Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail.

February 9, 2023

Consolidated Financial Results
for the Nine Months Ended December 31, 2022
(Under Japanese GAAP)
Japan Communications Inc.
Company name:
Listing:
Tokyo Stock Exchange: Prime Market
Securities code:
9424
URL:
http://www.j-com.co.jp/
Representative:
Naohisa Fukuda, Representative Director-President
Inquiries:
Mitsuru Kodaira, Executive Officer and CFO
Telephone:+81-3-5776-1700
Scheduled date to file quarterly securities report:
February 10, 2023
Scheduled date to commence dividend payments:–
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:
Yes (for institutional investors, analysts andthe press)(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the nine months ended December 31, 2022 (from April 1, 2022 to
December 31, 2022)(1) Consolidated operating results (cumulative)
Net revenue
Nine months ended(Percentages indicate year-on-year changes.)

Operating profit

Millions of yen%

Profit attributable toowners of parent

Ordinary profit

Millions of yen%

Millions of yen%

December 31, 2022

4,321

27.6

542

171.5

568

176.3

December 31, 2021

3,386

39.9

199

–

205

–

Note: Comprehensive income

For the nine months ended December 31, 2022:
For the nine months ended December 31, 2021:

%

511

135.0

217

–

[139.2%][–%]

Diluted earnings
per share

Basic earnings
per share
Nine months ended¥464 million¥194 million

Millions of yen

Yen

Yen

December 31, 2022

3.10

3.07

December 31, 2021

1.32

1.31

(2) Consolidated financial position
Total assets
As of

Net assets

Equity-to-asset ratio

Net assets per share

Millions of yen

Millions of yen

December 31, 2022

2,735

1,337

44.5

7.38

March 31, 2022

1,944

785

33.6

3.97

Reference:

EquityAs of December 31, 2022:
As of March 31, 2022:¥1,217 million¥652 million

1

%

Yen

2. Cash dividends
Annual dividends per shareFirst quarter-end
Yen

Fiscal year ended
March 31, 2022
Fiscal year ending
March 31, 2023

Second quarter-end

Third quarter-end

Yen

Yen

–

0.00

–

–

0.00

–

Fiscal year-end

Fiscal year ending
March 31, 2023
(Forecast)

Total

Yen

Yen

0.00

0.00

0.00

0.00

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Overview and management policy for the fiscal year ending March 31, 2023
Since its founding in 1996, the Company has propounded and implemented the MVNO business model, an
innovative form of telecommunications business, having developed its business with the mission of transferring(communicating) data safely, securely, and conveniently. Specifically, the Company is engaged in threebusinesses: mobile communications business (SIM business), communications business through local mobile
networks (local 4G/5G), and digital ID (FPoS: Fintech Platform over SIM) business for use on smartphones.
The Company plans to build a stable income stream by continuing the evolution of the SIM business, as well as
to develop the local 4G/5G business and FPoS business to become the pillar of future earnings by investing in
the two businesses.
In the local 4G/5G business, the Company aims to build advanced showcases in the U.S. and leverage theexperience to expand in Japan.
In the FPoS business, the Company has acquired certification under the Digital Signature Act for “my Digital
Certificate” (the issuing entity is my FinTech Inc., a subsidiary of the Company.) based on its patented FPoS
technology, and are working on its actual use as a digital ID that can be used safely, securely, and conveniently
on smartphones.
With the surrounding situation above described, the management of the Company perceives a market
capitalization of 500 billion yen as the growth business scale in three to five years from the launch ofcommercial service of FPoS (launched on October 21, 2022).

2

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change
in scope of consolidation): None
(2) Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements:
None(3) Changes in accounting policies, changes in accounting estimates, and restatement(i) Changes in accounting policies due to revisions to accounting standards and other regulations: None(ii) Changes in accounting policies due to other reasons: None(iii) Changes in accounting estimates: Yes(iv) Restatement: None
(4) Number of issued shares (common shares)(i)

Total number of issued shares at the end of the period (including treasury shares)
As of December 31, 2022

165,009,239 shares

As of March 31, 2022

164,258,239 shares(ii) Number of treasury shares at the end of the period
As of December 31, 2022

15,004 shares

As of March 31, 2022

15,004 shares(iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal
year)
Nine months ended December 31, 2022

164,622,831 shares

Nine months ended December 31, 2021

164,243,235 shares* Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants
or an audit corporation.

3

1. Qualitative Information on Results for the Nine Months Ended December 31(1) Explanation on operating results
Since its founding in 1996, the Company has propounded and implemented the MVNO business model, an
innovative form of telecommunications business, having developed its business with the mission oftransferring (communicating) data safely, securely, and conveniently. Specifically, the Company is engaged inthree businesses: mobile communications business (SIM business), communications business through local
mobile networks (local 4G/5G), and digital ID (FPoS: Fintech Platform over SIM) business for use on
smartphones.
The Company plans to build a stable income stream by continuing the evolution of the SIM business, as wellas to develop the local 4G/5G business and FPoS business to become the pillar of future earnings by investingin the two businesses.
(i) Mobile Communications Business (SIM business)
In July 2020, the Company launched the “Nihon Tsushin SIM,” which provides flat-rate voice plans
equivalent to that of major mobile operators, following the June 2020 ruling by the Minister for Internal
Affairs and Communications that set the prices of wholesale telecommunication services relating to voicecommunications services provided to the Company from NTT DOCOMO, INC. shall not exceed theamount of the appropriate costs under efficient management plus appropriate profit. Net sales of “Nihon
Tsushin SIM” are increasing steadily, and with the increase in MNP transfers from major mobile operatorsand major MVNOs, it is beginning to become recognized as a main line.
Although the Company has timely introduced new additional plans to “Nihon Tsushin SIM,” since April
2022, the Company began supporting eSIM, which is embedded in devices such as smartphones, inadvance of other MVNO operators (announced on April 6, 2022). An eSIM is a SIM on which subscriber
identity information (profiles) necessary for using telecommunication services can be remotely written in
eSIM-embedded devices such as smartphones so that customers can change mobile service operators
without replacing SIM cards, as was the case before. This will enable customers to use multiple lines ofdifferent mobile operators and/or use separate phone numbers, such as for private and business purposes,on the same smartphone.
Besides, as of January 2023, the Company has started an identification by the electronic certificates stored
in “My Number Card” as an identification under the Act on Identification, etc. by Mobile VoiceCommunications Carriers of their Subscribers, etc. and for Prevention of Improper Use of Mobile VoiceCommunications Services. In this approach, an identification will be completed upon customer’s reading
their “My Number Card” with their smartphone and they can start using our service on the day of
application, in case of that they choose eSIM. This will improve customer’s convenience and willcontribute to prevent improper use of mobile phones by strict identification.
In addition, the Company has requested NTT DOCOMO, INC. for an interconnection of voice networks
in June 2022 (announced on June 10, 2022). This request, which the Company had been considering forlong time, was made as the Information and Communications Council of the Ministry of Internal Affairs
and Communications presented a policy of allocating mobile numbers (090, etc.) to MVNOs in December
2021. The Company will secure a stable business foundation by procuring both data and voicecommunication networks through interconnection and aim to become a “Neo Carrier” who can provide
comparable services as mobile operators without owing mobile base station.
(ii) Local 4G/5G Business through Local Mobile Networks
A U.S. subsidiary of the Company operates a business that provides SIMs used for connections with local
mobile networks in the U.S. market. For connections with local mobile networks, it is necessary to write alarge amount of highly specialized information to SIMs. The Company provides SIMs that are able toconnect to local mobile networks set up by partner and customer companies by accumulating and utilizing
technologies and expertise in relevant fields through the U.S. subsidiary. By utilizing achievements in theleading U.S. market, the Company is working on similar initiatives for the local 4G/5G business in Japan.

4

(iii) Digital ID (FPoS) Business for Use on Smartphones
Under the “Vision for a Digital Garden City Nation” (vision to realize a comfortable life for everyone sothat they enjoy benefits from digitalization, leaving no one behind by solving regional issues throughdigital implementation) which was declared by the Japanese government in 2021, it was announced onJune 17, 2022 that project applications by Maebashi City, Ebetsu City (Hokkaido Prefecture), and Gunma
Prefecture were adopted.
Among the above, in the project of “Maebashi living-tech promotion business,” which was applied by
Maebashi City, a business corporation (“Mebuku Ground Inc.”), which was established with the joint
investment by prominent companies and financial institutions in Gunma Prefecture, released the “mebuku
App,” which utilizes digital ID (“mebuku ID”), in October 2022. Customers can use “mebuku ID” ontheir smartphone for both public services (such as administrative procedures) and private services. At the“Maebashi BOOK FES,” an event held in Maebashi City at the end of October 2022 where people bring
their books and have a relationship with new readers, it was utilized as the digital ID to connect each bookand person.
The “mebuku ID” platform is FPoS based, and the Company has supported the “mebuku ID” as the firstcase of the FPoS business.
Gunma Prefecture and Ebetsu City also plan to use “mebuku ID,” and the Company plans to provide
FPoS based services in these three regions during the current fiscal year.
As a result of the above, the Group’s consolidated net revenue for the nine months ended December 31, 2022
were 4,321 million yen, an increase of 935 million yen (up 27.6%) compared to the nine months ended
December 31, 2021 (hereinafter referred to as the “same period of the previous year”). This was because of
the growth of the flat-rate or semi-flat rate voice services of “Nihon Tsushin SIM” in the MVNO Business (up22.6% from the same period of the previous year), and the growth of the voice services of partner brands inthe Enabler Business (up 33.6% from the same period of the previous year).
Cost of sales was 2,388 million yen, an increase of 370 million yen (up 18.3%) compared to the same periodof the previous year. This was mainly due to an increase in mobile network usage fees in association with thegrowth of “Nihon Tsushin SIM.” Nevertheless, increase in cost of sales compared to increases in net revenue
are largely avoidable because the mobile networks of both data and voice communications procured by theCompany from NTT DOCOMO, INC. have been set to not exceed the amount of the appropriate costs underefficient management plus appropriate profit. In addition, there were partial adjustment of bandwidth costs forpast fiscal years retroactively by mobile operators during the nine months ended December 31, 2022.
As a result, gross profit amounted to 1,933 million yen, an increase of 564 million yen (up 41.3%), comparedto the same period of the previous year.
Operating profit amounted to 542 million yen (199 million yen for the same period of the previous year) andprofit attributable to owners of parent amounted to 511 million yen (217 million yen for the same period of theprevious year).
Financial results by business are as follows:(Millions of yen)
Net revenue

For nine months
ended December 31,
2021

For nine months
ended December 31,
2022

Year-on-year change

Year-on-year change(%)

MVNO Business

1,842

2,258

416

22.6

Enabler Business

1,544

2,063

518

33.6

Total

3,386

4,321

935

27.6

Revenue of 97 million yen (93 million yen in the same period of the previous year) from overseas operationsin the segment information is included in the Enabler Business.

5(2) Explanation on financial position(i) Assets, liabilities and net assets
AssetsCurrent assets at the end of the current third quarter were 2,011 million yen, an increase of 601 million yen
compared to the end of the previous year. This was mainly due to increases of 370 million yen in cash anddeposits and 101 million yen in accounts receivable - trade. Non-current assets were 723 million yen, an
increase of 191 million yen compared to the end of the previous year. This was mainly due to increases of 66
million yen in intangible assets and 102 million yen in investments and other assets.
As a result, total assets amounted to 2,735 million yen, an increase of 791 million yen compared to the end of
the previous year.
Liabilities
Current liabilities at the end of the current third quarter were 1,328 million yen, an increase of 222 million yen
compared to the end of the previous year. This was mainly due to increases of 90 million yen in accounts
payable - trade, 37 million yen in accounts payable - other and 32 million yen in deposits received. Noncurrent liabilities were 70 million yen, an increase of 17 million yen compared to the end of the previous year.
This was mainly due to an increase of 11 million yen in lease liabilities.
As a result, liabilities amounted to 1,398 million yen, an increase of 239 million yen compared to the end of
the previous year.
Net assets
Net assets at the end of the current third quarter were 1,337 million yen, an increase of 551 million yen
compared to the end of the previous year. This was mainly due to recording 511 million yen in profit
attributable to owners of parent. Along with decreasing the amounts of capital and capital reserve, on August
10, 2022, the Company implemented an appropriation of surplus. Capital and capital reserve were decreased
by 4,028 million yen and 2,789 million yen, respectively, and the entire decreased amount was transferred toother capital surplus. By transferring the increase in other capital surplus to retained earnings brought forward,
the deficit was covered, and there was no impact on net assets.
As a result, the equity ratio was 44.5% (33.6% at the end of the previous year).
(ii) Status of cash flows
Cash and cash equivalents at the end of the nine months ended December 31, 2022 were 1,299 million yen, an
increase of 370 million yen compared to the end of the previous year.
The status of cash flows and their factors during the nine months ended December 31, 2022 are as follows:
Cash flows from operating activities
Net cash provided by operating activities totaled 534 million yen (an outflow of 259 million yen in the same
period of the previous year). This was mainly due to recording 568 million yen in profit before income taxes.
Cash flows from investing activities
Net cash used in investing activities totaled 166 million yen (an outflow of 243 million yen in the same periodof the previous year). This was mainly due to payments for purchase of investment securities of 50 million
yen, and purchase of intangible assets of 85 million yen.
Cash flows from financing activities
There were no cash flows from financing activities (an inflow of 150 million yen in the same period of theprevious year).

6(3) Explanation on future forecast information such as consolidated business forecast
Since its founding in 1996, the Company has propounded and implemented the MVNO business model, an
innovative form of telecommunications business, having developed its business with the mission oftransferring (communicating) data safely, securely, and conveniently. Specifically, the Company is engaged inthree businesses: mobile communications business (SIM business), communications business through local
mobile networks (local 4G/5G), and digital ID (FPoS: Fintech Platform over SIM) business for use on
smartphones.
The Company plans to build a stable income stream by continuing the evolution of the SIM business, as wellas to develop the local 4G/5G business and FPoS business to become the pillar of future earnings by investingin the two businesses.
In the local 4G/5G business, the Company aims to build advanced showcases in the U.S. and leverage theexperience to expand in Japan.
In the FPoS business, the Company has acquired certification under the Digital Signature Act for “my Digital
Certificate” (the issuing entity is my FinTech Inc., a subsidiary of the Company.) based on its patented FPoS
technology, and are working on its actual use as a digital ID that can be used safely, securely, andconveniently on smartphones.
With the surrounding situation above described, the management of the Company perceives a market
capitalization of 500 billion yen as the growth business scale in three to five years from the launch ofcommercial service of FPoS (launched on October 21, 2022).

7

Quarterly consolidated financial statements
Quarterly consolidated balance sheets(Thousands of yen)
As of March 31, 2022
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Merchandise
Supplies
Accounts receivable - other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
VehiclesAccumulated depreciation
Vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Patent right
Trademark right
Software
Software in progress
Total intangible assets
Investments and other assets
Investment securities
Leasehold and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Deferred assets
Share issuance costs
Bond issuance costs
Total deferred assets
Total assets

8

As of December 31, 2022

928,688378,641
47,55271
576
57,440△2,692
1,410,277

1,299,413
480,089
53,451
40
63,988120,235△5,2902,011,929

84,111△83,292
818
7,027△4,881
2,145
795,689△766,969
28,719263,727△263,727－
90,093
121,777

106,019△84,495
21,524
7,027△5,4171,609
901,013△792,730
108,282
277,702△264,659
13,043－
144,459

3,834
2,097
73,999125,984
205,916

4,698
3,327
251,972
12,311
272,310

63,281
140,335456
204,073
531,767

125,751
139,088
42,079306,919
723,689

376
1,937
2,313
1,944,359

－
352
352
2,735,971

(Thousands of yen)
As of March 31, 2022
Liabilities
Current liabilities
Accounts payable - trade
Accounts payable - other
Income taxes payable
Unearned revenue
Deposits received
Valuation Reserve For Inventory PurchaseCommitments
Other
Total current liabilities
Non-current liabilities
Long-term accounts payable - other
Long-term unearned revenue
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeShare acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

9

As of December 31, 2022

421,105
85,27062,055
117,785
27,918511,548
123,046
74,704
108,826
60,155

263,951

286,184

127,992
1,106,078

163,710
1,328,175

2,149
50,920－53,0701,159,149

3,064
56,448
11,18470,698
1,398,874

4,528,440
2,977,376△6,977,888△2,192525,737

529,260
225,749
351,110△2,192
1,103,927

126,815

114,052

126,815

114,052

67,86464,792785,210
1,944,359

88,91230,204
1,337,097
2,735,971

Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income
Quarterly consolidated statements of income(Thousands of yen)
Nine months ended
December 31, 2021
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Foreign exchange gains
Share of profit of entities accounted forusing equity method
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Amortization of share issuance costs
Amortization of bond issuance costs
Miscellaneous losses
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Total extraordinary income
Profit before income taxes
Income taxes - current
Total income taxes
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

10

Nine months ended
December 31, 2022

3,386,845
2,017,990
1,368,855
1,168,917
199,937

4,321,916
2,388,282
1,933,634
1,390,847
542,787

57,074

413,366

4,690

12,2892,763
14,533

2,234
27,894

28
839
1,585
6,297
8,751
205,719

318
376
1,585
49
2,330
568,351

100
100
205,8196,131
6,131
199,687△17,936
217,624－－568,351
91,471
91,471
476,879△34,587
511,467(Thousands of yen)
3rd quarter ended
December 31, 2021
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Foreign exchange gains
Share of profit of entities accounted forusing equity method
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Amortization of share issuance costs
Amortization of bond issuance costs
Foreign exchange losses
Miscellaneous losses
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Total extraordinary income
Profit before income taxes
Income taxes - current
Total income taxes
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

11

3rd quarter ended
December 31, 2022

1,182,776
655,001
527,775
380,467
147,308

1,558,967
811,158
747,809498,863
248,945

4,610

－

2,938

4,717

1,619
9,167

483
5,201

－
263
528
－
6,281
7,073
149,40231
63
528
20,245－
20,869233,277

100
100
149,502
4,086
4,086
145,415△7,413
152,829－－
233,277
37,82237,822
195,454△14,888
210,343

Quarterly consolidated statements of comprehensive income(Thousands of yen)
Nine months ended
December 31, 2021
ProfitOther comprehensive income
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to ownersof parent
Comprehensive income attributable to noncontrolling interests

12

Nine months ended
December 31, 2022

199,687

476,879△5,681△5,681
194,006△12,763△12,763
464,116

211,942498,704△17,936△34,587(Thousands of yen)
3rd quarter ended
December 31, 2021
ProfitOther comprehensive income
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to ownersof parent
Comprehensive income attributable to noncontrolling interests

13

3rd quarter ended
December 31, 2022

145,415

195,454△4,292△4,292
141,123

16,887
16,887
212,342

148,537

227,231△7,413△14,888

Quarterly consolidated statement of cash flows(Thousands of yen)
Nine months ended
December 31, 2021
Cash flows from operating activities
Profit before income taxes
Depreciation
Interest and dividend income
Interest expenses
Share of loss (profit) of entities accounted
for using equity method
Foreign exchange losses (gains)
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in accounts receivable other
Increase (decrease) in unearned revenue
Increase (decrease) in Long-term unearned
revenue
Increase/decrease in consumption taxes
payable/consumption taxes refund receivable
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold andguarantee deposits
Other, net
Net cash provided by (used in) investing
activities
Cash flows from financing activities
Repayments of long-term borrowings
Proceeds from share issuance to noncontrolling shareholders
Net cash provided by (used in) financing
activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodCash and cash equivalents at end of period

14

Nine months ended
December 31, 2022

205,819
14,842△5
28568,351
45,369△4318△4,690△12,289△6,576△41,70933,273△351,726△15,180△96,451△7,182
89,405△111,118△63,409△43,185△11,235

11,9802,023△7,274△4,05845,533△254,810
5△28△4,63080,276575,9334△99△41,305△259,464

534,532△92,838△148,495－△2,203△30,158△85,479△50,000△3,690

－

3,038

△336

－

△243,874△166,290△9,600－160,050－

150,450

－

943

2,482

△351,944

370,725

1,025,466

928,688673,521

1,299,413