2020 Slogan< 2020-2025 Mid-term Plan > Designing our New Normal Context

Digital Garage, Inc.

2Q of FYE March 31, 2021 Financial Report2020.11.13

Table of Contents
Mission and Business Model ・・・・・・・・・

3

Investment Highlights ・・・・・・・・・・・・

7

Segment Performance Review ・・・・・・・・ 13

Appendix・・・・・・・・・・・・・・・・・・・ 33

Mission & Business Model

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

3Corporate Mission
As aDigital Garage creates innovative
business context for the new
Internet age and provides uniquebusiness solutions for new
lifestyles, society, and industries bylinking
Real & Cyber
Local & International
Marketing & Technology
Present & Future

Copyright © 2020 Digital Garage, Inc. All Rights Reserved4

DG’s Business Model
Producing and incubating Internet businesses by optimizing
our 3 core strengths: IT, MT, and FTInformation
Technology

Information
Technology

MarketingTechnology
MarketingTechnology

Financial
Technology

Financial
Technology

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

5Enabling Platform for DG’s Incubation Model
DG continues to incubate and develop unique Internet services
through its Enabling Platform since the early days of the Internet

Ⅰ

Ⅱ

Ⅲ

Portal/Search

e-commerce/
Destination Site

Social Media

1995-2000

2000 -

2008-2015

Marketing2016 -

Payment
環亞智富有限公司

Advertising / Promotion

Big Data Businesse-Commerce / Online Settlement Platform

Enabling Platform – Two Revenue Sources
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

6Investment Highlights

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

7

Financial Results Highlights
Profit before tax in 2Q rose 10% YoY (14 times in QoQ) to 5.6 B JPY, a record high for quarterly profits～ The impact of COVID-19 remained in MT and LTI mainly. In addition to solid performance in FT,valuation gains grew in IT ～Consolidated profit before tax

Transition of profit before tax(JPY in 100 Millions)

+10％

51
34

56
Consoli
dated

40
32

2Q

3Q

FY19.3

FY21.3 2Q（YoY）

5.1B JPY 5.6 B JPY +10 ％Profit before tax by segments

28

31
22
4

1Q

FY20.3 2Q

4Q

1Q

2Q

3Q

FY20.3

-4
4Q

1Q

2Q

FY21.3-3％FT

1.1B JPY 1.1 B JPY

MT

0.7B JPY 0.1 B JPY - 88 ％IT

3.1B JPY 4.9 B JPY +57 ％LTI

0.9B JPY 0.5 B JPY - 48 ％Copyright © 2020 Digital Garage, Inc. All Rights Reserved

8

Financial Results Highlights
Transaction volume in FT continued high growth, rising 20% YoY to 1.4 T JPY～ The financing in IT recovered due to the normalization of the stock market on a global scale, and MT
implemented large-scale optimization for medium-term growth ～KPI by Segments

FT

MT■ Transaction volume

1.4 T JPY (YoY +20%)

of which, face-to-facesettlement• Transaction volume continued to grow strongly, rising 20% YoY
to 1.4 T JPY due to at-home consumption, despite a sharp
decrease in inbound and travel-related payments

69.2 B JPY (YoY -36%)• Focusing on system investment, and work on further stable
operation toward the mid-term plan

■ Number of Transaction

303 million (YoY +35%)• In Cloud Pay(multi-QR payments), add “au Pay” following “dBaraiⓇ” to establish a bridgehead with leading carriers■ Digital Ads volume

12.5 B JPY (YoY +1%)

■ Other volume

3.3 B JPY (YoY +17%)(Next-generation user database business, etc.)

IT

LTI

Outlook by Segments• Booked upfront costs for strategic businesses and restructuringcosts in the real estate field, aiming for a V-shaped recovery
from the next fiscal year onward

0.7 B JPY/ 1.6 B JPY• Global stock market and IPO environment normalized,
financing environment for startups also recovered

40.6 B JPY (from E of Mar.2020 +11%)• Increased in fair value of DX companies, mainly in Europe,
the U.S. and Asia. Recorded a gain on the sale of Goodpatch
Inc. in Japan■ Investment/ Sold
■ Fair valuation• Advertising volume of digital ads remained firm, mainly in thefinancial field, and the next-generation user DB business,
including CRM, was strong■ Investment profit on equity
method of Kakaku.com■ BioHealth/Number of Brain MRI consultation

0.9 B JPY (YoY -51%)
Exceeds 30,000 cases in total• “Tabelog”, which was affected by COVID-19 in 1Q, recoveredin 2Q due to the launch of a “Go To Eat” campaign. Expected
to recover further after 3Q• BioHealth: The MRI business for drivers is expected to turnprofitable on a monthly basis and also to be profitable for thefull fiscal year. Ready to start data business utilizing AI
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

9

FY21.3 2Q Consolidated P/L Summary (IFRS)Revenues in 2Q (Jul.-Sep.) were 12.3 B JPY, profit before tax was 5.6 B JPY, both up from 1Q (Apr.-Jun.)～ The impact of the COVID-19 bottomed out, and results are recovering ～FY20.3
JPY in Millions

1Q

Revenue

8,217

QonQ

YonY

Amount

1Q-2Q

1Q-2Q

%

+5,377

19,596

19,264

-1.7%

-332

1Q

11,379

9,078

8,262

6,944

12,320 +77.4%

6,138

6,718

6,576

7,256

6,148

6,301

+2.5%

+153

12,856

12,449

-3.2%

-406

Revenue in operational
investment securities

459

3,332

968

-739

302

4,968

16.5 x+4,666

3,790

5,270 +39.0%+1,480

Other income

817

422

301

877

193

207

+7.6%

+15

1,239

400

-67.7%-839

Finance income

1

16

28

48

1

0

-75.6%-1

17

1-91.6%

-16

803

891

1,205

821

300

843

2.8 x

+544

1,694

1,143

-32.5%

-551

5,999

6,271

6,016

8,643

6,539

6,689

+2.3%

+150

12,27013,228

+7.8%

+958

Cost of sales

2,740

2,976

2,853

3,467

2,764

2,829

+2.3%

+65

5,716

5,593

-2.1%

-123

Selling, general andadministrative expenses

2,951

3,138

3,121

4,813

3,453

3,588

+3.9%

+135

6,089

7,041 +15.6%+952

Other expenses

78

86

74

254

69

109 +57.6%

+40

164

178

+8.5%

+14

Finance costs

230

71

-32

109

252

163

-35.4%-89301

415 +37.8%+114

Profit before tax

2,218

5,108

3,062

-381

405

5,632

13.9 x+5,227

7,326

6,037

-17.6%-1,290

Profit attributable to owners of parent

1,624

3,647

2,253

-105

224

3,779

16.9 x+3,556

5,271

4,003

-24.1%-1,268

Expenses%

FY21.3

4Q

Share of profit of investments accounted
for using equity method

2Q

FY20.3

3Q

Revenue in recurring business

2Q

FY21.3

Amount

NOTE: The above Revenue, Expenses, and Profit before tax refers to the continuing operations excluding discontinued operations
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

10

FY21.3 2Q Consolidated Segment P/L Summary (IFRS)
Significant growth in IT results, FT/LTI revenues and profits up compared to 1Q～ MT is expecting to recover from 4Q due to cost optimization
measures in the real estate advertising business ～FY21.3

FY20.3
JPY in Millions

1Q

Revenue

8,217

Financial Technology%

FY21.3

YonY

Amount

1Q-2Q

1Q-2Q

%

+5,377

19,596

19,264

-1.7%

-332

4Q

1Q

11,379

9,078

8,262

6,944

12,320 +77.4%

2,083

2,204

2,184

2,138

2,340

2,409

+2.9%

+69

4,287

4,749 +10.8%+462

Marketing Technology

3,376

3,984

3,705

4,311

3,335

3,257

-2.4%

-78

7,360

6,591

-10.4%-768

Incubation Technology

507

3,462

1,405

-506

389

5,269

13.5 x+4,8803,969

5,658 +42.6%+1,690Long-term Incubation

2,232

1,696

1,744

2,257

801

1,305 +62.9%

+504

3,928

2,105

-46.4%-1,823

19

33

39

63

79

81

+3.0%

+2

53

160

3.0 x

+108

2,218

5,108

3,062

-381

405

5,632

13.9 x+5,227

7,326

6,037

-17.6%-1,290Financial Technology

1,061

1,112

1,129

746

1,018

1,083

+6.3%

+64

2,173

2,101

-3.3%

-72

Marketing Technology

327

676

512

336

178

78

-56.2%

-100

1,004

256

-74.5%-747

Incubation Technology

146

3,138

1,114

-835

72

4,916

68.7 x+4,845

3,284

4,988 +51.9%+1,704Long-term Incubation

1,493

932

890

1,385

120

485

4.1 x

+365

2,426

605

-75.1%-1,821Others/Adjustments and Eliminations

-810

-751

-584

-2,013

-983

-931

-

+52

-1,561-1,913--353

Profit before tax

2Q

FY20.3

3Q

Others/Adjustments and Eliminations

2Q

QonQ

Amount

NOTE: Segment revenue and profit before tax are before elimination of intersegment transaction and corporate revenue and expenses.
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

11

FY21.3 2Q Consolidated B/S Summary (IFRS)JPY in Millions
Current assets

End of
FY21.3 2Q

End of
FY20.3Difference

Reason for change / Remarks

98,852

100,806+1,954

Cash and cash equivalents

32,702

39,259+6,556

FT business-related items

Trade and other receivables

26,657

19,157-7,500

FT business-related items and decrease of account receivables

Operational investment securities

36,546

40,585+4,038

Increase in fair value of investee companies

63,44465,401+1,957

Property, plant and equipment

21,367

20,388-980

Decrease by depreciation

Investments accounted for using equity method

21,475

21,736+262

Equity in earnings of affiliates

Other financial assets
Total assets

6,319
162,296

8,858
166,206+2,539+3,911

Current liabilities

50,83847,287-3,551

Borrowings

4,927

6,678

+1,751

Borrowing for operating funds

Trade and other payables
Non-current liabilities

41,20358,66334,75461,805-6,449+3,142

FT business-related items and decrease of account payables

Bonds and borrowings

38,247

39,570+1,323

Borrowing of capital expenditures

Other financial liabilities

13,553

12,966-588

Deferred tax liabilities
Total liabilities

5,426
109,501

7,347
109,092+1,922-408

Total equity

52,795

57,114+4,31952,03356,075+4,042

Share capital

7,591

7,619

+28

Capital surplus

4,409

4,569

+161

Treasury shares-5,012-4,915

+97

324

1,826

+1,502

Increase due to mark-to-market valuation of listed shares

Retained earnings

44,721

46,975+2,254

Increased profit

Non-controlling interests
Total liabilities and equity

762
162,296

1,039
166,206+277+3,911

Non-current assets

Total equity attributable to owners of parent

Other components of equity

Increase due to mark-to-market valuation of listed shares

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

12Segment Performance Review

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

13

FT Segment
Ⅰ

Financial Technology Segment
Revenue

FY20.3

Profit before tax

1Q-2Q

4,287 M JPY

2,173 M JPY

FY21.3 1Q-2Q

4,749 M JPY

2,101 M JPY➤ econtext, Inc.

Integrates online and offline business as the convenience store
payment pioneer➤ VeriTrans Inc.

Provides leading e-commerce payment solutions➤ econtext ASIA Ltd.

Payment business in Hong Kong

➤ NaviPlus Co., Ltd.

Subsidiary of VeriTrans Inc. Offers website support tools including
personalized recommendation engines➤ ANA Digital Gate, Inc. （49％ stake／equity method）
Develops and offers the new payment solution by FinTech➤ SCORE Co., Ltd （49％ stake／equity method）

Development of post-settlement payment business and various
financial businesses utilizing settlement data

➤ TD Payment Corporation （49％ stake／equity method）
Offers multiple payment solutions for POS systems

NOTE: Revenue here shows revenue from external customers. Profit before tax is before elimination of intersegment transaction.
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

14

FT Segment – Five-Year Mid-term Plan Overview
Five-Year Mid-term Plan ＜Aim for Transaction Volume 10 T JPY in 2025（CAGR:30%）＞
FT Segment
External environment

Cashless

Contactless

Deregulation

Accelerate growth in both EC and face-to-face payments by strengthening support
for diversifying payment methods



Focus on building advanced and secure next-generation systems and operation systems for 24/365 systems
Amount of Capital
investment
900

Strengthen CAPEX

Depreciation

60%

10 T JPY

Ratio of profit before tax
700

FY25.3
Transaction Volume (Plan)
59%

800

to revenue

CAGR：30％

58%

57%(of which, Face-to-face Settlement 2 T JPY）
56%

55%

FY 20.3
47.0%

54%

53%

52%

600

500

FY20.3
Transaction Volume

51%

FY 21.3 2Q
45.0%

50%

49%

48%

47%

400

46%

2.6 T JPY

45%

44%

300

43%

42%

41%

200

40%

39%

38%
100

37%

36%

0

35%

FY20.3

FY21.3

FY22.3

FY25.3Copyright © 2020 Digital Garage, Inc. All Rights Reserved

15

FT Segment – Highlights（KPI）
Transaction volume increased 20% YoY to 1.4 T JPY, and the number of transactions increased 35% YoY
to 300 million, continuing high growth～ Although inbound and travel-related transaction are decreasing, total transaction volume isincreasing due to at-home consumption such as EC, digital contents, Take Out etc. ～Transaction Volume
FY20.3
1Q-2Q(JPY in 100 Millions)

FY21.3
1Q-2Q(+20%)

11,872

14,213Shop
payment
Type

Number of Transaction
FY20.3
1Q-2Q(in Millions)

FY21.3
1Q-2Q(+35%)

224.75303.19SpreadType

Fee Type
Shop
payment
Type

SpreadType

Fee Type

SpreadType
スプレッド型Transaction Volume

YoY

-2.1%

Number of Transaction

YoY+37.6％• Transaction volume decreased, due to a decrease in
inbound payments and travel-related payments inthe first half, but transaction volume of travelrelated payments is on a recovery trend from 2Q• Cashless payments and QR code payments in Japangrew due to the progress of cashless transactions

Fee Type
Transaction Volume

YoY+39.5%

Number of Transaction

YoY+36.1％• In addition to the increase in EC payments by athome consumption,
increased the number oftransaction mainly in digital contents such as Gamesand Video distribution services

Shop payment TypeTransaction Volume

YoY

-4.2%

Number of Transaction

YoY+11.8％

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

16

FT Segment – Highlights（P/L）
Transaction volume and the number of transaction strongly increasing,revenue marked 4.8 B JPY, +11% YoY～ Profit before tax decreased due to decrease of transaction volume of travel-related payments,
inbound payments and increased capital investment costs ～Revenue
FY20.3
1Q-2Q(JPY in 100 Millions)

42.9

FY21.3
1Q-2Q(+11%) 47.5
Payment
peripheralbusiness

FY20.3
1Q-2Q(JPY in 100 Millions)25

Fee Type

Spread
Type

50.7%

20

15

10

5

21.7

• Revenue decreased due to decrease Transaction
Volume of travel-related payments, inboundpayments

FY21.3
1Q-2Q
Ratio of profit
before tax torevenue

44.2%

(-3%)

Stock TypeShop
payment
Type

Revenue

Profit before tax

50
40

21.0

• Increased revenue in EC and digital contents by agoing out self-restraint by COVID-19

30 • Other growth in SaaS for EC and fraud detection
services20
10 
0Profit before tax
Profit is currently flat due to the following reasons• Started development of next-generation core system• Development to support diversifying payment-10 methods such as mobile orders and QR payments
-20
-30

0

• Face-to-face payments‘ revenue increased with theincrease in merchant• Established a new operation center and realize
complete redundancy of operations such as customer
support• Increased fixed costs associated with office expansion-40 (Tokyo Office / Operation center in Yokohama）
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

17

FT Segment – Strategy in Face-to-face Settlement
Payment methods that match all store sizes and strategy support for O2O businessDirectPOS Register

TD Payment
Corporation

OEM
TabletPOS

MultiPayment
TerminalmPOS

QR CodeScanning
Panel
Cloud Pay

• Having introduced it directly to largest fast-food stores,
department stores, general merchandising stores andstation buildings, etc.
• JV with Toshiba Tec Corporation, the top share company
in Japan providing multi-payment solution. Smoothly
introduced to major retailers such as drug stores

Large
Scale

• Providing multi-payment solutions for mobile POS such
as Recruit Holdings Co., Ltd.
• JV with ANA group, “ANA Digital Gate, Inc.” providing
multi-payment terminals for face-to-face retailers, etc.
Airport facilities were affected by COVID-19, but
recovery trend due to national measures such as Go To
Travel campaign• Develop consortium-type multi-QR solutions
that integrate various MPM-type payments into
one QR code, focusing on small stores.
• Starts linkage with LINE Pay in August, au Pay
in October.
• Due to the cashless trend, electronic payments
for small-scale individual stores are becoming
widespread. The number of merchants has
increased to hundreds of thousands.

Medium
Scale

Small
Scale

Note) MPM (Merchant Presented Mode) : Method in which consumers scan QR codes displayed at stores with their smartphones to make payments
Copyright © 2020 Digital Garage, Inc. All Rights Reserved18

MT Segment
Ⅱ

Marketing Technology Segment
Revenue

Profit before tax

FY20.3

1Q-2Q

7,360 M JPY

1,004 M JPY

FY21.3

1Q-2Q

6,591 M JPY

256 M JPY

➤ Marketing Technology Company

Supports client’s business through performance-based ads, Online to
Offline strategy and web marketing➤ DG Communications Co., Ltd.

Provides solutions that make people‘s lives more comfortable, mainly
through the real estate advertising business➤ BI.Garage, Inc.

Develops and provides ad products incorporating data science, media
consortium business, and cutting edge ad technology➤ CyberBuzz, Inc. （20.4％ stake／equity method）

Provides the social media marketing platform structured with influencers
as its center part

➤ DG MARKETING DESIGN, Inc. （20％ stake／equity method）
Established on June 25th, 2018 and its predecessor is Business Design
Company

NOTE: Revenue here shows revenue from external customers. Profit before tax is before elimination of intersegment transaction.
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

19

MT Segment – Highlights
Volume of digital ads remained firm, and higher revenue in CRM and other next-generation user DB businesses～ Expenses recorded due to optimization of costs in the real estate field over the next five years and upfront
investment in strategic businesses ～Advertisement volume(JPY in
100 Millions)

Real estate

FY20.3
1Q-2Q

FY21.3
1Q-2Q

Smartphone/App
Financial

167

140

43

Cosmetics/HR

180

160

120
100
80

Digital
Ads60

40
20
0

38
35
51

(-7%)

156
30

Revenue(JPY in
100 Millions)

FY20.3
1Q-2Q

73.6 (-10%)

FY21.3
1Q-2Q

65.9
CRM etc

25
34
67

 Mainstay digitalads remained firm
2Q(累計)
2Q(累計)
 Real estate sales advertising decreased
significantly due to the COVID-19

Profit before tax(JPY in
100 Millions)13
12

FY20.3
1Q-2Q

FY21.3
1Q-2Q

14.0%

13.6%

12.0%

11
10
9
8

10.0

10.0%

Ratio of profit before
tax to revenue

8.0%

7
Real
estate ads

643

DigitalAds
 Digital 20.3期2Q
Ad earnings remainedrobust21.3期2Q
 Revenue of CRM etc up 18% YoY
 On the other hand, real estate ads
declined 32% YoY

6.0%

5

2
1

4.0%

3.9%

2.6

2.0%

0

 COVID-19
impact on real estateads
20.3期2Q
21.3期2Q
 Promote measures to optimize costs fromthe next fiscal year onward and expenses
for strategic businesses are in advance
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

20

0.0%

MT Segment – Five-year Mid-term Plan Overview
Marketing Environment/ Technological change
Cookieless/Personal Information protection

Evolution of DX(Digital contracts etc)

Portfolio in 2025

Strategic Businesses
Media-cross advertising solutions
through a consortium with 28
companies

New normal of media contract

DX Expansion

Evolution of UXUIEvolution ofexisting business group

A new AD platform implementing
a cookieless new technology
Digital solutions for real estate
contracts
Full-scale entry into DOOH
New media development

DX（Neo interactive agency）

Media consortium
vs GAFA
with COVID-19

De facto of digital contract
LTV products/Real estate x DX
DOOH

New media

Evolution of existing businessgroups

Evolution of Data business
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

21

MT Segment – Topics “Musubell”
Promoting DX for the real estate industry through the Group’s comprehensive strengths
Entry into the real estate legal tech area in addition to real estate advertising and Regi-Tech investment•

Automated screening and generation of necessary
documents in the real estate sales agreement andexecution of digital contract conclusion•

Online centralized management of contract status•

Simplification of signatures, stamps, mailings, etc. bydigitization is omitted.

•

Signing, mailing, etc. are omitted by digitization.

■Conceptual Image of “Musubell”

Launched in July as the first phase
Automation of documents, stamps, mailings,
document management, and business in realestate sales contracts
Industry needs are rapidly increasing due tothe COVID-19 and the trend toward DX
Application to marketing and financial
domains through data analysis
Introduced in Nomura Real Estate
Development Co., Ltd. as the first phase
Press release:https://www.garage.co.jp/en/pr/release/2020/07/20200728/

Digital contract solutions connected to API of
Bengo4.com, Inc. as the first phase

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

22

IT Segment
Ⅲ

Incubation Technology Segment
Revenue

Profit before tax

FY20.3

1Q-2Q

3,969 M JPY

3,284 M JPY

FY21.3

1Q-2Q

5,658 M JPY

4,988 M JPY➤ DG Ventures Inc. （Former DG Incubation, Inc.)*
Invests in and incubates cutting-edge internet startups*Trade name changed to “DG Ventures Inc.” as of January 1st 2020.

➤ Open Network Lab, Inc.

Seed Accelerator Program in progress in the 22nd term

➤ Digital Garage US, Inc.

The US-based global strategy headquarters➤ DG Daiwa Ventures, Inc. （50％ stake／equity method）

Manages DG Lab Fund to invest in startups with next-generation technologies

NOTE: Revenue here shows revenue from external customers. Profit before tax is before elimination of intersegment transaction.
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

23

IT Segment – Highlights
In addition to Goodpatch Inc.'s IPO, the fair value of the U.S., Europe and Asia investees
has increased significantly～ Operating investment securities increased 11% YoY to 40.6 B JPY ～Operational Investment Securities（ratio by currencies）(JPY in
100 Millions)365(+11%)

406
INR

3.7%

Portfolio by Regions
EuropeOthers
1.0%

JPY

24.8%

0.5%

GBP
1.0%

Asia

North America

35.5%

Japan
Focus on: DX

End of20.3期末
Mar. 2020

End21.3期2Q末
of Sep. 2020

etc..

31.3%

24.3%
69.6%

Focus アジアの投資環境
on: EC market

8.3%

Japan

USD

Asia

Othersetc..

North America
Focus on: DX / Security

The former Game Closure

etc..

※Portfolio of consolidated subsidiaries (DG Ventures, DK Gate, D2 Garage, econtext ASIA )Copyright © 2020 Digital Garage, Inc. All Rights Reserved

24

IT Segment – Examples of Investment
Growth in promising investments in the era of COVID-19 in Japan, Asia, and North America

Japan

Asia

Following Goodpatch Inc., DX
leading-edge companies prepare
for domestic IPO

Investing in prominent companies
such as Indonesia, India andVietnamInvest in unicorn and potentialunicorn, mainly in DX/FinTech

Goodpatch[Japan]Sen Do Technology[Vietnam]A design company specializing in UI/UX
design. Provides “Prott”, a product typing
tool, and “ReDesigner”, a career support
service specifically designed for designers.

MX Technologies[US]

Operates Sendo, a marketplace for C2C andB2C in Vietnam, and provides electronic wallet
services

Offers a PFM (personal financial management)
tool for financial institutions in the US.

STMN[Japan]Tokopedia[Indonesia]

Playco Global (The former Game Closure)

Offers perks and benefits through its cloud
platform TUNAG to help companies increase
employee satisfaction.

Indonesia‘s largest online marketplace. Providing
a platform for individual entrepreneurs and SMEs
to open online stores

Provider of a mobile application intended tooffer a HTML5 game development platform.

QD Laser[Japan]NoBrokerTechnologies
Solutions [India]

ThredUp[US]

Develop and provide new semiconductor laser
solutions in the telecommunications, industrial,
medical, and consumer sectors as a pioneer inthe commercialization of quantum dot laser
technology

North America[US]

Operates
India’speer-to-peer
property
marketplace. Using this service, people canrent/buy houses online without brokers

The world’s largest fashion resale platform,
inspiring a new generation to think secondhand
first. Specializing in women's and children's
clothing※The investees of DG Ventures, DK Gate, D2 Garage, econtext ASIA EC Fund
Copyright © 2020 Digital Garage, Inc. All Rights Reserved25

IT Segment – DG Lab Fund
Complete establishment of “DG Lab Fund II” for global startups with next-generation
technologies～ Total of approximately 20 B JPY invested in DG Lab Fund I & II,
and strengthening collaboration with DG Lab globally ～DG Lab Fund II＜ Fund I & II ＞
Total operating
amount（As of Sep. 30, 2020）

Approx. 20 B JPY

Sponsoring
partners
Investees17
40 or more

DG Lab Fund
Examples of Investment
Listed on the Mothers section of
the Tokyo Stock Exchange onJune 30, 2020
Acquired U.S. FDA approval for
the world's first game-based
digitaltherapeuticappandacquired CE mark in the EU region

Efforts in edge computing andhighly evaluated globally
Established
JV
withDigitalGarage and Tokyo Tanshi Co.,
Ltd. based on blockchain basic
technologies
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

26

IT Segment – Investment Strategy in Mid-term Plan
Establish a DG investment ecosystem based on a key strategy (barbell strategy) in linewith corporate growth and a global portfolio (Japan, Asia, and the U.S.) diversifying
geopolitical risks
Concentrated
investment area

Value
Investment and follow-up
from seed/early stage

Operational
investment
securities

40.6vvB JPY
Concentrated
investment area

(End of Sep. 2020)

Middle
Stage

Japan

1/3

Asia

1/3

US

1/3

OthersStartup
Seed

Early

Middle

Later

Time

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

27

LTI Segment
Ⅳ

Long-term Incubation Segment
Revenue

Profit before tax

FY 20.3

1Q-2Q

3,928 M JPY

2,426 M JPY

FY21.3

1Q-2Q

2,105 M JPY

605 M JPY

➤ Kakaku.com, Inc. （20％ stake／equity method ）Operates purchase support service Kakaku.com, restaurant review andrestaurant service tabelog, and New Media and Solutions➤ Crypto Garage, Inc.
Promoting development of advanced financial services utilizing blockchain
technology and cryptography technology with Tokyo Tanshi Co., Ltd.

➤ Brainscan Technologies, Inc.
MRI business for drivers➤ ACADEMIE DU VIN
Operation of wine schools and development of community and e-commercebusinesses utilizing digital technologies

NOTE: Revenue here shows revenue from external customers. Profit before tax is before elimination of intersegment transaction.
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

28

LTI Segment – Highlights
Decrease share of profit of investments accounted for using equity method of Kakaku.com, Inc.
and advance the commercialization cost of new business～ "Tabelog" will recover after 2Q, and will recover further with the start of the “Go To Eat” campaign ～Profit before tax
FY20.3
1Q-2Q

FY21.3
1Q-2Q(JPY in 100 Millions)

Business Progress of Kakaku.com, Inc.
【 Quarterly Consolidated Revenue for Kakaku.com Group 】
Consolidated Revenue YoY-26.4%
Ref. Kakaku.com, Inc. Results Briefing for FY21.3 2Q

24.3（-75%）

6.1

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

29

LTI Segment – Topics
Bio-Health/ The number of the brain MRI medical consultations exceeds total 30,000 casesin Brainscan Technologies, Inc.
～ Service development by the inflection of the big data and AI of the brain
based on the business of the brain MRI to drivers ～Brainscan Technologies, Inc. Business Model
About 400 Companies（Bus・Truck・Taxi）

Drivers
about 1.5 million drivers
Number of consultation
20,000 cases/ year

Clients expansion

Car
MedicalTransportation examinee
Company

About 200
Partner medical institution

Medical Institution

General Company

Inspection
Instrument (MRI)

Membership organization（Credit Cards/Real estate etc）

Obtainedbusiness model patent
Patent No. 6100668

By the law revision of 2017※, eachassociation group and healthinsurance starts grant supply tobrain MRI consultations. So, thenumber of consultation is largely
extended※ Partial Revision of the Road Transportation
Law and Motor Truck Transportation Business Act■The number ofannual consultation plan

(Health insurance society/
Labor Union）

Suggestion and discountof insurance products

The number of brain MRI medical
examination consultations

Exceeds total
30,000 casesin October 2020

The second use of data

Insurance
Company

Platform of Healthcare data

FY

FY

FY

FY

FY

FY

FY

FY

FY

FY

16.6 17.3 18.3 19.3 20.3 21.3 22.3 23.3 24.3 25.3

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

30

LTI Segment – Topics
For the purpose of future business expansion, we are promoting the acquisition of domestic andforeign excellent customers and the expansion of the handling assets～ Accelerate business deployment for construction of the next-generation global finance infrastructure ～Crypto Garage/SETTLENET

Blockstream Corporation Inc. /Liquid Network• Continue the activity for the acquisition of domestic
and foreign excellence customers• Toward the entry examination to the security token
field, we join association of Japan STO• The number of the network participation companies
and the distribution Bitcoin largely increase• To the block chain for the largest enterpriseConnect with 7 major crypto asset relatedcompanies in Japan and overseas
To expand assets handled next to BTC / JPY

As a block chain for enterprise, Liquid Network
grows into a network with the largest number ofparticipating companies＜The number of participants＞ ＜The total number of distribution BTC＞

OTCOperators
in overseas

Simultaneous
settlementon blockchain

29x

+18

Exchange
in Japan

53

2,598

35
89
End ofMarch 2020

End ofOctober 2020
Copyright © 2020 Digital Garage, Inc. All Rights Reserved31

Others ‐ Initiatives of DG Lab″DG Lab″ started in 2016 advance to the second stage

R&D and experiments instrategical 5 focus areas(Blockchain, AI, XR,
Security, BioHealth）＜Sponsor＞＜
1st & 2nd
Fund＜Core Sponsor＞

JV withInc.

＞

Management of funds
about 20 billion JPY scales
Eisai Co., Ltd. / Sompo Japan Insurance Inc.
Taisho Pharmaceutical Holdings Co., Ltd. /TAKENAKA CORPORATIONTSI HOLDINGS CO., LTD./ Hanwha Group.
Sumitomo Mitsui Trust Bank etc..

R&D / Next-Generation Business Themes

 AI
 Blockchain BioHealthPreparing to create next-generation
businesses based on data held by DG Lab
sponsors.

Crypto asset settlement business, constructionof crypto asset system for financial industry
Utilization of brain MRI image data andpersonal health diagnosis data. Preparation for
distribution business of digital medicine（DTx) Security
 xR
 DataUnder development of use case utilizing secretcalculation technology that enables analysis
processing while concealing data
Building an advertising platform targeting digital
outdoor signage (DOOH)
We are planning a next-generation data
distribution platform by utilizing deep learningbased clustering technology that promotes datacollaboration between different industries.
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

32

Appendix

Copyright © 2020 Digital Garage, Inc. All Rights Reserved

33

FT Segment – Change of Classification
Due to the diversification of payment methods, there will be a divergence fromthe actual situation in the conventional disclosure classification, change theclassification from the viewpoint of management approach from current termPrevious
Classification

New
Classification

Definition

Credit card
payment

Spread Type

Payment such as credit card payment, which
are fees that are based on the payment amount

Data processing

Fee Type

Payment in which fees are paid according to thenumber of payment processes, mainly Data
processing etc.

Convenience
store payment

Shop Payment Type

Payment settlement by convenience store
terminal

Stock Type

Fixed income generated by fixed monthly
amount such as monthly basic fee and OEM
offer fee for payment system

Monthly basic fee/OEM
OthersPayment peripheral Revenues from refund remittance service andgroup companies that develop paymentbusiness
peripheral businesses etc.
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

34

Financial Results: Consolidated PL (IFRS)FY18.3

FY19.3

FY20.3

Other expenses
Finance costs
Profit before tax
Income tax expense
Profit from continuing oprerations

25,50318,141
1,007
2,111
764
3,481
17,127
7,187
9,095
542
303
8,376
1,857
6,518

35,68722,713
6,090
1,933
117
4,835
22,264
10,401
11,296332
235
13,424
4,088
9,336

36,936
26,687
4,020
2,416
93
3,720
26,92912,036
14,022492
379
10,0082,677
7,331■ Discontinued operations
Revenue
ExpensesProfit (loss) before tax
Income tax expense
Loss (gain) on sales on discontinued operations
Income tax expense from sale of discontinued operations
Profit (loss) from discontinued oprerations

3,260
3,403
-143
38
-181

1,261
1,655
-394
-225
898
275
454

-

6,337
6,412
-75

9,790
9,771
19

7,331
7,420
-89

JPY in Millions■ Continuing operations
Revenue
Revenue in recurring business
Revenue in operational investment securities
Other income
Finance income
Share of profit of investments accounted for using equity method
Expenses
Cost of sales
Selling, general and administrative expenses

ProfitOwners of parent
Non-controllong interests

ResultResultResultCopyright © 2020 Digital Garage, Inc. All Rights Reserved

35

Financial Results: Consolidated PL by Segments (IFRS)FY18.3

FY19.3

FY20.3

JPY in Millions

ResultResultResultRevenue

25,50335,68736,936

Financial Technology

5,929

7,447

8,609

Marketing Technology

9,939

12,922

15,375

Incubation Technology

2,553

8,022

4,868

Long-term Incubation

6,301

7,133

7,929

781

164

8,376

13,424155
10,008Financial Technology

2,809

3,349

4,049

Marketing Technology

1,856

1,215

1,853

Incubation Technology

1,321

6,889

3,563

Long-term Incubation

3,621

4,378

4,701

Others/Adjustments and Eliminations-1,231-2,408-4,158Others/Adjustments and Eliminations
Profit before tax

NOTE: Segment revenue and profit before tax are before elimination of intersegment transaction and corporate revenue and expenses.
Copyright © 2020 Digital Garage, Inc. All Rights Reserved

36Press Releases
Date

Title

2020.11.5

Digital Garage and Daiwa Securities Group Complete Establishment of DG Lab Fund II for Global Startups with
Next-generation Technologies with Around 12.5 Billion Yen

2020.10.27

DG Group’s “Cloud Pay,” a Unified QR Code Payment Solution Starts Linkage with “au Pay” and “WeChat Pay”

2020.10.13

Digital Garage, FDC, Fukuoka Growth Next Begin Accepting Applications for the 2nd Batch of “Onlab FUKUOKA,”
the Open Innovation Program

2020.10.1

VeriTrans Provides Facial Recognition Payment Service for “Toyama-city Facial Recognition System Pilot Program”
with NEC

2020.9.29

VeriTrans – Comprehensive Payment Solution “VeriTrans4G” Supports “Amazon Pay”

2020.8.31

VeriTrans Provides “POS Barcode Payment Solution,” which Installs Multiple Barcode/QR Code Payment Types All
at Once, to PRONTO Corporation

2020.8.12

DG Group’s “Cloud Pay,” a Unified QR Code Payment Solution Starts Linkage with “LINE Pay”

2020.8.3

Digital Garage Enters the DOOH Market with the Launch of “SAKIZAKI TERUKO,” a Digital Signage Media for
Beauty Salons2020.7.31

Digital Garage Supports the Ministry of the Environment to Set Up an Official “LINE” Account and Provides a
Message Delivery Service for “Heat Stroke Caution Alert (Trial Service)”2020.7.28

Digital Garage Develops “Musubell” for Centralized Real Estate Contract Management, Integrated with
Bengo4.com’s “CloudSign” to Fully Digitalize Contract Documents

2020.6.22

28 Prominent Media Companies Establish the Content Media Consortium

2020.6.9

Crypto Garage Launches the Commercial Service of “SETTLENET,” a Settlement Platform for the Crypto Asset OTC
Market2020.5.28

Digital Garage’s Portfolio Company, Goodpatch is Approved for Listing on the TSE’s Mothers Section

Copyright © 2020 Digital Garage, Inc. All Rights Reserved37

Please note that the business forecasts and strategies covered in today’s presentation are based on our current evaluation and future results may vary significantly depending
on unforeseeable events or circumstances. This announcement is solely for the purpose of the investors relationship and is not for making any solicitation for investment inany securities. This announcement does not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States or any other jurisdiction in whichsuch offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any securities of our consolidated
subsidiaries have not been registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements of the U.S. Securities Act. Any public offering of securities to be made in the United States will bemade by means of a prospectus. Such prospectus will contain detailed information about the company making the offer and its management and financial statements.