2nd Quarter of Fiscal Year Ending March 2023 (FY2023)

Financial Results Briefing Material

Confidence Inc.

Securities code: 7374

Table ofContents

01

P.3

02

Executive Summary

Company
Overview

04

05

P.20

Progress in Growth
Strategies/Business Topics

P. 7

03

P. 10

Consolidated
Financial Results andSegment Results

Appendix.
P. 24

Shareholder
ReturnsP. 26

Business Plan and Growth Potential
Announced on June 23, 2022

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2

01

Executive Summary

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3

Financial Highlights of Q2 FY2023 (Cumulative)
 Revenue grew 21.5% year on year, with the number of creator staffing assignments increasing by 35 people from the end of the previous fiscal year Due to enhanced productivity, operating profit increased by 41.5% year on year. Operating profit margin also grew, surpassing the target of 15%▍Q2 results (cumulative)

Revenue

Gross profit

2,544

million yen

903

million yen

Gross profit margin:

35.5%+21.5%
YoY+25.7%
YoY

Staffing
assignments

Operatingprofit+35

775

from the end ofpeopleFY2022

501

million yen+41.5%

Operating profit margin:

19.7%

YoY

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4

Q2 FY2023 Performance Trends (Cumulative)
 FY2023 (ending March 2023) : Revenue of 5,200 million yen and operating profit of 850 million yen set as targets,announced on May 12, 2022 in the Consolidated Financial Results for the Fiscal Year Ended March 2022

 Strong progress made in Q2 (cumulative) as well ➡ [Progress rate] Revenue: 48.9% (47.8% a year earlier) / operating profit: 58.9% (49.2% a year earlier)▍Operating profit▍Revenue+17.5%(Million yen)

+24.0%

6,000
5,000

1,000
0

5,200 ◀ Forecast

800

2,604

46
FY2015

1,140188

FY20162,544

512◀ 58.9%

400

335

300
200

148

FY2018FY2019
Past
results

FY2020

FY2021

FY2022

FY2023Current
fiscal
year

-100

174

501

69

100
0

FY2017

Progressrate

500◀ 48.9%2,004
Established inAugust 2014

604

600
Progressrate

850 ◀ Forecast

745

700

3,569

3,000
2,000

900

4,425

4,000

+23.3%(Million yen)

+14.0%-6-15
FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
Past
results

Current
fiscalyear

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5

Shareholder Returns for Q2 FY2023 (Interim): Summary
 Interim dividend for FY2023 has been finalized at 20.0 yen per share, as announced on May 12, 2022 in the Consolidated Financial Results

for the Fiscal Year Ended March 2022

 Full-year forecast: no revision is made to total dividend of 45.0 yen per share, the most recently announced forecast➡ Annual DOE (dividend on equity ratio) (forecast) is at a high level of 11.6%▍FY2023: Interim dividend results / year-end dividend forecast
Finalized

Dividend
per share(forecast)45.0 yen
DOE (forecast)

11.6%

Of which,interim dividend(actual)20.0 yen+12.5%YoY
Of which,
year-end dividend(forecast)25.0 yen±0.0 yenfromforecast±0.0 yenfromforecast

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6

02

Company Overview

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7

Company Profile
VisionCompany name

Confidence Inc.
Nobuyuki Takushi, President

Representative

Envisioning the future together
at the frontline of the creative industry
Jointly create a future in which creators achieve their dreams ofcareer enhancement, the products in which they were involved are

Established

August 2014

Head office location

BYGS Shinjuku Bldg. 10F
2-19-1 Shinjuku, Shinjuku-ku, Tokyo

Consolidated subsidiary

Dolphin Inc.

well-received, which leads to the advancement of clientorganizations, the industry, and society

Creators

Clients

Joined Staff Service Co., Ltd. (currently Staff Service Holdings Co., Ltd.) in 1996, and worked as asales manager and a person in charge of recruiting in the Human Resources Department. Joined
Staff Service Sales Marketing Co., Ltd. (currently Link Agent Inc.) and, as Director and General
Manager of Marketing, drove growth of such departments as staffing, recruitment andoutsourcing.
Took office as President of Confidence Inc. in 2015 (current position).

Officers

President

Nobuyuki Takushi

Outside Director

Hirofumi Miki

Senior Managing
Director

Takuro Yoshikawa

Outside Director

Toshinori Aoki

Director and General
Manager,
Administration Division

Koji Nagai

Outside Auditor

Takashi Yachi

Outside Director

Reona Amemiya

Outside Auditor

Tadahiko Yasukuni

Outside Director

Midori Mizutani

Outside Auditor

Kenya Fujimori

Paid-in capital

498.73 million yen (as of September 30, 2022)

Line of business

Staffing, recruitment and outsourcing services for gaming and entertainment industries
Media operations

No. of employees

903 (as of September 30, 2022)

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8

Business Overview
2. Media business

1. HR Solution business
Staffing business/recruitment business
Accommodate the needs of each phase/department
Planning

Development

Planners

Engineers/designers

Quality
management
Testing/debugging

SupportBack office

Customer
support

Clerical work/
assistants▍Outsourcing business

DesignMultilingual
localization

Debugging

LovelyMedia for women

Plush

Fortune-telling media

GAMEMOInterview media
related to Web 3.0

Web marketing business

Provide outsourcing support fromdevelopment to operation phases
Planning anddevelopment

Media site operations

Operation
services

Conduct promotion support, such as social
media operation service, based on operational
know-how of media sites,
and accommodate not only the gaming
industry but a wide range of other industries

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9

03

Consolidated Financial Results andSegment Results

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10

[Consolidated] Financial Highlights of Q2 FY2023 (Cumulative)
 Revenue and respective profits kept growing steadily from the year-earlier period
 In terms of progress toward the earnings forecast for FY2023 (full year), operating profit and other profits at lower stages made progress larger than

anticipated▍Q2 results (cumulative)(Million yen)

FY2022（Q2）

FY2023（Q2）

YoY

Full year forecast(announced on
May 12, 2022)

FY2022(Full year)

Progress rate

Revenue *

2,094

2,544

+21.5%

5,200

48.9%

4,425

Gross profit

718

903

+25.7%

1,787

50.5%

1,528

Gross profit
margin

34.3%

35.5%

+1.2 pts

34.4%

-

34.5%

Operating profit

354

501

+41.5%

850

58.9%

745

16.9%

19.7%

+2.8 pts

16.3%

-

16.8%

Ordinary profit

347

500

+44.1%

848

59.0%

737

Profit233

339+45.2%

585

57.9%

530

Operating profit
margin* Figures after eliminating internal sales within the consolidated companies are indicatedCopyright© Confidence Inc. All Rights Reserved.

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11

[Consolidated] Quarterly Results Trends by Business The HR Solution business, our mainstay operations, grew steadily and recorded the highest revenue in Q2 FY2023
 Operating profit showed an upward trend, reflecting the impact of head office relocation completed in Q1, among other factors▍Revenue (quarterly trends)

1,500

832

0

808

Q1
FY21.3
1Q

830
12

817

926
14

979
20

1,042 1,052
17

1,149

1,180
16

24

1,250
16

1,293

300

： Media business

28

18

236

200

912

Q2
Q3
FY21.3
FY21.3
2QFY2021
3Q

958

Q4
FY21.3
4Q

1,024

1,034

1,163

1,234

Q2
Q3
FY22.3
FY22.32Q
FY20223Q

Q4
FY22.3
4Q

134

100

Q1
Q2
FY23.3
FY23.3
1QFY2023
2Q

0

0

180

0

2

170

6

180

4

186
133

172

4

123

0

159

Q1
FY22.3
1Q

-1

161

1,265

181

264

-4

211

185
1

1,125

+53.5%： HR Solution business(Million yen)

： Media business

24

500

+22.9%： HR Solution business(Million yen)

1,000▍Operating profit (quarterly trends)

206

240

258

180

118

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
FY21.3
FY21.3
FY21.3
FY21.3
FY22.3
FY22.3
FY22.3
FY22.3
FY23.3
FY23.3
1Q
2QFY2021
3Q
4Q
1Q
2QFY2022
3Q
4Q
1QFY2023
2Q* Figures after eliminating internal sales within the consolidated companies are indicatedCopyright© Confidence Inc. All Rights Reserved.

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12

[HR Solution Business] Financial Highlights of Q2 FY2023 (Cumulative) Achieved strong growth while keeping profit margin at a high level▍Q2 results (cumulative)(Million yen)

FY2022（Q2）

FY2023（Q2）

YoY

Full year forecast(announced on
May 12, 2022)

FY2022(Full year)

Progress rate

Revenue *

2,059

2,510

+21.9%

5,078

49.4%

4,353

Gross profit

693

883

+27.3%

-

-

1,481

Gross profit
margin

33.7%

35.2%

+1.5 pts

-

-

34.0%

Segment profit

538

730

+35.6%

-

-

1,166

26.2%

29.1%

+2.9 pts

-

-

26.8%

Segment profit
margin* Figures before eliminating internal sales within the consolidated companies are indicatedCopyright© Confidence Inc. All Rights Reserved.

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13

[Human Resources Business] Trends in Major KPIs
 Creator staffing assignments, which serve as the foundation of the Company’s recurring income model, steadily increased to end

up at 775 (an increase of 102 from the year-earlier period) The utilization rate has been kept at a high level since last year

▍Utilization days*1 / Utilization rate*2▍Creator staffing assignments+102 people

1000

800

600

504

529

564

620

630

673

715

740

768

Utilization days
80.0

775

60.0

99.4%

99.9%

99.7%

99.6%

99.5%

99.2%

56.7

54.5

56.9

55.0

56.4

55.7

100.0%
80.0%
60.0%

40.0

40.0%

20.0
0.0

400

20.0%
0.0%
Q11Q
Q22Q
Q22Q
Q33Q
Q44Q
FY23
FY23
FY23
FY23
FY23
FY23 3Q
FY23 4Q
FY2022
FY2023*1 Quarterly total of the number of days arrived at by dividing the total number of days worked by each
person on a monthly basis by the number of utilized persons at the end of the month* As the above formula is applied from the current fiscal year, figures for the previous fiscal year havebeen re-calculated by using the formula*2 The ratio obtained by dividing the number of non-utilized persons at month end by the total staffing
assignments at month end
Q11Q
FY23

▍Trends in average daily overtime hours*

200

FY20220.8
0Utilization rate

FY21
Q11Q

FY21
Q22Q

FY21
Q3 3Q

FY2021

FY21
Q44Q

FY22
Q11Q

FY22
Q22Q

FY22
Q3 3Q

FY2022

FY22
Q44Q

FY23
Q11Q

FY23
Q22Q

FY2023

0.6
0.4

0.68

0.71

0.60

0.63

Apr

May

FY2023

0.69

0.69

0.58

0.59

0.61

0.62

Jun

Jul

Aug

Sep

0.63

0.68

0.66

0.69

Oct

Nov

0.63

0.64

Dec

Jan

0.74

0.62

0.2
0

Feb

Mar

* Daily average obtained by dividing the average total monthly overtime hours by the average number of actual
utilization days
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14

[Media Business] Financial Highlights of Q2 FY2023 (Cumulative) Although the Media business accounts for a small portion of the entire revenue and the impact on consolidated results is limited,

the progress rate as of the end of Q2 fell below the forecast at 34.2%

 The business, which posted segment loss in Q1, turned to be profitable in Q2▍Q2 results (cumulative)(Million yen)

FY2022（Q2）

FY2023（Q2）

YoY

Full year forecast(announced on
May 12, 2022)

FY2022(Full year)

Progress rate

Revenue *35

44+24.1%

130

34.2%

77

Gross profit

25

20-19.4%--

46

Gross profit
margin

69.9%

45.4%

-24.5 pts

-

-

60.4%

Segment profit

7

6-12.3%

-

-

13

20.4%

14.4%

-6.0 pts

-

-

17.5%

Segment profit
margin* Figures before eliminating internal sales within the consolidated companies are indicatedCopyright© Confidence Inc. All Rights Reserved.

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[Media Business] Trends in Major KPIs and Targeted Revenue Structure Page views (PVs) somewhat improved in Q2, standing at the similar level as the year-earlier quarter The ratio of outsourced promotional services in revenue sources rose in Q2 due to a temporal project, but the transformation of revenue

structure remains to be an issue to address on a continuous basis▍Trends in PVs▍Improvements in current revenue structure / Target(Thousand PVs)
50,00045,00041,36340,00035,00033,49531,20337,52236,015

Revenuestructure
for FY2022

Targeted revenue
structure

31,71930,00026,590 43,463

25,00021,86520,00015,00010,000Shift the primary source of revenue fromadvertising network to outsourced
promotional services

FY2021Q1Q1

FY2021Q2
Q2

FY2021Q3Q3FY2021

FY2021Q4Q4FY2022Q1Q1

FY2022Q2Q2FY2022Q3Q3FY2022

FY2022Q4Q4Q1FY2023Q1

Q2
FY2023Q2

FY2023

Revenuestructure
for Q2
FY2023

The ratio of outsourced promotional services inrevenue sources rose in Q2 due to a temporal project,
but continuous improvement of revenue structure is
not attained■ Revenue from Advertising network■ Outsourced promotional services■ Media production and others

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16

[Consolidated] Quarterly SG&A Expenses Trends
 In Q2, SG&A expenses showed a downward trend from Q1 without the impact of increased depreciation associated with head office relocation➡ costs were controlled appropriately
 In the second half of FY2023, meanwhile, will proactively invest for future growth and aim for higher growth rates▍Quarterly trends(Million yen)

250

Personnel expenses

Rent expenses on land and buildings

Taxes and dues

Commission expenses

Depreciation

Other

200

150

100

143

143

24
2
15
6
13

26
1
17
4
13

149
27
2
19
4
13

195

188

37

32

2

30

4
13

2

32
9
13

*1
*2

231

0

80

79

82

Q1

Q2

Q3

FY2021

212

34
187

176

17

＊2

35

32

7

2
24
5
13

27

5
13

＊2

＊2

189

36

33

17

11
14

29

32

＊2

2
28

7
15

7
15

105

103

Q1

Q2

＊1

＊1

50

Includes performance bonus(15 million yen for FY2021 / 16 million yen for FY2022)
Includes impact of head office relocation(19 million yen for FY2022 / 14 million yen for FY2023)

105

98

98

98

Q4

Q1

Q2

Q3

FY2022118

Q4

FY2023Copyright© Confidence Inc. All Rights Reserved.

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[Consolidated] Factor Analysis of Increase/Decrease in Operating Income (YoY) Gross profit increased steadily along with business expansion, contributing to larger operating profit(Million yen)

Gross profit

SG&A expenses

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18

[Consolidated] Balance Sheets/Statements of Cash Flows There is no concern about financial stability (net cash: 1.77 billion yen / equity ratio: 70.7%)▍Balance sheets at end of Q2 FY2023▍Cash flows for Q2 FY2023 (Cumulative)(Million yen)

Balance of cash and deposits as of March 31, 2022

1,724

674

Cash flows from operating activities *+371

Borrowing 67

Cash flows from investing activities-31

Cash flows from financing activities **-225

Increase/decrease in cash and deposits+114

Balance
Balanceofofcash
cashand
anddeposits
depositsasasofofSeptember
September30,
30,2022
2022

1,838

Other current liabilities

Cash and deposits

1,838

Net assets

1,815

Share capital

498 million yen

Capital surplus

390 million yen

Retained earnings

917 million yen

Share acquisition rights

Other current assets

544

Non-current assets

173(Million yen)

8 million yen*

Subtotal of cash flows from operating activities: +485 million yen,income taxes: -105 million yen, other, net: -8 million yen** Dividends paid: -183 million yen, repayments of borrowings: -45 million yen,other, net: +2 million yen

Financial indicators
Net cashEquity ratio

1.77 billion yen
70.7%
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19

04

Progress in Growth Strategies/Business Topics

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20

Growth Strategy (Overall)
Medium-term growth strategy

Long-term growth strategy

Deepen client relationships and establish
an ecosystem

Utilize knowledge obtained from expanding
target markets and outsourcing service
business, and develop into new markets

Acquire an overwhelming
market share in staffing business bydeepening client relationships

Outsourcing

Regional
operation
base

Entertainment
industry

Maximize transaction
opportunities by strengthening

Expand the scale andaccumulate knowledge by

StaffingMedia

Industry│Area│Contract type

Staffing

cross-sellingHR

Expand business of HR Solution services

× Recruitment × Outsourcing

Enhance business
management efficiency by

establishing an ecosystem
HR Solution

×

Media

Freelance

expanding the outsourcing service business
Gaming-related
outsourcing

Promotions
Expand matching solutions

Expanding into new areas
Web 3.0

Metaverse

Other areas

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21

Growth Strategy: Expand Business of HR Solution Services
Press release dated September 15, 2022

Expand business of HR Solution services

Industry│Area│Contract typeEntertainment industry

Regional operation base

• Expand business scale andenhance name recognition by
expanding geographical areas

BranchLocation

Confidence Inc. Osaka Branch
Daiei Building New Building 9F
1-12-7 Shibata, Kita-ku, Osaka-shi, Osaka
530-0012

BranchestablishedStart ofoperations

Freelance• Aim to develop into gaming companies located in
the Kansai area, which the second largest
market in Japan, in addition to deepening
relationships with existing gaming companies in theTokyo metropolitan area
• As for financial impact, minimize the initiallaunch costs as the starting point and aim to
expand sales while maintaining highprofit margin, by taking advantage of thecharacteristics of the HR Solution business

October 1, 2022
December 1, 2022 (scheduled)
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22

Growth Strategy:
Enhance Business Management Efficiency by Establishing an Ecosystem
HR

Media

Outsourcing

Enhance business
management efficiency

Press release dated September 5, 2022

by establishing an ecosystem
HR Solution

×• Knowledge obtained from Media business
operations
LovelyMedia for women

Plush

Media

• Make “GAMEMO,” the gaming media operated by the Company,
into an interview media covering companies related toContent creation

Fortune-telling media

Web 3.0 and metaverse in the entertainmentarea

Marketing skills

Social media
operations
No. of followers

36 thousand

Monthly PVs

10 million PVs

Search engine
optimization (SEO)• Make it the first step for obtaining business
opportunities in preparation for the formation of
new markets going forward, taking into accountthe recent market trends
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23

05

Shareholder Returns

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24

Policy and Status of Shareholder Returns for Q2 FY2023 (Interim) For FY2023, plan to increase dividends from 40.0 per share in the previous fiscal year to 45.0 yen per share for the full year Of the amount, interim dividend has been finalized at 20.0 yen per share▍Policy on Shareholder Returns▍FY2023: Interim dividend results /year-end dividend
forecast

Target indicators
Highercapitalefficiency

Dividend per share(forecast)

Return toshareholders

45.0 yen

Finalized

ROE

×

Payout ratio

DOE(Dividend on
equity ratio)

over

over

30.0%
10.0%

Of which,interim dividend(actual)Of which,
year-end dividend(forecast)+12.5%
YoY

20.0 yen±0.0 yenfromforecast25.0 yen±0.0 yenfromforecast* No change has been made to the forecast year-end dividend as of November 10, 2022
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25

Appendix
Business Plan and Growth Potential
Announced on June 23, 2022

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26

Business Model, Source of Competitivenessand Market Environment

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27

Our Competitive Advantages and Strengths
Business strategy

Efficient organizational operations

Maximize the total amount of matching by
maximizing the number of job seekers andjob openings

Conduct organizational design based on division oflabor and standardization, and simplify operations
as much as possible▍ Our strengths▍ Comparison with competitors: growth rate x profit margin
5-year CAGR of Revenue
60.0%
40.0%

=

×

20.0%
0.0%

Hiringcapabilities Attract creators throughproactive entry into
popular industries➡ Number of applicants:
approx. 10,000/yearSales
capabilities
 Ability to cultivate newcompanies without dependingon specific clients➡ Number of corporate clients(total): over 200 companies* Compiled based on the actual data through FY2022

Matching
capabilities
 Maintain a high level ofutilization rate throughhighly precise matching➡ Average utilization
rate: 99.7%-20.0%-5.0%**

Operating profit margin
0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Prepared by Confidence based on information publicized by other companies that conduct the samebusiness as ours
5-year CAGR of Revenue is calculated based on each company's forecast of its ongoing fiscal year for thefifth year (FY2022 actual figure is used for Confidence)

Since its establishment in August 2014, the Company
has achieved high business growth rates andprofitability despite being a latecomer to the industry
Copyright© Confidence Inc. All Rights Reserved.

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28

Business Diagram Recruit and hire creators to deliver staffing, recruitment and outsourcing services for the gaming industry

 Provide media operation assistance services on top of earning advertising income through the operation of our own media

Clients
Creators (job seekers)

Job posting
Application
Hiring

HR Solution
business

Staffing
Recruitment

Request for creator staffing andrecruitment
Creator staffing and recruitment
Provision of outsourcing services
Payment of consideration

Outsourcing

Outsourcing
business

Web promotion support centeringon the gaming and entertainment
industries

Media business

Payment of consideration

Self-operated
media

Provision of advertising slots
Payment for advertising slots

Advertising network
operators

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29

Our Major Revenue Structure and KPIs: HR Solution Business (1/2)
 The revenue structure and KPIs of the HR Solution business - staffing business, which accounts for the majority of our sales, areas follows
 With a particular focus on creator staffing assignments among the breakdown items, aim to achieve gross profit margin of 30%
and operating profit margin of over 15% for the entire Group
HR Solution
business: Business KPIs
: Indicators we attach particular importance toGross profit

Operating profit
Gross profit
margin

Revenue

Staffing
business

Staffing unit
price

×

 Increase unit price byenhancing creator training Receive orders for projects

with high unit price Attract and hire highly

skilled creators

Creatorstaffing
assignments× Process management toachieve quick matching Stable attraction and hiring
 Discover demand fromexisting clientsMediabusiness

Gross margin

 Negotiate unit price basedon equal pay for the samework

 Maintain intervention value

Operating profit margin

Life timevalue (LTV) of
hiringSales
productivity

 Minimize hiring costs

 Improve gross profit per Long-term employment byimproving employee
satisfaction

employee(*)

 Streamline internal

processes

 Minimize the number ofpeople on standby* Measures to improve gross profit per employee are the same as measures to improve sales and gross profit margin
Copyright© Confidence Inc. All Rights Reserved.

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30

Our Major Revenue Structure and KPIs: HR Solution Business (2/2)
 The revenue structure and KPIs for the HR Solution business - outsourcing business and recruitment business, which are related

to the staffing business, our core business, are as follows

HR Solution
business: Business KPIs
: Indicators we attach particular importance toGross profit

Operating profit
Gross profit
margin

Revenue
Outsourcing
business

Project unit
price

×

 Provide high-quality

 Increase the number ofdeliverables
image

project leads tocontinuously acquire
projects

Unit price ofrecruitment

No. ofrecruited staff

 Establish our brandRecruitment
business

No. of projects

 Acquire high-classprojects

× Secure a sufficientnumber of job seekers

Mediabusiness

×

Gross margin

Operating profit margin

Life time value(LTV) of hiring

 Conduct thorough cost Minimize hiring costs

 Acquire projects withimproving employee
satisfaction

controlhigh unit price× Gross margin
 Reduce database use fees

Sales
productivity

 Long-term employment by

 Improve gross profit

per employee(*)

Creatorattraction
efficiency

Sales
productivity

 Reduce cost of creator Improve gross profit

attraction per person

per employee(*)* Measures to improve gross profit per employee are the same as measures to improve sales and gross profit margin
Copyright© Confidence Inc. All Rights Reserved.

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Our Major Revenue Structure and KPIs: Media Business The revenue structure and KPIs of the Media business are as follows

 Aim to shift from the existing media site operations business to the revenue structure centering on web promotion business

HR Solution
business: Business KPIs
: Indicators we attach particular importance toGross profit

Media site
operations

PV unit price×Webpromotionbusiness

PVs

 Appropriate selection of Secure excellent writers Acquire pure advertisements Launch new media

advertising network
operators

Invoice unit
price
 Provide high-quality

deliverables Acquire projects withhigh unit price Enclose popular manga×Operating profit
Gross profit
margin

Revenue

artists

× Gross margin
 Conduct thorough cost

control

No. of projects
in operation

× Gross margin

 Increase the number of Conduct thorough costproject leads tocontinuously acquire
projects

Mediabusiness

control

Operating profit margin

Life timevalue (LTV) of
advertisement

Productivity

 Expand the effectiveness Improve gross profit per

Projectacquisition
efficiency

Productivityof advertising expenses
per yenemployee(*)

 Reduce acquisition cost per

project

 Improve gross profit per

employee(*)* Measures to improve gross profit per employee are the same as measures to improve sales and gross profit margin
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[Existing Areas] Trends in the Content / Gaming Markets
 Of the content market, the gaming market is projected to remain on an expansion trend both in Japan and overseas
 Consequently, demand for human resources from gaming companies is assumed to keep growing▍Trends in the gaming market
Size of the content market /gaming market

Japan

Source: “Overview of Global and Japanese Content Markets” by Ministry of
Economy, Trade and Industry, December 2021

(US$ billion)

Gaming market
ゲーム市場

20.2

23.7

Gaming market: +4 pts
Game
Video

13.1

Publication
CharacterMusic

FY2016

Overseas

FY20209%

Source: “Overview of Global and Japanese Content Markets” by Ministry of
Economy, Trade and Industry, December 2021

7%
Overall

Overseas

155.7

Publication
CharacterMusic

FY2016FY2020

FY20251,000

FY2025Gaming market: +3 pts

Video

97.5

billionSource: “Overview of Global and Japanese Content Markets” by Ministry of
Economy, Trade and Industry, December 2021

Game

9%

8%

11%

15%

OverallUS$
24% 1,046.7
billion44%
FY2020

23%

2,500
2,000

37%

18%

OverallUS$
1,131.9billion48%
FY2025Gaming market: console /software /online
Famitsu Gaming White Paper 2021

OverallMarket size ratio by content

Gaming market
ゲーム市場

209.1

25%

29% US$ 95.4

FY2020Japan(Billion yen)

9%

21%

US$ 93.9
30% billion
33%

FY2025Size of the content market /gaming market(US$ billion)

Market size ratio by content

Japan

Source: “Overview of Global and Japanese Content Markets” by Ministry of
Economy, Trade and Industry, December 2021

Online platform
Home-use software (including online)
Home-use console

1,500
500
0

FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

While the growth of the content market
as a whole is moderate in both theglobal and domestic markets, thepresence of the gaming market isincreasing markedly year by year
Demand for human resources fromgaming companies is assumed to remain
on a growing trend
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[Existing Areas] Supply and Demand Situation for IT Personnel According to a survey conducted by the Ministry of Economy, Trade and Industry, the shortage of IT personnel tends toexpand year by year in response to the expansion of IT needs
 A similar trend is assumed to continue in the gaming industry ➡ Recruitment will become increasingly difficult forcontinuous growth▍ Estimation on the supply and demand of IT personnel
Supply of human resources(thousand people)

2,000
200

Shortage
High-level scenario (demand growth: 9-3%)

Market size will continue toexpand due to expanding IT needs

Approx..

787 thousand

Mid-level scenario (demand growth: 5-2%)
Low-level scenario (demand growth: 1%)
Market size with 2018 set as 100

1,600
160

(Mid-level scenario)
100.0

1,200
120

220

800
80

105.1
261

110.5

111.0

304

314

115.6

118.2

120.9

123.7

126.3

129.0

131.7

134.5

137.4

Market size expands due to
growing IT needs(High-level scenario)

Approx..

449 thousand(Mid-level scenario)

Shortage of IT personnel
becomes more serious

Approx..

326

338

351

364

381

398

415

432

449

Supply anddemand gapof IT personnel
as of 2018

400
40

00

Scale of shortage ofIT personnel

164 thousand(Low-level scenario)

Supply anddemand gapof IT personnel
as of 2030

994

1,005

1,018

1,032

1,046

1,060

1,071

1,081

1,091

1,101

1,110

1,114

1,118

1,122

1,127

1,133

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Similar trends are assumed tooccur in the gaming andentertainment industries
Hiring of human resources
will become even moredifficult

Source: excerpt from “Report on the Supply and Demand Survey for IT personnel” (project commissioned by the Ministry of Economy, Trade and Industry) by Mizuho Information & Research Institute, Inc., March 2019

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[New Areas] Changes in Recent industry Trends▍Changes in the industry trends from the previous
announcement to the latest“Metaverse”

Jan 3, 2021

As of previous
announcement▼

Jun 6, 2021

Apr 10, 2022

“Metaverse” and “Web3” havebecome a global trend“Web3”Jan 3, 2021

Nov 7, 2021

Jun 6, 2021

Nov 7, 2021

Source: Google Trends ▶ Search object: all countries / Jan 1, 2021 - May 31, 2022

Apr 10, 2022

▍Status of companies in the gaming industry and otherindustries (examples)

Overseas

Facebook• Changed the company name to Meta / announced “Horizon Home,” an initial
metaverse concept
NVIDIA• Announced “Omniverse,“ a metaverse production platform
Microsoft• Announced “Microsoft Mesh,” a mixed reality platform/ Acquired Activision Blizzard (a gaming company)** The largest acquisition ever made by the company (as of June 2022) at totalacquisition price of approx. $68.7 billion
Japan

Sony
• Reinforced endeavors to create new live entertainment experiences in the“metaverse” domain that is expected to grow
Bandai Namco• Constructed “IP Metaverse” as its axis strategy on IP / established a fundto invest in startups in and outside Japan, such as those related to
VR/AR/XR, Web3 and metaverse
CyberAgent• Established a blockchain-based gaming subsidiary to enter into GameFi
businessKDDI• Opened virtual “Virtual Shibuya” as its “Shibuya 5G Entertainment Project”
Source: Prepared by Confidence based on the websites and press releases of respective companies

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[New Areas] Gaming Industry and Future Target Markets▍Changes in content creation, distribution and usage brought about by digitization
Overseas

Transformation ofindustrial structure“GLOBAL METAVERSE MARKET 2018-2028” by Emergen Research,released in November 2021

• The market becomes borderless and globalized• Distribution routes become double-tracked
and diversified• Personal products are directly delivered

Personal creative
activities• Contents created by ordinary people
expand due to popularization of
production/editing solutions

Metaverse market

New trends inthe virtual space• Commercial transactions on the
metaverse space• Possibility of a new life as a reality
different from the real world($ billion)

829.0

1,000

500

47.7
0

Overseas

FY2020

FY2028NFT (Non-Fungible Token) market“NFT White Paper (draft)” by the NFT Production Review Project Team of
Liberal Democratic Party, released in March 2022
(Billion yen)
5,000

4,700.0

4,000• Since the 3DCG space and community in games are close to the concept of the metaverse,
proactive investments are made in gaming business as a foothold for metaverse-related
businesses• Possibility of forming a new labor market ➡ Areas having high affinity with our focus areas

3,000
2,000
1,000
0

40.0
FY2020

FY2021

Source: Prepared by Confidence using excerpts from “Content Strategy in the Digital Age” by Intellectual Property Strategy Promotion Bureau,
Cabinet Office, released in January 2022
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Growth Strategy/M&A Strategy

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37

Image of Future Growth Securely grow the “game x human resources” area, our existing domain, while entering the peripheral areas and outsourcing service area

 Also, look to expansion into new markets in new areas (such as Web 3.0 and metaverse) in response to changes in the external environment

Deepen and expand existing business

Advance into new areas

Focus on staffing in the gaming area,

Expand the Web promotion area, positioned asa focus business, and enter new areas

our main business

Revenue

Expand into new markets in new areas(Web 3.0, metaverse, etc.)

Expand the outsourcing service areas

Diversify and expand the human resourcesareas(industry, geographical area and format)

Deepen the client relationships, conduct
cross-selling and establish an ecosystemthrough “gaming industry x humanresources”

Present

FutureTime

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Basic Strategy and Investment Concept for the Image of Future Growth As the basic strategy and investment concept for our future growth, maximize revenue per client and the client base, and proactively invest

the collected profit in new areas with high growth potential

Increase revenue per client
Deepenrelationship witheach client

Provide services to all departments
Dispatch and recruit staff for avariety of work types

Expand the client base

Diversify the scopeof or services
Creator staffing and recruitment
Outsourcing
Marketing

Maximize long-term profits andfree cash flows

Expand thenumber of clientsand covered areas

Cover the entire clients in thegaming industry
Advance into XR (cross reality) andmedia companies

Appropriately invest in areas where scale canbe expanded or synergy can be achieved

Aim to achieve a high growth rate over the long termby investing the collected profits in growth areas
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Growth Strategy (Overall) Medium-term: Expand business by deepening client relationships and establishing a virtuous cycle (ecosystem) of business collaborations
 Long-term: Expand target markets and develop into new markets in new areas (such as Web 3.0 and metaverse) with matching solutions

Medium-term growth strategy

Long-term growth strategy

Deepen client relationships andestablish an ecosystem

Accumulate knowledge through expanding target markets
and outsourcing service business, and develop into newmarkets in new areas (such as Web 3.0 and metaverse)
HR

Media

Acquire an
overwhelming market
share in staffing
business by deepening
client relationships
Maximize the number of people
dispatched per client

Maximize transaction
opportunities bystrengthening crossselling
Increase revenue per client by
diversifying the scope of ourservices

Outsourcing

Enhance business
management
efficiency by
establishing an
ecosystem

Expand business of
HR Solution services

Expand the scale andaccumulate knowledge
by expanding theoutsourcing service
business

Expand matchingsolutions

Establish a service circulation
through collaboration
between the HR Solution
business and the Mediabusiness

Diversify client industries,
regional areas and contract
types

Expand the scope of services toaccumulate knowledge and pool
diverse human resources

Expand into new markets in
new areas(Web 3.0, metaverse, etc.)

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[Medium-Term Growth Strategy (1)]:Expand Staffing Business by Deepening Client Relationships
 Aim to gain the overwhelmingly No.1 position as staffing business operator in the gaming industry by further deepening client relationships

Before deepening client
relationships

After deepening client
relationships

Once the human resource needs at certain departments aremet, human resources become saturated to limit employment
opportunities for creators.

・ Understand future needs by interviewing clients about theirdevelopment schedules
・ Cultivate new human resource needs through referrals toother departments▶ Acquire new employment opportunities for creators

Maximize the number of people dispatched
per client

Department A

Department A
Confidence

Client a

Client a

Confidence
Department B

Client b

Department C

Client c

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[Medium-Term Growth Strategy (2)]:Conduct Cross-Selling to Existing Clients
 Expand revenue through cross-selling of recruitment and outsourcing services by leveraging the network built in staffing business

Before cross-selling

After cross-selling

Recruitment department and outsourcing service department
separately work to expand into clients’ other departments▶ Fail to identify clients’ needs, causing potential loss ofopportunity to occur• Recruitment: Can obtain attractive job offers by increasing
contact points• Outsourcing: Can understand needs accurately and provide
services at an appropriate timing by in a timely manner bydiscerning clients’ development schedules▶ More contact points will allow us to provide services more
efficiently

Recruitment

Confidence

Company A

Revenue per client increases by diversifying ourservices provided to clients

Outsourcing

Staffing

Recruitment

Confidence

Outsourcing

More contact points with clients,
more opportunities

Company A

Cross-selling

Staffing

Need to cultivate clients
separately

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[Medium-Term Growth Strategy (3)]:
Establish and Expand Ecosystem
 Establish and expand an ecosystem of staffing, recruitment, outsourcing and media businesses, improve management efficiency, and increase

opportunities to provide services to the gaming industry

Establish an ecosystem• Attract more people for staffing and recruitment by utilizing
customer attraction know-how of the Media business• Have less-experienced creators employed at outsourcing service
projects• Enhance creator skills through on-the-job training at outsourcing
service projects• Increase charge rates by employing high-skilled creators, or
support their job transfer to gaming companies throughrecruitment

Project
Confidence

Have each business exercise synergy
to enhance corporate management efficiency

Decision-making
level

Staffing
HiringInterview

Assignment

StandbyExpand the ecosystem• Increase outsourcing service projects and recruitment
achievements by utilizing networks established through staffing• Increase in outsourcing service projects and presence of key persons
at clients through recruitment increase staffing opportunities• Conduct promotion assistance for gaming companies by utilizing
the customer attraction know-how of the Media business

ClientEstablish and expand ecosystem

Outsourcing

Attraction

Recruitment

Deliverables

Recruitment
WebsiteMedia

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[Long-Term Growth Strategy (1)]:Diversify and Expand HR Solution Areas (Industry, Geographical Area and Work Type) Work to diversify and broaden the client industries, geographical areas and formats (freelancers), and advance into web and entertainment

areas instead of specializing in gaming industry

Expansion of regional areas• Expand the HR Solution business in theentertainment and web industries, which
are peripheral area of the gaming
industry• Establish operation bases in Fukuoka andOsaka• Accumulate knowledge about theentertainment and web industries

Web industry

Gaming industry• Enhance name recognition and expand
business scale by expanding regional
areas
Plan to expand into Fukuoka
and Osaka
Look to expand overseas in the
futureEntertainment
industry

Diversification of contract types(freelancers)• Enter the freelance area, which uses a
different contract format from that ofstaffing and recruitment• Form teams of highly skilled talents andprovide a wide range of services bybuilding a network with freelancers
Freelancer

Company/individual

Matching

Diversification of industries

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[Long-Term Growth Strategy (2)]:Expand Outsourcing Service Area
 Expand media-related outsourcing services and, by further enlarging and diversifying the human resource pool, provide a variety of HR

Solution services

Media-related outsourcing services

Expand the scale and further diversify
the human resource pool

• Conduct promotional assistance to gaming companies upon
release of new titles (attracting customers through social
media and by influencers)• Secure a pool of diverse human resources by handling a varietyof outsourcing services, such as promotional assistance,
debugging, translation and development• Develop owned media for gaming companies or game titles
and conduct operation services• Establish a lab to allow employees to mutually acquire newskills by securing a diverse pool of human resources• Provide new services using the skills acquired at the lab
Promotion assistance

Promotion assistance
Gamingcompany

Confidence

Company A

Confidence

Lab (*2)

Release of new titles

Diverse humanresource pool

Debugging support (*1)
Company B

Development and operation
services of owned media
Confidence

Translation/development
Gamingcompany

Company C
(*1)
(*2)

Debugging refers to the task of finding and revising computer program bugs and defects and making changes toensure operation in accordance with specifications
Abbreviation for laboratory
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[Long-Term Growth Strategy (3)]:Expansion into New Areas (Web 3.0 and Metaverse, Etc.)
 Match the technology of the gaming industry with companies in various industries by utilizing our network with gaming companies and, after

matching, provide support to the companies by our talents utilizing the know-how accumulated in our staffing and outsourcing businesses
 Consequently, conduct business activities with an aim to enter new markets in new areas (such as Web 3.0 and metaverse) for a variety ofcompanies

Matching the technology of gaming companies
and various industries

Gaming companies
Confidence Conduct business matching through Confidence as the contact

point in order to allow companies of various industries to utilize
the technologies held by gaming companies

Gamingcompany A

 Provide promotion and personnel assistance along withmatching

 Network with divisions and departments at gaming companies

Companies from various industries

Gamingcompany B

Gamingcompany C

EventsMedicalTravelRetailManufacturing

Logistics

Matching

Matching &promotions(*1)

Matching &personnel
assistance(*2)

New areas (Web 3.0 / metaverse)
(*1)
(*2)

It is assumed that Confidence will serve as the contact point with gaming companies for companies of various industries interested in gaming-related technologies, and complete matching by selecting and advisingwhat services can be provided
Look to enter into new markets in new areas (such as Web 3.0 and metaverse) by offering services for companies in various industries to conduct promotion with entertainment aspects through gaming-related
technologies, among other measures
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[M&A Strategy]: Approach to Business Development Based on Growth Strategy▍Approach to business development: break down the focus areas around the core business (staffing),
and newly establish, deepen and expand each part on our own or through external forces (M&A)
Medium-term(1)

Acquire an overwhelming
market share in staffing
business by deepening client
relationships

Medium-term(2)

Maximize transaction
opportunities by strengthening
cross-selling

Medium-term(3)

Enhance business management
efficiency by establishing an
ecosystem

Long-term (1)Expand business of HR Solution
services

Long-term (2)Expand the scale andaccumulate knowledge by
expanding the outsourcing
service businessLong-term (3)Expand matching solutions

Core business processes - by value chain -Attracting humanresources

Matching/
contract

Human resource
development- Career support -Human resource
development- Skill upgrading -Core business processes - by service line -Planning

Development/
designQA/CS/translation

Promotions

Diversification of areas, tasks and contract formats associated with core business
Staffing-Tokyometropolitan area/
regional cities -Recruitment

Freelancers

Outsourcing

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[M&A Strategy]: M&A Policy / Financial Discipline / Governance Proactively utilize M&A for the portions indispensable for future growth while considering the timeline
 Set up disciplines for executing the M&A

Targeted M&A
candidates

Financial
discipline for
executing M&As

Post-M&A
governance Focus on consistency with the target businesses and areas set out in themedium- to long-term growth strategy(Refer to the previous page)

Organic growth ofexisting businesses The operating profit margin we target must be kept in mind and, as a rule, weshould be able to create more value than the goodwill after M&A so that thedeal is expected to contribute to profit

 The acquisition price should not be overvalued (investigate with EBITDA

multiple in mind)

 In principle, dispatch our personnel as officers

 Integrate back offices in pursuit of economies of scale Conduct regular monitoring after investment (at the same level as thebusinesses operated by the Company)

Accelerate further
growth throughM&A

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Risk Information

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Major Risks Related Business Environment Of the risks described in the annual securities report (filed on June 30, 2022), the major risks are as follows

Business risk

Risk overview
Shortage of human resources due
to increased demand may notallows to meet the needs of ourclient companies

HR

Securing humanresources

HR

Entry of competitors enticed by
Entry of competitors market expansion may reduce
staffing fees

HR

HR

Media

Dependence on a
specific industry(gaming industry)

The market may shrink inaccordance with cooling of thegaming market

Probabilityofoccurrence

MediumMediumLow

Degree ofimpactOur policy to address the risk

Medium

We have taken measures to enhance our welfare programs, training systems
and employee exchange systems, etc. in order to secure stable, ready-to-work
human resources

Medium

We have superiority over actual and potential competitors thanks to ourstrong networks with major companies in the industry, accumulation of
excellent know-how in hiring human resources, and strong collaboration
between the hiring department and sales department

MediumWe respond by expanding the scope of the HR Solution business into IT/Web
business, video distribution business, live distribution business, AR/VRbusiness, etc., which are adjacent fields of the gaming industry

Violation of laws
and regulations

Infringement of labor-related laws
and regulations may lead tocancellation, etc. of government
approval and authorization

MediumLarge

We ensure thorough compliance with various laws and regulations byconducting compliance training, strengthen the system by holding Risk
Management Committee meetings, and strive to prevent legal violations fromhappening by conducting continuous internal audits

Updates of searchengines

The order in the display of search
results of our clients may belowered and the unit price of
remuneration we receive fromclients may decrease

MediumSmall

We always monitor various indicators including the number of views and staytime, and constantly implement such measures as increasing the number ofposted articles and improving the quality of articles

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Envisioning the future together at the frontline of the creative industry
Inquiries about this material: Administration Division (ir@confidence-inc.jp)
Handling of this material
This material includes forward-looking statements. These are nothing but the statements prepared on the basis of the information available at the time of preparing them. Moreover,such statements are not a guarantee of future results, and contain risks and uncertainties. Please note that actual results may differ significantly from future forecasts due to changes
in the business environment and other factors. Factors that may affect the actual results mentioned above include, but are not limited to, economic conditions in and outside Japanand trends of the industries related to the Company.
In addition, the information contained in this material and related to matters other than the Company has been quoted from publicized information. The Company has made no
verification about the accuracy and appropriateness, etc. of such information, and provides no guarantee about it.
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