 1,387 7,007 6,560 Advertising 1,641 815 -124 827 1,765 Commission fees 4,223 398 -143
Slide 40: 4Q FY18 Balance Sheet
3. Appendix 4Q FY18 Balance Sheet Billions of yen FY18 4Q FY18 3Q FY17 4Q QoQ YoY Current assets 100.33 1.85 3.88 98.48 96.46 Fixed assets 25.03 -2.53 -1.47 27.56 26.50 Total assets 125.36 -0.68 2.41 126.04 122.95 Current liabilities 11.60 0.11 -0.89 11.71 12.49 Fixed liabilities 0.72 0.08 0.14 0.64
Slide 41: Breakdown of Group Headcount
3. Appendix Breakdown of Group Headcount Number of employees Headcount at Group companies end-4Q Game/Entertainment Business Pokelabo, Wright Flyer Studios, funplex, etc. 942 Advertising and Media Business Glossom, Limia, 3 Minutes, aumo, etc. 358 Other businesses Includes GREE Business Operations 2
Slide 42: Forward-looking statements notice
■ This document includes some forecasts, which are based on currently available information. Actual performance may differ due to various factors. ■ When producing this document, we were careful to avoid errors or omissions, but the accuracy and completeness of the provided information is not guaran