GREE’s Q3 2013 sales declined quarter-over-quarter to $370.9M, profits down 24 percent to $105.7M

Mobile-social gaming giant GREE today reported 37.9 billion yen ($370.9 million) in revenue and 10.8 billion yen ($105.7 million) in operating profit for the third quarter of 2013, a quarter-over-quarter decline of both sales and profits. Sales fell 4 percent and profits 24 percent. Year-over-year, revenues are down 18 percent from 46.2 billion yen ($452.1 million) in Q3 2012 and operating profit dipped by 56 percent from 24.5 billion yen ($239.7 million).

The Japanese company, which was established in 2004, also posted an “extraordinary” loss of 4.03 billion yen (39.4 million) on one-time write-off of assets related to some titles. The loss was part of GREE’s plans to shift growth strategy to “selection” and “concentration”, where it will streamline its portfolio of core titles. Card battle titles from Pokelabo, the Japanese game studio GREE acquired in October 2012, are performing well for GREE. Three of the top 25 grossing iOS apps in Japan include Guardian Battle of Glory at No. 7, Sword of Phantasia at No. 10 and Clan Battle of Fate at No. 25. GREE also plans to share its successful Android lessons with Pokelabo, while Pokelabo plans to do the same for GREE with iOS lessons.

In Japan, GREE’s coins consumption, a virtual currency users can exchange for in-game content, on smartphone titles grew, particularly from Pokelabo’s existing titles,  but fell short of targets. Overseas, coin consumption has doubled on strong performance from titles developed by GREE’s Funzio studio including Crime City and Modern War.

Japanese mobile-social gaming rival DeNA latest earnings on May 9 outperformed GREE’s significantly, with $528 million in revenue and $184 million in operating profit, an increase over GREE of 42.4 percent and 74.1 percent, respectively.

Advertising revenues decreased 3 percent quarter-over-quarter from 3.1 billion yen ($30.3 million) in Q2 to 3 billion yen ($29.4 million) in Q3, which falls in line with GREE’s decline in revenues.

For the remainder of 2013, GREE plans to release 15-20 titles in Japan and 5 titles overseas. The company lowered its fiscal year 2013 estimate for net sales and profits due to its Q1 to Q3 results and recent trends. GREE now forecasts 150 billion yen ($1.5 billion) in revenue and 46 billion yen ($450.2 million) in operating profit. By the end of Q3, which ended March 31, GREE had 37.2 billion yen ($364.1 million) in its war chest.

GREE stock closed today at 1,194 yen ($11.68) per share, up 1.8 percent.

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