Financial Results for the Second Quarter of the Fiscal Year Ending on June 30, 2011

This financial report details the performance of GREE, Inc. for the second quarter of the fiscal year ending June 30, 2011. Covering the three-month period from October to December 2010, the data reflects a period of significant growth for Japan’s largest social networking service. The company reported record net sales of 14.3 billion yen, representing a 15% increase quarter-over-quarter and a 75% increase year-over-year. Operating profit reached 6.9 billion yen, up 36% from the previous year, despite increased investments in data center infrastructure and personnel to support a growing user base of 23.83 million subscribers.

The primary drivers of this financial success were paid services and the expansion of the GREE Platform. Paid service sales rose 18% quarter-over-quarter, fueled by the monetization of original titles such as Pirate Kingdom Columbus and Monster Planet. The platform ecosystem also matured, doubling its title count to 560 within three months and introducing monthly fee plans for partner applications. While feature phones remained a core segment, the company aggressively pivoted toward smartphones, launching beta versions for Android and free casual games for iOS.

Strategic expansion and safety initiatives define the forward-looking outlook. GREE established a U.S. subsidiary and formed a major partnership with Tencent to enter the Chinese market, aiming to share APIs and cross-promote social games internationally. Simultaneously, the company implemented rigorous safety measures to protect younger users, including 24-hour monitoring, age verification through carrier data, and functional restrictions on interactions between minors and adults. These efforts aim to maintain a secure environment as the company transitions its social graph-based advertising and gaming services to a global, smartphone-centric market.