Second Quarter of 2024

Presentation of Financial Results
FAN Communications, Inc.
August 9, 2024

©FAN Communications, Inc. All Rights Reserved

Agenda01 Executive Summary
02 Second Quarter of 2024 Results
03 2024 Performance Forecast
04 Overview by Business

05 Other Topics
06 Company Information
07 Reference Material©FAN Communications, Inc. All Rights Reserved

01

Executive Summary••••

Major Topics
Major KPIs
Progress vs. Performance Forecast
Medium- to Long-Term Roadmap©FAN Communications, Inc. All Rights Reserved

Executive Summary

Major Topics
We are tackling the key issues of further strengthening A8.net, our mainstay business, and tolaunch strategic new businesses.

Q2 summary

CPA Solution Business

New BusinessQ3 plan

FY24 Q2 was to be the launch of our second founding,where we worked to adapt to changes
Recovered in FY24 Q2 after halting losses in Q1. Transaction volume rosein new business types.
Human resources post-withdrawal from nend are allocated to strategic new
businesses.
Currently seeking immediate and explosive launch of multiple B2B
strategic new businesses.
To recover net sales in the CPA Solution Business.
Aiming for market fit for each new business.
©FAN Communications, Inc. All Rights Reserved

4

Executive Summary

Second Quarter of 2024: Major Figure Summary
The negative YoY trend due to nend withdrawal is expected to continue for some time, but weare building a foothold to start a positive YoY trend in FY24.
◼ Transaction volume◼ Net sales

6,291

¥

YoY change

million(11.1%)◼ Operating income

1,702

¥

YoY change

353

million(7.7%)¥

YoY change

million(30.6%)

Q2 topics• The A8.net, our mainstay business, saw an increase in the number of advertisers in new industries, and June transaction volume turned positive
YoY.
• Deteriorated operating income was due to the failure to achieve the A8.net targets and due to advance investment in new businesses, including
subsidiaries.
• Withdrawing from existing businesses and launching strategic new businesses, with beginning of investments.
• Acquired WAND to strengthen influencer marketing, one of our strategic new businesses.
• MAU, views, and other key figures for GERA, the comedy radio app in the fan marketing business, showed firm performance.
Launched in-app purchases and sales of advertising tie-ins, etc.

©FAN Communications, Inc. All Rights Reserved

5

Executive Summary

Progress vs. Performance Forecast
Consolidated net sales and operating income for the first half reached 48.8% and 37.0% of the
full-year targets, respectively, falling slightly short.

◼ Net sales progress rate in 2024 Q2◼ Progress rate

24.4%

24.4%

48.8

%

1Q

2Q

3Q

4Q

◼ Operating income progress rate in 2024 Q2◼ Progress rate

18.4%
1Q

18.6%
2Q

37.0
3Q

%

4Q
*No revisions have been made to the performance forecast announced on May 2, 2024.

©FAN Communications, Inc. All Rights Reserved

6

Executive Summary

Medium- to Long-Term Roadmap
Maximizing number of customers/net sales (≈ gross profit) for existing businesses: Expanding
and investing in strategic new businesses to add value to existing businesses and targetingnew business opportunities.
◼ Investing in strategic new businesses
Business scaleInternet marketing support
Reinvestment
Key future action

Key present action

Utilizing existing
assets to create
new business
opportunities

Strengthening up-selling and cross-selling to existingcustomers by providing solutions to customer issues
based on internet marketing, going beyond affiliate
marketing.

◼ Expanding strategic new businesses

Reinvestment

Influencer marketing
supportSupporting and maximizing the introduction ofmedia to people’s lives.

◼ Deepening existing businesses

Maximizing net sales

CPA Solution
Maximizing
net sales

Aiming to maximize net sales by continuing to
produce results and increasing the number ofoperating advertisers.

Period©FAN Communications, Inc. All Rights Reserved

7

02

Second Quarter of 2024 Results• P/L• [Major KPIs] (Quarterly Basis)©FAN Communications, Inc. All Rights Reserved

Second Quarter of 2024 Results

P/L
Compared to the same quarter of the previous fiscal year, transaction volume, net sales, andoperating income decreased, but profit increased.

(Millions of yen)2023 Q2

YoY change

2024 Q2

ChangeChange (%)

Transaction volume

14,352

12,391(1,961)(13.7％)Net sales

3,764

3,404

(360)

(9.6％)

Operating income

1,138

706

(432)

(37.9％)(Operating income totransaction volume ratio)

7.9％

5.7％

ー

ー

Ordinary income

1,149

781

(368)

(32.0%)

602

830

+228

+37.7%

4.2％

6.7％

ー

Profit(Profit to transaction volume
ratio)*The Company has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29) from the beginning of 2022.
*Transaction volumes for fiscal years prior to 2022 have been calculated internally to enable comparison with said figures for 2022 and earlier. Until the end of 2021, transaction volume was disclosed as net sales.

©FAN Communications, Inc. All Rights Reserved

9Second Quarter of 2024 Results

Transaction Volume (Quarterly Basis)Though this figure declined by 11.1% year on year, this was up 3.1% quarter on quarter.
◼ Transaction volume◼ 2024 Q2 results( (Millions of yen)

OverallYo Y c h a n g e

8,000(11.1％)¥

6,291 million

YoY change(11.1%)

QoQ change

＋3.1%

6,000

4,000

7,513

7,124

6,462

7,053

7,276

7,075

6,779

6,534

6,100

6,291

Q１

Q２

2,000

0

Q１

Q２

Q３
2022

Q４

Q１

Q２

Q３
2023

Q４

2024

*Figures for transaction volume represent amounts before elimination of intragroup transactions.
*The Company has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29) from the beginning of 2022.
*Transaction volumes for fiscal years prior to 2022 have been calculated internally to enable comparison with said figures for 2022 and earlier. Until the end of 2021, transaction
volume was disclosed as net sales. 10©FAN Communications, Inc. All Rights Reserved

Second Quarter of 2024 Results[Net Sales] (Quarterly Basis)
Net sales were down 7.7% year on year, and flat (0.0% change) quarter on quarter.
◼ Net sales◼ 2024 Q2 results

YoY change( (Millions of yen)

(7.7%)

2,000

YoY change
Overall

¥

1,000
1,837

1,997

1,980

1,921

1,919

1,844

1,800

1,831

Q２

Q３

Q４

1,702

1,702

Q１

Q２

1,702 million

YoY change(7.7%)

QoQ change

0.0%

0
Q１

Q２

Q３
2022

Q４

Q１

2023

2024

*The Company has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29) from the beginning of 2022.
*Transaction volumes for fiscal years prior to 2022 have been calculated internally to enable comparison with said figures for 2022 and earlier. Until the end of 2021, transaction volume was disclosed as net sales.
©FAN Communications, Inc. All Rights Reserved

11Second Quarter of 2024 Results[Operating Income] (Quarterly Basis)
Operating income was down 30.6% year on year, and up 0.5% quarter on quarter.
◼ Operating income◼ 2024 Q2 results( (Millions of yen)

YoY change

YoY change
Overall(30.6%)
600

¥

500

353 million

YoY change(30.6%)

QoQ change

＋0.5%

400
674
300

642

628

585

516

509

504

411

200

352

353

Q１

Q２

100

0
Q１

Q２

Q３
2022

Q４

Q１

Q２

Q３

Q４

2023

2024

*The Company has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29) from the beginning of 2022.
*Transaction volumes for fiscal years prior to 2022 have been calculated internally to enable comparison with said figures for 2022 and earlier. Until the end of 2021, transaction volume was disclosed as net sales.
©FAN Communications, Inc. All Rights Reserved

12

03

2024 Performance Forecast• P/L (Forecast)©FAN Communications, Inc. All Rights Reserved

Second Quarter of 2024 Results

P/L (Forecast)
Operating income and ordinary income lagged behind, but profit remained steady.

(Millions of yen)2024
Full-year forecast

2024
2Q results

Progress rate

Net sales

6,980

3,404

48.8%

Operating income

1,910

706

37.0%

Ordinary income

1,920

781

40.7%

Profit

1,560

830

53.2%

23.55

12.53

53.2%

(Earnings per share)(Yen)

Dividend forecast

2023 results

2024 forecast

19

19*No revisions have been made to the performance forecast announced on May 2, 2024.

©FAN Communications, Inc. All Rights Reserved

14

04

Overview by Business• Business Model• CPA Solution Business• New Business©FAN Communications, Inc. All Rights ReservedOverview by BusinessBusiness Model
We are in the business of connecting producers, sellers, and consumers , and generatesales from fees we receive from advertisers.The Fan marketing connects producers andconsumers not only through advertising but also through billing.
Producers

Sellers

Consumers

Advertisers

Media

Users

CPA Solution

Fee payment
Affiliate site app

Action,e.g., product purchase

Registration

Usage fee
Companies

Influencer marketing

Influencers

Service provision

Instagrammers
General consumers

FAN Marketing

Private person
Entertainer
Creator
AthleteInfluencers

Registration and service fees

Service/product provision©FAN Communications, Inc. All Rights Reserved

16

Overview by Business

CPA Solution Business: Business Overview
Together with A8.net, which has been ranked No. 1 for 1 4 consecutive years as the ASP
with the highest satisfaction as selected by affiliate media operators, and the appsupporting seedApp, we will build an affiliate network through a fusion of media and apps.
To deliver a variety ofgood products andservices

Fee payment

To inform many different
people about products andservices

Usage fee

Ranked No. 1 for 14
consecutive years

Registration

ASP with the highest satisfaction as selected by affiliate
media operators

Media
Service provision
Action,e.g., product purchase
Smartphone app install ads

Advertisers

To know about a varietyof good products andservices

Service/product purchase priceService/product provision©FAN Communications, Inc. All Rights Reserved

Users
17

Overview by Business

CPA Solution Business: Key Summary
Net sales at both A8.net and seedApp declined year on year, but the number of active
advertiser IDs and registered partner sites at A8.net both increased.

◼ Net sales◼ Number of operating advertiser IDs

A8.net

1,327¥

YoY change

3,451

million(3.4%)

YoY change＋2.6%◼ Number of registered partner sites

3,461,463
YoY change＋4.8%

Q2 topics
seedApp118¥

YoY change

million(9.0%)• The number of A8.net active advertiser IDs declined slightly on a quarter-to-quarter
basis.
• A8.net’s transaction volume has been growing overall while the top transaction
volume categories have been gradually changing, a development that bore fruit in Q2.
Transaction volume is also on an upward trend after halting losses in 2024 Q1 on aquarter-on-quarter basis.
Figures for transaction volume represent amounts
before elimination of intragroup transactions.
©FAN Communications, Inc. All Rights Reserved

18

Overview by Business

CPA Solution Business: Transaction Volume
Year on year, the CPA Solution Business was down 2.5%, while within the A8.net business, thiswas up 12.5% quarter on quarter.
◼ Transaction volume◼ 2024 Q2 results

YoY change

Transaction volume of A8.net(2.5%)

Transaction volume of seedApp

Overall(Millions of yen)

6,000

610

518
630

488
536

565

426
504

5,926 million

YoY change

515

627

¥

4,000

(2.5%)

A8.net
5,581

5,535
5,008

4,685

5,588

5,262

5,121

5,132

5,500
4,878

¥

5,500 million

YoY change

2,000(1.6%)

seedApp
0
Q１

Q２

Q３

Q４

Q１

Q２

Q３

Q４

Q１

Q２

¥

426 million

YoY change
2022

2023

(12.7%)

2024*Figures for transaction volume represent amounts before elimination of intragroup transactions.

©FAN Communications, Inc. All Rights Reserved

19Overview by Business

CPA Solution Business: Net Sales
Overall, the CPA Solution Business was down 1.8% year on year.
Within A8.net, this was down 3.4%, with seedApp down 9.0%.
◼ Net Sales◼ 2024 Q2 results(Millions of yen)

Overall

2,000
Net sales of A8.net
Net sales of Others

Net sales of seedApp

△1.8％

¥

1,492 million

YoY change

17

13
163

YoY change

36

179

181

14
161

22
144

14
130

29
134

35
132

(1.8%)

45
118

49
134

A8.net

¥
1,382

1,298

1,261

1,319

1,371

1,374

1,313

1,306

1,327

1,238

1,327 million

YoY change(3.4%)

seedApp

¥

0
Q１

Q２

Q３
2022

Q４

Q１

Q２

Q３

Q４

2023

©FAN Communications, Inc. All Rights Reserved

Q１

Q２

118 million

YoY change(9.0%)

2024* Others include contracted development andSeasaa-related sales.

20Overview by Business

CPA Solution Business: Number of Operating Advertiser IDs andRegistered Partner Sites
The number of operating advertiser IDs and the number of registered partner sites on A8.net
both increased year on year.
◼ Number of operating advertiser IDs◼ Number of registered partner sites(IDs)

YoY change

4,000

+2.6％
3,377

3,319

3,314

3,328

3,341

3,364

3,420

3,472

3,475

3,451

2,000

0

0
Q２

Q３

2022

Q４

Q１

Q２

Q３

2023

Q４

+4.8％

4,000

2,000

Q１

YoY change(Thousands of sites)

Q１

Q２

3,171

3,257

3,086

3,131

3,206

3,304

Q１

Q２

Q３

Q４

Q１

Q２

2024

2022

3,381

3,421

3,461

3,350

Q３

Q４

Q１

Q２

2023

2024

*The number of operating advertisers is as of the final month of each quarter.
©FAN Communications, Inc. All Rights Reserved

21

Overview by Business

CPA Solution Business: Key Points
We will increase the number of advertisers continuously generating results through company wide efforts to both provide added value in acquiring new customers, as well in acquiringexisting customers.
Increasing the numberof operating
advertisers• Launching affiliate launch preparation support services• Making marketing investments to acquire prospective customers

Increasing successfees• Proposing and executing strategies for each customer category• Acquiring media for focus categories

Increasing productivity

Synergizing withstrategic new
businesses• Reviewing workflows• Using systems to resolve issues in areas where systemization can be applied• Understanding needs for Internet marketing services and verifying new
products• Verifying combinations of influencer marketing and affiliates©FAN Communications, Inc. All Rights Reserved

22Overview by Business

New Business Summary
Began investing in the influencer marketing support, Internet marketing support, and fanmarketing businesses as strategic new businesses with high compatibility to the core
CPA Solution Business. Aiming for market fit in the second half of the year.
CRM support tools utilizing LINE

N-INE Series(Internet
marketing)Support tools for easy form placement*Going forward, several marketing-adjacent tools will be tested andreleased.

CPA Solution
Business
Influencer
marketingSelecting noninvestment
businesses
Selection andconcentration

Influencer monetization support services
TikTok-focused marketing support services

App for listening to comedy radio for the most popular comedians of today

FAN Marketing

Emphasis on
speed ofverification

Profile curation services for athletes
Platform services allowing anyone to open an online salon for free

©FAN Communications, Inc. All Rights Reserved

23

Overview by Business

New Business FY24 2H Milestones
Resources are being invested in strategic new businesses. Since April, nend personnel
resources have been allocated to strategic new businesses, and personnel expenses related to
new businesses have doubled compared to FY24 Q1.

2H milestones

N-INE Series
Internet marketing support

WAND・Linkhere
Influencer marketing support

GERA
FAN Marketing

Achieving market fit in each business and aim forfurther investment expansion in FY25.
• 100 operating accounts• Creating best practices• WAND: PMI = Budget achieved + sales generated through partnership with
A8.net• Building up recurring sales (subscription billing)• Achievement of monthly profitability©FAN Communications, Inc. All Rights Reserved

24

05

Other Topics• Consolidated Group Businesses• Business Investment Status©FAN Communications, Inc. All Rights Reserved

Other Topics

Consolidated Group Businesses: FAN Communications Global
Although transaction volume increased due to strong performance of the game publishingbusiness, operating income was a loss due to advance investment in advertising expenses.
◼ Transaction volume◼ Operating income(Millions of yen)

(Millions of yen)2023 Q2

-7.9

372

-9.3

266
2023 Q22024 Q2

YoY change＋39.9%

2024 Q2

YoY change＋16.7%

Topics• New businesses have been launched and transaction volume has been steadily increasing, but it has fallen
short of the budget.
• Formed business alliance with Luckmon, a platform for mobile game users.
*Figures for transaction volume represent amounts before elimination of intragroup transactions.
*The Company has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29) from the beginning of 2022.
*Transaction volumes for fiscal years prior to 2022 have been calculated internally to enable comparison with said figures for 2022 and earlier. Until the end of 2021, transaction volume was disclosed as net sales.
©FAN Communications, Inc. All Rights Reserved26

Other Topics

Business Investment Status: Partnership with WAND
With an advertising network combining WAND Co.,Ltd., an influencer marketing company, andA8.net and strategic businesses, we will promote the activation of the influencer business andaccelerate its growth strategy.
◼ Company Overview◼ Services HandledCompany
Name

WAND Co.,Ltd.

Corporate
Management

Yuichi Kurosaki, Representative Director and CEO
Yuta Kamezaki, Director, CTO and COO

Head Office

Aoyama Diamond Building, 1-1-8, Shibuya Shibuya-ku,
Tokyo

Established

October 2021

Capital¥20,007,400 (including capital reserve)

Business
Lines

Operation of a marketing platform utilizing short videos
such as those on TikTok.

LUMOS

LUMOS BUZZ

TikTok creator multi-channel network

Closed project acquisition platform forcreators

Number of Affiliated Creators

Total Number of Followers

5,000

100 million

Accelerating growth by combining FAN Communications’management resources with WAND’s creator network
assets and unique marketing knowledge©FAN Communications, Inc. All Rights Reserved

27

06

Company Information• Vision• Company Overview• External Environment©FAN Communications, Inc. All Rights ReservedFrom an ad network provider to a prosumer
support company.
The market mechanism created by the era of mass
production and mass consumption is coming to an
end.
The boundary between production and consumption

Producers
Producers

Prosumers

Consumers
Consumers

will blur, and the world will be filled with “prosumers”
who resemble both sides.

We, FAN Communications will continue to develop

our business to support such prosumers and move
forward to become a company that can maximize
their joy.

Prosumer happiness= The “vision” we are working toward
29Company Information

Company Overview
Company NameFAN Communications, Inc.

Securities Code2461 (Tokyo Stock Exchange, Prime Market)

Fiscal Year-End

DecemberEstablished

October 1, 1999

Capital¥1,173.67 million (As of June 30, 2024)

President andRepresentative
Director

Koji Ninomiya

Number of
Employees

Non-consolidated: 440
Group total: 463 (As of June 30, 2024; includes part-time and temp staff)

Headquarters

Aoyama Diamond Building, 1-1-8, Shibuya, Shibuya-ku, Tokyo
150-0002, Japan

Telephone+81-3-5766-3530 (IR)Fax

+81-3-5766-3782©FAN Communications, Inc. All Rights Reserved30Company Information

External Environment
The internet advertising market is expected to continue to grow, which is expected to be a
tailwind for our affiliate network business .
◼ Domestic affiliate market size and forecast(Billions of yen)

◼ Future trend forecast

800

The size of the market in
FY2027 is forecast to exceed
533.1¥586 billion.

486.5
444.8
383.6

400

322.1

586.2

Growth expected inyoung generation
participation,with focus on social media

411.6

350.5

◼ Our actions
Focusing on A8.net with thelargest number of registeredusers in the industry and0
FY2020

FY2021

Measured values

FY2022

FY2023

FY2024FY2025

FY2026FY2027

Forecast values

aiming to expand
by attracting
influencers

Source: From “Research on the Affiliate Market (2024)” by Yano Research Institute Ltd. https://www.yano.co.jp/press-release/show/press_id/3523©FAN Communications, Inc. All Rights Reserved

31

07

Reference Material••••

Stock Information
Selling, General and Administrative Expenses
Balance Sheet Summary
Disclaimer©FAN Communications, Inc. All Rights ReservedReference Material

Stock Information
The number of total shareholders has decreased. The percentage of shares held by foreign
shareholders is on the rise.
◼ Total number of shareholders◼ Percentage of shares held by individual and foreign shareholders(shares)

14,00040%
12,652

10,50010,464

10,167

Percentage of shares held by foreign shareholders

11,932

Percentage of shares held by indivisual shareholders

10,76121.38%
20%

7,000

19.28%

19.18%

18.13%

18.03%

8.31%

3,500

5.42%

5.62%
3.76%

4.69%

0%

0
June

December
2022

June

December
2023

June

June

December
2022

2024

June

December
2023

June
2024

*Percentage of shares held by individual shareholders does not include shares held by the Company’s executives.
©FAN Communications, Inc. All Rights Reserved33

Reference Material

Selling, General and Administrative Expenses(Consolidated/Quarterly Basis)
The increase in advertising expenses from Q4 2023 is due to activities to acquire newcustomers.
1,200

Personnel expenses
Advertising expenses
Other expenses

Sales commissions
Rent expenses on land and buildings

1,000

208
800

600

168

164
153
54
56
5

55
83
4

56
84
4

580

601

614

Q１

Q２

Q３

172
56
86
4

207

221

231

57

55

57
62
4

150

154

180

58

56
65
3

57
62
4

646

620

638

623

617

592

Q４

Q１

Q２

Q３

Q４

Q１

3

213

154
3

3

400

643

200

0

2022

2023

Q２
2024

*Figures have been calculated based on figures before application of the Accounting Standard for Revenue Recognition to enable comparison with previous results.
*Other expenses include outsourcing expenses, commission expenses, etc.
©FAN Communications, Inc. All Rights Reserved34

Reference Material

Balance Sheet Summary
The increase in intangible assets was due to goodwill from the acquisition of WAND.

(Millions of yen)

Vs. End of previous FY

2024 Q22023 End of FY

Change21,155

19,975(1179)(5.6％)

17,29915,954(1345)(7.8%)

2,223

2,808

＋585

＋26.3%

Property, plant and equipment

92

62

(30)

(32.7%)

Intangible assets

387

1,034

+646

+166.6%

1,742

1,712

(30)

(1.7%)

Total

23,37822,784(593)(2.5%)

Liabilities

5,489

5,305

(184)

(3.4％)Net assets

17,88817,479(409)(2.3%)

Total

23,37822,784(593)(2.5%)

Current assets
Cash and deposits

Non-current assets
AssetsInvestments and other assets

Liabilities
and netassetsChange (%)©FAN Communications, Inc. All Rights Reserved35Company Information

Disclaimer⚫ Forward-looking statements such as the performance forecasts and other predictions of future events and strategies published in thisdocument are based on the Company’s judgment within the scope of events foreseeable under normal conditions using data that werereasonably available at the time of preparation.
⚫ However, there is a risk that actual results may differ from the Company’s published performance forecasts due to reasons including
special events or outcomes that are unforeseeable under normal conditions.
⚫ The Company works to proactively disclose information that it considers important for investors. However, we strongly advise that you
not rely solely on the performance forecasts in this document in making decisions.
⚫ The Company makes every effort to ensure the accuracy of published content, but takes no responsibility for errors in the information
or damage caused by downloading the data.
⚫ These materials may not be reproduced or retransmitted for any purpose without the consent of the Company.

◼ Contact

FAN Communications, Inc.
E-mail: ir-info@fancs.com©FAN Communications, Inc. All Rights Reserved36