FY2022.6 Q1

Table of Contents

1

Summary

2

Financial Highlights

3

Appendix2

FY2022.6 Q1
Summary3

1

FY2022.6 Q1 Progress & Highlights
Consolidated● Overall there have been no changes made to our business policy announced at the beginning of the ﬁscal year.
All initiatives related to our three pillars and new businesses are progressing as planned.
● We are continuing to invest aggressively to achieve sustainable growth and maximize future proﬁts.

Mercari JP

MerpayMercari US● Remain on track to hit our targets of +20%
or higher YoY GMV growth rate and 30% or
higher adjusted operating margin for thefull year● Achieved a signiﬁcant milestone with 20
million MAU for a single month in
September● Achieved quarterly proﬁtability1 for the ﬁrst
time
● Growth in the number of users and totalbalance is as expected, with the credit area
established as the proﬁt base● Launched new services such as Mercari
Local (same-day delivery) and a buy now,
pay later (BNPL) service● GMV growth rate bottomed out in July andis now back on track to reach +20% or
higher for the full year

SouzohMercoinKashima Antlers● Response during the advance opening was
better than expected, with manybusinesses requesting to open stores
despite the limited number of stores andfeatures● Preparing to start our businesses● Making good progress towards ourrecruitment target of 100 people this FY, withboth the management layer progressing
well and the foundation of the organization
growing stronger● Still impacted by COVID-19 restrictions, but
steadily promoting businesses overall● Promoting our second crowdfunding
project (investment for groundmaintenance for Antlers Academy)

1. Before excluding internal transactions with Mercari (outsourced payment processing fees)4

1

FY2022.6 Q1 KPI Summary
Consolidated
Net
Sales

33.6

billion JPY(YoY +52%)

Excluding the impact ofaccounting policies on sales

28.8

Operating
Income0.8

billion JPY(YoY +0.4 billion)

billion JPY(YoY +30%)

Mercari JP
GMV1

YoY +19%
Adjusted Operating Margin
26% (YoY -3ppts)

MerpayMercari US
GMV1

Number of Users2

YoY -6%11.3 million

MAU3

4.8 million (YoY +18%)

1. Aggregated transaction value after adjusting for cancellations (the GMV of Mercari JP does not include the GMV of Mercari Shops)
2. Aggregated number of unique users who have registered for Merpay Electronic Money or used QR Code Payments, Online Payments, or Merpay Smart Payments (lump-sum payment or ﬁxed-amount payment), etc.
as of the end of September 2021.
3. Quarterly average number of users who browsed our service (app or web) at least once during a given month.

5

FY2022.6 Q1
Financial Highlights

6

2
●

Financial Highlights

Consolidated Net Sales & Operating Income
In addition to steady growth of the three pillars, Q1 net sales increased mainly as a result of the change inaccounting policies for recording sales of Mercari US.
○
Excluding the impact of accounting policy change, which totaled 4.7 billion yen, net sales for Q1
were 28.8 billion JPY (YoY growth rate +30%).

Net Sales1(Billion JPY)

33.6

YoY
+52%

Operating Income(Billion JPY)

YoY
+30%
(Excluding the impactof the change inaccounting policies)

1. Due to the adoption of the new sales recognition standards under J GAAP, as of FY2022.6 Q1 Mercari US shipping revenue and costs are to be calculated based on gross results instead of net results. Net sales increased
mainly due to this change. The gross results for Mercari US are nearly double those of the net results.

7

2

Talent Supporting Mercari’s Growth●●

Increased headcount in Q1 after strengthening hiring initiatives at the end of last year as a key step
toward supporting our mid- to long-term vision.
Expect to continue aggressively recruiting for key positions across the group.

Number of Employees

8Mercari JP—GMV/MAU

2●●

GMV continued to grow at a high rate of +19% in Q1 despite the high hurdleof the previous year due to strong growth of +34% YoY in FY2021.6 Q1.
Exceeded 20 million MAU for a single month in September, showing
steady expansion of our user base.

GMV1/MAU2

YoY(Million +13%
users)YoY+19%(Billion
JPY)(Billion JPY)
(Million users)

1. Does not include the GMV of Mercari Shops
2. Quarterly average number of users who browsed our service (app or web) at least once during a given month.

9

Mercari JP—Net Sales/Adjusted Operating Income

2●●

Expect to see increased operating margin due to higher sales for our typical high season from Q2
onwards.
No change in our policy of targeting an adjusted operating margin of 30% or higher.

Adjusted Operating Income/Margin1

Net Sales1(Billion JPY)

(Billion JPY)

YoY
+22%

YoY
‐3pptsAdjusted Operating Income
Margin1. From FY2022.6 Q1, to compare business results (YoY) exclusively for C2C transactions, the net sales shown here represent only the C2C results.

YoY
+10%

10

2

Mercari JP—Cost Structure Against Net Sales●

The increase in percentage of promotion costs was due in large part to investments toacquire new users and activate existing users for future growth.

1

1. Outsourcing expenses, rent, and taxes & dues112

Mercari JP

Promoting Cross-Use1 to Lift User Retention Rate and ARPU●●

In addition to acquiring new users through invitation campaigns, we have implemented
cross-use initiatives (listing, buying, and Merpay payment) for new users since Q1 in order toincrease retention of new users.
We plan to promote cross-use for existing users as well as to increase ARPU from Q2 onwards.
Retention rate tends to increase
as cross-use increases

Speciﬁc initiatives and their results

Free shipping if youlist now!

100%

Why don't you use your sales proceeds
to make a purchase?
Get a coupon when you buy!

Nextmonthretention
rate

Browsing-Only Users

Listing-Only Users0%0 actions(Browsing only)

1 action

2 actions

3 actions

1. Initiatives encouraging users to use Merpay payment in addition to buying and listing items on Mercari.

Ratio of new users who performed
all three actions improved bymore than 10% QoQ

122

Mercari JP

Promoting Integration of Primary & Secondary Distribution●●

Goods purchased on Marui's online store using Merpay payment can now be linked to Mercari’s“Inventory List” feature, enabling a seamless listing experience (a total of 14 companies support theInventory List feature).
We are continuing to strengthen cooperation with primary distribution to build a circular economy.
Inventory List integration

Merpay payment
Primary
distribution EC

Users

Collaboration with Marui to date
● In order to acquire the targeted 36 million potential listers,
operating Mercari Stations at 11 stores currently1● In addition to Mercari Workshops, in which users can learn how
to use Mercari, there are photo shooting and packing booths
and Mercari Posts● Mercari Station is an ofﬂine place where users can experience
Mercari and learn more about our service
Mercari Workshop

Link purchasehistory

Easy listingon Mercari

Purchasehistory

1. As of October 2021

13

2

Merlogi—Starting a Logistics Service Business●●As Mercari’s GMV has grown over the years, there has also been an increased workload on shipping
operations and more.
In order for Mercari to see continuous growth, we have decided to launch a logistics service business tocreate sustainable shipping operations and improve the shipping UX.

Reducing the operationalload on post ofﬁces / CVS1
Example of past initiatives
Mercari Posts – installed inapprox. 1,000 locations – allow
users to ship items without
having to line up at the counter
Example from a convenience store:
One package shipped from a
Mercari Post saves approx. 60
seconds of work at the register

Improving shipping UXWhile we have worked on ofﬂine
initiatives and ways to simplify how
users send packages, there are still
issues in the overall shipping process

I know how to list items, but shipping is
hard because the size of the item
determines how it is shipped andwhere I drop it off...

Reducing environmental
burden when shipping
Mercari is working to advance thecreation of a circular economy whereﬁnite resources are used sparingly

Example of past initiatives
Developed the Mercari Eco Packreusable packaging materials

It’s hard to list items because I don’tknow how much shipping is going tocost...
1. Convenience stores

14

2

Merlogi—Focus Areas and Strengths●●

Planning to focus on some of the initial steps of package logistics
Working with other logistics partners to create an assetless logistics business that does not requirelarge-scale investment

Focus Areas

Merlogi’s Strengths● Will take on the new challenge of optimizing andproviding added value to the package pickup
process in collaboration with logistics partners● Will continue to work with partner companies tooptimize last-mile delivery solutions

Personshipping
item(home)

Shipping Shipping
relay
location
point

Delivery
relay
point

Merlogi’s focus areas

Deliverylocation

Delivery

Personreceivingitem(home)

Focus areas of existing
logistics businesses

Using
Mercari data
to expand● Can maximize efﬁciency of
pickup by focusing on areas withhigh volumes of items shipped

Leveraging
Mercari’s
touchpoints● Mercari Posts are now available atapprox. 1,000 locations (Expecting toProviding
added value inthe pickup
process● Packaging-free shipping (in testing since Apr 2021)● Services providing high added value in Mercari’s

expand to 8,000 touchpoint locations by
the end of 2024)

package pickup logistics network, such as
cleaning/repair (to be launched in spring 2022)

15

2

Souzoh—Response to the Advance Opening of Mercari Shops●●●

Response to the advance opening exceeded projections, with many businesses applying to open shops
despite the limited number of stores accepted and features.
Popular categories so far include food, handmade goods, apparel, and goods for home use.
First-time online store openings represent 57% of Mercari Shops accounts1, showing steady progress
toward our objective of providing a place where anyone can easily sell products online.

Popular categories

Percentage of ﬁrst-time
online store openings1

Food

Local specialties fromfarmers, ﬁshermen, andrestaurants

Handmade

Original handmade products

ApparelApparel brands from creators

1. Based on the results of a survey at the time of application for advance store opening. Survey period: August 1, 2021–September 22, 2021

16

3
2

SouzohMercari Shops Full Rollout Details & Future Initiatives●●●

Following the full rollout on October 7, all businesses (individuals and companies) can now open theirown store. Functionality was expanded with added support for RakuRaku Mercari Shipping, which wassomething many store owners were requesting.
In order to continue attracting more new store owners, we are running a promotion to charge no selling
fees from October 7 to December 31.
On the functionality side, we will continue to improve shipping options and leverage the web to attract
new store owners.

Current feature expansion
Added RakuRaku
Mercari Shipping● Flat-rate nationwide● Anonymous shipping● No need to ﬁll out shipping labels

Expandedlisting categories● Support for listing of liquor
products

Launched
follow feature● Buyers receive a notiﬁcation when
the sellers they follow list an item

Planned future updates

Shipping

Leveraging
the web● Improve Mercari Shipping forbusinesses● Provide refrigerated shipping
support for Mercari Shipping● Allow the creation of custom web
pages for stores● Offer the ability to manage listings
on the web17Merpay—A Single Wallet

2●

A single wallet for payment, credit, and Growing Wallet.

Payment

CreditGrowing Wallet

Various payment methods available:iD payment, code payment, and virtual card

Various services that utilize unique credit
based on behavior history such as usage
history on Mercari

Started services allowing users to use
their Merpay balance for asset
management and more

VirtualCard
Input a number

iD Payment
Hold your phone
over a reader

Lump-Sum
Payment

Fixed-AmountPayment

Pay for everyday
purchases all at once
the following month

Treat yourself now and pay
over several months at aﬁxed amount of your choice

Code
Payment
Scan the code

NEW

1. Launched on August 3, 2021

Asset Management

Smart Money1
Borrow when needed and repay ﬂexibly:interest rates ﬂuctuate depending on the
borrower's usage of Mercari

18

2

Merpay—Credit

Merpay Smart Payments (lump-sum/ﬁxed-amount payment)1

User growth progress

User demographics2

Steady growth in number of users
since the service launched

Users of all ages and genders

Age

Gender

18–19
50+

years old

18.8%

years old

3.4%

Male
45.1

20–29

%

years old

27.3%

40–49
0
0
0
0
9
21
21
21
19
19
02
02
02
02
01
20
20
20
20
20
2
2
2
2
2
r
c
n
p
r
p
c
n
p
n
a
a
Ju
Se
Se
M
De
Ju
Ju
Se
M
De

years old

24.7%

30–39
years old

25.8%

Female54.9

1. Lump-sum payment: Not available for persons under 18 years old. For persons ages 18 and 19 years old, the maximum usage amount is 50,000 yen and parental consent is required.
Fixed-amount payment: Not available for persons under 20 years old. The usage limit is 300,000 yen in total for lump-sum payment and ﬁxed-amount payment.
2. As of September 2021

%

19

2

Merpay—Credit
AI Credit●●

Became the ﬁrst company in Japan to be certiﬁed for AI credit1 on August 27, 2021.
Able to more ﬂexibly and appropriately grant credit and design services than before.

● Estimated payable amount for payment
can be calculated based on the usage
history of Mercari● Appropriate credit can be provided basedon behavior information held internallysuch as usage history without using
information from credit information
agencies

1. "Comprehensive Credit Purchase Intermediary" in Installment Sales Act. ((Certiﬁcation) No.1 / Registration date: August 27, 2021)

20

2

Mercari US—GMV/MAU●

The Q1 result of -6% YoY GMV was within the range of expectations and due to the signiﬁcant growth
in FY2021.6 Q1 (YoY +165%) impacted by COVID-19. The rapid growth a year ago was mainly supported
by a temporary increase in buying frequency, which has now normalized to pre-COVID levels.
1

GMV/MAU

YoY+18%(Million users)(Million USD)(Million users)

YoY

-6%

(Million USD)

1. Quarterly average number of users who browsed our service (app or web) at least once during a given month.

21

2

Mercari US—Q1 Sales/Adjusted OP (US GAAP)●

Sustained positive YoY sales growth despite negative GMV growth, due to PPF adoption in FY2021.6 Q2.

Adjusted Operating Proﬁt1

Sales(Million USD)(Million
USD)
YoY
+11%

1. Adjusted operating proﬁt after non-cash items (i.e., stock-based compensation and depreciation) are deducted.

(Million USD)(Million
USD)

22

2

Mercari US—Q1 Business Objectives Update●●

Objectives progressing as planned, including the key area of strengthening the organization witha signiﬁcant increase in Q1 in engineering capability, which remains an area of focus for further
enhancement.
Planning an acceleration in marketing spending towards the holiday season to support initiatives.

Automation &Personalization● Development of automation for more effective and targeted
messaging (based on timing, content, etc.) is showing signs of lifting
retention of both buyers and sellers

Shipping
Innovation● Mercari Local (same-day delivery service) is showing positive earlysigns including driving transaction volume of higher unit price goods

Ease of Use● The buy now, pay later (BNPL) service launched in September inpartnership with Zip is showing strong buyer adoption and contributing
to the acquisition of users and signiﬁcant increases in transaction unit
price
23

2

Mercari US

Growth Strategy to Achieve a Full-year GMV Growth Rate of 20% or More●●

Accelerating GMV growth rate on a monthly basis following the bottoming out in July.
Remain conﬁdent in achieving 20% full-year growth in part due to enhanced initiatives going into theholiday season and expected expansion of Mercari Local and our BNPL payment service.

●

Anticipating logistics networks being strained during the end-of-year holiday period, we are working
steadily to capitalize on increasing demand for secondhand gifts by strengthening Mercari’s uniqueshipping methods such as Mercari Local.
Leveraging Mercari Local and BNPL payment service initiatives to help acquire users and unlock new
inventory going into and beyond the holiday season.

●

24

Appendix

25

Board of Directors Structure

3●

Aiming to globalize our business, we have invited a new director with expertise in global
management to serve as one of the independent outside directors.
5 Directors
Directors (2)Shintaro Yamada

Fumiaki Koizumi

Chief Executive Ofﬁcer

President
CEO of Kashima Antlers F.C.
Co., Ltd.

(Re-appointment)(Re-appointment)

Independent Outside Directors (3)Ken Takayama(Re-appointment)

Makiko Shinoda(Re-appointment)

Norio
Murakami(New appointment)

26

Strong Governance Structure (Independent Outside Directors)

3

Makiko Shinoda

Ken Takayama

Norio
Murakami

Background
•
•
•
•
•
•

The Industrial Bank of Japan, Limited (currently
Mizuho Bank, Ltd.)
Chief Financial Ofﬁcer of Rakuten, Inc.
Outside Director of STAR FESTIVAL INC. (current
position)
Outside Director (Audit and Supervisory
Committee Member) of TECHMATRIXCORPORATION (current position)
Outside Director (Audit and Supervisory
Committee Member) of Metaps Inc.
Outside Board Member of MEDIA DO Co., Ltd.
(current position)•

The Long-Term Credit Bank of Japan, Limited(currently Shinsei Bank, Limited)
McKinsey & Company, Inc.
Novartis Pharma K.K.
Head of Finance of Nestlé Nutrition K.K.
(currently Nestlé Health Science)
Director CFO of Hobonichi Co., Ltd.
Director of YeLL Inc. (current position)

•
•
•
•
•

•
•
•
•
•
•

Hitachi Electronics Corporation (nowHitachi Kokusai Electric Inc.)
Chairman Emeritus of Google Japan,
Inc. (currently Google Japan G.K.)
External Director, V-cube, Inc. (current
position)
External Director, Weathernews Inc.
Chairman and Representative Director,
ENERES Co., Ltd.
Outside Director, CellSource
Corporation (current position)

Reasons for Selection
as Outside Directors•

Specialized knowledge and extensive experiencein the ﬁnancial business and managing internet
services companies.

•

Professional knowledge and deep experiencein D&I, ESG, ﬁnance, etc.

•

Management experience and technicalknowledge of global companies

27

3

Consolidated BS

1

1. Includes long-term borrowings planned to be repaid within 1 year.

28

3

Consolidated P&L

1

1. Operating income + Depreciation and Goodwill amortization29

3

Mercari JP P&L

1

1. From FY2022.6 Q1, to compare business results (YoY) exclusively for C2C transactions, the net sales shown here represents only the C2C results.
2. Excludes internal transactions with Merpay (outsourced payment processing fees)30

3

Mercari US P&L (US GAAP)12

1. Based on US GAAP. Different in booking method from the ﬁgures of Mercari US included in Consolidate PL (J GAAP).
2. Adjusted operating proﬁt after non-cash items (i.e., stock-based compensation and depreciation) are deducted.

31

3

Mercari JP—Q1 Cost Structure●

The increase of promotion costs was due in large part to investments to acquire new users for
future growth.

(Billion JPY)

1

1. Outsourcing expenses, rent, and taxes and dues323

Q1 (Jul–Sep)—Category Shift

Mercari US

Mercari JP

Toys, including trading cards,
grew signiﬁcantly YoY

Toys increased YoY

FY2021.6
Q1

FY2022.6
Q1

FY2021.6
Q1

FY2022.6
Q1

33

3

Merpay—Credit

Volume of Deferred Payment in the EC Market1
●
●

1,880

Amount of deferred payments in the EC market is growing.
A rate of high market growth is forecast for the future.

billion JPY

882

billion JPY

440

billion JPY

Outlook

Forecast

Forecast

Forecast

Forecast

Source: E-commerce Payment Services (Payment Gateway) Market in Japan: Key Research Findings 2021. Survey by Yano Research Institute (notice: based on the transaction amount of deferred payment service providers)34

3

Mercari US—US Reuse Market●●

The US online reuse market has more than doubled since 2015 and is expected to reach approx. 200 billion USD
by 2030.
Key categories to watch include apparel and electronics, some of our strongest areas, while the data overall
supports our strategy of continuing to strengthen our horizontal marketplace covering a wide range ofdemographics and categories to meet the growing market demand.

2030 Forecast

US Online Reuse Market

2015$25 billion$196 billion

2020$56 billion

Source: Mercari US ”The Reuse Report”

35

3

ESG—Initiatives in Q1 for Each Material Topic
Material Topic

Initiatives in Q1

Creating a Circular
Economy/Mitigating
Climate Change● Took part in global initiatives (supported the TCFD and replied to CDP questionnaires)● Added 59 groups that promote Mercari and the circular economy as recipients of the funds collected
through the Mercari Donation feature

Diversity & Inclusion● Entered into a school education partnership with Kamiyama College (tentative name) for thepromotion of Diversity & Inclusion (D&I)● Implemented Mercari's new normal "Your Choice" policy to accommodate diverse working styles.
● Released the Mercari Culture Doc externally. This internally drafted document summarizes the values
shared among our employees

3

Local Empowerment● Kicked off the advance opening of Mercari Shops, a service that helps companies start offering online
sales and establish their own online shops, through Group company Souzoh● Formed partnership agreements with Souzoh and the communities of Funabashi, Yamada, and Seto
● Developed donation packing materials* jointly with the Nippon Foundation as a new way to stimulate
donations (Note: Part of the proceeds from buying the packing materials go to the Foundation)

4

Safe, Secure, and Fair
Transactions● Ran the ﬁrst ever Advisory Board on the Ideal Form of a Marketplace● Entered a comprehensive partnership agreement with Asahi Beer to build an environment for safe
and secure transactions and to pursue customer satisfaction

5

Corporate
Governance/
Compliance● Invited Norio Murakami, who is experienced in global corporate management, to join the company as
an independent outside director. With his appointment, we aim to foster global business.
● Updated the Group’s report on corporate governance

1

2

36

3

For Investors New to Mercari●

Materials that cover basic information regarding Mercari Group

Fact Book link
https://speakerdeck.com/mercari_inc/mercari-fact-book-en

Overview link
https://speakerdeck.com/mercari_inc/merpay-overview-en

37Disclaimer
This material has been prepared based on information gathered at the time of its
preparation and is not in any way intended as a commitment to future implementation.
Also note that information contained herein has not been audited or reviewed by anindependent certiﬁed public accountant or audit corporation, and includes ﬁnancial
information based on past ﬁnancial statements or accounting documents as well as
management ﬁgures not based on ﬁnancial statements or accounting documents.
This document is an English translation of the original Japanese language document andhas been prepared solely for reference purposes. No warranties or assurances are given
regarding the accuracy or completeness of this English translation. In the event of any
discrepancy between this English translation and the original Japanese language
document, the original Japanese language document shall prevail in all respects.

The FY2022.6 Q2 ﬁnancial results are scheduled to be released at 15:00 or lateron February 3.

38