Financial

FY2024 First Quarter Financial Results Briefing

Published by GREE

Summary

The briefing presents FY2024 first‑quarter results for GREE, Inc., highlighting net sales of ¥15.8 billion and operating income of ¥1.2 billion, with EBITDA at ¥1.3 billion. Performance across business segments is mixed: the Game and Anime Business generated strong earnings (¥1.56 billion operating income) driven by the Heaven Burns Red anniversary event; the Metaverse Business benefited from a robust REALITY Platform, though the XR cloud and VTuber subsidiaries posted losses; the DX Business maintained steady sales but flat operating income; the Commerce Business showed upward momentum, particularly from aumo’s SaaS expansion. The Investment Business recorded an operating loss of ¥0.2 billion due to the absence of large distributions that had supported prior quarters, yet assets under management increased to ¥82.7 billion. Quarter‑over‑quarter declines are attributed mainly to the reactive drop in Investment Business distributions, offset by cost reductions in variable expenses and controlled increases in fixed costs. Forecasts indicate a weaker Game and Anime segment in Q2, with company‑wide operating income projected at roughly ¥0.5 billion excluding investment gains. Full‑year FY24 operating income is expected to remain within the ¥4–5 billion range, unchanged from initial guidance. Medium‑term targets aim for sales growth to ¥3.3 billion by FY26, leveraging aumo’s SaaS base and jobda’s HR services. Methodologically, the briefing relies on internal financial statements, segment‑level analyses, and forward‑looking estimates without external survey data. Geographic coverage is global with emphasis on North America for Metaverse expansion, while the time period covers Q1 FY2024 and comparative references to Q3–Q4 FY2023.

From the report

Toshiki Oya, Senior Vice President, CFO: Thank you for joining the FY2024 first quarter financial results briefing of GREE, Inc. I am Toshiki Oya. Looking at the executive summary on page 2, we see net sales of ¥15.8 billion, operating income of ¥1.2 billion, and EBITDA of ¥1.3 billion. During the first quarter, the Metaverse Business remained strong and results were basically in line with our forecast. We will provide detailed information regarding each business later, but I’d first like to provide a quick summary. In the Game and Anime Business, earnings were strong owing to the success of the 1.5-year anniversary event for Heaven Burns Red. In the Metaverse Business, the REALITY Platform Business provided a strong earnings boost. In the DX Business, the Commerce Business progressed in line with our expectations. In the Investment Business, we posted an operating loss of ¥0.2 billion as there were no large distributions received. On page 5, we provide an overview of financial results. We will provide explanations regarding net sales and operating income later. Also, there were no significant movements in terms of ordinary income and net income. Page 6 shows trends in net sales and operating income. In the third quarter and the fourth quarter of FY23, we received large distributions in the Investment Business, but this was not the case in the first quarter of FY24. Companywide sales and income therefore declined QoQ due to this reactive decline. On page 7, we have an analysis of sales and operating income by segment. We will provide an explanation of this later.

istributions in the Investment Business, but this was not the case in the first quarter of FY24. Companywide sales and income therefore declined QoQ due to this reactive decline. On page 7, we have an analysis of sales and operating income by segment. We will provide an explanation of this later. On page 8, we present an analysis of operating income in the first quarter. The main factor behind the decline in sales was the aforementioned reactive decline in the Investment Business and quarterly operating income was ¥1.2 billion. On page 9, we break down our cost structure for the first quarter. Variable costs declined QoQ on the winding down of promotions for Heaven Burns Red. Commission and fee costs declined on a decline in sales. Looking at fixed costs, labor costs increased on allocation of human resources to growth businesses including hiring to expand REALITY operations in Page 1 of 7

North America and increased hiring in the VTuber Business. However, we have narrowed our focus and, although fixed costs rose QoQ, we do not expect them to continue rising at this pace. Page 11 shows our earnings estimates and forecasts. We expect results in the Game and Anime Business to be weaker in the second quarter FY24 than in the first quarter. Excluding the Investment Business, we forecast companywide operating income of roughly ¥0.5 billion in the second quarter. Our full-year FY24 forecast remains unchanged from our initial forecast. Excluding contribution from new titles and the Investment Business, we forecast FY24 operating income of roughly ¥4–5 billion. Moving on to page 12, here we show progress toward our full-year forecast. Progress in the Game and Anime Business surpassed 25% due to strong performance in this business and, in the Metaverse Business, the Platform Business contributed to income. The DX Business and the Commerce Business trended in line with expectations. Now, let’s hear from the heads of each of our businesses. Yuta Maeda, Senior Vice President: Yuta Maeda will cover the Game and Anime Business. First, page 14 shows an overview of the Game and Anime Business as a whole. In the first quarter, the Game and Anime Business posted sales of ¥11.72 billion and operating income of ¥1.56 billion. Focus points include the very well-received 1.5-year anniversary event for Heaven Burns Red. While there was a negative QoQ impact from many of our titles marking anniversaries in the fourth quarter of FY23, collaboration events for That Time I Got Reincarnated as a Slime: ISEKAI Memories were successful and other titles performed very well.

.5-year anniversary event for Heaven Burns Red. While there was a negative QoQ impact from many of our titles marking anniversaries in the fourth quarter of FY23, collaboration events for That Time I Got Reincarnated as a Slime: ISEKAI Memories were successful and other titles performed very well. Next, I would like to talk about our subsidiaries. First, on page 15, we have WFS, Inc. As I mentioned before, the 1.5-year anniversary event for Heaven Burns Red was very well received. Page 2 of 7

Next is Pokelabo, Inc. The company saw a reactive decline from anniversary events in the fourth quarter of FY23 and development costs rose sharply as development work on major titles peaked. Also, as just announced last week, we will be terminating support for SINoALICE and we have announced a tremendous story ending for this title. We began to see the impact from the termination of support for SINoALICE in the first quarter results. Now let’s turn to GREE Entertainment, Inc. The first quarter earnings were firm owing to very strong performance in licensing and outsourced development projects. In the first quarter, there were no extraordinary factors like the write downs posted on some titles in the fourth quarter of FY23. Page 18 shows our pipeline. As we explained in our fourth quarter FY23 results presentation, we are diversifying our pipeline. We are making steady progress in this area and we feel that we have built a good, solid pipeline. On page 19, we provide our second quarter FY24 earnings forecast. To be frank, we do not have many major focus points for the second quarter, but we continue to hold second anniversary events for That Time I Got Reincarnated as a Slime: ISEKAI Memories. Based on these factors, our forecast is as shown. Page 20 shows our full-year earnings forecast. We are making smooth progress in terms of sales and income and we expect to reach our initial forecasts. On page 21, we present our medium-term targets. As we explained previously, our forecasts for sales of new titles, which can be highly volatile, are very conservative. However, we view our medium-term cost estimates as realistic. Thank you for your kind attention.

to reach our initial forecasts. On page 21, we present our medium-term targets. As we explained previously, our forecasts for sales of new titles, which can be highly volatile, are very conservative. However, we view our medium-term cost estimates as realistic. Thank you for your kind attention. Eiji Araki, Senior Vice President: Next, Eiji Araki will explain the Metaverse Business. First, page 23 shows an overview of the Metaverse Business as a whole. Sales rose sharply in the first quarter, especially in the Platform Business. Also, although we continued to Page 3 of 7

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Words: 2,349
Format: PDF
Type: Financial

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