COMPANY RESEARCH AND ANALYSIS REPORTNetyear Group Corporation
3622
TSE Mothers

10-Jul.-2020
FISCO Ltd. Analyst

Yuzuru SatoFISCO Ltd.
http://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. FY3/20 results..............................................................................................................................................

01

2. Forecast for FY3/21.....................................................................................................................................

01

3. Growth strategy...........................................................................................................................................

01■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 02
1. Company profile.. ................................... ......................................................................................................

02

2. Business description. . ..................................................................................................................................

03■Performance trends------------------------------------------------------------------------------------------------------------------------------------------------- 06
1. FY3/20 results overview......................... ......................................................................................................

06

2. Financial position and management indicators. ...........................................................................................

08■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 09
1. FY3/21 outlook...................................... ......................................................................................................

09

2. Growth strategy...........................................................................................................................................

09■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 13■Information security------------------------------------------------------------------------------------------------------------------------------------------------ 13

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html█ Summary
Positive effect of collaboration with NTT Data starting to appear,rising expectations for growth from 2021
Netyear Group Corporation <3622> (hereinafter also referred to as “the Company”) provides digital marketing
assistance utilizing Internet technology and has an extensive track record mainly in web marketing. Tribal MediaHouse, Inc., a leading provider of digital marketing assistance using social media, is a subsidiary. In February 2019,
the Company concluded a capital and business alliance contract with NTT Data <9613> and aims to bolster growthagain as a group company under NTT Data.
1. FY3/20 results
For FY3/20, the Company reported ¥5,465mn in net sales (-0.9% YoY) and a ¥77mn operating loss (vs. a ¥21mn
profit in the previous fiscal year). In non-consolidated results, it posted ¥3,493mn in net sales (+2.6%) and ¥50mn
in operating income (vs. a ¥58mn loss), restoring profitability for the first time in four fiscal years, driven by increasein collaborative projects with NTT Data and successful efforts to raise project productivity. Substantial downturn inresults at subsidiary Tribal Media House because of shrinkage in advertising budgets at major customers and otherimpacts, however, weighed on the Company’s consolidated numbers.
2. Forecast for FY3/21
The Company has not decided FY3/21 guidance yet due to difficulty rationally calculating the effect of the COVID-19
outbreak. In non-consolidated business, the switch to telework operations in response to Japan’s state of emergency
declaration is affecting sales activities at potential new customers, and even though impact on discussions withexisting customers is relatively mild thanks to online interaction, customer cutbacks in advertising budgets and other
trends have influenced business. Orders hence slumped in April and May. Despite the prospect of weak near-term
results amid these conditions, we expect continued growth in the digital marketing industry and extensive growth
opportunities over the medium to long term.
3. Growth strategy
In its Medium-Term Vision through 2022, the Company describes itself as a “company that designs business andsociety by dramatically altering human experience.” It redefines service coverage into three areas of “designing
CX (Customer Experience) changes,” “building mechanisms for realization of ideal CX,” and “operating marketing
activities to continuously improve CX.” Through seamless provision of these services and delivery of various solutions
packaged as products, the Company hopes to expand business scale and enhance profitability. CX design, an
upstream process, in particular, is a strong area for the Company that leverages knowhow accumulated overmany years. The Company aims to recruit orders from large companies through integration of NTT Data’s systemdevelopment capabilities and its own design capabilities. We expect a rise in the percentage of sales from NTT Databecause orders will pass through NTT Data and steady expansion of the Company’s results.
Key Points
Provides digital marketing assistance and joined the NTT Data Group in 2019
Restored profitability for the first time in four fiscal years in FY3/20 non-consolidated results, though booked
consolidated operating losses for the first time in two fiscal years due to earnings downturn at the subsidiary• Growth potential is rising as the Company makes steady progress in collaboration with NTT Data••

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation

10-Jul.-2020

3622 TSE Mothers

https://www.netyear.net/ir.html

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Source: Prepared by FISCO from the Company’s financial results█ Business overview
Provides digital marketing assistance and joined the NTT Data
Group in 2019
1. Company profile
The Company’s vision is to “Create the future of business digitally and with users. Everything starts from the user
experience.” It is developing businesses to support companies and communities for the reforms required in the digitalage. Specifically, this includes proposing digital marketing measures, development of Owned Media for realizing
ideal CX, and sales, deployment assistance, and operation of marketing tools.
The Company was established in 1999 and listed shares on the TSE Mothers market in 2008. It announced a capitaland business alliance with NTT Data in February 2019, and NTT Data became the Company’s largest shareholder
with a 48.5% stake in March 2019 through a TOB. Group subsidiary Tribal Media House (acquired as a subsidiarywith a 92.5% stake in 2009) provides marketing assistance, analysis, and consulting utilizing social media.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html

Business overview

Possesses strength in design capabilities for realizing ideal CX(Customer Experience)
2. Business description
The Company’s business area is digital marketing, which refers to the marketing techniques in corporate activities
that are centered on the Owned Media (website of the client company) and that are coordinated with elements suchas existing media, marketing, call centers, and stores. These services are for clients such as companies and local
governments, and propose and implement new digital marketing strategies to produce the outcomes that the clientswant, including improved brand value, sales growth, and the promotion of business transformations.
Digital marketing has four main segments depending on the advertising method and media used in customer
contact – Paid Media that carries Internet ads, Earned Media that mainly utilizes influencer marketing, Shared Mediain which consumers submit word-of-mouth comments, and Owned Media that conducts advertising measures on
a company’s own website. The Company proposes, develops, and operates digital marketing measures that utilize
Owned Media. Additionally, subsidiary Tribal Media House, offers promotion assistance mainly via twitter in the
Shared Media segment.
Digital marketing-related companies and the Company’s position

Source: Prepared by FISCO from the Company’s results briefing materials

We think an important strength is the Company’s extensive array of methods for realizing ideal CX (robust consulting
capabilities) cultivated through projects based on the “CX design” concept over roughly 20 years since its founding.
CX in this context refers to “user experience when visiting an Owned Media site and eliciting interest through theexperience.” The ultimate aim of enhanced CX is getting users to purchase products or become a supporter.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html

Business overview

Consumer contact with digital media has risen from 24.1% in 2008 to 50.4% in 2018, putting it at a majority of
all media contact thanks to easy access to desired information anyplace and anytime via the Internet enabled bywidespread use of PCs and smartphones. This reality makes CX enhancement for corporate websites, the contact
point with customers, even more important than previously in efforts by companies to promote marketing and brandstrategies.
Market environment

Source: Prepared by FISCO from the Company’s results briefing materials

Since methods used to effectively enhance CX differ by the content of client businesses, this business consistsof customized projects that define criteria for individual projects. The development period is typically about threemonths and might extend to about one year in a prolonged case. The Company utilizes outsourcing for a majorityof the system development portion. Furthermore, while order value varies by project, projects have become more
complex and larger recently with use of marketing methods that incorporate data analysis and system collaboration
with other divisions at customer companies (such as the sales division and information system division). Design
activities to realize ideal CX have risen in importance because of growing difficulty in communicating corporate
messages to consumers amid excessive amounts of digital information. We think this offers a positive environment
for capitalizing on the Company’s strength. The Company is also resolving limits on system development capabilities,
which had been an issue, through collaboration with NTT Data and hence has established a foundation for growth.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html

Business overview

Company’s business

Source: Prepared by FISCO from the Company’s results briefing materials

In addition to its custom project implementation support service, Netyear is also putting effort into selling in-housedeveloped products and products developed by other companies. One example of an in-house product is its social
media integrated management tool Engage Manager, developed by Tribal Media House. Software tools developedby third-parties that are sold and installed by Netyear include MA (Marketing Automation) tools from Salesforce.
com <CRM> and Access analytical tools from Google <GOOG> and Adobe <ADBE>. In this relation, the Company
noted that it has recently been receiving a growing number of requests to include other companies’ products suchas MA tools in the systems it develops as part of custom projects.
As new services, the Company has been strengthening areas to improve customer success, such as provision of“KPI Design Assistance Service”* in digital marketing measures with an approach that utilizes business, UX, anddata perspectives in July 2019 and “Innovation Design Service” that supports innovation activity across different
businesses and organizations within companies in September 2019. It is promoting arrangements that connect
growth at customer companies to its own sales improvement.
*	This service consists of reassessing website significance from a business perspective, defining KGI (Key Goal Indicator)
obtained from the analysis and KSF (Key Success Factor) components from a UX perspective, and identifying KPI (Key
Performance Indicator) from extractable data from a data perspective.

Client industries have a wide range, including retail, manufacturing, financial services, and data communication
services, and many clients are leading companies that represent Japan. The Company had transactions with roughly
110 clients in non-consolidated business in FY3/20.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation

10-Jul.-2020

3622 TSE Mothers

https://www.netyear.net/ir.html█ Performance trends
Restored profitability for the first time in four fiscal years in FY3/20
non-consolidated results, though booked consolidated operating
losses for the first time in two fiscal years due to earnings downturn
at the subsidiary
1. FY3/20 results overview
The Company reported FY3/20 consolidated results of ¥5,465mn in net sales (-0.9% YoY), a ¥77mn operating loss
(vs. a ¥21mn profit in the previous fiscal year), a ¥77mn ordinary loss (vs. a ¥20mn profit), and a ¥68mn loss in net
profit attributable to the owners of the parent (vs. an ¥83mn loss). Net sales dropped for a second straight fiscal
year and operating income and ordinary income incurred losses for the first time in two fiscal years.
FY3/20 consolidated results(¥mn)
FY3/19ResultFY3/20% of sales

Initialforecast

Revisedforecast

Result% of sales

YoY

ChangeNet sales

5,513

-

6,200

5,300

5,465

-

-0.9%

-47

Cost of sales

4,644

84.2%

-

-

4,630

84.7%

-0.3%

-14

SG&A expenses

847

15.4%

-

-

912

16.7%

7.7%

65

Operating income

21

0.4%

80

-200

-77

-1.4%

-

-99

Ordinary income

20

0.4%

80

-200

-77

-1.4%

-

-98

Extraordinary income and loss

-73

-

-

-

2

0.0%

-

75

Net profit attributable to theowners of the parent

-83

-1.5%

56

-233

-68

-1.2%

-

15

Note: Revised plan shows values announced in January 2020
Source: Prepared by FISCO from the Company’s financial results㻺㼛㼚㻙㼏㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻌㼞㼑㼟㼡㼘㼠㻌㼠㼞㼑㼚㼐㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕

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Source: Prepared by FISCO from the Company’s financial results

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html

Performance trends

In non-consolidated results, the Company posted ¥3,493mn in net sales (+2.6%) and ¥50mn in operating income(vs. a ¥58mn loss), restoring profitability for the first time in four fiscal years, driven by orders activity with emphasis
on profitability, rigorous project management, and increase in collaborative projects with NTT Data. Tribal MediaHouse’s inability to recruit major projects because of shrinkage in advertising budgets at major customers and otherimpacts, however, resulted in the first sales decline since the acquisition as a subsidiary and an operating loss,
including cost pressure from higher personnel costs to strengthen internal management operations. These outcomes
weighed on the Company’s consolidated numbers.
Even though the number of customers in non-consolidated business dropped from 135 companies in the previous
fiscal year to about 110 companies, this reflects effort to boost operating efficiency with sales focus on top customers
and NTT Data collaborative projects as part of earnings improvement measures. The roughly 20% YoY rise in averagesales price per project confirmed that these initiatives are contributing to healthier profitability. Net sales from NTT
Data increased sharply from just under ¥100mn in FY3/19 to ¥480mn in FY3/20, reaching 8.8% of consolidated net
sales. The Company received orders for the portion of B-to-C system development projects booked as orders by
NTT Data that correspond to Salesforce MA tool deployment assistance and other digital marketing.
Earnings downturn at Tribal Media House was the main reason for missing period-start guidance. Upside compared
to updated targets from January 2020, meanwhile, came from higher NTT Data-related project sales and stronger
progress in initiatives to lift profitability in the non-consolidated results.
As new services launched in FY3/20, the Company began provision of “KPI Design Assistance Service” in digitalmarketing measures with an approach that utilizes business, UX, and data perspectives (July 2019), “Innovation
Design Service” that supports innovation activity across different businesses and organizations within companies(September 2019), and other consulting services, and subsidiary Tribal Media House started provision of “Influencer
Relations Services” through collaboration with NTT Data (February 2020).
While results impact of these services is still modest, we think “Influencer Relations Service” deserves attention as
an area with healthy growth potential in light of growing demand in this market. This is a service for companies thatwant to implement effective sales promotions and other measures through Twitter. It mainly consists of monitoring
fan influencers utilizing all data submitted to Twitter and proposing activity content and a roadmap. Subsequent
measures are engaging in activities to generate word-of-mouth that influences purchase interest and behavior
together with fan influencers and measuring changes in awareness, attitudes, and behavior as impact on followers.
Tribal Media House designs the concept and logic and handles service operation and management, while NTT Databuilds infrastructure, acquires all Twitter data, and conducts data analysis and processing. Service charges begin
from ¥1.3mn for relation planning as initial costs and ¥300,000 for relations activity assistance as a monthly cost.
The two companies share revenue from this service.
FY3/20 period-end employee volume switched to an increase for the first time in three fiscal years with an addition offour people YoY to 189 non-consolidated employees (and a 22-person rise to 306 consolidated employees). While
mid-career hires were roughly unchanged with the FY3/19 level, resignations declined. We think entry into the NTT
Data Group might have provided a positive psychological effect, and it appears that the Company’s internal moodhas improved recently (versus the atmosphere a year ago).

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation

10-Jul.-2020

3622 TSE Mothers

https://www.netyear.net/ir.html

Performance trends

Financially sound with the capital ratio in the 60% range and debtfree management
2. Financial position and management indicators
Looking at financial standing at end-FY3/20, total assets were down ¥29mn from the previous fiscal year-end to¥2,712mn. Main changes were a ¥206mn increase in notes and accounts receivable and a ¥248mn decline in cash
and deposits under current assets and increases of ¥18mn in leasehold and guarantee deposits and ¥10mn indeferred tax assets under fixed assets.
Total liabilities climbed ¥73mn from the previous fiscal year-end to ¥856mn. Interest-bearing debt dropped ¥36mn,
moving the Company into a debt-free state, and provision for bonuses was down ¥43mn. Meanwhile, the Company
had increases of ¥135mn in accounts payables and ¥37mn in unpaid consumption tax. Net assets declined ¥102mn
from the previous fiscal year-end to ¥1,856mn due to booking a ¥68mn net loss attributable to the owners of theparent and ¥22mn in dividend payments.
In management indicators, we think the Company is financially sound, despite decline in the equity ratio from 70.3%
at the previous fiscal year-end to 67.7%, considering its achievement of debt-free operations and other factors.
While cash and deposit value is somewhat weak at just under ¥1bn, the Company explains that it is reviewing capital
availability measures, such as deployment of the NTT Data Group’s cash management system (CMS). We hence
think the most pressing issue at this point is reviving profitability, including Tribal Media House.
Consolidated balance sheet(¥mn)
Current assets(Cash and deposits)

FY3/17

FY3/18

FY3/19FY3/20Change

2,753

2,877

2,496

2,438

-58

1,052

1,289

1,241

992

-248

Fixed assets

419

326

245

274

29

Total assets

3,172

3,203

2,742

2,712

-29

Current liabilities

1,231

1,094

755

830

74

Fixed liabilities

173

46

27

26

-1

Total liabilities

1,404

1,141

783

856

73

313

152

36

0

-36

1,768

2,062

1,958

1,856

-102

Equity ratio

55.0%

63.5%

70.3%

67.7%

-2.6ptInterest-bearing debt ratio

17.9%

7.5%

1.8%

-

-1.8pt-3.6pt(Interest-bearing debt)
Net assets(Stability)(Profitability)
ROA

-6.6%

-1.7%

0.7%

-2.9%

ROE

-15.8%

16.6%

-4.2%

-3.6%

0.6pt

Operating income margin

-3.5%

-0.8%

0.4%

-1.4%

-1.8ptSource: Prepared by FISCO from the Company’s financial results

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html█ Outlook
FY3/21 guidance undecided due to difficulty rationally calculating
the effect of the COVID-19 outbreak
1. FY3/21 outlook
The Company has not decided FY3/21 guidance yet due to difficulty rationally calculating the impact of the COVID19 outbreak. Reflecting on impact in Apr–May, while suspension of event participation and seminars and otherdisruptions slowed inquiries from some industries, including stalled recruitment of potential customers and businessmeeting delays, there was not much interference in business discussions with existing customers thanks to using
web conference tools. Since existing customers provide a large percentage of overall business, negative impact
has been modest. Despite the possibility of customers scaling back or delaying investment plans in some cases, we
expect continued demand growth over the medium to long term on the prospect of steady advances in corporate
digital transformation activity and likely increase in the importance of marketing measures utilizing Owned Media
amid calls for a “new normal.”
Tribal Media House, meanwhile, reported upbeat sales in April, but encountered difficult orders conditions andappears to have missed the previous year’s level. Sales promotions that combine real events and SNS are a strength.
Inability to hold real events has led to suspension of entire projects in certain cases. Nevertheless, Twitter accountoperation provides about half of overall sales, and we think this portion is healthy. We expect recovery in Tribal
Media House’s results with the outlook for gradually resuming events from June following withdrawal of the stateof emergency declaration.
Also, the Company’s consolidated results in the past five years have exhibited seasonality with an income bottom
in Q1 and concentration of sales and profits in Q4. This pattern reflects a skew in inspection and acceptance timing
toward the period-end. In FY3/21, we think seasonality will be even more pronounced as we expect wider losses
in Q1.

Growth potential is rising as the Company makes steady progress incollaboration with NTT Data
2. Growth strategy(1) Collaboration with NTT Data
We believe collaboration with NTT Data is an important factor in the Company’s growth strategy. This view reflects
the possibility of substantial increase in orders, mainly in business with large companies, from combining NTT
Data’s system development capability and customer foundation strengths and the Company’s Owned Media
design capabilities from a CX perspective, as explained above. In fact, the Company received orders for just over
10 projects and related sales expanded to over ¥400mn in FY3/20.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html

Outlook

NTT Data’s Toshiyuki Hayashida assumed the role of Representative Director and Vice President in June 2019 andis a key person in orders recruitment. He previously worked in the IT services and payment business headquarters
at NTT Data and is pursuing orders for collaborative projects with this headquarters. The IT services and paymentbusiness headquarters mainly handles solution development, such as B-to-C corporate financial payment systems
and fits well with the Company’s strength in Owned Media design and development. Mr. Hayashida is actively
promoting business via information exchanges with NTT Data at a weekly pace along with the president andseeking collaboration possibilities in new projects. We hence expect steady increase in collaborative projects. The
Company hopes to become a top brand in the digital marketing industry through collaborative fusion of mutual
strengths with NTT Data and is likely to see an upward trend in the percentage of sales from NTT Data over the
medium term. Below we review specific examples of the collaborative strategy with NTT Data.
a) Joint branding and marketing
The Company believes it is capable of delivering systems that realize ideal CX and leading highly complex
large-scale projects that extend across multiple divisions by combining its own strength in CX design and NTT
Data’s robust system development capabilities. In particular, it sees opportunities to leverage strengths of bothcompanies in the “marketing x commerce x payments” field. The Company hopes to solidify an industry-leading
brand by accumulating such cases and also intends to create examples that design client futures.
b) Expansion of digital marketing business
The Company wants to expand digital marketing business sales through mutual customer introductions byproposing its digital marketing services to NTT Data customers and conversely offering NTT Data’s systemsolutions to its own customers.
c) Development of new businesses and solutions utilizing AI and big data
The Company aims to develop solutions for the marketing industry and retail industry by integrating its CX
knowhow with NTT Data’s fundamental technology capabilities in AI and big data.
A specific example was development and provision jointly with NTT Data of an experience-type workshop menu
that uses a test store as the first phase of deploying digital stores that eliminate register payments in 2019. This
project aims to confirm efficacy, feasibility, and deployment-related issues through actual experience with how
UX/EX (User Experience/Employee Experience) changes in digital stores and clarify subsequent actions. The
Company handled UX/EX design and intends to leverage knowhow accumulated from the test store project infuture orders recruitment efforts.
First phase of deploying digital stores that eliminate register payments

Source: Prepared by FISCO from the Company’s results briefing materials

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html

Outlookd) Cultivation of an exciting workplace that attracts human resources
The Company intends to cultivate a unique and attractive workplace by integrating its flexibility and imagination
with NTT Data’s reliability and technology capabilities and share knowhow through personnel exchanges between
the two companies. It also plans to utilize NTT Data’s human resource training program.
As its own initiative, the Company adopted a new human resources program called the “Side-Job Employee
Program” in April 2020. While the Company already encouraged self-driven career formation via a side-job program
since its founding, the new program lets side-job employees set their own work goals and freely engage in sidejobs without restriction by work hours and also gives access to the same insurance and benefits program as fulltime employees. The Company expects the new program to stimulate in-house staff and attract outside experts.
(2) Medium-term vision through 2022
In its Medium-Term Vision through 2022, the Company describes itself as a “company that designs business andsociety by dramatically altering human experience.” It redefines service coverage into three areas of “designing
CX changes,” “building mechanisms for realization of ideal CX,” and “operating marketing activities to continuously improve CX.” Through seamless provision of these services and delivery of various solutions packaged as
products, the Company hopes to enhance profitability.
The “building mechanisms for realization of ideal CX” service provides roughly 80% of sales at this point. This islabor-intensive business that involves designing and building Owned Media, DMP (Data Management Platform),and MA tools. The Company plans to pursue cost savings by standardizing tasks, utilizing offshore and near-shore
services, and taking other steps.
Furthermore, the “marketing operation” service, which generates just over 10% of sales, is an area where theCompany intends to place emphasis. The Company wants to increase sales in operation service following deployment assistance for Salesforce products with robust demand as well as in the “marketing operation service” withhigh added value that commit to concrete results for customer companies. Since operation services are recurringbusinesses, increase in the number of companies with deployments should support the Company’s results as astable earnings foundation.
In the “design” category, an important strength, the Company aims to bolster comprehensive CX support capabilities, including digital and real aspects, and reinforce service design. Despite the low sales ratio, this is a highvalue-added area and source of differentiation in orders recruitment. The Company therefore wants to expand
business scale while promoting reinforcement of human resources. It also hopes to enhance profitability throughprovision of solutions from these three areas as a package with a standard service format.

We encourage readers to review our complete legal statement on “Disclaimer” page.

11 13

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html

Outlook

Initiatives for medium-term growth

Source: Prepared by FISCO from the Company’s results briefing materials

Furthermore, the Company wants to “maximize value” for customers through seamless provision of services
required in all processes of consumer behavior from product and service awareness to appeal and interest, search,
purchase, sharing, and repeat in digital marketing measures for customer companies. We think it might collaborate
with subsidiary Tribal Media House, which has strong SNS marketing capabilities, in marketing measures andintend to monitor developments.
Provision of services with an integrated marketing funnel

Source: Prepared by FISCO from the Company’s results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

12 13

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Netyear Group Corporation
3622 TSE Mothers

10-Jul.-2020
https://www.netyear.net/ir.html

Outlook

While the Medium-Term Vision does not disclose detailed management numerical goals, we think the Company istargeting at least 10% sales growth because of the prospect of double-digit annual growth in the digital marketingarea. Despite uncertainty about FY3/21 due to impact from the COVID-19 outbreak, we expect a full-fledged
growth phase from FY3/22 driven by acquisition of collaborative projects with NTT Data and steady progress
reinforcing internal human resources.

█ Shareholder return policy
Basic policy is to pay dividends stably and continuously premised
retention of internal reserves
The Company pays dividends in order to return profits to shareholders. Its basic dividend policy is to stably andcontinuously pay dividends while ensuring it retains the internal reserves necessary to develop its businesses in the
future and to strengthen its business structures. For this reason, from FY3/08 onward it has sustained dividends per
share at ¥3.25. In FY3/21, the Company has not decided the dividend target yet, similar to guidance. Separately,
the Company intends to introduce performance-linked dividends in the future if it further supplements its internal
reserves and obtains a stable cash flow in each fiscal period.

█ Information security
Because there are situations in which the Group handles confidential information from client companies and personal
information, the Company takes data management very seriously, as evidenced by its receipt of the “Privacy
Mark” certification from the Japan Information Technology Services Industry Association in 2005. In terms of actual
administration, the Company uses a thin client system* that is designed to prevent external data leaks.
*	System architecture that limits the processing done on client terminals to the minimum required and keeps nearly allprocessing on the server side.

We encourage readers to review our complete legal statement on “Disclaimer” page.

13 13

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
This report is provided solely for the purpose of offering information, and is not a solicitationof investment nor any other act or action.
FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
The issuers’ securities, currencies, commodities, securities and other financial instruments
mentioned in this report may increase or decrease in value or lose their value due to influence
from corporate activities, economic policies, world affairs and other factors. This report does
not make any promises regarding any future outcomes. If you use this report or any information
mentioned herein, regardless of the purpose therefor, such use shall be made based on yourjudgment and responsibility, and FISCO shall not be liable for any damage incurred by you asa result of such use, irrespective of the reason.
This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
the hypotheses, conclusions and all other contents contained herein are based on analysis
by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
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Please use the information in this report upon accepting the above points.

◾ For inquiry, please contact: ◾

FISCO Ltd.
5-11-9 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (Financial information Dept.)
Email: support@fisco.co.jp