Annual Securities Report

Fiscal Year Ended June 30, 2023

Mercari, Inc.
and its Subsidiaries

English Translation
This is a partial translation of the Japanese original report (YukashokenHokokusho) issued on September 28, 2023 for reference purposes only. The
Japanese original report has been prepared based on information gathered at thetime of its preparation and is not in any way intended as a commitment to future
implementation. In the event of any discrepancy, the original release in Japanese
shall prevail.

- 1 -Contents
A. Company Information ····················································································································· 3
I. Overview of Mercari ························································································································ 3
1. Key financial data and trends ····································································································· 3
2. History ······························································································································· 5
3. Business Activities ················································································································· 6
4. Information on subsidiaries and associates ····················································································· 8
5. Employees ··························································································································· 9
II. Business Overview ······················································································································· 11
1. Management policy, management environment, issues to address, etc ··················································· 11
2. Views and initiatives on sustainability ························································································ 15
3. Business risks ····················································································································· 20
4. Analysis of financial position, operating results, and cash flows ·························································· 25
III. Facilities ·································································································································· 27
1. Overview of capital investments ······························································································· 27
2. Major facilities···················································································································· 27
3. Plan for acquisition and retirement of facilities ·············································································· 28
IV. Company information ··················································································································· 29
1. Dividend policy··················································································································· 29
V. Financial Information ···················································································································· 30
1. Consolidated financial statements ····························································································· 30
2. Notes on the basis of preparation on consolidated financial statements ·················································· 36
3. Notes on accounting estimates ································································································· 38
4. Consolidated balance sheets ···································································································· 39
5. Consolidated statements of income ···························································································· 40
6. Consolidated statements of comprehensive income ········································································· 41
7. Consolidated statements of changes in equity ················································································ 42
8. Consolidated statements of cash flows ························································································ 44
9. Lease transactions ················································································································ 45
10. Notes to financial instruments ·································································································· 46
11. Retirement benefits ·············································································································· 49
12. Stock options······················································································································ 50
13. Tax effect accounting ············································································································ 63
14. Revenue recognition ············································································································· 65
15. Segment information············································································································· 66
16. Per-share information ············································································································ 71
17. Significant subsequent events ·································································································· 71

- 2 -

A.
I.
1

Company Information
Overview of Mercari (the “Company”)
Key financial data and trends(1) Summary of consolidated financial dataTerm

7th fiscal year

8th fiscal year

9th fiscal year

10th fiscal
year

11th fiscal
year

Year ended

Year ended
June 30, 2019Year ended
June 30, 2020

Year ended
June 30, 2021

Year ended
June 30, 2022

Year ended
June 30, 2023

51,68376,275

106,115

147,049

172,064(12,171)(19,391)

4,975(3,896)

17,449(13,764)(22,772)

5,720(7,569)13,070(14,098)(18,981)

1,699(6,331)

13,823

Net sales
Ordinary profit (loss)
Net profit (loss) attributableto owners of parent
Comprehensive income(Millionsof yen)(Millionsof yen)(Millionsof yen)(Millionsof yen)Net assets(Millionsof yen)50,93635,36840,01337,99855,228

Total assets(Millionsof yen)163,685

198,014

262,529

339,862

415,292

Net asset per share
Basic earnings (loss) per
share

(Yen)

337.88222.78247.52228.57329.80(Yen)(94.98)(147.86)36.43(47.34)81.01

Diluted earnings per share
Equity ratio

(Yen)
(%)

–
31.1

–
17.6

35.15
14.9

–
10.8

77.36
12.9

Return on equity

(%)

–

–

15.5

–

28.9

Price earnings ratio(Times)––161.95–

41.46

Net cash provided by (usedin) operating activities(Millionsof yen)(7,289)12,533

3,367(26,217)(36,883)

Net cash provided by (usedin) investing activities(Millionsof yen)(2,805)(2,653)

6,907

(671)

(632)

Net cash provided by (usedin) financing activities(Millionsof yen)32,200465

19,77362,065

26,839Cash and cash equivalents
at the end of period(Millionsof yen)130,774

141,008

171,463

211,406

202,047

1,826

1,792

1,752

2,209

2,101

Number of employees[Separately, average(Persons)
number of temporary
[221]
[402]
[286]
[467]
[453]
employees](Notes) 1. Information on diluted earnings per share is omitted because, although potential shares exist for the 7th fiscal year, 8th
fiscal year, and 10th fiscal year, the recorded figures were losses.
2. Return on equity is omitted for the 7th fiscal year, 8th fiscal year, and 10th fiscal year due to the recording of net losses
attributable to owners of parent in those periods.
3. The price earnings ratio is omitted for the 7th fiscal year, 8th fiscal year, and 10th fiscal year due to the recording of net
losses attributable to owners of parent in those periods.
4. The number of employees stated indicates working employees, and the average number of temporary employees during
the year is stated separately in square brackets.
5. The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020)
since the beginning of the 10th fiscal year. Key financial data for the 10th fiscal year and subsequent fiscal years reflects
the application of this accounting standard.

- 3 -(2) Summary of financial data of the company submitting this report
7th fiscal
8th fiscal
Term
year
year
Year ended

9th fiscal
year

10th fiscal
year

11th fiscal
year

Year ended
June 30,2019Year ended
June 30,
2020

Year ended
June 30,
2021

Year ended
June 30,
2022

Year ended
June 30,2023

Net sales(Millionsof yen)46,25458,74475,152

86,107

101,671

Ordinary profit(Millionsof yen)

7,090

11,55015,426

13,221

27,203

Net profit (loss)(Millionsof yen)(5,046)(28,014)

7,926(4,965)

7,274

Capital stock(Millionsof yen)40,11041,44042,63044,62846,052

Shares issued(Shares)

150,755,347

156,150,364

157,807,344

160,813,967

162,465,598

Net assets(Millionsof yen)60,242

38,88445,76045,15255,596

Total assets(Millionsof yen)125,742

104,683

119,376

137,359

160,680(Yen)

399.61249.02286.39275.01335.48

–

–

–

–

–

[–]

[–]

[–]

[–]

[–]

Net asset per share
Dividends per share[Interim dividends per
share](Yen)

Basic earnings (loss) per
share

(Yen)

(34.82)(181.89)50.48(31.05)45.09

Diluted earnings per
share

(Yen)

–

–

48.71

–

43.05

Equity ratio

(%)

47.9

37.1

37.9

32.2

33.9

Return on equity

(%)

–

–

18.9

–

14.7

Price earnings ratio(Times)––116.88–74.50

Dividend payout ratio(%)

Number of employees

–

–

–

–

–

1,178

1,090

1,060

1,232

1,315

(174)

(277)

(204)

(290)

(271)

[Separately, average
number of temporary
employees](Persons)

Total shareholder return[Comparative
benchmarks: TOPIX]

(%)

63.0

73.4

130.1

43.0

74.1

(%)

[91.8][94.6][120.5][118.8][149.3]Highest share price

(Yen)

4,975

3,530

6,400

7,390

3,519

Lowest share price
(Yen)
1,704
1,557
3,370
1,850
1,885
(Notes) 1. Information on diluted earnings per share is omitted because, although potential shares exist for the 7th fiscal year, 8th
fiscal year, and 10th fiscal year, the recorded figures were losses.
2. Return on equity is omitted for the 7th fiscal year, 8th fiscal year, and 10th fiscal year due to the recording of net losses inthose periods.
3. The price earnings ratio is omitted for the 7th fiscal year, 8th fiscal year, and 10th fiscal year due to the recording of a loss
in those periods.
4. The dividend per share and dividend payout ratio are omitted due to dividends not being paid.
5. The number of employees stated indicates working employees, and the average number of temporary employees during
the year is stated separately in square brackets.
6. The highest and lowest share prices are for the Mothers section of the Tokyo Stock Exchange up to April 3, 2022, for the
Growth section of the Tokyo Stock Exchange between April 4, 2022, and June 6, 2022, and for the Prime section of theTokyo Stock Exchange from June 7, 2022, onward.
7. The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020)
since the beginning of the 10th fiscal year. Key financial data for the 10th fiscal year and subsequent fiscal years reflects
the application of this accounting standard.

- 4 -2 History
Month/Year
Feb. 2013
July 2013
Nov. 2013
Jan. 2014
Sept. 2014
Oct. 2014
Sept. 2015
Nov. 2015
Jan. 2016
Mar. 2016
Apr. 2016
Oct. 2016
Feb. 2017
Mar. 2017
May 2017
July 2017
Aug. 2017
Nov. 2017
Feb. 2018
Apr. 2018
June 2018
July 2018
Nov. 2018
Feb. 2019
Aug. 2019
Sept. 2019Feb. 2020
July 2020
Oct. 2020
Jan. 2021
Mar. 2021
Apr. 2021
July 2021
Sept. 2021
Oct. 2021
Dec. 2021
May 2022
June 2022
Nov. 2022
Feb. 2023
Mar. 2023
Aug. 2023
Sept. 2023

Overview
Founded Kouzoh, Inc. with a capital of ¥20 million in Roppongi, Minato-ku, Tokyo
Launched the Mercari C2C marketplace
Renamed company Mercari, Inc.
Founded US subsidiary Mercari, Inc. (US)
Launched the Mercari C2C marketplace in the US
Started charging fees proportionate to the value of merchandise traded at the Mercari C2C marketplace
Founded domestic subsidiary Souzoh, Inc. (former entity) (In July 2019, started liquidation proceedings forthe subsidiary after the resolution on dissolution. The proceedings were completed in November 2019.)
Founded UK subsidiary Mercari Europe Ltd.
Launched anonymous shipping service for the Mercari C2C marketplace
Launched classifieds service app Mercari Atte (In May 2018, the service was discontinued.)Founded UK subsidiary Merpay Ltd. (In June 2019, started liquidation proceedings for the subsidiary after
the resolution on dissolution. In July 2019, all shares were transferred, and in April 2022, the proceedings
were completed.)
Started charging fees proportionate to the value of merchandise traded at the Mercari (US) C2C marketplace
Zawatt Inc. became a wholly owned subsidiary (In May 2017, the subsidiary disappeared in an absorptiontype merger with the Company as a surviving company.)
UK subsidiary Mercari Europe Ltd. launched the Mercari C2C marketplace (In March 2019, the service wasdiscontinued.)
Launched C2C marketplace for books, CDs, and DVDs Mercari Kauru (In December 2018, the feature wastransitioned to Mercari and the service was discontinued.)
Launched live video streaming service Mercari Channel (In July 2019, the service was discontinued.)
Launched C2C marketplace for brand name items Mercari Maisonz (In August 2018, the feature wastransitioned to Mercari and the service was discontinued.)Founded domestic subsidiary Merpay, Inc.
Launched immediate purchase service Mercari NOW (In August 2018, the service was discontinued.)
Launched bike share service Merchari in Fukuoka-shi, Fukuoka (In June 2019, the business was succeeded
to neuet, Inc.)
Launched skill share service teacha (In August 2018, the service was discontinued.)
Listed on the Mothers section of the Tokyo Stock Exchange
Founded domestic subsidiary Merpay Connect, Inc. (In June 2019, the subsidiary was absorbed and merged
by Merpay, Inc.)
Michael Inc. became a wholly owned subsidiary (In June 2020, all shares were transferred.)
Domestic subsidiary Merpay, Inc. launched the Merpay mobile payment service
Acquired shares of Kashima Antlers F.C. Co., Ltd., which then became a subsidiary
Launched Mercari Workshops, where participants learn how to use Mercari
Domestic subsidiary Merpay, Inc., acquired shares of Origami Inc., which then became a wholly owned
second-tier subsidiary (In March 2021, started liquidation proceedings for the second-tier subsidiary after the
resolution on dissolution. In June 2021, the proceedings were completed.)
Began a business partnership with NTT DOCOMO, INC.
Launched Merpay Smart Payments (fixed-amount payment) in the Merpay mobile payment service
Started levying a payment fee at Mercari (US)Founded domestic subsidiary Souzoh, Inc. (new entity)
The Merpay mobile payment service launched the virtual card service, which can be used to make payments
to online merchants
Founded domestic subsidiary Mercoin, Inc.
Domestic subsidiary Mercoin, Inc., acquired shares of Basset Inc., which then became a wholly owned
second-tier subsidiary (In June 2023, the second-tier subsidiary disappeared in an absorption-type merger
with the domestic subsidiary Mercoin as a surviving company.)
Mercari (US) launched deferred payment service
Domestic subsidiary Souzoh, Inc., launched Mercari Shops, which enables users to open online stores on the
Mercari marketplace
Founded domestic subsidiary Merlogi, Inc. (In January 2023, the subsidiary disappeared in an absorptiontype merger with the Company as a surviving company.)
Established ESG Committee to advise the Senior Executive Committee
Launched the Mercari Price & Volume Index
Changed listing on the Tokyo Stock Exchange to the Prime Market segment
Established Indian subsidiary Mercari Software Technologies India Private Limited
Domestic subsidiary Merpay, Inc., launched the Mercard credit card, which can be used and managed within
the Mercari app
Formulated the new Group mission of “Circulate all forms of value to unleash the potential in all people”
Domestic subsidiary Mercoin, Inc. started offering a service for trading bitcoin on Mercari
Conducted an absorption-type company split in which the departments, other than the business development
function related to Mercari Shops, operated by domestic subsidiary Souzoh, Inc., were succeeded to theCompany
Made the transition from a company with an audit and supervisory board to a Company with Three
Committees (Nominating Committee, Compensation Committee, and Audit Committee)- 5 -3 Business Activities
Mission
The Company was established out of its founder’s desire to create a world in which people everywhere can live more prosperous lives
by using the power of the internet to connect individuals and enabling them to make the most of the world’s limited resources. It hascontinued to grow through advanced product development utilizing technology and bold investments based on a disciplined approach.
In February 2023, celebrating the 10th anniversary of its founding, the Company formulated the Group mission of “Circulate all formsof value to unleash the potential in all people,” which includes its belief that Mercari enables people to expand their potential, and now
strives as a united group to achieve that mission. The Company aims to utilize advanced technology, including large language models(LLM) and blockchain technology, to provide a new user experience, such as transactions involving not only material items but also
skills and digital assets, and by creating an ecosystem that circulates all kinds of value, both tangible and intangible, the Company strives
to be a business entity that unleashes the potential in people.
Overview of services
The Mercari service operated by the Company functions as a marketplace for consumer-to-consumer (C2C) transactions, offering users
a unique and never-before-available experience by enabling anyone to readily and simply buy and sell secondhand items.
Buying and selling used items at traditional secondhand stores has various disadvantages, including time needed to physically visit theretail location, limited product availability, and lack of transparency with respect to pricing (from the perspective of both the buyer andseller given that there is an intermediary involved). The sale of secondhand items via internet auction also has disadvantages, including
complexity and difficulty of listing items and time necessary to engage in the bidding process.
The Mercari service, on the other hand, enables anybody and everybody to readily buy and sell items using their smartphones or thewebsite. The service also offers convenient and affordable shipping options through its alliances with shipping companies andconvenience stores. In addition, both sellers and buyers are mainly individuals, allowing the service to offer anyone both the fun ofeasily converting their unnecessary possessions into cash and the “treasure-hunt” experience that users feel when searching for uniquesecondhand items. Through the prevention of fraud by requiring sellers to register their personal information (address, name, andbirthdate) when they sign up, employing AI technology to automatically detect transactions that violate its terms of service, and othermeasures, the Company strives to ensure that users feel at ease using its marketplace.
Services operated by the GroupThe Group consists of the Company, its consolidated subsidiaries Mercari, Inc. (US), Souzoh, Inc., Merpay, Inc., Mercoin, Inc., Kashima
Antlers F.C. Co., Ltd., India Center of Excellence, and others (as of June 30, 2023). The Group has set its businesses in Japan, excluding
Kashima Antlers, as the Japan Region. In addition, the explanations of the businesses in the Japan Region have been provided based on
the two domains of Marketplace and Fintech.
(Note)On August 1, 2023, the Company conducted an absorption-type company split in which the departments, other than thebusiness development function related to Mercari Shops, operated by Souzoh, Inc., were succeeded to the Company.

In the Marketplace domain, the Mercari Japan business operates the consumer-to-consumer (C2C) marketplace app Mercari, on which
it has been working since the Company was founded, and has also operated the business-to-consumer (B2C) marketplace Mercari Shops
since October 2021. These services provide a unique user experience that enables anybody to buy and sell items easily and simply, withthe platform’s gross merchandise value (GMV) reaching about ¥1 trillion and monthly active users (MAU) exceeding 22.00 million in
the fiscal year ended June 30, 2023.
In the Fintech domain, the Mercari Japan business operates the Merpay mobile payment service. The Group has been striving to expand
the business in association with the creation of new forms of credit centered on credit services, utilizing its high technological prowess
and unique user and information bases of the Mercari service. In addition, the Group has made steady progress toward the creation ofGroup synergy, such as through the Mercard credit card that utilizes AI credit based on an individual’s history of using the Mercari
service and through launching a service that enables users to buy and sell bitcoin using their sales balance and points.
The Mercari US business operates the marketplace app Mercari (US) as “the easiest and safest selling app” in order to create amarketplace where anybody can easily and safely sell a variety of items. Although growth has continued to slow down due to the impact
of inflation and other factors in the challenging external environment, there has been a certain level of positive results, such as anincreasing number of listed items and signs of improvement with respect to the decline in the number of transactions, as a result of suchthings as initiatives to simplify the process for listing and measures to reduce the burden on buyers.

- 6 -Past growth of Marketplace
Since the launch of the service in 2013, Mercari has continued to grow mainly in Japan. MAU has exceeded 22 million, and the annual
GMV has reached ¥1 trillion.

(Notes) 1. GMV (Gross Merchandise Value) represents the total value of C2C and B2C transactions.
2. MAU (Monthly Active Users) is defined as the quarterly average number of registered users who accessed the Mercari
service via the app or website at least once during a given month.
Past growth of Mercari US
Since the brand redesign in 2018, Mercari US is recognized and reputed as the “easiest and safest selling app,” with a focus on increasing
service convenience and striving to become a critical part in efforts to create a circular economy in the US, too.

- 7 -

4

Information on subsidiaries and associates
Name

Location

Capital stock

Main business activities

Percentage ofvoting rights
owning orowned (%)

Description ofrelationship(Consolidated
subsidiaries)
Mercari, Inc. (US)(Notes 1, 4)

Palo Alto,
California,
United States

US$633,511
thousandMerpay, Inc.
(Notes 1, 4)

Minato-ku,
Tokyo¥100 million

Planning, development,
and operation of the
Mercari (US) C2C
marketplace
Planning, development,
and operation of funds
transfer service andother finance-related
businesses

1. Management of theKashima Antlers
professional soccer
club
2. Planning andmanagement of soccer¥2,257 million
matches, other sports
matches, and otherevents3. Management of asoccer stadium andother sports facilities,
etc.

Kashima Antlers
F.C. Co., Ltd.

Kashima-shi,
IbarakiSouzoh, Inc.

Minato-ku,
Tokyo¥100 million

Mercoin, Inc.

Minato-ku,
Tokyo¥100 million

Planning, development,
and operation of the
Mercari Shops ecommerce platform
Planning, development,
and operation ofservices related to
cryptoassets andblockchain technologies

100.0Interlocking of officers,
consignment ofdevelopment operations
to the Company

100.0Interlocking of officers,
contracting of operations

71.2

Interlocking of officers,
advertising transactions,lending of funds

100.0

Business alliances

100.0Interlocking of officers

Mercari Software
Technologies India Bangalore,
Development ofContracting of
INR31 million
100.0
Private Limited
India
internet services
development operations(Note 3)(Notes) 1. This is a list of specified subsidiaries.
2. There are no companies that submit a securities registration statement or securities report.
3. The percentage of voting rights owning for Mercari Software Technologies India Private Limited includes the indirectownership of 0.1% by Souzoh, Inc.
4. For Mercari, Inc. (US) and Merpay, Inc., the percentage of net sales (excluding internal sales between consolidated
companies) to consolidated net sales exceeded 10%.
Mercari, Inc. (US)(1)
Net sales¥44,440 million(2)
Ordinary loss
¥8,473 million(3)
Net loss¥8,661 million(4)
Net assets¥9,172 million(5)
Total assets¥26,506 million
Merpay, Inc.

(1)
(2)
(3)
(4)
(5)

Net sales
Ordinary profit
Net profit
Net assets
Total assets- 8 -¥31,195 million¥3,041 million¥6,422 million¥16,744 million¥273,756 million

5

Employees(1) Consolidated companies

As of June 30, 2023
Number of employees (Persons)Japan Region
1,464 [368]US
260 [8]
Reportable segment total
1,724 [376]
Other98 [51]
Corporate (shared)
279 [26]
Total
2,101 [453](Notes) 1. The number of employees stated indicates working employees, and the average number of temporary employees during
the year is stated separately in square brackets.
2. The number of employees indicated as Corporate (shared) belongs to administrative divisions, which cannot be classified
in any specific segment.
Name of segment(2) Company submitting this report
Number of employees(Persons)

Average age (Years old)

1,315 [271]

Average years of service

35.6

As of June 30, 2023
Average annual salary(Thousands of yen)

3.4

10,357

Name of segment
Number of employees (Persons)Japan Region
1,002 [243]US34 [2]
Reportable segment total
1,036 [245]
Other
– [–]
Corporate (shared)
279 [26]
Total
1,315 [271](Notes) 1. The number of employees stated indicates working employees, and the average number of temporary employees during
the year is stated separately in square brackets.
2. Average annual salary includes bonuses and surplus wages.
3. The number of employees indicated as Corporate (shared) belongs to administrative divisions, which cannot be classified
in any specific segment.
(3) Labor union
No labor union has been formed within the Group, but relations between labor and management are stable.
(4) Percentage of women in management positions, percentage of male employees who take childcare leave, and difference in
pay between male and female employees
Company submitting this report
Percentage of women in management
Percentage of male employees who
Difference in pay between male andpositions (%) (Note 1)
take childcare leave, etc. (%) (Note 2)
female employees (%) (Note 3)
20.4
91.4
37.5
(Notes) 1. The percentage was calculated pursuant to the provisions of the Act on the Promotion of Women’s Active Engagement inProfessional Life (Act No. 64 of 2015).
2. The percentage of male employees who take childcare leave, etc. defined under Article 71-4, item (1) of the Ordinance for
Enforcement of the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring forChildren or Other Family Members (Ordinance of the Ministry of Labour No. 25 of 1991) was calculated pursuant to theprovisions of the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring forChildren or Other Family Members (Act No. 76 of 1991). Accordingly, spouse’s childbirth leave was excluded.
3. The percentage was calculated based only on regular employees. Regular employees includes members seconded tosubsidiaries.
Calculation period: Year ended June 30, 2023 (from July 1, 2022, to June 30, 2023)
Pay: includes basic salary, bonuses, and overtime pay and excludes pre-listing stock options, incentives for employee
stock ownership plans, commutation allowances, and others.
Regular employees: conforms to the principle for calculating the “difference in pay between male and female
employees” under the Act on the Promotion of Women’s Active Engagement in Professional Life.
The gap was found to be mainly due to the distribution of grades among men and women. Multiple regression analysis
revealed that there existed an “unexplained pay gap” of roughly 7%. In addition, the results of analyzing the causes ofthe pay gap revealed that the factor that had the most impact on it was the differences in the salaries of men and women
upon entering the company (at the time of joining the company, there existed an unexplained pay gap of roughly 9%).
Based on the above analysis results, the Company implemented the following measures.
● Started periodic monitoring of unexplained gender pay gap using multiple regression analysis● In August 2023, implemented corrective action for the pay gap and reduced the unexplained pay gap found from
7.0% to 2.5%
Details are disclosed in the “FY2023.6 Impact Report.”- 9 -4. Information on consolidated subsidiaries is omitted as they are not obliged to disclose information under the provisions of
the Act on the Promotion of Women’s Active Engagement in Professional Life (Act No. 64 of 2015) and the Act onChildcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family
Members (Act No. 76 of 1991).

- 10 -

II. Business Overview
1 Management policy, management environment, issues to address, etc.
Forward-looking statements in this document are based on the views of Group management as of the end of the fiscal year
under review.
(1) Basic corporate management policy
Under its mission, “Circulate all forms of value to unleash the potential in all people,” Mercari Group provides services
such as Merpay, Mercari (US), and its main Mercari C2C marketplace app, which enables users to use their smartphone orcomputer to readily buy and sell items that they no longer need.
(2) Target management indicators
Mercari Group is actively expanding its operations in Japan and the US. Although the stage of growth varies by region, theGroup is working to enhance its corporate value through the use of indicators such as gross merchandise value (GMV),
growth in net sales, MAU(Note), and brand awareness.
(Note) MAU (Monthly Active Users) is defined as the quarterly average number of registered users who accessed the
Mercari service via app or website at least once during a given month.
(3) Medium- to long-term management strategies
The formulation of the Group’s management strategy over the medium-to-long term is based on the following strengths.
The Group’s strengths:
1) Being a pioneer in C2C marketplaces, driving the expansion of the secondhand market
By providing a C2C marketplace that is enjoyable, easy to use, and safe and secure, the Group has built a marketplace
app and driven the expansion of the entire secondhand market in Japan beyond solely online stores and internet
auction sites. According to a survey conducted by the Company in 2023, more people with experience using
marketplace apps and auction sites had used Mercari’s services than any similar service, as a result of which theCompany has won a level of support that exceeds that of other companies’ services. Mercari Group is confident thatby leveraging the dominant position the Group enjoys as a pioneer in C2C marketplaces, the Group is well-placed tobenefit from the strong growth in the secondhand market.
Furthermore, there is also strong demand for the buying and selling of secondhand items by individuals in overseas
markets, such as the US, and the Group will use the Mercari platform to contribute to the growth of the secondhand
market.
2)

Utilizing high-value-added data from a highly engaged user base
By making the platform simple and easy to use for both buyers and sellers, and by providing an enjoyable andimmersive user experience, Mercari has achieved a high level of user engagement. The MAU for Mercari in the
fourth quarter of the fiscal year ended June 30, 2023, was 22.6 million, and according to a survey conducted by theCompany in 2023, the Company’s services are ranked highest in terms of customer satisfaction for ease of selling andease of use among four companies operating marketplace apps and auction sites. Through its highly engaged userbase, the Company is able to collect large quantities of highly usable data, such as information on user transactions
and user transaction ratings. By utilizing this data and technologies, including artificial intelligence (AI), which is afocus area for the Company, the Company will seek to raise purchase conversion rates by proposing items that matchthe tastes of each buyer, to raise listing conversion rates by proposing prices at which items will sell easily, and to
improve the efficiency of customer support.
The Company also makes efforts to improve user experience of its existing services, for example, by granting credit
depending on the user’s history on the Mercari service as part of the credit services provided by the Merpay mobile
payment service, and to develop new services expected to contribute to the Group’s growth.

3)

Building greater loyalty through networking that is unique to C2C platforms
Mercari is a C2C marketplace that exhibits strong network effects. As a result of an increase in the number of sellers
and listings, the numbers of buyers and purchases will also increase due to the overall increase in the number of items
that people want to buy. This in turn results in higher item liquidity and even further increases in the number of sellers
and listings. Furthermore, many buyers and sellers are frequent users of the Mercari service, which encourages selfsustaining growth through highly connected features. Such network effects lead to the building of greater loyalty
among buyers and sellers, and continuous participation in transactions by repeat users contributes significantly to thegrowth in gross merchandise value. Moreover, the accumulation of a user’s past transaction ratings not only enables
other users to conduct transactions with confidence but also works to prevent them from switching to rival services asa result of competition to acquire users. In addition, the Company has focused on building greater loyalty through the
improvement of user experience, for example by launching a loyalty program based on the usage of Mercard, theCompany’s credit card, in the fiscal year ended June 30, 2023.

4)

Leveraging a business model that achieves high profitability
The Group has already achieved high profitability in the Marketplace domain. Once a certain scale is reached,
Mercari’s business model enables costs to be controlled appropriately when the business expands further. Specifically,
advertising expenses constitute a significant proportion of the Company’s cost structure, but although advertisingexpenses as a percentage of net sales generally rise in the initial growth stage for mobile apps, it becomes possible tocontrol the percentage accounted for by advertising expenses as the user base expands and stabilizes. This is whatenables the high profitability achieved by Mercari.
Moreover, the Group has strived to create a second pillar of revenue, for example by enhancing the revenue base ascredit services have grown in the Fintech domain.

- 11 -

5)

Organizational and corporate cultures that support value creation
To achieve the Group mission “Circulate all forms of value to unleash the potential in all people,” the Company
prioritizes creating a borderless organization where talent from all over the world can thrive. The Company believes
that its diverse members with a wide variety of backgrounds are the source of value creation and has promoted D&I inline with a major policy of “Unleashing the Potential in Diverse Talent Worldwide.” As of June 30, 2023, theCompany has talented members from about 50 countries and territories, and diverse talent has thrived, especially inthe engineering organization with no less than 50% of its engineering-related jobs being filled by members of nonJapanese citizenship.
The Company has three core values acting as guidelines for what it needs to do to achieve its mission: “Go Bold,”“All for One,” and “Be a Pro.” All decisions, ranging from those about daily work to management decisions, are madebased on these three values.

Management strategy details
In the fiscal year ended June 30, 2023, the Group worked on business management that takes into consideration thebalance between growth and profitability by building a lean business foundation globally. As a result, the Group
achieved record-high net sales and operating profit on a consolidated basis. In the Marketplace domain, full-year
gross merchandise value (GMV) reached a scale of ¥1 trillion. For the Fintech domain, this year the Group embarked
on several initiatives in order to create Group synergy that will support future growth, such as launching new services(Mercard and a bitcoin trading service).
Furthermore, in February 2023, which marked the Group’s 10th anniversary, the Group announced the new Groupmission of “Circulate all forms of value to unleash the potential in all people.” In anticipation of the next ten years,
the Company will solidify the Group’s revenue base by developing a source of revenue second to Marketplace,continue to make aggressive investments aiming for the disruptive growth of its business in a disciplined manner, andaim for reacceleration of growth by maximizing Group synergies and creating new businesses. In addition, as
activities important to achieve these goals, the Company will promote D&I to develop a diverse organization thatmeets a global standard where talent from all over the world can thrive and continue to strengthen technologicalinfrastructures.
1)

Marketplace: achieving GMV growth of 10% or higher
In the Marketplace domain, the Company will strive to achieve GMV growth of 10% or higher and adjusted operating
margin of 30–40% through marketing investments and product developments as well as expansion of new domains.
• Areas of enhancement
To push forward the growth of the Marketplace domain, the Company will commit to continual productdevelopment and effective marketing investments as well as expansion of areas of enhancement for GMV growth.
Crossborder transactions, which the Company started in 2019, have experienced steady growth as evidenced by theincrease in the number of partners contributing to GMV growth. In the fiscal year ending June 30, 2024, theCompany will aim to further accelerate this growth by selecting regions to be covered, increasing the number ofproxy purchasing partners, and commencing crossborder transactions of items on Mercari Shops.
Also, the Company will aim to contribute to GMV by tailoring the UI and UX of focus categories (categories thathave expanding markets and greater potential to grow), launching marketing campaigns in focus categories linked
to increases in demand owing to seasonality and other factors, acquiring corporate merchants selling reused andoutlet products that have a strong affinity with Mercari, and expanding B2C transactions through enhancement oflisting features such as API integration.

2)

Fintech: aiming to enhance Group synergy by increasing Mercard holders
In the Fintech domain, the Company will promote the enhancement of Group synergy and the revenue base in
anticipation that the domain will become the second pillar of revenue of the Group, while also contributing to the
maximization of Mercari’s GMV.
• Enhancement of Group synergy
The Company will enhance Group synergy by focusing on acquiring Mercard holders and encouraging further use
and will strengthen UX through such features as enabling payment using bitcoin on Mercari to boost transactions.
• Enhancement of the revenue base
The Company will strive to grow its credit service and maintain and raise the collection rate by continually
improving the accuracy of its unique AI credit system and strengthening collection actions, and to promote morediverse ways of financing for a sound financial foundation to enhance the revenue base.

3)

Mercari US: aiming to get back on track for growth
Mercari US will aim to get back on track for growth by focusing on refining the product and efficient marketing tostrengthen retention of existing users.
• Getting back on track for growth
Mercari US is working to improve the product to strengthen retention of existing users while adapting tosignificant changes in the external environment, such as inflation, and building a lean management foundation. In
addition, Mercari US aims to get back on track for growth by achieving incomparable ease of use, building acommunity-type marketplace, developing new transaction methods, and implementing measures to encourage
people in Gen Z who are expected to drive future growth to use the service.

- 12 -

(4) Challenges facing the Company
1) Ensuring the safety and soundness of Mercari Group services
The increasing prevalence of e-commerce services and social media, as well as ever-more sophisticated fraudulent use
associated therewith, appear to be giving rise to further mounting societal demands with respect to maintaining thesafety of internet-based services. In order to provide a platform for carrying out safe and secure transactions, theGroup continually engages in efforts that involve safeguarding personal information and combating infringement ofintellectual property rights, which it regards as its highest priority in securing the safety and soundness of MercariGroup’s various services.
2)

Developing talent
Mercari considers investment in talent to be the most important factor in achieving its Group mission. This is because
Mercari believes that each and every employee growing and fully demonstrating Mercari’s values is the shortest pathto achieving its mission.
As a major policy, the Group has set one of its material topics as “Unleashing the Potential in Diverse TalentWorldwide.” With regard to “diverse talent worldwide,” the diversity of its members is the source of its creativity.
Mercari’s policy is to acquire professional talent around the world with market-competitive compensation levels andprovide training through continuous opportunities for learning. To unleash this potential, Mercari has mechanisms toconstantly encourage bold challenges. All members continually ask themselves, “Are we taking on bold challenges toachieve the mission?” and “Are we quickly learning from our failures and successes?” based on Mercari’s values invarious situations. The Group has also established mechanisms that increase opportunities for bold promotions andappointments for employees that demonstrate high levels of value-embodying behavior, and realize competitivecompensation that is not based on individual backgrounds.
Going forward, Mercari will give further balance to investment decisions that maximize the total amount of long-termvalue displayed by its employees.

3)Enhancing technological strengths
As a provider of online services, the Group recognizes the importance of managing its business in a manner that
ensures consistent operations of systems involved in providing its services. The Group will continue to pursue
initiatives to ensure system stability, for example by reinforcing server equipment to better handle the increasing
traffic to its services associated with the increasing number of listed items, and also by installing parallel processing
systems in order to distribute processing loads.
In addition, the Group will focus on investing in innovative technologies to further improve the user experience. For
instance, the Group will promote efforts geared toward heightening service convenience as well as maintaining andenhancing service safety and soundness through AI and machine learning technologies using massive data setsencompassing past transaction histories and rating information. Furthermore, the Group will work to enhance its
technological strengths in part by investing in innovative technologies such as LLM and blockchain.

4)

Addressing global expansion
The Group has also promoted global expansion such as by entering the US market in 2014 and by starting crossbordersales of items listed on the Mercari marketplace in Japan to overseas buyers in 2019. Through steady growth of the
Mercari marketplace provided in the US, and demand from overseas users for crossborder sales, the Group believes
that there are potential business opportunities extending before it in areas that it has not yet entered. In 2022, theGroup invested in Beebs SAS, which plans, develops, and operates Beebs, a marketplace app dedicated to babies andkids’ goods that conducts business in France and Belgium. While continuing to place the highest priority on thefurther expansion of the Mercari marketplace in the US, the Group’s policy is to move forward while monitoring thebusiness environment and timing in order to take on the challenge of entering other countries when the opportunity
arises.

5)Strengthening corporate governance
The Group has set forth the mission of improving enterprise value through working to enhance its supervising
management function and its internal control function while practicing strict compliance management as its basic
policy on corporate governance. In order to meet the trust of all stakeholders, going forward, the Group will work to
improve the efficiency and transparency of management, maximize enterprise value, and achieve sustainable growthand development.
The Company made the transition to a Company with Three Committees (Nominating Committee, Compensation
Committee, and Audit Committee), subject to approval at the 11th Annual General Meeting of Shareholders held on
September 28, 2023. By further clarifying the separation of the supervisory and executive functions through thistransition, the Group will establish a structure that strengthens the supervisory function of the Board of Directors
while enabling the executive function to make prompt and resolute decisions and promote business.

6)

Enhancing the internal management system and practicing strict complianceIn pursuing further business expansion, the Group believes that when fulfilling its social responsibilities and striving
to achieve sustainable growth and improvement in enterprise value, securing and developing the talent that will
facilitate the Group’s growth and practicing strict compliance are important management issues. In addition to hiring
talent with high levels of expertise and abundant experience in fields such as internal auditing, legal affairs, financial
affairs, accounting, and information security, the Group will practice strict compliance while further strengthening
internal management systems by raising awareness and implementing training activities for employees on a regularbasis.

- 13 -

7)

Strengthening financial discipline
In order to achieve continued growth and expansion, the Group must further enhance and expand its revenue base andincrease its capabilities to secure financing leveraging increased profits. The Group will build on this base bymanaging its three main businesses (Marketplace, Fintech, and Mercari US) in a manner that balances growth andprofitability, including disciplined investment with an awareness of priorities.

- 14 -

2

Views and initiatives on sustainability
1. Overall sustainability
Mercari strives to be a planet-positive(Note) company that contributes to solving environmental issues through its businessactivities by realizing a society in which all forms of value—not just physical goods and money—circulate seamlessly.
Calculation of the total amount of greenhouse gas emissions avoided through the business showed that transactions in selectMercari categories enabled the Group to avoid approximately 530,000 tons of greenhouse gas emissions in one year in Japanand the US combined (estimation).
Mercari will contribute to creating a circular economy that makes the most of the world’s finite resources by implementing avariety of measures to promote reuse and reduce waste.
(Note) “Planet positive” is based on the concept of “planetary boundaries” (the earth’s limited resources). Mercari Group adopted
this term to express its stance of being a company that has a positive impact on the environment through the growth of its
business.
(1) GovernanceIn order to better incorporate ESG perspectives into management decisions and execution processes, in December 2021,
Mercari established an ESG Committee to advise its Senior Executive Committee.
Mercari considers ESG and climate change to be important management topics. The ESG Committee aims to ensuresufficient time for regular discussions regarding ESG and climate change in order to enable better discussions and enhance
the quality of decisions made by the Senior Executive Committee.
The Company has appointed ESG officers for each of its material topics. Having these officers offer an ESG perspective inbusiness-related management decisions enables the Company to plan each of Mercari’s business strategies in alignment
with its material topics and ensures a structure that allows for swift implementation and promotion of these initiatives. The
ESG officers also take part in discussions and decision-making for sustainability strategies across the Group as membersof the ESG Committee.
(2) Strategy
Mercari defines its materiality as important topics that relate to creating value to contribute to resolving social andenvironmental issues through its business, and creating the management foundation necessary for continuous growth. The
Company reviewed its materiality following the change of the new Group mission earlier this year.
Mercari Group’s materiality
1) Empowerment of Individuals and Society
By creating opportunities for anyone to realize their dreams and contribute to society and the people around them, we
will achieve a world that unleashes the potential in all people.
2)

Creating a World That Circulates All Forms of Value
We strive to be a planet-positive company that contributes to solving environmental issues through its businessactivities by realizing a society in which all forms of value—not just physical goods and money—circulate
seamlessly.

3)

Creating a New User Experience Through Technology
We utilize data, AI, and other innovative technologies to constantly evolve our products and create new user
experiences through the seamless exchange of value.

4)

Building Long-Term Public Trust
We fulfill our responsibilities as a public entity and build public trust by establishing a robust and highly transparent
decision-making process, and through more effective corporate governance and thorough compliance. We contributeto the realization of healthy internet services around the world by achieving a safe, secure, and fair transaction
environment, and also by educating and sharing information throughout the industry.

5)

Unleashing the Potential in Diverse Talent Worldwide
We aim to be a company that can continue to grow sustainably by creating an environment in which people fromdiverse backgrounds all around the world can reach their full potential.

(3) Risk management
The Company monitors the identified risks and opportunities under its structure for promoting sustainability, which
includes the ESG Committee. In this structure, there is also a process for reporting and making suggestions to the Board of
Directors as necessary, depending on the project. For details about risk management, please refer to “Business risks.”(4) Metrics and targets
The table below presents the focus areas, results, and plans for each of the identified material topics.

- 15 -

Material topic
1) Empowerment of
Individuals and Society

Results for year ended June30, 2023

Focus areas

Create a world where anyone can unleash their potential

2) Creating a World That
Circulates All Forms ofValue• Achieving sustainablebusiness growth• Forming a culture thatwill lead to the creationof a circular economy• Mitigating climatechange• GMV: ¥1.1241 trillion• Avoided greenhouse gas
emissions: approx.
530,000 tons
• Environmental impact:
approx. 43,000 tons
• Users who think thatusing Mercari issustainable: 60%

3) Creating a New User
Experience ThroughTechnology• Using data/AI to achievea seamless user
experience• Promoting circularfinance• Creating innovation
through R&D on value
exchange• JP MAU: 22.6 million• US MAU: 4.77 million• Merpay users: 15.71
million• Mercards issued: 1.25
million• Number of bitcoin
trading service users:
530,000

4) Building Long-Term
Public Trust

5) Unleashing the Potential
in Diverse TalentWorldwide

Plans for year ending June30, 2024• Realizing safe, secure,and fair transactions• Enhancing theeffectiveness of corporate
governance and ensuring
compliance• Earning the trust of users
and stakeholders (society,investors, media, etc.)• Recruiting and training
professionals fromaround the globe• Taking on boldchallenges to achieve its
mission• Building anorganizational culture
and environment• Embodying diversity &inclusion• Comprehensive
partnership agreements
signed with primary
distributors: 11• Monetary impact offraudulent usage: reducedby 89.3%• Number of donations
made on Mercari
Donation: Cumulative
total of approx. 55,000• Number of partnerships
with local governments:
around 50• Decision to transition to a
Company with Three
Committees• Consolidated headcount:
2,101 people• Average age: 35.7
• Annual percentage of
employees who join
Mercari Group byreferral: 26.4% (47.2% ofwhom are non-Japanesecitizens)• Number of nationalities:
approx. 50• Proportion of nonJapanese citizens in thesoftware engineeringorganization: 53.8%• Implementation of gender
pay gap correction• The first Japanesecompany to earn the
global certification forgender equity “EDGE
Assess”- 16 -• Work across the Group to
maximize Marketplace
GMV growth, expand theB2C reuse market,
expand the crossbordermarket, and collaborate
with external partners tostrengthen market sharein the C2C market• Marketplace: Continue tomake disciplined
investments while
focusing on GMV growthby investing inmarketing, further
evolving the product, andputting more emphasis on
areas of enhancement• Fintech: Create MercariGroup synergy byacquiring more Mercard
users and enhancing UX
with such features asallowing users to makepayments in bitcoin on
Mercari• Strengthen the internal
audit structure in advanceof the transition to a
Company with Three
Committees• Strengthen structures fordata and privacy
governance andcybersecurity• Strengthen collaboration
with external partners(local governments,
primary distributors,
universities, NPOs)• Update and implement
D&I policies tostrengthen inclusion• Strengthen new-graduate
hiring to secure diverse
talent• Build a work
environment and prepare
a compensation system toexpand the India Centerof Excellence• Update and ensure
understanding ofcompany culture, which
encourages members todemonstrate Mercari’svaluesDetails are disclosed on the official Sustainability section of the Company’s website and in the Impact Report. Please access thefollowing website:
https://about.mercari.com/en/sustainability/(4) Metrics and targets
By 2030, the Group will aim to reduce 100% of scope 1+2 emissions compared to its benchmark year (year ended June 30,2021) and reduce emissions related to added value for scope 3 by 51.6%.
Actual Amount of Greenhouse Gas (GHG) Emissions in Year Ended June 30, 2023 (July 2022‒June 2023):
In the year ended June 30, 2023, the Group as a whole had about 43,000 tons of GHG emissions (see below).
Compared to its benchmark year (year ended June 30, 2021), the Group was able to reduce scope 1+2 emissions by 70%
and the intensity of scope 3 emissions by 32%.
The Group will continue to work on initiatives to achieve its 2030 targets.
(Tons)
Scope 1
207
Scope 2645
Scope 3
41,844
Total
42,696
As a result of the refinement of the calculation scope for this fiscal year, the items applicable to Scope 3 were changed.
Accordingly, the calculation results for previous fiscal years were revised as follows.
• Year ended June 30, 2021
Scope 3 Total
Before revision:
36,974 tons
After revision:
41,015 tons
Scope 1/2/3 Total:
41,802 tons
• Year ended June 30, 2022
Scope 3 Total
Before revision:
37,558 tons
After revision:
44,964 tons
Scope 1/2/3 Total:
46,162 tons
3. Initiatives for human capital and diversity(1) Strategy
Mercari considers investment in talent to be the most important factor in achieving its Group mission. This is because
Mercari believes that each and every employee growing and fully demonstrating Mercari’s values is the shortest path toachieving its mission. As a major policy, the Group has set one of its material topics as “Unleashing the Potential in
Diverse Talent Worldwide.”With regard to “diverse talent worldwide,” the diversity of its members is the source of its creativity. Mercari’s policy is toacquire professional talent around the world with market-competitive compensation levels, and provide training throughcontinuous opportunities for learning. Mercari now employs talented members from about 50 countries and territories.
Particularly in the engineering organization, members of non-Japanese citizenships account for more than 50% of theorganization.
To unleash this potential, Mercari has mechanisms to constantly encourage bold challenges. All members continually ask
themselves, “Are we taking on bold challenges to achieve the mission?” and “Are we quickly learning from our failuresand successes?” based on Mercari’s values in various situations. The Group has also established mechanisms that increase
opportunities for bold promotions and appointments for employees that demonstrate high levels of value-embodying
behavior, and realize competitive compensation that is not based on individual backgrounds.
For example, the survey on gender pay gap conducted in this fiscal year revealed that the portion of the raw gender pay
gap known as “unexplained” was 7%; thus, the Company conducted individual salary adjustments to reduce it. This is partof the mechanisms that the Company has in place to provide competitive compensation regardless of its members’
attributes, based on its belief that there should be no difference due to gender, only by grades and job type.
Going forward, Mercari will give further balance to investment decisions that maximize the total amount of long-termvalue displayed by its employees. Therefore, as part of its culture, the Company will continue to clarify and constantly
update the expectations it holds for its members based on its values. At Mercari, this is its concrete judgment criteria forinvesting in its people.
For details about Mercari’s initiatives on human capital and diversity, please see the FY2023.6 Impact Report below.
https://about.mercari.com/en/sustainability/- 17 -

(2) Metrics and targets
Mercari uses the following indicators for the above-mentioned policy regarding the development of talent, including
ensuring the diversity of talent, and policies regarding establishment of the internal environment.
Consolidated headcount(Note)
2,101 people
20s: 22.2% / 30s: 57.1%/ 40s: 18.3% / 50s: 2.2%
Basic information
Age ranges(Average age: 35.7)
Average annual salary¥10,357,750

Diversity-related
information

Percentage of women employees
Percentage of women directors
Percentage of women in management positions
Difference in pay between full-time men andwomen employees
Pay gap between men and women employees thatcannot be explained
Percentage of employees in engineering positions

Number of nationalities of people working at theTokyo office
Percentage of employees of non-Japanesecitizenship
Usage rate of annual paid leave
Percentage of men employees who take childcare
leave
Information
regarding
Average number of days of childcare leave taken
childcare leaveby men employees
and paid leave
Percentage of employees who feel re-acclimatedto the company 12 months after returning fromchildcare leave (by gender)
The above table shows information regarding Mercari, Inc.

32.9%
30%
20.4%
37.5%
7%
Overall: 36.3%(Men: 89.4%, Women: 10.6%)(Non-Japanese citizens: 53.8%)
Approx. 50
25.7%
85%
91.4%
80.5 days
Overall: 83.3%(Men: 31 people, or 83.8%; Women: 14 people,
or 82.4%)(Note) Includes Mercari, Inc., Souzoh, Inc., Merpay, Inc., Mercoin, Inc., Kashima Antlers F.C. Co., Ltd., Mercari, Inc.
(US), and Mercari Software Technologies India Private Limited
Embracing diversity & inclusion
At Mercari, the diversity of its members is a source of creativity. The Company pursues equal opportunity for all members
to be able to embody its three values to the fullest. The Company does not stand for discrimination or unfair treatment
stemming from someone’s background and continues monitoring its status using quantitative and qualitative data in orderto make improvements. Under the principles of “Focusing on equal opportunity rather than equal outcomes” and “Setting
and monitoring process-focused goals instead of outcome-focused goals like employee ratios,” the Company implemented
the following initiatives from three perspectives: diversity, fairness, and inclusion.
1) Initiatives for a diverse workplace• Monitoring the indicators defined for hiring and appointment candidate pools• Identifying issues and creating a cross-organizational action plan
• Strengthening hiring initiatives• Holding “Build@Mercari 2023,” a training program for software engineers• Continuing the Company’s partnership for education with Kamiyama Marugoto College of Design, Technology, andEntrepreneurship to promote diversity & inclusion• Running the Mercari Restart Program to help people who temporarily left the workforce for reasons such as
childbirth, childcare, or nursing restart their careers
2) Initiatives for a fair workplace• Formulating a Basic Human Rights Policy• Determining a process to assess, correct, and communicate on the gender pay gap, and conducting salaryadjustments• Improving the transparency of the promotion and appointment process, and communicating it to all employees• Implementing a mechanism to ensure equal opportunities to access career-critical assignments
3) Initiatives for an inclusive workplace• Language learning programs• Having a dedicated translation and interpretation team• Running Yasashii Communication trainings• Holding Unconscious Bias workshops and expanding their target audience
Implementation of gender pay gap correction
Aware of the fact that the gender pay gap only shows the average difference in pay between men and women within an
organization, Mercari also calculates for “unexplained pay gap,” which is the gap not due to differences in things such asrole, grade, or job type, in order to ascertain the situation of the gender pay gap at the company more accurately.
- 18 -

1) The investigation revealed that the raw gender pay gap was calculated to be 37.5%, and upon using multiple regression
analysis, the unexplained gap was 7%.
2) The explainable portion of the gap was mainly caused by the difference in the distribution of grades among men andwomen.
3) The results of analyzing the causes of the pay gap revealed that the factor that had the most impact on it was thedifferences in the salaries of men and women upon entering the company (at the time of joining the company, there
existed an unexplained pay gap of roughly 9%).
Based on the above analysis results, the Company implemented the following measures.
• Implemented periodic pay gap monitoring using multiple regression analysis• At all-hands meetings in July 2023, the leadership team communicated on the company’s plan to proactively ensure
gender pay equity• In August 2023, reduced the unexplained pay gap found at Mercari from 7.0% to 2.5%
• Revised its hiring practices to break the chain of pay gaps being carried over from outside its organization at thetime of hiring- 19 -

3

Business risks
Of the items related to the overview of business and financial information described in this Annual Securities Report, thefollowing are major risks that management recognizes could have a significant effect on the financial position, operating
results, and cash flows of consolidated companies. In addition, the probability and timing of such risks materializing, anddetails of the impact on the Company’s financial position, operating results, and so on, have not been specifically stated incases where they cannot reasonably be foreseen. The Company believes that through the implementation of risk management(identifying and assessing risks and formulating countermeasures), it has mitigated to a certain extent the probability of thefollowing risks occurring.
It is the policy of Mercari Group to fully recognize the possibility of risks materializing, and to subsequently strive to avoid
them and to prepare measures to take in the event that they do materialize, but the Company believes that investors must makedecisions regarding shares of the Company only after careful consideration of the matters stated in this document andelsewhere.
Moreover, forward-looking statements in this document are based on the views of Group management as of the end of the
fiscal year under review, and do not constitute an exhaustive list of all risks that could materialize in the future.
(1) Risks related to the business environment1) Growth potential of the industry
Mercari Group operates the Mercari C2C marketplace, which enables individuals to easily and safely buy and sellitems they no longer need. Against the background of such phenomena as the expansion in recent years of the global
market for secondhand items, the popularization of smartphones and improvements in their functionality, and the
expansion of the e-commerce market, the Mercari C2C marketplace has seen steady growth in gross merchandise
value and the number of users, and the Company perceives this trend to be likely to continue going forward.
Merpay, Inc. also provides the Merpay mobile payment service and the Mercard credit card service through the
Mercari app. Helped by the tailwind of the expansion of the cashless payment market, the Group has been working toenhance the convenience of these services, resulting in steady rises in Merpay gross payment value and number ofusers. In the credit area, the Group’s main focus, it has witnessed a steady increase in the number of users and theusage balance of Merpay Smart Payments (lump-sum payment/fixed-amount payment) as well as the number of
Mercards issued.
Mercoin, Inc. also provides a bitcoin trading service through the Mercari app. As users are able to easily start bitcoin
trading with the sales balance and points from selling unwanted items on Mercari, the number of people who haveopened accounts on Mercari’s bitcoin trading service has steadily grown.
However, there are a number of factors that may affect Mercari Group's business, financial results, and financial
position. These include changes in laws and regulations restricting the secondhand market or e-commerce, changes in
economic trends, or changes in consumer tastes and the like, a slowdown in the growth of target markets resulting in
the gross merchandise value of the Mercari C2C marketplace (which accounts for the majority of the Group’s sales)
as a whole or the gross merchandise value of mainstay categories no longer expanding steadily and leading to users
abandoning the platform and to the Group being unable to maintain its business model over the long term, or in theevent that services other than the Mercari C2C marketplace provided by the Group, such as Merpay and Mercoin, do
not grow steadily.
2)Competition
Currently there are many companies active in the market for C2C services that make use of smartphones, representing
a diverse range of product categories and service formats. Internet auctions and secondhand stores also exist, and thecompetitive environment in the secondhand market is becoming increasingly intense. Furthermore, in the payment
and finance-related business, there are multiple competitors providing electronic payment services, credit card
services, and services related to those services.
Mercari Group’s policy is to continue to work to respond to the needs of users and to link this to service
enhancements; however, in the event that these initiatives do not generate the expected results, or in the event that
more attractive or innovative services or companies providing services on more competitive terms emerge, leading tousers abandoning the services provided by the Group, a decline in the number of listed items, or a fall in the level offees, the business, financial results, and financial position of Mercari Group may be affected.

3)Legal regulation
In the Mercari C2C marketplace operated by the Group, sellers can purchase points with the sales balance of items
they have sold, which they can then use to purchase other items. For this reason, Merpay, Inc. is registered as an
issuer of prepaid payment instruments for third-party business and as a funds transfer service provider under the termsof the Payment Services Act and conducts its business in compliance with relevant laws and regulations, includinglaws and ordinances, and Cabinet Office orders. Currently, no events constituting grounds for revocation haveoccurred.
Furthermore, in addition to the provision of the Mercard credit card service, the Merpay mobile payment service
provides Merpay Smart Payments (lump-sum payment/fixed-amount payment), a service enabling buyers to pay off
amounts at the end of the following month or in installments, and Merpay Smart Money, a small-sum loan service.
For this reason, Merpay, Inc. is registered as a business operator concluding contracts involving the handling of credit
card numbers, etc., as a registered comprehensive credit purchase intermediary (including certification as a certifiedcomprehensive credit purchase intermediary) and as a moneylender under the terms of the Installment Sales Act andconducts its business in compliance with relevant laws and regulations, including laws and ordinances, and Cabinet
Office orders. To offer the bitcoin trading service, Mercoin, Inc. is registered as a cryptoasset exchange service
provider under the terms of the Payment Services Act and conducts its business in compliance with relevant laws andregulations, including laws and ordinances, and Cabinet Office orders. Currently, no events constituting grounds forrevocation have occurred in any of these businesses.
- 20 -

In the US, the Group has applied for money transmitter licenses in those states that require it for regulatory purposesin relation to payments, and has already obtained licenses in all such states.
The Group responds appropriately to moves by regulatory authorities, including tax authorities, and moves to revise
existing laws and regulations, but in some cases it is impossible or extremely difficult to accurately predict suchmoves in advance, and in the event that it is unable to respond in a timely and appropriate fashion, the business,financial results, and financial position of Mercari Group may be affected. In the event that Mercari Group receives anadministrative punishment of some kind for infringement of these laws and regulations, etc., or in the event that theapplication of new laws or regulations or significant changes in the approach taken by regulatory authorities lead torestrictions on the operation of the Mercari C2C marketplace or on other existing or new businesses, the business,financial results, and financial position of Mercari Group may be affected.
4)Natural disasters
In the event of unexpected situations caused by fires or natural accidents and disasters such as major earthquakes or
typhoons resulting in the suspension of development or operations, damage to facilities, restrictions on the supply ofelectricity, or interruptions or disruption to the delivery network, the provision of services by the Group may behindered, and the business, financial results, and financial position of Mercari Group could in turn be affected. For
other risks related to climate change, please refer to “Management policy, business environment, issues to address.”(2) Risks related to the business
1) Maintaining the soundness of services
The services operated by the Group consist in essence of the provision of a platform where transactions take place. In
order to ensure the soundness of this platform, the Group strives to eliminate counterfeit items and other items whose
listing is prohibited, not only by clearly indicating prohibited items within the service but also by putting in placemonitoring and reporting systems, and by cooperating with rights owners such as brands. In addition, the Group is nota party to sale contracts with users or user service provision agreements, and the terms of service also stipulate thatproblems arising between users are not the responsibility of Mercari Group and must be resolved between the parties
involved.
However, in the event that actions that harm the intellectual property, good name, privacy, or other rights of third
parties occur, or fraud or other illegal acts take place within the services provided by the Group, or in the event that it
is impossible to prevent inappropriate acts within these services, leading to the inability of the Group to ensure thesafety and soundness of the platform, trust in Mercari Group or the services provided by Mercari Group may decline,
leading to users abandoning the platform. Furthermore, in the event that responsibility is forced not only on the party
performing such problematic acts but also on the Group as provider of the platform, this may result in damage to thecorporate image and trustworthiness of Mercari Group, and in turn affect its business, financial results, and financial
position.
2)

Risks related to fraudulent use
On the Mercari C2C marketplace operated by the Group, credit card payments are offered as a method of payment fortransactions conducted on the platform. In order to prevent the illicit hijacking of accounts through phishing or othermeans, the Group has strengthened measures to prevent fraudulent logins by third parties through the use ofmultifactor authentication and other approaches when logging in to the platform. Additionally, in order to prevent the
fraudulent use of third parties’ credit cards by buyers, the Group has introduced an authentication service (EMV-3D
Secure) as well as human and system surveillance of transactions, so as to form comprehensive risk judgment andblock fraudulent use.
However, in the event that fraudulent transactions on the platform cannot be prevented, damage may be caused byusers being compensated for fraudulent transactions and by a decline in trust in Mercari Group, and in the event that
this damage spreads further, the business, financial results, and financial position of Mercari Group may be affected.

3)

Risks related to global expansion
With the aim of expanding revenue opportunities, the Group operates Mercari in the US as a marketplace where
anybody can easily and safely sell a variety of items, and the Group intends to continue strengthening global
expansion going forward.
In the course of this global expansion, it is possible that in the future the Group will continue to make substantial
investments in advertising and personnel. There are also a variety of potential risks associated with language,
geographical factors, various regulations including legal and tax systems, economic and political instability,
differences in culture, user tastes, and business customs, and exchange rate volatility, as well as risks related todifficulties in obtaining the human resources necessary for business expansion, and the risk of rivalry from highly
competitive companies in the country in question. In the event that the Group is unable to deal with such risks, theglobal expansion of Mercari Group may be affected.

4)

Systems
When using the Mercari C2C marketplace operated by the Group, it is essential that the user be able to access theinternet or mobile networks, in addition to which the IT systems of the Group are also important.
In order to reduce the probability of system trouble, the Group has implemented thoroughgoing measures tostrengthen the security and operational stability of its systems, and has put in place a structure to enable prompt
recovery even in the event of such trouble occurring. The various financial figures in the financial statements of theCompany are also obtained from the IT systems of the Company, and these consist of multiple business-processing
systems developed internally. In order to ensure the appropriateness of system processing, the Group has put in placeand operates a business processing control framework.
- 21 -

However, in the event that a system goes down as a result of factors that are impossible for the Group to predict, suchas temporary overload of the system or the interruption of its power supply, software malfunctions, infiltration ofcomputers as a result of computer viruses or by illicit third-party access, or due to natural disasters or accidents, or incases where events originating outside the Group’s systems have a detrimental impact on user access, the business,financial results, financial position, and structure for appropriate financial reporting of Mercari Group may beaffected.
In order to maintain stable operation of its services and grow business, the Group must continuously invest in areas
such as system infrastructure. In the event of rapid growth in users or traffic that exceeds the expectations of theGroup, or the need to augment systems in order to strengthen security or for other reasons, additional investments
may be required, which may affect the business, financial results, and financial position of Mercari Group.
5)

Possibility of litigation, etc.
In the event of illegal acts or trouble caused by users, or infringements of the rights of third parties, the Group may besued or be the target of other demands from users or other third parties.
Conversely, in the event that the rights of the Group are infringed or damaged by third parties in some way, the Groupmay need to spend large sums of money on litigation to protect its rights.
In such cases, depending on the details of the litigation or the sums of money demanded, the Group’s business,financial results, financial position, and social credibility as a company may be affected.

6)

Risks related to intellectual property rights
Mercari Group works to acquire intellectual property rights related to the businesses that it operates, and seeks toprotect the trademarks, technology, content, and other assets used by the Group through intellectual property rights,
but in the event that its intellectual property rights cannot be protected from infringement by third parties, or in theevent that significant costs are incurred as a result of protecting such intellectual property rights, the business,financial results, and financial position of Mercari Group may be affected. In addition, in the event that a third party
claims infringement of intellectual property rights in relation to the technology or content used by Mercari Group,
resulting in costs or losses being incurred in order to protect against or resolve related disputes, there is a possibility
that the business, financial results, and financial position of Mercari Group may be affected.

7)

Enhancing the business foundation
In order to expand the scale of the business and to diversify sources of revenue, the policy of the Group is to enhance
the business foundation and to work on new business initiatives, including efforts such as building a Mercari Groupecosystem with integrated Mercari IDs. In the future it is possible that the Group will launch new services or adopt
services from third parties, but the ecosystem concept is still in the initial stages, and because it involves many
uncertain elements, including competition with other services, profitability, regulatory risk, the impact on operations,and the effect on the Group’s reputation, the building of this ecosystem may not progress as anticipated by the Group;
even if the Group succeeds in building this ecosystem, the Group may not obtain sufficient profits from it.
In addition, Merpay, Inc. is registered as an issuer of prepaid payment instruments for third-party business, as a funds
transfer service provider, as a business operator concluding contracts involving the handling of credit card numbers,
etc., as a registered comprehensive credit purchase intermediary (including certification as a certified comprehensive
credit purchase intermediary), and as a moneylender, while Mercoin, Inc. is registered as a cryptoasset exchange
service provider, but risks associated with the nature and content of future services provided may emerge.
With regard to enhancing the business foundation and developing new businesses, the Group’s policy is to seek tomitigate risk by fully investigating both risks and synergies with existing services at the planning and development
stages. The Group recognizes that M&A, joint ventures, capital and business alliances, and investment activities arealso effective approaches when enhancing the business foundation or developing new businesses in this way, and its
policy is to continue to explore these going forward.
On the other hand, because there are many uncertain elements associated with enhancing the business foundation anddeveloping new businesses, in the event that the Group implements such initiatives, they may not progress as
anticipated by the Group, the expected synergies may not be obtained, and new legal or operational risk elements may
emerge. Liabilities and losses may occur in relation to unexpected costs and impairments of goodwill and other items,
and additional investments may become necessary as a concomitant of these initiatives. Furthermore, in the case of
M&A or similar initiatives, there is a risk of unexpected events occurring as a result of the limitations of due
diligence, which may affect the business, financial results, and financial position of Mercari Group.

8)

Dependence on third parties
Because the Group offers smartphone apps for users, providing apps via the platforms operated by Apple Inc. andGoogle LLC is an important precondition of the Group’s business in its current form. The Group has also adopted
services provided by external operators, such as credit card payments, convenience store payments, and ATM
payments, as payment methods for users. Accordingly, the business, financial results, and financial position of
Mercari Group may be affected by trends and business strategies at these operators, and by their relationship with theGroup.
In addition, because delivery of items sold on the Group’s services is dependent on delivery service operators such as
Yamato Transport Co., Ltd. and Japan Post Co., Ltd., in the event of changes in the terms of transactions with these
operators, revisions to their business policies, etc., or changes in delivery conditions, the business, financial results,
and financial position of Mercari Group may be affected.

- 22 -

9)

Payment and finance-related business
Risks that affect the business of Mercari Group may emerge in the future as a result of such factors as significant costs
required for compliance with regulatory requirements, or additional regulatory requirements, associated with thepayment and finance-related business.
In the course of operating its services and the payment and finance-related business in Japan and overseas, the Groupmay become subject to a variety of laws and regulations in such areas as the transfer of money, payments, ecommerce transactions, money laundering, user authentication, prevention of terrorist financing, installment sales, andmoney lending. In the unlikely event that the Group is found to be in violation of its duties under these laws andregulations such as due to it being unable to establish internal systems quickly enough to keep up with the speed of
growth in services, it may be subject to fines or other penalties or sanctions such as an order to suspend business,
and/or be forced to change its services, which in either case may have a significant impact on the business, financial
position, and operating results of the Group.
Furthermore, with regard to mobile payment services and other parts of the payment and finance-related business, avariety of additional risks may emerge, including the following.
a. Increases in operating expenses and management costs associated with fraudulent transactions, response to failedtransactions, customer service, and management of consigning entity
b. Impact on relationship with companies currently providing payment processing services
c. Increase in cost of capital following infrastructure constructiond. Potential fraud or illegal acts committed by users, platform partners, employees, or third parties
e. Leaks of users’ personal information and concerns regarding the use and safety of information used
f. Restrictions on the amount of funds deposited by users for the purpose of payment processingg. Additional disclosure and reporting obligations

10) Cryptoasset exchange service
The cryptoassets deposited to the Group by users are stored in the wallet managed by Mercoin, Inc. To address therisks of such cryptoassets being leaked due to unauthorized access from an outside party and other risks, the Grouphas implemented various measures, including the development of a system to control a private key and a wallet
structure. However, in the event that cryptoassets are leaked due to unauthorized access, this could significantly affect
Mercari Group’s financial results and financial position.
(3) Risks related to the Company’s organization
1) Risks related to human resources
Mercari Group is highly dependent on the management team for the formulation and execution of business strategy
for the Group as a whole; in the event of insufficient human resources within this management team, Mercari Group’sbusiness, financial results, and financial position may be affected.
Moreover, in order for the Group to continue expanding in scale and providing the services needed by society, theGroup must secure exceptional and highly motivated talent who share Mercari Group’s values. This includes talent
with technical expertise in smartphone app development and design, as well as talent whose expertise is suited for
Mercari’s security, corporate, and customer support divisions. The Group’s global expansion also requires it to securetalent who are well-versed in local market trends and business.
The Group intends to continue recruiting as necessary to secure the kind of talent that is required to expand the scaleof the business and enhance its services. However, should it become difficult to obtain talent of the necessary standard
due to such factors as intensifying competition for human resources or changes in market needs, which may prevent
the Group from hiring as expected, or in the event that talent currently employed by the Group leave to work
elsewhere, Mercari Group’s business, financial results, and financial position may be affected.
2)

Business structure and internal control structure
Established in February 2013, Mercari is still in its growth phase. The Group recognizes that in order to address the
future management and expansion of the business, further enhancements to the business structure and internal control
structure are required. In the event that delays arise in the building of a suitable business structure and internal control
structure, this could affect Mercari Group’s business, financial results, and financial position. In accordance with laws
and regulations, the Group has built and operates an internal control system to ensure the appropriateness of financial
reporting. However, there is a possibility that a significant error in the financial reports of the Group could be
discovered. There is also no guarantee that the Group will always be able to build and operate an effective internal
control system in the future. Furthermore, the trustworthiness of Mercari Group’s financial reporting may be affectedby such things as specific limitations inherent in the internal control system, ineffective functioning of the internal
control system associated with the financial reporting of the Group, or a significant deficiency that occurs in theinternal control system associated with financial reporting.

3)

Management of personal information
For the operation of the Mercari C2C marketplace service, the Group collects information that enables theidentification of individual users, such as addresses, names, and telephone numbers. In addition to appropriately
managing this personal information in accordance with its personal information protection policy, the Group has set
out internal regulations for the protection of personal information, has implemented thorough internal education, andhas built and continues to improve its management systems.
The Group takes the utmost care with the protection of personal information and the privacy of users, and takes
appropriate steps to manage information. However, there is a possibility that user privacy could be violated, that
personal information could be leaked, or that information leaked outside the Company as a result of unauthorizedaccess could be misused following such leaks. If such an event were to occur, Mercari Group’s business, financial
results, financial position, and social credibility as a company could be affected.
- 23 -

In addition, in the event of revisions to laws and regulations related to user privacy or the protection of personal
information in any of the jurisdictions in which the Group operates, the business, financial results, and financial
position of Mercari Group could also be affected.
(4) Operating results and financial position
1) Operating results
Established in February 2013, Mercari is still in its growth phase. In previous fiscal years, consolidated results havebeen characterized by the recording of losses attributable to owners of parent, initially due to the Company being at
the stage of establishing its Mercari C2C marketplace, and subsequently as a result of investments in new businesses,
primarily Mercari (US) and the Merpay mobile payment service in Japan. A profit attributable to owners of parent
was recorded for the fiscal year under review, but the Group is implementing a disciplined program of investment
focused on the maximization of future profits. However, there is no guarantee that the Company will consistently
achieve profits at the consolidated level going forward. Furthermore, because the Group is going through a process of
rapid growth, operating results from previous fiscal years may not provide adequate material for comparisons between
different periods.
Gross merchandise value, MAU(Note), and other indicators are calculated using methods considered reasonable within
Mercari Group, but in addition to these not necessarily being comparable with those of other companies, past figures
may not provide adequate material to form a judgment on future trends.
(Note) MAU (Monthly Active Users) is defined as the quarterly average number of registered users who accessed the
Mercari service via app or website at least once during a given month.
2)

Continuous investments
In order to achieve continuous growth, the Group believes it is necessary to raise awareness and trust so as to bothacquire more new users and retain existing users. Accordingly, since Mercari was established, the Group has invested
in product improvements, enhancements to the convenience of packing and shipping, and marketing initiatives. Goingforward, the Group’s policy will be to continue investments that lead to growth while maintaining discipline.
However, Mercari Group’s business, financial results, and financial position may be affected by such factors aschanges in the business environment, advertising expenses that do not generate sufficient results, rising costs, or
profits not being generated as planned due to investments continuing for longer than expected.

3)

Results of consolidated overseas subsidiaries
In January 2014, the Group established US-based consolidated subsidiary Mercari, Inc. (US), which operates Mercariin the US as a marketplace where anyone can sell a variety of items easily and safely. The service was launched in
September 2014, began charging a selling fee proportionate to the purchase value in October 2016, and started
levying a payment fee in October 2020.
Even after beginning to charge fees, the Group has continued to invest in the expansion of the user base and further
development of the service, and in the event that the business does not expand as expected and continuous advertisingexpenses, additional investments, and other burdens lead to losses expanding or extending over a long period of time,
there is a possibility that the business, financial results, and financial position of Mercari Group will be affected andthat losses at the consolidated level will expand in the short term.

4)

Dividend policy
The Group regards its efforts to return profits to shareholders while simultaneously enhancing its financial standing
and securing competitive strengths as key managerial challenges. At this point in time, the Group deems that it is in
the process of achieving growth and has accordingly concluded that the best means of maximizing shareholder returns
is by supplementing internal reserves and channeling such funds to investment geared to expanding business andstreamlining operations. As such, the Company has not made any dividend payments since it was founded, and its
policy going forward shall be that of striving to supplement internal reserves for the time being. The Group’s policy is
to consider returns to shareholders in the future while taking into account operating results for each fiscal year.
However, at this point in time, the Group has not made any decisions on the possibility or timing of paying dividends.

(5) Other
Dilution of share value through issuance of additional shares, etc.
Mercari Group grants stock acquisition rights and Restricted Stock Units (RSU) to its directors, auditors, and employeeswith the aim of providing medium- to long-term incentives to enhance corporate value. This system can also be used forthe recruitment of outstanding talent. In addition, the Company issues convertible bonds with stock acquisition rights. In
the event that the stock acquisition rights are exercised, the shares associated with the RSU are issued, or the convertible
bonds with stock acquisition rights are converted into shares, the value and percentage of voting rights of shares held byexisting shareholders may be diluted.

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4

Analysis of financial position, operating results, and cash flows(1) Overview of operating results, etc.
1) Overview of operating results
In the fiscal year ended June 30, 2023, the Group worked on business management that takes into consideration thebalance between growth and revenue by building a sturdy global business base. As a result, the Group achieved recordhigh net sales and operating profit on a consolidated basis. In the Marketplace domain, where Mercari celebrated the10th anniversary of the launch of its core marketplace app, this was a year in which the Group embarked on several
initiatives, such as launching new services (Mercard and a bitcoin trading service), to reach a scale of ¥1.0 trillion for
full-year gross merchandise value (GMV (Note 1)) and create Group synergy that will support future growth for the Fintech
domain.
In the Marketplace domain, as one of its business objectives for the current fiscal year, the Group strove to increase thenumber of listings on Mercari through strengthened collaboration between the C2C and B2C business areas. The Group
was able to achieve steady growth and a high level of profitability with MAU (Note 2) of 22.60 million, full-year GMV of¥984.6 billion (up 10% year-on-year) and adjusted operating margin (Note 3) of 44% due to disciplined investments in areasthat will have steadily accumulating results. On the product front, the Group implemented major updates to the internal
system of the Mercari app in order to build a system environment where development work such as adding and modifying
new features can be executed even faster than before. Furthermore, to maximize Group synergy through collaboration
with Fintech, the Group promoted measures, for example introducing a loyalty program, that will spur further growth forthe next fiscal year and onward.
In the Fintech domain, the Group worked to promote circular finance by strengthening Group synergy as one of its
business objectives for the current fiscal year. The Group made steady progress on creating Group synergy for the future,such as by launching Mercard and a bitcoin trading service as well as other initiatives. In spite of expanding investments
into new services, the Group recorded an unadjusted operating profit (Note 4) for the full year owing to continuous
improvement in profitability, which became even stronger due to the steady growth of credit services led primarily by
fixed-amount payment. Amid credit balance (Note 5) growing to ¥117.8 billion, driven by the growth of fixed-amountpayment, the collection rate (Note 6) improved to 98.7% as a result of strict credit control, etc. that utilized the Group’s
proprietary AI credit check, and realized sound growth.
As a result of the above, Japan Region reported net sales of ¥122,199 million (up 22.0% year-on-year) and segment profitof ¥34,464 million (up 107.3% year-on-year) for the fiscal year ended June 30, 2023.
In its US business, the Group’s business policy for the current fiscal year focused on product improvements that promote
both selling and buying. In addition to implementing efficient marketing activities mainly targeting existing users, theGroup implemented various measures to promote purchases and reduce the burden on buyers, such as by introducing a
new plan that reduces shipping costs for small packages and introducing a bundled shipping option. On the other hand,the full-year GMV growth rate was -11% year-on-year due to the ongoing slowdown of purchases owing to external
environment factors such as inflation, which persisted from the previous fiscal year. As a result of the above, in thecurrent fiscal year, GMV for Mercari in the US market decreased by $130 million year-on-year to $1,015 million (¥139.5
billion; the exchange rate conversion is the total of the amounts calculated for each month using the average rate during
the month), and MAU totaled 4.77 million. Net sales amounted to ¥44,440 million (up 6.8% year-on-year). On the other
hand, segment operating loss improved significantly to ¥8,804 million (versus a segment operating loss of ¥12,135
million in the corresponding period of the previous fiscal year), resulting from a review of expenses for lean business
management.
As a result, for the fiscal year ended June 30, 2023, the Group recorded net sales of ¥172,064 million (17.0% increaseyear-on-year), operating profit of ¥17,023 million (compared to operating loss of ¥3,715 million in the previous fiscal
year), ordinary profit of ¥17,449 million (compared to ordinary loss of ¥3,896 million in the previous fiscal year), andnet profit attributable to owners of parent of ¥13,070 million (compared to net loss attributable to owners of parent of¥7,569 million in the previous fiscal year).
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)

2)

GMV (Gross Merchandise Value) is the total value of merchandise sold during a specified period.
MAU (Monthly Active Users) is defined as the quarterly average number of registered users who accessed
the Mercari service via app or website at least once during a given month.
Profit after deducting internal transactions with Fintech (outsourced payment processing fees).
Profit before deducting internal transactions with Marketplace (outsourced payment processing fees).
Merpay Smart Payments (lump-sum and fixed-amount payment) and Merpay Smart Money credit balance
as of June 30, 2023 (excludes debt converted into bankruptcy reorganization debt, etc.).
Average aggregated rate of the quarterly cumulative collections completed within the past 11 months
compared to the amount of Merpay Smart Payments (lump-sum payment and fixed-amount payment) andMerpay Smart Money billed in the past 11 months (excludes debt converted into bankruptcy reorganization
debt, etc.).

Overview of financial position(Assets)
Total assets at the end of the current fiscal year increased by ¥75,430 million from the end of the previous fiscal year to¥415,292 million.
The main reasons for any increases and decreases are as follows.
- The main reasons for any increases and decreases in cash on hand and in banks are outlined in the Overview of Cash
Flows for the Period section below.
- Other receivable increased by ¥35,427 million compared to the end of the previous fiscal year, primarily due to anincrease in use of Merpay Smart Payments (lump-sum payment and fixed-amount payment).
- Guarantee deposits increased by ¥34,834 million from the end of the previous fiscal year, primarily due to deposits
paid based on laws and regulations accompanying the increase in the amounts spent on Mercari and Merpay.
- 25 -

(Liabilities)
Total liabilities at the end of the current fiscal year increased by ¥58,199 million from the end of the previous fiscal yearto ¥360,063 million.
The main reasons for any increases and decreases are as follows.
- Borrowings increased by ¥26,179 million from the end of the previous fiscal year, primarily due to the liquidationof receivables for lump-sum payments and fixed-amount payments.
- Deposits received increased by ¥24,308 million from the end of the previous fiscal year, primarily due to higher
spending on Mercari and Merpay.
(Net assets)
Net assets at the end of the current fiscal year increased by ¥17,230 million from the end of the previous fiscal year to¥55,228 million.
The main reasons for any increases and decreases are as follows.
- Capital stock increased by ¥1,423 million from the end of the previous fiscal year following the issuance of newshares.
- Capital surplus increased by ¥1,423 million from the end of the previous fiscal year following the issuance of newshares.
- Retained earnings increased by ¥13,070 million from the end of the previous fiscal year due to the recording of net
profit attributable to owners of parent.
3)

Overview of cash flows for the period
Cash and cash equivalents (hereinafter referred to as “cash”) for the current fiscal year decreased by ¥9,359 million
from the end of the previous fiscal year and amounted to ¥202,047 million at the end of the current fiscal year.
The status of cash flows and their contributing factors for the current fiscal year are as follows.
(Cash flows from operating activities)
Cash used in operating activities during the current fiscal year amounted to ¥36,883 million (compared to ¥26,217
million used in the previous fiscal year). This is primarily attributable to net profit before income taxes of ¥16,389
million, an increase in deposits received of ¥23,608 million, an increase in other receivable of ¥35,381 million, and anincrease in guarantee deposits of ¥34,831 million.
(Cash flows from investing activities)
Cash used in investing activities during the current fiscal year amounted to ¥632 million (compared to ¥671 million
used in the previous fiscal year). This is primarily attributable to purchase of property and equipment of ¥471 million
and purchase of investment securities of ¥286 million.
(Cash flows from financing activities)
Cash provided by financing activities during the current fiscal year amounted to ¥26,839 million (compared to ¥62,065
million provided in the previous fiscal year). This is primarily attributable to change in short-term borrowings of ¥867
million and proceeds of ¥25,660 million from long-term borrowings.

5

Important business contracts
Not applicable.

6

Research and development activities
In December 2017, Mercari established Mercari R4D as a research and development organization with the goal of
implementing its findings in society. Rather than merely establishing a system for exchanging value, Mercari R4D aims to use
the power of science and technology to update social infrastructure without being constrained by existing conventions andcreate a world where all forms of value are circulated to unleash the potential of people and things. The organization’s current
research areas include not only natural science areas, such as value-exchange engineering, quantum information technology,
accessibility, blockchain technology, and mobility, but also ethical, legal, and social issues (ELSI), communication, linguistics,
and other sociocultural areas. The total research and development expenses for the year ended June 30, 2023, were ¥369
million.
Information by segment is omitted as the research and development activities conducted during the year ended June 30, 2023,
cannot be linked to a certain segment.

- 26 -

III
1

2

Facilities
Overview of capital investments
Total capital expenditure undertaken during the year ended June 30, 2023, amounted to ¥531 million (including intangible fixed
assets) and was mainly allocated for the purchase of office equipment for Mercari’s head office in the Japan Region segment
and for the acquisition of leased assets for shipping services.
No major facilities were retired or sold during the year ended June 30, 2023.
Major facilities(1) Company submitting this report
As of June 30, 2023
Carrying amount

Officename

Numberofemployees(Persons)

Buildings
andstructures(Millionsof yen)Tools,
furniture,andfixtures(Millionsof yen)Leasedassets(Millionsof yen)Software(Millionsof yen)Other(Millionsof yen)Total(Millionsof yen)Businessfacilities

217

440

388

74

–

1,121

1,156
[49]

Businessfacilities

0

4

–

–

–

4

60 [136]

Location

Name ofsegment

Facilities

Head
OfficeMinatoku,
Tokyo

Japan
Region/Corporate(shared)Fukuoka
OfficeHakataku,
Fukuoka-shi,
FukuokaJapan
Region(2) Domestic subsidiaries
As of June 30, 2023
Carrying amountCompany
nameOfficename(Location)

Buildings
andstructures(Millionsof yen)Tools,
furniture,andfixtures(Millionsof yen)Leasedassets(Millionsof yen)Software(Millionsof yen)Other(Millionsof yen)Total(Millionsof yen)Numberofemployees(Persons)

Name ofsegment

Facilities

Japan
RegionBusinessfacilities

–

–

–

–

–

–

361
[100]

Other

Businessfacilities

1,631

28

3

4

66

1,735

61 [46]

Souzoh,Inc.

HeadOffice(Minatoku,
Tokyo)

Japan
RegionBusinessfacilities

–

0

–

–

–

0

27 [24]

Mercoin, Inc.

Head
Office(Minatoku,
Tokyo)

Japan
RegionBusinessfacilities

–

0

–

–

–

0

74 [1]

Merpay,Inc.

Kashima
Antlers
F.C. Co.,
Ltd.

Head
Office(Minatoku,
Tokyo)
Head
Office(Kashima-shi,
Ibaraki)- 27 -

(3) Overseas subsidiaries
As of June 30, 2023
Carrying amountCompany
nameOfficename(Location)

Name ofsegment

Facilities

Buildings
andstructures(Millionsof yen)Tools,
furniture,andfixtures(Millionsof yen)Leasedassets(Millionsof yen)Software(Millionsof yen)Other(Millionsof yen)Total(Millionsof yen)Numberofemployees(Persons)

Head
Office(Palo
Mercari,
Alto,
Business
Inc.
US
–
56
–
–
–
56
226 [6]
Californfacilities(US)ia,
UnitedStates)
Head
Mercari
OfficeSoftware(BengalBusiness
Technologi
uru,
Other
–
14
–
–
–
14
37 [5]
es Indiafacilities
Karnata
PrivateLimitedka,
India)(Notes) 1. Mercari Group leases space in a number of buildings as well as land, and annual rent expenses are ¥2,050 million.
2. The average number of temporary employees during the year is stated in square brackets.
3

Plans for acquisition and retirement of facilities(1) Acquisition of important facilities
Not applicable.
(2) Retirement of important facilities
Not applicable.

- 28 -

IV

Company information
1 Dividend policy
As the Company has focused on the accumulation of internal reserves in the aim of enhancing its financial standing andexpanding its business continually for long-term stability of the management base, it has not made any dividend payments since
its incorporation. This policy is applicable to the fiscal year ended June 30, 2023. However, the Company also believes thatmaximizing interests of its shareholders is a key management objective, and going forward, it intends to consider issuing
dividends from surplus to its shareholders after comprehensively taking into account its business and financial condition, plans
for future business and investments, and the appropriate level of internal reserves.
The Company will effectively use the internal reserves as funds to enhance its financial standing and expand its business
continually for long-term stability of the management base.
In principle, the Company will make annual dividend payment at the end of a fiscal year, if any. Furthermore, the Articles ofIncorporation set out that the Company can make an interim dividend payment once a year and make another dividend payment
by setting a record date other than the above date. In accordance with Article 459, paragraph (1) of the Companies Act, theCompany’s Articles of Incorporation provide that the Board of Directors shall make decisions regarding the dividends ofsurplus.

- 29 -

V Financial Information
1. Consolidated Financial Statements, etc.
(1) Consolidated financial statements
1) Consolidated balance sheets(Millions of yen)
As of June 30, 2023

As of June 30, 2022
AssetsCurrent assets
Cash on hand and in banks
Trade accounts receivable
Securities
Other receivable
Prepaid expenses
Deposits paid
Other current assets
Allowance for doubtful accounts
Total current assets
Non-current assets
Property and equipment
Intangible assets
Investments and other assets
Investment securities
Lease deposits
Deferred tax assets
Guarantee deposits
Other assets
Total investments and other assets
Total non-current assets
Total assets- 30 -

211,406
4,454
80,287
2,805
7,093
2,156
(4,807)303,396

196,271
6,374
5,775
115,714
2,261
2,708
16,994(5,455)
340,644

3,462
666

2,781
584

117
1,614
3,417
26,774413
32,33736,466
339,862

78
1,407
7,802
61,608385
71,282
74,648415,292

(Millions of yen)
As of June 30, 2023

As of June 30, 2022
Liabilities
Current liabilities
Short-term borrowings
Current portion of long-term borrowings
Accounts payable
Accrued expenses
Income taxes payable
Deposits received
Provision for bonuses
Provision for point certificates
Provision for share-based compensation
Other current liabilities
Total current liabilities
Non-current liabilities
Convertible-bond-type bonds with stock acquisitionrightsLong-term borrowings
Retirement benefit liability
Asset retirement obligations
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings (Accumulated deficit)
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Total accumulated other comprehensive income
Stock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets- 31 -

54,254
1,348
18,2171,915
1,525
139,094
1,389
359
91
6,525
224,72255,121
16,713
19,509
1,485
6,627
163,402
1,914
1,036
209
7,588
273,608

50,00050,00025,749
75
126
162
1,028
77,141
301,864

35,696
42
126
138
451
86,454360,063

44,62844,582(53,757)(0)35,45346,05246,005(40,687)(0)51,370

-

(0)

1,303
1,303
926
314
37,998339,862

159
2,051
2,211
1,092
554
55,228415,292

2)

Consolidated statements of income and comprehensive income
Consolidated statement of income

For the fiscal year
ended June 30, 2022
147,049
51,905
95,143
98,859(3,715)Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit (loss)
Non-operating income
Interest income
Consumption taxes refund
Subsidy income
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expense
Foreign exchange loss
Bond issuance costs
Other
Total non-operating expenses
Ordinary profit (loss)
Extraordinary income
Gain on sales of investment securities
Gain on liquidation of investment securities
Gain on reversal of stock acquisition rights
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on devaluation of investment securities
Loss on cancellation of leases
Cancellation penalty
Other
Total extraordinary losses
Net profit (loss) before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net profit (loss)
Net loss attributable to non-controlling interests
Net profit (loss) attributable to owners of parent(Millions of yen)
For the fiscal year
ended June 30, 2023
172,064
57,639114,425
97,401
17,023

50
28
4
26
110

501
34
139
41
716

129
149
11
0
290
(3,896)

182
79
28
290
17,449

15
16
1
32

2
2

51
82
133
(3,997)
4,718(1,075)
3,642(7,640)(70)(7,569)

50
325
519
114
53
1,063
16,3897,944(4,470)3,474
12,914(155)
13,070Consolidated statements of comprehensive income(Millions of yen)
For the fiscal year
ended June 30, 2023

For the fiscal year
ended June 30, 2022
Net profit (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests- 32 -(7,640)12,914

1,308
1,308(6,331)

(0)
160
747
908
13,823(6,260)(70)

13,978(155)

3)Consolidated statements of changes in Equity
For the fiscal year ended June 30, 2022
(Millions of yen)
Shareholders’ equity
Capital stock

Balance at the beginning of current
periodCapital surplus

42,630Retained earnings(Accumulated deficit)

Treasury stock

Total shareholders’equity(46,149)(0)

39,06542,585

Cumulative effects of changes inaccounting policies
Restated balance(38)
42,63042,585

1,998

1,997

(38)

(46,188)(0)39,027

Changes of items during the period
Issuance of new shares

3,996

Net loss attributable to owners ofparent(7,569)(7,569)Purchase of treasury stock

(0)

(0)

Net changes of items other thanshareholders’ equity
Total changes of items during theperiod

1,998

1,997

(7,569)(0)(3,573)

Balance at the end of current period

44,62844,582(53,757)(0)35,453

Accumulated other comprehensive income
Valuation
Deferred gains
difference onor losses onavailable-forhedges
sale securities
Balance at the beginning of current
period-Foreigncurrencytranslation
adjustments

Total
accumulated
othercomprehensive
incomeStockacquisitionrights

(5)

(5)

566

-

Non-controlling
Total net assetsinterests

386

Cumulative effects of changes
in accounting policies
Restated balance

40,013
(38)

-

-

(5)

(5)

566

386

39,974

Changes of items during the period
Issuance of new shares

3,996

Net loss attributable to ownersof parent(7,569)Purchase of treasury stock(0)

Net changes of items other thanshareholders’ equity

-

-

1,308

1,308

360

(72)

1,597

Total changes of items during theperiod

-

-

1,308

1,308

360

(72)

(1,976)

Balance at the end of current period

-

-

1,303

1,303

926

314

37,998- 33 -

For the fiscal year ended June 30, 2023
(Millions of yen)
Shareholders’ equity
Capital stock
Balance at the beginning of current
periodRetained earnings(Accumulated deficit)

Capital surplus

44,62844,582

1,423

1,423

Total shareholders’equityTreasury stock(53,757)(0)35,453

Changes of items during the period
Issuance of new shares
Net profit attributableowners of parent

2,846

to

13,07013,070Net changes of items otherthan shareholders’ equity
Total changes of items during theperiod

1,423

1,423

13,070-15,917

Balance at the end of current period

46,05246,005(40,687)(0)51,370

Accumulated other comprehensive income

Balance at the beginning of current
periodValuationdifference on
available-forsale securities

Deferred gains
or losses onhedgesForeigncurrencytranslation
adjustments

Total
accumulated
othercomprehensive
incomeStockacquisitionrights

-

-

1,303

1,303

926

Non-controlling
Total net assetsinterests

314

37,998Changes of items during the period
Issuance of new shares
Net profit attributableowners of parent

2,846
to

13,070Net changes of items other thanshareholders’ equity

(0)

159

747

907

165

240

1,313

Total changes of items during theperiod

(0)

159

747

907

165

240

17,230

Balance at the end of current period

(0)

159

2,051

2,211

1,092

554

55,228- 34 -

4)

Consolidated statements of cash flows(Millions of yen)
For the fiscal year
ended June 30, 2023

For the fiscal year
ended June 30, 2022
Cash flows from operating activities
Net profit (loss) before income taxes
Depreciation and amortization
Loss on retirement of non-current assets
Gain on sales of investment securities
Loss on devaluation of investment securities
Gain on liquidation of investment securities
Bond issuance costs
Change in allowance for doubtful accounts
Change in provision for point certificates
Change in provision for bonuses
Change in provision for share-based compensation
Interest income
Interest expense
Change in trade accounts receivable
Change in other receivable
Change in accounts payable
Change in deposits paid
Change in deposits received
Other—net
SubtotalInterest income received
Interest expense paid
Change in guarantee deposits
Income taxes paid
Other—net
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of property and equipment
Proceeds from refund of lease deposits
Purchase of subsidiaries’ shares resulting in a change inscope of consolidation
Other—net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Change in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Proceeds from issuance of common stock
Other—net
Net cash provided by (used in) financing activities
Foreign currency translation adjustments on cash and cash
equivalents
Change in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period- 35 -(3,997)
818
51
(15)
82
(16)
11
2,391
(442)
(294)
(60)
(50)
129
(2,019)(33,133)
343(720)
19,934
156(16,832)
50
(129)
(0)
(9,339)33(26,217)

16,389
933
50
325
648
677
524
117
(501)
182
(1,913)(35,381)
1,234
4,436
23,608(10,897)
435
500
(183)
(34,831)(2,978)173(36,883)

15
(669)
2
(18)

(286)
0
(471)
177
-

(1)
(671)

(51)
(632)

34,652
1,000(25,449)
49,8762,090(103)
62,065
4,767

867
25,660
(348)
832
(171)
26,8391,317

39,942
171,463
211,406(9,359)211,406
202,047

(Notes on the basis of preparation on consolidated financial statements)
1. Overview of capital investments(1) Scope of consolidation
1) Number of consolidated subsidiaries: 6
Names of consolidated subsidiaries:
Mercari, Inc. (US)Merpay, Inc.
Kashima Antlers F.C. Co., Ltd.
Souzoh, Inc.
Mercoin, Inc.
Mercari Software Technologies India Private Limited
Merlogi, Inc. became part of Mercari, Inc. through an absorption-type merger and thus was excluded from the scope of
consolidation.
Basset, Inc. became part of Mercoin, Inc. through an absorption-type merger and thus was excluded from the scope of
consolidation.
2) Number of unconsolidated subsidiaries
Not applicable(2) Application of equity method
Not applicable(3) Fiscal year-ends of consolidated subsidiaries
Because the fiscal year-end of consolidated subsidiary Kashima Antlers F.C. Co., Ltd., is January 31, which is more than
three months away from the consolidated fiscal year-end, that company is consolidated based on the provisional settlementof accounts as of April 30.
Because the fiscal year-end of consolidated subsidiary Mercari Software Technologies India Private Limited is March 31,
which is less than three months away from the consolidated fiscal year-end, that company is consolidated based on thefinancial statements as of its fiscal year-end.
When significant transactions occur at those subsidiaries between their fiscal year-ends and the consolidated fiscal year-end,
the necessary adjustments are made in the consolidated financial statements.
(4) Accounting policies
1) Valuation standards and methods for significant assets
Valuation standards and methods for securities
Available-for-sale securities
Available-for-sale securities other than shares, etc. without market prices:Stated at fair value (valuation differences are directly charged or credited to net assets, and cost of securities sold isdetermined by the moving average method).
Shares, etc. without market prices:Stated at cost using the moving average method.
2) Method of depreciation and amortization of significant depreciable and amortizable assets
a.
b.

c.

Property and equipment (except for leased assets)
The declining balance method is applied (however, the straight line method is applied for buildings (except for
facilities attached to buildings) and for facilities attached to buildings acquired on or after April 1, 2016).
Intangible assets
Software for internal use is amortized by the straight line method over its estimated useful life (5 years).
Trademark rights are amortized by the straight line method based on the effective period (20 years).
Leased assets
For leased assets related to finance lease transactions that do not transfer ownership, the straight line method isapplied assuming the lease period as the useful life without residual value.

- 36 -

3) Standards for recognition of significant reserves
a.

b.
c.
d.

Allowance for doubtful accounts
For loss arising from uncollectible debt, an estimated amount of irrecoverable debt is provided as an allowancefor doubtful accounts based on the historical write-off rate for ordinary receivables, and based on therecoverability of individual cases for specified receivables such as debt with a possibility of default. Note that for
claims provable in bankruptcy, rehabilitation, etc., the estimated unrecoverable amount is directly deducted fromthe claim amount.
Provision for bonuses
For payment of employee bonuses, an allowance is provided for the portion of the total anticipated bonuses thatare attributable to the current fiscal year.
Provision for point certificates
As preparation for utilization of points granted to users, the amount that is expected to be utilized in the future isprovided.
Provision for share-based compensation
A provision has been made for the amount of expected monetary claims resulting from contribution in kind in theform of share issuances to Group employees and others, based on Regulations for Granting Incentives.

4) Standards for recognition of revenues and expenses
In the Marketplace domain, the Group assumes a performance obligation to provide services such as the Mercari
marketplace, which is a platform for buying and selling items, to users. Since this performance obligation is satisfied
at the point of time when delivery of goods and ratings between the seller and the buyer are completed, selling fees
calculated by multiplying the transaction price by a certain rate are recognized as revenue at the said point. In
addition, in delivery services accompanying Marketplace’s services, the Group assumes a performance obligation
to deliver goods overseas and to entrust delivery of goods to delivery firms as an agency in Japan. Because thisperformance obligation is satisfied at the point of time when delivery of goods between the seller and the buyer iscompleted, the total amount of delivery charges or the net amount after deduction of delivery charges paid to delivery
firms according to the delivery size is recognized as revenue at the said point. Transaction consideration is received
within one year after performance obligations are satisfied, and does not contain a significant financial component.
In the Fintech domain, the Group principally provides users with a payment service and a credit service. As theprincipal revenue from the payment service is received as consideration for providing a means of payment fortransactions between Merpay users and merchants, and the satisfaction of the performance obligation for this isdeemed to occur at the time the payment is determined to be settled, revenue is recognized at that time. The principal
revenue from the credit service is received as consideration for providing specified amounts of payment as thesystem for advanced payments offered to Merpay users, and this consideration is interest in nature. Accordingly,
such revenue is recognized in accordance with “Accounting Standard for Financial Instruments” (ASBJ Statement
No. 10, July 4, 2019).
5) Principal method for hedge accountinga.

Method for hedge accounting
Deferred hedge accountingb.

c.

Hedging instruments and hedged items
Hedging instruments

Forward exchange contracts

Hedged items

Foreign currency-denominated payables

Hedging policy
The Group uses forward exchange contracts for foreign currency-denominated payables and hedges the risk offluctuations in foreign exchange rates based on the Group’s management rules, aiming to avoid the risk offluctuations in foreign exchange rates in foreign currency-denominated transactions.

d.

Method for assessing the hedge effectiveness
The Group compares the cumulative market fluctuations, or changes in cash flows, of the hedged items and hedging
instruments, and assesses the hedge effectiveness based on the ratio of those fluctuations.

6) Other significant matters for the preparation of consolidated financial statements
Standards for translation of foreign currency-denominated assets and liabilities into Japanese yen
Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the spot
exchange rate on the closing date of the accounting period, with the difference arising from translation being treatedas profit or loss.
Assets and liabilities of foreign subsidiaries are translated into Japanese yen at the spot exchange rate as of theclosing date of the consolidated accounting period. Revenues and expenses of foreign subsidiaries are translated into
Japanese yen at the average rate of exchange during the fiscal year. Differences arising from these translations areincluded in foreign currency translation adjustments under the net assets section.
- 37 -

(Notes on accounting estimates)
1. Allowance for doubtful accounts(1) Amount recorded in the consolidated financial statements for the current fiscal year
Allowance for doubtful accounts ¥5,455 million(2) Information on details of significant accounting estimates for identified items
1) Calculation method
For Merpay, Inc., a consolidated subsidiary of the Company, other receivable, etc. is classified into ordinary
receivables (normal receivables and managed receivables) and claims provable in bankruptcy, rehabilitation, etc.,
depending on credit risk based on the payment status of debtors and other factors.
a.

Ordinary receivables (normal receivables and managed receivables)
For normal receivables, estimated loan losses are calculated by type of receivables, using the historical collection
rate.
Managed receivables for which payment has been delayed for more than a certain period are classified depending
on credit risk by type of receivables based on the delay period of debtors, etc., and the estimated loan losses arecalculated using the historical collection rate in each category.

b.

Claims provable in bankruptcy, rehabilitation, etc.
The remaining amount derived by deducting the expected amount of collection, which is estimated for individual
claims, from the remaining balance of claims is considered as estimated loan losses.

2) Key assumptions
Changes in economic conditions, etc. as at the end of the fiscal year could affect debtors directly or indirectly. A
judgment on whether or not the historical write-off rate needs to be adjusted is made to reflect these changes inassessment of other receivable, etc.
3) Impact on the consolidated financial statements for the next fiscal year
Although allowance for doubtful accounts as of the end of the current fiscal year is the best estimated at this point
in time, there is uncertainty in assumptions used for the estimation, and if credit risk of debtors changes due tochanges in economic conditions, etc., the amounts of allowance for doubtful accounts and provision of allowancefor doubtful accounts recognized in the consolidated financial statements for the next fiscal year may be affectedsignificantly.
(Changes in presentation)“Gain on reversal of stock acquisition rights,” which was included in "Extraordinary income" under "Other" in the results for the
fiscal year ended June 30, 2022, has been recorded independently in the results for the Period. This change is due to “Gain on
reversal of stock acquisition rights” comprising more than 10% of the total of “Extraordinary income” in the results for the fiscal
year ended June 30, 2023.
Consolidated financial statements for the fiscal year ended June 30, 2022, have been rearranged in order to adopt this change to
how the information is presented. As a result, the amount of 1 million JPY, recorded in “Extraordinary income” under “Other,” inthe fiscal year ended June 30, 2022, has been rearranged for the Period as 1 million JPY in “Extraordinary income” under “Gainon reversal of stock acquisition rights.”(Additional information)
The Company and some domestic consolidated subsidiaries transitioned from the non-consolidated taxation system to the grouptax sharing system from the current fiscal year. Accordingly, accounting treatment and disclosure of corporation tax, local
corporation tax, and tax effect accounting are conducted pursuant to “Practical Solution on the Accounting and Disclosure Under
the Group Tax Sharing System” (ASBJ Practical Issues Task Force Report No. 42, August 12, 2021).

- 38 -

(Consolidated balance sheets)*1. Accumulated depreciation of property and equipment as of June 30, 2022, and June 30, 2023, is as follows.
(Millions of yen)
June 30, 2022
Accumulated depreciation of property andequipment

June 30, 2023
2,529

2,067

*2. Liquidation of receivables
Of funds raised through the liquidation of receivables, those which were accounted for as financial transactions as of June30, 2022, and June 30, 2023, are as follows.
(Millions of yen)
June 30, 2022
Short-term borrowings
Long-term borrowings

June 30, 2023
54,154–55,954
23,166

Receivables for the year ended June 30, 2023, contributed to trust to show the source of financing derived from theaforementioned liquidation of receivables are as follows.
(Millions of yen)
June 30, 2022
Other receivable

June 30, 2023
66,736

105,504*3. Balance of contract liabilities from contracts with customers
Contract liabilities from contracts with customers are included in “other current liabilities.” The amount of contract liabilities
is stated in “Notes (Revenue recognition) (3) 1) Balance of contract liabilities” in the consolidated financial statements.

- 39 -

(Consolidated statements of income)*1. Revenue from contracts with customers
Net sales is presented without separating revenues arising from contracts with customers and other revenues. The amount ofrevenue from contracts with customers is stated in “Notes (Segment information) 3. Information regarding amounts of items
for each reportable segment such as net sales, profit or loss, assets, and liabilities and information on disaggregation ofrevenue” in the consolidated financial statements.
*2. Major components of selling, general, and administrative expenses for the years ended June 30, 2022, and June 30, 2023,
are as follows.
(Millions of yen)
June 30, 2022
Salaries and wages
Commission fees
Advertising expenses
Provision of allowance for doubtful accounts
Provision for bonuses
Provision for point certificates
Provision for share-based compensation
Retirement benefit expenses

June 30, 2023
10,25722,25937,712
5,991
692
359
56
70

12,29823,18432,023
5,745
1,096
1,036
135
200

*3. Total amount of research and development expenses included in general and administrative expenses and manufacturingcosts for the years ended June 30, 2022, and June 30, 2023, are as follows.
(Millions of yen)
June 30, 2022

June 30, 2023
398

369

*4. Loss on cancellation of leases
This is due to the recording of the amount equivalent to the loss on cancellation of leases in association with leasecancellations of leased assets.
*5. Cancellation penalty
This is due to the recording of the amount equivalent to the cancellation penalty in association with a decision to relinquish
some floors of the Company’s head office building.

- 40 -

(Consolidated statements of comprehensive income)* Amount of reclassification adjustments and tax effects of other comprehensive income for the years ended June 30, 2022,
and June 30, 2023
(Millions of yen)
June 30, 2022
Valuation difference on available-for-salesecurities:
Amount arising during the period
Reclassification adjustments
Before tax effect adjustments
Tax effect adjustments
Valuation difference on available-forsale securities
Deferred gains or losses on hedges:
Amount arising during the period
Reclassification adjustments
Before tax effect adjustments
Tax effect adjustments
Deferred gains or losses on hedges
Foreign currency translation adjustments:
Amount arising during the period
Reclassification adjustments
Before tax effect adjustments
Tax effect adjustments
Foreign currency translation
adjustments
Total other comprehensive income- 41 -

June 30, 2023

–
–
–
–

(0)
–
(0)
–

–

(0)

–
–
–
–
–

326
(105)
220
(60)
160

1,308
–
1,308
–

747
–
747
–

1,308

747

1,308

908

(Consolidated statements of changes in equity)
For the year ended June 30, 2022
1. Class and total number of shares issued and treasury stock
Balance at the
Increase during theClass
beginning of the period
period(shares)(shares)

Decrease during
the period(shares)

Balance at the endof the period(shares)

Shares issued
Common stock

157,807,344

3,006,623–

160,813,967

2

101

–

103

Treasury stock
Common stock(Notes) 1. The total number of shares of common stock issued increased by 39,724 shares as of August 15, 2021, due to issuance of
new shares for the Restricted Stock Unit (RSU) Incentive Plan pursuant to the resolutions at the Board of Directors
meetings held on June 28, 2021, and July 1, 2021.
2. The total number of shares of common stock issued increased by 56,590 shares as of November 15, 2021, due to issuanceof new shares for the Restricted Stock Unit (RSU) Incentive Plan pursuant to the resolution at the Board of Directors
meeting held on October 19, 2021.
3. The total number of shares of common stock issued increased by 49,075 shares as of February 15, 2022, due to issuanceof new shares for the Restricted Stock Unit (RSU) Incentive Plan pursuant to the resolution at the Board of Directors
meeting held on January 18, 2022.
4. The total number of shares of common stock issued increased by 52,839 shares as of May 15, 2022, due to issuance of
new shares for the Restricted Stock Unit (RSU) Incentive Plan pursuant to the resolution at the Board of Directors meeting
held on April 1, 2022.
5. The total number of shares of common stock issued increased by 2,808,395 shares in conjunction with the exercise ofstock acquisition rights.
6. The increase of 101 shares in treasury stock of common stock was due to requests for the purchase of shares of less than
one unit.
2. Dividends(1) Dividends paid
Not applicable.
(2) Dividend payments for which the record date falls in the year ended June 30, 2022, and the effective date falls in
the year ended June 30, 2023
Not applicable.
Category

Submitting
company(parent
company)

3. Stock acquisition rights
Breakdown of stockacquisition rights

Stock acquisition rights as
stock options
Total

Class ofshares to
be issued
upon
exercise ofstock
acquisitionrights–Number of shares to be issued upon exercise of stockacquisition rights (Shares)
Beginning
Increase
Decrease
End of theof theduring theduring theperiodperiodperiodperiod–- 42 -

Balance atthe end of
the period(Millionsof yen)

–

–

–

–

926

–

–

–

–

926

For the year ended June 30, 2023
1. Class and total number of shares issued and treasury stock
Balance at the
Increase during theClass
beginning of the period
period(shares)(shares)

Decrease during
the period(shares)

Balance at the endof the period(shares)

Shares issued
Common stock

160,813,967

1,651,631–

162,465,598

103

–

–

103

Treasury stock
Common stock(Notes) 1. The total number of shares of common stock issued increased by 52,302 shares as of August 15, 2022, due to issuance of
new shares for the Restricted Stock Unit (RSU) Incentive Plan pursuant to the resolution at the Board of Directors meeting
held on July 1, 2022.
2. The total number of shares of common stock issued increased by 91,084 shares as of November 15, 2022, due to issuanceof new shares for the Restricted Stock Unit (RSU) Incentive Plan pursuant to the resolution at the Board of Directors
meeting held on October 21, 2022.
3. The total number of shares of common stock issued increased by 115,327 shares as of February 15, 2023, due to issuanceof new shares for the Restricted Stock Unit (RSU) Incentive Plan pursuant to the resolution at the Board of Directors
meeting held on January 20, 2023.
4. The total number of shares of common stock issued increased by 122,806 shares as of May 15, 2023, due to issuance of
new shares for the Restricted Stock Unit (RSU) Incentive Plan pursuant to the resolution at the Board of Directors meeting
held on April 4, 2023.
5. The total number of shares of common stock issued increased by 1,270,112 shares in conjunction with the exercise ofstock acquisition rights.
2. Dividends(1) Dividends paid
Not applicable.
(2) Dividend payments for which the record date falls in the year ended June 30, 2023, and the effective date falls in
the year ending June 30, 2024
Not applicable.
Category

Submitting
company(parent
company)

3. Stock acquisition rights
Breakdown of stockacquisition rights

Stock acquisition rights as
stock options
Total

Class ofshares to
be issued
upon
exercise ofstock
acquisitionrights–Number of shares to be issued upon exercise of stockacquisition rights (Shares)
Beginning
Increase
Decrease
End of theof theduring theduring theperiodperiodperiodperiod–- 43 -

Balance atthe end of
the period(Millionsof yen)

–

–

–

–

1,092

–

–

–

–

1,092

(Consolidated statements of cash flows)
1. Reconciliation between year-end balance of cash and cash equivalents and amount of the line item presented in the
consolidated balance sheets for the years ended June 30, 2022, and June 30, 2023
(Millions of yen)
June 30, 2022
Cash on hand and in banks
Securities
Cash and cash equivalents

June 30, 2023
211,406–
211,406

196,271
5,775
202,047

2. Material transactions not requiring use of cash or cash equivalents for the years ended June 30, 2022, and June 30, 2023
Assets and liabilities related to finance lease transactions(Millions of yen)
June 30, 2022

June 30, 2023

Assets related to finance lease transactions
840–
Liabilities related to finance lease transactions
924–(Note) Amounts of assets and liabilities related to finance lease transactions for the year ended June 30, 2023, are omitted due to their
low materiality.

- 44 -

(Lease transactions)
As lessee
1. Finance lease transactions
Finance lease transactions that do not transfer ownership(1) Components of leased assets
Property and equipment
Mainly electronic equipment (tools, furniture, and fixtures) for the shipping services of the Company.
(2) Accounting method for depreciation of leased assets
The straight line method is applied assuming the lease period as the useful life without residual value.
2. Operating lease transactions
Future minimum lease payments under non-cancellable operating lease transactions as of June 30, 2022, and June 30,
2023(Millions of yen)
June 30, 2022

June 30, 2023

Due within one year

2,006

1,630

Due after more than one year
Total

3,501
5,507

1,621
3,252

- 45 -

(Notes to financial instruments)
1. Status of financial instruments(1) Company policy for financial instruments
The Group invests one-time surplus funds in short-term deposits and highly secure financial assets, and mainly uses its
own capital, borrowings from financial institutions, issuance of bonds, and liquidation of receivables for its financing
needs. Derivatives are used to avoid risks as described below, and the Group has a policy of not engaging in speculativetransactions.
(2) Nature and extent of risks arising from financial instruments and risk management system
Trade accounts receivable and other receivable, which constitute trade receivables, are exposed to credit risks of customers
and business partners. The Group mitigates such risks by monitoring and managing the payment terms and outstandingbalances.
Deposits paid are exposed to credit risks of business partners. The Group mitigates such risks by monitoring and managing
the outstanding balances.
The Group only holds securities with high credit ratings in securities according to the Fund Management Policy andbelieves that the credit risk of these securities is remote.
The holding status of investment securities is reviewed on an ongoing basis by regularly monitoring the financial positionand other aspects of issuers.
Lease deposits are exposed to credit risks of lessors. The Group determines the credit status of lessors when entering lease
contracts.
Guarantee deposits are primarily deposits paid to the Legal Affairs Bureau under the Payment Services Act, and the Group
believes the credit risk of these deposits is remote.
Borrowings with variable interest rates are vulnerable to risk of interest rate fluctuations.
Trade payables, borrowings, and convertible-bond-type bonds with stock acquisition rights are vulnerable to liquidity risk.
The Group manages liquidity risk mainly by checking the cash flow on a timely basis.
Derivative transactions are mainly forward exchange contracts used as hedging instruments to avoid the risk of fluctuations
in foreign exchange rates in foreign currency-denominated operating transactions.
(3) Supplementary information on fair values of financial instruments
Fair values of financial instruments are based on the quoted price in active markets. If a quoted price is not available, fairvalues are based on prices that are reasonably estimated. Since variable factors are reflected in estimating the fair value,
different assumptions and factors could result in a different fair value.
2. Fair values of financial instruments
Carrying amounts, fair values, and the differences between them as of June 30, 2023, are as follows.

Trade accounts receivable
Other receivable
Allowance for doubtful
accounts (*2)

Carrying amounts
6,374
115,714

Fair values(Millions of yen)
Differences(4,651)
117,437
1,407
118,844

135,445
1,344
136,789

18,007(62)
17,944Long-term borrowings (*4)

52,41052,410–Convertible-bond-type bonds
with stock acquisition rights

50,00038,951(11,048)

102,410
196

91,361
196(11,048)–

Lease deposits
Total assets

Total liabilities
Derivative transactions(*1) Because cash on hand and in banks, securities, deposits paid, short-term borrowings, accounts payable, accrued
expenses, income taxes payable, and deposits received are cash and settled in a short period of time, and thus their fairvalues approximate the carrying amounts, the information is omitted.
(*2) Allowance for doubtful accounts for trade accounts receivable and other receivable have been deducted.
- 46 -

(*3)

(*4)
(*5)
(*6)

Because guarantee deposits are primarily deposits paid to the Legal Affairs Bureau as security deposits under the
Payment Services Act, the credit risk of these deposits is remote. In addition, because guarantee deposits are financial
assets that protect deposits received from users and settled in a short period of time, and thus their fair values
approximate the carrying amounts, the information is omitted.
Current portion of long-term borrowings is included in long-term borrowings.
Net receivables and payables arising from derivative transactions are presented on a gross basis, and values for items
that are a net payable after totaling of receivables and payables are shown in parentheses.
Carrying amounts of shares, etc. without market prices are as follows.
(Millions of yen)
Carrying amounts
Investment securities

78

3. Breakdown by level of fair values of financial instruments
Fair values of financial instruments are classified into the following three levels in accordance with observability andsignificance of inputs for fair value measurement.
Level 1 fair value: Fair values determined using quoted prices that are formed in an active market for the asset or liability
whose fair values are being measured, of observable inputs for fair value measurement
Level 2 fair value: Fair values determined using inputs for fair value measurement other than Level 1 inputs, of observable
inputs for fair value measurement
Level 3 fair value: Fair values determined using unobservable inputs for fair value measurement
If multiple inputs that have significant impact on fair value measurement are used, the fair value is classified into the lowest
priority level of fair value measurement in which each input belongs.
(1) Financial instruments recorded at fair value on the consolidated balance sheet
Current fiscal year (As of June 30, 2023)(Millions of yen)
Fair value
Level 1

Level 2

Level 3

Total

–

196

–

196

Derivative transactions(2) Financial instruments other than financial instruments recorded at fair value on the consolidated balance sheet
Current fiscal year (As of June 30, 2023)(Millions of yen)
Fair value
Level 1

Level 2

Level 3

Total

Trade accounts receivable andother receivable––

135,445

135,445

Lease deposits

–

1,344

–

1,344

Long-term borrowings–

52,410–52,410Convertible-bond-type bonds withstock acquisition rights–

38,951–

38,951(Note)

Explanation of valuation techniques and inputs for fair value measurement used to measure fair values- 47 -

Trade accounts receivable and other receivable
Fair values of receivables for fixed-amount payments (receivables for which there is a fixed-amount payment commission on theprincipal) that are included in trade accounts receivable and other receivable are based on the present value of the future cash
flows based on the estimated collectable amount classified by user, discounted using the risk-free interest rate, and credit risk istaken into account on the basis of the future cash flows. The credit risk, etc. are classified as Level 3 fair value because they areunobservable. As for delinquent receivables, etc., the estimated uncollectible amount is calculated in consideration of thecollectability. Therefore, their fair values approximate the amounts calculated by deducting the write-off amounts from theamounts of receivables, and these amounts are shown as the fair values.
In addition, as for those trade accounts receivable and other receivable which are settled in a short period of time, because theirfair values approximate their carrying amounts, the fair values are based on the carrying amounts.
Lease deposits
Fair values of lease deposits are determined using the present value of the refund amount based on the agreed period, discounted
using the risk-free interest rate, and are classified as Level 2 fair value.
Long-term borrowings
In terms of long-term borrowings, those with variable interest rates are calculated based on the carrying amounts as they promptly
reflect market interest rates and their fair values approximate the carrying amounts.
Those with fixed interest rates are calculated by discounting the total amount of principal and interest at an interest rate thatwould be charged for similar new loans, and their fair values are classified as Level 2 fair value.
Convertible-bond-type bonds with stock acquisition rights
Fair values of convertible-bond-type bonds with stock acquisition rights are based on market prices. However, since they are notnecessarily traded in active markets, their fair values are classified as Level 2 fair value.
Derivative transactions
Fair values of forward exchange contracts are determined using the fair values provided by financial institutions, etc., and areclassified as Level 2 fair value.

- 48 -

(Retirement benefits)
1. Description of retirement benefit plans
Certain domestic consolidated subsidiaries of the Company have defined benefit plans in the form of lump-sum
retirement payment plans, and retirement benefit liability and retirement benefit expenses are calculated using thesimplified method. In addition, the overseas consolidated subsidiary of the Company has adopted defined contribution
pension plans.
2. Defined benefit plans(1) Reconciliation between the beginning and ending balances of retirement benefit liability for plans for which thesimplified method was applied for the years ended June 30, 2022, and June 30, 2023
(Millions of yen)
June 30, 2022
June 30, 2023
Retirement benefit liability at the beginningof the year
Retirement benefits paid
Retirement benefit expenses
Payment due to plan transfer
Retirement benefit liability at the end of the
year

92

75

(13)
(3)
–

(24)
7
(16)

75

42

(2) Reconciliation between the ending balance of retirement benefit obligation and retirement benefit liability recordedon the consolidated balance sheet as of June 30, 2022, and June 30, 2023
(Millions of yen)
June 30, 2022
June 30, 2023
Retirement benefit obligation for unfundedplans
Net retirement benefit liability and assets
recorded on the consolidated balance sheet
Retirement benefit liability
Net retirement benefit liability and assets
recorded on the consolidated balance sheet

75

42

75

42

75

42

75

42

(3) Retirement benefit expenses
Retirement benefit expenses calculated with the simplified method for the years ended June 30, 2022, and June 30,2023
Year ended June 30, 2022:¥(3) million
Year ended June 30, 2023:¥6 million
3. Defined contribution pension plans
The amounts of required contributions to defined contribution plans of the overseas consolidated subsidiary of theCompany were ¥76 million for the year ended June 30, 2022, and ¥195 million for the year ended June 30, 2023.

- 49 -

(Stock options)
1. The account and the amount of stock options charged as expenses(Millions of yen)
June 30, 2022

June 30, 2023

Cost of sales

284

248

Selling, general, and administrative expenses

969

1,022

2. Amounts recognized as profit due to forfeiture of vested stock options resulting from their non-exercise(Millions of yen)

Gain on reversal of stock acquisition rights

June 30, 2022

June 30, 2023

1

2

3. Outline and number of stock options and changes therein(1) Outline of stock options
5th Stock Option Plan

10th Stock Option PlanTitle and number of grantees

1 Director and
57 employees of the Company

92 employees of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 1,760,000 shares

Common stock: 1,007,500 shares

August 20, 2014

February 14, 2015

(Note 3)(Note 3)

Not specified

Not specified

August 21, 2016, to August 19, 2024

February 15, 2017, to August 19, 2024

11th Stock Option Plan

13th Stock Option Plan

1 Audit and Supervisory Board Member of
the Company

1 employee of the Company
7 employees of the Company’s
subsidiaries

Common stock: 50,000 shares

Common stock: 765,000 shares

February 14, 2015

June 27, 2015

(Note 2)

(Note 2)

Not specified

Not specified

Grant date
Vesting conditions
Requisite service period
Exercise period

Title and number of grantees
Number of stock options granted by stock
type (Note 1)
Grant date
Vesting conditions
Requisite service period
Exercise period

February 15, 2017, to August 19, 2024

- 50 -

June 27, 2015, to June 27, 2025

14th Stock Option Plan

15th Stock Option PlanTitle and number of grantees

105 employees of the Company

1 Audit and Supervisory Board Member of
the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 1,018,500 shares

Common stock: 25,000 shares

August 22, 2015

August 22, 2015

(Note 3)(Note 2)

Not specified

Not specified

August 23, 2017, to August 21, 2025

August 23, 2017, to August 19, 2024

18th Stock Option Plan

21st Stock Option Plan

1 Audit and Supervisory Board Memberand 152 employees of the Company

2 Directors of the Company

Common stock: 533,500 shares

Common stock: 800,000 shares

February 13, 2016

June 25, 2016

(Note 2)

(Note 3)

Not specified

Not specified

February 14, 2018, to February 12, 2026

June 26, 2018, to February 12, 2026

25th Stock Option Plan

26th Stock Option Plan

1 Audit and Supervisory Board Memberand 268 employees of the Company

12 employees of the Company

Common stock: 403,950 shares

Common stock: 240,000 shares

August 31, 2016

August 31, 2016

(Note 2)

(Note 3)

Not specified

Not specified

September 1, 2018, to August 30, 2026

September 1, 2018, to August 30, 2026

Grant date
Vesting conditions
Requisite service period
Exercise period

Title and number of grantees
Number of stock options granted by stock
type (Note 1)
Grant date
Vesting conditions
Requisite service period
Exercise period

Title and number of grantees
Number of stock options granted by stock
type (Note 1)
Grant date
Vesting conditions
Requisite service period
Exercise period- 51 -

30th Stock Option Plan

32nd Stock Option Plan

1 Audit and Supervisory Board Member
and 353 employees of the Company

5 employees of the Company’s
subsidiaries

Common stock: 323,970 shares

Common stock: 122,000 shares

February 24, 2017

February 24, 2017

(Note 2)

(Note 3)

Not specified

Not specified

February 25, 2019, to February 23, 2027

February 24, 2017, to February 24, 2027

34th Stock Option Plan

35th Stock Option Plan

2 Directors, 1 Audit and Supervisory Board
Member, 499 employees of the Company,
and 1 employee of the Company’s
subsidiary

2 Directors and 24 employees of theCompany

Common stock: 3,035,100 shares

Common stock: 1,799,000 shares

June 23, 2017

June 23, 2017

(Note 2)

(Note 3)

Not specified

Not specified

June 24, 2019, to February 23, 2027

June 24, 2019, to February 23, 2027

36th Stock Option Plan

38th Stock Option PlanTitle and number of grantees

1 Director of the Company and21 employees of the Company’s
subsidiaries

1 Audit and Supervisory Board Member
and 570 employees of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 2,136,800 shares

Common stock: 1,331,550 shares

June 23, 2017

November 29, 2017

(Note 2)

(Note 2)

Not specified

Not specified

June 23, 2017, to June 23, 2027

November 30, 2019, to November 28,
2027

39th Stock Option Plan

40th Stock Option PlanTitle and number of grantees

14 employees of the Company

2 Directors of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 42,500 shares

Common stock: 265,522 shares

March 13, 2018

October 12, 2020

(Note 2)

(Note 2)

Not specified

Not specified

March 14, 2020, to March 12, 2028

September 25, 2023, to September 24,
2030

41st Stock Option Plan

42nd Stock Option Plan

6 Senior Vice Presidents of the Company

134 employees of the Company

Title and number of grantees
Number of stock options granted by stock
type (Note 1)
Grant date
Vesting conditions
Requisite service period
Exercise period

Title and number of grantees
Number of stock options granted by stock
type (Note 1)
Grant date
Vesting conditions
Requisite service period
Exercise period

Grant date
Vesting conditions
Requisite service period
Exercise period

Grant date
Vesting conditions
Requisite service period
Exercise period

Title and number of grantees- 52 -

Number of stock options granted by stock
type (Note 1)

Common stock: 295,637 shares

Common stock: 93,123 shares

October 12, 2020

March 25, 2021

(Note 2)

(Note 3)

Not specified

Not specified

June 1, 2022, to December 31, 2025

September 1, 2021, to March 31, 2023

43rd Stock Option Plan

44th Stock Option PlanTitle and number of grantees

1 employee of the Company

49 employees of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 13,858 shares

Common stock: 29,142 shares

March 25, 2021

September 30, 2021

(Note 3)(Note 3)

Not specified

Not specified

September 1, 2021, to September 30, 2023

March 1, 2022, to September 30, 2023

45th Stock Option Plan

46th Stock Option PlanTitle and number of grantees

17 employees of the Company

12 employees of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 67,400 shares

Common stock: 56,176 shares

September 30, 2021

September 30, 2021

(Note 2)

(Note 2)

Not specified

Not specified

March 1, 2022, to September 30, 2024

March 1, 2022, to September 30, 2024

47th Stock Option Plan

48th Stock Option PlanTitle and number of grantees

46 employees of the Company

3 employees of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 40,439 shares

Common stock: 10,830 shares

March 31, 2022

March 31, 2022

(Note 2)

(Note 2)

Not specified

Not specified

September 1, 2022, to March 31, 2024

September 1, 2022, to March 31, 2025

Grant date
Vesting conditions
Requisite service period
Exercise period

Grant date
Vesting conditions
Requisite service period
Exercise period

Grant date
Vesting conditions
Requisite service period
Exercise period

Grant date
Vesting conditions
Requisite service period
Exercise period- 53 -

49th Stock Option Plan

50th Stock Option PlanTitle and number of grantees

1 employee of the Company

108 employees of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 3,530 shares

Common stock: 80,754 shares

March 31, 2022

March 31, 2022

(Note 2)

(Note 2)

Not specified

Not specified

September 1, 2022, to March 31, 2025

September 1, 2022, to March 31, 2024

51st Stock Option Plan

52nd Stock Option PlanTitle and number of grantees

38 employees of the Company

4 employees of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 58,285 shares

Common stock: 31,510 shares

September 30, 2022

September 30, 2022

(Note 3)(Note 2)

Not specified

Not specified

March 1, 2023, to September 30, 2024

March 1, 2023, to September 30, 2025

53rd Stock Option Plan

54th Stock Option PlanTitle and number of grantees

16 employees of the Company

11 employees of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 79,397 shares

Common stock: 65,160 shares

September 30, 2022

September 30, 2022

(Note 2)

(Note 2)

Not specified

Not specified

March 1, 2023, to September 30, 2025

March 1, 2023, to September 30, 2025

55th Stock Option Plan

56th Stock Option PlanTitle and number of grantees

42 employees of the Company

214 employees of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 45,404 shares

Common stock: 267,679 shares

September 30, 2022

April 30, 2023

(Note 3)(Note 2)

Not specified

Not specified

March 1, 2023, to September 30, 2024

September 1, 2023, to March 31, 2026

Grant date
Vesting conditions
Requisite service period
Exercise period

Grant date
Vesting conditions
Requisite service period
Exercise period

Grant date
Vesting conditions
Requisite service period
Exercise period

Grant date
Vesting conditions
Requisite service period
Exercise period- 54 -

57th Stock Option PlanTitle and number of grantees

3 employees of the Company

Number of stock options granted by stock
type (Note 1)

Common stock: 45,269 shares

Grant date
Vesting conditions
Requisite service period
Exercise period(Notes)April 30, 2023
(Note 2)
Not specified
September 1, 2023, to March 31, 2026

1. The number of stock options is translated into the number of shares. In addition, the number of shares reflects the 10-for1 stock split dated October 20, 2017.
2. Presented under the conditions for exercising stock acquisition rights in “IV. Status of Submitting Company, 1. Status ofshares, etc., (2) Status of stock acquisition rights”
3. The conditions for exercising the stock acquisition rights are as follows:(1) Concerning the stock acquisition rights to be exercised or their right holders, the stock acquisition rights may be
exercised as long as the circumstances for the Company’s acquisition of the stock acquisition rights provided in the
Guidance for Issuing Stock Acquisition Rights have not occurred. The stock acquisition rights may not be exercised
if the aforementioned circumstances have occurred, unless otherwise permitted by the Company in exceptional
circumstances.
(2) The exercise of the stock acquisition rights requires that the right holder is alive, and in cases where the right holder
is deceased, the stock acquisition rights will not be succeeded and can no longer be exercised, unless their inheritanceis otherwise permitted by the Company in exceptional circumstances.
(3) Other conditions concerning the exercise of the stock acquisition rights shall be governed by agreements on theallotment of the stock acquisition rights entered into between the Company and a person who has received theallotment of the stock acquisition rights based on the resolution of the Board of Directors where the issuance of thestock acquisition rights was decided.

- 55 -

(2) Number of stock options and changes therein
The following tables cover stock options that existed during the year ended June 30, 2023. The number of stock options
is translated into the number of shares.
1) Number of stock options
5th Stock Option
10th Stock Option 11th Stock Option 13th Stock Option
Plan
Plan
Plan
Plan
Non-vested(shares)

Outstanding as of June 30, 2022

–

–

–

–

Granted

–

–

–

–

Forfeited

–

–

–

–

Vested––––Outstanding as of June 30, 2023

–

–

–

–

2,000

1,000

34,000

3,860

–

–

–

–

Exercised

2,000

1,000

10,000–Forfeited

–

–

–

–

Balance of options not exercised––

24,0003,860

Vested(shares)

Outstanding as of June 30, 2022
Vested14th Stock Option
Plan
Non-vested

15th Stock Option
Plan

18th Stock OptionPlan

21st Stock OptionPlan(shares)

Outstanding as of June 30, 2022

–

–

–

–

Granted

–

–

–

–

Forfeited

–

–

–

–

Vested––––Outstanding as of June 30, 2023

–

–

–

–

2,000

25,0007,600

195,000

–

–

–

–

Exercised

2,000

–

1,600

195,000

Forfeited

–

–

–

–

Balance of options not exercised–

25,0006,000–

VestedOutstanding as of June 30, 2022
Vested(shares)- 56 -

25th Stock Option
Plan
Non-vested

26th Stock OptionPlan

30th Stock OptionPlan

32nd Stock
Option Plan

(shares)

Outstanding as of June 30, 2022

–

–

–

–

Granted

–

–

–

–

Forfeited

–

–

–

–

Vested––––Outstanding as of June 30, 2023

–

–

–

–

6,650

8,680

9,050

11,250––––Exercised

1,650

8,680

3,300

11,250Forfeited

–

–

400

–

5,000

–

5,350

–

Vested(shares)

Outstanding as of June 30, 2022
VestedBalance of options not exercised

34th Stock Option
Plan
Non-vested

35th Stock OptionPlan

36th Stock Option
Plan

38th Stock OptionPlan(shares)

Outstanding as of June 30, 2022

–

–

–

–

Granted

–

–

–

–

Forfeited

–

–

–

–

Vested––––Outstanding as of June 30, 2023

–

–

–

–

1,854,890

73,5209,240

517,650

–

–

–

–

Exercised

500,890

72,0202,070

200,200

Forfeited

500

1,500

–

15,0501,353,500

–

7,170

302,400

VestedOutstanding as of June 30, 2022
VestedBalance of options not exercised(shares)- 57 -

39th Stock Option
Plan
Non-vested

40th Stock OptionPlan

41st Stock OptionPlan

42nd Stock
Option Plan

(shares)

Outstanding as of June 30, 2022–

265,522

189,868

23,882Granted

–

–

–

–

Forfeited

–

–

–

2,495

Vested––63,286

21,387

Outstanding as of June 30, 2023–

265,522

126,582

–

9,500

–

–

–

Vested––63,286

21,387

Exercised––63,286

21,191

Forfeited

–

–

–

196

9,500

–

–

–

Vested(shares)

Outstanding as of June 30, 2022

Balance of options not exercised

43rd Stock Option
Plan
Non-vested

44th Stock OptionPlan

45th Stock Option
Plan

46th Stock OptionPlan(shares)

Outstanding as of June 30, 2022

11,08718,06442,37033,445Granted

–

–

–

–

Forfeited

5,544

6,943

10,5696,694

Vested5,543

11,121

20,697

13,360––

11,104

13,391––––

Vested5,543

11,121

20,697

13,360Exercised

5,543

11,121

20,697

13,360Forfeited

–

–

–

–

Balance of options not exercised

–

–

–

–

Outstanding as of June 30, 2023
VestedOutstanding as of June 30, 2022

(shares)- 58 -

47th Stock Option
Plan
Non-vested

48th Stock OptionPlan

49th Stock OptionPlan

50th Stock OptionPlan(shares)

Outstanding as of June 30, 2022

40,43910,8303,530

77,784

Granted

–

–

–

–

Forfeited

14,401––

42,719Vested25,551

3,608

1,176

33,830

487

7,222

2,354

1,235

–

–

–

–

Vested25,551

3,608

1,176

33,830Exercised

25,338

3,608

1,176

33,431

Forfeited

213

–

–

399

–

–

–

–

51st Stock OptionPlan

52nd Stock
Option Plan

53rd Stock Option
Plan

–

–

–

–

Granted58,28531,51079,397

65,160Forfeited

39,796

7,337

17,6672,715

Vested18,4897,334

13,13010,860–16,83948,60051,585––––Vested18,4897,334

13,13010,860Exercised18,4897,334

13,13010,860Forfeited

–

–

–

–

Balance of options not exercised

–

–

–

–

Outstanding as of June 30, 2023
Vested(shares)

Outstanding as of June 30, 2022

Balance of options not exercised

Non-vested(shares)

Outstanding as of June 30, 2022

Outstanding as of June 30, 2023
VestedOutstanding as of June 30, 2022

54th Stock OptionPlan(shares)- 59 -

55th Stock Option
Plan
Non-vested

56th Stock OptionPlan

57th Stock OptionPlan(shares)

Outstanding as of June 30, 2022

–

–

–

Granted

45,404

267,679

45,269Forfeited

35,516

9,639

30,180

Vested

9,888

–

–

–

258,040

15,089–––Vested

9,888

–

–

Exercised

9,888

–

–

Forfeited–––

Balance of options not exercised

–

–

–

Outstanding as of June 30, 2023
Vested(shares)

Outstanding as of June 30, 2022

(Note)The number of stock options is translated into the number of shares. In addition, the number of shares reflects the 10-for-1
stock split dated October 20, 2017.

- 60 -

2) Per-share price information
5th Stock Option
Plan
Exercise price10th Stock OptionPlan

11th Stock OptionPlan

13th Stock Option
Plan

(Yen)

20

20

20

20

Average stock price upon exercise (Yen)

2,694

2,694

2,814

–

–

–

–

–

Per-share fair value at grant date(Yen)

14th Stock Option
Plan
Exercise price15th Stock Option
Plan

18th Stock OptionPlan

21st Stock Option
Plan

(Yen)

20

20

102

102

Average stock price upon exercise (Yen)

2,817

–

2,817

2,814

–

–

–

–

30th Stock OptionPlan

32nd Stock
Option Plan

Per-share fair value at grant date(Yen)

25th Stock Option
Plan
Exercise price26th Stock Option
Plan

(Yen)

332

332

353

353

Average stock price upon exercise (Yen)

2,371

2,782

2,396

3,026

–

–

–

–

Per-share fair value at grant date(Yen)

34th Stock Option
Plan
Exercise price35th Stock OptionPlan

36th Stock Option
Plan

38th Stock Option
Plan

(Yen)

353

353

353

3,000

Average stock price upon exercise (Yen)

3,154

2,581

2,877

3,212

–

–

–

–

Per-share fair value at grant date(Yen)

39th Stock Option
Plan
Exercise price40th Stock OptionPlan

41st Stock OptionPlan

42nd Stock
Option Plan

(Yen)

3,000

1

1

1

Average stock price upon exercise (Yen)

–

–

3,013

2,274

Per-share fair value at grant date

–

5,819

5,819

5,079

(Yen)

43rd Stock Option
Plan
Exercise price44th Stock OptionPlan

45th Stock Option
Plan

46th Stock Option
Plan

(Yen)

1

1

1

1

Average stock price upon exercise (Yen)

2,175

2,241

2,259

2,280

Per-share fair value at grant date

5,079

6,159

6,159

6,159

(Yen)

- 61 -

47th Stock Option
Plan
Exercise price48th Stock OptionPlan

49th Stock OptionPlan

50th Stock Option
Plan

(Yen)

1

1

1

1

Average stock price upon exercise (Yen)

2,276

2,280

2,280

2,273

Per-share fair value at grant date

3,224

3,224

3,224

3,224

51st Stock OptionPlan

52nd Stock
Option Plan

(Yen)

1

1

1

1

Average stock price upon exercise (Yen)

2,386

2,386

2,386

2,386

Per-share fair value at grant date

1,933

1,933

1,933

1,933

Exercise price

(Yen)

(Yen)

55th Stock Option
Plan
Exercise price56th Stock Option
Plan

53rd Stock OptionPlan

57th Stock Option
Plan

(Yen)

1

1

1

Average stock price upon exercise (Yen)

2,386

–

–

Per-share fair value at grant date

1,933

2,317

2,317

(Note)(Yen)

54th Stock OptionPlan

The number of shares reflects the 10-for-1 stock split dated October 20, 2017.
4. Method for estimating the per-share fair value of stock options granted during the year ended June 30, 2023
The method of estimating the grant-date per-share fair value of stock options is calculated using the stock price of theCompany’s stock on the grant date, as this value is deemed to approximate that stock price.
5. Method for estimating the number of stock options vested
Because it is difficult to reasonably estimate the number of options that will expire in the future, the number of stock
options vested only reflects the number of options that have actually been forfeited.
6. Aggregate intrinsic value as of June 30, 2023, and aggregate intrinsic value on the dates of exercise of stock options
exercised during the year ended June 30, 2023, when estimating the per-share fair value of stock options by using the
intrinsic value(1) Aggregate intrinsic value as of June 30, 2023: ¥4,429 million(2) Aggregate intrinsic value on the dates of exercise of stock options exercised during the year ended June 30, 2023:¥2,247 million- 62 -(Tax effect accounting)
1. Major components of deferred tax assets and deferred tax liabilities(Millions of yen)
As of June 30, 2022
Deferred tax assets
Net operating loss carryforwards (Note)
Loss on devaluation of investment securities
Accrued enterprise tax
Depreciation and amortization
Provision for bonuses
Allowance for doubtful accounts
Accrued expenses
Provision for point certificates
Retirement benefit liability
Deferred tax credit
Stock acquisition rights
Other
Subtotal deferred tax assets
Valuation allowance for net operating loss
carryforwards (Note)
Valuation allowance for the sum of deductible
temporary differences
Valuation allowance
Total deferred tax assets
Offset with deferred tax liabilities
Net deferred tax assets

As of June 30, 2023

28,129
183
148
1,489
480
3,906
725
120
23
737
262
656
36,86328,210
263
464
2,801
609
5,794
1,020
336
12
985
330
302
41,129(27,265)(27,350)(6,181)(5,916)(33,446)
3,417
–
3,417

(33,266)
7,862
(60)
7,802

Deferred tax liabilities
Trademark right
(140)
(123)
Deferred gains or losses on hedges
–
(60)
Other
(22)
(14)
Total deferred tax liabilities
(162)
(198)
Offset with deferred tax assets–
60
Net deferred tax liabilities
(162)
(138)
(Note) The amounts of net operating loss carryforwards and related deferred tax assets by carryforward expirationdate- 63 -

As of June 30, 2022
(Millions of yen)
Due after one Due after two Due after Due after four
Due after
Due within one year andyears andthree years
years andmore than
Total
year
before two before three and before
before five
five years
years
years
four years
years
Net operating loss
–
–
–
–
–
28,12928,129carryforwards (*1)
Valuation–––––(27,265)(27,265)
allowance
Deferred tax
–
–
–
–
–
864
(*2) 864
assets(*1)
Net operating loss carryforwards represent the amount multiplied by the effective statutory tax rate.
(*2)
As a result of taking into account estimated taxable income based on future earning power of each company with
net operating loss carryforwards, it has been determined that deferred tax assets related to net operating loss
carryforwards are recoverable.
As of June 30, 2023
(Millions of yen)
Due after one Due after two Due after Due after four
Due after
Due within one year andyears andthree years
years andmore than
Total
year
before two before three and before
before five
five years
years
years
four years
years
Net operating loss
–
–
–
–
–
28,21028,210carryforwards (*1)
Valuation–––––(27,350)(27,350)
allowance
Deferred tax
–
–
–
–
–
859
(*2) 859
assets(*1)
Net operating loss carryforwards represent the amount multiplied by the effective statutory tax rate.
(*2)
As a result of taking into account estimated taxable income based on future earning power of each company with
net operating loss carryforwards, it has been determined that deferred tax assets related to net operating loss
carryforwards are recoverable.
2. Reconciliation between the effective statutory tax rate and the actual effective tax rate after the application of tax effectaccounting when there is a major difference between them(%)
As of June 30, 2022

As of June 30, 2023

Effective statutory tax rate–
30.6
(Adjustments)
Change in valuation allowance–(6.0)
Tax credit
–
(2.4)
Other
–
(1.0)
Actual effective tax rate after the application of tax–
21.2
effect accounting(Note)The information as of June 30, 2022, is omitted because a net loss before income taxes wasrecorded.
3. Accounting treatment and disclosure of corporate tax, local tax, and tax effect accounting
The Company and certain domestic consolidated subsidiaries have applied the group tax sharing system from the year
ended June 30, 2023. In addition, the accounting treatment and disclosure of corporate tax, local tax, and tax effectaccounting are based on “Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System”(ASBJ Practical Issues Task Force Report No. 42, August 12, 2021).
(Asset retirement obligations)
Asset retirement obligations for the years ended June 30, 2022, and June 30, 2023, are omitted due to their low
materiality.

- 64 -

(Revenue recognition)(1) Information on disaggregation of revenue from contracts with customers
Information on disaggregation of revenue from contracts with customers is stated in “Notes (Segment information) 3.
Information regarding amounts of items for each reportable segment such as net sales, profit or loss, assets, andliabilities and information on disaggregation of revenue.”(2) Information that forms a basis for understanding revenue from contracts with customers
The information is provided in “(4) Standards for recognition of significant revenues and expenses” under “4.
Accounting policies” of “Notes on basis of preparation of consolidated financial statements.”(3) Information on the relation between satisfaction of performance obligations based on contracts with customers andcash flows arising from the contracts, and amount and timing of revenue that is expected to be recognized in and after
the following fiscal year from contracts with customers that existed as of June 30, 2023
1) Balance of contract liabilities
For the year ended June 30, 2022
(Millions of yen)Contract liabilities (beginning balance)

1,925

Contract liabilities (ending balance)

2,560

Contract liabilities are recorded in “other current liabilities” in the consolidated balance sheet. Contract liabilities aremainly advances received from customers. Contract liabilities are reversed upon the recognition of revenue.
Of the revenue amount recognized in the year ended June 30, 2022, the amount included in the beginning balance ofcontract liabilities was ¥1,925 million.
For the year ended June 30, 2023
(Millions of yen)Contract liabilities (beginning balance)

2,560

Contract liabilities (ending balance)

2,749

Contract liabilities are recorded in “other current liabilities” in the consolidated balance sheet. Contract liabilities aremainly advances received from customers. Contract liabilities are reversed upon the recognition of revenue.
Of the revenue amount recognized in the year ended June 30, 2023, the amount included in the beginning balance ofcontract liabilities was ¥2,560 million.
2) Transaction price allocated to the remaining performance obligations
The Group does not have any significant transactions for which the initially expected contractual period exceeds one
year. In addition, there are no significant amounts of consideration arising from contracts with customers that were notincluded in transaction prices. A practical expedient has been applied to the notes regarding the transaction priceallocated to the remaining performance obligations, and this information is not included in the notes for contracts forwhich the initially expected contractual period is within one year.

- 65 -

(Segment information)[Segment information]
1. Overview of reportable segments
The reportable segments of the Group are components of the Company for which discrete financial information isavailable and regularly reviewed by the Board of Directors to make decisions about allocation of managerial resources
and to assess their performance. The Group classifies the reportable segments as “Japan Region,” for which the Group
operates its core business of the Mercari marketplace in Japan, and “US,” for which the Group operates the Mercari(US) marketplace app in the United States of America. The Group also proposes and determines Group strategies along
these segment lines.
Note that the principal information included in each reportable segment is as follows.
Japan Region
Marketplace
Operation of a marketplace app inJapan
FintechPayment- and finance-related
business in Japan
US
Marketplace
Operation of a marketplace app in
the US
2. Method for calculating amounts of items for each reportable segment such as net sales, profit or loss, assets, andliabilities
The accounting method of the business segments reported is in accordance with the accounting policies adopted toprepare consolidated financial statements.
Intersegment internal income or transfers are based on market prices.
3. Information regarding amounts of items for each reportable segment such as net sales, profit or loss, assets, andliabilities and information on disaggregation of revenue
For the year ended June 30, 2022
Reportable segment
Japan
US
Total
Region

Other

Total

(Millions of yen)
Adjustments
Amountreported ontheconsolidated
statements ofincomeNet sales
Marketplace
41,611
126,934–
126,934–
126,934
85,322Fintech–14,434–
14,434–
14,434
14,434
Other
–
–
5,680
5,680
–
5,680
–
Revenue from contracts
41,611
141,3685,680
147,049–
147,049
99,757
with customers
Sales to external
41,611
141,3685,680
147,049–
147,049
99,757
customers
Intersegment net sales
–
398
765
1,164
(1,164)–398
or transfers
Total
41,611
141,767
6,446
148,214(1,164)147,049
100,156
Segment profit (loss)(12,135)
4,489
(214)
4,274
(7,990)(3,715)
16,624
Other items
Depreciation
117
537
151
689
129
818
420
(Notes) 1. Total amount of segment profit (loss) agrees with operating loss presented in the consolidated statements of income.
2. Adjustments for segment profit (loss) refer mainly to general and administrative expenses that do not belong to any
reportable segment.
3. The “Other” column includes business segments that are not included in the reportable segments, such as the sportsbusiness.
4. For “US,” the full amount of consideration received from the customer is recognized as distribution sales.
5. “Net sales” of ¥147,049 million recorded in the consolidated statement of income is mainly “revenue recognized fromcontracts with customers.” Revenue recognized from other sources is financial revenue principally arising from credit
services. Because its amounts are insignificant, it is included in information on disaggregation of revenue from contracts
with customers for disclosure.
6. The segment asset and liability amounts are not disclosed because the Company does not allocate assets and liabilities toreportable segments.

- 66 -

For the year ended June 30, 2023
Reportable segment
Japan
US
Total
Region

Other

Total

(Millions of yen)
Adjustments
Amountreported ontheconsolidated
statements ofincomeNet sales
Marketplace
44,440146,155–
146,155–
146,155
101,714
Fintech–20,485–
20,485–
20,485
20,485
Other
–
–
5,423
5,423
–
5,423
–
Revenue from contracts
44,440166,640
5,423
172,064–
172,064
122,199
with customers
Sales to external
44,440166,640
5,423
172,064–
172,064
122,199
customers
Intersegment net sales
–
–
1,176
1,176
(1,176)––or transfers
Total
44,440166,640
6,599
173,240(1,176)
172,064
122,199
Segment profit (loss)(8,804)25,660(528)
25,131(8,108)17,023
34,464
Other items
Depreciation
132
629
163
792
140
933
497
(Notes) 1. Total amount of segment profit (loss) agrees with operating profit presented in the consolidated statements of income.
2. Adjustments for segment profit (loss) refer mainly to general and administrative expenses that do not belong to any
reportable segment.
3. The “Other” column includes business segments that are not included in the reportable segments, such as the sportsbusiness.
4. For “US,” the full amount of consideration received from the customer is recognized as distribution sales.
5. “Net sales” of ¥172,064 million recorded in the consolidated statement of income is mainly “revenue recognized fromcontracts with customers.” Revenue recognized from other sources is financial revenue principally arising from credit
services. Because its amounts are insignificant, it is included in information on disaggregation of revenue from contracts
with customers for disclosure.
6. The segment asset and liability amounts are not disclosed because the Company does not allocate assets and liabilities toreportable segments.
4. Matters related to changes in reportable segments
Previously, the Group operated as a single segment, the marketplace business. Commencing the year ended June 30,
2023, the Group changed its reportable segments to those of Japan Region and US.
This change was made because the Group transitioned to a new management execution structure from January 1, 2022,
and changed its corporate management classification from July 1, 2022, with the objectives of further strengthening thestrategy of the overall business structure in Japan and further expanding globally.

- 67 -

[Related information]
For the year ended June 30, 2022
1. Information by product and service
The information is omitted because the same information is disclosed in “[Segment information].”
2. Information by geographical area
(1) Net sales
The information is omitted because the same information is disclosed in “[Segment information].”(2) Property and equipment
This information is omitted because property and equipment in Japan accounted for more than 90% of property
and equipment amounts on the consolidated balance sheets.
3.

Information by major customer
This information is omitted because there were no external customers who accounted for 10% or more of net
sales in the consolidated statement of income.

For the year ended June 30, 2023
1. Information by product and service
The information is omitted because the same information is disclosed in “[Segment information].”
2. Information by geographical area
(1) Net sales
The information is omitted because the same information is disclosed in “[Segment information].”(2) Property and equipment
This information is omitted because property and equipment in Japan accounted for more than 90% of property
and equipment amounts on the consolidated balance sheets.
3.

Information by major customer
This information is omitted because there were no external customers who accounted for 10% or more of net
sales in the consolidated statement of income.

[Impairment loss of non-current assets by reportable segment]
For the year ended June 30, 2022
Not applicable.
For the year ended June 30, 2023
Not applicable.
[Amortization of goodwill and unamortized balance by reportable segment]
For the year ended June 30, 2022
Not applicable.
For the year ended June 30, 2023
Not applicable.
[Gain recognized on negative goodwill by reportable segment]
For the year ended June 30, 2022
Not applicable.
For the year ended June 30, 2023
Not applicable.
[Information on related parties]
Related party transactions
Transactions between the company submitting the consolidated financial statements and related parties
Officers, major shareholders (individuals only), etc. of the company submitting the consolidated financial statements
For the year ended June 30, 2022
Name

Percentage ofvoting rights
owning or owned

Relationship

Officer

Shintaro
YamadaDirectly (owned)
23.97%

Representative
Director of theCompany

Officer

FumiakiKoizumiDirectly (owned)
0.93%

Director of theCompany

Category- 68 -

Details oftransaction
Exercise ofstock acquisitionrights (Note 1)
Exercise of stockacquisition rights(Note 2)

Transaction
amount(Millions ofyen)Account

Endingbalance(Millionsof yen)

43

–

–

11

–

–

OfficerJohn
Lagerling

Directly (owned)
0.02%

Officer

Naoki
Aoyagi

Directly (owned)
0.04%

OfficerJun
YokotaDirectly (owned)
0.04%(Notes)Senior Vice
President of
the Company
Senior Vice
President of
the Company
Senior Vice
President of
the Company

Exercise of stockacquisition rights(Note 3)
Exercise of stockacquisition rights(Note 4)
Exercise of stockacquisition rights(Note 5)

152

–

–

1,350

–

–

26

–

–

1. Exercise of stock acquisition rights in the year ended June 30, 2022, concerning those granted pursuant to
the resolutions at the Board of Directors meetings held on December 12, 2014, and June 24, 2016.
Transaction amounts listed above are amounts paid upon exercise of stock options in the year ended June 30,
2022.
2. Exercise of stock acquisition rights in the year ended June 30, 2022, concerning those granted pursuant to
the resolutions at the Board of Directors meetings held on June 24, 2016, and June 22, 2017. Transaction
amounts listed above are amounts paid upon exercise of stock options in the year ended June 30, 2022.
3. Exercise of stock acquisition rights in the year ended June 30, 2022, concerning those granted pursuant to
the resolutions at the Board of Directors meetings held on June 22, 2017, and September 25, 2020.
Transaction amounts listed above are amounts paid upon exercise of stock options in the year ended June 30,
2022.
4. Exercise of stock acquisition rights in the year ended June 30, 2022, concerning those granted pursuant to
the resolutions at the Board of Directors meetings held on November 28, 2017, and September 25, 2020.
Transaction amounts listed above are amounts paid upon exercise of stock options in the year ended June 30,
2022.
5. Exercise of stock acquisition rights in the year ended June 30, 2022, concerning those granted pursuant to
the resolutions at the Board of Directors meetings held on June 22, 2017, November 28, 2017, and September
25, 2020. Transaction amounts listed above are amounts paid upon exercise of stock options in the year
ended June 30, 2022.

- 69 -

For the year ended June 30, 2023
Name

Percentage ofvoting rights
owning or owned

Relationship

Officer

Shintaro
YamadaDirectly (owned)
24.12%

Representative
Director of theCompany

Officer

FumiakiKoizumiDirectly (owned)
0.94%

Director of theCompany

Officer

Naoki
Aoyagi

Directly (owned)
0.18%

Senior Vice
President of
the Company

Category(Notes)

Details oftransaction
Exercise ofstock acquisitionrights (Note 1)
Exercise of stockacquisition rights(Note 2)
Exercise of stockacquisition rights(Note 3)

Transaction
amount(Millions ofyen)Account

Endingbalance(Millionsof yen)

182

–

–

11

–

–

600

–

–

1. Exercise of stock acquisition rights in the year ended June 30, 2023, concerning those granted pursuant to
the resolutions at the Board of Directors meetings held on June 24, 2016, and June 22, 2017. Transaction
amounts listed above are amounts paid upon exercise of stock options in the year ended June 30, 2023.
2. Exercise of stock acquisition rights in the year ended June 30, 2023, concerning those granted pursuant to
the resolution at the Board of Directors meeting held on June 22, 2017. Transaction amounts listed above areamounts paid upon exercise of stock options in the year ended June 30, 2023.
3. Exercise of stock acquisition rights in the year ended June 30, 2023, concerning those granted pursuant to
the resolutions at the Board of Directors meetings held on November 28, 2017, and September 25, 2020.
Transaction amounts listed above are amounts paid upon exercise of stock options in the year ended June 30,2023.

- 70 -

(Per-share information)(Yen)
June 30, 2022

June 30, 2023

Net assets per share

228.57329.80

Basic earnings (loss) per share(47.34)

81.01

–

77.36

Diluted earnings per share(Notes) 1.
2.

Information on diluted earnings per share for the year ended June 30, 2022, is omitted since, although potential shares
did exist, the recorded figure was a basic loss per share.
The basis for the calculation of basic earnings (loss) per share and diluted earnings per share is as follows.
June 30, 2022

June 30, 2023

Basic earnings (loss) per share
Net profit (loss) attributable to owners ofparent (Millions of yen)Amount not attributable to commonshareholders (Millions of yen)
Net profit (loss) attributable to owners ofparent related to common stock (Millions ofyen)
Average number of shares of common stock
outstanding during the period (Shares)(7,569)13,070––(7,569)13,070159,908,850

161,334,419–

7,618,161

Diluted earnings per share
Increase in number of common stock(Shares)
Outline of potential common stock excluded
from the computation of diluted earnings per
share due to its non-dilutive effect

Stock options
Number of stock acquisition rights:
1,468,345
Number of common stock:3,487,711
Restricted Stock Units
Number of Restricted Stock Units:
478,312
Number of common stock:478,312
Zero Coupon Convertible Bonds
Number of stock acquisition rights:
5,000
Number of common stock:5,349,882(Significant subsequent events)
Not applicable.

- 71 -–

(5) [Consolidated supplementary schedules][Schedule of bonds payable]

Balance at the
beginning of
the current
period(Millions ofyen)

Balance at theend of thecurrent period(Millions ofyen)Interest
rate(%)

PledgeMaturity

Company nameSecurity titles

Date ofissuance

Mercari, Inc.

Zero Coupon Convertible Bonds
due in 2026

July 14, 2021

25,00025,000–

None

July 14,2026

Mercari, Inc.

Zero Coupon Convertible Bonds
due in 2028

July 14, 2021

25,00025,000–

None

July 14,
2028

Total

–

–

50,00050,000–––(Notes) 1.

Description of the convertible-bond-type bonds with stock acquisition rights is provided below.
Security titles

Zero Coupon Convertible Bonds
due in 2026

Zero Coupon Convertible Bonds
due in 2028

Common stock

Common stock

Without contribution

Without contribution

Shares to be issued
Issuance price of stock acquisition rights(Yen)
Issuance price of shares (Yen)

9,346

9,346

Total amount of issuance price (Millions ofyen)
Total issuance price of shares issued upon
exercise of stock acquisition rights (Millionsof yen)Percentage of grant of stock acquisitionrights (%)

25,00025,000

–

–

100

100

July 28, 2021, to June 30,
2026

Exercise period of stock acquisition rights

July 28, 2021, to June 30,
2028(Note) When there is a request from a person intending to exercise stock acquisition rights, in place of the redemptionof the full amount of the bonds to which the stock acquisition rights are attached, it is deemed that the amountto be paid upon exercise of the stock acquisition rights has been paid in full. In addition, when stockacquisition rights are exercised, it is deemed that said request has been received.
2.

Payable amounts under the redemption schedule for the five years after the consolidated balance sheet date are as
follows:(Millions of yen)
Due within one year
Due after one year
Due after two years
Due after three years
Due after four years
and before two years
and before threeand before four years and before five years
years
–
–
–
25,000–[Schedule of borrowings]
Category(Millions of yen, unless otherwise stated)
Balance at the Balance at the end Average interest
beginning of theof the current
rate
Due date
current period
period(%)

Short-term borrowings

54,254

55,121

0.39–

Current portion of long-term borrowings

1,348

16,713

0.39

–

193

104

3.94

25,74935,696

0.53

From 2024 to 2027

816

370

3.94

From 2024 to 2028

82,361

108,007––

Current portion of lease liabilities
Long-term borrowings (excluding current portion)
Lease liabilities (excluding current portion)
Total(Notes) 1.
2.
3.

The average interest rate indicates the weighted-average interest rate for the balance of borrowings as of June 30, 2023.
The interest rate as of June 30, 2023, is used for borrowings with variable interest rates.
The amounts of long-term borrowings and lease liabilities (excluding current portion) to be repaid within five years
after June 30, 2023, are as follows.

- 72 -

(Millions of yen)
Due after
Due after two years Due after three years Due after four years
one year and before
and before three years and before four years and before five years
two years
Long-term borrowings
Lease liabilities

14,894

9,636

1,165

10,000

106

106

104

52

[Schedule of asset retirement obligations]Pursuant to the provision of Article 92-2 of the Regulations on Consolidated Financial Statements, the information isomitted, because the amounts of asset retirement obligations at the beginning and the end of the year ended June 30, 2023,
were not more than 1% of the total of liabilities and net assets at the beginning and the end of the year ended June 30, 2023,
respectively.
(2) [Other]
Quarterly information for the year ended June 30, 2023
(Cumulative period)
Three months ended
September 30, 2022
Net sales (Millions of yen)
40,029Net profit before income taxes
2,965(Millions of yen)
Net profit attributable to owners of412
parent (Millions of yen)
Basic earnings per share (Yen)
2.56(Accounting period)
Basic earnings per share (Yen)First quarter
2.56

Six months ended
December 31, 2022
84,285
5,221

Nine months ended
March 31, 2023
127,913
10,976

Year ended
June 30, 2023
172,064
16,389

1,202

5,056

13,070

7.47

31.38

81.01

Second quarter
4.91

Third quarter
23.87

Fourth quarter
49.50- 73 -