Fiscal Year 2022 Third Quarter Consolidated Financial Results (Japanese GAAP)
November 14, 2022
Name of Listed Company: GMO Internet Group, Inc.
Exchange Listing: Tokyo Stock Exchange
Stock Code: 9449
URL: https://www.gmo.jp/en
Representative: Masatoshi Kumagai, Founder, Chairman and Group CEO
Official Contact: Masashi Yasuda, Director, Executive Vice President and Group CFO,
Deputy to Group CEO, Head of Group Management Division
Contact Number: +81-3-5456-2555
Date of Quarterly Report Release: November 14, 2022 Start Date of Dividend Payout: －Supplementary documents available pertaining to quarterly financial results: Yes
Quarterly results briefing: Yes (live stream only and Q&A session for institutional investors)(all amounts rounded down to the nearest million yen)
1. Third Quarter Financial Results in the Year Ending December 2022 (01.01.2022- 09.30.2022)(1) Consolidated Operating Results (cumulative)(percentages shown represent year-on-year % change)
Profit Attributable to
Net Sales
Operating Profit
Ordinary Profit
Owners of the
ParentNine months ended¥ millions%¥ millions%¥ millions%¥ millions%

September 30, 2022
September 30, 2021

183,134
176,951

3.5
12.5

38,01030,63324.1
36.0

42,43832,22231.7
47.1

13,854
13,3004.2
97.3(Note) Comprehensive Income: September 30, 2022: 44,790 million (74.4%), September 30, 2021: 25,681 million (84.8%)

Net Profit per
Share

Net Profit per Share(Diluted)

Nine months ended¥¥

September 30, 2022
September 30, 2021

129.03121.31127.89120.49(2) Consolidated Financial Condition
Total Assets
As ofShareholders’ Equity
Ratio

Net Assets¥ millions¥ millions%

September 30, 2022
1,545,403
163,685
4.8
December 31, 2021
1,418,936
140,402
5.2(Reference) Shareholders’ Equity: September 30, 2022: ¥74,209 million; December 31, 2021:¥73,548 million
2. Dividends
Annual Dividends
End of Q1

Year Ended 12/2021
Year Ending 12/2022
Year Ending 12/2022 (forecast)End of Q2

End of Q3

End of Term

Total

¥

¥

¥

¥

¥

17.10
19.60

12.20
28.00

10.80
0.00

12.60

52.70

―

―

3. Consolidated Results Forecast for the Year Ending December 31, 2022 (01.01.2022 – 12.31.2022)

As the Group's business “Internet Finance business,” "Cryptoassets business" and “Incubation
business” are affected by economic conditions, financial markets, cryptoassets and other market
conditions, it is difficult to forecast business performance, and therefore we do not disclose
consolidated business results and dividend forecast. GMO Financial Holdings Co., Ltd., oursubsidiary, discloses sales indicators, such as foreign exchange transaction volume, stock
brokerage trading value, CFD trading value, cryptoasset trading value and the number of customer
accounts, and operating revenue on a monthly basis.

*Notes(1) Changes to significant subsidiaries in the current term: No(2) Special accounting treatments used in preparation of the quarterly consolidated financial statements:
None(3) Changes in accounting policy, changes in accounting estimates, restatements
1. Changes resulting from revisions to accounting standard, etc.: Yes
2. Changes other than those specified above: None
3. Changes in accounting estimates: None
4. Restatements: None
(4) Number of Outstanding Shares (Common Shares)(Unit: shares)

1. Outstanding shares at period end (inc. treasury)

Q3 FYE 12/2022

110,704,401

FYE 12/2021

111,893,046

2. Treasury shares at period end

Q3 FYE 12/2022

3,979,562

FYE 12/2021

2,283,361

3. Average number of shares during the period

Q3 FYE 12/2022

107,368,801

Q3 FYE 12/2021

109,636,555*Quarterly financial results are not subject to quarterly review by independent auditors.
*Note regarding the appropriate use of result forecasts and other items
Although the Company aims to pay dividends quarterly with a payout ratio of 33% to net income
attributable to owners of the parent, because it is difficult to forecast business performance, the amountof dividend forecast is yet to be determined at this time. We will promptly disclose dividend forecast
when it becomes available.
On November 14, 2022, we plan to stream a financial results briefing live. The presentation andexplanation (voice) along with explanatory materials used on the day will be posted on our company
website (https://ir.gmo.jp/en/) promptly after the meeting.

Contents
1. Qualitative Information Related to Financial Results. ............................................................................... 2(1) Operating results ........................................................................................................................... 2(2) Financial condition ....................................................................................................................... 10(3) Consolidated results forecast and other forward-looking information ......................................... 10
2. Quarterly Consolidated Financial Statements and Major Notes ............................................................. 11(1) Quarterly consolidated balance sheet ......................................................................................... 11(2) Quarterly consolidated statements of income and comprehensive income ................................ 13(3) Notes regarding the quarterly consolidated financial statements ............................................... 15
Notes regarding the going concern assumption .......................................................................... 15
Notes regarding changes impacting shareholders’ equity .......................................................... 15
Changes in accounting policies ................................................................................................... 15
Segment information ................................................................................................................... 16
Significant subsequent event....................................................................................................... 17―1―

1. Qualitative Information Related to Financial Results(1) Operating results◆ Overview of the Financial Results for the Nine Months Ended September 30, 2022
(Unit: ¥millions)

Previous Q3

Current Q3

Change% Change

Net Sales

176,951

183,134

6,182

3.5%

Operating Profit

30,63338,010

7,377

24.1%

Ordinary Profit

32,22242,438

10,216

31.7%

Profit Attributable to Owners of the Parent

13,30013,854553

4.2%

Under the corporate slogan “Internet for Everyone,” GMO Internet Group has consistently focusedresources on the service to provide internet and service infrastructure since its foundation in 1995.
With the increased usage of the Internet, the volume of information available on the Internet and thevolume of transactions conducted over the Internet have increased exponentially, which has opened
new business opportunities for the Group one after another and the Internet infrastructure businesswith the recurring business model has been leading revenue growth; and as a result, the Group
reported increases both in net sales and profit for the year ended December 31, 2021, marking its
13th straight yearly increase.
While there are signs of economic recovery following the implementation of the countermeasures
to prevent the spread of COVID-19, the progress of Digital Transformation (DX) and the spread of
online consumption have been becoming an irreversible trend and there is an increasing need forservices provided by the Group.
Amidst such a business environment, (1) the Internet Infrastructure segment, a collective of No. 1
products, showed steady growth mainly in Payment and Security. (2) In the Online Advertising &Media segment, transactions with customers in certain industries showed strong growth as economic
activities are gradually resuming, and our own media also showed strong growth. (3) In the Internet
Finance segment, OTC FX faced a challenging business environment in terms of profitability due tocontinued one-sided depreciation of the yen against the U.S. dollar although transaction volume
increased due to consolidation of Gaika ex byGMO. On the other hand, CFD showed strong growththanks to increased volatility in the commodity market. (4) The Cryptoassets segment showedsluggish growth compared to FY2021 Q3 which enjoyed active trading, due to a significant decreasein transaction value caused by lower volatility. (5) The Incubation segment sold some investment
securities.
As a result, for the nine months ended September 30, 2022, the Company recorded net sales of¥183,134 million (up 3.5% year-on-year), operating profit of ¥38,010 million (up 24.1% year-on-year),ordinary profit of ¥42,438 million (up 31.7% year-on-year) and net profit attributable to owners of theparent of ¥13,854 million (up 4.2% year-on-year). The impact of applying the accounting standard forrevenue recognition was a decreases in net sales of ¥23,611 million and an increase in operating
profit of ¥144 million, respectively, and operating results under the previous accounting standard
would have also been increases in net sales and profit from a year ago.

―2―

Net Sales and Operating Profit by Segment for the Nine Months Ended September 30, 2022
(Unit: ¥millions)Internet Infrastructure
Net Sales
Operating Profit
Online Advertising & MediaNet Sales
Operating Profit
Internet Finance
Net Sales
Operating Profit
Cryptoassets
Net Sales
Operating Profit
Incubation
Net Sales
Operating Profit
Other
Net Sales
Operating Profit
Adjustment
Net Sales
Operating Profit
Total
Net Sales
Operating Profit

Previous Q3

Current Q3

Change% Change

102,90913,702

109,499
16,622

6,589
2,920

6.4%
21.3%

38,471
1,323

25,291
2,212-13,180888-34.3%
67.2%

22,531
7,859

31,162
9,309

8,630
1,450

38.3%
18.5%

16,2597,852

4,133-1,059-12,125-8,911-74.6%－

962
473

13,392
10,31812,430
9,844

－
－

1,195
-382

2,604
-179

1,408
203

117.8%－-5,378-195-2,949
786

2,429
981

－
－

176,951
30,633

183,134
38,010

6,182
7,377

3.5%
24.1%

◆Overview of Financial Results for the Three Months ended September 30, 2022
(Unit: ¥millions)

Net Sales
Operating Profit
Ordinary Profit
Profit attributable to Owners of
the Parent or net loss
attributable to Owners of the
Parent(- represents loss)

Previous Q3
56,471
8,012
8,601

Current Q357,578
7,069
8,955

3,597

-1,651

Change% Change
1,107
2.0%
-943
-11.8%
354
4.1%-5,249－During the three months ended September 30, 2022, the Cryptoassets segment showed sluggish
growth compared to FY2021 Q3 which enjoyed active cryptoassets trading due to a decline involatility resulting in a significant decrease in trading value in the cryptoassets exchange business.
Meanwhile, the Internet Infrastructure segment showed steady growth mainly in Payment andSecurity services while making strategic investment in e-contract service GMO Sign. The Online
Advertising & Media segment also continued to be on a recovery trend due to steady demand foradvertising as the advertising market showed further recovery. The Internet Finance segment
reported increases in both net sales and operating profit mainly due to consolidation of Gaika ex
byGMO despite an issue on the profitability of OTC FX resulting from a rapid depreciation of the yen
against the dollar.

―3―Net Sales and Operating Profit by Segment for the Three Months ended September 30, 2022
(Unit: ¥millions)
Previous Q3

Current Q3

Change% Change

Net Sales
Operating Profit

34,335
4,021

38,074
4,753

3,738
731

Online Advertising & MediaNet Sales

12,0588,886-3,171-26.3%

Operating Profit

251

737

485

193.0%

7,386

10,002

2,615

35.4%

2,628

2,683

55

2.1%

3,677
1,482

775
-821

-2,902-2,303-78.9%

64

0-64-100.0%

-33

-96

-63

－

Internet InfrastructureInternet Finance
Net Sales
Operating Profit

10.9%
18.2%

Cryptoassets
Net Sales
Operating Profit
Incubation
Net Sales
Operating Profit
Other
Net Sales

－

437

903

465

106.3%

-197

-85

111

－

-1,489-141-1,063
-101

426
39

－
－

56,471

57,578
7,069

1,107

2.0%

-943

-11.8%

Operating Profit
Adjustment
Net Sales
Operating Profit
Total
Net Sales
Operating Profit

8,012

Segments results for the three months ended September 30, 2022 are as follows.
1) Internet Infrastructure
The Internet Infrastructure segment provides basic and service infrastructure for customers operating
business in an online environment. Domain, hosting & cloud, ecommerce solutions, payment andsecurity - the five major businesses in this segment – are all developed and offered in-house andeach holds top share in their respective markets in Japan. In addition, the segment includes
consumer Internet provider services. The following is a breakdown of results in each of thebusinesses comprising this segment.
Effective January 1, 2022, in light of the future business development of our service using
authentication technologies to provide secure and safe Internet, including electronic authentication,
cybersecurity and trademark management, we changed the name of a sub-segment and restructured
segmentation. Namely, “Digital certificate and eSignature” was changed to “Security,” and the brandsecurity business previously included in “Domain” was transferred to “Security.” Accordingly, year-onyear comparison is performed using the figures under the new segmentation.
i. Domain
Positioned as a gateway to the Group’s infrastructure segment, the domain business has steadilygrown its customer base with a low-pricing strategy mainly through the Company and GMO Pepabo.
While the number of domain registration and renewals during the three months ended September 30,
2022 decreased to 1.30 million (down 12.6% year-on-year), the total number of domains undermanagement as of September 30, 2022 increased to 7.04 million (up 2.2% year-on-year) andcontinued strong sales in .shop in Japan and overseas also contributed to earnings. As a result, net
sales were ¥2,379 million (up 11.6% year-on-year).

―4―ii. Hosting & cloud
The hosting & cloud business responds to growing diversification of client needs through shared,
dedicated, VPS and cloud-based offerings under a multi-brand strategy mainly through the Company,
GMO GlobalSign Holdings and GMO Pepabo. Thanks to the continued steady growth in sales ofretail server, the number of web hosting contracts as of September 30, 2022 was 1,097 thousand (up4.3% year-on-year) and net sales were ¥4,693 million (up 14.3% year-on-year).
iii. Ecommerce solutions
Ecommerce solutions are offered mainly by GMO Pepabo and GMO MAKESHOP and comprise EC
platforms that provide platforms for online stores, minne, a C2C handmade market, SUZURI, an
original merchandise production/sales service, and O2O support service. In EC platform, the numberof contracts of Color me shop for a free plan that allows to open an online store without a monthly fee
increased, so while the number of paid stores as of September 30, 2022 decreased 7.5% year-onyear to 58 thousand, total transaction volume showed solid growth at ¥117.0 billion (up 2.6% year-onyear) mainly in MakeShop which offers high-price plans. For minne, the total transaction volume
decreased by 3.5% year-on-year to ¥3.3 billion as a reaction to stay-at-home consumption as
economic activities resumed. The effect of the change in accounting standard was a decrease in net
sales of ¥624 million, and as a result, net sales were ¥3,846 million (down 8.4% year-on-year).
iv. Security
This business offers security services to provide secure and safe Internet for everyone, including
digital certification security such as SSL server certificates and e-contract service GMO Sign
provided mainly through GMO GlobalSign Holdings, cybersecurity provided by GMO Cybersecurity
by Ierae, and brand security provided by GMO BRAND SECURITY Inc. Results of GMO
Cybersecurity by Ierae have been included in the consolidated results from the three months ended
June 30, 2022. SSL server certificate service returned to a favorable growth trend as the effect of theshortened certificate lifespan from two years to one year to improve security fully subsided. As aresult, this sub-segment reported net sales of ¥3,285 million (up 66.1% year-on-year).
v. Payment
Payment services are mainly operated by GMO Payment Gateway and offer comprehensive
payment-related service and finance-related services. In the payment-related service,
online/recurring payments in the Ecommerce market showed strong growth, and sales of a nextgeneration payment platform “stera” terminal in the face-to-face payments also increased in
response to an expansion of cashless payment market. In finance-related services, the transaction
volume of a deferred payment service “GMO Payment After Delivery” continued to show favorable
growth. As a result, the number of transactions and the transaction volume increased, and net sales
increased to ¥13,108 million (up 15.8% year-on-year).
vi. Provider
In this sub-segment, the Company offers Internet provider services for consumers. During the threemonths ended September 30, 2022, the mobile line service which had declined sharply started toshow signs of flattening out due mainly to product improvement. The fixed line service also showedsteady growth despite a slowdown in teleworking-related demand. As a result, the number ofsubscriptions at September 30, 2022 was 2.25 million (up 0.9% year-on-year). The effect of thechange in accounting standard was a decrease in net sales of ¥812 million, and as a result, net sales
were ¥10,009 million (up 0.1% year-on-year).
Overall, the Internet Infrastructure segment recorded net sales of ¥38,074 million (up 10.9% year-onyear) and operating profit of ¥4,753 million (up 18.2% year-on-year). The effect of applying the
Accounting Standard for Revenue Recognition was a decrease in net sales of ¥1,768 million and anincrease in operating profit of ¥168 million.
2) Online Advertising & MediaThe Online Advertising & Media segment provides marketing solutions for online businesses. The―5―

following is a breakdown of results in each of the businesses comprising this segment.
i. Online advertisingThis sub-segment provides comprehensive Internet advertising services such as advertising agency
and ad platform mainly through GMO AD Partners and GMO TECH. In the advertising agency
service, the recovery in demand for advertising from the COVID-19 crisis was more than expected.
The affiliated ads also showed favorable growth. On the other hand, in-house AdTech products suchas AkaNe, an ad network for smartphones, and ReeMo, an ad distribution platform (DSP) specializedin collecting users most likely to be interested in the contents, continued to show sluggish growth due
to competition in media buying. The effect of the change in accounting standard was a decrease in
net sales of ¥5,913 million, and as a result, net sales amounted to ¥5,076 million (down 34.6% yearon-year).
ii. Internet media
This sub-segment provides advertising space through operation of our own media and the marketing
support services mainly through GMO Media. Advertising revenue increased due to a favorable unit
price movement and increased pageviews. The effect of the change in accounting standard was adecrease in net sales of ¥1,114 million, and as a result, net sales were ¥2,598 million (down 21.3%
year-on-year).
Overall, the Online Advertising & Media segment recorded net sales of ¥8,886 million (down 26.3%
year-on-year), and operating profit of ¥737 million (up 193.0% year-on-year). The effect of applying
the Accounting Standard for Revenue Recognition was a decrease in net sales of ¥7,028 million andan increase in operating profit of ¥7 million, and operating results under the previous accounting
standard would have been increases in both net sales and operating profit.
3) Internet Finance
The Internet Finance segment provides online financial services for retail investors mainly through
GMO Click Securities, a consolidated subsidiary of GMO Financial Holdings. The customer base
expanded, with the number of OTC FX accounts increasing to 1,412 thousand (up 50.4% year-onyear) due to consolidation of Gaika ex byGMO in the three months ended September 30, 2021 andthe number of securities accounts increasing to 499 thousand (up 5.2% year-on-year). In OTC FX,
the rapid depreciation of the yen against the U.S. dollar and increased volatility led to an increase intransaction volume, but profitability decreased due to increased costs of cover transactions. However,net sales increased due to consolidation of Gaika ex byGMO. CFD showed favorable growth thanks
to increased volatility in the commodity market. The securities business in Thailand also continued toshow steady growth.
Overall, the Internet Finance segment recorded net sales of ¥10,002 million (up 35.4% year-onyear) and operating profit of ¥2,683 million (up 2.1% year-on-year).
4) Cryptoassets
The Cryptoassets segment operates businesses pertaining to “mining,” “exchange” and “payment” ofcryptoassets. Performance of each business is as follows.
i. Cryptoassets mining
The Cryptoassets mining business runs mining centers. Net sales amounted to ¥241 million (down
85.4% year-on-year) due to declines in the operating rate of machines in the mining facilities andcryptoassets prices.
ii. Cryptoassets exchangeThis sub-segment is engaged primarily in spot trading and leveraged transactions of cryptoassets
mainly through GMO Coin, a consolidated subsidiary of GMO Financial Holdings. The customer basesteadily expanded with the number of customer accounts as of September 30, 2022 increasing to
537 thousand (up 21.0% year-on-year). On the other hand, the transaction value decreased―6―significantly compared to FY2021 Q3 which reported strong results thanks to the brisk market. As aresult, net sales decreased to ¥527 million (down 73.9% year-on-year). We will continue to reinforce
our internal efforts including introduction of new currency pairs.
Overall, the Cryptoassets segment reported net sales of ¥775 million (down 78.9% year-on-year)
and operating loss of ¥821 million (operating profit of ¥1,482 million for the three months ended
September 30, 2021).
5) Incubation
This segment is engaged in investing in domestic and overseas internet related companies aimed at
capital gains, supporting business expansion, and supporting corporate value improvement mainly
through GMO Venture Partners. Net sales were ¥0 million (¥64 million for the three months ended
September 30, 2021), and operating loss was ¥96 million (¥33 million of operating loss for the threemonths ended September 30, 2021).
(Reference1)

Changes in Operating Results and Financial Condition by Quarter

Net sales
Operating profit
Ordinary profit
Profit attributable toowners of the Parent or
net loss attributable toowners of the Parent(- represents loss)
Total assets
Shareholders’ equity(Unit: ¥millions)Q3 202257,5787,069
8,955

Q3 202156,4718,012
8,601

Q4 202164,494
10,464
11,171Q1 202256,065
11,12812,099Q2 2022
69,49019,812
21,382

3,597

4,227

6,431

9,074

-1,651

1,369,409
73,094

1,418,936
73,5481,487,484
70,415

1,433,731
78,904

1,545,403
74,209―7―

(Reference2)
Table: Quarterly Results by Segment
I Net Sales by Segment
Internet Infrastructure
Provider (ISP)
DomainHosting & cloud
Ecommerce solutions
Security
Payment
Other
Total
Online Advertising & Media
Online advertisingInternet media
Internet research & other
Total

Internet Finance
Total
Cryptoassets
Cryptoassets exchange
Cryptoassets mining
Cryptoassets payment
Total
Incubation
Total
Sub total
Other
Adjustment
Net Sales(Unit: ¥millions)
Q2 2022
Q3 2022

Q3 2021

Q4 2021

Q1 2022

10,002
2,132
4,107
4,197
1,978
11,323593
34,335

9,825
2,188
4,226
4,262
2,599
12,013736
35,852

9,420
2,221
4,484
3,559
2,534
12,025512
34,759

9,606
2,244
4,569
3,622
3,090
12,657874
36,666

10,009
2,379
4,693
3,846
3,285
13,108749
38,074

7,759
3,302
996
12,058

8,602
3,788
1,208
13,599

3,831
2,707
1,353
7,892

4,937
2,401
1,174
8,512

5,076
2,598
1,211
8,886

7,386

11,368

10,796

10,363

10,002

2,023
1,653
0
3,677

1,740
1,864
770
4,375

1,078
856
127
2,062

890
394
10
1,294

527
241
6
775

64
57,523437-1,48956,471607
65,804396-1,70564,494536
56,047835-817
56,065

12,856
69,693865-1,06869,490057,738903-1,06357,578Q3 2021
4,021
251
2,628
1,482
-33
8,350
-197
-141
8,012

Q4 2021
5,530
-136
3,856
1,241
311
10,803-239-99
10,464

Q1 2022
6,283
927
3,650
159
252
11,272-90-53
11,128Q2 2022
5,586
547
2,975
-397
10,162
18,874-3
941
19,812Q3 2022
4,753
737
2,683
-821
-96
7,256
-85
-101
7,069

II Operating Profit by Segment
Internet Infrastructure
Online Advertising & MediaInternet Finance
Cryptoassets
Incubation
Sub total
Other
Adjustment
Operating Profit―8―

(Reference3)
Description of businesses in each segment
Business Segment
DomainHosting & cloud

Ecommerce
solutionsInternet
Infrastructure

Security

Payment

OnlineAdvertising &Media

Main Operations
・Domain registry services including “.shop” and “.tokyo”
・Domain registration services: Onamae.com, MuuMuu Domain, and
VALUE-DOMAIN
・Provision, operation, management, and maintenance of shared, VPS,
dedicated and cloud-based web hosting services including Onamae.com
Rental Server, ConoHa by GMO, Z. com Cloud, GMO Cloud VPS, GMO
Cloud ALTUS, GMO Cloud Private, Lolipop!, heteml, and 30days Album
・SaaS based services for online store building including Color me shopand operation of EC platform to set up net shop offered by MakeShop.
・Operation of C2C handmade marketplace “minne”
・Operation of production/sales service of original merchandise including
SUZURI and canvath・Operation of factoring service for freelancers “FREENANCE”
・Operation of ecommerce/O2O support services, etc.
・Operation of OMAKASE, reservation management service forrestaurants
・Web design, operational support and system consulting, etc.
・DomainSSL, OrganizationSSL, and other SSL certificates, code signing
certificates, PDF document signing, client certificates and other digital
certificate services
・e-contract service “e-contract service GMO Sign”
・Cybersecurity service including vulnerability assessment of web andsmartphone applications, penetration test and security incident response
・Brand security service including brand protection measures, detectionand elimination of fake products, provision of trademark management
system, and acquisition and management of domain name
・PG Multi-Payment Service for mail order and ecommerce business,
comprehensive payment processing services for public sector, andfinance-related service including early payment service, transaction
lending, Sokkyu by GMO, and GMO payment after delivery

Provider・GMO TokuToku BB and other Internet provider services.

Onlineadvertising・Comprehensive online advertising service including listing, mobile andad networks, reward advertising, affiliate advertising.
・Advertising planning and production

・Operation of online media such as community site for teenage girls“prican,” programming educational portal “coeteko,” point site “Point
Town,” game platform “gesoten,” joint purchase coupon site “Kumapon”
Internet media
and aesthetic medical ticket purchase site “KIREIPASS,” life informationsite for career women “michill” and ad distribution to own media
・SEM Media: Sales of SEO.
Internet research ・Provision of Internet research systems, management and operation of& other
online research panel including GMO Research Cloud PanelInternet FinanceInternet finance・Operation of online securities trading, FX trading, CFD trading, etc.
・Spot trading and leveraged transactions of cryptoassets, etc.

Cryptoassets

Cryptoassets
exchange
Cryptoassets
miningCryptoassets
payment
Venture capital・Investment in private Internet startups

Incubation

・Operation of mining centers
・Issuance and redemption of stablecoin “GYEN” and “ZUSD”―9―(2) Financial condition
Assets, Liabilities and Net Assets
Assets
As of September 30, 2022, total assets increased ¥126,466 million from December 31, 2021 to¥1,545,403 million. Major factors included an increase of ¥71,464 million in cash and deposits, anincrease of ¥81,264 million in various assets due to fluctuations in customer assets in the Securities
segment (deposits, margin transaction assets, loan secured by securities, short-term guarantee
deposits and variation margin paid) and a decrease of ¥39,579 million in cryptoassets under custody.
Liabilities
As of September 30, 2022, liabilities increased ¥103,184 million from December 31, 2021 to¥1,381,718 million. Major factors included an increase of ¥46,130 million in short-term debt, an
increase of ¥24,022 million in long-term debt, an increase of ¥75,108 million in various liabilities due
to fluctuations in customer assets in the Securities segment (deposits received, margin transaction
liability, guarantees received, variation margin received, and loans payable secured by securities)
and a decrease of ¥39,782 million in deposits received for cryptoassets.
Net Assets
As of September 30, 2022, net assets increased ¥23,282 million from December 31, 2021 to¥163,685 million. Major factors included an increase of ¥2,618 million in earned surplus (consistingof an increase from recording profit attributable to owners of the parent totaling ¥13,854 million, adecrease from dividend payments of ¥6,466 million, a decrease from retirement of treasury stock of¥2,352 million and a decrease of ¥2,416 million in the beginning balance of earned surplus as aresult of application of Accounting Standard for Revenue Recognition), an increase of ¥22,633
million in non-controlling interests, a decrease of ¥4,482 million due to acquisition and retirement oftreasury stock and an increase of ¥3,551 million in foreign currency translation adjustments.

(3) Consolidated results forecast and other forward-looking information
For the fiscal year ending December 31, 2022, the Group plans to increase both net sales andoperating profit, mainly in Internet Infrastructure segment. Meanwhile, there are certain factors thatcannot be reasonably predicted at this point, including: (1) fluctuation of cryptoasset prices andglobal hash rate trends in Cryptoassets business, (2) potential impact of economic situations andmarket conditions in Internet Finance segment, and (3) when and how much of capital gains will be
realized in Incubation segment. Accordingly, we do not disclose the consolidated results forecast for
the fiscal year ending December 31, 2022.

―10―

2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheet
Previous Fiscal Year(As of Dec 31, 2021)(Unit: ¥millions)
3rd Quarter
Current Fiscal Year(As of September 30,
2022)

AssetsCurrent Assets
Cash and deposits

240,136

311,600

Trade notes and accounts receivable

27,382－－

34,192

Trade notes, accounts receivable and contract
assetsOperational investment securities

8,449

10,782Cryptoassets under custody

115,973

76,393

Securities segment deposits

478,489

518,350

Securities segment margin transaction assets

134,732

143,493

Securities segment loan secured by securities

9,626

15,028

Securities segment short term guarantee deposits

67,862

68,720

Securities segment variation margin paid

70,51296,894Other

143,655

140,362-3,835-4,286

1,292,984

1,411,533

44,78845,698Provision for doubtful debts
Total Current Assets
Fixed Assets
Tangible fixed assets
Intangible fixed assets
Goodwill

14,251

20,388

Software

10,181

11,225

Other

15,132

15,848

Total intangible fixed assets

39,566

47,462

Investment securities

28,60527,680

Deferred tax asset

2,328

4,624

Other

11,362

9,182

Investments and other assets

Provision for doubtful debts
Total investments and other assets
Total Fixed Assets
Total Assets

―11―

-699

-778

41,59740,709125,952

133,870

1,418,936

1,545,403

Previous Fiscal Year(As of Dec 31, 2021)(Unit: ¥millions)
3rd Quarter
Current Fiscal Year(As of September 30,
2022)

Liabilities
Current Liabilities
Trade notes and accounts payable

11,921

12,142

Short term debt

172,995

219,126

Amount payable

45,22840,784

Deposits received for cryptoassets

116,161

76,379Securities segment deposits received

55,392

48,937

Securities segment margin transaction liability

30,55441,701

Securities segment guarantees received

519,131573,326

Securities segment variation margin received

7,677

18,800

Securities segment loans payable secured by securities

20,61425,711

Accrued corporate tax, etc.

4,731

7,453

Allowance for bonuses

2,948

3,354

Allowance for bonuses to directors

1,452

521

Allowance for contract loss

－

6,341

Advance payment received

11,082－Contract liabilities－

21,586

Deposits received

110,817

95,076

Other

34,272

21,384

1,144,982

1,212,628

Corporate bonds

45,00051,000Convertible bonds with equity warrants

20,99020,825Long term debt

55,67879,700

Deferred tax liability

1,568

6,748

Other

9,390

9,870

132,627

168,144

Financial instruments transaction liability reserve

924

945

Total Statutory Reserve

924

945

1,278,533

1,381,718

Total Current Liabilities
Fixed Liabilities

Total Fixed Liabilities
Statutory Reserve

Total Liabilities
Net Assets
Shareholders’ Equity
Capital stock

5,000

5,000

Capital surplus

34,32833,521

Earned surplus

35,75638,374

Treasury stock-5,684-10,166

Total Shareholders’ Equity

69,40066,729

3,559

3,384

Accumulated Other Comprehensive Income
Other securities valuation differences
Deferred hedging profit (loss)－-43

Foreign currency translation adjustments

588

4,139

4,147

7,479

Total Accumulated Other Comprehensive Income
Equity Warrants
Non-controlling Interests
Total Net Assets
Liabilities, Net Assets Total

―12―

52

40

66,80289,435

140,402

163,685

1,418,936

1,545,403

(2) Quarterly consolidated statements of income and comprehensive income
Quarterly consolidated statement of income
3rd Quarter (cumulative)(Unit: ¥millions)

Net Sales

3rd Quarter
Previous Fiscal Year
(9 months to September
2021)
176,951

3rd Quarter
Current Fiscal Year
(9 months to September
2022)
183,134

Cost of Sales

83,947

69,873Gross Profit on Sales

93,004113,261

Sales, General & Administrative Expenses

62,37175,250Operating Profit

30,63338,010Non Operating Revenue
Dividends received
Foreign exchange gain
Gain on investments in partnership
Other

610

857

1,028

2,628

283

256

966

1,960

2,888

5,702

Interest paid

351

658

Equity method investment losses

551

324

Total Non Operating Revenue
Non Operating Expenses

Other
Total Non Operating Expenses
Ordinary Profit

395

291

1,299

1,274

32,22242,438Extraordinary Profit
Gain from business transfer

149－

Gain on sale of investment securities
Reversal of financial instruments transaction
liability reserve
Other

620

20,527

185

－

14

16

Total Extraordinary Profit

969

20,543

Provision for contract loss
Provision of financial instruments transaction
liability reserve
Compensation for customer’s loss

－

6,341

－

21

－

241

Loss on valuation of investment securities

5500

Impairment loss

195

341

Loss on disposal of fixed assets

16

36

Other

30

55

Extraordinary Loss

Total Extraordinary Loss

248

7,537

Net Profit before Adjustment for Tax, etc.

32,94355,443

Corporate, Municipal and Enterprise Taxes

10,474

12,531

Corporate Tax etc. Adjustment

1,029

3,915

Total Corporate Taxes, etc.

11,503

16,446

Net Profit

21,44038,997

Profit Attributable to Non-controlling Interests

8,139

25,143

Profit Attributable to Owners of the Parent

13,30013,854―13―

Quarterly consolidated statement of comprehensive income
3rd Quarter (cumulative)(Unit: ¥millions)

Net Profit

3rd Quarter
Previous Fiscal Year
(9 months to September
2021)
21,440

3rd Quarter
Current Fiscal Year
(9 months to September
2022)
38,997

3,818-1,050

Other Comprehensive Income
Other securities valuation differences
Deferred hedging profit (loss)

14

-66

Foreign currency translation adjustments

339

7,087

Share of other comprehensive income (loss) of associates
accounted for using equity method

70

-176

Total other comprehensive income

4,241

5,793

Comprehensive Income

25,68144,790(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

17,384
8,297

17,18527,604―14―

(3) Notes regarding the quarterly consolidated financial statements(Notes regarding the going concern assumption)
Not applicable.
(Notes regarding changes impacting shareholders’ equity)
Pursuant to the resolutions at the Board of Directors meetings held on February 12, 2021 andFebruary 10, 2022, the Company acquired 1,287,200 shares of treasury stock for ¥3,261 million and
1,597,600 shares of treasury stock for ¥4,253 million, respectively.
Also, pursuant to the resolution at the Board of Directors meeting held on February 21, 2022, theCompany retired 1,188,645 shares, which resulted in decreases in capital surplus of ¥680 million,
earned surplus of 2,352 million and treasury stock of ¥3,032 million.
As a result, capital surplus, earned surplus and treasury stock as of September 30, 2022 were¥33,521 million, ¥38,374 million and ¥10,166 million, respectively.
(Changes in accounting policies)(Application of Accounting Standard for Revenue Recognition)
On January 1, 2022, the Company applied “Accounting Standard for Revenue Recognition”(Accounting Standards Board of Japan (“ASBJ”) Statement No.29, March 31, 2020, “AccountingStandard for Revenue Recognition”), etc., and recognizes revenue at an amount that it expects toreceive in exchange for the promised goods or services when the control of the goods or services istransferred to a customer.
Accordingly, we identified performance obligations in the contracts with customers and changed themethod to recognize certain initial cost revenue in the Internet Infrastructure segment fromrecognizing at the commencement of service to recognizing over the service contract period. In
addition, the method to recognize revenue for services which the Group is deemed to have provided
as an agent was changed from recognizing at gross amount to recognizing at net amount.
We applied the Accounting Standard for Revenue Recognition, etc. from January 1, 2022 pursuant
to the transitional treatment provided for in the proviso of Paragraph 84 of the Accounting Standard
for Revenue Recognition, with the cumulative effect of the retrospective application, assuming the
new accounting policy had been applied to periods prior to January 1, 2022, adjusted to thebeginning balance of earned surplus as of January 1, 2022.
As a result, net sales for the nine months ended September 30, 2022 decreased by ¥23,611 million,
cost of sales decreased by ¥21,444 million, sales, general and administrative expenses decreasedby ¥2,312 million, and operating profit, ordinary profit and net profit before adjustment for tax etc.
increased by ¥144 million, respectively. Also, the beginning balance of earned surplus decreased by¥2,416 million.
As a result of the application of the Accounting Standard for Revenue Recognition, etc., “Tradenotes and accounts receivable” which was presented in “Current Assets” on the consolidated balance
sheet as of December 31, 2021 is included in “Trade notes, accounts receivable and contract assets”
from January 1, 2022. Also, “Advance payment received” which was presented in “Current liabilities”
and “Unearned revenue” included in “Other “ in “Current liabilities” are included in “Contract liabilities”
from January 1, 2022.
Pursuant to the transitional treatment stipulated by Paragraph 89-2 of the Accounting Standard for
Revenue Recognition, the Group did not reclassify figures for the year ended December 31, 2021 toconform to the new presentation method. Also, pursuant to the transitional treatment provided for in
Paragraph 28-15 of the “Accounting Standard for Quarterly Financial Reporting” (ASBJ Statement No.
12, March 31, 2020), information on the breakdown of revenue arising from contracts with customers
for the nine months ended September 30, 2021 is not presented.

―15―

(Application of Accounting Standard for Fair Value Measurement)
On January 1, 2022, the Company applied “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019, “Accounting Standard for Fair Value Measurement”), etc., andthe new accounting policies specified in the Accounting Standard for Fair Value Measurement, etc.
are applied prospectively pursuant to the transitional treatment prescribed in Paragraph 19 of the
Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the “Accounting Standard
for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). The impact on the Quarterly
Consolidated Financial Statements is insignificant.

(Segment Information)
I 3rd Quarter of Previous Fiscal Year (01.01.2021-09.30.2021)
1. Information relating to net sales and profit or loss by reportable segment(Unit: ¥millions)
Reportable Segment
Other
(*i)

Adjustment Consolidated(*ii)
P/L (*iii)

Internet
Infrastructure

Online Ad& MediaInternet
Finance

Sales to unaffiliatedcustomers

102,105

34,123

22,531

16,259962

175,981969－

176,951

Internal transactions
or transfer

804

4,348

－

－

－

5,153

225

-5,378－

Total

102,90938,471

22,531

16,259962

181,135

1,195-5,378

176,951

Segment Profit/Loss

13,702

1,323

7,859

7,852

473

31,211-382-195

30,633

Cryptoassets Incubation

Total

Net Sales*Notesi. “Other” represents mobile entertainment and other businesses not included in reportablesegments.
ii. Segment profit or loss adjustment (¥-195 million) is an elimination of inter-segment transactions.
iii. Segment profit/loss is based on operating profit in the quarterly consolidated statement of income.
2. Information on impairment losses on fixed assets or goodwill by reporting segment.
(Significant impairment loss on fixed assets)
For the nine months ended September 30, 2021, the Internet Infrastructure and Other segments
recognized impairment loss on fixed assets of ¥131 million and ¥64 million, respectively.
(Significant change in goodwill)In the Internet Finance segment, the amount of goodwill recognized as a result of the businesscombination with Gaika ex byGMO, Inc. in the three months ended September 30, 2021 was aprovisional amount as the allocation of the acquisition cost had not been completed. However, theamount of goodwill was revised as the provisional accounting treatment was finalized after the
allocation was completed at the end of the fiscal year ended December 31, 2021.

―16―

II 3rd Quarter of Current Fiscal Year (01.01.2022-09.30.2022)
1. Information relating to net sales and profit or loss by reportable segment(Unit: ¥millions)
Reportable Segment

Adjustment Consolidated(*ii)
P/L (*iii)

Total

Other
(*i)

13,392

180,7812,353－

183,134

－

－

2,698

250

-2,949－31,162

4,133

13,392

183,479

2,604-2,949183,134

9,309-1,05910,31837,403-179

786

38,010Internet
Infrastructure

Online Ad& MediaInternet
Finance

Sales to unaffiliatedcustomers

108,563

23,52831,162

4,133

Internal transactions
or transfer

935

1,763

－

Total

109,499

25,291

Segment Profit/Loss

16,622

2,212

Cryptoassets Incubation

Net Sales*Notesi. “Other” represents mobile entertainment and other businesses not included in reportablesegments.
ii. Segment profit/loss adjustment (¥786 million) is an elimination of inter-segment transactions.
iii. Segment profit/loss is based on operating profit in the quarterly consolidated statement of income.
2. Information on changes in reportable segments, etc.
As described in Changes in accounting policies, following the application of the AccountingStandard for Revenue Recognition, etc. on January 1, 2022, the Group changed the accounting
treatment for revenue recognition and also the method to measure segment profit (loss)
accordingly.
Compared to the previous method, for the nine months ended September 30, 2022, in theInternet Infrastructure segment, net sales decreased by ¥6,221 million and segment profit
increased by ¥85 million; in the Online Advertising & Media segment, net sales decreased by¥20,421 million and segment profit increased by ¥59 million; and in the Internet Finance segment,
net sales decreased by ¥16 million and there was no impact on segment profit. There was no
impact on the Cryptoassets and Incubation segments. Also, “Adjustment” for Internal transactions
or transfer decreased by ¥3,048 million and there was no impact on the adjustment for segment
profit.
3. Information on impairment losses on fixed assets or goodwill by reporting segment(Impairment loss on fixed assets)
For the nine months ended September 30, 2022, the Online Ad & Media, the Cryptoassets andOther segments recognized impairment loss on fixed assets of ¥34 million, ¥12 million and ¥293
million, respectively.
(Significant change in goodwill)In the Internet Infrastructure segment, goodwill in regard to the business combination with GMO
Cybersecurity by Ierae, Inc. that took place at the end of the three months ended March 31, 2022
was recorded at a provisional amount as the allocation of the acquisition cost was not completed.
During the three months ended June 30, 2022, the provisional accounting treatment was finalized
after the allocation was completed, which resulted in a change in the amount of goodwill from ¥7,724
million, a provisionally calculated amount, to ¥7,606 million.

(Significant subsequent event)Not applicable―17―