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GREE
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Distilling the key insights…
The GREE, Inc. Annual Securities Report for the 18th fiscal term, covering July 2021 through June 2022, details a period of strategic reorganization and financial growth. The company reported consolidated net sales of 74,906 million yen, an 18.5% year-on-year increase, driven primarily by its Internet and Entertainment segment. This segment, which encompasses mobile gaming, the REALITY metaverse platform, and media operations, remains the core revenue driver. To support long-term value, the company implemented a "Engine × IP × Global" strategy while simultaneously restructuring its Investment and Incubation operations into a dedicated subsidiary, GREE Capital Management, Inc., to enhance operational agility.
Financial stability remains a priority, evidenced by an equity ratio of 77.4% and the execution of significant share buybacks totaling over 34 million shares. The company maintains a shareholder return policy targeting a 2% dividend on equity and a minimum 20% payout ratio. Management has also aligned executive incentives with long-term performance through stock option plans, including specific market capitalization targets of 500 billion yen. These efforts are supported by a robust corporate governance framework, which includes an Audit & Supervisory Committee and independent outside directors to ensure objective oversight and rigorous internal controls.
The report highlights a shift in accounting practices, specifically the adoption of new revenue recognition standards for virtual items and fair value measurement. These changes, alongside the reclassification of investment activities as a core business, reflect a broader effort to align with evolving Japanese accounting standards. While the company faces risks related to market competition, high development costs, and reliance on major platform partners like Apple and Google, independent auditors from Ernst & Young ShinNihon LLC confirmed that the financial statements are fairly presented. The company enters the subsequent period with a strong cash position and a clear focus on scaling its metaverse and gaming ecosystems.
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