GREE Reports FY2013 Fourth Quarter Results

FY2013 Fourth Quarter Financial Summary

Millions of yen, rounded down

• 1. EBITDA=operating profit/loss + depreciation costs + amortization of goodwill
• 2. Ordinary profit includes gain on currency exchange of approximately ¥1.1 billion and investment business profit of ¥0.5 billion
• 3. An extraordinary gain of ¥3.4 billion was recorded on the sale of investment securities, but an extraordinary loss of ¥10.2 billion was also recorded from a write-off of assets related to certain titles, resulting in a total extraordinary loss of ¥6.7 billion

Financial Highlights

• Net sales for the fourth quarter amounted to ¥37.0 billion, a decrease of 2% compared with ¥37.8 billion in the third quarter of fiscal 2013
• Operating profit was ¥7.7 billion, a decrease of 28% compared with ¥10.8 billion in the third quarter of fiscal 2013
• Paid services sales amounted to ¥34.7 billion, which was roughly on a par with ¥34.8 billion in the third quarter of fiscal 2013
• Advertisement sales were ¥2.2 billion, a decrease of 25% compared with ¥3.0 billion in the third quarter of fiscal 2013


• Cost of sales was ¥6.2 billion, a decrease of 6% compared with ¥6.6 billion in the third quarter of fiscal 2013
• Sales, general & administrative costs were ¥22.9 billion, an increase of 12% compared with ¥20.4 billion in the third quarter of fiscal 2013
• A total extraordinary loss of ¥6.7 billion was recorded as a result of an extraordinary gain of ¥3.4 billion recorded on the sale of investment securities combined with an extraordinary loss of ¥10.2 billion recorded from a write-off of assets related to certain titles and other extraordinary losses

Business Highlights

Overall

• Created a leaner business structure with fewer titles in portfolio in line with selection and concentration strategy
• Streamlined portfolio of titles to enable future cost reductions

Web games:*

• Japan coin consumption on feature phones remained on a downtrend
• Created some new hit titles on smartphones, such as Shingoku no Valhalla Gate, developed in collaboration with Grani, Inc.
• However, the effect of these was mostly offset by sluggish performance from existing titles

Native games:*

• GREE recorded quarter-on-quarter growth of more than 30% on contribution from growth in overseas markets, establishing its position as a top global player
• GREE’s U.S. studio achieved positive cash flow in May (excluding M&A-related costs)
• Cultivated new hit titles such as Knights & Dragons, developed in collaboration with IUGO Mobile Entertainment Inc., and the first-party title War of Nations by leveraging accumulated development and operational expertise and using cross promotion

FY2014 First Half: Initiatives

Web games:

• Target further growth of GREE Platform in Japan by strengthening ties with leading partners and enhancing product appeal. Plan to release approximately 10 new first-party and co-developed titles during first half of fiscal 2014

Native games:

• Expand on and reproduce success models to bolster position in native games market. Boost profitability of native games business while strengthening cost control
• Convert success models to franchise titles and invest in titles in new genres and new game engines. Plan to release approximately 15 new titles during first half of fiscal 2014

New businesses:

• Continue to develop new businesses in pursuit of growth in areas other than games.
  
  • Advertising and ad network: Increase smartphone ad sales by developing new advertising products and improving the functionality of GREE’s advertising network
  • Venture capital: Identify new investment opportunities and continue to grow and increase the value of GREE Ventures, Inc. investments
  • Licensing and merchandising: Further expand merchandise business through GREE Entertainment Products, Inc., targeting sales contribution from trading card game business with second product in SiegKrone series, Attack on Titan, scheduled for launch in autumn of 2013

Reference

For further information, see FY2013 Fourth Quarter Financial Results [PDF : 1,246KB]

About GREE, Inc.

GREE is a global mobile social company with businesses that include social gaming, social media, advertising, licensing and merchandising, and venture capital. Established in December 2004, GREE created the world’s first mobile social game in 2007 and today operates one of Japan's largest social networking services. With studios in Tokyo, Osaka, San Francisco, Vancouver, and Seoul, GREE employs approximately 2,500 people around the world. GREE is listed on the Tokyo Stock Exchange (3632).