Slide 1: FY2016 Second Quarter Financial Results
GREE, Inc. FY2016 Second Quarter Financial Results February 4, 2016 Copyright © GREE, Inc. All Rights Reserved.
Slide 2: Executive Summary
Executive Summary Financial Surpassed targets with net sales of ¥18.1 billion, Results operating income of ¥4.0 billion Overview ⁃ Net sales beat expectations, advertising and fixed costs successfully controlled Progress in development of native games to be released in 2H ⁃ Energized existing ti
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: FY16 2Q Financial Results Overview
1. Financial Results Overview (Consolidated) FY16 2Q Financial Results Overview Net sales ¥18.1bn, operating income ¥4.0bn Billions of yen FY16 2Q FY16 1Q FY15 2Q QoQ YoY Net sales 18.13 -1.18 -6.0 19.31 24.12 EBITDA 4.36 -0.39 -1.82 4.75 6.18 Operating income 4.00 -0.39 -0.73 4.39 4.73 Ordinary inc
Slide 6: Net Sales, EBITDA, and Operating Income
1. Financial Results Overview (Consolidated) Net Sales, EBITDA, and Operating Income Operating margin narrowed by 0.6 percentage points to 22.1% Billions of yen 300 30% 25.42 25.1% 24.12 21.99 22.3% 22.7% 22.1% 20.92 19.6% 20.1% 200 19.31 20% 18.13 100 8.01 10% 6.38 6.18 6.01 4.73 4.91 5.11 4.75 4.3
Slide 7: Operating Income Analysis
1. Financial Results Overview (Consolidated) Operating Income Analysis Operating income decreased by ¥0.39 billion due to lower sales Billions of yen ¥0.39 bn Decrease 4.39 -1.18 ＋1.10 4.00 -0.30 Operating Decrease Increase Decrease Operating Income in net in variable in fixed Income sales costs cos
Slide 8: FY16 2Q Cost Structure
1. Financial Results Overview (Consolidated) FY16 2Q Cost Structure Total costs decreased by ¥0.8 billion to ¥14.1 billion Billions of yen FY16 FY16 FY15 Factors in change（QoQ） 2Q QoQ YoY 1Q 2Q Mass-media promotion costs (ratio to net sales: 1Q 6.3% → Advertising 1.61 0.40 - 1.54 2Q 8.9%) 1.21 3.15
Slide 9: FY16 Earnings Forecast
1. Financial Results Overview (Consolidated) FY16 Earnings Forecast Net sales of ¥7.2bn, operating income of ¥14.0bn Billions of yen FY16 1H results 2H forecast FY16 forecast Net sales 37.4 34.6 72.0 Operating income 8.4 5.6 14.0 Ordinary income 8.5 5.5 14.0 Net income 4.9 3.1 8.0 Top line ⁃ In th
Slide 10: 2. Operational Overview
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 11: Review and Summary of 2Q
2. Operational Overview: Summary Review and Summary of 2Q Business Plan Review Launch new • Increased sales from Shometsu Toshi by Japan titles and running TV ad generate hit • Made progress toward 2H release of memories Native titles of the Blue game business • Stabilized coin consumption by improv
Slide 12: Native Game Pipeline
2. Operational Overview: Summary Native Game Pipeline Currently 11 titles in development pipeline FY16 FY17 Already Market released 2H 1H Fatal Seeker (co-developed) Approx. 3 titles Approx. 7 titles Japan Guardian Clash (co-developed) 1st party: 2 titles 4 titles Co-developed: 1 title 3 titles Knig
Slide 13: Native Games (Japan): Progress Made
2. Operational Overview: Native Games (Japan ) Progress Made Coin Consumption Topics Billions of coins Shometsu Toshi TV ad successfully boosted 60 sales • Posted highest-ever monthly sales 4.9 4.7 4.7 4.6 4.4 The SAMURAI Kingdom posting strong sales • First TV ad aired in January 30 Plan to a
Slide 14: Energizing Existing Titles
2. Operational Overview: Native Games (Japan ) Energizing Existing Titles Shometsu Toshi The SAMURAI Kingdom Set monthly sales record Aired first TV ad 10月 11月 12月 • Aired TV ad in collaboration with famous • Still posting strong sales more than 2 years musicians after release • Further increased sa
Slide 15: Development of New Titles(1)
2. Operational Overview: Native Games (Japan) Development of New Titles(1) Developing memories of the Blue for release in 2H • High-quality action gameplay was well received by users at Game Party Japan 2016 • Marketing partnership with LINE Note: Screenshots are of development version 14 Copyright
Slide 16: Development of New Titles(2)
2. Operational Overview: Native Games (Japan) Development of New Titles(2) Soul Arms scheduled for release in early spring, started pre-registration sales on January 28 • Players strive to become the ultimate warrior in this full-blown action RPG from Wright Flyer Studios featuring various battle ac
Slide 17: Native Games (Overseas): Progress Made
2. Operational Overview: Native Games (Overseas) Progress Made Coin Consumption Topics Billions of coins European version of Knights & Dragons 60 released in October 5.7 5.2 Signs of stabilization in overseas coin 4.3 consumption 3.9 3.7 2 Q Mo nthly co in co nsumptio n tr e nd 30 0 2Q 3Q 4Q 1Q
Slide 18: Native Games (Overseas): Topics
2. Operational Overview: Native Games (Overseas) Topics Steady growth in Europe Knights & Dragons League of War Mercenaries Expanding sales in European market Under development for release in 2H 10月 Oct 11月 Nov 12月 Dec • Strong sales in US and Europe following • Players create the ultimate mercenary
Slide 19: Web Games: Progress Made
2. Operational Overview: Web Games Progress Made Coin Consumption Topics Billions of coins Launched game operation business 300 • Aiming to achieve sales growth in the 24.5 game operation business market 21.7 - Established Funplex, Inc. 18.8 - Partnership with Mynet Inc. 16.8 15.8 150 New IP-bas
Slide 20: Web Games: Topics
2. Operational Overview: Web Games Topics Established game operation Development of new business IP based titles Full-scale entry into game operation market Danmachi X.I Silbird Stable Operation Customer Spending Satisfaction Acceleration ©Fujino Omori-SB Creative Corp/Danmachi Project • Supplying h
Slide 21: Home-related Business: Topics
2. Operational Overview: Home-related Business Topics Increased sales at Renoco Launch of LIMIA service Online renovation service Home visualization platform Up 130% FY16 1Q FY16 2Q • Sales up QoQ on growth in B2B orders • Providing information related to homes and • Targeting FY2018 sales of ¥10bn
Slide 22: Health & Fitness Business: Topics
2. Operational Overview: Health & Fitness Business Topics Increased number of Lespas affiliate studios Expanding service Free lesson pass service Released apps for iPhone and Android 1,900 studios 800 studios FY15_4Q End-1Q FY16_1Q End-2Q FY16 FY16 • Expanding network in Kansai and • Released apps o
Slide 23: Ad Media Business: Topics
2. Operational Overview: Ad Media Business Topics Launch of video Steady growth at AdColony marketing service Video advertising distribution Video production and casting platform service Up 230% GREE Facebook Twitter YouTube Instagram… 3Q 4Q 1Q 2Q FY15 FY16 • Steady progress in attracting valuable •
Slide 24: VR Business: Topics
2. Operational Overview: VR Business Topics Establishment of GREE VR Exibition and distribution Studio of VR content Sydney a nd The King o f To m b Sa r a h a nd The Vip er 's Cr o w n • Entry in the early stage of VR market, an • Distributing GREE VR Studio’s first VR title for area with medium-te
Slide 25: 3. Appendix
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 26: Coin Consumption (1)
3. Appendix Coin Consumption (1) Overall coin consumption Web game coin consumption Billions of coins Billions of coins 400 300 34.8 24.5 31.3 8.5 21.7 27.9 7.3 25.7 18.8 24.0 10.4 5.9 16.8 5.2 9.1 15.8 4.7 200 150 7.8 16.0 7.0 14.4 6.4 13.0 11.7 11.0 14.0 12.7 11.0 9.9 9.4 10.4 9.5 9.0 8.8 8.3 0 0
Slide 27: Coin Consumption (2)
3. Appendix Coin Consumption (2) Overseas Japan Millions of U.S. dollars Billions of coins 60 400 49 44 29.1 26.1 35 23.6 32 21.7 30 14.4 20.4 30 200 12.7 11.8 10.7 9.8 14.8 13.4 11.8 11.0 10.5 0 0 2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q FY15 FY16 FY16 FY15 FY16 Notes: ■ Third-party ■ サードパーティ ■ First-party/Co
Slide 28: FY16 2Q Cost Structure
3. Appendix FY16 2Q Cost Structure Millions of yen FY16 FY16 FY15 2Q 1Q 2Q QoQ YoY Rental charges 846 - 54 - 97 899 943 Labor costs 2,280 - 402 - 764 2,682 3,044 Others 1,517 - 73 - 1,136 1,590 2,653 Cost of sales 4,643 - 529 - 1,997 5,172 6,640 Advertising 1,614 401 - 1,536 1,212 3,150 Commission f
Slide 29: FY16 2Q Balance Sheet
3. Appendix FY16 2Q Balance Sheet Billions of yen FY16 FY16 FY15 2Q QoQ YoY 1Q 2Q Current assets 90.64 2.33 - 11.04 88.31 101.69 Fixed assets 21.43 0.41 - 16.46 21.02 37.89 Total assets 112.07 2.75 - 27.51 109.33 139.58 Current liabilities 13.97 0.26 -14.34 13.71 28.32 Fixed liabilities 0.68 - 0.02
Slide 30: Breakdown of Group Headcount
3. Appendix Breakdown of Group Headcount Number of employees Headcount at Group companies End-2Q Japan Game Business - 863 Native Game Business Pokelabo, Wright Flyer Studios (490) Web Game Business - (233) Shared game depts. - (140) Includes GREE International (U.S. Studio), GREE Native Game Busine
Slide 31: ■ 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