GREE, Inc. reported Q3 FY2018 net sales of ¥17.9 billion and operating income of ¥2.8 billion, achieving a 15% operating margin.
The company missed revenue targets due to delayed title launches and acquisitions but exceeded profit expectations by cutting ¥500 million in fixed costs and optimizing advertising spend.
GREE is pivoting to a three-pillar business model consisting of mobile gaming, advertising and media, and a new live entertainment segment focused on the Virtual YouTuber (VTuber) market.
The company projects Q4 revenue to reach ¥18.5 billion, driven by the global release of 'DanMachi' and domestic performance of 'In Love with News' and 'Puchiguru Love Live!'.
GREE is diversifying its gaming strategy by porting successful mobile IPs, such as 'Another Eden', to consoles including the Nintendo Switch.
The media segment is showing growth through the 'aumo' travel application, which has achieved a high category ranking in vertical media.
This financial presentation details GREE, Inc.’s performance for the third quarter of fiscal year 2018, ending March 31, 2018. The primary thesis centers on a strategic transition toward a three-pillar business model comprising mobile gaming, advertising and media, and a newly established live entertainment segment. Geographically, the report covers the Japanese domestic market and ongoing expansion efforts into North America, with future plans for Asia and Europe.
Financial results for the quarter show net sales of ¥17.9 billion and operating income of ¥2.8 billion. While the company missed its revenue targets due to delays in title launches and business acquisitions, it exceeded profit expectations through aggressive cost reductions. Fixed costs were reduced by ¥500 million, and advertising spending was optimized, resulting in a 15% operating margin. For the fourth quarter, the company forecasts a slight revenue increase to ¥18.5 billion, supported by the global rollout of titles like DanMachi and the domestic performance of new releases such as In Love with News and Puchiguru Love Live!.
A significant strategic shift highlighted is the entry into the live entertainment business, specifically focusing on the Virtual YouTuber (VTuber) market. GREE intends to leverage its existing 3D engineering capabilities from its gaming and VR divisions to manage production, distribution, and IP development for VTubers. Additionally, the company is diversifying its gaming portfolio by moving successful mobile IPs like Another Eden to consoles, including the Nintendo Switch. In the media segment, the travel application aumo is noted for its high category ranking, signaling steady growth in vertical media and client acquisition.
