GREE’s net income hits a record high of $167.6M on $578M in sales during Q3

GREE has once again posted a record quarter, reporting a 186 percent increase in net income year-on-year to 13.4 billion yen ($167.6 million) in its third quarter. Net sales reached a record high of 46.2 billion yen ($578.1 million), up 182 percent year-on-year and 11 percent quarter-on-quarter.

By comparison Electronic Arts reported mobile revenues of $87 million in the same three month period. The company’s forecasts for the full fiscal year were unchanged — overall GREE predicts net sales of 160 to 170 billion yen ($2.1 to 2.2 billion) and net income of 44 to 50 billion yen ($578 to $657 million) by the end of its fiscal year on June 30.

GREE credited the record quarter to a strong growth in paid services sales (virtual goods and avatar customization services) which increased 12 percent quarter-over-quarter and accounted for 92 percent of total sales. GREE’s advertising sales were nearly flat however, rising from 3.2 billion yen ($40 million) in the second quarter to 3.3 billion yen ($41.2 million) in the third. GREE currently holds 51.6 billion yen ($645.7 million) on hand in cash and cash equivalents, up 63 percent quarter-on-quarter and 123 percent year-on-year.

The company also revealed more specifics about its long-awaited global mobile-social gaming platform. According to GREE’s earning slides, the platform will go live at the end of May in 153 counties. GREE plans to have 50 to 60 partner titles live by September and several hundred partner games available on the service by December. GREE also reported its global userbase increased to 234.8 million players in Q3. The share of Japanese players continued to decline, falling from 13.5 percent in Q2 to 12.9 percent at the end of Q3.

Despite record earnings, the company’s shares fell on the news, dropping 9.9 percent to 1,486 yen. Reports that Japan’s Consumer Affairs Agency intends to introduce regulations banning one of GREE’s key monetization methods led GREE shares fall to their lowest level in more than a year. The company’s market capitalization is currently 346 billion yen ($4.3 billion), down from 578.6 billion yen ($7.6 billion) in February.

GREE acknowledged its recent difficulties in its earnings report, outlining four new initiatives it is undertaking under the banner of improving its user environment. In recent months the company has set up an internal user environment improvement committee that reports to GREE founder and CEO Yoshikazu Tanaka, established telephone support centers and placed limits on how much money underaged consumers can spend on a monthly basis. GREE also highlighted the tactics it has undertaken to prohibit users from re-selling virtual goods for real money outside its network.