Gree Holdings.inc. · TSE:3632

Gree Holdings.inc — FY2015 Q2 Earnings Presentation

39 slides from Gree Holdings.inc's earnings presentation, Feb 4, 2015

  1. Slide 1: FY2015 Second Quarter Financial Results

    GREE, Inc. FY2015 Second Quarter Financial Results February 4, 2015 Copyright © GREE, Inc. All Rights Reserved.

  2. Slide 2: Executive Summary

    Executive Summary  Net sales ¥24.1 billion, operating income ¥4.7 billion ⁃ Net sales and operating income exceeded forecasts due to a firming of revenues from first-party and partner web games Financial （2Q forecast: Net sales ¥23.6 billion, operating income ¥4.1 billion) Results Overview ⁃ Record

  3. Slide 3: Contents

    Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.

  4. Slide 4: 1. Financial Results Overview

    Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.

  5. Slide 5: FY15 2Q Financial Results Overview

    1. Financial Results Overview (Consolidated) FY15 2Q Financial Results Overview Net sales of ¥24.1 billion, operating income of ¥4.7 billion Net loss of ¥7.7 billion due to extraordinary loss on goodwill impairment Billions of yen FY15 2Q FY15 1Q QoQ FY14 2Q YoY Net sales1 24.12 25.42 -1.30 32.62 -8

  6. Slide 6: Net sales, EBITDA, and Operating Income

    1. Financial Results Overview (Consolidated) Net sales, EBITDA, and Operating Income Operating margin decreased by 5.5 percentage points to 19.6% （億円） Billions of yen 400 40 40.0% 35.33 32.62 31.07 32.0% 27.7% 28.1% 26.58 25.42 25.1% 24.12 23.1% 200 20 19.6% 20.0% 11.64 10.96 11.67 9.78 9.95 9.15 7.

  7. Slide 7: Operating Income Analysis

    1. Financial Results Overview (Consolidated) Operating Income Analysis Operating income decreased by ¥1.64 billion to ¥4.7 billion, mainly due to impact of decline in net sales Billions of yen ¥1.64bn decrease 6.38 -1.30 -0.07 -0.27 4.73 Decrease in Increase in Increase in net sales variable costs f

  8. Slide 8: FY15 2Q Cost Structure

    1. Financial Results Overview (Consolidated) FY15 2Q Cost Structure Total costs increased ¥0.35 billion to ¥19.4 billion Billions of yen FY15 FY15 FY14 Factors in change（QoQ) 2Q 1Q QoQ 2Q YoY Increased mass marketing toward end of year Advertising 3.15 2.90 0.25 3.3 -0.15 (ratio to net sales: 1Q 11.

  9. Slide 9: FY15 2Q Extraordinary Gains and Losses

    1. Financial Results Overview (Consolidated) FY15 2Q Extraordinary Gains and Losses Recorded extraordinary gains on the sale of investment securities, but recorded a total extraordinary loss of ¥11.7 billion due to extraordinary losses related to goodwill impairment Billions of yen Breakdown Gain/lo

  10. Slide 10: Extraordinary loss due to goodwill impairment

    1. Financial Results Overview (Consolidated) Extraordinary loss due to goodwill impairment Recorded impairment charges related to goodwill associated with OpenFeint and Pokelabo, but we maintain firm earning power and a stable financial base as we pursue our shift to native games OpenFeint, Inc. Pok

  11. Slide 11: FY15 Full-year Earnings Forecast

    1. Financial Results Overview (Consolidated) FY15 Full-year Earnings Forecast FY15 full-year forecast: net sales of ¥98.0 billion; operating income of ¥20.0 billion Billions of yen FY15 Full-year 1Q Actual 2Q Actual 2H Forecast Forecast Net sales 25.4 24.1 48.5 98.0 Operating income 6.4 4.7 8.9 20.0

  12. Slide 12: 10th Anniversary Dividend, Stock Repurchase

    1. Financial Results Overview (Consolidated) 10th Anniversary Dividend, Stock Repurchase  FY2015 Year-end Dividend 1 ⁃ Plan to pay a 10th anniversary dividend of ¥10 per share (at year end)  Stock repurchase 1. Class of stock to be repurchased: GREE common stock 2. Total no. of shares to be repurc

  13. Slide 13: 2. Operational Overview

    Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.

  14. Slide 14: FY15 Strategy and FY15 2Q Update

    2. Operational Overview: Summary FY15 Strategy and FY15 2Q Update FY15  Decisive pivot to native game business structure Strategy*  Target turnaround in revenues through creation of native game hit titles  Japan native game business ⁃ Made steady progress with native shift through expansion of na

  15. Slide 15: FY15 2Q Coin Consumption (Overall)

    2. Operational Overview: Game Business KPIs FY15 2Q Coin Consumption (Overall) Overall consumption declined 4% to 34.8 billion coins Ratio of consumption on smartphones to total grew to 76% Coin Consumption Composition(%) Billions of coins 600 60 60 100% 50.8 27% 26% 24% 47.0 32% 29% 35% 44.2 17.7 3

  16. Slide 16: FY15 2Q Coin Consumption (Native Games)

    2. Operational Overview: Game Business KPIs FY15 2Q Coin Consumption (Native Games) Shometsu Toshi grew substantially on effective mass marketing including TV advertising. Native game coin consumption grew 2% to 10.4 billion coins Billions of coins 140 14 12.6 12.8 12.7 11.2 Japan market 10.2 10.4 5

  17. Slide 17: FY15 2Q Coin Consumption (Web Games)

    2. Operational Overview: Game Business KPIs FY15 2Q Coin Consumption (Web Games) Earnings from first-party and co-developed titles stabilized, but overall web game consumption fell 6% to 24.5 billion coins Billions of coins 400 40 38.2 First-party / Co-developed 34.2  Achieved steady earnings contr

  18. Slide 18: Image of top line

    2. Operational Overview: Japan Game Business (Overall) FY15 2H onward Image of top line Achieved steady momentum in native game business revenues during 2Q. From second half, aim to use firmer web game revenues to drive a turnaround based on new native game releases Targeting a turnaround with a lay

  19. Slide 19: Working to create new hit titles

    2. Operational Overview: Japan Game Business (Native) FY15 2Q/3Q Working to create new hit titles Expanding native development operations and making qualitative improvements to development capabilities; plan to release new titles from 3Q with aim of creating new hits Increasing development pipeline

  20. Slide 20: Strengthening development capabilities

    2. Operational Overview: Japan Game Business (Native) FY15 2Q Strengthening development capabilities Made steady improvements to native game development capabilities with Garage titles.1 Have released total of 17 titles to date; 11 titles in development planned for release from 3Q Recent releases 2

  21. Slide 21: Growth of existing titles

    2. Operational Overview: Japan Game Business (Native) FY15 2Q Growth of existing titles Generated strong growth in revenues from Shometsu Toshi through effective mass marketing including TV advertising; first title from Wright Flyer Studios to rank within Top 30 Grossing Growth in Shometsu Toshi TV

  22. Slide 22: Pipeline for new titles (1/5)

    2. Operational Overview: Japan Game Business (Native) FY15 3Q Pipeline for new titles (1/5) Pazukue, an all-new fusion of puzzle and tower defense gameplay planned for release in 3Q Pipeline for new titles Pazukue Wright Flyer Studios Planned for release in 3Q  Clear puzzles to summon “phantoms” an

  23. Slide 23: Pipeline for new titles (2/5)

    2. Operational Overview: Japan Game Business (Native) FY15 3Q Pipeline for new titles (2/5) POITTO HERO, a joint project between Pokelabo and SEGA Networks Pre-registration starts this spring Pipeline for partner titles POITTO HERO Pokelabo/ SEGA Networks Pre-registration scheduled to start this spr

  24. Slide 24: Pipeline for new titles (3/5)

    2. Operational Overview: Japan Game Business (Native) FY15 3Q Pipeline for new titles (3/5) First co-developed title with LINE planed for release on LINE GAME in 4Q New title to be released on LINE GAME  New title developed by Wright Flyer Studios will be released through LINE and GREE joint ventur

  25. Slide 25: Pipeline for new titles (4/5)

    2. Operational Overview: Japan Game Business (Native) FY15 3Q Pipeline for new titles (4/5) Project Weapon (tentative), developed by Trifort, scheduled for release this spring First release under the GREE and KDDI mobile game publishing partnership Pipeline for published titles Project Weapon (t ent

  26. Slide 26: Pipeline for new titles (5/5)

    2. Operational Overview: Japan Game Business (Native) FY15 3Q Pipeline for new titles (5/5) Releasing key titles in overseas markets in collaboration with major publishers Pipeline for cross-border titles China market Global market NARUTO Shinobi Masters CHINA MOBILE GAMES AND ENTERTAINMENT GROUP LI

  27. Slide 27: Steady Earnings Contribution

    2. Operational Overview: Japan Game Business (Web) FY15 2Q Steady Earnings Contribution Achieved steady earnings contribution from web games while streamlining operations Revenues from feature phones stabilizing, smartphone revenues on turnaround trend Stabilizing of first-party and co-developed tit

  28. Slide 28: Pipeline for new titles

    2. Operational Overview: Japan Game Business (Web) FY15 3Q Pipeline for new titles Expanding titles in popular genres and titles based on strong IP in collaboration with leading partners Pipeline for partner titles Rebellion Blade Million Arthur Extasis GRIPHONE Pre-registration now open Pre-registr

  29. Slide 29: Initiatives at U.S. Studio

    2. Operational Overview: Overseas Game Business FY15 2Q/3Q Initiatives at U.S. Studio Month-on-month revenue growth on firm sales of War of Nations and Knights & Dragons. War of Nations achieved strong growth in Android version Update on U.S. studio Monthly revenues at U.S. studio Higher revenues fr

  30. Slide 30: Advertising Business

    2. Operational Overview: Expanding Business Domains FY15 2Q/3Q Advertising Business Strong start in January to sales of global ad distribution platform AdColony with strong demand from advertisers and steady progress in securing media partners Strong start to sales of AdColony Strong demand from adv

  31. Slide 31: Developing a home-related services platform

    2. Operational Overview: Expanding Business Domains FY15 2Q/3Q Developing a home-related services platform Acquired sekaie Inc., provider of online fixed-price renovation service Renoco Aim to become a top player in the rapidly growing online renovation service industry Revenue growth in online reno

  32. Slide 32: 3. Appendix

    Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.

  33. Slide 33: FY14 2Q Cost Structure

    3. Appendix FY14 2Q Cost Structure Millions of yen FY15 2Q FY15 1Q QoQ FY14 2Q YoY Rental charges 943 947 -4 1,256 -314 Labor costs 3,044 2,937 107 3,961 -917 Others 2,653 2,304 349 3,100 -447 Cost of sales 6,640 6,188 451 8,317 -1,678 Advertising 3,150 2,904 246 3,304 -154 Commission fees 4,612 4,7

  34. Slide 34: FY15 2Q Balance Sheet

    3. Appendix FY15 2Q Balance Sheet Billions of yen FY15 2Q FY15 1Q QoQ FY14 2Q YoY Current assets 1,01.69 90.39 11.30 89.82 11.87 Fixed assets 37.89 54.96 -17.07 62.45 -24.56 Total assets 139.58 145.34 -5.76 152.27 -12.69 Current liabilities 28.32 27.35 0.97 37.75 -9.43 Fixed liabilities 2.01 3.19 -1

  35. Slide 35: Coin Consumption

    3. Appendix Coin Consumption Overseas Japan Millions of dollars Billions of coins 80 50 500 72 70 44.1 68 39.7 60 36.9 53 32.9 49 20.2 30.8 29.1 18.4 17.5 40 250 15.9 25 14.7 14.4 23.9 21.3 19.4 17.1 16.1 14.8 0 0 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q FY14 FY15 FY14 FY15 Notes: ■Third-party ■First-par

  36. Slide 36: Coin Consumption (Smartphone Web Games)

    3. Appendix Coin Consumption (Smartphone Web Games) Coin consumption Composition (%) Billions of coins 240 24 100% 20.5 19.4 32% 18.8 33% 34% 35% 35% 38% 17.2 16.7 6.5 16.0 6.5 6.4 6.1 5.9 6.0 120 12 50% 68% 67% 66% 65% 65% 62% 14.0 12.9 12.3 11.1 10.8 10.0 0 0% 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q F

  37. Slide 37: Breakdown of Group Headcount

    3. Appendix Breakdown of Group Headcount * Number of employees Headcount at Group companies End-2Q Japan Game Business - 966 Native Game Business Includes Pokelabo, Wright Flyer Studios (457) Web Game Business - (374) Shared game depts. - (135) Includes GREE International (U.S. Studio), GREE Native

  38. Slide 38: Partnership with MakeSchool

    3. Appendix: Native Game Business Strengthened personnel development through partnership with MakeSchool In February 2015, formed a business partnership with MakeSchool, which provides mobile app development courses. Aim to facilitate the training of both internal and external personnel as part of a

  39. Slide 39:  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

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