Digital Garage, Inc.

1Q of FYE March 31, 2017 Financial Report2016.11.10

Investment Highlights
Income before income taxes 3.1 B JPY +62% YoY for 1Q FY17.3〜 Annual progress rate 44% despite 9 months irregular settlement due to fiscal term change 〜Ⅰ

IT: Large profit growth brought by a big exit, driving global incubation ecosystem Income before income taxes led by sales of stocks due to the acquisition of the investee(Citrus, a leading
payment provider in India) became +26% YoY 1.3 B JPY
 Launched “DG Lab Fund” to strengthen group’s incubation business Established “DG Technologies” to drive technical development in coordination with DG LabⅡMT : Smartphone Ads continue a good state, accelerating strategic data science business Significant increase : YoY Sales +46% 6.5 B JPY, Income before taxes +49% 0.3 B JPY
 Smartphone business showing good growth Propelling data science business coordinating with “DG Lab”

Ⅲ

FT : Expansion of profit-making foundation for Payment services, driving next-gen FinTech
 Quarterly transaction surpassed record-high 0.3 T JPY, YoY revenue +15%, Income before taxes +13%
 Started to support Apple Pay. Along with Alipay and Line Pay, cooperating with big platformers at fullswing.
 Established a JV ”ANA Digital Gate” with ANA Group to work on Blockchain related projects※ DG takes a management approach to drive performance based on income before income taxes for total and by segment
Copyright © 2016 Digital Garage, Inc. All Rights Reserved2

FY17.3 1Q Consolidated P/L Summary
YoY Sales grew +12%, Income before income taxes grew + 62% to 3.1 B JPY～ Incurred extraordinary income due to sales of stocks of a portfolio company,44% progress rate on income before income taxes basis ～FY16.6

FY17.3

1Q (Act)

1Q (Act)%Amount

Net sales

10,336

11,558+11.8+1,222

Operating income

1,425

412-71.1-1,012Non-operating income

669

1,566

2.3 x+896

520

1,273

2.4 x+752

Non-operating expenses

231

197

-14.9-34

Foreign exchange loss

131

67-48.7-64

Ordinary income

1,863

1,781-4.4-81

Extraordinary income

78

1,380

17.6 x+1,302

78

12-83.9-65-

1,368-+1,368

1,9413,148+62.2+1,207744

456-38.7-288

1,1962,689

2.2 x+1,492

JPY in Millions

Investment profit on equity method

Gain on change in equity
Gain on sales of investments in securities

Income before income taxes
Income taxes
Net income attributable to owners of parentYoY

FY17.39 month1Q(Forecast) Progress
37,500

31%

7,100

44%

5,300

51%

Note: Compared FY17.3 1Q with FY16.6 1Q as follows due to change of fiscal term
Companies whose fiscal term was March ending prior to the change : FY16.6 1Q (April – June ) vs FY17.3 1Q (April – Sep.)
Companies which changed fiscal term to March ending: FY16.6 1Q (July – Sep. ) vs FY17.3 1Q (July – Sep.)
Copyright © 2016 Digital Garage, Inc. All Rights Reserved3

FY17.3 1Q Consolidated Segment P/L Summary
Significant profit increase in all segments; MT sales／profit both over +45% YoY growth～ MI being mainly influenced by the irregular settlement, investment profit on equity
method from Kakaku.com growing steadily on real term basis ～FY16.6

FY17.31Q (Act)1Q (Act)%Amount10,336

11,558+11.8+1,222

37,50031%

Incubation Technology

1,899

496-73.8-1,403

6,5008%MT Marketing Technology

4,502

6,550+45.5+2,048

17,50037%

FT Financial Technology

3,934

4,511+14.7+576

13,50033%------

1,941

3,148+62.2+1,207

7,100

44%

Incubation Technology

1,064

1,340+26.0+276

2,50054%

MT Marketing Technology

247

368+49.2+121

1,10034%

FT Financial Technology

413

468

+13.3+54

1,500

31%

MI Media Incubation

627

1,292

2.1 x+664

2,900

45%

JPY in Millions

Net sales
ITMI Media IncubationIncome before income taxes
ITYoY

FY17.39 month1Q(Forecast) Progress

Note: Income before income taxes per segment is based on figures prior to elimination or group deduction, etcCopyright © 2016 Digital Garage, Inc. All Rights Reserved4

FY17.3 1Q Consolidated B/S Summary
JPY in Million

FY16.6

FY17.3 1Q

Difference

Reason for change / Remarks

Current assets

48,32453,818+5,493

Cash and deposits

15,703

18,137+2,434

New borrowings, payout of corporate tax and dividends

Receivables

13,94615,001+1,054

Money held in trust

2,5924,544+1,951

Payment segment related items, stock-selling
Payment segment related items

Operational investment securities

11,164

11,327+162

Fixed assets

29,011

28,665-346

Investment securities

14,844

15,248+403

Goodwill

5,765

5,647

-117

Total assets

77,33582,483+5,147

Current liabilities

30,18736,402+6,215

Deposits

21,87623,882+2,005

Short-term borrowing

3,200

7,126

+3,925

Fixed liabilities

16,484

14,633-1,850Long-term borrowing

15,37013,671-1,698

Total liabilities

46,671

51,036+4,365

Net assets

30,664

31,446+782

Shareholders' equity

28,61029,895+1,284

Common stock

7,435

7,437+1

Capital surplus

2,825

2,828+2

Retained earnings

18,41919,699+1,280

1,502

986-515138▲ 56-194

77,33582,483+5,147

Accumulated other comprehensive income

Unrealized gains on securities

Liabilities / Net assets

New investment
Increased investment profit on equity method, stock-selling, mark-tomarket for listed stocks, etc.

Payment segment related items
Transfer from Long-term borrowing, demand for working capital
Transfer of Long-term borrowing due within one year toCurrent liabilities

Driving finance strategy with focus on
asset and capital efficiency

Copyright © 2016 Digital Garage, Inc. All Rights Reserved

5

Contribution to Net sales(B Yen)10.3

IT△1.4(△74%)

MT+2.0(+46%)

FT

11.5+0.5(+15%)

FY16.61Q

FY17.3
1Q+1.2 B Yen (+12%)
Copyright © 2016 Digital Garage, Inc. All Rights Reserved

6

Contribution to Operating income(B Yen)

1.4

IT
△1.1

MTFT+0.06+0.1(+45%) (+16%)

HQ/Elimination△0.07

FY16.6
1Q0.4
FY17.3
1Q△1.0 B Yen (△71%)
Copyright © 2016 Digital Garage, Inc. All Rights Reserved

7

Contribution to Income before income taxes
FX loss△ 0.1(B Yen)

1.9MTITFTMI

3.1

HQ/Elimination+0.08+0.2(+26%)+0.1(+49%)+0.05(+13%)+0.6(2X)

FY16.61Q

FY17.3
1Q+1.2 B Yen (+62%)
Copyright © 2016 Digital Garage, Inc. All Rights Reserved

8

Contribution to Net income attributable to owners of parent(B Yen)
Investment profit
on equity method

1.1Profit
attributableto nonIncome
ExtraExtracontrolling
ordinary ordinary taxes interests+ 0.7

income+1.3
Non-op (18X)
Non-opOp
income income expense△1.0+0.8 △0.03(△71%) (2.3X) (△15%)

loss+0.01△0.2(△39%)+0.002(41X)

2.6

Gain on sales ofinvestments in securities+ 1.3

FY16.61Q

FY17.3
1Q+1.5 B Yen (2.2X)
Copyright © 2016 Digital Garage, Inc. All Rights Reserved

9Segment Performance Review

Copyright © 2016 Digital Garage, Inc. All Rights Reserved

10

IT Segment Highlights
Segment
Income before
income taxes

1.3
YoY

Major Portfolio
Blockstream [U.S. /Canada]

B Yen+26 ％Develops sidechain
technologies, parallel
blockchains that areinteroperable

Current Portfolio
EquityDomestic
Overseas

FundTotalNote)# ofcompanies

Book Value(B Yen)

118
3682
6

10.4
1.8
8.6
0.7

124 11.2

DG Incubation’s investment balanceMark-to-market as of quarter end forlisted stocks. Equity includes convertible note

Increments [Japan]
Provide technicalknowledge platform
called Qiita forengineers

Droom [India]

Welby [Japan]

A leading online marketplace for
new and second-hand automobiles
in India

Builds apps for patients with chronic
malady, diabetes, cancersWevr [U.S.]

Goodpatch [Japan]

Virtual reality community and VR
media player for aspiring andprofessional creatives

Estimote [U.S.]
Provides small, wirelesssensors and location
technology to retailers

Web development and consulting
service firm

Monstar Lab [Japan]
Operates Sekai Lab, a global outsourcing
platform that provides a network of over
10 k engineers in over 15 countries
Copyright © 2016 Digital Garage, Inc. All Rights Reserved

11

MT Segment Highlights
Segment sales

6.5
YoY

B Yen+46 ％Achieved + over 45% YoY growth both in sales andprofit. Growth continuing to gain traction inperformance based ads sales【Segment sales】(B Yen)Segment
Income before
income taxes

3.6
YoY+46%

6.5【Sales from Performance-based ads】

(B Yen)

+62%

4.5

3.1

FY16.61Q

FY17.3
1Q

1.4
1.5

0.9
0.7
1.4

B Yen
+49 ％

5.1

2.1

FY16.6
1Q

Smartphone /app+62%
Cosmetics /HR, etc＋91%
Financial＋45%

FY17.3
1Q

Copyright © 2016 Digital Garage, Inc. All Rights Reserved

12FT Segment Highlights
Amount oftransactions

0.3
YoYT Yen+11 ％# oftransactions

58 MYoY

Exceeded 0.3 trillion yen for the first time inquarterly transaction volume.
Income before income taxes grew +13% YoY【Amount of Transactions】【Income before income taxes】(T Yen)(B Yen)

0.27

+11%

+5 ％

Market growthrate *7.6

0.30%

* METI “Domestic BtoC E-Commerce 2015”

+13%

51

0.41

FY17.3
1Q

FY16.61Q

0.46

31
FY16.61Q

FY17.31Q

Copyright © 2016 Digital Garage, Inc. All Rights Reserved13MI Segment Highlights
Income before
income taxes

Investment profit on equity methodfrom Kakaku grew steadily

B Yen2.1 x【Income before income taxes】

1.2
YoY

YoY compared FY17.3 1Q with
FY16.6 1Q as follows due tochange of fiscal term
FY17.3 1Q includes invest profit
on equity method from Kakaku
for six months (April throughSep.)(B Yen)Adjustment for changeof fiscal term
Income before
income taxes

0.6

1.2
0.7
0.6

FY16.61Q

FY17.31Q

Copyright © 2016 Digital Garage, Inc. All Rights Reserved

14Appendix

Copyright © 2016 Digital Garage, Inc. All Rights Reserved

15Quarterly Consolidated Sales / Income before income taxes
YoY Sales grew +12%, Income before income taxes grew + 62% to 3.1 B JPY～ IT achieved big exit, MT and FT grew ～(JPY in Million）【Net Sales】

FY16.6【Income Before Income Taxes】

FY17.3

FY16.6

FY17.3Copyright © 2016 Digital Garage, Inc. All Rights Reserved

16Quarterly comparison of IT Segment
Achieved significant growth in profit by selling stocks of a portfolio company acquired〜 Enhanced domestic and global portfolio. Investment balance reached about 11 B Yen 〜(JPY in Million）【Net Sales】

FY16.6【Income Before Income Taxes】FY17.3

FY16.6

FY17.3Copyright © 2016 Digital Garage, Inc. All Rights Reserved

17Quarterly comparison of MT Segment
Achieved + over 45% YoY strong growth both in sales and profit～ Growth gaining traction in performance-based ads. Data science business grew steadily ～(JPY in Million）【Net Sales】

FY16.6【Income Before Income Taxes】

FY17.3

FY16.6

FY17.3Copyright © 2016 Digital Garage, Inc. All Rights Reserved18Quarterly comparison of FT Segment
Achieved + over 10% YoY growth both in sales and profit~ Payment grew in C to C domain relating to event ticket selling in summer ~(JPY in Million）【Net Sales】

FY16.6【Income Before Income Taxes】

FY17.3

FY16.6

FY17.3Copyright © 2016 Digital Garage, Inc. All Rights Reserved19

Quarterly comparison of MI Segment
Investment profit on equity method from Kakaku grew steadily~ Launching incubation business with media as a core ~【Income Before Income Taxes】【ARPU for domestic users 】(JPY in Million）（in Yen）

Kakaku.com【Monthly unique users 】（in Million）

Tabelog

FY16.6

FY17.3Results Briefing for the Second Quarter of the Fiscal YearEnding March 31, 2017, Kakaku.com, Inc.
Copyright © 2016 Digital Garage, Inc. All Rights Reserved20Last 6 Year Financial Performance, Consolidated
Net sales
100 M Yen

CAGR 32 ％337
279
110380Net income
437

100 M Yen

CAGR 42 ％149
9212750 51
28

11.6 12.6 13.6 14.6 15.6 16.6

11.6 12.6 13.6 14.6 15.6 16.6

ROE

Dividend Payout Ratio

TSE Avg.* 7.9 %14.0 ％
11.8 ％
9.7 ％

17.6 ％
17.2 ％

10.1 ％

11.6 12.6 13.6 14.6 15.6 16.6

23.1％
10.3 ％
8.6 ％
0％

27.3 ％

8.2 ％

11.6 12.6 13.6 14.6 15.6 16.6

Note ) * Tokyo Stock Exchange, Summary of Earnings Digests by Listed Companies, Fiscal year ending Mar. 2015 (TSE 1st, 2nd, Mothers, and JASDAQ)
Used Net income attributable to owners of parent for FY15.6 onwards
Copyright © 2016 Digital Garage, Inc. All Rights Reserved

21Quarterly Profit and Loss(Consolidated)

JPY in Million

FY16.6
1Q

2Q

FY17.3
3Q

4Q

1Q

Net sales

10,336

9,507

11,631

12,288

11,558Operating income

1,4252011,477

1,097412

Ordinary income

1,863

831

1,887

1,6101,781

Income before income taxes

1,941

860

1,933

2,838

3,148

1,196

599

1,510

1,857

2,689

Net income attributableto owners of parent

Copyright © 2016 Digital Garage, Inc. All Rights Reserved

22Quarterly Segment Profit and Loss(Consolidated)

JPY in Million

Net sales

FY16.6
1Q

2Q

FY17.3
3Q

4Q

1Q

10,336

9,507

11,631

12,288

11,558ITIncubation Technology

1,899

657

1,863

1,921

496

MT

Marketing Technology

4,502

4,730

5,648

6,147

6,550

FT

Financial Technology

3,934

4,118

4,119

4,219

4,511

MIMedia Incubation

-----

1,941

860

1,933

2,838

3,148

Income before income taxes
ITIncubation Technology

1,064

△ 215

879

1,376

1,340

MTMarketing Technology

247

313

386

448

368

FT

Financial Technology413

453

440

451

468

MIMedia Incubation

627

566

683

1,174

1,292

Note: Income before income taxes per segment is based on figures prior to elimination or group deduction, etc
Copyright © 2016 Digital Garage, Inc. All Rights Reserved

23

Press Releases
DateTitle

2016.10.19

Digital Garage and DG Lab will host THE NEW CONTEXT CONFERENCE 2016 SAN FRANCISCO

2016.9.20

Apple Pay Coming to VeriTrans2016.8.24Digital Garage and TIS to Establish Strategic Technological Development Company DG Technologies toDevelop FinTech-related Business2016.7.22

Digital Garage and Daiwa Securities Group establish "DG Lab Fund," a fund directed towards startups
that specialize in next generation technology

2016.7.4

Digital Garage, Kakaku.com, and Credit Saison establish open innovation-based R&D organization "DGLab"Copyright © 2016 Digital Garage, Inc. All Rights Reserved24Please note that the business forecasts and strategies covered in today’s presentation are based on our current evaluation and future results may vary significantly depending
on unforeseeable events or circumstances. This announcement is solely for the purpose of the investors relationship and is not for making any solicitation for investment inany securities. This announcement does not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States or any other jurisdiction in whichsuch offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any securities of our consolidated
subsidiaries have not been registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements of the U.S. Securities Act. Any public offering of securities to be made in the United States will bemade by means of a prospectus. Such prospectus will contain detailed information about the company making the offer and its management and financial statements.