Financial Results Briefing
for Q3 FY2023
August 9, 2023

This report contains forward-looking statements on business performance based on the judgments, assumptions, and beliefs
of management using the information available at the time. Actual results may differ materially due to changes in domestic oroverseas economic conditions or changes in internal or external business environments or aspects of uncertainty contained in
the forecasts, latent risks or various other factors. In addition, risk and uncertainty factors include unpredictable elements that
could arise from future events.

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Contents
P.01 Financial Results
Overview for Q3 FY2023
02 Financial highlight

P.16 Measures to be adopted
17 Basic policies and priority issues

03 Consolidated P/L

for FY2023

04 Consolidated SG&A

18 Cloud drug record service

05

20 Maternal and child health handbook app

Performance by segment+ Childcare DX services
25 School DX business28 Image of medium-term profit

P.30 Appendix
31
32
33
34
35

Earning forecast of FY2023
Consolidated B/S
Trends in consolidated P/L
Trends in consolidated SG&A
Performance by segment

39
40
41
43
47

The list of main healthcare services
Overview of healthcare services
Cloud drug record service
Maternal and child health handbook
School DX business

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Financial Results Overview
for Q3 FY2023

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I would now like to give you an overview of the results for the third
quarter of the fiscal year ending September 2023.

1

Financial highlight１

Operating income decreased, profit for the period increased.
・Net sales: ¥20,113 million(+¥758 million, YoY)

・Operating income: ¥(17) million (-¥440 million, YoY)
⇒ Loss-making projects in DX support business for major companies.
・ Profit attributable to owners of parent: ¥495 million (+¥583 million, YoY)
⇒ 873 million yen recorded as consumption tax refund(extraordinary income).

2

Healthcare business: Trend of contracting losses continued.
School DX business: Trend of contracting losses continued.
Other business: Loss-making projects in the DX support businessfor companies continued being handled with the aim of winding
them down.

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2Here are the financial highlights.
Consolidated net sales reached 20,130 million yen.
The operating loss was mainly affected by the loss-making in the DX
support business for companies, resulting in 17 million yen.
Profit attributable to owners of parent was primarily influenced by therecognition of special profits, amounting to 495 million yen.
Our main achievements in the first three quarters are as follows.
In the healthcare business and the school DX business, results
improved as planned.
In other business, we are still dealing with loss-making projects inpart of the DX support business for companies, implementing
measures to resolve it within this fiscal year.
I will be explaining our initiatives in each area in greater detail, lateron.

Consolidated P/L
Net sales : increased
Operating income : decreased, ordinary income and profit: increased（Unit：Mil yen）

FY2022Q3

FY2023
Q3

Net sales

19,354

20,113

Cost of sales

5,756

6,495

29.7%

32.3%

13,597

13,617（ratio)Gross profit（ratio）

70.3%

67.7%

SG&A

13,175

13,635（ratio）

68.1%

67.8%

Operating income

422

(17)

（ratio）

2.2%(0.1)%

Ordinary income

87

151

（ratio）

0.5%

0.8%

Profit attributable toowners of parent

(88)

495

(0.5)%

2.5%（ratio）

YoY
AmountPercentage

+758

+3.9%

+739

+12.8%

+19

+0.1%

+460

+3.5%

(440)

-%

+63

+72.4%+583-%

Q1: Posting of spot
sales of the videostreaming service

Posting of spot cost of
sales of the videostreaming service
Increase in advertisingexpenses (AdGuard)

Q3: Recording ofextraordinary income
for consumption tax
refund, etc., of 873
million yen

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3

I would now like to explain the consolidated P/L.
Net sales increased, operating profit decreased, but ordinary profit
and profit attributable to owners of parent for the quarter bothincreased.
Net sales increased 3.9% year on year to 20,113 million yen.
In the content business, while the number of paying subscribers has
decreased, net sales increased overall due to strong spot sales fromvideo distribution in the subsidiary Video Market in the first quarter,
as well as the successful performance of original comics and securityrelated applications. Additionally, the healthcare business and school
DX business have been progressing well.
Gross profit remained stable year on year at 13,617 million yen,primarily due to an increase in the cost of sales of some DX support
businesses for companies.
Operating income posted losses of 17 million yen, primarily due to anincrease in selling and administrative expenses attributed to the risein advertising and promotion expenses.
Profit attributable to owners of parent came to 495 million yen, due
to the recognition of corporate taxes related to the stock transfer
among group companies in the healthcare business in October 2022.
Additionally, special profits of 873 million yen in "consumption tax
refund, etc." and 237 million yen in "gain on change in equity" wererecognized.

Consolidated SG&A：
Advertising expenses and outsourcing expenses : increased（Unit：Mil yen）

FY2022Q3

FY2023Q3

YoY
AmountPercentage

13,175

13,635

+460

+3.5%

1,137

1,569

+432

+38.0%

5,786

5,929

+142

+2.5%

Commission fee

2,315

2,223

(92)

(4.0)%

Subcontract
expenses

1,542

1,462

(80)

(5.2)%

Depreciation

991

924

(67)

(6.8)%

1,400

1,526

+125

+9.0%

SG&A
Advertisingexpenses
Personnel
expenses

Other

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The breakdown of consolidated SG&A is as shown.

Increase in sales
promotion costs for
AdGuard4

Performance by segment

Content
Business・Content service(Entertainment & Life content)

・Original comics service

Security

Healthcare
Business
・Healthcare service for
women
・Childcare DX service
・Cloud drug record service
・Online consultation
service, etc.

School DX
Business・School DX service

Other
Business
・AI business・DX support businessfor companies
・Solution service forcorporate

comic

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Next, I would like to explain the performance by segment.

5

Content business: Net sales and operating income
QoQ（Unit：Mil yen）
5,137

5,100
4,639

4,436

4,342

*1

*2

4,364

4,317

1,322

1,411

1,328

The number of paying subscribers
remained almost unchanged.

Operating income
decreased

2,014
1,534

Levelled off net sales

*1

1,383

1,210

Advertising expense increased.
Special factors

1Q

2Q

3Q

FY2022
Net sales

4Q

1Q

2Q

3Q

FY2023Operating income*1：Net sales & Operating income 717 million yen:
Change in treatment of consumption tax in monthly
content services that award points.
*2：Net sales 739 million yen:
Posting of spot sales of the video-streaming service.

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This is the quarterly trend of the content business.
Due to the paying subscribers remaining relatively unchanged, thenet sales have shown a flat trend compared to the previous quarter.
The net sales for the current third quarter accounting periodamounted to 4,317 million yen.
Operating profit decreased to 1,210 million yen compared to theprevious quarter, due to an increase in advertising and promotion
expenses associated with new subscriptions of paid members.

6

Content business: The number of paying subscribers

Total paying subscribers
5.00

4.25

3.69 million subscribers
4.81

4.67 4.59

4.08 3.96

4.48

4.38

4.23 4.16

3.95 3.89

3.80 3.79 3.76 3.73

Degree of decrease
is being reduced
3.69

・Brisk Security-related apps
3.88 3.78

3.69 3.57

3.52

3.33 3.27 3.20

3.20 3.18 3.16 3.14

0.75 0.73 0.71 0.71 0.70 0.69 0.66 0.64 0.62 0.62 0.60 0.59 0.58 0.57

・Mostly unchanged from theprevious quarter

0.55

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY2020

FY2021
Healthcare business

FY2022

FY2023

Content business* The number of paying subscribers are including healthcare business ‘Luna-luna and ‘Caradamedica’ whose business model are monthly paid business above.
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7

The number of paying subscribers in the content business isdecreasing, but the pace of decrease has become even more gradual.
While there is an ongoing trend of contraction overall, the enrollment
in security-related apps has been strong. As of the end of June, thetotal number of paying subscribers stood at 3.69 million.This figure ismostly unchanged from the previous quarter.

Content business: Security-related app

Total paying subscribers

Security-related apps
are growing
Over 610 thousand people
Four functions

Ad blocking

Trace blocking

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY2020

FY2021

FY2022Threat blocking

Parent function（Child protection
function）

FY2023Copyrights (c) 2023 MTI Ltd. All Right Reserved

As of the end of June, the number of paying subscribers to securityrelated apps had grown to 610,000.

8

Content business: Original comics content businessNet sales

Stable growth

Effect of TV drama
adaptation

・The serialization of hit titles
contributed
・Keep in comic titles introduced

1Q

2Q

3Q

FY2021

4Q

1Q

2Q

3Q

FY2022

4Q

1Q

2Q

3Q

FY2023Copyrights (c) 2023 MTI Ltd. All Right Reserved

The original comics content business experienced a decrease inrevenue compared to the second quarter due to a backlash in
download numbers following the TV drama adaptation of a work in
January. However, there is a trend of increased revenue over thequarters.
The stable growth is attributed to the success of multiple hit titles inserialization.

9

Healthcare business: Net sales and operating income（Unit：Mil yen）

QoQ

1,240

908

1,031

977

1,113

1,109
1,001

Net sales increased
・Cloud drug record service(Decrease in spot sales)

・Childcare DX services(Decrease in spot sales)

(336)

(311)

1Q

2Q

(250)

3Q

FY2022

Net sales

(209)

4Q

(145)

1Q

(74)

2Q

(13)

Loss decreased

3Q

FY2023Operating income

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10

In the healthcare business, although the net sales decreased
compared to the previous quarter, there is a trend of reducing
operating losses.
The net sales for the current third quarter accounting period reached1,109 million yen. While there was a reactionary decrease due to therush demand in March, the cloud drug record service is progressing
well.
The childcare DX business is also performing well.
The operating loss came to 13 million yen.
Although there has been continued expense due to upfront
investments, the positive effects of increased revenue and cost
containment are leading to a steady progression towards profitability.

Healthcare business: The number of paying subscribers

Healthcare paying subscribers(LunaLuna, CARADA medica)

0.55 million subscribers

QoQ

Mostly unchanged
0.62

1Q

0.62

2Q

0.60

0.59

0.58

3Q

4Q

1Q

FY2022

0.57

0.55

2Q

3Q

FY2023Copyrights (c) 2023 MTI Ltd. All Right Reserved

The number of paying subscribers in the healthcare business was
mostly unchanged from the previous quarter at 550,000.

11

Healthcare business: Cloud drug record service

1,639

+107

Pharmacies
introduced

1,639
1,532
1,382
1,264

1,096
978
864
765

573

Steady expansion
in the number ofpharmacies that
introduced the service

633

451

1Q

2Q

3Q

FY2021

4Q

1Q

2Q

3Q

FY2022

4Q

1Q

2Q

3Q

FY2023Copyrights (c) 2023 MTI Ltd. All Right Reserved

12

The cumulative number of pharmacies that have introduced the cloud
drug record service increased by 107 stores in the current third
quarter, reaching a total of 1,639 stores, indicating steady expansion.

School DX business: Net sales and operating income（Unit：Mil yen）

272
150
55

65

(121)

(111)

154

155

(246)

1Q

2Q

(305)

3Q

4Q

FY2022

Net sales

Sales expansion
・Increase in number ofschools introducing

153

(107)

(302)

QoQ

(214)

The operating loss
improved significantly
・Effect of increased revenue

1Q

2Q

3Q

FY2023Operating income

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13

In the school DX business, the net sales for the current third quarteramounted to 272 million yen.
This increase is attributed to the rise in the number of schools
introduced since April.
The operating loss was 170 million yen, but it improved significantly.
This is because we had invested heavily to manage a sudden increasein orders compared to the same period last year.
Additionally, stricter rules for recognizing software assets led tohigher outsourcing costs. As a result, our expenses had gone up.
However, thanks to higher revenue and cutting development costs,
the size of the loss was greatly reduced.

School DX business

Cloud-based school affairs support system

The number of
introduced schools
566

Expansion of the numberof introduced schools

340

114

FY2021

FY2022

FY2023（3月まで）

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14

There is a growing demand for the cloud-based school administration
support systems.
The number of schools adopting “BLEND” has shown strong growth,reaching 566 schools, a significant increase of 166.7% compared tothe same period of the previous year, due to its successful
implementation during the new school term in April.

Other business (Includes DX support business for companies, AI):Net sales and operating income（Unit：Mil yen）
1,261

1,277

1,200
1,097

1,190

1,227

1,183

Operating loss
・Responded to loss-making
projects in part of the DX
support business for companies
(36)
(140)
(251)

1Q

2Q

3Q

FY2022
Net sales

(397)

(393)

(413)

(413)

4Q

1Q

2Q

3Q

FY2023Operating income

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15

In other business, the net sales for the current third quarter reached1,183 million yen, and the operating loss was 410 million yen.
This is primarily due to a significant increase in cost of sales in part of
the DX support business for companies since the third quarter of theprevious fiscal year.

We are currently working to resolve the loss-making projects in thisbusiness and aim to resolve them within the current fiscal year.

Measures to be adopted

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16

Next, I would like to explain measures to be adopted, going forward.

Basic policies and priority issues for FY2023
1. Healthcare business: Further sales growth① Further expansion of the Cloud drug record service② Promotion of the platform strategy of the childcare DX, "Boshimo"

2. School DX business: Further sales growth① “BLEND” version upgrade② Increased number of schools introduced in April

3. Content business: Securing profit① Original comics content business growth② Security-related app growth

4. Other business (AI,DX business): Sales growth① AI business expansion② Conclusion of loss-making projects in DX support business
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17

In each segment, we will focus on priority issues based on thefollowing basic policies, respectively.
・In the healthcare business, we will continue to aim for further sales
growth. More specifically, we will focus on further expanding thecloud drug record service and will also promote the childcare DX
platform strategy.
・Similarly in the School DX Business, we will aim for further sales
growth.
・In the content business, the decline in the number of paying
subscribers has slowed but we plan to generate profit in the segment
as a whole through growth in security-related apps and the original
comic business.
・In other business, we will focus on expanding our AI business andaddressing the loss-making projects in the DX support business.

Healthcare business: Cloud drug record service
Connecting pharmacies and patients

Cloud drug record service

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18

Next, I would like to explain the progress targets regarding the
introduction of our cloud drug record service in the healthcare
business.

Healthcare business: Cloud drug record service

Continuing to strengthen cooperation in sales and to
reinforce function development① Continuing to strengthen cooperation in sales
・Collaboration with a major prescription pharmaceutical wholesaler⇒ Sharing more sales information and improving efficiency② Continuing to strengthen function development for differentiation
・Connecting the drug histories possessed by different pharmacies
・Home care and nursing functions
・Additive Logic, Guidance Navigation
・Planning to add electronic prescriptions and other functions as needed

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19

In the cloud drug record service, the number of pharmacies thathave introduced dispensing pharmacies is steadily increasing.
We will continue to strengthen our sales efforts and enhance thefunctionality of the service.
To strengthen sales, we will continue to cooperate in sales with ourbusiness partner MEDIPAL HOLDINGS CORPORATION and improve
efficiency by meticulously sharing sales information.
For function enhancement, we will enable information sharing amonggroup stores. Additionally, we will add features for at-home andcaregiving use, as well as electronic prescription compatibility.

Healthcare business:
Maternal and child health handbook app + Childcare DX services
Connecting parenting households and municipalities

Maternal and child health handbook app+ Childcare DX services

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20

Next, I would like to explain our progress targets for the maternaland child health handbook app “Boshimo” and childcare DX services.

Healthcare business:
Maternal and child health handbook app + Childcare DX services

Development of the platform businessstarting with the maternal and childhealth handbook app "Boshimo"Phase 1：Introducing maternal andchild health handbook app “Boshimo”
Phase 2：Online consultation
Phase 3：Childcare DX services

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In the field of childcare business, we have divided the services into
phases, including the maternal and child health handbook app"Boshimo," online consultations, and childcare DX services, and are
expanding our service offerings.

21

Healthcare business:
Maternal and child health handbook app + Childcare DX services
Accelerated introduction of childcare DX services at municipalities using“Boshimo”
P has e1

P has e2

P has e3

Maternal and childhealth handbook app

Online consultation

Childcare DX services

553

79

100
Tailwind for the“Accompanying
Support Program”*

1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q
FY2017 FY2018 FY2019 FY2020 FY2021 FY2022FY2023

4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY2020 FY2021

FY2022

FY2023

1Q

2Q

3Q

FY2022

4Q

1Q

2Q

3Q

FY2023* Policy initiated by the Ministry of Health, Labour and Welfare in January 2023. Transferred to “Children and Families Agency” from April 1 .
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22

Among the 1,741 municipalities nationwide, the number ofmunicipalities that have introduced the "Boshimo" app reached 553
as of the end of June. "Boshimo" has become the standard maternaland child health handbook for municipalities.
The number of municipalities that have also introduced the online
consultation service has reached 79.
The additional adoption of our focused "Childcare DX service" isprogressing well, and as of the end of June, we have reached acumulative total of 100 introductions.
In particular, the number of municipalities introducing the“Questionnaire” and “Appointment functions” increased, with the
Ministry of Health, Labour and Welfare’s “Accompanied Support
Program ” launched in January this year serving as a tailwind.

Healthcare business:
Maternal and child health handbook app + Childcare DX services
The “Boshimo” app and Childcare DX service are evolving into a platform.

Phase

1

2

3
Childcare DX services

Servicefunctionalities

Fee

The number ofmunicipalities
introduced

Maternal andchild healthhandbookapp¥50,000~¥100,000/
month

553

Onlineconsultation

・ Questionnaire andreservation form functionality
・ Childhood immunizations(Digital preliminary examination
slip , etc.)

・ Infant health checkup
・Visits to all householdswith infants

Monthly：Tensof thousandsof yen79

Tailwind for the“Accompanying
Support Program”*

Initial：Millions of yen ～Monthly：Hundreds ofthousands of yen ～100(Number of municipalities
nationwide 1,741)
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23

The childcare DX service is also progressing smoothly, including
components such as ”Infant health checkup," "Infant home visit," andhigh-value "Child vaccination" services.

Healthcare business:
Maternal and child health handbook app + Childcare DX services
Phase 3︓Childcare DX services

Municipalities advance childcare DX w ith the introduction of
infant health checkup services.
( Digitization of m edical questionnaires and m edical checkup results)
Fukuoka City, Fukuoka Prefecture
Municipal

N o n eed for d a ta en try for p a p er d ocu m en ts( sim p lifica tion of p a p erw ork)
Su b m ission of m ed ica l q u estion n a ire( d ig ita liza tion of a p p lica tion )Prom p t sh a rin g of d eta ils of m ed ica l
exa m in a tion in terview s a n d d a ta on
h ea lth ch ecku p resu lts

Th e resu lts of h ea lth ch ecku p s ca n
b e view ed im m ed ia tely on th e a p pGu住⺠
a rd ia n

I nfant checkup
serviceI m m u n iza tion
fa cilities
H ea lth ch eck
ven u e“Boshimo” app

24

In August, Fukuoka City introduced the infant health checkup service.
With the traditional paper-based processes, it used to take several
months from application to receiving the health checkup results andsubsequent meetings and support with public health nurse.
Digitizing the procedures
streamlines the process.

eliminates

manyinefficiencies

andGuardians can now apply anytime, anywhere using the app, and thenecessary data is sent directly to the municipality, eliminating theneed for staff to input data manually. After the health check, data is
promptly shared between medical institutions, municipalities, andpublic health nurse, leading to quicker and more efficient support.
We will continue to increase such cases in the future and drive
revenue expansion.

Motivation Works Inc.

School DX businessConnecting students and teachers

Cloud-based school affairs support system

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Next, I would like to explain more about the school DX business.

25

School DX business

Cloud-based school affairs support system

Motivation Works Inc.

Conceptional image of a risein the number of schools introducing the system

Aiming to expand thenumber of schools to be
introduced in the next
fiscal year

⇒Planned

566

・Definite orders received for October 2023
introduction (26 schools)
・Many potential projects for April 2024
introduction

340
114

FY2021

FY2022

FY2023
FY2024（3月まで）FY2025

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26

With demand for cloud-based school administration support systems
still growing, we plan to further expand the number of schools
introducing “BLEND”.
Among schools which decided not to introduce the system before the
new school year in April, there is still strong interest in the cloudbased school administration support system and so we will continue
conducting proactive sales activities that will lead to introduction by
the next fiscal year.

School DX business

Cloud-based school affairs support system

Motivation Works Inc.

Image of medium-term profit

Aiming to significant
reduce loss next fiscal
year
Net sales : Expansion of the number ofschools that introduced the system
Operating income : Significantly reducing
introduction expenses per school
FY2021

FY2022

FY2023

ActualActualPlannedFY2024
Planned

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27

In the school DX business, there is every prospect of a smaller loss
next fiscal year, given expectations for a boost to sales fromexpansion in the number of schools introducing “BLEND” andsignificant reduction in introduction costs per school as a result of thedevelopment of a new version which will reduce development andoperating costs in the future.

We remain strongly committed to the school DX business.

Image of medium-term profit(by segment)

Content business

Healthcare business

Degree of decrease in the number of paying subscribers is reduced
Focus on highly in-demand contents

Focus on expansion of stock sales (=profit)

School DX business
Sharp growth in a short period of time

Other business(Includes DX support
business for companies, AI)
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Our medium-to-long term earnings projection is as shown here.
The school DX business is expected to achieve the fastest businessgrowth. We believe that the healthcare business will be a driver of
profit growth in the medium term.
By focusing on the steadily expanding cloud drug record service andthe childcare DX service, we aim to achieve “sustainable growth”
through growth in the subscription-based sales of each service.

〈Contact us〉
Investor Relations Officee-mail: ir@mti.co.jp
https://ir.mti.co.jp/eng/

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Thank you for your time.