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.

August 3, 2023

Consolidated Financial Results
for the Three Months Ended June 30, 2023
(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:
August 4, 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 three months ended June 30, 2023 (from April 1, 2023 to June 30,2023)(1) Consolidated operating results (cumulative)
Net revenue
Three months ended(Percentages indicate year-on-year changes.)

Operating profit

Millions of yen%

Millions of yen

Profit attributable toowners of parent

Ordinary profit%

Millions of yen%

June 30, 2023

1,715

26.7

267

68.6

287

59.1

June 30, 2022

1,353

28.1

158

556.2

180

616.8

Note: Comprehensive income

For the three months ended June 30, 2023:
For the three months ended June 30, 2022:

%

597

270.1

161

459.8

[329.8%][425.2%]

Diluted earnings
per share

Basic earnings
per share
Three months ended¥574 million¥133 million

Millions of yen

Yen

Yen

June 30, 2023

3.61

3.61

June 30, 2022

0.98

0.97

(2) Consolidated financial position
Total assets
As ofMillions of yen

Net assets
Millions of yen

Equity-to-asset ratio

Net assets per share%

Yen

June 30, 2023

3,008

2,112

66.3

12.08

March 31, 2023

3,040

1,534

46.1

8.50

Reference:

EquityAs of June 30, 2023:
As of March 31, 2023:¥1,993 million¥1,402 million

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

Fiscal year ended
March 31, 2023
Fiscal year ending
March 31, 2024
Fiscal year ending
March 31, 2024
(Forecast)–Second quarter-end

Third quarter-end

Yen

Yen

Fiscal year-end

Total

Yen

Yen

0.00

–

0.00

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, 2024
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 ensure a stable revenue base with continuous evolution in the SIM business and to invest
the revenue in the local 4G/5G business and FPoS business in order to develop them into pillars of future earnings.
In the local 4G/5G business, the Company aims to build advanced showcases in the U.S. and leverage thisexperience to expand in Japan.
In the FPoS business, the Company has acquired a certification under the Digital Signature Act for “my Digital
Certificate” (issued by my FinTech Inc., a subsidiary of the Company) based on its patented FPoS technology,
and develops the “my Digital Certificate” to be actually utilized as a safe, secure, and convenient digital ID thatcan be used on smartphones.
Considering the factors described above, one of the Company’s management priorities is to grow the scale of its
business to a market capitalization of 500 billion yen in three to five years from the launch of the commercial
service of FPoS (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: None(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 June 30, 2023

165,009,239 shares

As of March 31, 2023

165,009,239 shares(ii) Number of treasury shares at the end of the period
As of June 30, 2023

15,004 shares

As of March 31, 2023

15,004 shares(iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal
year)
Three months ended June 30, 2023

164,994,235 shares

Three months ended June 30, 2022

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 Three Months Ended June 30(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 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 ensure a stable revenue base with continuous evolution in the SIM business and to invest
the revenue in the local 4G/5G business and FPoS business in order to develop them into pillars of future
earnings.
(i) Mobile Communications Business (SIM business)
Upon a ruling by the Minister of Internal Affairs and Communications in June 2020, the Company launched
the “Nihon Tsushin SIM” which provides flat-rate voice plans equivalent to that of major mobile phone
operators in July 2020, and the Company has continued to achieve growth both in the number of subscribedlines and quarterly revenue.
The Company has been improving the product specifications of “Nihon Tsushin SIM” to strengthen its
product competitiveness. In April 2022, the Company started supporting eSIM, which is embedded indevices such as smartphones, in advance of other MVNOs (announced on April 6, 2022). In addition, by
March 2023, the Company had introduced an identification method using electronic certificates stored in“My Number Card” in identification under the Act on Identification, etc. by Mobile Voice Communications
Carriers of their Subscribers, etc. and for Prevention of Improper Use of Mobile Voice Communications
Services.
In April 2023, the Company enhanced “Reasonable Minna-no Plan,” which is a flagship plan of “Nihon
Tsushin SIM.” While keeping basic monthly fees unchanged, the Company increased the basic data limit
for data communications from 6 GB to 10 GB. Besides, the Company made two options for free domestic
voice calling, one is 70 minutes of free voice calls and another is an “all-you-can-calls” for calls no longer
than 5 minutes. By these options available, customers can compare the price of the “Reasonable Minna-no
Plan” with the price of other companies’ plan.
Furthermore, the Company supported the MNP One Stop service in May 2023. When customers would liketo switch mobile phone carriers without changing their mobile phone numbers (a process known as “Mobile
Number Portability” or “MNP”), they had to start MNP process at the mobile phone carrier with which they
are currently under contract, and in some cases, customers may give up on MNP due to cancellation
prevention measures and other such actions taken by the mobile phone carrier with which they are currently
under contract. In the MNP One Stop service, customers can start MNP process with the mobile phone
carrier to which they intend to switch. The MNP One Stop service is supported by NTT DOCOMO, INC.
(hereinafter, “NTT DOCOMO”), KDDI CORPORATION / OKINAWA CELLULAR TELEPHONE
COMPANY, SoftBank Corp., Rakuten Mobile, Inc. and the Company.
As a result of the above, revenue from “Nihon Tsushin SIM” has been growing steadily for both individualand corporate subscribers, and the number of MNP port-ins from major mobile phone operators and major
MVNOs has also been increasing. In addition, the number of subscribers for voice communication services
under partner brands has also been increasing steadily, and as a result, the SIM business has seen growthboth in the MVNO Business and Enabler Business.
(ii) Local 4G/5G Business through Local Mobile Networks
In the local 4G/5G business, the Company aims to build advanced showcases in the U.S. and leverage thisexperience to expand in Japan. 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. To connect with local mobile networks,
it is necessary to write a large amount of highly specialized information to SIMs. The Company provides
SIMs that can connect 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. The Company willcontinue to accumulate knowledge in Japan and the U.S., and will utilize this knowledge to develop caseexamples in the local 4G/5G business.
4

(iii) Digital ID (FPoS) Business for Use on Smartphones
Smartphones become widely used, and we can use various business operators’ services with downloading
their apps on smartphones. Meanwhile, we are recognizing that the various information including personal
information of customers are shared with numerous business operators including service providers in an
unclear state whether a sufficient security is ensured or not. On the other hand, as globalization accelerates,
well-developed societies such as Japan does not have option to give up efforts to digitalize data including
personal information and to generate new value by working with the digitalized data. A mechanism isrequired to ensure the security and privacy of data, including personal information.
Against the above background, the Company is pushing forward with a business that will establish andprovide digital IDs that can be used on smartphones using FPoS, the Company’s patented technology. FPoS
guarantees the identity (confirmation of the person’s identity) and authenticity (confirmation that theperson’s intent is not falsified) of a customer by examining the combination of an electronic certificate
issued to the customer’s smartphone (iPhone and Android) by an electronic certification authority accredited
under the Digital Signature Act and a private key generated in the customer’s smartphone.
In the Internet world, it is easier to impersonate or falsify than in real world. Because we cannot confirm
the counterpart is who we think he or she is, and we cannot confirm the information that arrived from thecounterpart is in fact sent by him or her, indications of intention or transactions over the Internet are notreliable. However, if the identity and authenticity of telecommunications via the Internet can be guaranteedusing FPoS, indications of intention or transactions over the Internet can be reliable. In Internet banking,for instance, banks will be able to execute transactions under conditions that guarantee that the transacting
entity is the account holder and requests for transactions such as remittances are made based on the accountholder’s intent and depositors can avoid the risk of having their funds transferred by a third-party
impersonator.
Guaranteeing the identity and authenticity of communications via the Internet will provide a means ofsolving issues faced by service providers in a wide range of sectors, including not only banking (Internet
banking), but also healthcare, administration, education, and transportation, etc.
Furthermore, the Company is collaborating with Mebuku Ground Inc., a private-public partnershipcompany made up of 57 participants, including Maebashi City, private-sector business enterprises anduniversities. As part of this collaboration, the Company has added “Dynamic Opt-in” function to FPoS.
With “Dynamic Opt-in”, customers can confirm the status of their personal information provided to business
operators and the status of their personal information shared with other business operators at any time. For
example, customers can permit, not permit or cancel to permit to provide their personal information to
Business Operator A or to share the information for Business Operator A with Business Operator B at any
time. With “Dynamic Opt-in”, customers can manage their personal information by themselves, and theirpersonal information cannot be shared with others without customer’s permission. Even when customers
provide their personal information to apps on smartphones etc., they can use it safely and securely because
they can choose which business operator they permit to use their personal information and which business
operator they do not permit to use their personal information.
“Dynamic Opt-in” is premised on a mechanism for conducting data sharing safely and securely among
business operators, which is one of the most important aspects of FPoS. FPoS works by granting accessonly when a public key contained in an electronic certificate correctly combines with a private key generated
in a smartphone. FPoS protects customers’ valuable personal information safely and shares the information
with other business operators only by explicit permission by customers.
Linking data with a single number is an effective method, but the simplicity of such a method exponentially
increases the associated risks. Therefore, extremely stringent technical restrictions must be placed on accessto this data. For example, when accessing a mobile communication network, or in other words using amobile phone, if access is provided using an ID/password or a one-time password, a mobile phone could be
used for free if these are hacked and exploited. To prevent this from happening, mobile phone operators
supply IC chips known as SIM. If this IC chip becomes ineffective, a mobile phone is rendered inoperable.
Similarly, access to valuable data, such as personal information, must be rigorously restricted.
The Company is working toward its mission of transferring (communicating) data safely, securely, andconveniently. FPoS is a technology and operation that fulfills a core role in this mission.

5

As a result of the above, the Group’s consolidated net revenue for the three months ended June 30, 2023 was
1,715 million yen, an increase of 361 million yen (up 26.7%) compared to the three months ended June 30,
2022 (hereinafter referred to as the “same period of the previous year”). This was because of the growth of theflat-rate or semi-flat-rate voice services centered on “Nihon Tsushin SIM” in the MVNO Business (up 19.5%
from the same period of the previous year) and the growth of the voice services of partner brands in the Enabler
Business (up 34.8% from the same period of the previous year).
Cost of revenue was 950 million yen, an increase of 183 million yen (up 23.9%) compared to the same periodof the previous year. This was mainly due to an increase in mobile network procurement costs associated withthe growth of “Nihon Tsushin SIM.” Nevertheless, the increase in cost of revenue can be contained relative toincreases in net revenue, because the mobile networks of both data and voice communications procured by theCompany from NTT DOCOMO have been set not to exceed the amount of the appropriate costs under efficientmanagement plus appropriate profit.
As a result, gross profit was 764 million yen (586 million yen in the same period of the previous year), selling,
general and administrative expenses was 497 million yen (428 million yen in the same period of the previousyear), and operating profit was 267 million yen (158 million yen in the same period of the previous year).
During the three months ended June 30, 2023, a final judgment was rendered in a lawsuit between the Company
and Quanta Computer Inc. In conjunction with the finalization of the judgment, the Company recorded
extraordinary income of 363 million yen, resulting in profit attributable to owners of parent of 597 million yen(161 million yen in the same period of the previous year).
Financial results by business are as follows:
Net revenue

For three months
ended June 30, 2022

For three months
ended June 30, 2023

Year-on-year change(Millions of yen)
Year-on-year change(%)

MVNO Business

713

851

138

19.5

Enabler Business

640

863

222

34.8

1,353

1,715

361

26.7

Total

Revenue of 26 million yen (41 million yen in the same period of the previous year) from overseas operationsin the segment information is included in the Enabler Business.
(2) Explanation on financial position(i) Assets, liabilities, and net assets
AssetsCurrent assets at the end of the current first quarter were 2,277 million yen, a decrease of 35 million yen
compared to the end of the previous year. This was mainly due to decreases of 66 million yen in cash anddeposits and 58 million yen in accounts receivable - trade, while there was an increase of 75 million yen inaccounts receivable - other. Non-current assets were 730 million yen, an increase of 2 million yen compared tothe end of the previous year. This was mainly due to an increase of 10 million yen in intangible assets, while
there was a decrease of 8 million yen in investments and other assets.
As a result, total assets amounted to 3,008 million yen, a decrease of 32 million yen compared to the end of theprevious year.
Liabilities
Current liabilities at the end of the current first quarter were 808 million yen, a decrease of 618 million yen
compared to the end of the previous year. This was mainly due to decreases of 324 million yen in accounts
payable - trade and 287 million yen in valuation reserve for inventory purchase commitments. Non-current
liabilities were 87 million yen, an increase of 7 million yen compared to the end of the previous year. This was
mainly due to an increase of 4 million yen in long-term unearned revenue.
As a result, liabilities amounted to 896 million yen, a decrease of 610 million yen compared to the end of theprevious year.

6Net assets
Net assets at the end of the current first quarter were 2,112 million yen, an increase of 577 million yen comparedto the end of the previous year. This was mainly due to recording 597 million yen in profit attributable to ownersof parent.
As a result, the equity ratio was 66.3% (46.1% at the end of the previous year).
(ii) Status of cash flows
Cash and cash equivalents at the end of the three months ended June 30, 2023 were 1,514 million yen, a decreaseof 66 million yen compared to the end of the previous year.
The status of cash flows and their factors during the three months ended June 30, 2023 are as follows.
Cash flows from operating activities
Net cash used in operating activities totaled 45 million yen (an inflow of 38 million yen in the same period of
the previous year). This was mainly due to the recording of a reversal of valuation reserve for inventory purchasecommitments of 287 million yen, a decrease in trade payables of 324 million yen, an increase in accounts
receivable - other of 75 million yen and a decrease in consumption taxes payable/consumption taxes refund
receivable of 20 million yen, despite recording profit before income taxes of 651 million yen.
Cash flows from investing activities
Net cash used in investing activities totaled 13 million yen (an outflow of 41 million yen in the same period of
the previous year). This was mainly due to purchase of intangible assets of 17 million yen.
Cash flows from financing activities
Net cash used in financing activities totaled 9 million yen (there were no cash flows from financing activities
in the same period of the previous year). This was mainly due to an outflow of 8 million yen for the purchaseand cancellation of share acquisition rights.
(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 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 ensure a stable revenue base with continuous evolution in the SIM business and to invest
the revenue in the local 4G/5G business and FPoS business in order to develop them into pillars of future
earnings.
In the local 4G/5G business, the Company aims to build advanced showcases in the U.S. and leverage thisexperience to expand in Japan.
In the FPoS business, the Company has acquired a certification under the Digital Signature Act for “my Digital
Certificate” (issued by my FinTech Inc., a subsidiary of the Company) based on its patented FPoS technology,
and develops the “my Digital Certificate” to be actually utilized as a safe, secure, and convenient digital ID thatcan be used on smartphones.
Considering the factors described above, one of the Company’s management priorities is to grow the scale ofits business to a market capitalization of 500 billion yen in three to five years from the launch of the commercial
service of FPoS (on October 21, 2022).

7

Quarterly consolidated financial statements
Quarterly consolidated balance sheets(Thousands of yen)
As of March 31, 2023
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
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
Total assets

8

As of June 30, 2023

1,580,619
576,323
75,46265
103
83,011△3,1382,312,448

1,514,025
518,004
75,34445
75,97397,356△3,432
2,277,317

106,085△84,942
21,142
7,027△5,596
1,430
876,556△773,909
102,647
285,882△266,737
19,144
144,365

106,993△86,210
20,782
11,021△5,826
5,195
903,059△805,289
97,769290,417△268,677
21,739145,487

4,727
3,229
264,297
9,752
282,007

5,212
3,132
261,613
22,490292,448

128,570
133,884
39,228
301,683
728,056
3,040,504

135,244
121,472
36,339293,055
730,992
3,008,309

(Thousands of yen)
As of March 31, 2023
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 June 30, 2023

630,125
78,842
109,651
120,872
66,559305,781
88,32576,938121,288
74,115287,979－

132,150
1,426,180

141,645808,094

6,102
56,613
17,212
79,9281,506,108

7,139
60,881
19,89087,911
896,006

535,822
224,109530,319△2,192
1,288,058

535,822
229,031
1,127,449△2,192
1,890,110

114,472

103,256

114,472

103,256

96,21835,646
1,534,395
3,040,504

94,58824,347
2,112,303
3,008,309

Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income
Quarterly consolidated statements of income(Thousands of yen)Three months ended
June 30, 2022
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Share of profit of entities accounted forusing equity method
Foreign exchange gains
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
Compensation for damage income
Reversal of provision for valuation reservefor inventory purchase commitments
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

Three months ended
June 30, 2023

1,353,761
767,235
586,526
428,117
158,408

1,715,277
950,762
764,515
497,427
267,088

1,322

6,673

21,241
1,018
23,582

13,919658
21,252

253
216
528
36
1,035
180,955

212
－
－
191
404
287,935－※１ 75,869－※２ 287,979－
180,955
29,25629,256
151,699△9,664
161,363

363,848
651,784
65,952
65,952585,831△11,298
597,130

Quarterly consolidated statements of comprehensive income(Thousands of yen)Three months ended
June 30, 2022
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

11

Three months ended
June 30, 2023

151,699585,831△18,005△18,005
133,693△11,216△11,216
574,615

143,358

585,914△9,664△11,298

Quarterly consolidated statement of cash flows(Thousands of yen)Three months ended
June 30, 2022
Cash flows from operating activities
Profit before income taxes
Depreciation
Interest expenses
Share of loss (profit) of entities accounted
for using equity method
Foreign exchange losses (gains)
Reversal of provision for valuation reservefor inventory purchase commitments
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 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
Proceeds from refund of leasehold andguarantee deposits
Payments of leasehold and guarantee deposits
Net cash provided by (used in) investing
activities
Cash flows from financing activities
Payments for retirement by purchase of shareacquisition rights
Repayments of lease liabilities
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

12

Three months ended
June 30, 2023

180,955
8,161
253

651,784
28,509212△1,322△6,673△21,712△14,633－△287,979△75,946△25,049
2,134

59,8892,823△324,766

388△75,869

3,567△2,354

5,573

△559

△35,232△20,752

27,577
69,348△34△30,428

52,277
61,908△212△107,283

38,885△45,587△6,080△31,862△4,022△17,12373

7,459△3,624－△41,493△13,685－△8,529－△959－△9,488

2,969

2,168

362

△66,594928,688

1,580,619

929,050

1,514,025