Slide 1: FY2014 Second Quarter Financial Results
GREE, Inc. FY2014 Second Quarter Financial Results February 14, 2014 Copyright © GREE, Inc. All Rights Reserved.
Slide 2: Executive Summary
Executive Summary Net sales of ¥32.6 billion; operating income of ¥9.2 billion Financial results ⁃ Overall monthly net sales bottomed out in October and recovered from November overview ⁃ Despite the negative factor of a decline in net sales, limited the decrease in operating income to ¥0.6 billio
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: FY14 2Q Financial Results Overview
1. Financial Results Overview (Consolidated) FY14 2Q Financial Results Overview Net sales of ¥32.6 billion; operating income of ¥9.2 billion Monthly net sales bottomed out in October and recovered from November Billions of yen FY14 2Q FY14 1Q QoQ FY13 2Q YoY Net sales1 32.6 35.3 -2.7 39.4 -6.8 EBITD
Slide 6: Net sales, EBITDA, and Operating Income
1. Financial Results Overview (Consolidated) Net sales, EBITDA, and Operating Income Improved operating margin by 0.4 percentage points to 28.1% Billions of yen 500 50.0% 50 41.5% 39.4 37.9 37.9 37.0 36.2% 35.3 32.6 28.5% 27.7% 28.1% 25 250 21.1% 25.0% 16.7 15.8 15.8 14.3 12.7 10.8 11.6 11.0 9.8 9.8
Slide 7: Operating Income Analysis
1. Financial Results Overview (Consolidated) Operating Income Analysis Despite a ¥2.7 billion decline in net sales, limited decrease in operating income to ¥0.6 billion through cost cuts totaling ¥2.1 billion Billions of yen ¥0.6bn decrease 9.8 -2.7 ＋0.7 9.2 ＋1.4 Fixed cost reductions Decrease in Va
Slide 8: FY14 2Q Cost Structure
1. Financial Results Overview (Consolidated) FY14 2Q Cost Structure Cut total costs by 8% QoQ to ¥23.5 billion through strict cost control. Met, ahead of schedule, target reduction committed to in previous results announcement 1 Billions of yen FY14 FY14 FY13 Factors in change (QoQ) 2Q 1Q QoQ 2Q YoY
Slide 9: Earnings Forecast
1. Financial Results Overview (Consolidated) Earnings Forecast FY14 nine-month forecast: net sales ¥99.0 billion; operating income: ¥27.0 billion （FY14 3Q three-month forecast: net sales ¥31.1 billion; operating income ¥8.1 billion) Billions of yen FY14 9M forecast FY13 9M actual Change (1Q-3Q) (1Q-
Slide 10: 2. Operational Overview
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 11: Business Update Summary
2. Operational Overview: Summary Business Update Posted firm sales growth in overseas markets, meeting commitment to achieve monthly profitability in overseas operations.1 On track with developing first-party titles in new genres, targeting turnaround in 4Q FY14 1H Initiatives Progress in FY14 2Q Re
Slide 12: Coin Consumption (Overall)
2. Operational Overview Coin Consumption (Overall) Overall 8% decrease on large impact of decline in feature phone consumption Smartphones reached approximately 68% of total coin consumption Coin consumption Composition (%) Billions of coins (億コイン) 600 57.7 100% 60 56.1 55.0 52.6 50.8 47.0 35% 32% 4
Slide 13: Coin Consumption (Smartphones)
2. Operational Overview: Summary Coin Consumption (Smartphones) In native games, strong sales in overseas markets offset weak sales in Japan, resulting in a slight increase. Web games (smartphones) recovered from November Coin consumption Composition (%) Billions of coins 400 40 100% 33.1 31.6 32.2
Slide 14: Release Schedule and Product Strategy
2. Operational Overview: Summary Release Schedule and Product Strategy Plan to release limited number of titles with emphasis on profitability 1H Releases 2H Releases (Actual) (Planned) 2H Product Strategy Approx. New titles Partner 11 titles 7 titles ⁃ Continue new title releases by joint venture
Slide 15: Coin Consumption (Overall)
2. Operational Overview: Web Game Business Coin Consumption (Overall) Overall consumption down 10% QoQ on large impact of decline in consumption on feature phones (億コイン) Billions of coins 600 24 50.7 51.0 45.8 First-party/ Co-developed 40.6 Downward momentum continued mainly in 38.2 feature phones
Slide 16: Coin Consumption (Smartphones)
2. Operational Overview: Web Game Business Coin Consumption (Smartphones) Coin consumption on smartphones declined 5.4% QoQ but recovered on a monthly basis Coin consumption Composition (%) Billions of coins (億コイン) 240 24 100% 20.5 19.8 20.0 19.6 19.4 35% 32% 33% 39% 42% 40% 17.3 6.5 8.0 6.8 6.5 8.3
Slide 17: Recovery in Monthly Coin Consumption
2. Operational Overview: Web Game Business Recovery in Monthly Coin Consumption Improved monthly KPIs for consumption and user activity through product and marketing initiatives Web games (Smartphones) Product and marketing Coin consumption initiatives Coin consumption increased 15% MoM Improved con
Slide 18: Growth in New Titles by Leading Partners
2. Operational Overview: Web Game Business Growth in New Titles by Leading Partners Steady growth in several new titles by leading partners Total coin consumption on six new titles ×33 7月 July 8月 August 9月 September 10月 October 11月 November December 12月 Title releases 1 3 4 5 6 Driland Maogun vs Y
Slide 19: Pipeline for Partner Releases
2. Operational Overview: Web Game Business Pipeline for Partner Releases Steady flow planned in 2H of releases of titles with high growth potential Key title releases in 2H Masou Eishou Battle Star MONSTER HUNTER: ROAR OF CARDS1 GxYz, Inc. CAPCOM CO., LTD. Released in January 2014 Due for release on
Slide 20: Coin Consumption
2. Operational Overview: Native Game Business Coin Consumption Posted firm sales growth in overseas markets, meeting commitment to achieve monthly Billions of coins 2 profitability in overseas operations1 140 14 12.6 12.8 12.0 Japan market 5.5 Improved profitability through portfolio adjustments 9
Slide 21: Japan Native Game Business
2. Operational Overview: Native Game Business (Japan) Japan Native Game Business Revenue from existing Pokelabo titles recovered from December; plan to release new titles in 2H to target renewed growth. Steady progress with development of new titles in new genres Revenue from Pokelabo titles Develop
Slide 22: Strong Growth of Knights & Dragons
2. Operational Overview: Native Game Business (Overseas) Strong Growth of Knights & Dragons One year from release, 30-day revenue topped $5 million Won 1st place in I Can’t Quit You category of Google PlayTM Players’ Choice Awards Won 1st place in Google PlayTM Continued growth in revenue user poll
Slide 23: Growth in overseas markets
2. Operational Overview: Native Game Business (Overseas) Growth in overseas markets Grew annual revenue of overseas business from zero start to US$200 million in 3 years. Pursuing further sales growth and earnings contribution in 2014 Overseas business sales Invested in growth Increase earnings cont
Slide 24: Promoting Continued Growth
2. Operational Overview: Native Game Business (Overseas) Promoting Continued Growth Pursue continued growth by growing existing hit titles and launching new titles Pursuing top-line growth New hit titles released from FY13 New titles for release from 2H Franchise versions Timing TBD (Planned for 2H)
Slide 25: Strengthening Development Capabilities
2. Operational Overview: Native Game Business (Global) Strengthening Development Capabilities Implementing program in U.S. and Japan to plan and develop new titles using small teams in short timeframes. Releasing titles onto market to test new gameplay and engineering techniques toward improving exi
Slide 26: FY14 2Q Progress and 2H Initiatives
2. Operational Overview: Expanding Business Domains FY14 2Q Progress and 2H Initiatives FY14 2Q Progress FY14 H2 Initiatives Favorable results in affiliate and reward business Aim to increase smartphone revenue Advertising Smartphone ad sales were firm, but not through development of new ad pr
Slide 27: Cultivating Offline Business
2. Operational Overview: Entertainment Business Cultivating Offline Business Expanding offline business around Internet and entertainment content Trading card game business Clinoppe SiegKrone Series 2 Shingeki no Kyojin Mascot collaborations with regional cities Mascot for Okazaki, Aichi Prefecture
Slide 28: 3. Appendix
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 29: FY14 2Q Cost Structure
3. Appendix FY14 2Q Cost Structure Millions of yen FY14 2Q FY14 1Q QoQ FY13 2Q YoY Rental charges 1,256 1,333 -77 1,091 +165 Labor costs 3,961 3,746 +215 3,119 +842 Others 3,100 2,783 +317 2,135 +966 Cost of sales 8,317 7,862 +455 6,345 +1,973 Advertising 3,304 4,447 -1,143 5,719 -2,415 Commission f
Slide 30: FY14 2Q Balance Sheet
3. Appendix FY14 2Q Balance Sheet FY14 2Q FY14 1Q QoQ FY13 2Q YoY Current assets 89.8 85.2 +4.6 Fixed assets 62.5 61.7 +0.7 Total assets 152.3 146.9 +5.4 Current liabilities 37.7 39.8 -2.0 Fixed liabilities 8.1 10.5 -24 Total liabilities 45.8 50.2 -4.4 Total net assets 106.4 96.7 +9.8 . Cash and cas
Slide 31: Coin Consumption
3. Appendix Coin Consumption Overseas market Japan Market Millions of dollars Billions of coins 80 600 60 56.2 72 54.6 68 51.6 61 46.6 44.1 30.2 39.7 28.6 27.2 23.0 20.2 40 37 30 300 18.4 19 19 26.0 26.0 24.4 23.6 23.9 21.3 0 0 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q FY13 FY14 FY13 FY14 Notes ■Third-par
Slide 32: Japan User Data
3. Appendix Japan User Data（as of December 31, 2013）*1, 2 Total no. of 50.5 million users in Japan GREE Users Number of users Gender breakdown Age breakdown 19 or under 男性 Male 21% 26% 45% 20s 40.6 million *2 55% 30s 女性 Female 23% 40s or above 30% Notes: 1. Pokelabo users counted based on number of
Slide 33: Breakdown of Group Headcount
3. Appendix Breakdown of Group Headcount1 Number of employees (単位：人) 2,051 265 ■ Corporate, Headquarters (includes GREE Business Operations) 142 96 ■ Engineering, Headquarters 764 ■ Advertising, Entertainment, Investment, New Business (includes Glossom, GREE Entertainment Products, GREE Ventures) ■
Slide 34: Established Sendai Customer Support Center
3. Appendix Established Sendai Customer Support Center Established customer support center in Sendai, Miyagi Prefecture to improve quality of customer support Purpose Improve quality of customer support Business Respond to customer inquiries regarding the GREE service Sendai customer service center
Slide 35: 10th Anniversary
3. Appendix 10th Anniversary Plans underway to celebrate 10th anniversary of GREE service and GREE, Inc. 10th anniversary of service launch, GREE 10th Anniversary campaign establishment of GREE, Inc. 10th anniversary of service launch in February 2014 Planning campaign to celebrate anniversary and a
Slide 36: ■ 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 accura