FY2017 Fourth Quarter Financial Results

Summary of Main Supplementary Explanations Questions and Answers at the FY2023 First Quarter GREE Results Briefing

The financial performance for the first quarter of fiscal year 2023 reflects a period of stabilization and strategic reinvestment across key business segments. The game business experienced a typical seasonal slowdown following the fourth-quarter peak, yet maintained a solid foundation through the sustained success of Heaven Burns Red. This title has established a stable user base, and its high level of visual expressiveness and multifaceted marketing approach now serve as the internal benchmark for future development and operational strategies. Management anticipates a recovery in momentum toward the end of the calendar year, driven by planned anniversary events and new content releases. The metaverse business has reached a significant financial milestone by achieving breakeven status. Current efforts are focused on expanding the user base for the REALITY platform, with profits being systematically reinvested into promotional activities to secure long-term growth. In contrast, the outlook for the investment and incubation business remains cautious due to volatile market conditions. While some distributions from investment exits are expected, there is a recognized risk of quarterly losses if these distributions fail to offset operational costs, leading to a conservative earnings forecast for this segment in the near term. Projected operating income for the internet and entertainment business in the second quarter is estimated to fall between 1.0 billion and 1.5 billion yen. This guidance accounts for the ongoing transition of the game portfolio and the deliberate reinvestment strategy within the metaverse sector. Overall, the strategy emphasizes leveraging the technical and operational know-how gained from recent hits to ensure the scalability of upcoming titles while maintaining a disciplined approach to emerging business segments and venture investments.