GREE Releases Q1 / Q2 Combined Results

Posted 19:03 EST on 16FEB2014 by: indie navi news staff in news » financials, GREE, knights and dragons

February 14th: GREE released its combined Q1 and Q2 results, which reveal an overall decrease to both sales and operating profit. GREE places the blame primarily with stagnant sales through its social games. Although GREE took steps to reduce its sales and general administrative expenses (primarily through cuts to advertising costs), sales costs cut heavily into GREE’s bottom line.

Specifically, GREE reported sales of 67.9 billion yen ($679 million), operating profits of 18.9 billion yen ($189 million), and net profit of 9.8 billion yen ($98 million) for the period of JUL through DEC. In comparison to the same six-month period one year prior, these figures represent a 12.1 percent drop in sales, a 36.9 percent drop in operating profit, and a 45.8 percent drop in net profit.

Social games remain GREE’s core business, and the drop in “coins” (GREE’s in-platform currency) spent is indicative of stagnant sales through social titles. As more and more users migrate away from traditional “feature phones” to smartphones, coins spent by feature phone users have dropped accordingly. With social platforms like that provided by GREE having difficulty finding footing in the face of de facto competition from Google Play and the App Store, coins purchased and spent by smartphone users of GREE’s social platform and social titles did not compensate for the loss of paying feature phone gamers.

From JUL to DEC (2013), the number of coins spent in GREE’s social platform for games and other services was 97.8 billion, down 16 billion from the same six-month period one year prior.

GREE emphasizes that it is in the process of culling unprofitable smartphone native titles and reorganizing to improve profit from ongoing smartphone apps. GREE also points out that its efforts beyond the shores of Japan have begun to bear fruit, with Knights and Dragons turning $5 million in profit in just the space of the month of December.

Q3 outlook

For Q1 through Q3, GREE anticipates combined sales of 99 billion yen ($990 million), operating profit of 27 billion yen ($270 million), and net profit of 14.5 billion yen ($145 million).

GREE announced that it intends on focusing its releases to titles which it anticipates will be most profitable on the basis of its growing experience in the field of native apps, releasing only four titles in the remaining half of its fiscal year. GREE also anticipates that overseas business will continue to contribute toward its bottom line.

News source: Social Game Info