The following is a brief overview of GMO Internet Group business results in the third quarter of Fiscal Year 2013. For further details please visit our Investor Relations website.
■Financial Results Overview
●Sales and profit both increased in the second quarter. Net Sales and Net Profit grew 29.5% and 30.8% respectively to reach record high levels.
●Strong growth accros all segments and a recovery in Securities segment profitability drove results in the current quarter.
■Web Infrastructure & Ecommerce Segment
Both revenue and profits grew in the most recent quarter. Net sales were at a record high, having shown a continuous increase for the third consecutive year. Expansion of ecommerce and increasing smartphone penetration are factors fuelling growth accross all product sub-segments.
■Internet Media Segment
In the Internet media segment, while net sales grew, operating profit remained almost flat. This is partly a result of a drop in sales of high-margin proprietary
ad network products as a percentage of over ad sales. We are actively working to improve sales mix in this segment.
■Internet Securities Segment
●Although profits recovered in the third quarter, sales fell QonQ. This is a result of measures introduced in response to external conditions.
In June and July FX trading volume peaked at over 100 trillion yen a month, however in August we saw a return to somewhat normal trading levels.
1. At its peak, FX trading of the USD/JPY currency pair accounted for over 80% of trading volume, this has now settled back to around 70%. Because the spread on this currency pair is very narrow, less dependency on JPY/USD trades improves profits.
2. High levels of market volatility will push bank rates up and this is what happened in the second quarter. However rates have now returned to lower levels and this has also contributed to imrpoved profitability in the current quarter.
●In the smartphone game segment we are now about a quarter behind our inital profit forecast. However we are seeing continued improvement accross all KPIs for the business.
●Going forward we plan to shift focus to 100% native apps and in the July quarter we already released three new titles.
●One of our most popular new games is called Shooting Yusha. This is a shooting game that combines action and role play.
●The smartphone market is a continously evolving space – however we continue striving to achieve profitabilty as early as possible in this segment.
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