GREE’s net income climbs threefold to $167M on $545M in revenue during holiday quarter

By Kim-Mai Cutler Comment

GREE said it more than tripled its net income from a year ago to 12.7 billion yen ($167.3 million) and nearly did the same for its overall revenue with net sales reaching 41.5 billion yen ($545.3 million).

Just for perspective, GREE’s annual revenue will probably end up being about twice what Zynga pulled in last year. GREE expects that it will make more than half a billion U.S. dollars in net income for the full fiscal year. (Meanwhile, Electronic Arts reported a $205 million net loss yesterday for the most recent quarter.)

The key to GREE’s remarkable growth has been the rise of paid services like avatar customization, which contributed 38.3 billion yen ($502.8 million), and unexpectedly strong growth in the company’s home market of Japan. Advertising revenue also grew slightly to 3.3 billion yen ($42.5 million). This split between virtual goods and advertising is very similar to what we’ve seen in Zynga’s revenues, where the San Francisco-based company earns just 6 percent of its revenue from advertising.

For the full fiscal year, GREE expects to see net sales of 160 to 170 billion yen ($2.1 to 2.2 billion) and a net income of 44 to 50 billion yen ($578 to $657 million). GREE says it doesn’t expect to see any sales revenue from Europe, U.S. or the rest of Asia for the fiscal year. The company is pouring resources into expanding overseas after spending $104 million last year to buy mobile-social gaming network OpenFeint. It’s also aggressively stepping up its headcount in the San Francisco Bay Area.

GREE says its plan this quarter is to combine its footprint in Japan with that of OpenFeint’s to create a brand-new, unified mobile-social gaming network that will debut by the middle of the year. It will have a reach of 190 million users and more than 7,500 games.

That’s a turnabout for the company, which originally said it would have two separate networks. In December, the company said it announced 12 games and 12 partners for the platform and yesterday it revealed that partners like Amazon and Microsoft would help provide support for developers.

The company’s shares rose 10.1 percent today to 2,499 yen or $34.81, giving the company a market capitalization of 578.6 billion yen ($7.6 billion).