Overview and Progress of Midterm Business Policies

The Septeni Group’s operating environment changes quickly and is difficult to predict. Therefore, we utilize a rolling method

Theme of the Midterm Business Policies

Domain Expansion

to review our Midterm Business Policies every year so that management can adapt quickly.
Our Midterm Business Policies, which were announced in October 2019, adopt the theme of domain expansion and delineate
the direction in which each segment should expand. The year since then has seen major societal change due to the COVID-19
pandemic. Consequently, using our rolling method for the fiscal year ending September 2021, we have updated our policies
to reflect the “new normal” while also focusing on the significant changes we are seeing now as opportunities for growth.

Overview of the Midterm Business Policies
Expansion within existing domains

Before Update (Announced in October 2019)

Expansion into new domains

From advertising agency to the data &solutions domain
Digital Marketing
Business

From performance advertising market tothe brand advertising market
From online advertising to the integrationof online and offline advertising

From a manga app to a content platform
Media Platform
Business

From individual media to amedia conglomerate

Expand into New
Business Segments

Consider expansion into
new business segments

From independent operation of eachcompany to a growth platform

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After Update (Announced in October 2020)

Step up business in the e-commerce
advertising domain
Enhance Group organization in the data &solutions domain

Focus on revenue from charge on users
Step up business development in
the D2C domain

Capture demand for DX in focus industries

OUR MISSIONOUR STRATEGYOUR WAYCOPORATE DATA18Overview and Progress of Midterm Business Policies

Performance Guidance (Consolidated)
Before Update (Announced in October 2019)
Revenue
Non-GAAP operating profit
Ratio of operating profit to revenue

After Update (Announced in October 2020)
Revenue
Non-GAAP operating profit
Ratio of operating profit to revenue(Billions of yen)

25.0

22.0
19.0

13.2%

13.6%

14.4%

2.5

3.0

3.6

2020

(Forecast)

2021(Forecast)

2022(Forecast)

13.7%

14.3%

2.45

2.85

2020

2023

2021

(Forecast)(Forecast)

24.0

22.0

20.0

17.9

(Billions of yen)

16.4%

17.9%

3.6

4.32022(Forecast)

2023(Forecast)(Years ended September)(Years ended September)

Outlook by Business Segment

Digital Marketing BusinessMedia Platform Business

Expect to generate sustainable growthby adapting to the operating environment
to increase sales and earnings

Aim for profitability in three years by
growing revenue in each business andreducing losses• D evelop the e-commerce advertising anddata & solutions domains as growth drivers• E xpect stable revenue growth by focusing
on charges from users• C ollaborate with the Dentsu Group toincrease market share• S tep up new business development in theD2C domain to increase earnings

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OUR MISSION

Expand into New Business Segments

OUR STRATEGY

To capture DX demand, deploy
internal capital with a focus onindustries including sports, assetsharing and entertainment

OUR WAYCOPORATE DATA

19

Strategy by Business: Digital Marketing Business

ネットマーケティング

Revenue and Non-GAAP Operating Profit
In providing comprehensive support for corporate DX, we focus on digital marketing, including digital

Revenue

Non-GAAP operating profit

advertising sales and operation, solutions that employ data and AI, and support for integrated online/13,409

offline advertising through our alliance with the Dentsu Group.

Opportunities

Issues• Industrywide progress in DX• Market expansion in the e-commerce
advertising domain

5,331• Increasing sophistication and specialization ofmarketing methods• Finding human resources versed in integrated
online/offline marketing

Business Model
Digital Marketing BusinessAds
DX supportAdvertisingpurchases• Planning and design ofintegrated marketing• Planning and designof promotions• Ad operation

2017

2018

20192020(Years ended September)

Note: S tarting from the fiscal year ended September 2018, Companywide
expenses are no longer allocated to each segment. In accordancewith this new reporting standard, non-GAAP operating
profit for theネットマーケティング
fiscal year ended September 2017 has been restated excluding
Companywide expenses.

Clients in
Collaborative
Business with
the Dentsu Group

Advertising
distribution,
display

5,248

4,774

4,026

Clients in collaborative businesswith the Dentsu Group5416

Campaign
implementation,
operation andeffectivenessmeasurement

Clients

Solutions
ProvidesolutionsInternetmedia

2016

5,468

15,807

15,07914,234

13,833(Millions of yen)

• Data analysis and creative
work using AI• Cloud-based CRM services• Affiliate networks• Internet media

2019
2020
(As of 4Q of fiscal year ended September)

Users

Domestic Brand
AdvertisingTransactions

Brand advertising (Billions of yen)transactions
Share of the digital
6.35
marketing business

5.29

Information
dispatch

3.47

8.5%

7.0%

4.8%
1.41
1.9%
2017

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OUR MISSIONOUR STRATEGYOUR WAY

2018
2019
2020
(Years ended September)

COPORATE DATA20

Strategy by Business: Digital Marketing BusinessAt a Glance

Overview of Results for the Fiscal Year
Ended September 2020

Revenue•	Revenue and operating profit increased year
on year. We more than compensated forlower demand for advertising that resulted
from the COVID-19 pandemic by capturing
emerging demand in other areas.

¥15,807

million(4.8% increase YoY)

Number of employees

1,055
Number of clients in collaborative
business with the Dentsu Group1654

companies⇒

companies•	Our alliance with the Dentsu Group has
made progress, with growth in the numberof clients and revenue per client over themedium term. The Septeni Group alsoacquired major clients independent ofthe alliance.
•	In e-commerce, which was already a focus
domain, we significantly expanded
advertising transactions with Amazon by
adapting to market acceleration resulting
from the COVID-19 pandemic.

(about 3.4 times increase YoY)

Growth in brand advertising

20.1% increase YoY

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OUR MISSIONOUR STRATEGY

Future Strategy
Our vision for the future regarding changes inlifestyles, work styles and values is becominga reality much faster than we had predictedbecause of the COVID-19 pandemic. This isparticularly true in the e-commerce domain,
where demand has gained momentum due tothe growth in online consumption. We seechanges in our operating environment asopportunities, and are aiming for sustainablegrowth by stepping up our business in thee-commerce advertising market.
In addition, we will continue to expand in
the data & solutions domain and leverage ouralliance with the Dentsu Group to provide finely
tuned support to address diverse client needs
and the rapidly evolving DX support market.
The establishment of a new data & solutions
company in January 2021 will enable us toprovide sustainable support for client companies
by leveraging the data and know-how we had
previously developed for in-house use. In ouralliance with the Dentsu Group, we will work tofurther increase market share and establish ourcompetitive advantage in the industry bypromoting marketing proposals for integrated
online/offline advertising.

OUR WAYCOPORATE DATA21

Strategy by Business: Media Platform Business

メディアコンテンツ

Revenue and Non-GAAP Operating Profit (Loss)

This business provides numerous media products, including the manga app GANMA! that offers mainly

Revenue

Non-GAAP operating profit

original content, and conducts the recruitment, social contribution and childcare platform businesses.

2,005

Each company in this business aims to achieve its vision and mission in focusing on the next potential
growth markets and social issues.

(Millions of yen)

2,487

1,324

1,163
601

Opportunities

Issues• Growth of each company’s target domain• Growth of the D2C market• Business structure that is easily affected byseasonality and the market environment• Need for user engagement that is not influenced
by the external environment

Business Model(718)(1,324)

2016

2018

(956)

(901)

(1,051)

2017

2019

2020

(Years ended September)

Note: Starting from the fiscal year ended September 2018, Companywideexpenses are no longer allocated to each segment. In accordancewith this new reporting standard, non-GAAP operating profit for thefiscal year ended September 2017 has been restated excluding
Companywide expenses.

Media Platform Business

Manga artists

Cultivation

Manga Content Business

Advertising sales• Management of manga artists• Manga content app GANMA!

Provision of
information on
job seekers
Support for
activities ofsocial contributiongroupsCorporations/Groups/Medicalinstitutions

Provision ofsolutions
for medicalinstitutions

Recruitment Platform
BusinessIn-app purchases/support513

App Revenue

Distribution

Index: R evenue in fiscal year ended
September 2016 = 100

Registration ofinformation100• ViViViTSocial Contribution
Platform Business2016
2020(Years ended September)

Support action
on the InternetUsers• gooddo

Medical Platform Business• Pharmarket• Sentry

Monitor medication
adherence
Index: Revenuein fiscal year ended
September 2016 = 100

Childcare Platform Business• Babyful• amanoppo

Integrated Report 2020

8,640

Subscription Revenue

INDEX

Sale of childcare
goods

OUR MISSION100
2016
2020
(Years ended September)

OUR STRATEGYOUR WAYCOPORATE DATA

22

Strategy by Business: Media Platform BusinessAt a Glance

Overview of Results for the Fiscal Year
Ended September 2020Revenue•A dvertising revenue decreased due to theimpact of the COVID-19 pandemic, but
in-app sales revenue increased steadily.

24.0% increase

Number of employees

87
Growth in subscription revenue• The cumulative number of GANMA!
downloads exceeded 14 million as of theend of September 2020.
•T he amount of supports for manga andanime artists provided by crowdfunding andthe number of supporters have increased
partly due to animation projects of popular
works in GANMA!

84.3% increase YoY

Future Strategy
We will focus on growth domains to increase
revenue and reduce losses in each business, withthe target of achieving profitability in three years,
as per the Midterm Business Policies. In theManga Content Business, we are shifting thefocus of monetization to in-app sales revenue
given the impact of the COVID-19 pandemic.
We are also planning to expand revenue inways such as converting our original IP based onapps into e-books.
In addition, we will step up businessdevelopment in the D2C domain by leveraging
the networks and communities that each businesshas built. We will roll out brands that reflect
Septeni’s unique added value and lifestyle
proposals to develop businesses that create
activities and spaces for consumption. We
expect these diverse business strategies tofurther increase revenue.

Number of GANMA! titles

Over200

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OUR MISSIONOUR STRATEGYOUR WAYCOPORATE DATA23