GungHo Online Entertainment FY2015 Q2 Financial Results

GungHo Online Entertainment’s financial results for the second quarter of the fiscal year ending December 2015 reflect a period of contraction compared to the previous year. The company reported a consolidated net sales figure of 82.34 billion yen, representing a 12.7% decline year-over-year. Operating profit fell by 22.9% to 41.46 billion yen, while quarterly net profit decreased by 18.0% to 26.30 billion yen. These results underscore a challenging environment for the company’s primary revenue driver, the mobile puzzle RPG Puzzle & Dragons, which experienced a decline in short-term monetization rates as the title entered its fourth year of operation.

Despite the decline in financial performance, the company maintained a focus on user engagement through continuous updates and large-scale events, such as the GungHo Festival 2015, which drew over 110,000 attendees. Diversification efforts continued with the release of Puzzle & Dragons-themed titles for the Nintendo 3DS and the expansion of other mobile titles like Summoners Board and Divine Gate, the latter of which received an anime adaptation announcement. Internationally, the company saw steady growth in user acquisition, particularly in North America, Hong Kong, Taiwan, and Macau.

The company’s financial position underwent significant changes during this period, primarily due to a large-scale share buyback program. Total assets decreased to 97.24 billion yen, largely driven by a 60.44 billion yen reduction in cash and deposits following the acquisition of treasury stock from SoftBank. Consequently, total equity was impacted by the 79.99 billion yen expenditure on these shares. Given the high volatility of the content-related business and the difficulty in providing accurate, rational forecasts, the company maintains its policy of not disclosing full-year consolidated earnings projections, opting instead for timely disclosure of quarterly results.