2011_1q_en

Copyright © 2004-2007 GREE,Inc. All Rights Reserved.Copyright © 2004-2010 GREE, Inc. All Rights Reserved.

GREE, Inc.Financial Results for the First Quarter of the Fiscal Year Ended on June 30, 2011

November 1, 2010

Copyright © 2004-2010 GREE, Inc. All Rights Reserved.

1

First Quarter FYE 6/2011 Highlights

Japan’s No.1 SNS

Achieved

Japan’s largest

user base

Expanded

“GREE

Platform”

Strengthened

social game

business

■ Became Japan’s No.1 SNS with 22.46 million

members as of September 2010

■ Acquired new members over a wide age range. With

members over the age of 30 accounting for 46% as

of September 2010

■ Launched “Pirate Kingdom Columbus”, its sixth first-

party social game, in August 2010, and started a

Monthly fee plan for Hacöniwa in September 2010

■ Game ARPU has steadily increased thanks to a

strong lineup and a variety of payment options to suit

user needs

■ Added around two hundred third-party social games

from a wide variety of partners to the “Gree Platform”

as of October 2010

■ Continues providing a wide variety of social features

to increase user activity


2

First Quarter FYE 6/2011 Income Statement

(JPY MM)

1Q FYE 6/11

(Jul-Sep 11)

4Q FYE 6/11

(Apr-Jun 11)

QoQ

(%)

1Q FYE 6/10

(Jul-Sep 10)

YoY

(%)

Net sales 12,410 10,940 +13% 6,837 +82%

Operating profit 6,221 5,294 +18% 3,939 +58%

Ordinary profit 6,227 5,303 +17% 3,942 +58%

Net income 3,695 3,113 +19% 2,129 +74%


3

Net Sales and Operating Profit

(JPY MM)

6,837

8,180

9,273

10,940

12,410

3,939

5,073 5,270 5,294

6,221

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1Q 2Q 3Q 4Q 1Q

FYE 6/2010 FYE 6/2011

Net sales Operating profit


4

Sales Breakdown

Paid Services Sales Advertisement Sales

(JPY MM) (JPY MM)

■ “Mon-Pla” and “Pirate Kingdom

Columbus” contributed to the

growth in Paid Services Sales

■ “GREE Platform” expanded

advertisement sales for partners

5,300

6,429

7,462

8,970

10,147

0

2,000

4,000

6,000

8,000

10,000

12,000

1Q 2Q 3Q 4Q 1Q

FYE 6/2010 FYE 6/2011

1,536

1,7511,811

1,972

2,262

0

500

1,000

1,500

2,000

2,500

1Q 2Q 3Q 4Q 1Q

FYE 6/2010 FYE 6/2011


5

■ Rental Charges： Invested in the last quarter, the rental charges decreased

■ Advertising： Continued investment focused on cost-effectiveness

■ Labor costs： Continued steady recruitment

First Quarter FYE 6/2011 Operating Expenses(JPY MM)

1Q FYE 6/11

(Jul-Sep 11)

4Q FYE 6/11

(Apr-Jun 11)

QoQ

(%)

1Q FYE 6/10

(Jul-Sep 10)

YoY

(%)

Cost of sales: 786 1,046 △25% 634 24%

Rental Charges 386 717 △46% 454 △15%

Labor costs 236 203 16% 120 96%

Others 162 125 29% 59 174%

SG&A: 5,402 4,598 17% 2,263 139%

Advertising 3,321 2,714 22% 1,127 195%

Paid-charge

commissions 1,159 969 20% 602 93%

Labor costs 267 224 19% 125 113%

Others 654 690 △5% 408 60%


6

■ Fixed assets： Increased with PP&E, Investment securities, and Other

■ Current assets： Decreased with Dividends and Corporate tax, etc

■ Current liabilities： Decreased with Corporate tax, etc

(JPY MM)

First Quarter FYE 6/2011 Balance Sheet

1Q FYE 6/11

(Jul-Sep 11)

4Q FYE 6/11

(Apr-Jun 11)

QoQ

(%)

1Q FYE 6/10

(Jul-Sep 10)

YoY

(%)

Current assets 28,344 30,903 △8% 14,872 91%

Cash and cash

equivalents16,973 21,354 △21% 9,046 88%

Receivables 9,308 7,682 21% 4,950 88%

Others 2,063 1,866 11% 875 136%

Fixed assets 2,301 1,267 82% 483 376%

Assets 30,645 32,170 △5% 15,356 100%

Current liabilities 7,519 11,617 △35% 4,216 78%

Liabilities 7,522 11,617 △35% 4,216 78%

Paid-in capital 2,118 2,113 0% 2,093 1%

Capital reserves 2,116 2,111 0% 2,091 1%

Retained earnings 18,889 16,330 16% 6,954 172%

Shareholder’s

equity23,123 20,552 13% 11,139 108%


7

■ Net cash provided by investment activities ： Increased with Fixed deposit

■ Net cash provided by operating activities ： Decreased with Corporate tax, etc

■ Net cash provided by financing activities ： Decreased with Dividends

First Quarter FYE 6/2011 Cash Flow Statement

(JPY MM)

1Q FYE 6/11

(Jul-Sep 11)

4Q FYE 6/11

(Apr-Jun 11)

1Q FYE 6/10

(Jul-Sep 10)

Net cash provided by operating activities △2,072 5,735 △1,317

Net cash provided by investment activities 8,781 △234 △120

Net cash provided by financing activities △1,090 13 △110

Cash and cash equivalents at the end of the

period16,973 11,354 9,046


Registered Members Page Views

8

Registered Members and Page Views

(Unit Bn)(Unit MM)

25.42 26.08 24.71 25.39

23.70

25.61 24.81

28.06

35.36

40.83

44.22

46.52

0.36 0.30 0.26 0.30 0.29 0.34 0.34 0.38 0.40 0.41 0.44 0.50

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

50.00

Oct-

09

Nov-0

9

Dec-0

9

Jan-1

0

Feb-1

0

Mar-

10

Apr-

10

May-1

0

Jun-1

0

Jul-10

Aug-1

0

Sep-1

0

mobile

PC

15.12 15.70

16.20 16.73

17.29 17.78

18.43 19.01

19.83 20.59

21.25 21.95

22.46

0.00

5.00

10.00

15.00

20.00

25.00

Sep-0

9

Oct-

09

Nov-0

9

Dec-0

9

Jan-1

0

Feb-1

0

Mar-

10

Apr-

10

May-1

0

Jun-1

0

Jul-10

Aug-1

0

Sep-1

0


52%48%男性

女性

By gender

By age

By area

9

Member Demographics

Note: as of September 30, 2010

Tohoku

Hokkaido

Tokyo

Metropolitan

Area

7%

9%

Koshinetsu/

Hokuriku

Chugoku/

Shikoku

Kyushu/

Okinawa

Tokai

Kinki

5%

8%

11% 16%

33%

11%14%7%

33%27%

19%Under 18

18,19

20 to 29

30 to 39

40 and above


Increased paid service sales

■ Accelerated growth in the game

market by diversifying contents,

including a new first party social

game10

August-2010

Launched

“Pirate Kingdom Columbus”

( Pirate battle game )

■ Increased paid services sales with

extra payment methods

September-2010

Started

“Monthly fee plan for Hacöniwa”

（NTT DoCoMo）

First Quarter FYE 6/2011 Business Report


Expanded the “GREE Platform”

11

■ Opened the “GREE Platform” to all developers Simplified the procedures for submission of social applications on the “GREE mobile version”

Provides open systems to developers for launching social applications

■ Customer Support Service Partnered with E-Guardian Inc.

To provide quality customer services, including 365-days customer support

■ Hosting Service Partnered with SAKURA Internet Inc., NIFTY Corporation, and Livedoor Co., Ltd.

To provide a wide range of hosting solutions and technical advise for third party developers

Sumzap, Inc.”COORDE MANIA”Cave Co., Ltd. ”Shiro-tsuku”



Summary of “GREE Platform”

12

Unique user growth rate on the “GREE

Platform”（daily average）

（Index （June 2010 = 1））

Coin usage growth rate ( daily average )


（Index （June 2010 = 1））

0

2

4

6

8

10

12

June July August September October

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

July August September October


Expand our overseas business

Capital partnership with Project Goth, Inc. which owns “mig33”,

one of the largest mobile SNS’s in emerging countries

Plan to open offices in Asia and North-America

Expand first-party social games portfolio

Develop contents for smartphones

Plans to start offering the “GREE” service on a variety of

smartphones by the end of the year

Accelerate the growth of the “GREE Platform”

Will launch several popular third-party titles

And a wide a variety of non-game applications

13

Strengthen services on multiple devices

Plans to launch more first-party social games

FYE 6/2011 Business Strategy


Appendix


Members

GREE

SNS

Advertisement Sales Paid Service Sales

Growth in

Page Views

Purchase of

items

15

Diary

/Comments

Community/

MB

Q&A

Social games

SNS + Social Games


16

A pirate battle game where members enjoy expanding their

pirate kingdoms by going on adventurous journeys to

various lands in search for treasures

“Pirate Kingdom Columbus”

A fishing game where members enjoy

collecting “fishing” gear and participating

in team events with other members

“Tsuri-Sta”

An adventure game where members enjoy

searching for treasures and exchanging

information about their collections with other

members

“Tanken Drilland”

A monster battle game where members train and

breed monsters by going on adventures, playing

with and doing battle and with other members

“Mon-Pla”

A gardening game where members grow and

collect different flowers and plants to create

their own personal miniature garden

“Hacöniwa”

A virtual pet game that allows members to

“raise” their own original “Clinoppe”

“Odoriko Clinoppe”

In-House Social Games


Advertisement

Sales

Paid

Service Sales

17

Wide Variety of Revenue

GREE Mobile screen

Ad Spot

Advertisement

- Advertisement (Banner/Text)

- Tie up

Avatar

- Sales of avatar clothing and cosmetic

changes

Social games

- A wide variety of micro-transaction based

social games


18

Started a 24hour-a day, 365-day-a-year third-party Patrol service in

November 2006

Established a GREE Patrol center within the main headquarters

Continuous strengthening of the patrol systems to maintain safe

content

① 24-hour-a-day, 365-day-a-year GREE Patrol System

② The “Safety and Security Committee”

The CEO serves as chairman of the Committee

Enable prompt responses to problems

Committee meeting held once a month with board members, patrol

officers, and the legal team

Harmful Postings

GREE Patrol

Warning/

Deletion

Screening/

Monitoring

Certificated as a

“Safe Content Sites”

EMA (Contents Evaluation and Monitoring Association)

③ Protection and Education of Youth

Introduced a new age restriction for certain services and the use of

monthly fee services

Creation of educational content and relevant warnings for younger

members

④ Obtained a third-party certificate as “Safe Content Sites”

The first “Safe Content Sites” certified by “EMA” on Aug 2008

GREE patrol system surpasses EMA standards and has

continuously passed EMA reviews

Safety & Security


② Strengthen usage limit by age：October 2010

Strengthened the age limits for in-service e-mail to protect minors

Limit the e-mail format for users when e-mailing users under 18

Limit the change of registered birth date in order to protect minors

③Awareness campaign with TV commercial

Summer vacation TV commercial campaign

Online safety education for minors and their parents

①Strengthen the site patrol：October 2010

Strengthened surveillance to reduce risk of abuse by strangers

Raised the penalty for in-service e-mail which includes personal information

Improved search systems for inappropriate words and content

19

Safety & Security: the latest projects


This material is presented solely for purposes of illustration and discussion and may include

information that is based, in part of in full, on hypothetical assumptions.

2011_1q_en

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