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July 29, 2014
GungHo Online Entertainment, Inc.
FY2014 Financial Results Briefing
Session for the 2nd quarter
2
FY2014
2Q Financial Highlights
Increase in sales and profit YoY
3
2013January-June
2014January-June
74,621
94,333
45,154
53,772
Sales
Operating profit
3,291 3,846 4,561
14,121
30,904
43,717 41,639
46,799
49,909
44,424
248 770 1,392
6,886
18,616
26,538
23,360 22,712
28,789
24,982
7.6%
20.0%
30.5%
48.8%
60.2% 60.7%
56.1%
48.5%
57.7% 56.2%
0.0%
50.0%
100.0%
0
20,000
40,000
60,000
2012.1Q 2Q 3Q 4Q 2013.1Q 2Q 3Q 4Q 2014.1Q 2Q
Sales
Operating profit
Operating profit ratio
Stable results 1Q sales made smooth progress from New Year's holiday. In addition to the seasonal factors, leaving the item price unchanged after consumption tax hike cause 2Q sales to decrease, but operating profit ratio was still on the same level.
4
PUZZLE & DRAGONS Z
Trends in Quarterly Results
（Unit: millions of yen）
3,500
9,550
25,220
43,580
57,340
68,000
78,000
0
20,000
40,000
60,000
80,000
100,000
2010.3 2011.3 2012.3 2013.3 2014.3 2015.3(E) 2016.3(E)
5
*Conjecture from market survey
【Reference】 Number of smartphone penetration in Japan
(Thousand units)
Smartphone already penetrated into late majority. Late majority and laggards are cautious and conservative. Smartphone penetration will be continuing hereafter, but market expansion is slowly.
Late majority
Early majority
Early adopters
8 48
307
546
658
746
823
0
200
400
600
800
1,000
2010 2011 2012 2013 2014(E) 2015(E) 2016(E)
6
(Billion yen)
*Conjecture from several market survey
【Reference】 Smartphone game market in Japan
Growth rate /year 465%
538%
77%
20%
13%
10%
The growth of the smartphone game market began to slow down from 2013. The market size will slightly increase, but competition is expected to intensify in the future.
134
317
428
25
163
0
200
400
600
2012 2013 2014(E)
Smartphone game market in Japan (Native App)
GungHo's sales
7
【Reference】 Trends in smartphone game market and GungHo’s results
With the expansion of smartphone market, our performance has continued to expand. Our sales occupy a half of the smartphone game market.
*Conjecture from several market survey
Share 19％
Share 51％
(Billion yen)
Domestic MAU
8
Overseas MAU
9
Consolidated Profit and Loss Sheet
Units: millions of yen
FY2014 2Q (Apr. – Jun. 2014)
FY2013 2Q (Apr. – Jun. 2013)
Change ratio YoY
FY2014 1Q (Jan. – Mar. 2014)
Change ratio QoQ
Sales 44,424 43,717 1.6% 49,909 △11.0%
Cost of sales 14,198 13,367 6.2% 16,048 △11.5%
Cost of sales ratio
32.0% 30.6% 1.3P 32.2% △0.3P
SG&A 5,242 3,811 37.6% 5,071 3.4%
Operating profit 24,982 26,538 △5.9% 28,789 △13.2%
Operating profit ratio
56.2% 60.7% △4.5P 57.7% △1.5P
Ordinary profit 24,699 26,650 △7.3% 28,095 △12.1%
Profit before tax 24,660 26,609 △7.3% 28,095 △12.2%
Net profit 15,029 15,857 △5.2% 17,063 △11.9%
10
Quarterly Income Statement
Sales was lower than 1Q, but operating profit ratio is on the same level.
SG&A slightly increase
2013.1Q 2Q 3Q 4Q 2014.1Q 2Q
Personnel expences 567 601 618 1,075 619 649
Advertisement expenses 814 1,897 3,223 4,498 2,963 3,166
Others 1,289 1,311 1,254 1,561 1,488 1,426
0
2,000
4,000
6,000
8,000
5,242
7,135
5,095
3,811
2,670
11
When the titles gets the enough number of DLs, we determine the start of the promotion. In 2Q, ad expenses slightly increase by holding GungHo Festival 2014 on May.
5,071
Trends in SG&A
（Unit: millions of yen）
Employees slightly increase
We have shifted the employees from PC online sector to mobile consumer sector. The number of employees slightly increase by recruitment.
2013.1Q 2Q 3Q 4Q 2014.1Q 2Q
Administration,others
43 44 42 43 46 46
CS, system 59 64 64 65 65 66
Mobile consumer 117 133 143 153 157 177
PC online 60 58 56 54 52 44
0
100
200
300
400
333 315 305 299
279
12
320
Trends in number of employees
Sales is stable by raising the
standard of MAU
In entering the mature stage, monthly sale used to fluctuated noticeably by the event contents and the seasonal factors, but it keep within a fixed range by raising the standard of MAU.
13
Trends in monthly non-consolidated sales and MAU
FY2014
2Q Business Outlook
14
15
Easy touch game “PICOTTO KINGDOM” Android version June 30
iOS version July 10
Create New Value
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App Store “Top Free Charts”
No.1 (July 14)
PICOTTO KINGDOM Gungho Online Entertainment, Inc.
DEADMAN’S CROSS SQUARE ENIX INC
Dino Hunter: Deadly Shores Glu Games Inc.
LINE: Disney TSUM TSUM NAVER JAPAN
Crossword Lv100 by dapan swagApp Inc.
1
2
3
4
5
Create New Value
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GungHo Festival 2014 May 29 TOKYO BIG SIGHT
31,022 visitors
Maximize Existing Value
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Over 1.5 million
Maximize Existing Value
*Cumulative number of shipments in Japan as of July 17, 2014 *Including download sales in Nintendo eShop
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Maximize Existing Value
April 24-
2.6 thousand machines
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◇Promotion schedule “CORO tour 2014” July 27, 2014 – beginning of November This fall, competition in shop will be held at every region of the country.
June 26-
1.5 thousand machines
Maximize Existing Value
21
■Japan Population: 127 million Smartphone penetration: 68 million
■North America [U.S./Canada] Population: 310 million Smartphone penetration: 218 million
■UK Population: 63 million Smartphone penetration: 41 million
■Hong Kong/Taiwan Population: 30 million Smartphone penetration: 17 million
*Population source is WHO ‘s survey. *Smartphone penetration is conjecture from several market survey.
■China Population: 1,300 million Smartphone penetration: 700 million
“PUZZLE & DRAGONS” Overseas expansion
Under the preparation of expansion to China
■South Korea Population: 50 million Smartphone penetration: 36 million
Strengthen Overseas Expansion
FY2014
2nd half year Business Outlook
22
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New game Under developing and
planning 10 new games [2014 3Q 1 new game release(expectation)]
Create New Value
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Title: LET IT DIE Category: Survival Action Platform: PlayStation®4 Online: Asynchronous Online
2015 release [Free to Play/ Item charging]
Create New Value
Rating: To be rated Website: http://letitdie.jp Publisher: GungHo Online Entertainment, Inc. Developer: Grasshopper Manufacture Inc.
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© LAD,LOTTE/Bikkuriman Project © LOTTE/Bikkuriman New Project
Maximize Existing Value
26
“PUZZLE & DRAGONS W”
July 29 Updated
Maximize Existing Value
27
Maximize Existing Value
28
Thank you !
GungHo Online Entertainment, Inc. IR/Corporate Communication Group, Business Planning Office
