FY2021/5 Financial Results for Q2

Gunosy Inc.
First Section of The Tokyo Stock Exchange
January 14, 2021

INDEX

1

Executive SummaryP3

2

Financial Results for FY2021/5 Q2

P 15

3

FY2021/5 Outlook

P 20

4

Business Overview by Division

P 24

5

Reference Materials:（C） Gunosy Inc. All Rights Reserved.

Overview of Gunosy Inc.

P 36

1

Executive Summary（C） Gunosy Inc. All Rights Reserved.

FY2021/5 Financial Summary
Executive Summary

In the current quarter, significant progress was made in implementing measures toachieve profit growth in the next fiscal year and beyond.
Although sales did not increase QoQ, operating profit marked growth.

Existing Business

GunosyExisting BusinessBusiness alliancewith KDDI

Existing / New
Businesses

Game8

Investment
External investment

Corporate
Office relocation

Progress in profitability
improvement

Decision made to start investment for re-growth

See(FY2021/5 Q4-)

p.5-6

A new business alliance with KDDIon large-scale media applications
announced.

Significant increase in MAUs and significant
contribution to profit expected

See

Domestic business reached a record
high, while overseas businessremained strong.

The second pillar of the Gunosy group

Follow-on investments in existingpromising partners / Invested in Incubate
Fund V (a prominent VC) as a limited partner

Continue to take an aggressive
approach for discontinuous growth

Decided to relocate the office withthe aim of improving productivity
through new work styles

Fixed costs reduced by approx. ¥260
million/year.

（C） Gunosy Inc. All Rights Reserved.

(FY2021/5 Q4-)

p.7-10
See

p.11
See

p.12
See

p.13
PAGE |

4

Profitability per DAU increased 14.1%
QoQ as Gunosy’s profitability began to
improve.

01
Plan to reinvest

Important KPIs for return on investment

Improve profitability

in Gunosy as its(sales/DAU)

profitability

Sales/DAU

improves

Improved by

14.1%

the spread of COVID-19 and other

Improve user retention
rate

Renew userinterface(QoQ)

Due to the deterioration of theadvertising market conditions caused by

Preparations
underway

Results

Profitability improved by improved
algorithms

Renew
content
deliverylogicPlan to start implementing
measures after Q3.
Aiming for improvement in the
short to medium term.

factors, advertising investment in Gunosy
was curtailed in the H1.
On the other hand, as a result of thesuccessful completion of measures tostart reinvestment in the H1, it was
confirmed that profitability had improved.
Accordingly, it was decided to resume
investment for scale expansion.

Based on the above, the decision was made toresume investment for advertising.
We plan to increase investment in advertising
by approximately ¥170 million in the H2.
PAGE |

5

Background to the Resumption of Advertising
Investment in Gunosy
The key measures for successful reinvestment being completed, improvements in profitability
were confirmed. We decided to resume investment based on the judgment that sufficient return on
investment could be expected even before the improvement in user retention rates was realized.
Business policy

Criteria forreinvestment

Resume investment to expand user scale and aim for renewed growth as amedia company
Whether the service iswidely accepted by theworld(Whether room for further growth created as a news media)

KPI

Improve quality ofcontent

Whether a high return on investment
can be expected(Whether the IRR of advertising investments exceeds the internal investment criteria)

Improve
profitability

Improve user
retention rate

Complete in Q1• Improve reliability of articles delivered• Improve reliability of ads

Measures

Complete in Q1• Add highly unique content that matches
trends.

Progression rate: 95%（C） Gunosy Inc. All Rights Reserved.

• Improve algorithms
Sales / DAU improved by
14.1% QoQ in Q2

Preparations under
way in Q3• Renew user interface• Renew content delivery
Preparations under
logic
way in Q3

Complete in Q2

Progression rate: 75%

Progression
rate: 50%

PAGE |

6

New business alliance with
KDDI

02

Selected as a partner for the joint development andoperation of a large-scale media application. ※New business allianceagreement signed
between Gunosy andKDDI.
Today, Gunosy signed a businessalliance agreement with KDDI for thedevelopment and operation of an
existing large media app operated byKDDI.

A significant contribution tobusiness performance expectedby capturing KDDI's huge userbase
詳細：P10* Based on KDDI's intentions, the name of the app is not disclosed at this time.

PAGE |

7

Scheme for Business Alliance
Leveraging the strengths of both companies, we seek to improve the service quality of new
collaborative apps. Improve the satisfaction of app users to achieve sustainable growth.

Business model

Image of medium- to longterm growth

Generate profit through revenue sharing.

Achieve better services by leveraging
the strengths of both companies

Contri bute to profi ts through a scheme si mi l ar to that of
NewsPass, the exi sti ng col l aborati ve medi a.

Both compani es worki ng together to achi eve totalbusi ness growth for NewsPass and the new
col l aborati ve medi a.

Advantage

Developme
nt andoperation

Business
Alliance

User base- Organize article- Ad delivery algorithms

Advantage- Brand value- Broad user base

New collaborative media
Revenue sharing

Revenue（C） Gunosy Inc. All Rights Reserved.

Revenue sharingNew
collaborative
media

PAGE |

8

Milestones
The renewed version of the new collaborative media is scheduled to be released in April 2021.
Gunosy will be in charge of the development of the app for the renewal and the operation of the app
after its release.

The renewed new collaborative media is scheduled to belaunched in April 2021.
After that, the operation & revenue sharing of the newcollaborative media will start.
Schedule
2021/ 4

Renewed media
scheduled to belaunched

2021/1/14
Business allianceagreement signed

Preparation period

Development and test period

Operation period

Approx. 3 months（C） Gunosy Inc. All Rights Reserved.

PAGE |

9Impact on Business Performance
We will take over the huge user base already established by the new collaborative app. It is
expected to make a significant contribution to Gunosy's business from April 2021.
Expected MAU before andafter the business alliance*
POINT

MAU

t
bs
u
S

th
ow
r
lg
ia
t
an

New

A huge MAU acquiredby the businessalliance.
Contribution tobusiness expected
after April 2021.
MAU expected to increase sharply after

MAU

April 2021.
We aim to achieve total growth with theexisting media, NewsPass, throughinitiatives that leverage the strengths of

Before business
新協業前
alliance

After business
新協業後
alliance

both companies.

* Estimate based on a simple sum of the MAUs (Monthly Active Users) of NewsPass and new collaborative media app in November 2020.

（C） Gunosy Inc. All Rights Reserved.

PAGE |

10Game8: Net sales and operating profit(Million yen)

1,600

Net sales
Operating profit

1,530(Million yen)

800

Game-8’s
1,101

significant
929

contribution to
profits as a second

800

pillar

400

440
586

381

Game8 has grown to become the second329

source of revenue.

260

While the performance of Gunosy remained
weak due to the impact of COVID-19 andother factors, it is expected to achieve record
high performance.
Aim to achieve further growth in the medium
to long term through overseas expansion andinvestment in peripheral areas.

00FY2018FY2019FY2020

FY2021(results)(results)(results)(expected)

PAGE |

11

Investment in domestic and Indian markets
to capture growth areas
Actively explore investment and M&A opportunities
Our portfolio *1

04
investment to achieve

India

Aggressive external

Early stage

Following the re-growth of the media
business and capturing the growth of thegame market (Game8), we are promoting
external investment as the third pillar of
growth.
While capturing the high growth rate of theJapandiscontinuous growth

Mid-to-late stage

FintechCommerce

MaaS

Education

FintechFintechFollow-on
investment in Q2

Follow-on
investment in Q1

Organic EL

HR techReal estatetechCommerce

Audio
deliveryIndian market, we aim to capture high-Reinforcesourcing

growth areas in Japan as well.

Investment in Incubate Fund V

Reinforcesourcing*2

We invested approx. ¥500 million as a limited partner*1. Excerpts from the investment portfolios of Gunosy and Gunosy Capital*2. Incubate Fund Ⅴ Limited Partnership

PAGE |

12

Annual office costs that can be
reduced１0億円¥360 milliontcu

reduced by approx.

通期営業利益Annualrent, etc.*tan
i fi cAnnual office costs

gn
Si

05

Annual costs
reduced byapprox. ¥260
million¥260 million※

Annual rent, etc.

通期営業利益１0¥100 億円
million
Despite the additional costs* incurred in
the current and next fiscal years, it will
result in overwhelming cost reductions

Until now
@Ark Mori Building

From now on@WeWork Shibuya SS

in the medium to long term.
* Total of office rent, operating expenses (utilities etc.) and depreciation expenses related to capital investments, etc.

Schedule for relocation* In FY2021/5, a total of ¥252 million in cost of sales and SGA expenses
and ¥35 million in non-operating expenses (idle asset expenses) will berecorded. In FY2022/5, ¥214 million in non-operating expenses (idleasset expenses) will be recorded.
In the event that the timing of the relocation which is currently planned ischanged, there may be a change in the amount of expenses recorded foraccounting purposes.

Decemb er,
2020

Sp ri n g t o su mmer o f
2021 ( sch ed u l ed )Notify the cancellationof the current office

Move to a new office
PAGE |

13

Capital Allocation
Aim for medium- to long-term growth by promoting internal and external investments for the regrowth of existing businesses and for the establishment of new earnings drivers.
Resources:

Human

CapitalInvestment
Objectives

Portfolio

Growth ofexisting
businesses• Gunosy• NewsPass• LUCRA• G8 (domestic)• ADNW

Develop new
businesses
internally• G8 (overseas)• D2C• Otokul• GTL

Establish a new pillar to
generate revenue• Challenge growth opportunities thatmatch the current trends especially in
the DX area

External
investment*(Investment /M&A)• Startups inIndia and inJapan• Investment in
VC as a limited
partner

Discontinuous growth bycapturing high growthareas• Minority investment in tech startups inIndia and in Japan

Return tostockholders

Expected results

Generate solid cash as apillar of business

Key investment items

Q2 highlights• Investment for the re-growth of Gunosy

1. Reinvestment in Gunosy due
to improved profitability• New business alliance with KDDI

2. A new business allianceagreement signed with KDDI• Capture the growth of the game market

3. Contribution by Game8 as thesecond pillar of revenue• Game8's business overseas• Capital alliance and M&A with growing
companies

1. Steady growth of G8's
business overseas
2. D2C business launched fortest marketing

1. Follow-on investment inpromising partners andinvestment in domestic
startups and major VCs

Based on the investment status and stock price, etc., we are considering share buybacks as an option at theappropriate time.

* Plan to invest approx. ¥4.5 billion in cash on hand over two years from the current fiscal year.

（C） Gunosy Inc. All Rights Reserved.

PAGE |

14

2

Financial Results for FY2021/5 Q2（C） Gunosy Inc. All Rights Reserved.

FY2021/5 Consolidated Results for Q2
Although net sales declined QoQ, operating profit increased QoQ due to lower personnel expenses atGunosy and profit growth at Grill and Smarprise.
Although net sales fell sharply YoY, the impact on profits was limited as the main reason for the decline was
the poor performance of ADNW, which has a low gross margin. Operating profit increased also YoY due(Million yen)
to restrained investment in advertising.

QuarterFirst half

FY2021/5 Q2

FY2021/5 Q1

FY2021/5 H1

FY2020/5 H1

Net sales

2,082

2,208

94.3%

4,291

7,585

56.6%

Operating profit

216

160

135.0%

376

156

239.9%

Operating margin

10.4%

7.3%

-

8.8%

2.1%

-

Ordinary profit

213

156

136.2%

369

131

280.1%

Profit attributable toowners of parent

154*

79

193.6%

233

127

182.7%QoQ

YoY* In extraordinary income/losses, gain on sales of investment securities of ¥51 million was recorded.

（C） Gunosy Inc. All Rights Reserved.

PAGE |

16*Total Number of Active Users (MAU)
A 5.1% decrease QoQ was recorded. Although the downward trend of active users due to investment
restraint has slowed down, we assume that the increased activation of users due to "stayhome" has been stripped out as a result of increased opportunities to go out through the 'Go to
Travel' campaign, etc.
QoQ

-5.1%
LUCRA
NewsPass
Gunosy

Q1

Q2

Q3

Q4

FY2018/5

Q1

Q2

Q3

FY2019/5

Q4

Q1

Q2

Q3

FY2020/5

Q4

Q1

Q2

FY2021/5* Average for each quarter of MAU (monthly active users) of “Gunosy”, “NewsPass” and “LUCRA”（C） Gunosy Inc. All Rights Reserved.

PAGE |

17

Breakdown of Net Sales*1

At Gunosy, although profitability per user showed improvement, sales of Gunosy Ads decreased
QoQ due to a decline in MAUs. The ADNW business also continued to suffer from difficult situations.
Nevertheless, the Game8 business remained strong and sales increased. The increase in sales
in the "Other" category was mainly due to the strong performance of Smarprise, a subsidiary of
Game8.
(Million yen)
4,500

Others
Game8
ADNW

54

Gunosy Ads*2

190

3,000
2

148

158

206

1,422

178

280
223

232
256

1,205

90

334

254

136

1,459

1,143

19
240

234

128
317

251
1,236

1,357

1,480

1,298

203
320

980

246

1,097

815

530

1,500

366
371

1,505

1,585

1,871

1,935

1,894

1,960

2,030

2,119

1,964

375
262

1,960
1,594

1,541

1,267

1,198

Q1

Q2

0

Q1

-7

-38

Q2

Q3

Q4

Q1

FY2018/5

Q2

Q3

Q4

Q1

FY2019/5

Q2

Q3

FY2020/5

Q4

FY2021/5*1. Sales of Gunosy Ads, ADNW and Game8 are presented on a non-consolidated basis. Internal trade adjustments are included in Others.
*2. Sales of Gunosy Ads are the total of “Gunosy”, “NewsPass” and “LUCRA”（C） Gunosy Inc. All Rights Reserved.

PAGE |

18

Cost Structure
Personnel expenses decreased QoQ due to the reduction in the number of hires at Gunosy fromthe beginning of the current fiscal year.
Other than that, ad network costs also decreased due to the QoQ decline in sales.
3,646
3,307

3,388

3,362
1,003

3,109

(Million yen)

1,092

2,908

3, 000
2,753

911

2,313
2,198
1,997
489

547

547

55

504
55
54

55

315

40

588
562

55

104

336
60

352
70

396

420
103

693

782

39

539

838

41

777

22

54

414
102

1,047

16

917
822

637

72

51
55

456

814

526
507

31

2,337
2,048

583

51

109

988

952

1,160
19

92

55

574

1,055

806

493

447

1, 500

678

3,781

526
146

157

1,866
950

90

541

786
757
7

193
134

86

560
884

977

1,027

153
94

131

1,091

24

Q2

Q3

Q4

FY2018/5（C） Gunosy Inc. All Rights Reserved.

Q1

Q2

Q3

FY2019/5Q493

Advertising expenses
Rents

535

Personnel expenses

121

Server expenses
Ad network costs

153

128

413

278

182

Q1

Q2

0

Q1

Live video production expenses
22

583

125

Q1

Q2

Q3

FY2020/5

Q4

Others

FY2021/5

PAGE |

19

3

FY2021/5 Outlook（C） Gunosy Inc. All Rights Reserved.

FY2021/5 Results Forecast (Consolidated)
In the H1, net sales fell below the lower range of the forecast due to the poor performance of
the ADNW business. However, because of the strong performance of the Game8 business,
operating profit and all other profit items remained near the upper range of the forecast.
(Million yen)

FY2021/5 H1

FY2021/5 H1
forecast(lower range)

Progression
rate

FY2021/5 H1
forecast(upper range)

Progression
rate

Net sales

4,291

4,652

92.2%

4,937

86.9%

Operating profit

376

242

155.5%

394

95.5%

Operating margin

8.8%

5.2%

-

8.0%

-

Ordinary profit

369

232

158.9%

384

96.1%

Profit attributable toowners of parent

233

123

189.7%

228

102.2%（C） Gunosy Inc. All Rights Reserved.

PAGE |

21

FY2021/5 Revised Results Forecast (Consolidated)
Based on factors including (i) reinvestment in Gunosy to prepare for growth in the next fiscal
year and beyond, (ii) temporary increase in depreciation and other expenses due to officerelocation for the purpose of improving productivity and reducing fixed costs and (iii)
weakness in the ADNW business, we have revised downward our full-year forecasts.
(Million yen)

FY2021/5 H1

Initial forecast(full-year)

Revisedforecast(full-year)

Increase /decrease

Increase /decreaserate

Net sales

4,291

10,297~11,297

8,897-1,400~-2,399-13.6%~-21.2%

Operating profit

376

1,030~1,414

500

-529
~-913

-51.4%~-64.6%

Operating margin

8.8%

10.0%~12.5%

5.6%

-

-

Ordinary profit

369

1,011~1,395

482

-528
~-912

-52.2%~-65.4%

Profit attributable toowners of parent

233

615~882

253

-362
~-628

-58.9%~-71.3%（C） Gunosy Inc. All Rights Reserved.

PAGE |

22

Breakdown of Revised Business Results

Major factors of increase/decreaseaffecting operating profit(100 million yen)

0.7

POINT

Upwardrevision

Downward
revision

1

2

1.1

0.3

1 Upward revision
Investment to expand
profits in the next fiscal
year and beyond▲3.4

Full-year
operatingprofit¥1,030
million3

2 Downward revision
ADNW:
Loss of competitiveness due tothe revision of advertisingguidelines.

▲2.3
▲1.7
Full-year
operatingprofit¥500
million

y
es
t
fit
os
ns
.
ofi
ro
it
r
n
e
c
f
p
t
p
u
p
o
Initial forecastesr
G Revised forecast
ex
os
on
ing
sp
(Before revision)
t in
gr
on
cti
i
os
rat
n
t
r
u
s
(after revision)
e
e
a
g
Ad
op
red
tm
oc
W
l
t
s
y
8
e
N
s
e
s
er
me
AD
Co
no
inv
fic
Ga
Gu
Re
Of

（C） Gunosy Inc. All Rights Reserved.

Strong business at Gunosy
Ads and Game8.
Progress made in cost
reduction

3 Investment costs for growth
Office relocation andreinvestment in Gunosy are
considered as investment
costs to achieve operating
profit growth in the next fiscal
year and beyond.

PAGE |

23

4

Business Overview by Division（C） Gunosy Inc. All Rights Reserved.

Summary of Media Business in FY2021/5 Q2
At Gunosy and NewsPass, a series of measures were taken to improve profitability, and anumber of improvements were realized.
At LUCRA, we verified our hypothesis for the D2C business while improving profitability as
well.
Gunosy

Focus

Summary

Q2

Investment

NewsPass

LUCRA

Focus on improving algorithms
to improve profitability• Improved profitability
due to improved
algorithms, including addelivery algorithms.

• There are signs ofincreased profitability
by reflecting thealgorithm improvementsthat were successful at
Gunosy.

•Reflect algorithms thatwere successful in
Gunosy and NewsPass•

Collaboration inadvertising for EC•

Verify hypothesis for
D2C businessthe uncertainty in the advertising market, we will
Restrain Given
continue to significantly curb advertising expenses.

MAU
Profitability（C） Gunosy Inc. All Rights Reserved.

PAGE |

25

ExistingBusiness

New Content: “Radio” Icon

As a measure to improve the quality of content, we enhanced radio content in the Q2.
Gunosy's original content has been developed. We will provide users with a wide variety of content
following texts and videos.
Enhance radio content

Unique content was developed toenhance the value of user experience.

“Radio” icon
provided（C） Gunosy Inc. All Rights Reserved.

• Content from popular podcasts provided by major radio stations will be added assoon as they are ready.
• A total of 120 programs (10,819 episodes) are currently available (as of January
14, 2021).
• We are also developing "Gunosy" original programs (14 programs in total,
PAGE | 26
including the 5 programs in the photo above).

ExistingBusiness

Measures to Improve User Retention Rate (Q3 -)As the first step in the user interface renewal, the specifications of the news top page were changed
so that users can grasp important news at a glance. We are also working on reforming the content
delivery logic to deliver articles that match more personalized interests of users on a deeper
level.

Renewal of the user interface (Q3-)•

We are promoting a transformation to an interface thatallows users to naturally cover important news andeasily open it again and again.

•

As the first step for this transformation, the top of the
topic tab has been changed to display a fixed list ofarticles that have received the most attention.

Renewal of content delivery logic (Q3-)（C） Gunosy Inc. All Rights Reserved.

•

Rather than the traditional entertainment-centeredcontent, we will shift our focus to the distribution ofcontent that matches more personalized interests ofusers on a deeper level and makes them want to read.

•

The results of the preliminary test for some users were
good.

•

We confirmed an increase in the number of clicks
while maintaining the retention rate.
PAGE |

27

Ad Network (ADNW)

Existing Business

The decline in sales appears to have slowed down, although the impact of the loss ofcompetitiveness due to the renewal of advertising guidelines continues.
In the future, we will focus on advertisers and media that place importance on ad quality to achieve
regrowth.
Nu mb er o f
I mp ressi o n s an d CPM(million imp)
60,000imp\40\36.84 \35.75

CPM\30.70 \30.70\29.71 \29.98\31.33\29.0645,000\27.70\25.10\19.50 \19.80
30,000\16.90\21.10\18.40\15.1450,98815,00027,34830,788 30,142

33,68038,610 39,585 36,330 39,529 38,872 40,900 38,390

41,138 43,325\11.48\20\12.5946,71834,54329,432
22,489

0

\0

Q1

Q2

Q3

Q4

Q1

FY2017/5

Q2Q3

FY2018/5

Q4

Q1

Q2

Q3

FY2019/5

Q4

Q1

Q2

Q3

FY2020/5

Q4

Q1

Q2

FY2021/5* CPM (cost per mille): Price per 1,000 impressions of advertisement（C） Gunosy Inc. All Rights Reserved.

PAGE |

28

Existing Business

New Business

Game8 Business Overview

Game8, whose main business is to operate game walkthrough wiki (game8.jp), is providing services
that address various issues in the life cycle of games together with its subsidiary, Smarprise.
Game life cycle
Growth to maturity phase

Release period

12

Honey Studio
Supports promotions by
exclusive creators

game8.jp (Game8)
Game walkthrough Wiki

Supports the spread of
information and the
expansion of awarenessamong game users who
visit Game8.

3Monthly figures (as of September, 2020)
380 million PV

5

SMART GAMEOne of the largest gaming platforms forpaying game users in Japan（C） Gunosy Inc. All Rights Reserved.

34 million UU

Pre-registration
Provides support to ensure
continued awareness of thegame from pre-registration
to post-release.

Moerin, who has over 700,000
subscribers, and other dedicatedcreators will produce the videos.

(A subsidiary of Game8)

4Intensive
display of ads

Produces and operates game walkthrough wiki for smartphone and home video
game console, providing users with game walkthrough information through highquality articles written by more than 100 fully-exclusive writers.

6

Rights Organize
Supports total planning for collaboration
with IP (game characters)

7

Surprise Box
Produces and sells goods
available only by subscription

PAGE |

29

Game8

Existing Business

New BusinessPV remained stable at a high level. CPM showed recovery and the quarterly sales reached arecord high.(Q2 results are for the period from July to September 2020 due to a gap with the parent
company's consolidated accounting period.)

Results*

Business Overview
売上⾼

Sales and profit growth

4 0 ,0 0 ,0 0

366

(YoY)
Sales and operating profit continued to be strong

3 5
0 ,0 0 ,0 0317•

In Q2, net sales and operating
profit reached record levels.

•

CPM recovered to the preCOVID-19 levels.

•

Continued investment inoverseas business.

375

320

(Million yen)

3 0 ,0 0 ,0 0

Net sales
2 50 ,0 0 ,0 0

256

190

2 0 ,0 0 ,0 0

148

234

232

Opeating profi t

240
223

206

- Steady increase in PV.

158

1 5
0 ,0 0 ,0 090
1 0 ,0 0 ,0 0

71

80

91

95

111

116

113

57

54

113

108

111

- CPM remained at a level
higher than in domestic
market.

50

FY2021/3 Q2

YoY

Net sales¥375 million

155.7%

Operatingprofit¥111 million

220.3%

5 0, 0 ,0 0

17
0

Q1

Q2

Q3

FY2018/3

Q4

Q1

Q2

Q3

FY2019/3

Q4

Q1

Q2

Q3

FY2020/3

Q4

Q1

Q2

FY2021/3* Non-consolidated results (before consolidated adjustment). Results of Smarprise, our subsidiary is not included.

（C） Gunosy Inc. All Rights Reserved.

PAGE |

30

New Business

New Business Trends

In Game8's overseas business, the number of PVs has been increasing steadily.
In the D2C business, a product test release is scheduled for early spring.

Game8: Overseas Expansion

D2C Business

The number of PVs has been growing steadily since
the commencement of the business.
RPM has been above the domestic level.

Explore the possibility of entering the market byleveraging strength such as the contacts withcustomers, marketing capabilities and data analysis
capabilities that will differentiate Game8 from its
competitors.

T he m ood par ing t ea, af un way t o c hoos e a t ea
t o s uit y our m ood

An English version of the gamewalkthrough wiki is provided.
（C） Gunosy Inc. All Rights Reserved.

T h e mo o d p ai ri n g t ea " YO U I N" w i l l b e
rel eased i n earl y sp ri n g .
A f un way t o choose a t ea t o suit yourm ood and t he oc c as ion.
PAGE |

31

New Business

Investment in Monokabu

Gunosy Capital executed an investment as a lead investor in "MONOKABU" which is one of
the largest CtoC marketplaces in Japan, specializing in sneakers and street fashion (announcedin December 2020).

Lead investment project(Released on December 15, 2020.
https://prtimes.jp/main/html/rd/p/000000010.000033955.html)（C） Gunosy Inc. All Rights Reserved.

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32

New Business

Follow-On Investment in Instamojo

We made a follow-on investment in Instamojo, which has been growing steadily since theinitial investment (announced in November 2020).
We are working with BASE to support the company to expand its business.

Follow-on investment announced in
November 2020

Co-investment with BASE

Steady growth since the initial investment

InvestProvide payment gateway services and ecommerce platform for SMBs in India
FintechSMBs

E-commerce

Working with BASE to support
Instamojo's empowerment efforts forsmall businesses.
(Released by BASE on November 13, 2020
https://binc.jp/press-room/news/press-release/pr_20201113)（C） Gunosy Inc. All Rights Reserved.

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33

New Business

Investment in Radiotalk

In October 2020, we invested in Radiotalk, which provides free voice services.

Outline of “Radiotalk”

A service that allows
anyone to easily deliver
audio at any time
• A service that allows users to easily
create and distribute audio programsfrom their smartphones. A variety ofpeople, from ordinary people such as
office workers and students to
comedians and cartoonists, aredelivering their talks.
• Since background playback is available,
users can listen while doing other tasks.

（C） Gunosy Inc. All Rights Reserved.

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34

New Business

Investment in Incubate Fund V

We invested in Incubate Fund V Limited Partnership as a limited partner in November 2020.

Invested in Incubate Fund V
as a limited partner

Investment Background

Independent venture capital firm specializing ininvestment and development of start-up
companies.

Total investment so far: Over¥62 billion（C） Gunosy Inc. All Rights Reserved.

1

Contribute to the start-up
industry by utilizing Gunosy's
technology

2

Explore opportunities forinvestment and businessalliances with venture companies
with high growth potential

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35

5

Reference Materials: Overview of Gunosy Inc.

（C） Gunosy Inc. All Rights Reserved.

Overview of Gunosy Inc.
Basic Information
Company name:Gunosy Inc.

Representative:

Shinji Kimura
Yuya Taketani

Established:

November 14, 2012

Fiscal year end:

May

Capital:4,094 million yen (as of the end of
November 2020)
6047 (First Section of The Tokyo
Stock Exchange)
Ernst & Young ShinNihon LLC

Officers:

Representative Director and Chairman, Group
Chief Executive Officer (CEO), Shinji Kimura
Representative Director and President, Yuya
Taketani
Director and CFO, Hiroki Maniwa
Director, Kentaro Nishio
Director, Kazuhiro Gonsho

Stock Code:
Audit corporation:
Number of
employees:
Head office:Business:231(as of the end of November 2020, on aconsolidated basis)
Ark Mori Building, 1-12-32 Akasaka,
Minato-ku, Tokyo
Development and operation of information
curation service and other media（C） Gunosy Inc. All Rights Reserved.

Director (Outside), Suguru Tomizuka
Director (Outside), Junichi Shiroshita
Director (Outside), Hirokazu Mashita
Corporate Auditor, Masakazu Ishibashi
Corporate Auditor (Outside), Kenji Shimizu
Corporate Auditor (Outside), Noboru Kashiwagi

PAGE |

37

Existing Business

Composition of Advertisers

The percentages for "beauty" and "health" categories continue to decline.
Aiming to serve a wider range of advertisers, we will continue to revamp our algorithms.

Percentage change of major categories(YoY)

FY2021/5 Q2

The percentages for "beauty" and "health"categories marked substantial decline YoY.

Beauty

17%

80%

72%

70%

Health11%

Others

72%

60%
50%
40%

39%

35%

26%

30%
20%
10%

17%

11%
15%

62%

23%

0%

HealthBeautyHealth（C） Gunosy Inc. All Rights Reserved.

Others

FY2020 Q2

BeautyFY2020 Q4

FY2021 Q1Others
FY2021 Q2

PAGE |

38

Q&A
No.

Questions

1

What was the impact of the spread of COVID19 on the business results for the current
quarter?

2What is the impact of the state of emergency
declared on January 7, 2021 on businessperformance?

3

Why will the decision to relocate the officeresult in a sharp decrease in operating profit forthe current period

4Regarding the temporary increase in costs dueto the office relocation, what is the difference
between the amount of increase in cost of
sales and SGA expenses for the current period(¥252 million), which is stated in the notes tosubsequent events in the quarterly report, andoffice relocation expenses shown on page 23of this report (¥230 million)?

5

Why did Gunosy Ads net sales decrease QoQ
while Gunosy's profitability per DAU improved
QoQ?

（C） Gunosy Inc. All Rights Reserved.

Answers•

Advertisers' willingness to place ads continued to be at a lower level than in previous years,
negatively impacting ad sales.

•

The increased activation of users due to "stay home" has been stripped out compared to Q1.

•

We believe it is necessary to monitor whether there will be further negative effects onadvertisers' willingness to place ads, although we do not see such a trend at this time.

•

Although activation of users may increase under "stay home" to some extent, we assume thatthe effect will not be as great as the previous time (April to May 2020).

•

Upon office relocation, fixed assets recorded in the current office that are expected to bedisposed of as a result of the relocation will be depreciated based on their useful life shortened
to the day before the move to the new office for accounting purposes. In addition, asset
retirement obligations (restoration costs) for the current office will be recognized in accordancewith the period up to the termination date of the current office. As a result, cost of sales and
SGA expenses will increase, which is the reason for the significant decrease in operating profit.

•

The increase in cost of sales and SGA expenses for the current period (¥252 million), which isstated in the notes to subsequent events in the quarterly report, only includes the increase incost of sales and SGA expenses for the current period due to the office relocation. After the
relocation to the new office scheduled for the current period, the amount of cost of sales and
SGA expenses will be partially lower than originally planned as a result of the difference in rent
between the new office and the current office, etc. The office relocation expenses (¥230
million) on page 23 reflects this amount.

•

While Gunosy's profitability per DAU improved, Gunosy, NewsPass, and LUCRA all
experienced significant declines in active users due to the loss of the "stay-home" effect. As aresult, overall revenue from Gunosy Ads declined.

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39

Disclaimer

Forward-looking statements contained in these materials are prepared from judgments andassumptions based on information available at the time of preparing the materials, and do notguarantee their accuracy. These materials contain financial data that have not been audited byan independent certified public accountant or an auditing firm.
Please note that actual results may differ materially from the forecasts due to various
uncertainties included in these judgments and assumptions and changes in risk factors and theeconomic environment.

（C） Gunosy Inc. All Rights Reserved.

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40

Optimally deliver information to people around the world