GungHo Online Entertainment, Inc.

FY2014 Financial Results Briefing

Session for the 1st quarter

April 28, 2014

FY2014

1Q Financial Highlights

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Updated Record-High Sales and Profit Again

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■Increase in sales and profit ( YoY, QoQ ) Sales： 49.9 billion yen (61.5% increase YoY)

Operating profit： 28.7 billion yen (54.6% increase YoY)

Consolidated Results

Mobile Consumer Business

■Further growth P&D, other games are good sales. Sales： 48.8 billion yen (67.1% increase YoY)

Operating profit： 29.6 billion yen (57.4% increase YoY)

PC Online Business

■Especially, domestic environment is under hard condition. Sales： 1.0 billion yen (36.4% decrease YoY)

Operating loss： 0.4 billion yen (2013 1Q: 0.4 billion yen)

Financial highlights

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Trends in Quarterly Results

Increase in sales and profit QoQ

（Unit: millions of yen）

Updated record-high sales and profit. Operating profit ratio had been declining because of promotion strengthening from last 2Q, but this 1Q operating profit ratio significantly improved 9.2p QoQ.

3,291 3,846 4,561

14,121

30,904

43,717 41,639

46,799

49,909

248 770 1,392

6,886

18,616

26,538

23,360

22,712

28,789

7.6%

20.0%

30.5%

48.8%

60.2%

60.7%

56.1%

48.5% 57.7%

0.0%

50.0%

100.0%

0

25,000

50,000

2012.1Q 2Q 3Q 4Q 2013.1Q 2Q 3Q 4Q 2014.1Q

Sales

Operating profit

Operating profit ratio

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Trends in Quarterly Results by Segment

Smartphone games are good sales

4Q sales including sales of “PAZUDORA Z” for Nintendo 3DS updated record high. This 1Q’s results updated record-high sales and operating profit by earnings of only smartphone games.

1,195 1,936 685

2,730 1,251

12,159

18,849

29,226

18,849

42,132

26,958

40,322

23,937

45,556

23,705

48,848

29,673

2,162 580

1,969 301

1,892 317

2,020

191

1,728

43

1,634 1,360

1,285

1,098

0

25,000

50,000

PC online

Mobile consumer

2012.1Q 2Q 3Q 4Q 2013.1Q 2Q 3Q 4Q 2014.1Q

（Unit: millions of yen）

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Consolidated Profit and Loss Sheet

SG&A is stable. Operating profit ratio improved significantly.

Units: millions of yen

FY2014 1Q (Jan. – Mar. 2014)

FY2013 1Q (Jan. – Mar. 2013)

Change ratio YoY

FY2013 4Q (Oct. – Dec. 2013)

Change ratio QoQ

Sales 49,909 30,904 61.5% 46,799 6.6%

Gross profit margin

33,860 21,286 59.0% 29,847 13.4%

Gross profit margin ratio

67.8% 68.9% -1.1p 63.8% 4.0p

SG&A 5,071 2,670 89.7% 7,135 -28.9%

Operating profit 28,789 18,616 54.6% 22,712 26.7%

Operating profit ratio

57.7% 60.2% -2.6p 48.5% 9.1p

Ordinary profit 28,095 18,662 50.5% 21,433 31.1%

Profit before tax 28,095 18,648 50.6% 20,842 34.8%

Net profit 17,063 12,321 38.5% 12,151 40.4%

Quarterly Income Statement

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Trends in SG&A

2013.1Q 2Q 3Q 4Q 2014.1Q

Personnel expenses 567 601 618 1,075 619

Advertisement expenses 814 1,897 3,223 4,498 2,963

Others 1,289 1,311 1,254 1,561 1,488

0

2,000

4,000

6,000

8,000

5,071

7,135

5,095

3,811

2,670

Advertisement expenses decrease

Advertisement expenses of TV commercial and events increased temporarily in last 4Q along with launch of “PAZUDORA Z” for Nintendo 3DS. Advertisement expenses of this 1Q was equal level to last 3Q, and SG&A decreased.

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Trends in number of employees

Stable

2013.1Q 2Q 3Q 4Q 2014.1Q

Administration,others

43 44 42 43 46

CS, System 59 64 64 65 65

Mobile consumer 117 133 143 153 157

PC online 60 58 56 54 52

0

100

200

300

400

320 315 305 299 279

We don’t believe that making a lot of games improves the results necessarily. We believe that sustaining the appropriate scale organization creating high quality game keeps GungHo quality and improves the position as a gaming company.

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FY2014

1Q Business Highlights

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Smartphone games are good

sales

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27 million 2 million 1 million 1.5 million 8 million 0.6 million

Total over 40 million downloads

※The number of downloads are not including overlap. ※The number of downloads includes downloads in Japan only.

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Japan P&D No.1

AppStore (As of April 28, 2014)

Google Play (As of April 28, 2014)

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Domestic MAU Increase

Hong Kong No.1

Google Play (As of April 3, 2014) （2014年３月14日時点）

AppStore

１．Puzzle & Dragons

２．BFB

３．武侠Ｑ傳

４．真三國大戦

５．神魔之塔

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Overseas MAU Increase

Trends in monthly non-consolidated sales and MAU

We think that MAU is important KPI, and managing the game that users can enjoy playing in long term. Therefore, MAU is increasing steadily and monthly sales is more stable.

* MAU of April 2014 doesn’t mention because it’s difficult to calculate. 17

New game Release on Feb. 10, 2014

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Downloads Rank

App Store

No.1 (Feb. 25, 2014)

Google Play

No.4 (Feb. 19, 2014)

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Over 1 million downloads

0

500,000

1,000,000

2/9 2/16 2/23 3/2 3/9 3/16 3/23 3/30

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2Q business measures

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2nd P&D JAPAN CUP

May 25, 2014 Tokyo Big Sight

GungHo Festival 2014

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Super Big Collaboration !

× ？

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It’s under development diligently !

Don’t miss it.

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Thank you !

GungHo Online Entertainment, Inc. IR/Corporate Communication Group, Business Planning Office

ir@gungho.jp