Toshiki Oya, Managing Executive Officer and CFO:
GREE Co., Ltd. Thank you for participating in the financial results briefing for the third quarter of the fiscal year ending March 31, 2023. My name is Toshiki Oya.
See overview on page 2.
Net sales were 22.2 billion yen, operating income was 4.2 billion yen, and EBITDA was 4.3 billion yen. Operating income in the Internet & Entertainment Business was 1.8 billion yen, exceeding the forecast, despite large upfront investments in promotional activities. Operating income from the investment and development business was 2.4 billion yen, contributing to profit growth for the entire company.
Moving on to the topic of business, the game business has continued to perform well since 2018. heaven burns red It is driven by two main initiatives. First, the Japanese version of the first anniversary event was held successfully, and the game continued to perform well, taking first place in the sales rankings. Next, we launched global distribution and got off to a good start. In the Metaverse business, we established new companies to handle the VTuber business and the B2B Metaverse business, respectively, in an effort to diversify our business portfolio.
The outlook for FY2023 remains unchanged. I would like to add some comments about the fourth quarter.Due to the end of donations from the Japanese version of the anniversary event heaven burns red Operating income for the Internet Entertainment business in the fourth quarter is expected to be approximately 1.5 billion yen due to factors such as the release of overseas versions. In addition, in the investment and development business, we expect operating income of approximately 500 million yen from the already secured financial resources due to the acquisition of dividend income from the CVC fund in the fourth quarter. The total will be the sum of these two segments.
Let’s move on to the summary of consolidated results on page 5. I will discuss sales and operating profit in more detail later. There are no noteworthy items for ordinary income and below.
Page 6 shows trends in net sales and operating income.Net sales and profit increased QoQ in the Internet Entertainment business due to strong performance
1/4 page
performance from heaven burns red. The Investment and Nurturing Business also posted significant increases in sales and profits due to a large amount of distributions from investment funds.
Page 7 is an analysis of operating profit. As I mentioned earlier, sales increased in both the Internet and entertainment business and the investment and development business. on the other hand, heaven burns red Variable costs increased due to the development of titles aiming for medium- to long-term growth. As a result, operating income was 4.2 billion yen.
Page 8 is the cost structure. As I mentioned earlier, variable costs increased by approximately 3 billion yen due to investment in advertising. Commissions, etc. also increased due to the increase in sales. Fixed costs remained almost unchanged. The total project cost is 17.9 billion yen.
Page 9 is the dividend forecast. We will not change our dividend policy, aiming for a DOE of 2.0% and a consolidated dividend payout ratio of 20% or more. We plan to pay a dividend of 11 yen per share.
Now let’s move on to the operational overview. Page 11 is an overview of the third quarter. We have not changed our overall business plan, and have continued to strengthen our three pillars of earnings.
From page 12 onwards, I will explain the game and animation business.for heaven burns redsuccessfully held the 1st anniversary event for the Japanese version, and continued to perform well, taking first place in the App Store sales ranking. On the other hand, we have aggressively implemented promotional activities to maximize earnings for this title over the medium to long term.
Page 13 is about global distribution. heaven burns red. The Korean and Traditional Chinese versions were released on February 10th, and won the first place in the App Store sales rankings in Taiwan and Hong Kong. We have expanded globally.
Page 14 is about existing titles. A campaign was held to commemorate the 4.5 million download breakthrough. That Time I Got Reincarnated as a Slime.for Assault Lily Last Bullethas activated the fan community by conducting a 2nd anniversary campaign.
2/4 pages
The pipeline is shown on page 15. No big updates here. We will continue to plan and develop multiple titles and aggressively distribute them globally in order to further strengthen our earning power.
From page 16, I will introduce the Metaverse business. We held a world event in collaboration with Sanrio Co., Ltd. as a content expansion measure that utilizes the world function of REALITY. In North America, the number of users continued to expand steadily, approximately doubling year-on-year, and progressed steadily. worldwide distribution.
Page 17 is about strengthening the VTuber business. Established Reality Studio Co., Ltd. as a subsidiary, and established a new VTuber talent office “First Stage Production” through that subsidiary. An audition has already been held, and the debut distribution of the first generation VTuber selected from among a large number of applicants. First-generation VTubers are off to a strong start, meeting YouTube’s monetization standards in their debut month.
Page 18 is about the B2B Metaverse business and established REALITY XR Cloud Co., Ltd. The company delivers a “metaverse full of people” to corporate customers as REALITY Worlds. REALITY Worlds has over 42 million annual visitors. In terms of collaboration, we have signed a basic agreement on a strategic business alliance with Nishinihon Marketing Communications Co., Ltd. All of this will further accelerate your business growth.
Page 19 is about the commerce business. Our flagship travel media, “aumo,” has been ranked among the top sites in the travel industry, and we are steadily strengthening our media capabilities. On the other hand, we have continued our efforts for further business growth, such as contributing to regional revitalization by sponsoring events using marketing SaaS “aumo My Business”.
Page 20 is about the DX business. We promoted DX collaboration with Nishinippon Shimbun Co., Ltd., Confidence Co., Ltd., Toyota Connected Co., Ltd., etc.
From page 21, I will explain the investment and incubation business. As you can see, total assets under management decreased by 4 billion yen due to distributions.
3/4 pages
middle of the chart. This was a revenue share from the VC fund and contributed significantly to our profit and loss, but total assets under management decreased.
Please see page 22. During the third quarter, we continued to invest in startups through his VC funds and his CVC. Operational investment securities are shown on the left. Book value decreased to 16.6 billion yen due to profit sharing. On the other hand, the investment evaluation value, which takes into account the evaluation of unlisted companies, was only around 30 billion yen.
The last slide shows the investment performance status of FoF and CVC. No major updates. Our portfolio continues to be of high quality.
This concludes my explanation. thank you very much.
4/4 pages
