2011_1q_en
DESCRIPTION
TRANSCRIPT
Copyright © 2004-2007 GREE,Inc. All Rights Reserved.Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
GREE, Inc.Financial Results for the First Quarter of the Fiscal Year Ended on June 30, 2011
November 1, 2010
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
1
First Quarter FYE 6/2011 Highlights
Japan’s No.1 SNS
Achieved
Japan’s largest
user base
Expanded
“GREE
Platform”
Strengthened
social game
business
■ Became Japan’s No.1 SNS with 22.46 million
members as of September 2010
■ Acquired new members over a wide age range. With
members over the age of 30 accounting for 46% as
of September 2010
■ Launched “Pirate Kingdom Columbus”, its sixth first-
party social game, in August 2010, and started a
Monthly fee plan for Hacöniwa in September 2010
■ Game ARPU has steadily increased thanks to a
strong lineup and a variety of payment options to suit
user needs
■ Added around two hundred third-party social games
from a wide variety of partners to the “Gree Platform”
as of October 2010
■ Continues providing a wide variety of social features
to increase user activity
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
2
First Quarter FYE 6/2011 Income Statement
(JPY MM)
1Q FYE 6/11
(Jul-Sep 11)
4Q FYE 6/11
(Apr-Jun 11)
QoQ
(%)
1Q FYE 6/10
(Jul-Sep 10)
YoY
(%)
Net sales 12,410 10,940 +13% 6,837 +82%
Operating profit 6,221 5,294 +18% 3,939 +58%
Ordinary profit 6,227 5,303 +17% 3,942 +58%
Net income 3,695 3,113 +19% 2,129 +74%
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
3
Net Sales and Operating Profit
(JPY MM)
6,837
8,180
9,273
10,940
12,410
3,939
5,073 5,270 5,294
6,221
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1Q 2Q 3Q 4Q 1Q
FYE 6/2010 FYE 6/2011
Net sales Operating profit
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
4
Sales Breakdown
Paid Services Sales Advertisement Sales
(JPY MM) (JPY MM)
■ “Mon-Pla” and “Pirate Kingdom
Columbus” contributed to the
growth in Paid Services Sales
■ “GREE Platform” expanded
advertisement sales for partners
5,300
6,429
7,462
8,970
10,147
0
2,000
4,000
6,000
8,000
10,000
12,000
1Q 2Q 3Q 4Q 1Q
FYE 6/2010 FYE 6/2011
1,536
1,7511,811
1,972
2,262
0
500
1,000
1,500
2,000
2,500
1Q 2Q 3Q 4Q 1Q
FYE 6/2010 FYE 6/2011
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
5
■ Rental Charges: Invested in the last quarter, the rental charges decreased
■ Advertising: Continued investment focused on cost-effectiveness
■ Labor costs: Continued steady recruitment
First Quarter FYE 6/2011 Operating Expenses(JPY MM)
1Q FYE 6/11
(Jul-Sep 11)
4Q FYE 6/11
(Apr-Jun 11)
QoQ
(%)
1Q FYE 6/10
(Jul-Sep 10)
YoY
(%)
Cost of sales: 786 1,046 △25% 634 24%
Rental Charges 386 717 △46% 454 △15%
Labor costs 236 203 16% 120 96%
Others 162 125 29% 59 174%
SG&A: 5,402 4,598 17% 2,263 139%
Advertising 3,321 2,714 22% 1,127 195%
Paid-charge
commissions 1,159 969 20% 602 93%
Labor costs 267 224 19% 125 113%
Others 654 690 △5% 408 60%
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
6
■ Fixed assets: Increased with PP&E, Investment securities, and Other
■ Current assets: Decreased with Dividends and Corporate tax, etc
■ Current liabilities: Decreased with Corporate tax, etc
(JPY MM)
First Quarter FYE 6/2011 Balance Sheet
1Q FYE 6/11
(Jul-Sep 11)
4Q FYE 6/11
(Apr-Jun 11)
QoQ
(%)
1Q FYE 6/10
(Jul-Sep 10)
YoY
(%)
Current assets 28,344 30,903 △8% 14,872 91%
Cash and cash
equivalents16,973 21,354 △21% 9,046 88%
Receivables 9,308 7,682 21% 4,950 88%
Others 2,063 1,866 11% 875 136%
Fixed assets 2,301 1,267 82% 483 376%
Assets 30,645 32,170 △5% 15,356 100%
Current liabilities 7,519 11,617 △35% 4,216 78%
Liabilities 7,522 11,617 △35% 4,216 78%
Paid-in capital 2,118 2,113 0% 2,093 1%
Capital reserves 2,116 2,111 0% 2,091 1%
Retained earnings 18,889 16,330 16% 6,954 172%
Shareholder’s
equity23,123 20,552 13% 11,139 108%
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
7
■ Net cash provided by investment activities : Increased with Fixed deposit
■ Net cash provided by operating activities : Decreased with Corporate tax, etc
■ Net cash provided by financing activities : Decreased with Dividends
First Quarter FYE 6/2011 Cash Flow Statement
(JPY MM)
1Q FYE 6/11
(Jul-Sep 11)
4Q FYE 6/11
(Apr-Jun 11)
1Q FYE 6/10
(Jul-Sep 10)
Net cash provided by operating activities △2,072 5,735 △1,317
Net cash provided by investment activities 8,781 △234 △120
Net cash provided by financing activities △1,090 13 △110
Cash and cash equivalents at the end of the
period16,973 11,354 9,046
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
Registered Members Page Views
8
Registered Members and Page Views
(Unit Bn)(Unit MM)
25.42 26.08 24.71 25.39
23.70
25.61 24.81
28.06
35.36
40.83
44.22
46.52
0.36 0.30 0.26 0.30 0.29 0.34 0.34 0.38 0.40 0.41 0.44 0.50
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
Oct-
09
Nov-0
9
Dec-0
9
Jan-1
0
Feb-1
0
Mar-
10
Apr-
10
May-1
0
Jun-1
0
Jul-10
Aug-1
0
Sep-1
0
mobile
PC
15.12 15.70
16.20 16.73
17.29 17.78
18.43 19.01
19.83 20.59
21.25 21.95
22.46
0.00
5.00
10.00
15.00
20.00
25.00
Sep-0
9
Oct-
09
Nov-0
9
Dec-0
9
Jan-1
0
Feb-1
0
Mar-
10
Apr-
10
May-1
0
Jun-1
0
Jul-10
Aug-1
0
Sep-1
0
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
52%48%男性
女性
By gender
By age
By area
9
Member Demographics
Note: as of September 30, 2010
Tohoku
Hokkaido
Tokyo
Metropolitan
Area
7%
9%
Koshinetsu/
Hokuriku
Chugoku/
Shikoku
Kyushu/
Okinawa
Tokai
Kinki
5%
8%
11% 16%
33%
11%14%7%
33%27%
19%Under 18
18,19
20 to 29
30 to 39
40 and above
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
Increased paid service sales
■ Accelerated growth in the game
market by diversifying contents,
including a new first party social
game10
August-2010
Launched
“Pirate Kingdom Columbus”
( Pirate battle game )
■ Increased paid services sales with
extra payment methods
September-2010
Started
“Monthly fee plan for Hacöniwa”
(NTT DoCoMo)
First Quarter FYE 6/2011 Business Report
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
Expanded the “GREE Platform”
11
■ Opened the “GREE Platform” to all developers Simplified the procedures for submission of social applications on the “GREE mobile version”
Provides open systems to developers for launching social applications
■ Customer Support Service Partnered with E-Guardian Inc.
To provide quality customer services, including 365-days customer support
■ Hosting Service Partnered with SAKURA Internet Inc., NIFTY Corporation, and Livedoor Co., Ltd.
To provide a wide range of hosting solutions and technical advise for third party developers
Sumzap, Inc.”COORDE MANIA”Cave Co., Ltd. ”Shiro-tsuku”
First Quarter FYE 6/2011 Business Report
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
Summary of “GREE Platform”
12
Unique user growth rate on the “GREE
Platform”(daily average)
(Index (June 2010 = 1))
Coin usage growth rate ( daily average )
First Quarter FYE 6/2011 Business Report
(Index (June 2010 = 1))
0
2
4
6
8
10
12
June July August September October
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
July August September October
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
Expand our overseas business
Capital partnership with Project Goth, Inc. which owns “mig33”,
one of the largest mobile SNS’s in emerging countries
Plan to open offices in Asia and North-America
Expand first-party social games portfolio
Develop contents for smartphones
Plans to start offering the “GREE” service on a variety of
smartphones by the end of the year
Accelerate the growth of the “GREE Platform”
Will launch several popular third-party titles
And a wide a variety of non-game applications
13
Strengthen services on multiple devices
Plans to launch more first-party social games
FYE 6/2011 Business Strategy
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
Appendix
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
Members
GREE
SNS
Advertisement Sales Paid Service Sales
Growth in
Page Views
Purchase of
items
15
Diary
/Comments
Community/
MB
Q&A
Social games
SNS + Social Games
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
16
A pirate battle game where members enjoy expanding their
pirate kingdoms by going on adventurous journeys to
various lands in search for treasures
“Pirate Kingdom Columbus”
A fishing game where members enjoy
collecting “fishing” gear and participating
in team events with other members
“Tsuri-Sta”
An adventure game where members enjoy
searching for treasures and exchanging
information about their collections with other
members
“Tanken Drilland”
A monster battle game where members train and
breed monsters by going on adventures, playing
with and doing battle and with other members
“Mon-Pla”
A gardening game where members grow and
collect different flowers and plants to create
their own personal miniature garden
“Hacöniwa”
A virtual pet game that allows members to
“raise” their own original “Clinoppe”
“Odoriko Clinoppe”
In-House Social Games
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
Advertisement
Sales
Paid
Service Sales
17
Wide Variety of Revenue
GREE Mobile screen
Ad Spot
Advertisement
- Advertisement (Banner/Text)
- Tie up
Avatar
- Sales of avatar clothing and cosmetic
changes
Social games
- A wide variety of micro-transaction based
social games
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
18
Started a 24hour-a day, 365-day-a-year third-party Patrol service in
November 2006
Established a GREE Patrol center within the main headquarters
Continuous strengthening of the patrol systems to maintain safe
content
① 24-hour-a-day, 365-day-a-year GREE Patrol System
② The “Safety and Security Committee”
The CEO serves as chairman of the Committee
Enable prompt responses to problems
Committee meeting held once a month with board members, patrol
officers, and the legal team
Harmful Postings
GREE Patrol
Warning/
Deletion
Screening/
Monitoring
Certificated as a
“Safe Content Sites”
EMA (Contents Evaluation and Monitoring Association)
③ Protection and Education of Youth
Introduced a new age restriction for certain services and the use of
monthly fee services
Creation of educational content and relevant warnings for younger
members
④ Obtained a third-party certificate as “Safe Content Sites”
The first “Safe Content Sites” certified by “EMA” on Aug 2008
GREE patrol system surpasses EMA standards and has
continuously passed EMA reviews
Safety & Security
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
② Strengthen usage limit by age:October 2010
Strengthened the age limits for in-service e-mail to protect minors
Limit the e-mail format for users when e-mailing users under 18
Limit the change of registered birth date in order to protect minors
③Awareness campaign with TV commercial
Summer vacation TV commercial campaign
Online safety education for minors and their parents
①Strengthen the site patrol:October 2010
Strengthened surveillance to reduce risk of abuse by strangers
Raised the penalty for in-service e-mail which includes personal information
Improved search systems for inappropriate words and content
19
Safety & Security: the latest projects
Copyright © 2004-2010 GREE, Inc. All Rights Reserved.
This material is presented solely for purposes of illustration and discussion and may include
information that is based, in part of in full, on hypothetical assumptions.