Slide 1: FY2016 Fourth Quarter Financial Results
GREE, Inc. FY2016 Fourth Quarter Financial Results 4 August, 2016 Copyright © GREE, Inc. All Rights Reserved.
Slide 2: Executive Summary
Executive Summary Net sales ¥69.9 billion, operating income ¥14.2 billion Full- ⁃ Native game business: Made progress on development of new Year titles ⁃ Web game business: Operations off to a smooth start ⁃ New businesses: Launched services for home visual platform LIMIA FY16 Actual Net sales ¥15.6
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 Full-Year and 4Q Financial Results Overview
1. Financial Results Overview (Consolidated) FY16 Full-Year and 4Q Financial Results Overview FY16 net sales of ¥69.9 billion, operating income of ¥14.2 billion 4Q FY16 net sales of ¥15.6 billion, operating income of ¥2.2 billion Billions of yen FY16 4Q FY16 3Q FY15 4Q FY16 YoY QoQ YoY Net sales 69.
Slide 6: Net Sales, EBITDA, and Operating Income
1. Financial Results Overview (Consolidated) Net Sales, EBITDA, and Operating Income Posted one-off costs, including up-front investments, of ¥1.0 billion Operating income grew 20% YoY when adjusted for one-off costs Billions of yen 25.0 25.0% 22.7% 22.1% 21.6% 19.3 18.1 16.8 15.6 14.2% 12.5 12.5% 4
Slide 7: Operating Income Analysis
1. Financial Results Overview (Consolidated) Operating Income Analysis Operating income decreased by ¥1.4 billion to ¥2.2 billion, mainly due to sales decline Fixed costs declined by ¥0.3 billion when adjusted for one-off costs, adjusted operating income topped ¥3.0 billion Billions of yen ¥1.42 Bil
Slide 8: FY16 4Q Cost Structure
1. Financial Results Overview (Consolidated) FY16 4Q Cost Structure Total costs decreased ¥0.2 billion QoQ to ¥13.4 billion Posted one-off costs, including up-front investments, of ¥1.0 billion Billions of yen FY16 FY16 FY15 Factors in change（QoQ） 4Q QoQ YoY 3Q 4Q Increase in platform advertising co
Slide 9: Difference between Results and Forecast
1. Financial Results Overview (Consolidated) Difference between Results and Forecast Net sales of ¥69.9 billion and operating income of ¥14.2 billion Billions of yen FY16 Actual Forecast Difference Net sales 69.9 70.0 -0.1 Operating income 14.2 14.0 0.2 Ordinary income 10.5 12.5 -2.0 Net income 8.4
Slide 10: Fiscal Year-End Dividend
1. Financial Results Overview (Consolidated) Fiscal Year-End Dividend Plan to pay dividend of ¥8 per share FY16 Forecast FY15 Actual Record date June 30, 2016 June 30, 2015 ¥10 Dividend per share ¥8 (memorial dividend) Total amount ¥1.875 billion ¥2.335 billion Payout ratio (consolidated) 22.3% - Ef
Slide 11: FY17 1Q Earnings Forecast
1. Financial Results Overview (Consolidated) FY17 1Q Earnings Forecast FY17 1Q forecast: net sales of ¥13.5 billion; operating income of ¥1.0 billion Billions of yen FY16 4Q FY17 1Q Actual Forecast Difference Net sales 15.6 13.5 -2.1 Operating income 2.2 1.0 -1.2 Ordinary income -0.6 1.0 1.6 Net inc
Slide 12: 2. Operational Overview
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 13: 4Q Topics: Native Games
2. Operational Overview: 4Q Topics Native Games Steady contribution from existing titles Topics Rank Shometsu Toshi 1 In final stages of preparation for upgrade Peak rank: 20th release with improved quality • Conducting closed beta testing of Memories of the Blue • Conducting open beta testing of Cr
Slide 14: 4Q Topics: Web Games
2. Operational Overview: 4Q Topics Web Games Coin Consumption Topics Billions of Coins Start of growth in the game operation 200 20.0 19.5 business • Funplex contributing to earnings through 16.8 growth in portfolio of titles operated 15.8 14.7 13.8 Multiple titles contributing to coin consumption •
Slide 15: 4Q Topics: Home-related Business
2. Operational Overview: 4Q Topics Home-related Business Renoco LIMIA Steady growth in number of orders MAU up 10x in 6 months ×2 ×10 FY14 FY15 FY16 Nov Dec Jan Feb Mar Apr May Jun 2015 2016 • Earnings growth achieved by increasing • Number of specialists registered doubled average sale price QoQ to
Slide 16: 4Q Topics: Health & Fitness Business
2. Operational Overview: 4Q Topics Health & Fitness Business Lespas Smart Sitter Ratio of repeat users (3 months) Steadily growth in number of rising registered sitters +22Pt ×3 End-2Q End-4Q 1Q 2Q 3Q 4Q • Growth in paying members • Number of childcare facilities increasing • Expanding network of af
Slide 17: 4Q Topics: Ad Media Business
2. Operational Overview: 4Q Topics Ad Media Business AdColony ADFULLY Steady sales growth High-growth company added to GREE group +85％ ×20 FY15 4Q FY16 4Q Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2015 2016 • Sales growth achieved by increasing the • Video ad sales grew by 20x in less than a number of
Slide 18: 4Q Topics: VR Business
2. Operational Overview: 4Q Topics VR Business Establishment of Japan VR Summit VR Fund Investment Investing in the top VR companies in North America VR business First summit: May 10, 2016 strategy Tomb of the Golems Market F×G VR WORKS Development Promotion First global VR release by a Tie up with
Slide 19: Review and Summary of FY16
2. Operational Overview: Review and Summary of FY16 FY16 Review Summary Focus on title development following shift to native games FY16 Business Plan Review • Achieve upturn in sales by Overall generating hit titles • Sales have not turned upward • Limited sales contribution ow- • Maximize sales by
Slide 20: Medium-Term Plan: Targeting Medium-Term Growth
2. Operational Overview: Medium-Term Plan Medium-Term Plan Targeting Medium-Term Growth Targeting medium- to long-term growth in our three main business segments as we revitalize our business base Native Game Business Global No. 1 Web Game Business New Businesses New types of games Using the Interne
Slide 21: FY17 Business Strategy
2. Operational Overview: FY17 Business Strategy FY17 plan FY17 Business Strategy Achieve a turnaround in game businesses and continue to invest in new Overall businesses to achieve medium- to long-term growth • Japan business - Strong focus on development ahead of new release blitz Native Game - Dev
Slide 22: Native Games (domestic market)
2. Operational Overview: FY17 Business Strategy FY17 plan Native Games (domestic market) FY14 FY15 FY16 FY17 Stage 1: Stage 2: Shift to Strengthen developme nt native games Release Blitz Stage 1 development titles Stage 2 development titles Wright Flyer In development: Studios W F S 5 titles Pokelab
Slide 23: Native Games (new titles): Naruto Shippuden
2. Operational Overview: FY17 Business Strategy FY17 plan Native Games (new titles) Naruto Shippuden: Ultimate Blazing released July 14 • First smartphone game in the Narutamate home console game series, which has shipped over 15 million units • Sold/distributed by GREE, developed/operated by BANDAI
Slide 24: Native Games (new titles): Memories of the Blue
2. Operational Overview: FY17 Business Strategy FY17 plan Native Games (new titles) memories of the Blue • The ultimate 2D action RPG from a splendid team of creators • In closed beta testing. Currently making final adjustments in preparation for release including marketing in partnership with LINE.
Slide 25: Native Games (new titles): Crash Fight
2. Operational Overview: FY17 Business Strategy FY17 plan Native Games (new titles) Crash Fight • Real-time battle game for up to 6 players • Android version currently in open beta testing in order to make final adjustments ahead of official launch 25 Copyright © GREE, Inc. All Rights Reserved.
Slide 26: Web Games
2. Operational Overview: FY17 Business Strategy FY17 plan Web Games Further growth expected in game operation business Game Operation Business Platform Business Scale of business Creating new sources of income Billions of coins 10 100 5.0 50 0 FY16 FY17 GREE PF Other その他PF Platforms • Steady progres
Slide 27: New Businesses
2. Operational Overview: FY17 Business Strategy FY17 plan New Businesses Continue investment in business growth to create future earnings generators Core businesses with Strengthen Platforms strong potential Home-Related Services Platform Ad Media Business Steady business expansion Aggressively expa
Slide 28: 3. Appendix
Contents 1. Financial Results Overview 2. Operational Overview 3. Appendix Copyright © GREE, Inc. All Rights Reserved.
Slide 29: Coin Consumption (1)
3. Appendix Coin Consumption (1) Overall coin consumption Web game coin consumption Billions of coins Billions of coins 30 300 28.8 200 20 19.5 25.6 16.8 6.3 24.0 15.8 22.2 14.7 5.2 8.0 4.7 13.8 20.1 4.2 6.9 3.7 6.4 5.8 13.2 5.6 150 15 11.7 100 10 11.0 10.4 10.2 11.5 9.9 9.4 8.8 8.2 9.4 8.8 8.2 7.6
Slide 30: Coin Consumption (2)
3. Appendix Coin Consumption (2) Japan Native Games Overseas Native Games Billions of coins Billions of coins 5.0 50 4.9 5.0 50 4.8 4.5 4.6 4.4 3.9 3.7 3.6 3.2 2.7 25 2.5 25 2.5 0 0 4Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q 3Q 4Q FY15 FY16 FY15 FY16 30 Copyright © GREE, Inc. All Rights Reserved.
Slide 31: Coin Consumption (3)
3. Appendix Coin Consumption (3) Overseas Japan Millions of U.S. dollars Billions of coins 40 250 25.0 23.6 35 21.7 32 20.4 30 19.1 27 17.5 11.8 25 10.7 9.8 9.1 12.5 8.3 20 125 11.8 11.0 10.5 9.9 9.2 0 0 4Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q 3Q 4Q FY15 FY16 FY15 FY16 • Classified by region of consumption ■■ Third
Slide 32: FY16 4Q Cost Structure
3. Appendix FY16 4Q Cost Structure Millions of yen FY15 FY16 4Q FY16 3Q 4Q QoQ YoY Rental charges 990 270 - 234 720 1,223 Labor costs 2,265 48 - 644 2,217 2,909 Others 1,475 201 - 764 1,274 2,239 Cost of sales 4,729 519 - 1,642 4,210 6,371 Advertising 1,211 123 - 518 1,088 1,729 Commission fees 2,94
Slide 33: FY16 4Q Balance Sheet
3. Appendix FY16 4Q Balance Sheet Billions of yen FY16 4Q FY16 3Q FY15 4Q QoQ YoY Current assets 94.69 5.94 -2.20 88.75 96.89 Fixed assets 17.68 -4.37 -3.07 22.06 20.75 Total assets 112.37 1.56 -5.27 110.81 117.64 Current liabilities 9.39 -0.89 -12.50 10.29 21.89 Fixed liabilities 0.37 -0.26 -0.35 0
Slide 34: Strengthening of Financial Base
3. Appendix Strengthening of Financial Base Increase in shareholders’ Increase in net cash equity ratio Billions of yen +3.8 +10% 91% 80.2 81% 76.4 FY15 FY16 FY15 FY16 34 Copyright © GREE, Inc. All Rights Reserved.
Slide 35: Breakdown of Group Headcount
3. Appendix Breakdown of Group Headcount Number of employees Headcount at Group companies End-4Q Japan Game Business - 836 Native Game Business Pokelabo, Wright Flyer Studios (446) Web Game Business - (234) Shared game depts. - (156) Native Game Business(Overseas) Includes GREE International (U.S. S
Slide 36: ■ 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