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Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending
February 29, 2020 [Japanese GAAP]
October 15, 2019
Listing Market TSE
Company nameRozetta Corp.
Stock Code6182
URL https://www.rozetta.jp
Representative: Junichi Goishi, Representative Director and CEO
Contact:

Yoko Jacobson, Executive Officer, General Manager of Group Administration Division

TEL 03-6685-9570

Scheduled date of filing of
Scheduled date of commencement of
October 15, 2019
quarterly report:
dividend payment
Preparation of supplementary materials for quarterly financial results: Yes-

Holding of quarterly financial results briefing: Yes(Figures are rounded down to the nearest million yen)
1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending February 29, 2020
(March 1, 2019-August 31, 2019)(1) Consolidated Results of Operation (Cumulative)(Percentages indicate year-on-year changes.)
Net income attributable
Net sales
Operating income
Ordinary income
to owners of parent
Millions ofMillions ofMillions ofMillions of
%
%
%
%
yen
yen
yen
yen
Q2 FY2/20
1,935
49.8
309
274.9
310
269.8
168
176.1
Q2 FY2/19(Note)
Comprehensive
incomeQ2 FY2/20

1,292

29.9

82

176

Millions of yen

149.6(188.8%)84
Q2 FY2/19

Net income per share

Diluted net income per
share

Yen
16.38
6.08

Yen
15.89
5.80

Q2 FY2/20
Q2 FY2/19

154.7
61

61

Millions of yen

680.3(680.3%)(2) Consolidated Financial Position

Q2 FY2/20

Total assets
Millions of yen
2,937

Net assets
Millions of yen
1,372

Shareholders' equity ratio
%
46.4

2,642

1,194

45.1

FY2/19(Reference)
Shareholders' equity

Q2 FY2/20

1,362Millions of yen

FY2/19

1,191

Millions of yen

2. Dividend payment
Annual dividend per share

FY2/19FY2/20FY2/20 (Forecast)End of Q1
Yen-

End of Q2
Yen
0.00

-

0.00

(Note) Revisions to the most recently announced dividend forecast: None

End of Q3
Yen-

Year-end
Yen
0.00
-

0.00

Total
Yen
0.00
0.00

3. Forecast of Consolidated Financial Results for the Fiscal Year Ending February 29, 2020 (March 1, 2019-February 29, 2020)
At present, the MT business has entered a period of rapid growth since the fourth quarter of the fiscal year ended February 28,
2018, and we are concentrating our management policy on maximizing medium-to long-term growth rather than short-term
profits. For the time being, we will not disclose the forecast as a fixed value until the sales growth rate of the MT businesssettles down (roughly 150% compared to the previous year), in order not to adjust expenses in accordance with earnings
forecasts, and therefore we make decisive choices that best meet its long-term growth objectives on an occasional basis.
For the consolidated business forecasts for the fiscal year ending February 29, 2020, we announced only the minimum figures,for example, by indicating record-high sales (2,908 million yen) or over and record-high profit (operating income of 338
million yen) or over.
*Notes(1) Changes in significant subsidiaries during the period(changes in specified subsidiaries resulting in changes in scope of consolidation): Yes
New consolidated (Company name) - Company
Excluded: 2 (Company name) - Inter media Inc., Quicktranslate, Inc.
(Note) For details, please refer to "2. Quarterly Consolidated Financial Statements, (4) Notes on Quarterly Consolidated Financial
Statements (Changes in Significant Subsidiaries during the Period)" on page 7 of the Appendix.

(2) Adoption of special accounting methods for presenting quarterly consolidated financial statements: Yes(Note) For details, please refer to "2. Quarterly Consolidated Financial Statements, (4) Notes on Quarterly Consolidated Financial
Statements (Application of Accounting Procedures Specific to Preparation of Quarterly Consolidated Financial Statements)" onpage 7 of the Appendix.
(3) Changes in accounting policies and changes or restatement of accounting estimates(i) Changes in accounting policies due to revisions of accounting standards, etc.: None(ii) Changes in accounting policies due to other reasons: None(iii) Changes in accounting estimates: None(iv) Restatement of prior period financial statements after error corrections: None

(4) Number of shares outstanding (common stock)① Number of shares outstanding at the endof the period (including treasury stock)② Number of treasury stock at the end of theperiod③Average number of shares outstanding
during the period (cumulative)

Q2 FY2/20

10,309,460 shares

FY2/1910,296,260

sharesQ2 FY2/20

349

FY2/19286

sharesQ2 FY2/20

10,296,789 shares

Q2 FY2/19

10,049,518 sharesshares*This quarterly financial report is not subject to the quarterly review by a certified public accountant or an auditing firm.
*Explanations and other special notes concerning the appropriate use of business forecasts(Cautionary Statement with Respect to Forward-Looking Statements)
Forecasts regarding future performance in this material are based on information currently available to us and certain assumptions that
we deem to be reasonable at the time this report was prepared. We do not make promises about the achievements. Actual results may
differ significantly from the forecasts due to various factors. Please refer to "1. Qualitative Information on Consolidated Financial
Results (4) Consolidated Business Forecasts" on page 3 of the Attachment for the assumptions underlying the forecasts and cautions
concerning the use thereof.

(Method of Obtaining Financial Results Briefing Materials)
Supplementary materials for financial results were disclosed on the TDnet on the same date.

Rozetta Corp. Consolidated Financial Results
For the Second Quarter of the Fiscal Year Ending February 29, 2020

○ Table of Contents of the Appendix
1. Qualitative Information on Quarterly Financial Results ...........................................................................................................

2(1) Results of Operations ..........................................................................................................................................................

2(2) Explanation of Financial Position .......................................................................................................................................

2(3) Cash flows ...........................................................................................................................................................................

3(4) Consolidated Business Forecasts ........................................................................................................................................

3

2. Quarterly Consolidated Financial Statements and Major Notes ...............................................................................................

4(1) Quarterly Consolidated Balance Sheets ..............................................................................................................................

4(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income ........

5

Quarterly Consolidated Statements of Income
For the Six-month Period ..........................................................................................................................................

5

Quarterly Consolidated Statements of Comprehensive Income
For the Six-month Period ..........................................................................................................................................

5(3) Quarterly Consolidated Statements of Cash Flows .............................................................................................................
(4) Notes on Quarterly Consolidated Financial
Statements..................................................................................................................................................................................
(Notes on Going Concern Assumptions) ..........................................................................................................................

6(Notes on Significant Changes in Shareholders' Equity) ..................................................................................................
(Changes in Significant Subsidiaries during the
Period) ...............................................................................................................................................................................
(Application of Accounting Procedures Specific to Preparation of the Quarterly Consolidated Financial
Statements) ........................................................................................................................................................................
(Additional Information) ...................................................................................................................................................

7(Segment Information) ......................................................................................................................................................

8(Per share Information) .....................................................................................................................................................

10

-1-

7
7

7
7
7

Rozetta Corp. Consolidated Financial Results
For the Second Quarter of the Fiscal Year Ending February 29, 2020

1. Qualitative Information on Quarterly Financial Results(1) Results of Operations
During the second quarter of the current fiscal year (March 1, 2019 to August 31, 2019), sales of T-4OO continued to be strong
in the MT business. Accordingly, we continuously increased the staff of all sections, including the marketing and management
sections, to fortify our organizational structure before expanding our business rapidly.
As a result, our group posted net sales of 1,935,744 thousand yen (up 49.8% year on year), operating income of 309,778 thousandyen (up 274.9% year on year), ordinary income of 310,918 thousand yen (up 269.8% year on year), and profit attributable toowners of parent of 168,710 thousand yen (up 176.1% year on year) for the cumulative second quarter of the current fiscal year.
The performance of each business segment is as follows:① MT Business
As for the MT business, sales were 969,790 thousand yen (up 197.5% year on year) due to continuous strong sales of T-4OO.
Segment income was 134,102 thousand yen (up 624.0% year on year) as a result of a significant increase in SG & A expenses
from the sales division to the administration division in preparation for the rapid expansion of the MT business.
② HT business
As for the HT business, sales were 740,358 thousand yen (down 8.4% year on year). Segment income was 183,247 thousand yen(up 54.4% year on year), mainly due to the rationalization of SG & A expenses due to a review of administrative headquartersfunctions.
③ Crowdsourcing business
As for the Crowdsourcing business, sales were 225,595 thousand yen (up 42.4% year on year). Segment income was 22,514
thousand yen (up 93.1% year on year), as a result of rationalization of SG & A expenses, such as a reduction of administrative
headquarters functions.
(2) Explanation of Financial Position(Assets)
Current assets increased by 146,972 thousand yen from the end of the previous fiscal year to 1,470,230 thousand yen at the endof the second quarter of the current fiscal year. This was mainly due to an increase of 38,326 thousand yen in cash and deposits
and an increase of 52,683 thousand yen in notes and accounts receivable. Non-current assets increased by 147,946 thousand yen
from the end of the previous fiscal year to 1,467,538 thousand yen. This was mainly due to an increase of 62,183 thousand yen
in property, plant and equipment and an increase of 90,516 thousand yen in intangible assets.
(Liabilities)
Current liabilities increased by 194,881 thousand yen from the end of the previous fiscal year to 1,351,394 thousand yen at theend of the second quarter of the current fiscal year. This was mainly due to an increase of 248,200 thousand yen in advances
received and a decrease of 42,714 thousand yen in notes and accounts payable-trade. Non-current liabilities decreased by 78,037
thousand yen from the end of the previous fiscal year to 214,134 thousand yen. This was due to the repayment of long-term debt.
(Net assets)
Net assets increased by 178,074 thousand yen from the end of the previous fiscal year to 1,372,241 thousand yen at the end of
the second quarter of the current fiscal year. This was mainly due to an increase of 168,710 thousand yen in retained earnings.

-2-

Rozetta Corp. Consolidated Financial Results
For the Second Quarter of the Fiscal Year Ending February 29, 2020
(3) Cash flows
Cash and cash equivalents at the end of the second quarter of the fiscal year under review increased by 37,496 thousand yen
from the end of the previous fiscal year to 889,308 thousand yen.
The status of each cash flow during the second quarter of the current fiscal year and the factors thereof are as follows.
(Cash-flow from operating activities)
Net cash provided by operating activities was 517,158 thousand yen (compared to net cash provided of 348,103 thousand yen
in the previous fiscal year).
This was mainly due to income before income taxes of 273,208 thousand yen, depreciation and amortization of 180,206 thousand
yen, amortization of goodwill of 10,631 thousand yen, and an increase in advances received of 248,200 thousand yen.
(Cash-flow from investing activities)
Net cash used in investing activities was 366,551 thousand yen (compared to an expenditure of 241,780 thousand yen in theprevious fiscal year).
This was mainly due to purchase of intangible assets of 239,739 thousand yen.
(Cash-flow from financing activities)
Net cash used in financing activities was 113,482 thousand yen (compared to an expenditure of 128,688 thousand yen in theprevious fiscal year).
This was mainly attributable to repayments of long-term debts of 115,470 thousand yen.
(4) Consolidated Business Forecasts
At present, the MT business has entered a period of rapid growth since the fourth quarter of the fiscal year ended February 28,
2018, and we are concentrating our management policy on maximizing medium-to long-term growth rather than short-term
profits. For the time being, we will not disclose the forecast as a fixed value until the sales growth rate of the MT businesssettles down (roughly 150% compared to the previous year), in order not to adjust expenses in accordance with earnings
forecasts, and therefore we make decisive choices that best meet its long-term growth objectives on an occasional basis.
For the consolidated business forecasts for the fiscal year ending February 29, 2020, we announced only the minimum figures,for example, by indicating record-high sales (2,908 million yen) or over and record-high profit (operating income of 338
million yen) or over.

-3-

Rozetta Corp. Consolidated Financial Results
For the Second Quarter of the Fiscal Year Ending February 29, 2020

2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly Consolidated Balance Sheets(Thousands of yen)Previous fiscal year
(February 28, 2019)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable
Inventories
Other
Allowance for doubtful accounts
Total current assets
Fixed assets
Property, plant and equipment
Intangible assets
Goodwill
Software
Software in progress
Other
Total intangible assets
Investments and other assets
Total fixed assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable-trade
Current portion of long-term loans payable
Income taxes payable
Provision for bonuses
Advances received
Other
Total current liabilities
Long-term liabilities
Long-term debt
Total long-term liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Share subscription rights
Non-controlling interests
Total net assets
Total liabilities and net assets-4-

Current second quarter(August 31, 2019)853,378
360,515
51,23766,716(8,589)1,323,258

891,705
413,198
32,675
139,216(6,565)
1,470,230

236,489

298,673

89,513432,361
423,287468
945,631
137,471
1,319,592
2,642,850

78,882
743,401
213,165698
1,036,148
132,717
1,467,538
2,937,769

140,961
231,601
111,002
26,577440,309
206,061
1,156,513

98,247
194,168
32,25932,595688,509305,614
1,351,394

292,171
292,171
1,448,684

214,134
214,134
1,565,528

250,794
1,230,983(289,839)(435)
1,191,502
458
2,206
1,194,166
2,642,850

251,870
1,232,058(121,129)(600)
1,362,199
89
9,952
1,372,241
2,937,769

Rozetta Corp. Consolidated Financial Results
For the Second Quarter of the Fiscal Year Ending February 29, 2020
(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(For the Six-month Period)(Thousands of yen)Previous second quarter(From March 1, 2018
To August 31, 2018)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries, allowances and bonuses
Provision for bonuses
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Subsidy income
Foreign exchange gain
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange loss
Other
Total non-operating expenses
Ordinary income
Special income
Surrender value of insurance
Gain on reversal of share subscription rights
Total special income
Special loss
Loss on retirement of noncurrent assets
Total special loss
Income before income taxes
Income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

Current second quarter(From March 1, 2019
To August 31, 2019)

1,292,496
531,319
761,177

1,935,744
665,348
1,270,395

229,52117,018432,008
678,549
82,627314,439
14,288631,889
960,617309,778

25
10
238
2,914
3,189

150
10
1,425
552
2,138

1,610
120
1,730
84,086863
133
997
310,918

11,513
11,513

369
369

1,672
1,672
93,92732,822
61,104
61,10438,07938,079273,208
96,752
176,456
7,746
168,710

Quarterly Consolidated Statements of Comprehensive Income(For the Six-month Period)(Thousands of yen)Previous second quarter(From March 1, 2018
To August 31, 2018)
Net income
Comprehensive income
Comprehensive income (loss) attributable to:
Owners of parent
Non-controlling interests-5-

Current second quarter(From March 1, 2019
To August 31, 2019)

61,104
61,104

176,456
176,456

61,104-

168,7107,746

Rozetta Corp. Consolidated Financial Results
For the Second Quarter of the Fiscal Year Ending February 29, 2020
(3) Quarterly Consolidated Statements of Cash Flows(Thousands of yen)Previous second quarter(From March 1, 2018
To August 31, 2018)
Cash-flow from operating activities
Income before income taxes
Depreciation
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in accrued bonuses
Interest and dividend income
Loss (gain) on insurance cancellation
Loss on retirement of noncurrent assets
Gain on reversal of share subscription rights
Interest expenses
Increase (decrease) in advances received(Increase) decrease in notes and accounts receivabletrade(Increase) decrease in inventories
Increase (decrease) in trade payables
Other
Sub-totalInterest and dividends received
Interest paid
Income taxes
Income taxes refunded
Cash-flow from operating activities
Cash-flow from investing activities
Expenditure from acquisition of fixed assets
Expenditure from acquisition of intangible assets
Payment for loans receivable
Proceeds from loans receivable
Expenditure due to fixed term deposit
Proceeds from refund of fixed term deposit
Proceeds from lease and guarantee deposits
Proceeds from cancellation of insurance funds
Cash-flow from investing activities
Cash-flow from financing activities
Repayment of short-term borrowings
Repayment of long-term debt
Proceeds from issuance of common stock upon
exercise of share subscription rights
Purchase of treasury stock
Cash-flow from financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the quarter-6-

Current second quarter(From March 1, 2019
To August 31, 2019)93,92786,491
10,631
1,775
2,813
(35)
(11,513)
1,672
1,610
108,990273,208180,206
10,631
(799)
6,018
(160)
38,079(369)
863
248,200

18,619(52,683)(26,444)
10,03537,028335,60235(1,610)(13,926)
28,002
348,103

18,561(42,714)(50,201)
628,841160(863)(110,995)
16
517,158(21,200)(262,644)
163(638)
15,374
27,164(241,780)(125,223)(239,739)(3,300)
1,193
(600)
1,118
(366,551)(14,075)(133,195)(115,470)

18,582

2,151(128,688)(164)(113,482)

(259)

372

(22,623)
955,840
933,216

37,496
851,811889,308

Rozetta Corp. Consolidated Financial Results
For the Second Quarter of the Fiscal Year Ending February 29, 2020
(4) Notes on Quarterly Consolidated Financial Statements(Notes on Going Concern Assumptions)Not applicable.
(Notes on Significant Changes in Shareholders' Equity)
Not applicable.
(Changes in Significant Subsidiaries during the Period)
During the first quarter of the fiscal year, the Company conducted an absorption-type merger of Inter media, Inc. by GLOVA
Corp., our consolidated subsidiary, and an absorption-type merger of Quicktranslate, Inc. by anydooR, Inc. As a result, Inter
media, Inc. and Quicktranslate, Inc. have ceased to exist, and therefore, they have been excluded from the scope of consolidationfrom the first quarter of the current fiscal year.
(Application of Accounting Procedures Specific to Preparation of the Quarterly Consolidated Financial Statements)
Income taxes are calculated by multiplying the net income before income taxes by the forecasted effective tax rate, which iscomputed by matching the forecasted yearly income taxes with the forecasted yearly income taxes.
(Additional Information)(Application of Partial Revision of "Accounting Standard for Tax Effect Accounting")
The Company has applied the "Partial Revision to the Accounting Standard for Tax Effect Accounting" (ASBJ Statement No.
28, February 16, 2018) and other accounting standards from the beginning of the first quarter of the current fiscal year.
Accordingly, deferred tax assets are presented as investments and other assets, and deferred tax liabilities are presented as noncurrent liabilities.

-7-Rozetta Corp. Consolidated Financial Results
For the Second Quarter of the Fiscal Year Ending February 29, 2020
(Segment Information)[Segment Information]
I. Previous second quarter (From March 1, 2018 To August 31, 2018)
1. Information on net sales and income (loss) by reportable segment
Reportable Segments(Thousands of yen)Amounts on the
consolidated
Adjustment
financial(Note 1)statements(Note 2)MT businessHT business

Crowdsourcing
Business

326,014808,021

158,461

1,292,496-

1,292,496

1,200

109,864

114,808

225,873(225,873)-

327,214917,885

273,270

1,518,369(225,873)

1,292,496

18,521

118,675

11,660148,857(66,229)

82,627Total

Net sales
Net sales tounaffiliatedcustomers
Intersegment sales
or transfer
Total
Segment income(Note)
1.

2.

Adjustments to segment income of (66,229) thousand yen include eliminations of inter-segment transactions and amortization of
goodwill not attributable to reportable segments, and corporate expenses. Corporate expenses mainly consist of expenses related
to the administrative departments of the parent company that are not attributable to reportable segments.
Segment income is adjusted with operating income in the quarterly consolidated statements of income.
II Current second quarter (From March 1, 2019 To August 31, 2019)
1. Information on net sales and income (loss) by reportable segment
Reportable Segments(Thousands of yen)Amounts on the
consolidated
Adjustment
financial(Note 1)statements(Note 2)MT businessHT business

Crowdsourcing
Business

969,790

740,358

225,595

1,935,744-

1,935,744

40,5304,181

84,126

128,838(128,838)-

1,010,321

744,539309,7212,064,583(128,838)

1,935,744

134,102183,247

22,514

339,864(30,086)

309,778

Total

Net sales
Net sales tounaffiliatedcustomers
Intersegment sales
or transfer
Total
Segment income(Note)
1. Adjustments to segment income of (30,086) thousand yen include eliminations of inter-segment transactions and corporate
expenses. Corporate expenses mainly consist of expenses related to the administrative departments of the parent company that are
not attributable to reportable segments.
2.

Segment income is adjusted with operating income in the quarterly consolidated statements of income.

-8-

Rozetta Corp. Consolidated Financial Results
For the Second Quarter of the Fiscal Year Ending February 29, 2020
2. Changes in reportable segments
In conjunction with the transfer of the GLOZE business to GLOVA Corp., our group has integrated the "GLOZE business,""Translation and Interpretation business," and "Corporate Training business" into the "HT business." As a result, our reportablesegments consist of the "MT business," "HT business" and "Crowdsourcing business" since the previous fiscal year.
GLOZE business has provided consigned translation services to standardize quality, reduce costs, and shorten lead times bycombining MT (machine translation) technology and HT (human translation).
However, as the precision of our MT increased significantly in the previous fiscal year, our current management task has shiftedto the stage of "the last mile to the full automation (the complete replacement of HT by MT)", and we decided to reorganize thesegment to streamline the organizational structure as there is no longer a fundamental difference between the GLOZE businessand GLOVA's translation business.
Segment information for the first half of the previous fiscal year has been prepared using the new segmentation method and isincluded in "I. Previous second quarter (From March 1, 2018 to August 31, 2018) 1. Information on net sales and income byreportable segment."-9-

Rozetta Corp. Consolidated Financial Results
For the Second Quarter of the Fiscal Year Ending February 29, 2020
(Per share Information)
The basis for calculating net income per share and diluted net income per share is as follows.
Previous second quarter(March 1, 2018
To August 31, 2018
(1) Net income per share

Current second quarter(March 1, 2019
To August 31, 20196.08 yen

16.38 yen

61,104

168,710--

61,104

168,710

10,049,518

10,296,789

5.80 yen

15.89 yen--

486,851

321,991--(Basis of calculation)
Net income attributable to owners of parent (thousandsof yen)Amount not attributable to common shareholders(thousands of yen)
Net income attributable to owners of parent related tocommon stock (thousands of yen)
Average number of shares of common stock
outstanding during the period (shares)(2) Diluted net income per share(Basis of calculation)
Adjustment to net income attributable to owners ofparent (thousands of yen)
Increase in number of common shares (shares)
Outline of potential shares that had not been included in
the calculation of diluted net income per share because
they had no dilutive effect, and that had changed
significantly since the end of the previous fiscal year

- 10 -