Digital Garage, Inc.
2Q of FYE June 30, 2015 Financial Report2015.2.13

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

3

Investment Highlights・・・・・・・・・・・

9Group Financial Performance Review・・・ 13
Segment Performance Review・・・・・・・ 20
Appendix・・・・・・・・・・・・・・・・・・ 41

Copyright © 2015 Digital Garage, Inc. All Rights Reserved2Mission & Business Model

Copyright © 2015 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 © 2015 Digital Garage, Inc. All Rights Reserved4DGʼs Business Model
Producing and incubating Internet businesses by optimizing
our 3 core strengths: IT, MT, and FTInformation
Technology
MarketingTechnology

Financial
Technology

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

5Enabling Platform for DGʼs 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 -

Advertising

Payment
環亞智富有限公司
HKEx:1390

Advertising / Promotion

Big Data Businesse-Commerce / Online Settlement Platform

Enabling Platform - 2 Revenue Sources
Copyright © 2015 Digital Garage, Inc. All Rights Reserved

6Mid-Term Global Strategy

Three HQs
Hong Kong

Tokyo

Payment Segment HQ

DG Group HQ

San Francisco
Incubation Center
Agile Development HQ

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

7Incubation Stream

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

8Investment Highlights

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

9Investment Highlights
Record-high ordinary income of 3.4 billion JPY (2.1x YoY) in Q2FY15〜 Consolidated yearly net income forecast revised upward to 5.2 billion JPY (+82% YoY);
year-end dividend increased to 25 JPY per share (+18 JPY) 〜

Ⅰ

Incubation: promoting global investment ecosystem
 Two domestic companies (lead outside investor : DG Incubation) went public while overseas portfolio
performed strong exit
 Began support for the Japanese expansion of Wikia, the commercial counterpart to Wikipedia
 Established App Works, an internal organization tasked to localize popular apps from the US

Ⅱ

Marketing : Performance adsʼ continueed strong growth with improved profitability
 YoY Sales grew +17% ; op income grew +57% led by a strong performance in the mobile domain in
addition to PC
 ROI-focused performance ads continued to lead a significant growth in sales and income
 Full-scale launch for BIG MINING, ad product utilizing big data

Ⅲ

Payment: growing domestic business and continuing expansion to Asia
 Op income grew +27% YoY despite a +7% increase in sales after IPO-related cost at HKEx eases
 Domestic growth led by convenience-store and credit card settlements due to growing e-commerce market
 Accelerated the expansion of businesses in Asian countries including Indonesia, China and India. Entered into
a subscription agreement to co-invest in a joint stock company in Vietnam
Copyright © 2015 Digital Garage, Inc. All Rights Reserved

10Track Record For DG Groupʼs GrowthCompleted global expansion structure for DG model〜 Record high for the third consecutive year. Aiming for EBITDA of 10 B JPY for the final year of the Mid-term Plan 〜

Trends in EBITDA

FY13

Full Year Act
1H Actʼ14.12

Full Year Plan
EBITDA(B JPY)

10
8
6

ʼ14.4

ʼ13.11Opened
DG717

ʼ12.4
Acquired
Veritrans0

LaunchedBIG
MINING

ʼ12.12IPO

ʼ14.6,9Invested inWikiaʼ13.12
econtext
ASIAʼsIPO

Plan

Progress

5.9

Ad
Sales

9.0

Capital andbusiness alliancew/ Dentsu

4
2

Bengo4.com
CrowdWorks

Investment
Balance

6.6

72 %Payment
Transaction
VolumeFY13
Actual

FY15 (1H)

Investment balance (book value) grew to 10 billion JPY
through average 2 billion JPY per annum investment

2.9

8.6

10

( B JPY )Performance ads sales grew above the market average
and reached to 10 billion JPY

5.6

9.5

4.8

817.3

+19%

( B JPY )Annual transaction volume exceeded
800 billion JPY

735.5

YoY

YoY

471.4

+19%

( B JPY )Monthly group-wide users surpassed 100 million

2.9
FY12
ActualFY14

FY14Actual

FY15
Plan

Interest expense, depreciation, and amortization are added back to income before income taxes to calculate EBITDA.

Kakaku.com
Group Users

Tabelogʼs Monthly users

46.16

56.61

63.69

(million)

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

11Revision of Dividend projection for FY15.6 (Announced Jan. 30th)< Revision of Dividend Projection > Revised to increase 20th year commemorative dividend by 18 yen to make it 20 yen from theprevious forecast of 2 yen Annual dividend per share to total 25 yen, improving consolidated dividend payout ratio from
8.2% to 22.6% (on a revised forecast basis )Shareholder Return Policy

Revision of Dividend projection

Internal reserves

FY15.6
Previous
Total

Dividend
Per Share

Dividend
Payout
Ratio

7 Yen

Difference

Net income

Revised

Incubation：Investment in startups

25 Yen ＋18 Yen

Ordinary(5 Yen)(5 Yen)(－)

Commemorative(2 Yen)(20 Yen)(＋18 Yen)

22.6%(Announced 2015/1/30)

Marketing：New biz development,
M&A

Shareholder return
・According to investment
performance

8.2%

Business Investment,
M&A

・Determine based on thecompanyʼs financial
conditions, performance,
and future financial
needs

Give positive
return toshareholders
when a big exit
occursPayment：M&A for development in
Asia

Working Capital,etc
Copyright © 2015 Digital Garage, Inc. All Rights Reserved

12Group Financial Performance Review

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

13

FY15.6 2Q (Cumulative) Consolidated P/L Summary
YoY Sales grew +14.5%, Ordinary income grew 2.1 x to 3.4 B JPY〜 All business segments grew Sales and Op income YoY 〜

JPY in Millions

Net sales

Incubation
Marketing
Payment

Operating Income

Incubation
Marketing
Payment
Non-operating income

Investment profit on equity method

Foreign exchange gain
Non-operating expenses

Ordinary Income

Extraordinary income
Gain on change in equity
Income before income taxes
Income taxes

Net Income
EBITDAFY14.6 2Q

FY15.6 2Q

Cumulative Act
1

Cumulative Act

15,622
2,394
6,625
6,603
812
471
335
463
1,196
776
272
321
1,687
473
350
2,146
695
1,426
2,926

17,887
3,023
7,781
7,082
1,739
1,139
526
590
1,884
905
708
159
3,464
2,302
2,234
5,694
1,988
3,507
6,579

YoY

FY15.6 Full Year Forecast%

AmountPrevious

Revised

+14.5
+26.3
+17.5
+7.3
2.1 x
2.4 x
+57.2
+27.4
+57.4
+16.6
2.6 x
-50.5
2.1 x
4.9 x
6.4 x
2.7 x
2.9 x
2.5 x
2.2 x

+2,264+628+1,156
+479
+927
+667
+191
+126
+687
+129
+435
-162
+1,776+1,828+1,883+3,547+1,292+2,081+3,65340,0007,500
17,00015,500
4,500
3,600
1,100
1,450

40,0007,500
17,00015,500
4,500
3,600
1,100
1,450

6,700

6,700

4,000
9,000

5,200
11,000Note: Interest expense, depreciation, and amortization are added back to income before income taxes to calculate EBITDA.
Op income per segment is based on figures prior to elimination or group deduction.
Copyright © 2015 Digital Garage, Inc. All Rights Reserved

14Half-year comparison of Consolidated Sales/Op income
Achieved Sales 17.8 B JPY (14.5% YoY), Op income 1.7 B JPY (2.1 x YoY)
〜 Hit record high Op income for 2Q Cumulative 〜【Net Sales】（JPY in Million）【Operating Income】

Adjustment for changeof fiscal term

Adjustment for changeof fiscal term

Net sales

Operating income

1H

2H

FY13.6

1H

2H

FY14.61H
FY15.6

1H

2H

FY13.6

1H

2H

FY14.61H
FY15.6Note : FY13.6 actuals include the effect of an irregular 15-month reporting period, due to the fiscal year end shift from March to June for consolidated Veritrans Group.
9 months for 1H, 6 months for 2H
Copyright © 2015 Digital Garage, Inc. All Rights Reserved15

Half-year comparison of Incubation Performance
Sales of stocks resulted in op income growth, delivering Incubation results〜 Investment balance reached 10 B JPY, two portfolio companies listed on TSE Mothers 〜（JPY in Million）

1H【Net Sales】

2H

FY13.6

1H

2H

FY14.6【Operating Income】

1H
FY15.6

1H

2H

FY13.6

1H

2H

FY14.61H
FY15.6

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

16Half-year comparison of Marketing Performance
Growth gaining traction in ROI-focused performance ads〜 YoY Op income increased 57%, driven by efficient implementation of ad platform 〜（JPY in Million）

1H【Net Sales】

2H

FY13.6

1H

2H

FY14.6【Operating Income】

1H
FY15.6

1H

2H

FY13.6

1H

2H

FY14.61H
FY15.6

Copyright © 2015 Digital Garage, Inc. All Rights Reserved17Half-year comparison of Payment Performance
Net sales and op income increased due to the expansion of the domestic
e-commerce market and the decrease of HK IPO expenses〜 Achieved net sales growth of 7% and op income growth of 27% YoY 〜（JPY in Million）【Net Sales】【Operating Income】

Adjustment for change of fiscal term

Adjustment for change of fiscal term

Net sales

Operating Income

1H

2H

FY13.6

1H

2H

FY14.61H
FY15.6

1H

2H

FY13.6

1H

2H

FY14.61H
FY15.6

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

18

FY15.6 2Q Consolidated B/S Summary
JPY in Million

FY14.6

FY15.6 2Q

Difference

Reason for change / Remarks

Current assets

45,45562,536+17,081

Cash and deposits

24,294

34,122+9,827

Receivables

8,596

14,469+5,872

889

1,068

+179

8,063

8,960

+896

Fixed assets

25,55427,320+1,766

Investment securities

10,644

12,278+1,634

Investment real estate

3,619

3,860

+241

Goodwill

7,354

7,112

-242

Total assets

71,00989,856+18,847

Current liabilities

25,46139,097+13,636

Deposits

16,43425,496+9,062

Payment segment related items

Short-term borrowing

3,690

6,806

+3,115

Transfer from Long-term borrowing

Deferred tax liability

1,264

1,545

+280

Fixed liabilities

9,058

8,976

-82

Long-term borrowing

8,841

8,130

-710

Total liabilities

34,51948,074+13,554

Net assets

36,48941,782+5,292

Shareholders' equity

27,76230,934+3,171Retained earnings

9,615

12,864+3,248

Accumulated other comprehensive income

2,679

4,447

+1,767

Unrealized gains on securities

2,193

3,463

+1,269Minority interests

5,906

6,231

+325

Liabilities / Net assets

71,00989,856+18,847

Money held in trust
Operational investment securities

Sales of stocks, etc
Payment segment related items
Payment segment related items
New investment, Mark-to-market for stocks
related to IPOs, etc
Increased investment profit on equity method,
Mark-to-market for listed stocks, etc

Estimated amount of tax for
Unrealized gains for securities w/ market value
Transfer of Long-term borrowing due within one
year to Current liabilities, Demand for working
capitalUnrealized gains after tax for securities withmarket value

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

19Segment Performance Review

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

20

DG Groupʼs Business Segment
Accelerating Lean Global Through 3 Business Segments

Ⅰ

Incubation Segment

Global Incubation of next-generation Internet businesses

INCUBATION

Investments to cultivate promising startups
Development of media
Technological & business development based on agile
development methodology

ⅡMarketing Segment

Provider of web ads and latest marketing technologies

MARKETING

Data science businessWeb advertisement, media business
O2O related, business development

Ⅲ

Payment Segment

One of the Asiaʼs largest payment platforms

PAYMENTOne of the largest online payment
service providers in Japan
Expansion of payment platform to Asia

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

21Incubation Segment
Ⅰ

Incubation Segment
Net Sales Operating Income

FY14.62Q(7-12)Actual

2,394 M JPY

471 M JPY

FY15.62Q(7-12)Actual

3,023 M JPY

1,139 M JPY

FY15.6

Full Year Forecast

7,500 M JPY

3,600 M JPY

Major consolidated subsidiaries➤ DG Incubation, Inc.

Invests in and incubates cutting-edge Internet startups➤ Open Network Lab, Inc.

Provides support to Internet-business entrepreneurs with global visions➤ Digital Garage US, Inc.

The US-based global strategy headquarters➤ Neo Innovation, Inc.

Provides agile software development solutions and lean start up methodology

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

22Incubation Segment – Business Concept
Incubation Ecosystem within the DG Group
Maximizing investment return through the global incubation platform where DG invests in andprovides development and business support to portfolio companies at each growth stage

MIT
Media
Lab

Top notch mentors andglobal development
environment

Experience in
Incubation businessfor over 20 years

Sourcing
Investment

Business
Development

Agile
Development
Hands-on, leveraging
Open Innovation Center
Enabling Platform（Advertising・Payment）

Beta
works

Agile development andLean startup methodology

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

23Incubation Segment – Business Strategy
Seamlessly integrating the Import model with the Export model
Utilizing global agile development network and SF Incubation Center
Establishment of omnidirectional incubation model
Import Model

Export Model・Incubating promising startups globally・Supporting localization of foreign ventures

・Investing in promising domestic startups
・Supporting global expansion of Japanese
Lean Global companies

Exit

Media Lab Fund
Investing in ventures of eachstage globally

M&A

Early
Seed

Collaboration
with DG717

Middle –Later

Incubating promising seedstage Japanese ventures
Utilizing agile
development
network

http://onlab.jp/

Accelerate Global Incubation
Copyright © 2015 Digital Garage, Inc. All Rights Reserved24

DG Incubation - Highlights
Strengthened and expanded global portfolio pipeline
Accelerating incubation of portfolio companies through collaboration with Marketing and Payment
Current Portfolio

Portfolio companies IPOed since FY14.6# of companies

Book Value ( M JPY )Equity（incl.CN）

82

9,598

Domestic

19

4,755

Overseas

63

4,843

Fund

5

455

Total

87

10,053Note : Mark-to-market as of quarter end for listed stocks■Distribution by sector （equity/ incl. CN）

Others
24.4%
Big Data
3.7%

B2B
18.3%

Ad tech
14.6%
Media
24.4%
Commerce
14.6%

Company number basis

Big Data
0.7%

Ad tech5.6%

Others
15.4%
Media
29.7%
B2B
42.1%

Commerce
6.6%（2013.11 NYSE）（2013.11 TSEM）（2014.12 TSEM）（2014.12 TSEM）

Major Portfolio※
AdStage, Inc.

iRidge,Inc.

Provides intelligent
cross-social-media
advertising platform

An O2O marketingprovider including alocation-based push
notification
distribution platform
for smartphones

AnyPerk, Inc.

Goodpatch Inc.

Provides employee
perk packages to SMB

Web development
and consulting
service firm

Value basis※ Major portfolio includes privately-held companies that have given DG disclosure permission of which DG's investment exceeds 100 M JPY and owns a minimum 5% share as of Dec 31,
2014. This information is based on the information disclosed from each company, and DG does not guarantee its authenticity, accuracy, rationality, and completeness.
Copyright © 2015 Digital Garage, Inc. All Rights Reserved

25

Providing stronger Japanese support to overseas Internet services
Launched a startup factory in collaboration with Betaworks- Localizing real-time website analytics toolas the first step -New businessdevelopment

A leading NYCbased startup
studioSeed-stage businesses Tracks and measures the secondby-second attention of site visitor
behaviors for site owners to identify
the most engaging articles andadvertisements in real-time Adopted by 50,000 websites in 62
countries including major news
outlets such as BBC, The New YorkTimes, and TIME
 Used by 80% of major US media

Vア
vv

v
Supporting
portfolio
companies andproducts

Transforming into
internal ventures

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

26

Incubation in the community marketing field
Providing localization support for Wikia, the for-profit counterpart of Wikipedia〜 Investing in both Wikia, Inc. and Wikia Japan while partnering as an ad sales representative for Wikia Japan 〜

Established in 2004 by the founder of
Wikipedia Jimmy Wales tocommercialize wiki

SNS postings byeach fanMonthly UVProfessional
editing

Collaboration in communities

130

Million

1.8

MonthlyPV

BillionCommunities

327K Languages 200

Detailed expansion plan to be announced soon

* Global traffic data

Copyright © 2015 Digital Garage, Inc. All Rights Reserved27

US - Highlights
First Anniversary for DG717, an incubation center connecting Silicon Valley and Asia

〜 Accelerating global incubation as the business expansion with our partner
Betaworks moves forward 〜West Coast (San Francisco)■ DG717 settled in the local startup community
after opening as the incubation center at theheart of San Francisco 1 year ago■ Operating at full-capacity with all seats assigned
to monthly residents■ Joi Ito hosted New Context Conference in Nov
2014 as the one year anniversary

East Coast (New York, Boston)■ Tightening partnership with the NYC-based
leading startup studio Betaworks
Recent startup investments by Betaworks

Giphy- A visual search engine for GIF animations- Joined a $17M round in Jan 2015 with a postmoney valuation at $80M

Product Hunt

- An online tool to discover best new products- Joined the seed round in Aug 2014

MIT Media Lab■ Promoting R&D on cutting-edge media and digitaltechnologies- R&D on open data utilization- Collaborating on sensing technologies with Open Innovation
Center, an internal R&D organization- Committing to Media Lab Fund
Copyright © 2015 Digital Garage, Inc. All Rights Reserved

28

Open Network Lab - Highlights
Established a strong brand recognition as the leading Japanese seed accelerator
 Nurtured 58 teams / 230+ entrepreneurs and engineers over 10 batches in 5 years since launch Continued hosting events for entrepreneurs with domestic and international guest speakers→ a talk by Betaworkʼs Partner, an online ad seminar with Twitter and AdStage,a lecture on entrepreneurship by an MIT lecturer

Updates from strong Open Network Lab graduates【 S i l i c o n Va l l e y - b a s e d 】【Japan-based】

AnyPerk, Inc.

papelook Inc.

Provides employee-perk services to
SMBs. Raised $8.5M in Feb 2015,
increasing the total funding to$14.4M

The Papelook app lets users add
stickers to photos and create acollage. Raised 120M JPY in Oct
2014. Total downloads surpassed
13M

WHILL, Inc.

Fablic, inc.

Develops nextgeneration personal
mobility devices.
Raised $11M from500 Startups et al.
in Sep 2014 andbegan shipping thefirst model in Oct.

Operates asmartphone-based
flea market app Fril.
Raised 1 B JPY in
Sep 2014.
Accelerating
customer acquisition
through TV
commercials Copyright © 2015 Digital Garage, Inc. All Rights Reserved

29Marketing Segment

Ⅱ

Marketing Segment
Net Sales Operating Income

FY14.62Q(7-12)Actual

6,625 M JPY

335 M JPY

FY15.62Q(7-12)Actual

7,781 M JPY

526 M JPY

FY15.6

Full Year Forecast

17,000 M JPY

1,100 M JPY➤ DG&Ibex company

Supports clientʼs business through performance-based ads, Online to Offline strategy
and web marketing➤ BI.Garage, Inc.

Develops and provides ad products incorporating data science, social
marketing, and cutting edge ad technology➤ NaviPlus Co., Ltd.

Offers website support tools including personalized recommendation engines

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

30Marketing Segment – Business Strategy
Collaborating with Dentsu group to begin strategic data science business

Deeply cultivating exiting digital marketing businessand realizing growth strategy illustrated by I, II, and III below

Ⅰ

Deeply cultivating digitalmarketing business

Monetization of O2O strategy and B2C media
businesses in addition to promoting growthof web promotions and mall businesses

Ⅱ

Expanding growth ofdata science business

Gathering data and know-hows of DG
Group and Dentsu group to pioneer a newfrontier in data business

Ⅲ

Expanding each businessto Asia

Horizontal expansion of businesses to themajor Asian markets in conjunction with
Payment Segment

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

31Marketing Segment – Business Model
Realizing Japanʼs #1 Performance Ad Agency and Big Data
Building Japanʼs one of the largest markets on ROI-focused performance ads, unique fromother online ad agencies. Offers data-driven high-value-added scientific ad solutions

DG Group
Ⅰ

Performance adⅡAffiliate

Big Data

Build DMP (Data Management Platform) that
consolidates and analyzes data from DG
group / advertisers
Develop DSP targeting ad / CRM

Listing

Internet media

Advertisers

Performance ad company

TargetingUsers / Audience

Operate ad distribution platform efficiently
Provide Trading Desk Services

DSP

Search /Recommendation

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

32

DG&Ibex - Highlights
Cumulative Results in FY15.6 (July to December)
Total sales

Number of clients

Sales per client

7.28 billion JPY

270 companies

26.97 million JPY+16% YoY-1% YoY+17% YoY

Achieved 16% YoY growth with 7.2 B Yen in sales【Growth Factors】

Sales growth (100 M JPY)

Growth led by ROI-focused performance ad taking
advantage of deep know-hows in digital marketing■Solution● Affiliated marketing w/ financial, cosmetic, game, app focus continued to leadsales. Launched web ads for overseas around Asia

■MediaYoY● Distribution value increased 19% YoY to 31.3 billion yen at Point Mall
● Collaborating and partnering with a membership platform with millionsof members■O2O● Sending customers to actual storefronts based on the know-hows gained
from the mall business● Launched in-bound project for international tourists to Japan

+16%

１H

2H

FY13.6

１H

2H

FY14.6１H
FY15.6

Copyright © 2015 Digital Garage, Inc. All Rights Reserved33BI. Garage - Highlights
DMP business enters the next phase, launching Private DMP
Introducing Private DMP to enterprises with large customers.
Realizing effective CRM with Big Data
< Business Overview ＞
Data from
Kakaku.com

Data from
DGG

Data from Dentsu Groupand others

Data fromsponsors
Clients datafrom sponsors
Behavior data
etc

Data
scienceview

Latesttechnology

DSP targeting ad

Coordination
with CRM area

2つのフェーズに分けた事業を展開

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

34

NaviPlus - Highlights
Further expanding customer base as a leading recommendation service provider in Japan

Increased Adoption of NaviPlusʼ Comprehensive Marketing Tools- Installed in 600+ websites, Over 1.5 billion requests per month -Comprehensive Marketing Tools

Enhanced platform

Providing tools such as recommendationengines and custom website search to increase
visitor conversion rates and to increase sales of
EC stores

Developing a new marketing solution“Retargeting mail” which helps convert
customers into buyers, improving profit for ecommerce

Site Visits

Search/ComparePurchase

Leading to purchase without dropping out

Site
Re-visits

Revisit after dropout

ｃｖ

Retargeting Mail：

Personalized mail with highopening ratio

Customers who viewed this item also viewed
Recommended products for you
Customer reviews by those who purchased
this item

Purchase

NEW Solution

Finalizing arrangements w/
a major EC site
【To be released in Summer 2015】

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

35

Payment Segment
Ⅲ

Payment Segment
Net Sales Operating Income

FY14.62Q(7-12)Actual

6,603 M JPY

463 M JPY

FY15.62Q(7-12)Actual

7,082 M JPY

590 M JPY

FY15.6

Full Year Forecast

15,500 M JPY

1,450 M JPY➤ econtext ASIA Ltd.

Payment headquarters to expand e-commerce platforms globally➤ econtext, Inc.

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

Provides leading e-commerce payment solutions➢ Veritrans Shanghai（50％ owned by econtext ASIA ／ equity method affiliated company）
Chinese JV➢ PT MIDTRANS（Veritrans Indonesia) ( 23% owned by econtext ASIA／Non-consolidated）
Indonesian JV➢ Citrus Payment Solutions Pte. Ltd（ 15.59%／Investment ）The holding company for the Indian online payment solutions provider( Citrus Payment Solutions Pvt. Ltd )Copyright © 2015 Digital Garage, Inc. All Rights Reserved

36

Payment Segment - Business Strategy
Further expanding payment business in Asia in addition to Japan

OfflineOnlineAchieving multi-directional strategy by expanding the settlement
expertise nurtured in Japan horizontally to Asia and to offline

Japan

Asia

STRATEGY Ⅰ

STRATEGY Ⅱ

Continued expansion of domestic
business

Aggressive expansion to Asia

Jointly cultivating settlement business with strong
domestic partners such as shareholders, expanding
major client base, and developing new businesses



Exploring small and medium-sized EC service segment

Strengthening alliances within settlement/EC industries

STRATEGY Ⅲ

Emerging EC Markets

→ JV



Developed EC Markets

→ M&A



China&India→ Tailored strategy

EC Fund to promote growth of e-commercebusiness in Asia

Simultaneous expansion of offline settlements toJapan and Asia

Credit Card Adoption<20% = big opportunity

LatestTechnology
New lifestylesupported bysmartphonesettlements

EC / Credit Card about to boom
Rapid smartphone adoption
being the key

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

37

Payment Business - Highlights
FY15.6 1H (July to December) Results
Expanded to

Number of transactions

Total amount of transactions

5 countries

90.22 million

471.4 billion JPY

Japan,Indonesia,China,India,Vietnam*+8.0% YoY

+19.0% YoY

Transaction amount and number of transactions grew to record high
■Domestic – Expanding services & partnerships■Foreign – Widening Asian expansion【Offline, Package Solution】

 econtext ASIA invests in Sendo to expand its online
marketplace in Vietnam

 Card settlement for restaurants “Tabelog Pay”,
real estate “Suma Pay”
 Settlement package for funerals “Ceremony Pay”

【Transaction amount】

Transaction
amount ( 100 M )Veritrans

econtext【Convenience Store O2O】
 Receiving refunds and cash-backs atconvenience stores, and direct sales of Jetstar
air tickets at Lawson【ID Payment w/ major EC platformers】
 Helping drive new customers for payment in alliance with major EC
platforms having large customers such as Seven & i and Rakuten

Plat formers

Drive customers
for payment

EC
Merchant

１H

2H

FY13.6

１H

2H

FY14.6１H
FY15.6

Note: # of transactions is on a gross basis. Transaction amount includes payment amountand data transaction amount* Basic agreement regarding investment & JV in Sendo
Copyright © 2015 Digital Garage, Inc. All Rights Reserved

38

Payment Business – Entering into New EC BusinessElectronic payment to become a 66 trillion JPY market by 2017 as stores adopt cashless payment〜 Penetrating growing new electronic payment market in addition to EC market 〜【 Electronic Payment to reach66 trillion JPY in 2017】( JPY in Trillion )Electronic Payment
66 Trillion JPY(1.5 x)

Focus areas(market size)

44

Food
service（12 T JPY）

(ʼ12)

66

Private Final
Consumption
Apprx. 290(ʼ17)

Potential = Non-electronic
payments(Cash payment, etc)

Real
EstateRentals（9 T JPY）

Funerals（1.7 T JPY）

DGʼs Solutions

Tabelog Pay
Jointly providing credit card
settlement service for restaurants
with Kakaku.com utilizing 770 k
restaurants listed on Tabelog

Suma PAY
Providing credit card settlement services for rents
and deposits in conjunction with DG Groupʼs realestate advertising agency, DG Communications

Ceremony Pay

Providing credit card and loan
financing services to funeralcustomers

New
Since
Feb 3rdConvenience-store-style Settlement
Electronic payments (Credit / Debit / Prepaid cards, Electronic money, etc)
Source : DG research, Statistics Bureau of Japan, Yano Research Institute

RetailStoresBringing convenience-store style payment
services to rapidly growing Asian market
utilizing expertise developed over years with
47,000 stores in Japan

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

39

Payment Business – Asian Expansion
Accelerating Expansion of Settlement and e-Commerce Solutions to Asia
Business
アジアでの事業展開
Expansion in Asia

・Established in ʻ13. 50% owned byecontext ASIA
・Provides payment settlement
solutions to local operators of Japanand foreign-based businesses

Japan（Vietnam）

China
Hong Kong

Monthlytransaction(100 M JPY)

India

ʻ14/6

Monthlytransaction(100 M JPY)

Vietnam+60%

25

・econtext ASIA invests in Sendo
primarily engaged in online
marketplace business and online
payment business in Vietnam41
ʻ14/12・Established in ʻ11. 15.59% owned
by econtext ASIA
・Monthly transaction grew 60% in a
half-year to 4 B JPY

Indonesia

・Established in ʻ12. 23% owned byecontext ASIA
・Monthly transaction grew about 4x toabout 3 B JPY in half a year
・Expanding settlement options to banks,
convenience store, e-wallet, etc

4x
7
ʻ14/6

28
ʻ14/12

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

40Appendix

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

41

Quarterly Profit and Loss (Consolidated)
JPY in Million

FY13.6

FY14.6

FY15.6

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

Net sales

5,307

8,539

6,482

7,636

7,273

8,349

8,271

9,857

8,126

9,760

Incubation

131

616

497

1,263

927

1,467

755

2,325

1,035

1,987

Marketing

2,364

2,748

2,825

3,104

3,068

3,557

4,012

4,184

3,669

4,111

Payment

2,810

5,174

3,158

3,269

3,277

3,326

3,503

3,346

3,421

3,661

Operating income

△ 51

523

151

698

86

726

374

1,421

398

1,341

Incubation

△ 258

56

△ 20

512

△ 77

548

△ 48

1,222

78

1,060

Marketing

129

120

55

167

136

199

308

210

245

281

Payment

308

480

253

260

203

260

415

322

316

273

Ordinary income

167

1,000

719

1,191

473

1,214

810

1,944

1,173

2,290

Net income

213

700

1,294

507

389

1,037

446

974

780

2,726

EBITDA

696

1,573

2,050

1,581

970

1,956

1,207

2,473

1,618

4,961

Amortization

200

333

211

195

191

204

170

191

171

217

Note: Interest expense, depreciation, and amortization are added back to income before income taxes to calculate EBITDA.
Op income per segment is based on figures prior to elimination or group deduction.
Copyright © 2015 Digital Garage, Inc. All Rights Reserved

42

Press Releases
Date

Title

2015.2.12

Digital Garage To Boost Its Japanese Expansion Business For Overseas Internet Services and Bring Website
Analytics Service 'Chartbeat' to Japan

2015.2.3

AnyPerk, Inc. announces an additional $8.5M Series A funding from DCM Ventures and DG Incubation

2015.1.28

Digital Garage To Support Japanese Expansion of Global Social Media Community Wikia Through Capital
Investment To Wikia, Inc. and Advertising Sales On Wikia Japan

2014.12.5

econtext ASIA co-invests in Sendo which is owned by FPT Corporation, a leading technology company in Vietnam,
to expand its online marketplace and payment services in Vietnam

2014.11.19

Participation in a Share Purchase Program through Public Tender Offering by Kakaku.com, Inc.

2014.11.7

CrowdWorks, DG Incubation's Portfolio Company, Approved For Listing On Tokyo Stock Exchange Mothers

2014.11.7

Bengo4.com, DG Incubation's Portfolio Company, Approved For Listing On Tokyo Stock Exchange Mothers

2014.11.4

ECONTEXT and VeriTrans launched "Chargeback" group compensation insurance to participating merchants

2014.10.31

Sumitomo Mitsui Card, Digital Garage and iRidge Collaborate and Launch Mitsui Sumitomo VISA Taiheiyo Masters
App

2014.10.29

Digital Garage Invests in Fleksy, Inc.

2014.9.19

VeriTrans teams with China's leading search engine Baidu to launch "Free SIM" service for Chinese tourists
visiting Japan

Copyright © 2015 Digital Garage, Inc. All Rights Reserved

43

Please note that the business forecasts and strategies covered in todayʼs 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.