GREE, Inc. FY2013 First Quarter Financial Results

Transcription

1 GREE, Inc. FY2013 First Quarter Financial Results November 14, 2012

2 Executive Summary Net sales declined QoQ in 1Q FY2013, but monthly sales entered a gradual recovery trend after bottoming in July The pace of game releases to the domestic market has increased. Games based on IP have recently shown striking growth We have taken steps to accelerate business development from 2H onward, including our strategic business partnership with Pokelabo and our comprehensive business partnership agreement with Yahoo! JAPAN Overseas, we have focused on improving and strengthening our development capabilities. The acquisition of Funzio was part of this effort. We have accelerated the pace of game releases ahead of the holiday season 1

3 FY2013 First Quarter Business Results 2

4 FY2013 First Quarter Highlights Gradual recovery in monthly sales; progress developing global operations Monthly sales entered a gradual recovery trend starting in August after bottoming in July Enhanced lineup of social games Added new popular IP to our portfolio; strengthened game development and operational capabilities Broadening our business domains and strengthening our businesses while creating a multilayered business structure 3

5 FY2013 First Quarter Financial Results (Consolidated) Millions of yen 1Q FY2013 4Q FY2012 QoQ change 1Q FY2012 YoY change Net sales 37,935 40,080-5% 30, % EBITDA* 16,744 19,634-15% 16,961-1% Operating profit 15,750 18,996-17% 16,646-5% Ordinary Profit 15,250 18,439-17% 16,528-8% Net profit 9,069 12,328-26% 9,449-4% Net sales declined slightly QoQ, but on a monthly basis have shifted to a gradual recovery trend Labor costs rose along with other upfront investment costs concomitant with global expansion *EBITDA = operating profit/loss + depreciation costs + amortization of goodwill 4

6 Net Sales & Operating Profit (Consolidated) Millions of yen 50,000 46,189 45,000 40,000 41,529 40,080 37,935 35,000 30,000 25,000 20,000 30,432 16,961 16,646 22,904 22,535 24,963 24,549 19,634 18,996 16,744 15,750 15,000 10,000 5, Q 2Q 3Q 4Q 1Q FY2012 年 6 月期 2013 FY2013 年 6 月期 売上高 Net sales EBITDA 営業利益 Operating profit Note: EBITDA = Operating profit +depreciation costs and amortization of goodwill 5

7 Sales by Business (Consolidated) Paid Services Sales Advertisement Sales Millions of yen Millions of yen 50,000 45,000 40,000 35,000 38,290 42,882 36,444 34,601 4,000 3,500 3,000 2,928 3,238 3,306 3,636 3,334 30,000 25,000 20,000 15,000 10,000 5,000 27,503 2,500 2,000 1,500 1, Q 2Q 3Q 4Q 1Q 2012 FY2012 年 6 月期 2013 FY2013 年 6 月期 Moderate pickup on monthly basis due to gradual recovery in existing titles, and progressive contribution from new titles 0 1Q 2Q 3Q 4Q 1Q 2012 FY2012 年 6 月期 2013 FY2013 年 6 月期 Advertisement sales fell slightly QoQ: although smartphone advertising was firm, it was temporarily insufficient to fully offset declining feature phone advertising sales 6

8 FY2013 First Quarter Operating Expenses (Consolidated) 1Q FY2013 4Q FY2012 QoQ change 1Q FY2012 Millions of yen YoY change Cost of sales: 4,690 4,571 +3% 2, % Rental charges 992 1,606-38% 999-1% Labor costs 1,825 1,709 +7% % Others 1,871 1, % % SG&A: 17,494 16,512 +6% 11, % Advertising 4,517 4,489 +1% 3, % Paid-charge commissions 5,105 4,958 +3% 3, % Labor costs 3,927 2, % 1, % Others 3,944 4,764-17% 3,786 +4% Rental charges: Declined slightly in 1Q FY2013 due to a temporary rise in 4Q FY2012 related to an increase in the number of data centers Advertising: Increased slightly due to implementation of advertising and promotion based on an examination of cost effectiveness Labor costs: Increased due to smooth progress of global personnel plan and acquisition of Funzio in 4Q FY2012 7

9 FY2013 First Quarter Balance Sheet (Consolidated) Millions of yen 1Q FY2013 4Q FY2012 QoQ change 1Q FY2012 YoY change Current assets 86, ,287-30% 55, % Cash and cash equivalents 37,679 72,759-48% 20, % Receivables 26,100 28,238-8% 25,754 +1% Others 22,336 21,288 +5% 8, % Fixed assets 50,328 43, % 17, % Totalassets 136, ,297-17% 72, % Current liabilities 40,811 68,512-40% 27, % Totalliabilities 51,905 81,311-36% 28, % Paid-in capital 2,189 2,179 +0% 2,158 +1% Capital reserves 2,187 2,177 +0% 2,156 +1% Retained earnings 81,393 79,338 +3% 40, % Others - 1, Total net assets 84,540 83,985 +1% 44, % 8

10 FY2013 First Quarter Business Results Expanded and improved social game lineup Added new IP-based games Added new battle games Tite Kubo/Shueisha, TV TOKYO, dentsu, Pierrot GREE, Inc. Copyright (Japan only) Introduced innovative game designs Expanded and improved lineup with IP-based games and battle games Launched several new smartphone native games that explore new game designs 9

11 FY2013 First Quarter Business Results Secured strong IP; strengthened game development and operation capabilities Social game version of Lineage Established Canada studio Vancouver Amsterdam London Seoul Beijing Tokyo San Francisco Osaka Dubai Singapore Sao Paulo Co-developing mobile game based on popular game title Lineage as first project of partnership with South Korean online game company NCSoft. Scheduled for launch on GREE Platform Established a subsidiary in Canada that is well-positioned to work with our U.S. office and partner developers. We have also sped up the development-to-launch process for social games and stabilized operations 10

12 FY2013 First Quarter Business Results Broadened business domain, strengthened business for multilayered business structure Launched merchandising business Strengthened ad business by forming partnership with major French ad company We established merchandising subsidiary GREE Entertainment Products, Inc. which plans and develops character-based consumer products based on GREE s IP portfolio Major French ad company MobPartner has the world s largest mobile affiliate network, which we can use to promote applications on GREE Platform around the globe 11

13 FY2013 Business Strategy

14 Platform Social games Card battle, simulation, adventure, RPG, etc. FY2013 Business Strategy We aim to become the top company in the global smartphone social game market by strengthening the user base of our platform while expanding our social game lineup. Accelerate implementation of strategy to become top global social game company Browser Native 1 Use strong IP 2 Expand lineup 4 Accelerate growth of simulation and card battle games 3 Expand user reach 5 Expand user reach Japan K S/S T P G A Copyright (Japan Only) Tite Kubo/Shueisha, TV TOKYO, dentsu, Pierrot AKS GREE, Inc./Ateam Inc. GREE, Inc. Copyright (Japan Only) Global 13

15 (1) Japan: Using strong IP Stably trending IP games and major IP-based title release schedule Major IP-based title release schedule METAL GEAR SOLID SOCIAL OPS(KONAMI) Konami Digital Entertainment / GREE World Ends With You LIVE Remix (SQUARE ENIX) SQUARE ENIX CO., LTD. / GREE, Inc. FINAL FANTASY GREE(tentative)(SQUARE ENIX) SQUARE ENIX CO., LTD. / GREE, Inc. AKB48 Stage Fighter AKS GREE, Inc. / Ateam NARUTO Ninja Masters K S/S T P G A Copyright (Japan Only BLEACH SOUL MASTERS Tite Kubo/Shueisha, TV TOKYO, dentsu, Pierrot GREE, Inc. Copyright (Japan only) Preparing more titles based on popular IP June July Sep. Oct. Dec. Jan. June FY2012 FY2013 Monthly sales of titles based on IP are showing steady growth In addition to the titles shown above, we plan to launch multiple card-type games based on popular IP 14

16 (1) Japan: Using strong IP Plan to launch multiple new games based on IP METAL GEAR SOLID SOCIAL OPS (KONAMI) Konami Digital Entertainment / GREE The World Ends With You LIVE Remix (SQUARE ENIX) SQUARE ENIX CO., LTD. / GREE, Inc. FINAL FANTASY GREE (tentative title) (SQUARE ENIX) SQUARE ENIX CO., LTD. / GREE, Inc. Numerous other card games based on strong IP scheduled for launch 15

17 3 位 3 位 3 位 3 位 2 位 (2) Japan: Enhancing our lineup Position in smartphone native app market 2 nd place GREE, Inc+Pokelabo, Inc. D2C rd place Applibot 2 3rd place COLOPL 2 3rd place NamcoBandai Games 2 3rd place SEGA CORPORATION 2 Source: App Store (Japan) Number of top 35 overall grossing apps as of October 1 Total apps by GREE and Pokelabo GREE Group has a dominant position in the native applications market, which we think has significant growth potential The strategic business partnership between GREE and Pokelabo will allow us to consolidate our top position, share knowledge and user bases, and generate synergies among development teams 16

18 (3) Japan: Expanding user reach Business partnership with Yahoo! JAPAN will allow us to reach more users GREE Platform on smartphones Yahoo! JAPAN on smartphones Provision of social games User traffic Wallet Point Alliance with Yahoo! JAPAN will enable us to expand our user reach on smartphones in Japan, which remains a critical objective for GREE Directing traffic from the top and other pages of the smartphone version of Yahoo! JAPAN to social games on GREE Platform. Introduce Yahoo! Wallet as a means of payment for GREE Platform social game purchases 17

19 (4) Global: Accelerating launch of simulation and battle games Stepping up game releases ahead of holiday season in North America and Europe Preparing numerous other titles October 2012 Holiday season Global launch of Monster Quest and MLB: Full Deck in October Plan to increase game offering ahead of the holiday season 18

20 (4) Global: Accelerating launch of simulation and battle games Full-scale entry into South Korean market, launch of card battle and simulation games Release of popular Japanese card-type game Release of hit U.S. simulation game The Clan Battle of Fate became the top ranking game in the Japanese App Store seven hours after its release (*1). Preregistration has started in South Korea for the localized version *1 App Store (Japan) Top Free Ranking (overall) *2 The Clan Battle of Fate is a Pokelabo title. We plan to release Modern War, a highranking app in the U.S. App Store, in South Korea 19

21 (5) Global: Expanding user reach Like our partnership with SK Telecom of South Korea, our business partnership with SingTel will expand our user reach in the Asia Pacific region GREE Platform on smartphones Promotions targeting SingTel users Ongoing launches of new social games Exclusive promotions Carrier billing GREE has formed a comprehensive business partnership agreement with SingTel, a major telecoms carrier in the Asia-Pacific region GREE will provide SingTel users with social games and accept direct carrier billing via SingTel 20

22 Japan Social Game Association JASGA established November 8 as a general incorporated association Name Japanese name: Ippanshadanhoujin Social Game Kyoukai English name: Japan Social Game Association Acronym: JASGA Members Six social game platform companies NHN Japan Corporation GREE, Inc. CyberAgent, Inc. DeNA Co., Ltd. Dwango Co., Ltd. mixi, Inc. Computer Entertainment Supplier s Association (CESA) Japan Online Game Association (JOGA) Social game providers Other social game-related companies Establishm ent date November 8,

23 Japan Social Game Association JASGA was established on November 8 JASGA will conduct activities with the goal of promoting the development of a social gaming environment that people can use safely, contributing to society and culture through social games, and promoting economic development by supporting industry. JASGA has three main goals: 1. Development of self-imposed regulations for social gaming companies Make further improvements to the user environment by conducting written surveys of platform providers, monitoring social games, and acting on information provided by users 2. Educational activities targeting youth Proactively participate in symposia and educational events to teach young people about Internet ethics and about how to use social games safely 3. Improvement of customer support Work to improve customer support throughout the industry by promoting cooperation between customer support staff of various companies to address the concerns of customers 22

24 Appendix 23

25 Social networking service + Social Games Users Social networking service Social games Diary / Comments Community / MB My Apps Growth in Page Views Purchase of items 広告メディア収入 Advertisement Sales 有料課金収入 Paid Service Sales GREE 24

26 Improving Safety & Security GREE patrol system runs 24 hours a day, 365 days a year A 24 hour, 365 days per year patrol service begun in November GREE Patrol Centers were established in the Tokyo metropolitan area, Hokkaido, and Okinawa, employing about 450 personnel. Systematic and visual surveillance of content and reporting is conducted. If inappropriate material is discovered, measures are taken such as deletion, cautioning, suspension of service, etc. Restrictions by age EMA (Content Evaluation and Monitoring Association) GREE Patrol Certified as a Safe Content Site Messaging between users over 18 and those under 18 is restricted. Users under 18 are excluded from the searches of users over 18. Users under 18 are excluded from the searches of users over 18. User authentication New sign-ups to GREE are verified using mobile phone authentication. Users in violation are blocked from signing up again. Membership of a mobile phone filtering service is checked to verify the user s age. Age information held by KDDI and SBM is checked for verification. (Discussions with other carriers underway.) Online Policy Compliance Committee chaired by CEO The president chairs the committee. Held monthly, members include executives in charge, patrol staff, legal staff, etc. Third-party certification The first website approved by EMA (Content Evaluation and Monitoring Association) (Aug. 2008) Maintains management system that exceeds EMA standards, passing continuous and periodic inspections Screening/ Monitoring Warning/ Deletion Illegal and harmful content 25

27 Improving Safety & Security Educational Activities On- and Off-site Educational activities on-site From February 2009, GREE joined the Motto Good Net initiative of the Safe Net- Making Promotion Conference, and maintains an official Motto Good Net account in GREE. From July 2011, links were added to each service on GREE to an educational page. Content is being renewed to make it even easier to understand. In Dec. 2011, the educational application GREE s 6 Promises to All, which was released in Aug., was upgraded to a service for each age. Educational app, Manabou! Asobou! Rules of the Internet includes this section for children of elementary school age and younger. Educational activities off-site Continually carrying out education activities aimed toward educational organizations and local governments such as courses on GREE s initiatives and the opening of the Patrol Center Active participation in many kinds of educational events and cooperation with private and public bodies such as the Safe Net- Making Promotion Conference Participated in Kids Workshop at Roppongi Hills (August 19, 2012) Participated in Koshigaya Obukuro Middle School PTA Bazaar (October 29, 2012) 26

28 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, etc. When producing this document, we were careful not to include errors or omissions, but the authenticity and integrity of the information are not guaranteed.