Financial Results Briefing
for Q1/ 2023
February 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.

Copyrights (c) 2023 MTI Ltd. All Right Reserved

Contents
P.01 Financial Results
Overview for Q1
02 Financial highlight
03 Consolidated P/L
04 Consolidated SG&A
06

Performance by segment

16 Progress for earnings
forecast of H1

P.17 Approach in Q2 and beyond
18 Basic policies and priority issues
for FY2023
19 Cloud drug record service
21 Maternal health record book app+ Childcare DX services
25 School DX business27 Content business28 Image of medium-term profit
29 Earnings forecast for FY2023

Copyrights (c) 2023 MTI Ltd. All Right Reserved

Financial Results Overview
for Q1 FY2023

Copyrights (c) 2023 MTI Ltd. All Right Reserved

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

1

Financial highlight
１

Q1 Results

・Net sales: ¥7,080 million(Up ¥529 million, Up 8.1%, YoY )・Operating income: ¥(61) million(Down ¥512 million)

・Profit attributable to owners of parent: ¥(590) million└ Posting of income taxes associated with the transfer of shares between Group companies

2

Progress for earnings forecast of H1・Net sales: 56.0%
・Operating income: Q1 actual results were a loss of 61million yen
against 200 million yen

3

Q1 Achievements and initiatives
・ Steady progress in Content business, Healthcare business andSchool DX business.
・ Other Business responded to loss-making projects in part of
the DX support business for major companies.
Copyrights (c) 2023 MTI Ltd. All Right Reserved

2Here are the financial highlights.
Consolidated net sales increased year on year to 7,081 million yen, and theoperating loss was 61 million yen.
Loss attributable to owners of parent came to 591 million yen.
The progress rate of net sales compared to the earnings forecast for the
first half was 56%, remaining within the forecast range.
Operating income remains below the first half forecast of 200 million yen, aloss of 61 million yen.
In terms of major achievements and initiatives in the first quarter underreview, the content business, the healthcare business and the school DX
business remained strong.
In other business, profitability has been deteriorating in some of the DX
support businesses for companies, and we are taking measures to resolve
the situation.
I will be discussing our initiatives in each area in greater detail, later on.

Consolidated P/L
Net sales : slight increased
Operating income : decreased（Unit：Mil yen）

FY2022Q1

FY2023
Q1

Net sales

6,551

7,080

Cost of sales

1,895

2,538

（ratio)

28.9%

35.9%

Gross profit

4,656

4,542

（ratio）

71.1%

64.1%

SG&A

4,204

4,603

（ratio）

64.2%

65.0%

Operating income

451

(61)

（ratio）

6.9%-%

Ordinary income

395

(88)

（ratio）

6.0%-%

Profit attributable toowners of parent

252

(590)

（ratio）

3.9%

-%

YoY
AmountPercentage

+529

+8.1%

+643

+34.0%(114)(2.5)%

+398

+9.5%

(512)

-%

(484)

-%

(843)

-%

Copyrights (c) 2023 MTI Ltd. All Right Reserved

Posting of spot sales ofthe video-streaming
service

Posting of spot cost of
sales of the videostreaming service
Increase inoutsourcing expenses.
(School DX business)
Increase in advertisingexpenses (AdGuard)

Posting of income taxes
associated with thetransfer of shares
between Group
companies

3

I would now like to discuss the consolidated P/L.
Net sales increased 8.1% year on year to 7,081 million yen.
In the content business, net sales increased overall due to strong video
sales at the consolidated subsidiary, Video Market Corporation, and thesteady performance of original comics and security-related applications, aswell as strong results in the healthcare business and school DX business.

Gross profit declined 2.5% year on year to 4,542 million yen, mainly due toan increase in the cost of sales of some DX support businesses forcompanies.
Operating income and ordinary income posted losses of 61 million yen and
89 million yen, respectively, mainly due to an increase in SG&A expenses inthe school DX business.
Loss attributable to owners of parent came to 591 million yen, reflecting theposting of corporate taxes associated with the transfer of shares between
Group companies in the healthcare business.

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

FY2022Q1
SG&A

FY2023
Q1

YoY
AmountPercentage

4,204

4,603

+398

+9.5%

360

479

+118

+33.0%

1,912

1,989

+76

+4.0%

Commission fee

753

746

(６)

(0.8)%

Subcontract
expenses

440

549

+109

+25.0%

Depreciation

303

289

(13)

(4.5)%

Other

435

549

+113

+26.0%

Advertisingexpenses
Personnel
expenses

Copyrights (c) 2023 MTI Ltd. All Right Reserved

The breakdown of consolidated SG&A is as shown on page 4.

Increase in sales
promotion costs for
AdGuard

Stricter requirements
for the posting ofsoftware assets(School DX business)

4

(Reference) Income tax-related settlement of gains
on sale of shares in Boshimo Ltd.
Contributing to increase of ¥1,096 million in profit

Nonconsolidated

Gain on sale of shares of subsidiaries: ¥1,579 million
Income taxes: ¥483 million

Contributing to decrease of ¥483 million in profit

Consolidated

Gain on transfer of shares: ¥0 million (Consolidated elimination)
Income taxes: ¥483 million (Deferred income taxes will not be posted)

Copyrights (c) 2023 MTI Ltd. All Right Reserved

5Here, I will explain the posting of corporate taxes, which is the main reason
for the decline in profit.
In October 2022, we transferred some of the shares we held in BoshimoLtd., which operates a childcare DX business, to MTI Healthcare Holdings
Inc., which is a joint venture with MEDIPAL HOLDINGS CORPORATION.
As a result, we posted a 1,579 million yen gain on sale of shares ofsubsidiaries in our non-consolidated financial results.
The settlement of accounts for both non-consolidated and consolidated
results is as shown on the slide.
In the non-consolidated results, a 1,579 million yen gain on sale of sharesin subsidiaries is recorded as extraordinary income, which results incorporate taxes of approximately 483 million yen.
This is a factor in the approximately 1 billion yen increase in profit.
On the other hand, this is also a factor in the 483 million yen reduction in
profit in the consolidated results.
This is because the gain on sale of shares in subsidiaries in the nonconsolidated results is eliminated on a consolidated basis, while it is subject
to corporate taxes totaling 483 million yen in the consolidated results.
As a result, the impact on consolidated profit is a negative 483 million yen.

Performance by segment“School DX Business” has been added to the segment disclosure
from Q1 under review.
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

Copyrights (c) 2023 MTI Ltd. All Right Reserved

Next, I would like to discuss performance by segment.

6

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

Net sales increased,
and the profit decreased

5,137
4,639

＋： Posting of spot sales of thevideo-streaming service
1,534

FY2022
1Q
Net sales

1,411－：The number of paying
subscribers decreased

FY2023
1Q
Operating income

Copyrights (c) 2023 MTI Ltd. All Right Reserved

7

In the content business, net sales increased and operating income declined.
Net sales increased 10.7% year on year to 5,137 million yen due to theposting of spot sales of video distribution.
Operating income decreased 8% year on year to 1,411 million yen due toan increase in SG&A expenses associated with higher advertising expenses
to promote new subscriber registrations for security-related applications.

Content business: The number of paying subscribers

Total paying subscribers

3.76 million subscribers
4.48

3.78

4.38

3.69

4.23

4.16

3.95

3.89

3.33

3.27

3.80

3.79

3.76

Degree of decrease
is being reduced
・Brisk Security-related apps

3.57

3.52

3.20

3.20

3.18

0.58

0.70

0.69

0.66

0.64

0.62

0.62

0.60

0.59

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

FY2021

Healthcare business

FY2022・Mostly unchanged from theprevious quarter

1Q
FY2023

Content business* The number of paying subscribers are including healthcare business ‘Luna-luna and ‘Caradamedica’ whose business model are monthly paid business above.
Copyrights (c) 2023 MTI Ltd. All Right Reserved

8

As of the end of December, the number of paying subscribers stood at 3.76
million.
This figure is mostly unchanged from the previous quarter.

Content business: Security-related app

Total paying subscribers

Security-related apps
are growing
Over 510 thousand people
Four functions

Ad blocking
1Q

2Q

3Q
FY2022

4Q

Trace blocking

1Q

Threat blocking

Parent function（Child protection
function）

FY2023Copyrights (c) 2023 MTI Ltd. All Right Reserved

As of the end of December, the number of paying subscribers to security
related apps had grown to 510,000.

9

Content business: Original comics content businessNet sales

Stable growth
The serialization of
hit titles contributed
Keep in comic titles introduced

1Q

2Q

3Q

FY2021

4Q

1Q

2Q

3Q

FY2022

4Q

1Q
FY2023Copyrights (c) 2023 MTI Ltd. All Right Reserved

10

Net sales in the original comics content business showed stable growth due
to multiple hit titles in serialization.

Healthcare business: Net sales and operating income（Unit：Mil yen）
1,001

Net sales increased,
and the loss decreased

908+: Cloud drug record
service going well
(145)
(336)
FY2022

FY2023

1Q

1Q

Net sales

Operating income+: Brisk Childcare DX
services－: The number of paying
subscribers decreased

Copyrights (c) 2023 MTI Ltd. All Right Reserved

11

In the healthcare business, net sales increased 10.2% year on year, to
1,001 million yen.
While the number of paying subscribers declined year on year, the cloud
drug record service and the childcare DX business performed well.
As a result, the healthcare business reported an operating loss due to thecontinued burden of costs associated with upfront investments.

Healthcare business: The number of paying subscribers

Healthcare paying subscribers(LunaLuna, CARADA medica)

0.58 million subscribers

Mostly unchanged fromthe previous quarter

0.70 0.69
0.66 0.64
0.62 0.62 0.60 0.59
0.58

1Q

2Q

3Q

FY2021

4Q

1Q

2Q

3Q

FY2022

4Q

1Q
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 580,000.

12

Healthcare business: Cloud drug record service

1,382

+118

Pharmacies
introduced

1,382
1,264
1,096

978
864
765
573

633

Steady expansion
in the number ofpharmacies that
introduced the service

451

1Q

2Q

3Q

FY2021

4Q

1Q

2Q

3Q

FY2022

4Q

1Q
FY2023Copyrights (c) 2023 MTI Ltd. All Right Reserved

13

The cumulative number of pharmacies that have introduced the cloud drug
record service is expanding steadily, reaching 1,382 in December.

School DX business: Net sales and operating income（Unit：Mil yen）
155

Sales expansion

55

・Increase in number ofschools introducing

Operating loss

(121)

(246)
FY2022
1Q
Net sales

FY2023
1Q
Operating income

・Stricter requirements forthe posting of software assets(FY2022 Q3~)
・Large-scale upfront investment to
respond to a surge in orders

Copyrights (c) 2023 MTI Ltd. All Right Reserved

14

In the school DX business, net sales increased 178.5% year on year to 155
million yen.
Net sales increased sharply year on year due to the active introduction of
the “BLEND” cloud-based school business support system.
The operating loss was 246 million yen due to the stricter accounting forsoftware assets since the third quarter of the previous fiscal year and the
expansion of subcontracting costs at the same level.

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

Sales slight decreased

1,261
1,190
438

309

822

880

FY2022
1Q(36)

AI business・AI businessDX support
business forcompanies

Operating loss

FY2023
1Q

・Responded to loss-making
projects in part of the DX
support business for major
companies(393)

Copyrights (c) 2022 MTI Ltd. All Right Reserved

15

In other business, net sales declined 5.6% year on year to 1,190 million
yen.
This was due to a decrease in the volume of orders in the AI business,despite an increase in net sales in the DX support business for companies.
Operating loss increased to 393 million yen.

This was due to a significant increase in cost of sales since the third quarterof the previous fiscal year in some of the DX support businesses forcompanies.

Progress for earnings forecast of H1

Earnings forecast remains unchanged（Unit：Mil yen）

FY2023

FY2023

Q1 Actual

H1 Forecast

Progress
ratio

7,080

12,70056%

Operating income

(61)

200

-%

Ordinary income

(88)

0

-%

Profit attributable toowners of parent

(590)

(740)

-％

Net sales

Copyrights (c) 2023 MTI Ltd. All Right Reserved

16

The progress rate of net sales compared to the earnings forecast for the
first half remained within the forecast range.
Income remains below the forecast, but at this point, we are leaving
earnings forecasts for the first half and the full year unchanged.
This concludes my consolidated financial results overview for the firstquarter of fiscal year 2023.

Approach in Q2 and beyond

Copyrights (c) 2022 MTI Ltd. All Right Reserved

Next, I would like to discuss the approach in the second quarter of fiscal
year 2023 and beyond.

17

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: Sales growth① AI business expansion② DX support business expansion
Copyrights (c) 2023 MTI Ltd. All Right Reserved

18

In each segment, we will focus on priority issues based on the following
basic policies, respectively.
・In the healthcare business, we will continue to aim for further sales
growth.
More specifically, we will focus on further expanding the cloud 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.
We will upgrade our cloud-based school administration support system“BLEND” and engage in active marketing activities to increase the numberof school using the system in April, when the new semester starts.
・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 wholethrough growth in security-related apps and the original comic business.
・In other business, we will strive to increase orders in the AI business andDX support business and strive to resolve the deterioration of the
profitability of the DX support business.

Healthcare business: Cloud drug record service
Connecting pharmacies and patients

Cloud drug record service

Copyrights (c) 2023 MTI Ltd. All Right Reserved

19

Next, I would like to discuss 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

Aim for

2,000⇒ Sharing more sales
information andimproving efficiency

pharmacies
introduced
FY2023

1,382② Continuing to strengthen function development
for differentiation

・・・

1Q

2Q

3Q

FY2021

4Q

1Q

2Q

3Q

FY2022

4Q

1Q

・Connecting the drug histories possessed bydifferent pharmacies
・Home care and nursing functions
・Additive Logic, Guidance Navigation
・Planning to add electronic prescriptions andother functions as needed

FY2023Copyrights (c) 2023 MTI Ltd. All Right Reserved

20

In the cloud drug record service, the number of pharmacies that haveintroduced dispensing pharmacies is steadily increasing.
To achieve our goal of introducing dispensing pharmacies at 2,000
pharmacies by the end of the current fiscal year, we will strengthen sales
and carry out development to enhance functions.
To strengthen sales, we will continue to cooperate in sales with ourbusiness partner MEDIPAL HOLDINGS CORPORATION and improve
efficiency by meticulously sharing sales information, as in the previous fiscal
year.
We will also continue to strengthen the development of functions fordifferentiation.
Specifically, we will add or enhance functions as needed, such as functions
for connecting the drug histories possessed by different pharmacies, forhome nursing care, for calculations for necessary nursing hours, guidancenavigation, and support for electronic prescriptions.

Healthcare business:
Maternal health record book app + Childcare DX services
Connecting parenting households and local governments

Maternal health record book app+ Childcare DX services

Copyrights (c) 2023 MTI Ltd. All Right Reserved

Next, I would like to discuss our progress targets for the maternal healthrecord book app “Boshimo” and childcare DX services.

21

Healthcare business:
Maternal health record book app + Childcare DX services

Development of the platform businessstarting with the maternal health record
book app "Boshimo"Phase 1：Introducing Maternal healthrecord book app “Boshimo”
Phase 2：Online consultation
Phase 3：Childcare DX services

Copyrights (c) 2023 MTI Ltd. All Right Reserved

By expanding the childcare DX service business, notably the childhood
vaccination management service, we will pursue the transformation of“Boshimo” into a platform.

22

Healthcare business:
Maternal health record book app + Childcare DX services
Phase 1,2 : Maternal health record book app ”Boshimo” & Online consultation

Seeking to establish the Boshimo app as the standard app
P has e2 Online consultation

P has e1 Maternal health record book app

67
As of December, 2022

510

YOY

As of December, 2022

+81

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
FY2017FY2018FY2019FY2020

FY2021

FY2022 FY2023

4Q

1Q

FY20202Q

3Q

FY2021

4Q

1Q

2Q

3Q

FY2022

4Q

1Q
FY2023Copyrights (c) 2023 MTI Ltd. All Right Reserved

23

The number of municipalities introducing “Boshimo” stood at 510 at the endof September.
The vaccination schedule function is popular and is becoming more andmore widely used by municipalities across Japan.

The childcare DX service remains strong.
The scope of this childcare DX service is not restricted to parents andmunicipalities but also extends to the sharing of data with medical
institutions such as neighboring pediatric clinics and health centers.
Through this, we seek to bring DX to services like childhood vaccinations,infant health check, and visits to all households with infants.
The service is highly rated by municipalities that have introduced it andorders including orders from ordinance designated cities and prefectural
capitals are steadily growing.
In addition, we are carrying out a number of development projects so that
we will be able to add the functions necessary for the DX of childcare byperiodically interviewing municipalities that have already introduced theservice.
Thanks to the success of these efforts, the Group’s childcare DX business isreceiving an increasing number of inquiries from municipalities nationwide,backed by the Ministry of Health, Labor and Welfare’s Accompanied Support
Program for childbirth and childcare, which has been a tailwind.
We would like to continue to increase the volume of orders for the childcare
DX service, thereby expanding sales in this business.

Motivation Works Inc.

School DX businessConnecting students and teachers

Cloud-based school affairs support system

Copyrights (c) 2023 MTI Ltd. All Right Reserved

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

Brisk in orders received

XtimesXtimes－ Orders received due to the strengthening of
direct sales are expanding－ Development of a new version to respond toa sharp increase in demand

3times 340
114

FY2021

FY2022

FY2023

FY2024

ActualActualPlannedPlanned

Copyrights (c) 2023 MTI Ltd. All Right Reserved

26

With the digitalization of school administration becoming a matter ofurgency, demand for the cloud-based school administration system has
grown dramatically.
A new version of “BLEND” is being developed for the new school term in
April 2023, and we would like to further increase the number of schoolsthat will adopt the system this term along with the launch of the newversion.

Content business:

Original comics, Brisk January
TV dramatization of two blockbuster hits
(Growth in the number of downloads due to increased recognition)

Copyrights (c) 2023 MTI Ltd. All Right Reserved

27

In the content business, original comics continue to perform well.
Since the number of popular titles has increased, we have decided todisclose information including the names of comic titles.
Two hit titles have been dramatized on TV since January.
Watashitte Saba Saba Shitteru Kara began broadcasting on NHK on January
9.
Shinyu Wa Akujo also began broadcasting on BS TV Tokyo on January 8.
The number of downloads of these two titles has increased rapidly as theTV dramas have further increased recognition of the popular works, leading
to further sales growth.
Several other titles also continue to be hits.
We will continue our efforts to expand this business by increasing thenumber of hit titles and developing them into TV dramas.

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)
Copyrights (c) 2023 MTI Ltd. All Right Reserved28

Our medium-to-long term earnings projection is as shown here.
The school DX business is expected to achieve the fastest business growth,followed by the healthcare business as another growth driver.
The medium-to-long-term earnings projection for the Group as a whole is
as shown here and we believe that the healthcare business will be a driverof profit growth in the medium and long term.
By focusing on the steadily expanding cloud drug record service and thechildcare DX service, we aim to achieve “sustainable growth” throughgrowth in the subscription-based sales of each service.

Earnings forecast for FY2023（Unit：Mil yen）

FY2022 (Actual)

FY2023 (Forecast)

YoY
AmountFull year

Ratio
Full year

13,300(479)(1.8)%

3,800

3,800

(187)

(2.4)%

18,400

8,900

9,500

(291)

(1.6)%

17,600

8,700

8,900

(220)

(1.2)%(70)(8.1)%(85)(17.7)%+330-%

Full year

H1

H2

Full year

H1

H2

26,47912,975

13,50326,00012,700

7,787

3,814

3,972

7,600

Gross profit

18,691

9,160

9,530

SG&A

17,820

8,561

9,259

Net sales
Cost of sales

Operating income

870

599

271

800

200

600

（Ratio）

3.3%

4.6%

2.0%

3.4%

1.6%

4.5%

Ordinary income

485

292

193

400

0

400

（Ratio）

1.8%

2.3%

1.4%

1.9%

0.0%

1.1%

Profit attributable toowners of parent

(930)

123

(1,053)

(600)

(740)

140

-

1.0%

-%

-%

-%

1.1%

（Ratio）

Copyrights (c) 2022 MTI Ltd. All Right Reserved

Details of the earnings forecast are as shown here.

29

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

Copyrights (c) 2023 MTI Ltd. All Right Reserved

Thank you for your time.