FinancialGREE
FY2014 First Quarter Financial Results
13 Nov 201332 pages~19 min full read
Operating profit rose to ¥9.8 billion, a ¥2.0 billion increase driven by a 12% reduction in total costs, despite net sales falling to ¥35.3 billion.
The company achieved a ¥3.7 billion reduction in advertising and fixed expenses, meeting its cost-reduction targets ahead of schedule.
Smartphone operations now account for 65% of total coin consumption, with smartphone-specific consumption growing by ¥1.6 billion during the quarter.
A ¥5.2 billion extraordinary loss was recorded due to asset write-offs for underperforming titles and provisions for a voluntary retirement program.
Management projects a full turnaround in sales and profits by Q4 FY2014, supported by a strategy to diversify beyond traditional card battle games.
The company aims to achieve a 15% year-over-year reduction in fixed costs by the end of the fiscal year while targeting monthly profitability for overseas operations by the end of 2013.
The financial results for the first quarter of fiscal year 2014 reflect a strategic pivot toward smartphone-centric operations and strict cost management. While net sales decreased quarter-over-quarter to ¥35.3 billion, operating profit rose to ¥9.8 billion, a ¥2.0 billion increase driven by a 12% reduction in total costs. This improvement was achieved through a ¥3.7 billion cut in advertising and fixed expenses, successfully meeting cost-reduction targets ahead of schedule. However, the period also saw a ¥5.2 billion extraordinary loss due to asset write-offs for underperforming titles and provisions for a voluntary retirement program.
The operational focus has shifted heavily toward the smartphone market, which now accounts for approximately 65% of total coin consumption. While coin consumption on feature phones continues to decline, smartphone consumption grew by ¥1.6 billion during the quarter. This growth was particularly strong in native game apps for overseas markets and third-party browser games. Overseas operations are currently on track to reach monthly profitability by the end of 2013, supported by the horizontal deployment of successful game engines and marketing techniques.
Management expects a full turnaround in sales and profits by the fourth quarter of FY2014. This outlook is based on a revised development pipeline that prioritizes high-quality releases and a transition into new genres beyond traditional card battle games. By realigning development resources and maintaining a leaner cost structure, the company aims to achieve a 15% year-over-year reduction in fixed costs by the end of the fiscal year while expanding its presence in the global native app market.
