Slide 1: GREE, Inc. FY2015 Fourth Quarter Financial Results
GREE, Inc. FY2015 Fourth Quarter Financial Results August 5, 2015 Copyright © GREE, Inc. All Rights Reserved.
Slide 2: Executive Summary
Executive Summary Net sales ¥92.5 billion, operating income ¥20.2 billion ⁃ Strengthened our financial base as ne t cash rose by ¥22.2 billion to ¥76.4 billion ⁃ Net loss of ¥10.3 billion owing mainly to goodwill impairment in 4Q Full- ⁃ Native game business: Improved development and operational Y
Slide 3: Contents
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 4: Contents: Financial Results Overview
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 5: FY15 Full-Year and 4Q Financial Results Overview
1. Financial Results Overview (Consolidated) FY15 Full-Year and 4Q Financial Results Overview FY15 net sales of ¥92.5 billion, operating income of ¥20.2 billion 4Q FY15 net sales of ¥20.9 billion, operating income of ¥4.2 billion Billions of yen FY15 FY15 4Q FY15 3Q FY14 4Q YoY QoQ YoY Net sales 92.
Slide 6: Net Sales, EBITDA, and Operating Income
1. Financial Results Overview (Consolidated) Net Sales, EBITDA, and Operating Income Operating margin declined by 2.2 percentage points to 20.1% Billions of yen 300 30 30% 25.42 25.1% 24.12 22.3% 21.99 20.92 19.6% 20.1% 20% 150 15 10% 8.01 6.38 6.18 6.01 4.73 4.91 5.11 4.21 0 0% 1Q 2Q 3Q 4Q FY15 Net
Slide 7: Operating Income Analysis
1. Financial Results Overview (Consolidated) Operating Income Analysis Operating income decreased by ¥0.7 billion to ¥4.2 billion, mainly due to lower net sales Billions of yen ¥0.7bn 4.91 decrease ▲1.07 4.21 +0.09 +0.27 Operating Decrease Decrease Decrease Operating Income in net sales in variable
Slide 8: FY15 4Q Cost Structure
1. Financial Results Overview (Consolidated) FY15 4Q Cost Structure Total costs decreased ¥0.4 billion QoQ to ¥16.7 billion Billions of yen FY15 FY15 FY14 Factors in change（QoQ） 4Q QoQ YoY 3Q 4Q Focused on increased efficiency (ratio to net sales: 3Q Advertising 1.73 - 0.32 - 2.07 9.3%→4Q 8.3%) 2.05
Slide 9: Difference between 4Q Results and Forecast
1. Financial Results Overview (Consolidated) Difference between 4Q Results and Forecast Recorded extraordinary losses Billions of yen FY15 4Q FY15 4Q Forecast Difference Actual (Announced April 28) Net sales 20.9 22.0 -1.1 Operating income 4.2 4.0 +0.2 Ordinary income 5.0 4.0 +1.0 Net income (loss)
Slide 10: FY15 4Q Extraordinary Gains and Losses
1. Financial Results Overview (Consolidated) FY15 4Q Extraordinary Gains and Losses Recorded a net extraordinary loss of ¥12 billion due to goodwill impairment Billions of yen Breakdown Gain/loss in FY15 4Q Gain on foreign currency translation adjustment 3.6 Gain on sale of investment securities 0.4
Slide 11: Goodwill Impairment in 4Q
1. Financial Results Overview (Consolidated) Goodwill Impairment in 4Q Goodwill impairment of ¥14.2 billion associated with Funzio, Inc. Funzio, Inc. • Planning, development, and operation of mobile social Main business applications Established June 2012 Goodwill ¥14.2 billion impairment • Earnings
Slide 12: Strengthening Financial Base
1. Financial Results Overview (Consolidated) Strengthening Financial Base Increased net cash Higher shareholders’ equity ratio Billions of yen 76.4 +5% 81% 76% +22.2 54.2 FY14 FY15 FY14 FY15 11 Copyright © GREE, Inc. All Rights Reserved.
Slide 13: Fiscal Year-End Dividend
1. Financial Results Overview (Consolidated) Fiscal Year-End Dividend Plan to pay a 10th anniversary memorial dividend of ¥10 per share FY15 Forecast FY14 Actual Record date June 30, 2015 June 30, 2014 Dividend per share ¥10 ¥11 Total amount ¥2.335 billion ¥2.593 billion Payout ratio (consolidated)
Slide 14: FY16 1H Earnings Forecast
1. Financial Results Overview (Consolidated) FY16 1H Earnings Forecast FY16 1Q forecast: net sales of ¥36.5 billion; operating income of ¥6.0 billion Billions of yen FY15 FY16 Full-Year 1H Actual 2H Actual 1H Forecast Actual Net sales 49.5 42.9 92.5 36.5 Operating income 11.1 9.1 20.2 6.0 Ordinary i
Slide 15: Agenda: Operational Overview
Agenda 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 16: FY15 4Q Coin Consumption (Overall)
2. Operational Overview: Game Business KPIs FY15 4Q Coin Consumption (Overall) Overall consumption declined 11% QoQ to 27.9 billion coins Coin Consumption Composition (%) Billions of coins 40 100% 36.3 34.8 21% 26% 24% 23% 31.3 9.4 8.5 27.9 7.3 5.9 46% 47% 50% 46% 46% 20 16.7 16.0 14.4 13.0 28% 30%
Slide 17: FY15 4Q Coin Consumption (Native Games)
2. Operational Overview: Game Business KPIs FY15 4Q Coin Consumption (Native Games) Native game coin consumption declined 6% QoQ to 9 billion coins Billions of coins 12 10.2 10.4 9.5 9.0 Japan market 4.7 4.7 • Turned upward on contribution from 4.4 Shometsu Toshi 4.7 • LINE TOWER RISING off to a str
Slide 18: FY15 4Q Coin Consumption (Web Games)
2. Operational Overview: Game Business KPIs FY15 4Q Coin Consumption (Web Games) Overall web game consumption fell 13% QoQ to 18.8 billion coins Billions of coins 30 26.1 24.5 First-party / Co-developed 21.7 10.7 18.8 20 10.4 • Overall, existing titles were soft 9.1 7.8 • Some titles, such as Avatar
Slide 19: FY15 4Q Native Games (Japan)
2. Operational Overview: Game Business Topics FY15 4Q Native Games (Japan) LINE TOWER RISING Shometsu Toshi sales growth off to a strong start 7-day retention rate +13% × 7.6 1Q 2Q 3Q 4Q Shometsu 消滅都市 TOWER タワーライジング Toshi RISING • Entered Top 15 • Off to a strong start with a retention rate higher •
Slide 20: FY15 4Q Native Games (Japan)
2. Operational Overview: Game Business Topics FY15 4Q Native Games (Japan) Improvement in POITTO HERO KPIs Improvement in Pazukue KPIs © Pokelabo / © SEGA All Rights Reserved. • 7-day retention rate improved by more than 30% • Released in June 2015. Now taking measures to versus post-release level
Slide 21: FY15 4Q Native Games (Overseas)
2. Operational Overview: Game Business Topics FY15 4Q Native Games (Overseas) War of Nations sales strong New development capabilities Acquisition of Twiitch + 34% Company name Established 2010 Steven Spagnolo(CEO) Founder Shane Stevens(CTO) Headquarters Melbourne, Australia Employees Approximately
Slide 22: FY15 4Q Web Games
2. Operational Overview: Game Business Topics FY15 4Q Web Games Continued improvement of New releases of popular titles existing titles Avatar Added new The Knights of Crystal Crusade functions Avalon CROOZ gloops +15% FY14 4Q FY15 4Q • Strong performance throughout the year thanks • Developing vers
Slide 23: FY15 4Q New Businesses
2. Operational Overview: New Business Topics FY15 4Q New Businesses Renoco sales growth Expanding Lespas affiliate studios Online renovation service Lesson free pass service Over 300 Studios × 1.5 3Q 4Q April 4月 May 5月 June 6月 • Strong QoQ order growth, sales remain on an • Aggressively expanding co
Slide 24: Review and Summary of FY15
2. Operational Overview: Review of FY15 FY15 review Review and Summary of FY15 Completed shift to native games and redeployed resources to create hit titles FY15 Business Plan Review • Restructure businesses • Strengthened development system Overall • Achieve upturn in sales by generating hit titles
Slide 25: Boosted operational/development capabilities for native games
2. Operational Overview: Review of FY15 FY15 review Boosted operational/development capabilities for native games Entered Boosted operational Top 15 capabilities Entered Top 30 Shometsu Toshi climbed in the rankings Boosted development capabilities Accelerated pace of new releases in 4Q 600 600 550
Slide 26: Increased Operational Efficiency of Web Games
2. Operational Overview: Review of FY15 FY15 review Increased Operational Efficiency of Web Games Operating income Improved operating efficiency 600 employees 300 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q • Improved efficiency of operating system • Remained profitable throughout the year for existing games owing to i
Slide 27: Building a Foundation for New Businesses
2. Operational Overview: Review of FY15 FY15 review Building a Foundation for New Businesses Home-Related Services Platform Health & Fitness Platform リフォームECサービス レッスンフリーパスサービス Lesson free pass service Online renovation service • Strengthening • Market pioneer ・先行的に市場参入 business base • Over 300 affil
Slide 28: Cost Control
2. Operational Overview: Review of FY15 FY15 review Cost Control Efficient deployment of Lower fixed costs advertising costs Billions of yen Billions of yen Ratio 売上比 to net sales 11.5% 52.9 -16% Efficient Adver- 10.6% tising 44.3 14.4 9.8 FY14 FY15 FY14 FY15 • Continue to take measures to cut fixed
Slide 29: Targeting Medium-Term Growth
2. Operational Overview: Medium-Term Plan Medium-term business plan Targeting Medium-Term Growth Leverage our management base to achieve medium- to long-term growth based on three earnings pillars ネイティブゲーム事業 Native Game Business グローバル No. Global No. 1 1 Web Game Business New Businesses ウェブゲーム事業 New
Slide 30: FY16 Business Strategy
2. Operational Overview: FY16 Business Strategy FY16 plan FY16 Business Strategy Overall Achieve and upturn in sales by creating hit native games ネイティブゲームのヒット創出による売上反転の実現 • • Development 開発計画 plan – -1515本の開発パイプラインが進行中 titles in development pipeline • • Japan 国内事業 business – Continue to invest in
Slide 31: Native Games (development plan)
2. Operational Overview: FY16 Business Strategy FY16 plan Native Games (development plan) 15 titles in development pipeline targeting Japan and overseas markets Market 1H 2H Full-Year Approx. 3 Approx. 7 Approx. titles titles 10 titles Japan 3 約 1本title 1st party: 5 titles 6 titles Co-developed: 2 t
Slide 32: Native Games (creating hit titles for Japanese market)
2. Operational Overview: FY16 Business Strategy FY16 plan Native Games (creating hit titles for Japanese market) Maintain high number of launches (as in FY15) and raise hit rate Basis for hit FY15 creation successes Approach in FY16 Scale of organi- • Continue to invest in pipeline Launch zation • O
Slide 33: Native Games (rebuilding in North America)
2. Operational Overview: FY16 Business Strategy FY16 plan Native Games (rebuilding in North America) Rebuild the business by achieving a quick recovery in earnings and investing in renewed growth Lackluster results in FY15 Rebuilding the business in FY16 • Recover operational capabilities for strong
Slide 34: Native Games (expanding in China)
2. Operational Overview: FY16 Business Strategy FY16 plan Native Games (expanding in China) Begin expanding in promising Autumn release of Chinese version markets of Shometsu Toshi planned NARUTO Chinese version of Shinobi Masters CROSS SUMMONER ©2002 MK - 2007SP. @Pokelabo Inc. (/ Beijing Star Worl
Slide 35: Web Games
2. Operational Overview: FY16 Business Strategy FY16 plan Web Games Develop new areas of business and pursue greater operational efficiency in order to achieve sustainable growth over the medium term Strengthen services Streamline operations • Focus on genres with strong • Continue to cut costs such
Slide 36: New Businesses
2. Operational Overview: FY16 Business Strategy FY16 plan New Businesses Invest resources in key Creating new businesses with businesses strong potential Home-Related Services Platform Online renovation service Stable sales growth Health & Fitness Platform Lesson free pass service Establish dominant
Slide 37: Cost Control
2. Operational Overview: FY16 Business Strategy FY16 plan Cost Control Targeting a decline of over 10% in fixed costs versus FY15 level ¥44.3 Decline billion of over 10% FY15 FY16 36 Copyright © GREE, Inc. All Rights Reserved.
Slide 38: Contents: Appendix
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 39: FY15 4Q Cost Structure
3. Appendix FY15 4Q Cost Structure Millions of yen FY15 FY15 FY14 4Q QoQ YoY 3Q 4Q Rental charges 1,223 304 130 919 1,093 Labor costs 2,909 -117 11 3,025 2,897 Others 2,239 56 101 2,183 2,138 Cost of sales 6,371 244 243 6,127 6,128 Advertising 1,729 -317 -2,072 2,046 3,801 Commission fees 4,111 -139
Slide 40: FY15 4Q Balance Sheet
3. Appendix FY15 4Q Balance Sheet Billions of yen FY15 FY15 3Q FY14 4Q 4Q QoQ YoY Current assets 96.89 -1.41 3.97 98.30 92.92 Fixed assets 20.75 -16.60 -37.12 37.35 57.87 Total assets 117.64 -18.01 -33.16 135.65 150.79 Current liabilities 21.89 -4.19 -10.81 26.09 32.71 Fixed liabilities 0.73 -1.24 -
Slide 41: FY15 Cash Flows
3. 3. Appendix 参考資料 FY15 Cash Flows End-FY15 cash and cash equivalents rose by ¥14.5 billion YoY Billions of yen （億円） 4.78 34.43 21.59 - 3.16 - 14.63 - 12.39 FY14 FY15 ■ Operating cash flow ■ 営業キャッシュ・フロー ■ Investing cash flow ■■財務キャッシュ・フロー ■ 投資キャッシュ・フロー Financing cash flow Note: FY15 cash balance in
Slide 42: Coin Consumption (Overall)
3. Appendix Coin Consumption (Overall) Overseas Japan Millions of U.S. dollars Billion coins 80 40 30.8 29.1 53 26.1 49 23.6 44 14.7 14.4 40 20 12.7 35 11.8 16.1 14.8 13.4 11.8 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY15 FY15 Notes: ※• Divided 国内/海外は消費エリアによる分類 by region of consumption ■Third-party サードパーティ ■Fir
Slide 43: Coin Consumption (Smartphone Web Games)
3. Appendix Coin Consumption (Smartphone Web Games) Coin Consumption Composition (%) Billion coins (億コイン) 20 100% 16.7 16.0 35% 38% 37% 37% 14.4 5.9 13.0 6.0 5.3 4.8 10 50% 65% 62% 63% 63% 10.8 10.0 9.1 8.2 0 0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY15 FY15 ■ Third-party ■ First-party/ Co-developed 42 Copyright
Slide 44: Breakdown of Group Headcount
3. Appendix Breakdown of Group Headcount Number of employees Headcount at Group companies End-4Q Japan Game Business - 908 Native Game Business Pokelabo, Wright Flyer Studios (527) Web Game Business - (274) Shared game depts. - (107) Includes GREE International (U.S. Studio), GREE Native Game Busine
Slide 45: 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 completeness of the provided information is not guaran