Slide 1: GREE, Inc. FY2013 Fourth Quarter Financial Results
GREE, Inc. FY2013 Fourth Quarter Financial Results August 14, 2013 Copyright © GREE, Inc. All Rights Reserved.
Slide 2: Executive Summary
Executive Summary Net sales and operating profit declined YoY to ¥152.2 billion and ¥48.6 billion respectively ⁃ Web games1 business: Full- ⁃ We were unable to fully capitalize the growth opportunities of the expanding smartphone market year ⁃ Native games2 business: ⁃ Grew rapidly to become a top
Slide 3: Contents
Contents 1. Overview of Consolidated Financial Results 2. Overview of Businesses 3. Appendix 2 Copyright © GREE, Inc. All Rights Reserved.
Slide 4: 1. Overview of Consolidated Financial Results
1. Overview of Consolidated Financial Results 2. Overview of Businesses 3. Appendix 3 Copyright © GREE, Inc. All Rights Reserved.
Slide 5: FY2013 Full-year and Fourth Quarter Financial Results Overview
1. Overview of Consolidated Financial Results FY2013 Full-year and Fourth Quarter Financial Results Overview FY2013 sales declined slightly YoY and profits fell on a rise in fixed costs. 4Q operating profit was ¥7.7 billion and ordinary profit was ¥9.5 billion Millions of yen FY2013 YoY 4Q FY2013 Yo
Slide 6: Net sales, EBITDA, and Operating Profit
1. Overview of Consolidated Financial Results Net sales, EBITDA, and Operating Profit Millions of yen 39,407 40,000 37,935 37,892 37,003 30,000 20,000 16,744 15,750 15,763 14,258 12,688 10,811 9,784 10,000 7,794 0 1Q 2Q 3Q 4Q 2013年6月期 FY2013 売上高 Net sales EBITDA 営業利益 Operating profit Note: EBITDA=op
Slide 7: Sales by Business
1. Overview of Consolidated Financial Results Sales by Business Millions of yen 40,000 39,407 37,935 37,892 3,129 37,003 3,334 3,039 2,272 30,000 20,000 36,278 34,601 34,853 34,731 10,000 0 1Q 2Q 3Q 4Q FY2013 2013年6月期 ■ Paid services sales ■ Advertisement sales 6 Copyright © GREE, Inc. All Rights Re
Slide 8: FY2013 Full-year and Fourth Quarter Cost Structure
1. Overview of Consolidated Financial Results FY2013 Full-year and Fourth Quarter Cost Structure Millions of yen FY2013 YoY 4Q FY2013 YoY 3Q FY2013 QoQ Cost of sales 23,960 +83% 6,266 +37% 6,658 -6% Rental charges 4,449 -25% 1,233 -23% 1,132 +9% Labor costs 9,976 +133% 2,510 +47% 2,521 -0% Others 9,
Slide 9: FY2013 Fourth Quarter Balance Sheet
1. Overview of Consolidated Financial Results FY2013 Fourth Quarter Balance Sheet Millions of yen End End End-3Q YoY QoQ FY2013 FY2012 FY2013 Current assets 93,004 122,287 -24% 83,277 +12% Cash and cash equivalents 46,226 72,759 -36% 37,171 +24% Receivables 21,595 28,238 -24% 22,383 -4% Fixed assets
Slide 10: FY2013 Cash Flow Statement
1. Overview of Consolidated Financial Results FY2013 Cash Flow Statement Millions of yen FY2013 FY2012 YoY Operating cash flow 14,488 59,578 -76% Investing cash flow (34,867) (24,488) - Financing cash flow (8,365) 15,479 - Cash and equivalents at end-term 45,467 72,759 -38% 9 Copyright © GREE, Inc.
Slide 11: Extraordinary Gains and Losses
1. Overview of Consolidated Financial Results Extraordinary Gains and Losses Posted a net extraordinary loss of ¥6.7 billion following implementation of selection and concentration strategy and a re-examination of our assets. Revised capitalization rules for development costs as assets: starting fro
Slide 12: Breakdown of assets related to titles
1. Overview of Consolidated Financial Results Breakdown of assets related to titles Lowered value of title-related assets to ¥6.9 billion as of end of 4Q Millions of yen 4Q FY2013 Asset value as of Type of asset Write-off end-4Q FY2013 Web game-related assets 343 1,400 Native game-related assets 4,5
Slide 13: Year-end Dividend Forecast
1. Overview of Consolidated Financial Results Year-end Dividend Forecast We plan to distribute dividends of ¥14 per share to keep the consolidated dividend payout ratio the same as in FY2012. We target a consolidated dividend payout ratio of 20% over the medium to long term Targeted dividend (FY2013
Slide 14: Coin Consumption
1. Overview of Consolidated Financial Results Coin Consumption In 4Q, coin consumption in native games grew to more than 20% of total consumption Coins spent (hundreds of millions) 600 300 0 1Q 2Q 3Q 4Q 2013年6月期 FY2013 ■ Web games ■ Native games Note: Includes coin consumption in games from Pokelabo
Slide 15: 2. Overview of Businesses
1. Overview of Consolidated Financial Results 2. Overview of Businesses 3. Appendix 14 Copyright © GREE, Inc. All Rights Reserved.
Slide 16: Business Highlights
2. Overview of Businesses Business Highlights We aim to achieve a turnaround in our core web game and native game businesses in FY2014 by implementing our selection and concentration strategy 4Q FY2013 Results 1H FY2014 Initiatives Ref. Created a leaner structure with Target further growth of fewer
Slide 17: Overview of Game Business
2. Overview of Businesses Overview of Game Business Plan to release approximately 25 new titles in 1H FY2014 Results in 4Q FY2013 1H FY2014 Content of business (see slide 13) Plan for release of new titles Development, operation, and distribution of first-party, Web co-developed, and third-party b
Slide 18: Growth Strategy for Web Games Business
2. Overview of Businesses Growth Strategy for Web Games Business Target further growth of GREE Platform by strengthening ties with leading partners and enhancing product appeal. Plan to release approximately 10 titles during 1H FY2014 Strengthen ties with leading partners Enhance product appeal Cult
Slide 19: Coin Consumption (Feature Phones / Smartphones)
2. Overview: Web Games Business (Results) Coin Consumption (Feature Phones / Smartphones) Coin consumption in the web games business declined QoQ Coins spent (hundreds of millions) 600 Feature phone coin consumption remained on a downtrend Smartphone coin consumption was basically flat - Steady
Slide 20: Coin Consumption (First-party/Co-developed and Third-party)
2. Overview: Web Games Business (Results) Coin Consumption (First-party/Co-developed and Third-party) Coin consumption firm in third-party titles Coins spent (hundreds of millions) 600 Coin consumption in First-party/Co-developed titles decreased due to impact of falling consumption on feature pho
Slide 21: Cultivating Hit Titles with Strong Partners
2. Overview: Web Games Business (Results) Cultivating Hit Titles with Strong Partners Launched new hit titles through close collaboration with leading partners Shingoku no Valhalla Gate (Grani) Coin consumption trend 2.8 2.1 1.8 2.8x higher 1.0 Apr. 4月 May 5月 June 6月 July 7月 A real-time guild batt
Slide 22: Delivering Titles with Strong Partners
2. Overview: Web Games Business (Initiatives) Delivering Titles with Strong Partners Work with leading partners to deliver both original titles and popular titles Plan to launch approximately 7 new titles during 1H FY2014 (some of which are shown below) HUNTER×HUNTER Sangokushi Guild Carnival Drilan
Slide 23: Renewed growth of existing titles
2. Overview: Web Games Business (Results) Renewed growth of existing titles Achieved renewed growth of some existing partner titles through a range of measures. We aim to apply these success models to our first-party titles and are adjusting our development operations accordingly Partner Title A Par
Slide 24: Enhancing product appeal
2. Overview: Web Games Business (Initiatives) Enhancing product appeal Adjust development operations to enable further enhancement of product appeal 4Q FY2014 1H FY2014 Streamlined development operations Adjust development operations to Overall and portfolio of titles as part of enable further enhan
Slide 25: Growth Strategy for Native Games Business
2. Overview: Native Games Business Growth Strategy for Native Games Business Aggressively launch new titles to bolster position in native games market Boost earnings of native games business while strengthening cost control Aggressively launch new titles and Strengthen cost control strengthen franch
Slide 26: Coin Consumption
2. Overview: Native Games Business (Results) Coin Consumption Achieved strong QoQ growth and established position as a top global player. U.S. studio achieved positive monthly cash flow in May2 Coins spent (hundreds of millions) 120 With QoQ growth of more than 30% in 4Q on contribution from growt
Slide 27: Created new hit titles
2. Overview: Native Games Business (Results) Created new hit titles Established new success model by investing in new game genre Knights & Dragons Coin consumption trend 3.8 3.8x increase 1.0 3Q 4Q Fantasy RPG set in the Middle Ages Successful leverage of knowledge and Released on App Store in
Slide 28: Aggressively Launch New titles and Strengthen Franchises
2. Overview: Native Games Business (Initiatives) Aggressively Launch New titles and Strengthen Franchises Use development and operational expertise to convert success models to franchise titles Leveraging expertise in game development and Approx. 15 additional releases planned in 1H operation as wel
Slide 29: Developing New Businesses
2. Overview: Expanding Business Domains Developing New Businesses Developing new businesses as pillars to support growth in areas other than games, in our aim to evolve into an integrated Internet company 4Q FY2013 Results 1H FY2014 Initiatives Increase smartphone ad sales by Advertisement sales hav
Slide 30: Cost Control Initiatives
2. Overview：Cost Control Cost Control Initiatives Targeting a 10% reduction in fixed costs YoY by 4Q FY2014 Expect fixed costs and operating costs to remain roughly stable QoQ in 1Q FY2014 (hundreds of millions yen) 3Q FY2013 4Q FY2013 1Q FY2014 2Q FY2014 Results Results Forecast Initiatives Expect
Slide 31: 3. Appendix
1. Overview of Consolidated Financial Results 2. Overview of Businesses 3. Appendix 30 Copyright © GREE, Inc. All Rights Reserved.
Slide 32: Further Growth in U.S. Studio
3. Appendix Further Growth in U.S. Studio Multiple titles in upper rankings of App Store and Google Play US App Store Grossing Ranking US Google Play Grossing Ranking (Highest chart positions in July 2013) (Highest chart positions in July 2013) 4 3 Modern War Crime City 6 7 Crime City Modern War 11
Slide 33: Coin Consumption
3. Appendix Coin Consumption Japan market Overseas markets Coins spent (hundreds of millions) Millions of dollars 600 60 400 30 200 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY2013 First-party/2013年6月期 自社・協業 サードパーティ Third-party 2013年6月期 FY2013 Co-developed1 Notes: 1. Titles in which GREE is credited are categoriz
Slide 34: Domestic User Data
3. Appendix Domestic User Data 1,2 (as of June 30, 2013) Total domestic users 44.8 million GREE Users Number of users Gender breakdown Age breakdown 19歳以下 19 or under 21% 22% 37.2 million 46% Male 男性 20代 20s 30代 54% 女性 Female 24% 33% 30s 40代以上 40s 1. Pokelabo users counted based on number of registe
Slide 35: Measures to Improve User Environment (1)
3. Appendix Measures to Improve User Environment(1) GREE patrol system runs 24 hours a day, 365 days a year EMA (Content Evaluation and Patrol operates 24 hours, 365 days per year, monitoring posts systematically and by visual Monitoring Association) checks Certified as a GREE Patrol Centers wer
Slide 36: Measures to Improve User Environment (2)
3. Appendix Measures to Improve User Environment (2) Development of a social gaming environment that people can use safely Efforts both inside and outside the company Advisory Board We established the User Environment Improvement Committee, headed by the CEO User We also established an advisory
Slide 37: Measures to Improve User Environment (3)
3. Appendix Measures to Improve User Environment(3) Educational Activities On- and Off-site Educational activities on-site GREE has established links to educational pages from each of our services Educational app, Manabou! Asobou! Rules of the Internet includes services for children of various a
Slide 38: ■ This document includes some forecasts, which are based on currently available information. The
■ This document includes some forecasts, which are based on currently available information. The authenticity of the information is not guaranteed. Actual performance may differ due to various factors. ■ When producing this document, we were careful not to include errors or omissions, but the authen