Slide 1: FY2014 Third Quarter Financial Results
GREE, Inc. FY2014 Third Quarter Financial Results May 8, 2014 Copyright © GREE, Inc. All Rights Reserved.
Slide 2: Executive Summary
Executive Summary Net sales of ¥31.07 billion; operating income of ¥9.95 billion Financial ⁃ Net sales declined as we were unable to maintain through March the recovery trend results seen toward the end of 2013 and start of 2014 overview ⁃ Despite the negative factor of a decline in net sales, we
Slide 3: Contents
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 4: Contents
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 5: FY14 3Q Financial Results Overview
1. Financial Results Overview (Consolidated) FY14 3Q Financial Results Overview Net sales of ¥31.07 billion; operating income of ¥9.95 billion Despite decline in net sales, achieved increase in profit through strict cost control Billions of yen FY14 3Q FY14 2Q QoQ FY13 3Q YoY Net sales1 31.07 32.62
Slide 6: Net sales, EBITDA, and Operating Income
1. Financial Results Overview (Consolidated) Net sales, EBITDA, and Operating Income Improved operating margin by 3.9 percentage points to 32.0% Billions of yen 50 50% 41.5% 39.41 37.94 37.89 37.00 36.2% 35.33 32.62 31.07 28.5% 32.0% 27.7% 28.1% 25 25% 16.74 21.1% 15.75 15.76 14.26 12.69 11.67 11.64
Slide 7: Operating Income Analysis
1. Financial Results Overview (Consolidated) Operating Income Analysis Despite a ¥1.55 billion decline in net sales, increased operating income by ¥0.80 billion through cost cuts totaling ¥2.35 billion Billions of yen ¥0.8bn increase +1.78 9.95 9.15 -1.55 +0.57 Fixed cost Decrease in Variable cost r
Slide 8: FY14 3Q Cost Structure
1. Financial Results Overview (Consolidated) FY14 3Q Cost Structure Cut total costs by 10.0% QoQ to ¥21.12 billion through strict cost control Billions of yen FY14 FY14 FY13 Factors in change (QoQ) 3Q 2Q QoQ 3Q YoY Advertising costs were less than initial estimate mainly due to revised release Adver
Slide 9: Earnings Forecast
1. Financial Results Overview (Consolidated) Earnings Forecast FY14 full-year forecast: net sales ¥129.0 billion; operating income: ¥38.0 billion （FY14 4Q three-month forecast: net sales ¥30.0 billion; operating income ¥9.1 billion) Billions of yen FY14 forecast FY13 Actual Change (1Q-4Q) (1Q-4Q) Ne
Slide 10: Contents
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 11: Business Update Summary
2. Operational Overview: Summary Business Update Achieved overall quarterly profitability in overseas operations (U.S., Canada and South Korea studios).1 Steady progress in development of new titles for Japan market FY14 Initiatives Progress in FY14 3Q Ref. Achieved overall quarterly profitability
Slide 12: Coin Consumption (Overall)
2. Operational Overview: Summary Coin Consumption (Overall) Overall 6% decrease on large impact of decline in feature phone consumption. Smartphones reached approximately 71% of total coin consumption Coin consumption Composition (%) Billions of coins (億コイン) 60 600 56.1 57.7 100% 55.0 52.6 50.8 32%
Slide 13: Coin Consumption (Smartphones)
2. Operational Overview: Summary Coin Consumption (Smartphones) Native games decreased slightly QoQ. Web games (smartphones) declined as they were unable to maintain the recovery trend seen toward end of 2013 and start of 2014 Coin consumption Composition (%) Billions of coins 400 100% 33.1 31.6 32.
Slide 14: Release Schedule and Product Strategy
2. Operational Overview: Summary Release Schedule and Product Strategy Revised release schedule for some titles. Maintaining policy of releasing limited number of titles but with emphasis on profitability 2H Releases (Planned)2 Progress to date Approx. New titles 7 ⁃ Continue new title releases by
Slide 15: Web Game Business: Coin Consumption (Overall)
2. Operational Overview: Web Game Business Coin Consumption (Overall) Overall consumption down 8%: although the decrease lessened, the impact of the decline in consumption on feature phones remained large Billions of coins 600 First-party/ Co-developed 50.7 51.0 45.8 Downtrend continued on feature
Slide 16: Web Game Business: Coin Consumption (Smartphones)
2. Operational Overview: Web Game Business Coin Consumption (Smartphones) Coin consumption on smartphones declined approximately 3% QoQ Coin consumption Composition (%) Billions of coins 240 24 100% 20.5 19.8 20.0 19.6 19.4 18.8 35% 32% 33% 34% 39% 42% 40% 17.3 6.5 8.0 6.8 6.5 8.3 6.4 6.7 12 120 50%
Slide 17: Current challenges and solutions
2. Operational Overview: Web Game Business Current challenges and solutions Taking action to address current challenges, targeting medium- to long-term growth in the web game business. Pursuing development of new title releases, our most critical challenge, while streamlining operation of existing t
Slide 18: Progress in adapting existing first-party hit titles for smartphones
2. Operational Overview: Web Game Business Progress in adapting existing first-party hit titles for smartphones Achieved growth in smartphone consumption on first-party titles such as Monster Planet and Kaizoku Oukoku Columbus through UI/UX improvements and the introduction of new game models and fe
Slide 19: New title releases with leading partners
2. Operational Overview: Web Game Business New title releases with leading partners MONSTER HUNTER: ROAR OF CARDS has grown steadily since its release on February 19. Continuing to work closely with leading partners MONSTER HUNTER: ROAR OF CARDS 1 CAPCOM CO., LTD. Accumulated no. of downloads Day 1
Slide 20: First-party title pipeline
2. Operational Overview: Web Game Business First-party title pipeline Postponed official launch dates to FY2015, but plan closed beta releases for two titles in 4Q.1 Focusing on creating development operations capable of releasing approx. two titles per quarter Upcoming GREE titles LOST LAND TACTICS
Slide 21: Pipeline for Partner Releases
2. Operational Overview: Web Game Business Pipeline for Partner Releases Work with leading partners to release steady flow of IP-based titles with high growth potential Key titles EA Sports™ FIFA BLEACH: Bankai Battle1 NARUTO: Shinobi Collection2 ORATTA ForGroove World Class Soccer 3 Electronic Arts
Slide 22: Native Game Business: Coin Consumption
2. Operational Overview: Native Game Business Coin Consumption Achieved overall quarterly profitability in overseas operations 1 (U.S., Canada and South Korea studios). In overseas markets, titles from overseas studios performed well, but Japan studio titles for overseas markets weakened 2 Billions
Slide 23: Update on Pokelabo
2. Operational Overview: Native Game Business (Japan) Update on Pokelabo Sales were roughly flat from 2Q to 3Q. Narrowed portfolio and reallocated resources to achieve major improvement in profitability. Developing new titles in new genres to improve top line New Pokelabo titles 2nd casual game from
Slide 24: Improving native game development capabilities
2. Operational Overview: Native Game Business (Japan) Improving native game development capabilities Made progress in improving development capabilities using program to plan and develop new titles with small teams in short timeframes. Released two casual games from the program during 3Q. Received h
Slide 25: Pipeline for new first-party titles
2. Operational Overview: Native Game Business (Japan) Pipeline for new first-party titles Created new label Wright Flyer Studios for native game business in Japan; two titles planned for release in 4Q. Plan steady flow of new title releases from FY2015 at approximately two per quarter Upcoming Wrigh
Slide 26: Update on U.S. studio
2. Operational Overview: Native Game Business (Overseas) Update on U.S. studio Range of initiatives underway targeting top-line growth, with steady progress in development of new titles in new genres Growth in sales of U.S. titles Initiatives for top-line growth Initiative Title Summary ＋10% Release
Slide 27: Pipeline for new titles
2. Operational Overview: Native Game Business (Overseas) Pipeline for new titles Targeting steady growth with 4Q releases of new titles in new genres such as 3D strategy and 3D MORPG Upcoming titles from U.S. and South Korea studios U.S. studio South Korea studio League of War ABRIA Planned for rele
Slide 28: Expanding Business Domains: FY14 3Q Progress
2. Operational Overview: Expanding Business Domains FY14 3Q Progress FY14 H2 Initiatives FY14 3Q Progress Plan to launch internet services in Test launch 2 to 3 new services commerce, travel and senior living-related sectors during H2 Develop trading card game business ⁃ Launch used luxury goo
Slide 29: Contents
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 30: FY14 3Q Cost Structure
3. Appendix FY14 3Q Cost Structure Millions of yen FY14 3Q FY14 2Q QoQ FY13 3Q YoY Rental charges 1,104 1,256 -152 1,132 -28 Labor costs 3,644 3,961 -317 2,521 +1,123 Others 2,346 3,100 -754 3,006 -659 Cost of sales 7,094 8,317 -1,223 6,659 +435 Advertising 2,882 3,304 -422 5,484 -2,602 Commission f
Slide 31: FY14 3Q Balance Sheet
3. Appendix FY14 3Q Balance Sheet Billions of yen FY14 3Q FY14 2Q QoQ FY13 3Q YoY Current assets 89.03 89.82 -0.79 83.28 +5.75 Fixed assets 59.80 62.45 -2.65 70.85 -11.05 Total assets 148.83 152.27 -3.44 154.13 -5.30 Current liabilities 32.09 37.75 -5.66 40.89 -8.79 Fixed liabilities 5.78 8.08 -2.30
Slide 32: Coin Consumption
3. Appendix Coin Consumption 1 Overseas market Japan Market Millions of dollars Billions of coins 80 600 60 56.2 72 54.6 70 68 51.6 61 46.6 44.1 30.2 39.7 28.6 36.9 27.2 23.0 20.2 40 37 300 30 18.4 17.5 19 19 26.0 26.0 24.4 23.9 23.6 21.3 19.4 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY13 FY14
Slide 33: Japan User Data (as of March 31, 2014)
3. Appendix Japan User Data (as of March 31, 2014) 1, 2 Total no. of 53.7 million users in Japan GREE Users Number of users Gender breakdown Age breakdown 19 or under 男性 Male 21% 45% 27% 20s 41.9 million 2 55% 30s 女性 Female 22% 30% 40s or above Notes: 1. Pokelabo users counted based on number of reg
Slide 34: Breakdown of Group Headcount
3. Appendix Breakdown of Group Headcount1 Number of employees 1,894 ■ Corporate, Headquarters Includes GREE Business Operations 237 139 ■ Engineering, Headquarters 101 ■ Commerce and Media, Advertising, Venture Capital Includes GREE Entertainment Products, Glossom, GREE Ventures, etc. 694 ■ Web Game
Slide 35: ■ This document includes some forecasts, which are based on currently available information. Actual
■ 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 integrity of the information is not guaranteed. Copyri