FinancialGREE
FY2017 Second Quarter Financial Results
1 Feb 201733 pages~11 min full read
GREE achieved its first quarter-on-quarter sales growth in four years, reaching ¥15.3 billion in net sales for Q2 FY2017.
Operating income declined by ¥1.0 billion to ¥1.5 billion due to increased advertising spend and depreciation costs associated with the acquisition of the DragonSoul title.
The company is shifting focus toward native games, supported by a pipeline of ten titles including a Wild Arms smartphone collaboration with ForwardWorks and strong performance from Shometsu Toshi 2.
Legacy web game performance continues to decline, with coin consumption dropping to ¥11.9 billion, while international coin consumption rose to 3.6 billion following the DragonSoul acquisition.
Diversification efforts in video media, bolstered by the February 2017 acquisition of 3Minute, resulted in a 3.5x year-over-year sales increase.
GREE has entered the VR sector by supplying content to amusement facilities such as VR PARK TOKYO.
Q3 net sales are projected to remain flat at ¥15.3 billion, with operating income expected to dip to ¥1.2 billion due to rising fixed costs from new title launches.
GREE’s financial results for the second quarter of fiscal year 2017 highlight a significant strategic pivot toward native games and new business segments, resulting in the first quarter-on-quarter sales growth in four years. Net sales reached ¥15.3 billion with an operating income of ¥1.5 billion. While sales grew, operating income saw a ¥1.0 billion decrease from the previous quarter, primarily due to increased advertising investments and depreciation costs following the acquisition of the DragonSoul title.
The domestic native game market showed strong momentum, driven by a major update to Shometsu Toshi 2, which doubled coin consumption. The company maintains a robust development pipeline with ten titles in progress, including high-profile collaborations like the smartphone version of Wild Arms with ForwardWorks. Overseas, the acquisition of DragonSoul in October 2016 contributed to an upturn in the top line, with coin consumption in international markets rising to 3.6 billion. Conversely, the legacy web game business continued its downward trend, with coin consumption falling to ¥11.9 billion.
Beyond gaming, there is a concerted effort to diversify into video-related and virtual reality (VR) businesses. The acquisition of 3Minute in February 2017 aims to accelerate growth in video media, where sales have already increased 3.5 times year-over-year. In the VR sector, the company began supplying attractions to amusement facilities like VR PARK TOKYO. Looking ahead to the third quarter, net sales are forecast to remain stable at ¥15.3 billion, while operating income is expected to decrease slightly to ¥1.2 billion as fixed costs rise with the launch of new titles in the second half of the fiscal year.
