DISCLAIMER: This document was prepared using our machine translation, and no manual modification has been made to thetranslated contents. This document is to be used solely as a reference and in cases where any differences occur between English
version and the original Japanese version, the Japanese version shall prevail. The consolidated financial statements in thisdocument are unaudited.

Consolidated Financial Results for the Second Quarter of the Fiscal YearEnding February 29, 2024 (Japanese GAAP)
October 13, 2023
Company name

Listing Market TSE

MetaReal Corp.

Stock Code
Representative

6182(Title)Contact(Title)URL https://www.metareal.jp
Representative Director and CEO (Name) Junichi Goishi
Director, General Manager of(Name) Taketo Arakawa
Group Administration Division

TEL 03-6685-9570

Scheduled date of filing of
October 13, 2023
Scheduled date of commencement of dividend payment
quarterly report:
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results briefings: 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, 2024 (March 1, 2023-August 31,
2023)(1) Consolidated Results of Operation (Cumulative)(Percentages indicate year-on-year changes.)
Net sales
%
△2.3
5.4

Millions of yen

Q2 FY2/24

2,112

Q2 FY2/23

2,161(Note) Comprehensive income

Q2 FY2/24%
61.5

Millions of yen

390

419

%
55.3

Net income attributableto owners of parent
Millions of yen
%
232
111.9

241

177.2

270

150.1

109

Operating income
Millions of yen

232Millions of yen (111.9%)

Ordinary income

Q2 FY2/23

Net income per share

Diluted net income per share

Yen
21.78
10.29

Yen
21.42
10.12

Q2 FY2/24
Q2 FY2/23

109Millions of yen

100.2(100.2%)(2) Consolidated Financial Position
Total assets
Q2 FY2/24
FY2/23(Reference) Shareholders' equity

Q2 FY2/24

Net assets

Shareholders' equity ratio

Millions of yen

Millions of yen

4,617
4,220

1,378
1,133

1,337Millions of yen

FY2/23

%
29.0
25.9

1,092Millions of yen

2. Dividend payment
Annual dividend per share
End of Q1
FY2/23End of Q2
Yen
-

Yen
0.00

FY2/240.00
FY2/24 (Forecast)(Note) Revisions to the most recently announced dividend forecast: None

End of Q3

Year-end

Total

Yen
-

Yen
0.00

Yen
0.00

-

0.00

0.00

3. Consolidated Business Forecasts for the Fiscal Year Ending February 29, 2024 (March 1, 2023 to February 29, 2024)(Percentages indicate year-on-year changes.)
Net sales

Operating income

Millions of yen

%

4,589

6.9

Full year

Ordinary income

Net income attributable toowners of parent

Net income per
share

%

Millions of yen%

Millions of yen%

Yen

611 18.6

-

-

-

-

-

Millions of yen(Note) Revisions to the most recently announced business forecasts: None
◆Consolidated Business Forecasts by Segment(Percentages indicate year-on-year changes.)
Net sales

Operating income

Full year

Millions of yen%

Millions of yen%

AI business

3,152

8.3

599

△4.9

HT business

1,416

3.4

254

△4.6

Metaverse business

20

95.0

△280

-

Other corporate expenses

-

-

36

△15.2

(Note) 1.

Since the second quarter of the consolidated fiscal year under review, the name of the reportable segment that had been the[MT business] has changed to the [AI business].
Previously, the segment centered on AI translation was called the [MT business]. However, as for the future corporate
strategy and current situation, we are looking at the broader AI service, including [generative AI], and we have changed thename to the [AI business] to indicate the actual situation more appropriately.
This is only a name change, and we have not revised the numerical classification. [Metareal AI], which had been included

2.

in the MT business until the first quarter of the consolidated fiscal year under review, is also included in the [AI business].
Business results forecasts were made over a range in the fiscal year ended February 28,2023. However, in light of factors
such as accumulation of information from release of speech AI translation services and designation of COVID-19 as a class
5 infectious disease, we have decided to make spot business forecasts for the fiscal year ending February 29, 2024 instead.
Although the above forecasts reflect the impact of Metareal AI (see "Notice Regarding the Commencement of New
Businesses by Subsidiaries" released March 8, 2023), expenses in the AI business have been recorded in the same amountas the increase in net sales (430 million yen), which corresponds to 10% of net sales in the previous fiscal year (fiscal year
ended February 28, 2023).
Although extraordinary expenditures through May 31, the launch date for Metareal AI, were limited, forecasts of expenses
employ a conservative estimate equal to the increase in sales resulting from Metareal AI, as the rapid changes in industry

3.

trends and growth curves make estimates difficult, and as a result expenses incurred are equal to their impact on sales.
[Ordinary income], [Net income attributable to owners of the parent] and [Net income per share] in the consolidated business
forecasts for the fiscal year ending February 29.2024 are not disclosed at this time because of uncertainties in financial planssuch as fund-raising in terms of both liabilities and equity associated with Metareal AI of new businesses. We plan todisclose specific figures promptly once we are able to make more accurate projections.

※ Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of
consolidation): None
(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)]
on page 7 of the Appendix.
(3) Changes in accounting policies, changes in accounting estimates and restatements① Changes in accounting policies due to revisions of accounting standards, etc.: None
② Changes in accounting policies other than ①: None
③ Changes in accounting estimates: Yes④ Restatements: None
(Note) For details, please refer to [2.Quarterly Consolidated Financial Statements, (4) Notes on Quarterly Consolidated Financial
Statements (Changes in Accounting Estimates)] on page 7 of the Appendix.
(4) Number of shares outstanding (common stock)① Number of shares outstanding at the end of
the period (including treasury stock)

Q2 FY2/24

10,762,060 shares

FY2/23

10,688,460 shares② Treasury shares at the end of the year

Q2 FY2/24

468 shares

FY2/23468 shares③ Average number of shares outstanding during
Q2 FY2/24
the period (cumulative)

10,689,592 shares

Q2 FY2/23

10,679,770 shares※ 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 of future performance and other forward-looking statements in this document are based on information currently available
to the Company and certain assumptions that the Company deems to be reasonable at the time this report was prepared. The Company
makes no promises concerning their achievement. 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
Appendix 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.

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

2(1) Results of Operations ……………………………………………………………………………………………………

2(2) 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 Statement of Cash Flows ………………………………………………………………………

6(4) Notes on Quarterly Consolidated Financial Statements …………………………………………………………………

7(Notes on Going Concern Assumptions) ………………………………………………………………………………

7(Notes on Significant Changes in Shareholders' Equity) ………………………………………………………………

7(Application of Accounting Procedures Specific to Preparation of the Quarterly Consolidated Financial Statements)

7(Changes in Accounting Estimates) ……………………………………………………………………………………

7(Additional Information) ………………………………………………………………………………………………

7(Notes to the Quarterly Consolidated Statements of Income) …………………………………………………………

7(Segment Information) …………………………………………………………………………………………………

8(Per share Information) …………………………………………………………………………………………………

10(Significant Subsequent Events) ………………………………………………………………………………………

10

- 1 -

1. Qualitative Information on Quarterly Financial Results(1) Results of Operations
During the second quarter of the consolidated fiscal year under review (March 1 to August 31, 2023), orders received, sales,
and operating income in the AI business hit record highs. In the HT business segment, income compared to the same period of
the previous fiscal year decreased, but the amount of loss incurred in the Metaverse business decreased.
As a result, in the cumulative second quarter of the consolidated fiscal year under review the Group recorded net sales of
2,112,250 thousand yen (down 2.3% year on year), operating income of 390,578 thousand yen (up 61.5% year on year),ordinary income of 419,871 thousand yen (up 55.3% year on year), and profit attributable to owners of the parent of 232,859
thousand yen (up 111.9% year on year).
Excluding the Metaverse business, sales were 2,110,110 thousand yen (down 2.2% year on year) and operating income was511,193 thousand yen (up 9.3% year on year).
The performance of each business segment is as follows:
Since the second quarter of the consolidated fiscal year under review, the name of the reportable segment that had been the[MT business] has changed to the [AI business]. This change had no impact on segment information.
① AI business
As for the AI business, activities for orders received were firm, at 1,677,545 thousand yen (up 15.2% year on year). Sales were1,554,617 thousand yen (up 5.7% year on year) due to the impact of consigned projects etc., and segment income was 443,116
thousand yen (up 36.5% year on year), including the impact of upfront spending on the new [Metareal AI] business. As for the[Metareal AI] project, which was developed and provided in this fiscal year as a short- to medium-term growth measure, we havebegun various proposals and business operations utilizing generative AI, mainly for major customers, with the aim of contributing
to results at an early stage.
② HT business
Sales in the HT business, were 555,493 thousand yen (down 19.1% year on year), and segment income was 71,083 thousandyen (down 48.4% year on year).
③ Metaverse business
Mid-to-short term growth measures were shifted to the [Metareal AI] project. The Metaverse business reduced investment
from a long-term perspective by 10±5 years. As a result, sales were 2,139 thousand yen (down 49.7% year on year), and segment
loss was 120,614 thousand yen (segment loss of 225,995 thousand yen in the same period of the previous fiscal year).
(2) Financial Position(Assets)
Current assets increased by 561,990 thousand yen from the end of the previous consolidated fiscal year to 3,535,266 thousand
yen at the end of the second quarter of the consolidated fiscal year under review. This was due mainly to an increase of 379,130
thousand yen in cash and deposits, an increase of 98,640 thousand yen in notes, accounts receivable and contract assets, and adecrease of 12,950 thousand yen in the allowance for doubtful accounts. Non-current assets decreased by 165,267 thousand yen
from the end of the previous fiscal year to 1,082,165 thousand yen. This was due mainly to a decrease of 28,268 thousand yen
in property, plant, and equipment and a decrease of 120,019 thousand yen in intangible assets.
(Liabilities)
Current liabilities increased by 190,454 thousand yen from the end of the previous consolidated fiscal year to 2,179,946
thousand yen at the end of the second quarter of the consolidated fiscal year under review. This was due mainly to an increase of
169,980 thousand yen in income taxes payable, an increase of 115,071 thousand yen in advances received, and a decrease of
100,000 thousand yen in short-term loans payable. Non-current liabilities decreased by 38,588 thousand yen from the end of theprevious fiscal year to 1,059,310 thousand yen. This was due mainly to a decrease of 77,990 thousand yen in long-term debt andan increase of 53,000 thousand yen in bonds.
(Net assets)
Net assets increased by 244,855 thousand yen from the end of the previous consolidated fiscal year to 1,378,174 thousand yen
at the end of the second quarter of the consolidated fiscal year under review. This was due mainly to an increase of 232,859
thousand yen in retained earnings as a result of recording profit attributable to owners of the parent.

- 2 -(3) Cash Flows
Cash and cash equivalents at the end of the second quarter of the consolidated fiscal year under review increased by 378,827
thousand yen from the end of the previous consolidated fiscal year to 2,920,855 thousand yen.
The status of each type of cash flow and related factors in the second quarter of the consolidated fiscal year under review arereviewed below.
(Cash flows from operating activities)
Net cash provided by operating activities was 501,785 thousand yen (compared to 147,349 thousand yen provided in thesame period of the previous fiscal year).
This was due mainly to the recording of income before income taxes of 417,877 thousand yen, depreciation and amortizationof 195,719 thousand yen, income taxes paid of 167,721 thousand yen, an increase in advances received of 115,071 thousand yen,
and an increase in notes, accounts receivable and contract assets of 59,118 thousand yen.
(Cash flows from investing activities)
Net cash used in investing activities was 52,606 thousand yen (compared to 84,731 thousand yen used in the same period of
the previous fiscal year).
This was due mainly to the purchase of 50,008 thousand yen in intangible assets.
(Cash flows from financing activities)
Net cash used in financing activities was 69,419 thousand yen (compared to 44,677 thousand yen used in the same period of
the previous fiscal year).
This was due mainly to repayments of long-term debt of 197,990 thousand yen and proceeds from long-term debt of 150,000
thousand yen.
(4) Consolidated Business Forecasts
Our two management themes for the future are:
① [Metaverser] concept in the Metaverse business and its method [Metaverse×AI]
As a long-term growth strategy aiming to achieve results in five years or longer, the Metaverse business will focus on the
Metaverser initiative and Metaverse×AI as a means of implementing it.
② AI business including [Metareal AI] project
We will continue to aim for stable growth in the AI business, which provides services such as [T-4OO] [T-3MT] for AI
document translation and [Onyaku] for speech AI translation.
The [Metareal AI] project, which was launched in this fiscal year, will provide platform development and application
development using various AI technologies such as generative AI such as ChatGPT, original LLM development, and consigned
development in accordance with the requests of individual companies. We will promote the development of a one-stop AI
business environment in which Japanese companies can respond to the rapid global trend toward AI.
We aim to grow by 5% to 20% through the AI business, including the [Metareal AI] project.

- 3 -2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly Consolidated Balance Sheets(Thousands of yen)Previous fiscal year
(February 28, 2023)
AssetsCurrent assets
Cash and deposits
Notes, accounts receivable and contract assets
Inventories
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Goodwill
Software
Software in progress
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term borrowings
Current portion of long-term loans payable
Current portion of corporate bonds
Income taxes payable
Provision for bonuses
Advances received
Other
Total current liabilities
Non-current liabilities
Corporate bonds
Long-term debt
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Share subscription rights
Total net assets
Total liabilities and net assets- 4 -Second quarter of the consolidated
fiscal year under review(August 31, 2023)

2,523,695
280,313
16,075
195,242△42,051
2,973,276

2,902,826
378,954
23,517
259,069△29,101
3,535,266

117,936

89,6686,709
647,051572
16,752
671,086

3,354
524,571
9,667
13,473551,067

86,071
372,338
458,4091,247,433
4,220,709

86,071
355,358
441,429
1,082,165
4,617,432

74,270100,000
385,980
134,000
28,91344,860859,439
362,028
1,989,491

68,462415,980
164,000
198,893
42,143
974,511
315,955
2,179,946

388,000
669,550
40,349
1,097,899
3,087,391

441,000
591,560
26,7501,059,310
3,239,257

786,021
1,759,968△1,452,866△951
1,092,171
41,146
1,133,318
4,220,709

792,020
1,765,966△1,220,007△951
1,337,027
41,146
1,378,174
4,617,432

(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, 2022 to August
31, 2022)

Current second quarter(From March 1, 2023 to August
31, 2023)

2,161,415
782,451
1,378,963

2,112,250
658,767
1,453,483

396,581
129,3152,113
3,564
605,585
1,137,159
241,803378,257
73,063147
3,656
607,780
1,062,904
390,57832
886
13,04934,042989
48,99935
1,347
1646,455
1,833
49,688

6,959

5,322

5,232

10,8296,624
1,601
20,417
270,386

3,088
1,154
20,395419,871

-

831
831

2,435
42,054
44,489225,896
116,025
109,871
109,871

2,826
2,826
417,877
185,018
232,859
232,859

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries, allowances and bonuses
Research and development expenses
Provision for bonuses
Retirement benefit expenses
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Foreign exchange gain
Subsidy income
Reversal of allowance for doubtful accounts
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of investments accounted for using equity
methodBond issuance expenses
Other
Total non-operating expenses
Ordinary income
Special income
Income on sales of non-current assets
Total special income
Special loss
Loss on sales and retirement of noncurrent assets
Impairment loss
Loss on valuation of investment securities
Total special loss
Income before income taxes
Income taxes
Net income
Net income attributable to owners of parent(Quarterly Consolidated Statement of Comprehensive Income)(For the Six-month Period)(Thousands of yen)Previous second quarter(From March 1, 2022 to August
31, 2022)

Current second quarter(From March 1, 2023 to August
31, 2023)

109,871
109,871

232,859
232,859

109,871-

232,859-

Net income
Comprehensive income
Comprehensive income (loss) attributable to:
Owners of parent
Non-controlling interests- 5 -(3) Quarterly Consolidated Statement of Cash Flows(Thousands of yen)Previous second quarter Current second quarter(From March 1, 2022 to (From March 1, 2023 toAugust 31, 2022)
August 31, 2023)
Cash flows from operating activities
Income before income taxes
Depreciation
Amortization of goodwill
Impairment loss
Increase or decrease in allowance for doubtful accounts (△ indicatesdecrease)
Increase or decrease in accrued bonuses (△ indicates decrease)
Increase in provision for surcharges (△ indicates decrease)
Interest and dividend income
Loss on valuation of investment securities (△ indicates gain)
Loss or gain on equity method investments (△ indicates gain)
Loss on sales and retirement of noncurrent assets (△ indicates gain)
Subsidy income
Interest expenses
Bond issuance expenses
Increase or decrease in advances received (△ indicates decrease)
Increase or decrease in notes and accounts receivable and contract assets(△ indicates increase)
Increase or decrease in inventories (△ indicates increase)
Increase or decrease in trade payables (△ indicates decrease)
Increase or decrease in accrued expenses (△ indicates decrease)
Increase or decrease in accrued consumption taxes
Other
Sub-totalInterest and dividends received
Subsidy income
Interest paid
Income taxes paid
Income taxes refund
Cash flows from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for intangible assets
Payment for loans receivable
Proceeds from loans receivable
Cash flows from investing activities
Cash flows from financing activities
Increase in short-term borrowings (△ indicates decrease)
Proceeds from issuance of bonds
Redemption of bonds
Proceeds from long-term debt
Repayment of long-term debt
Repayment of lease obligations
Proceeds from issuance of common stock upon exercise of sharesubscription rights
Cash flows from financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase or decrease in cash and cash equivalents (△ indicatesdecrease)
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the quarter- 6 -225,896
240,6393,893-

417,877
195,719
3,354
2,826

△38,484△54,601△2,160△283,090△32
42,054
5,232
2,435△13,049
6,959
6,624
1,027

△2,717△35
10,829
△831
△16
5,322
3,088
115,071

132,737△59,118

2,493
2,001
△40,126△48,972△17,817228,26232
13,049△6,959△97,185
10,149147,349△7,441△5,807
6,234
2,265△16,147
615,87235
16△5,322△167,721
58,905
501,785△929
757△74,492△10,850
782△84,731△3,860831△50,008△700
1,130△52,606△100,000
293,375△37,000△192,990△13,083△100,000
146,911△67,000
150,000△197,990△13,338

5,020

11,996△44,677△2,031△69,419△931

15,908378,827

2,410,143
2,426,052

2,542,027
2,920,855

(4) Notes on Quarterly Consolidated Financial Statements(Notes on Going Concern Assumptions)Not applicable.
(Notes on Significant Changes in Shareholders' Equity)
Not applicable.
(Application of Accounting Procedures Specific to Preparation of the Quarterly Consolidated Financial Statements)
Income taxes are calculated by estimating a reasonable effective tax rate after tax-effect accounting for the consolidated
fiscal year including the second quarter under review and multiplying it by the quarterly income before taxes.
However, if the calculation of tax expenses using the estimated effective tax rate yields a highly unreasonable result, then thestatutory tax rate is used.
(Changes in Accounting Estimates)(Changes in Estimates to Record Consigned Development Revenue)
We record revenue on consigned development based on the nature of each consigned development. If the entire consigned
project is long-term and although the progress made in satisfying performance obligations cannot be reasonably estimated,recovering the costs incurred in satisfying the performance obligations is expected under [ASBJ Statement No. 29, Paragraph
45 of the Accounting Standard for Revenue Recognition] on the project with complex contractual relationship, we conduct
treatment based on the cost recovery standard.
The application of the same paragraph is only under circumstances where it is difficult to reasonably estimate the progress
made in satisfying performance obligations. For cases in which the progress of the project itself and the progress made insatisfying performance obligations can be reasonably estimated due to the establishment of various contract conditions has
been changed, and the input method has been changed from the treatment under the cost recovery method to the input method
based on total cost, and the difference between the cost and the previous estimate has been recorded in net sales.
As a result, gross profit, operating income, ordinary income, and income before income taxes for the second quarter of theconsolidated fiscal year under review have each increased by 120,725 thousand yen compared to the previous method.
The impact of this change on segment information is described under [Segment Information].
(Additional Information)(Handling of Accounting and Disclosure for Application of the Group Comprehensive Accounting System)
We, as well as some of our domestic consolidated subsidiaries, have shifted from the consolidated tax payment system to thegroup-wide tax system since the first quarter of the consolidated fiscal year under review. Accordingly, accounting and disclosureof income taxes, local income taxes, and tax-effect accounting are handled in accordance with [Accounting and Disclosure forApplication of the Group Comprehensive Accounting System] (PITF No. 42, August 12, 2021. Hereinafter [Practical Issues Task
Force No. 42]). In addition, in accordance with Paragraph 32(1) of the Practical Issues Task Force No. 42, we do not deem theimpact of changes in accounting policies due to the application of Practical Issues Task Force No. 42.
(Notes to the Quarterly Consolidated Statements of Income)(1) Impairment loss
Previous second quarter (from March 1, 2022 to August 31, 2022)
Not applicable.
Current second quarter (from March 1, 2023 to August 31, 2023)
This information is omitted because it is not material.
(2) Loss on valuation of investment securities
Previous second quarter (from March 1, 2022 to August 31, 2022)
It is our judgment that the real value of investment securities we hold of VoiceApp Co., Ltd., has declined significantly.
Accordingly, we have recorded 42,054 thousand yen in losses on valuation of investment securities as extraordinary losses.
Current second quarter (from March 1, 2023 to August 31, 2023)
Not applicable.

- 7 -(Segment Information)[Segment Information]
Ⅰ Previous second quarter (from March 1, 2022 to August 31, 2022)
Information on net sales and income or loss by reportable segment and breakdown of income(Thousands of yen)

Adjustment
Note 1:

Amounts on the
consolidated
financialstatements
Note 2

Reportable Segments
AI business

Metaverse
business

HT businessTotal

By type of goods or services
Machine translation
Human translation

1,432,777
14,814

686,689-

1,432,777
701,504-

1,432,777
701,504

22,882

-

4,251
-

4,251
22,882-

4,251
22,882

1,470,474

686,689

4,251

2,161,415-

2,161,415

124,443

619,1314,251

747,826-

747,826

1,346,030

67,558-1,413,589-

1,413,589

Revenue from contracts
with customers

1,470,474

686,689

4,251

2,161,415-

2,161,415

Net sales to unaffiliatedcustomers

1,470,474

686,689

4,251

2,161,415-

2,161,415

3,023

21,621-

24,644△24,644-

Total

1,473,497

708,3114,2512,186,060△24,644

2,161,415

Segment income or loss (△)

324,524

137,879△225,995

236,409

5,394

241,803

Metaverse
Consigned development
Revenue from contracts withcustomers
Revenue recognition by period
Goods or services that aretransferred at one time
Goods or services that aretransferred over a period oftime

Intersegment sales ortransfer(Note) 1. Adjustments to segment income or loss (△) of 5,394 thousand yen include elimination of intersegment transactions andcorporate 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 or loss (△) is adjusted with operating income in the quarterly consolidated statements of income.

- 8 -Ⅱ Current second quarter (from March 1, 2023 to August 31, 2023)
1. Information on net sales and income or loss by reportable segment and breakdown of income(Thousands of yen)
Reportable Segments
AI business(Note 3,4)

Metaverse
business

HT business

Total

Amounts on the
consolidated
Adjustment
financial
Note 1:statements
Note 2By type of goods or services
Machine translation
Human translation

1,386,851
26,547

16,281
539,211-

1,403,133
565,759-

1,403,133
565,759

141,218

-

2,139
-

2,139
141,218-2,139
141,218

1,554,617

555,493

2,139

2,112,250-

2,112,250

124,658

485,6541,111

611,424-

611,424

1,429,958

69,8381,028

1,500,825-

1,500,825

Revenue from contracts
with customers

1,554,617

555,493

2,139

2,112,250-

2,112,250

Net sales to unaffiliatedcustomers

1,554,617

555,493

2,139

2,112,250-

2,112,250

3,209

24,83939

28,088△28,088-

Total

1,557,827

580,332

2,178

2,140,338△28,088

2,112,250

Segment income or loss (△)

443,116

71,083△120,614

393,584△3,005

390,578

Metaverse
Consigned development
Revenue from contracts withcustomers
Revenue recognition by period
Goods or services that aretransferred at one time
Goods or services that aretransferred over a period oftime

Intersegment sales ortransfer(Note) 1.

2.

Adjustments to segment income or loss (△) △ of 3,005 thousand yen includes elimination of intersegment transactions
and corporate expenses. Corporate expenses mainly consist of expenses related to the administrative departments of theparent company that are not attributable to reportable segments.
Segment income or loss (△) is adjusted with operating income in the quarterly consolidated statements of income.

3.

Sales related to generative AI are included in [Machine translation] for platform-type sales, and sales related to consigned
development are included in [Consigned development].

4.

As described under [Changes in Accounting Estimates], we record revenue on consigned development based on the natureof each consigned development. If the entire consigned project is long-term and although the progress made in satisfying
performance obligations cannot be reasonably estimated, recovering the costs incurred in satisfying the performanceobligations is expected under [ASBJ Statement No. 29, Paragraph 45 of the Accounting Standard for Revenue
Recognition] on the project with complex contractual relationship, we conduct treatment based on the cost recovery
standard.
The application of the same paragraph is only under circumstances where it is difficult to reasonably estimate theprogress made in satisfying performance obligations. For cases in which the progress of the project itself and the progress
made in satisfying performance obligations can be reasonably estimated due to the establishment of various contract
conditions has been changed, and the input method has been changed from the treatment under the cost recovery method
to the input method based on total cost, and the difference between the cost and the previous estimate has been recorded in
net sales.
As a result, gross profit, operating income, ordinary income, and income before income taxes for the second quarter ofthe consolidated fiscal year under review have each increased by 120,725 thousand yen compared to the previous method.
2. Information on impairment loss on noncurrent assets or goodwill by reportable segment(Significant impairment loss on noncurrent assets)
This information is omitted because it is not material.

- 9 -3. Changes in reportable segments(Change of Segment Name)
Since the second quarter of the consolidated fiscal year under review, the name of the reportable segment that had
been the [MT business] has changed to the [AI business]. This change was made to the segment name only. There was
no impact on segment information. Segment information for the second quarter of the previous consolidated fiscal year
also is presented under the new name.
(Per share Information)
Net income per share and the basis for calculating it, and diluted net income per share and the basis for calculating it are as
follows.
Previous second quarter(From March 1, 2022 to August 31,
2022)(1) Net income per share

Current second quarter(From March 1, 2023 to August
31, 2023)

10.29 yen

21.78 yen

109,871

232,859--

109,871

232,859

10,679,770

10,689,592

10.12 yen

21.42 yen--

177,336

179,505(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
(Significant Subsequent Events)
Not applicable.

- 10 --