Slide 1: FY2017 Fourth Quarter Financial Results
GREE, Inc. FY2017 Fourth Quarter Financial Results August 3, 2017 Copyright © GREE, Inc. All Rights Reserved.
Slide 2: Executive Summary
Executive Summary Net sales ¥65.4 billion, operating income ¥8.0 billion, EBITDA ¥10.1 billion ⁃ Created many hit titles in release blitz, achieved tur naround in game Full- business year ⁃ Leveraged operational capabilities to stabilize sales of long-running titles ⁃ Game operation business trans
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: FY17 Full-Year and 4Q Financial Results Overview
1. Financial Results Overview (Consolidated ) FY17 Full-Year and 4Q Financial Results Overview FY17 net sales of ¥65.4 billion, operating income of ¥8.0 billion 4Q FY17 net sales of ¥19.2 billion, operating income of ¥2.4 billion Billions of yen FY17 FY17 4Q FY16 FY17 3Q YoY QoQ Net sales 65.37 -4.5
Slide 6: Net Sales, EBITDA, and Operating Income
1. Financial Results Overview (Consolidated) Net Sales, EBITDA, and Operating Income Growth in quarterly sales and income both QoQ and YoY Billions of yen 20.0 19.2 25.0% 15.6 15.9 15.3 14.9 17.1% 14.2% 12.5% 10.0 12.5% 9.7% 9.8% 2.9 3.1 2.7 2.5 2.4 2.2 2.1 2.2 1.5 1.5 0.0 0.0% 4Q 1Q 2Q 3Q 4Q FY17 N
Slide 7: Operating Income Analysis
1. Financial Results Overview (Consolidated) Operating Income Analysis Operating income increased by ¥0.86 billion due to sales growth Billions of yen ¥0.86 bn Increase ＋3.35 -2.17 -0.32 2.41 1.55 Operating Increase Increase Increase Operating income in net in variable in fixed income sales costs co
Slide 8: FY17 4Q Cost Structure
1. Financial Results Overview (Consolidated) FY17 4Q Cost Structure Invested aggressively in advertising for hit titles Billions of yen FY17 FY17 FY16 Factors in change（QoQ） 4Q QoQ YoY 3Q 4Q Increase from investment in ads for hit titles Advertising 1.77 0.88 0.56 (3Q: 5.5% → 4Q: 9.2%) 0.88 1.21 Com
Slide 9: Difference between Results and Forecast
1. Financial Results Overview (Consolidated) Difference between Results and Forecast Net sales up ¥3.4 billion, operating income up ¥1.0 billion Billions of yen FY17 Actual Forecast Difference Net sales 65.4 62.0 3.4 Operating income 8.0 7.0 1.0 Ordinary income 10.0 8.6 1.4 Net income 12.1 11.0 1.1
Slide 10: Fiscal Year-End Dividend
1. Financial Results Overview (Consolidated) Fiscal Year-End Dividend Plan to pay dividend of ¥11 per share FY17 Forecast FY16 Actual Record date June 30, 2017 June 30, 2016 Dividend per share ¥11 ¥8 Total amount ¥2.586 billion ¥1.875 billion Payout ratio (consolidated) 21.3% 22.3% Effective date Se
Slide 11: FY18 1Q Earnings Forecast
1. Financial Results Overview (Consolidated) FY18 1Q Earnings Forecast Net sales ¥20.5 billion, operating income ¥1.5 billion, EBITDA ¥1.9 billion Billions of yen FY17 4Q FY18 1Q Difference Actual Forecast Net sales 19.2 20.5 1.3 Operating income 2.4 1.5 -0.9 Ordinary income 2.8 1.5 -1.3 Net income
Slide 12: 2. Operational Overview
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 13: Game Business, Native Games: Progress Made
2. Operational Overview: Game Business, Native Games 4Q Topics Progress Made Coin Consumption Topics Billions of coins Four new titles released, all reached 120 12.0 top 20 10.0 60 6 5.4 No. 1 No. 8 4.6 4.1 3.7 0 4Q 1Q 2Q 3Q 4Q No. 6 No. 12 FY16 FY17 ※ Rankings indicate highest sales ranking reach
Slide 14: Another Eden: The Cat Who Goes Beyond Time
2. Operational Overview: Game Business, Native Games 4Q Topics Another Eden: The Cat Who Goes Beyond Time Released April 12; TV commercials aired starting July 21 to bolster major update Major update TC commercials airing アップデート予定 画像挿入予定 - Single play RPG from an all-star development staff 14 Copyri
Slide 15: SINoALICE
2. Operational Overview: Game Business, Native Games 4Q Topics SINoALICE Released June 6; planning to further strengthen operations through large-scale collaborations, etc. Over 2 million downloads Plan to launch large-scale collaboration 画像挿入予定 コロシアム本番実装 ニーアコラボ - Battle fantasy RPG for smartphones
Slide 16: Senki Zesshou SYMPHOGEAR XD Unlimited
2. Operational Overview: Game Business, Native Games 4Q Topics Senki Zesshou SYMPHOGEAR XD Unlimited Released June 26; full-scale media mix promotion TV commercials airing during anime series broadcast Created new storyline for game 画像挿入予定 画像挿入予定 アニメの3.5期をゲーム内だけで展開する 声優イベント アニメのキービジュアル ゲーム外プロモ施策 - S
Slide 17: Is It Wrong to Try to Pick Up Girls in a Dungeon: Memoria Freeze
2. Operational Overview: Game Business, Native Games 4Q Topics Is It Wrong to Try to Pick Up Girls in a Dungeon: Memoria Freeze Released June 19 after successful pre -release media mix promotion TV commercials aired during Over 3 million downloads anime series broadcast - Smartphone game based on a
Slide 18: Game Business, VR: Progress Made
2. Operational Overview: Game Business , VR 4Q Topics Progress Made Progress in investment, development and market promotion No. 1 ranked VR game on Steam Hosted Japan VR Summit in Nagoya Developed jointly with Square Enix The largest VR conference in Japan - Began distribution on Steam in May; - It
Slide 19: Review and Summary of FY17
2. Operational Overview: Review and Summary of FY17 FY17 Review Summary FY17 Business Plan Review Achieve Overall turnaround in - 4Q coin consumption up sharply QoQ game business - Released eight titles, one of which was developed for Native game Japan Release blitz overseas markets Game business -
Slide 20: Release Blitz: Multiple titles in top 50 sales rankings
2. Operational Overview: Review and Summary of FY17 FY17 Review Release Blitz Multiple titles in top 50 sales rankings Ranking Ranking 1st 12th SINoALICE Senki Zesshou SYMPHOGEAR XD Unlimited 6th 45th Another Eden: A Farewell to Arms The Cat Who Goes Beyond Time 8th 46th Is It Wrong to Try to Pick U
Slide 21: Turnaround in game business
2. Operational Overview: Review and Summary of FY17 FY17 Review Turnaround in game business Achieved upturn in coin consumption, especially in native games Coin consumption turned upward in 4Q Native games account for over 50% of coin consumption Billions of coins Upturn 21.5 20.1 19.0 18.5 18.4 50%
Slide 22: Achieved solid results with long-running titles
2. Operational Overview: Review and Summary of FY17 FY17 Review Achieved solid results with long-running titles Anniversary campaigns stabilized coin consumption for long-running titles Coin consumption stable Anniversary campaigns throughout the year 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 22 Copyright © GREE, Inc
Slide 23: Strategic pivot in overseas business
2. Operational Overview: Review and Summary of FY17 FY17 Review Strategic pivot in overseas business Establishing system to adapt/operate titles developed in Japan for global markets; increase number of globally distributed titles Pre-FY18 model: FY18 onward: Focus on development in Japan and overse
Slide 24: Growth in game operation business
2. Operational Overview: Review and Summary of FY17 FY17 Review Growth in game operation business Coin Consumption Topics Billions of coins Transaction volume grew sharply to 10 9.8 nearly 10 billion coins 100 Business operates 13 titles 6.9 50 5 4.5 2.2 0 1Q 1H 2Q累計 1Q-3Q 3Q累計 Full-year 4Q累計 GR
Slide 25: Narrowing focus of advertising and media business
2. Operational Overview: Review and Summary of FY17 FY17 Review Narrowing focus of advertising and media business Growth in media page LIMIA app ranked top in views its category 2.8x QoQ growth App Store（free） Google Play（free） ×2.8 3Q 4Q • Steady growth in page views at websites including LIMIA and
Slide 26: Targeting Medium-Term Growth
2. Operational Overview: Medium -Term Plan Medium-Term Plan Targeting Medium-Term Growth Targeting sustainable growth as we build three earnings pillars Scale Third pillar: New businesses Sowing the seeds of new business Second pillar: Advertising and media business Expanding scale of operations to
Slide 27: FY18 Strategy Summary
2. Operational Overview: FY18 Business Strategy FY18 Strategy Summary - Aggressive push in preparation for medium-to-long-term leap Overall forward - Continue strategic investment in growth businesses Game/entertainment Native - Drive earnings growth through “game engine, IP, and global” game strate
Slide 28: Game engine, IP, and global
2. Operational Overview: FY18 Business Strategy FY18 Strategy Game and entertainment business strategy Game engine, IP, and global Engines Increase our sustainable competitive advantage ✖ Increase hit rate and IP profitability ✖ Global Increase earnings from IP- based titles 28 Copyright © GREE, Inc
Slide 29: Strategy 1: Game engine strategy
2. Operational Overview: FY18 Business Strategy FY18 Strategy Strategy 1: Game engine strategy Increase our sustainable competitive advantage Game quality and achieving differentiation through quality Contents ・Characters ・Scenarios Enhance ・Immersion, etc. Contents Enhance Contents Apply Technical
Slide 30: Strategy 2: IP strategy
2. Operational Overview: FY18 Business Strategy FY18 Strategy Strategy 2: IP strategy Increase hit rate and profitability and make well-balanced use of a wide range of IP First-party IP Long-term growth from IP assets developed in house Wide Co-developed IP range of IP Created in cooperation with ou
Slide 31: Strategy 3: Global strategy
2. Operational Overview: FY18 Business Strategy FY18 Strategy Strategy 3: Global strategy Increase earnings from IP-based titles through our globally targeted Japan-based development system and by working with our partners Create and secure global IP Distribution Japan-based partnerships development
Slide 32: Example of "game engine, IP, and global" strategy
2. Operational Overview: FY18 Business Strategy FY18 Strategy Example of “game engine, IP, and global” strategy Boosting earnings by leveraging engines to maximize appeal of globally effective IP and developing the global market Engines Engines that enhance the × IP Japan-based IP that is × Global A
Slide 33: Development Pipeline
2. Operational Overview: FY18 Business Strategy FY18 Strategy Development Pipeline Six titles in development 1H 2H F18 full-year First-party IP Co-developed IP 1 0 1 （1） （0） （1） Third-party IP 1 （1） 4 （4） （5） 5 Notes: • All titles in pipeline have received approval for development; titles still unde
Slide 34: AKB48 Stage Fighter 2 Battle Festival
2. Operational Overview: FY18 Business Strategy In Development AKB48 Stage Fighter 2 Battle Festival New smartphone version of AKB48 Stage Fighter (distributed by GREE), pre-registration underway - Team up with fans of your favorite AKB48 member for real time battles of up to 16 versus 16 - Integrat
Slide 35: Library Cross Infinite
2. Operational Overview: FY18 Business Strategy In Development Library Cross Infinite Joint development by Idea Factory and Wright Flyer Studios, pre-registration underway - All-new bittersweet romance puzzle RPG featuring an all-star cast of popular characters from Otomate (a division of Idea Facto
Slide 36: App, Video, and Investment
2. Operational Overview: FY18 Business Strategy FY18 Strategy Advertising and media business App, Video, and Investment Establish media management App system with high continuation rate ✖ Video Accumulate high quality video production know-how ✖ Investment Establish our position in multiple genres 3
Slide 37: 3. Appendix
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 38: Coin Consumption (1)
3. Appendix Coin Consumption (1) Overall coin consumption Web game coin consumption Billions of coins Billions of coins 250 25.0 150 15.0 13.8 21.5 12.7 20.1 19.0 11.9 18.5 18.4 2.2 10.9 3.7 5.6 9.9 3.3 2.9 2.5 5.3 7.7 4.9 4.6 125 12.5 75 7.5 4.7 10.1 8.4 9.4 8.9 8.2 11.5 7.4 6.9 6.3 7.5 5.2 6.4 6.3
Slide 39: Coin Consumption (2)
3. Appendix Coin Consumption (2) Japan Native Games Overseas Native Games Billions of coins Billions of coins 120 12.0 30 3.0 10.0 2.7 2.5 2.1 1.7 60 5.4 1.5 6.0 15 1.5 4.6 4.1 3.7 0 0 4Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q 3Q 4Q FY16 FY17 FY16 FY17 Coin consumption declined temporarily owing to the business Note:
Slide 40: Coin Consumption (3)
3. Appendix Coin Consumption (3) Overseas Japan Millions of U.S. dollars Billions of coins 30 22.0 220 20.0 25 23 17.5 17.3 16.0 16.3 19 16 8.7 14.2 9.3 8.5 9.2 15 14 110 11.0 8.7 8.0 7.5 7.0 5.8 0 0 4Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q 3Q 4Q FY16 FY17 FY16 FY17 Notes: ■■ Third-party サードパーティ ■ First-party/Co- ■
Slide 41: 4Q FY17 Cost Structure
3. Appendix 4Q FY17 Cost Structure Millions of yen FY17 4Q FY17 3Q FY16 4Q QoQ YoY Rental charges 889 105 △101 783 990 Labor costs 2,283 163 18 2,120 2,265 Others 3,389 510 1,914 2,879 1,475 Cost of sales 6,560 779 1,831 5,782 4,729 Advertising 1,765 883 554 882 1,211 Commission fees 4,365 1,242 1,4
Slide 42: 4Q FY17 Balance Sheet
3. Appendix 4Q FY17 Balance Sheet Billions of yen FY17 4Q FY17 3Q FY16 4Q QoQ YoY Current assets 96.46 -2.41 1.77 98.87 94.69 Fixed assets 26.50 -2.10 8.82 28.60 17.68 Total assets 122.95 -4.51 10.58 127.47 112.37 Current liabilities 12.49 -1.38 3.10 13.87 9.39 Fixed liabilities 0.58 -0.86 0.21 1.44
Slide 43: Breakdown of Group Headcount
3. Appendix Breakdown of Group Headcount Number of employees Headcount at Group companies end-4Q Japan Game Business - 885 Native Game Business Pokelabo, Wright Flyer Studios (378) Web Game / Operation Business funplex (277) Shared game depts. ExPlay (230) Includes GREE International Entertainment,
Slide 44: ■ 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