Slide 1: FY2015 First Quarter Financial Results
GREE, Inc. FY2015 First Quarter Financial Results November 7, 2014 Copyright © GREE, Inc. All Rights Reserved.
Slide 2: Executive Summary
Executive Summary Financial Net sales ¥25.4 billion, operating income ¥6.4 billion Results ⁃ Net sales fell with softening in sales of existing titles in Japan and overseas Overview ⁃ Operating income was level with previous quarter on major cut in advertising costs Steady progress with native s
Slide 3: Contents
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 4: Financial Results Overview
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 5: FY15 1Q Financial Results Overview
1. Financial Results Overview (Consolidated) FY15 1Q Financial Results Overview Net sales of ¥25.4 billion, operating income of ¥6.4 billion Operating income was level with previous quarter, despite decline in net sales Billions of yen FY15 1Q FY14 4Q QoQ FY14 1Q YoY Net sales1 25.42 26.58 -1.15 35.
Slide 6: Net sales, EBITDA, and Operating Income
1. Financial Results Overview (Consolidated) Net sales, EBITDA, and Operating Income Operating margin increased by 2 percentage points to 25.1% Billions of yen 400 40 50.0% 35.33 32.62 31.07 26.58 32.0% 25.42 27.7% 28.1% 25.1% 200 20 23.1% 25.0% 11.64 11.67 10.96 9.78 9.95 9.15 7.73 8.01 6.13 6.38 1
Slide 7: Operating Income Analysis
1. Financial Results Overview (Consolidated) Operating Income Analysis Operating income was level with the previous quarter due to a large reduction in advertising costs Billions of yen ¥0.25bn increase 6.13 +1.19 +0.22 6.38 - 1.15 Decrease in Decrease in Decrease in net sales variable costs fixed c
Slide 8: FY15 1Q Cost Structure
1. Financial Results Overview (Consolidated) FY15 1Q Cost Structure Total costs decreased 7％ to ¥19.0 billion Billions of yen FY15 FY14 FY14 Factors in change（QoQ） 1Q 4Q QoQ 1Q YoY Curbed mass-media marketing (ratio to net sales: 4Q 14.3% Advertising 2.90 3.80 -0.90 4.45 -1.54 → 1Q 11.4% ) Decreased
Slide 9: FY15 1Q Extraordinary Gains and Losses
1. Financial Results Overview (Consolidated) FY15 1Q Extraordinary Gains and Losses Reviewed game portfolio and terminated development and operation of selected titles. Recorded an extraordinary loss following ¥2.03 billion in write downs of assets related to those games Billions of yen Breakdown Ga
Slide 10: FY15 2Q Earnings Forecast
1. Financial Results Overview (Consolidated) FY15 2Q Earnings Forecast FY15 1H forecast: net sales of ¥49.0 billion; operating income of ¥10.5 billion Billions of yen FY15 1H FY15 2Q FY15 1Q QoQ Forecast Forecast Actual Change Net sales 49.0 23.6 25.4 - 7% Operating income 10.5 4.1 6.4 - 35% Ordinar
Slide 11: Operational Overview
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 12: FY15 Strategy and FY15 1Q Initiatives
2. Operational Overview: Summary FY15 Strategy and FY15 1Q Initiatives FY15 Decisive pivot to native game business structure Strategy* Aim for turnaround in sales through creation of a native hit title Japan native game business ⁃ Steady progress with native shift through expansion of native d
Slide 13: Coin Consumption (Overall)
2. Operational Overview: Game Business KPIs FY15 1Q results Coin Consumption (Overall) Overall consumption declined 7% to 36.3 billion coins Ratio of consumption on smartphones to total grew to 74% Coin Consumption Composition(%) Billions of coins 600 60 100% 50.8 26% 29% 27% 47.0 35% 32% 44.2 17.7
Slide 14: Coin Consumption (Native Games)
2. Operational Overview: Game Business KPIs FY15 1Q results Coin Consumption (Native Games) Growth of new titles was not sufficient to fully offset softening in sales of existing hit titles. Native game coin consumption fell 10％ to 10.2 billion coins Billions of coins 140 14 12.6 12.8 12.7 Japan mar
Slide 15: Coin Consumption (Web Games)
2. Operational Overview: Game Business KPIs FY15 1Q results Coin Consumption (Web Games) Overall web game consumption fell 6% to 26.1 billion coins on continued steep decline in consumption on feature phones Billions of coins 400 40 38.2 34.2 First-party / Co-developed 31.5 Strong sales in avatars
Slide 16: Strengthened native game development operations (1/3)
2. Operational Overview: Japan Game Business (Native) FY15 1Q results Strengthened native game development operations (1/3) Advanced with strengthening of native game development operations mainly by shifting resources from web game operations. Increased new title production lines to 12 Increased na
Slide 17: Strengthened native game development operations (2/3)
2. Operational Overview: Japan Game Business (Native) FY15 1Q results Strengthened native game development operations (2/3) Boosted native game development capabilities using small-team, short-term development project “Garage”. Focused on improving creative execution in art and design Technical trai
Slide 18: Strengthened native game development operations (3/3)
2. Operational Overview: Japan Game Business (Native) FY15 1Q results Strengthened native game development operations (3/3) New Garage titles have garnered critical acclaim from media, users and app markets. In 2Q, we will channel our improved development capabilities into the addition of new produc
Slide 19: Cross-border, Cross-platform
2. Operational Overview: Japan Game Business (Native) FY15 2Q Plan Cross-border, Cross-platform Pursuing cross-border, cross-platform strategy through partnerships Joint venture with LINE Publishing partnership with KDDI Developers in Japan Investment Investment Provision of games Epic Voyage, Inc.
Slide 20: Initiatives at Japan studios (1/3)
2. Operational Overview: Japan Game Business (Native) FY15 1Q/2Q Initiatives at Japan studios (1/3) Implementing growth initiatives for Shometsu Toshi and CROSS SUMMONER targeting monthly sales of several hundred million yen each Concentrated deployment of Mass-media promotion development resources
Slide 21: Initiatives at Japan studios (2/3)
2. Operational Overview: Japan Game Business (Web) FY15 2Q Plan Initiatives at Japan studios (2/3) Planned for release in 2Q: two first-party web games based on strong IP Upcoming titles Web game Web game GUNDAM SPIRITS FINAL FANTASY ARTNIKS DIVE Published by BANDAI NAMCO Games Inc., developed by GR
Slide 22: Initiatives at Japan studios (2/3)
2. Operational Overview: Japan Game Business (Native/Web) FY15 2Q Plan Initiatives at Japan studios (2/3) Working with partner developers to expand lineup of titles based on strong IP and in popular genres Upcoming partner titles Native game Web game Web game Web game NARUTO: SHINOBI TERRAFORMARS FR
Slide 23: Initiatives at U.S. Studio
2. Operational Overview: Overseas Game Business FY15 2Q Plan Initiatives at U.S. Studio Reduce number of titles and reallocate resources to growth initiatives. Revitalize existing titles during 2Q with marketing activities targeting U.S. holiday season Growth Initiatives at U.S. Studio Reduced numbe
Slide 24: Advertising Business
2. Operational Overview: Expanding Business Domains FY15 2Q Plan Advertising Business Enter high-growth mobile video ad market with acquisition of exclusive distribution license in Japan for global ad distribution platform AdColony Using AdColony to enter mobile video ad market Growth forecast for J
Slide 25: Update on New Services, VC Investments
2. Operational Overview: Expanding Business Domains FY15 1Q/2Q Update on New Services, VC Investments New Services Venture Capital Business Anshin Reform Ie Plus FY15 1Q Investments Low-cost renovation service provider Invested in two startups in Japan Ie Plus off to strong start and one startup in
Slide 26: Appendix
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Note: User numbers are omitted from this quarter due to difficulties in calculation arising from discrepancies between the classification of web and native game users Copyright © GREE, Inc. All Rights Reserved.
Slide 27: FY14 1Q Cost Structure
3. Appendix FY14 1Q Cost Structure Millions of yen FY15 1Q FY14 4Q QoQ FY14 1Q YoY Rental charges 947 1,093 -146 1,333 -386 Labor costs 2,937 2,897 +40 3,746 -808 Others 2,304 2,138 +166 2,783 -479 Cost of sales 6,188 6,128 +60 7,862 -1,673 Advertising 2,904 3,801 -897 4,447 -1,543 Commission fees 4
Slide 28: FY15 1Q Balance Sheet
3. Appendix FY15 1Q Balance Sheet Billions of yen FY15 1Q FY14 4Q QoQ FY14 1Q YoY Current assets 90.39 92.92 -2.53 85.19 5.20 Fixed assets 54.96 57.87 -2.92 61.72 -6.76 Total assets 145.34 150.79 -5.45 146.91 -1.56 Current liabilities 27.35 32.71 -5.36 39.76 -12.41 Fixed liabilities 3.19 4.07 -0.88
Slide 29: Coin Consumption
3. Appendix Coin Consumption Overseas Japan Millions of dollars Billions of coins 80 500 50 72 44.1 70 68 39.7 60 36.9 53 20.2 32.9 30.8 18.4 17.5 40 250 25 15.9 14.7 23.9 21.3 19.4 17.1 16.1 0 0 1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q FY14 FY15 FY14 FY15 Notes: ■Third-party ■First-party/ Co-developed2 1. Div
Slide 30: Coin Consumption (Smartphone Web Games)
3. Appendix Coin Consumption (Smartphone Web Games) Coin consumption Composition (%) Billions of coins 100% 24 240 20.5 32% 33% 34% 19.4 35% 35% 18.8 17.2 16.7 6.5 6.5 6.4 6.1 5.9 50% 120 12 68% 67% 66% 65% 65% 14.0 12.9 12.3 11.1 10.8 0 0% 1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q FY14 FY15 FY14 FY15 ■ Third-p
Slide 31: Breakdown of Group Headcount
3. Appendix Breakdown of Group Headcount * Number of employees Headcount at Group companies End-1Q Japan Game Business - 1,011 Native Game Business Includes Pokelabo, Wright Flyer Studios （358） Web Game Business - （491） Shared game depts. (Art, QA, etc.) - （162） Includes GREE International (U.S. Stu
Slide 32: 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