FY2023/5 Financial Results

Gunosy Inc.
TSE Prime (6047)
July 14, 2023

INDEX

1. Company Profile

P3

2. Executive Summary

P8•

Financial Highlights••

Gunosy
Game8

•

slice

3. Financial Results for FY2023/5

P 29

4. FY2024/5 Outlook And Policy

P 34

5. Initiatives in LLM

P 42

6. Business Overview by Division

P 47

7. Reference Materials

P 54（C） Gunosy Inc. All Rights Reserved.

2

Company Profile（C） Gunosy Inc. All Rights Reserved.

3

MISSION

Optimally deliver
information to people
around the world（C） Gunosy Inc. All Rights Reserved.

4

History
November 2021
Achieved unicorn status in the
fintech sector by raising
significant funds in its Series B
funding round

June 2016“NewsPass” released

November 2012

July 2018
Established Gunosy Capitaland started investment
business

Established Gunosy Inc. in
Roppongi, Minato-ku, Tokyo

2012

2015

2016

April 2015
Listed on the Mothers
Section of the Tokyo Stock
Exchange
December 2015
Game8 Inc. became
subsidiary

2017

2018

2019

December 2017
Changed markets from Mothers
Section to First Section of theTokyo Stock Exchange(Currently listed on TSE Prime)

September 2019
Started investment in
GaragePreneurs
Internet Pvt

2021

2022

April 2022
Became an equity
method investee by
dispatching a director
April 2021
Launched "au Service
Today" service（C） Gunosy Inc. All Rights Reserved.

5

Gunosy Group Business Portfolio

Medium- to long-term growth driven by three businesses
12Media business•••

GunosyNewsPass
Au Service Today

Game8 group
•
•

Game8
Smarprise

DATA

•

•
•
•

3

＋

Investment

Newbusinesses

Gunosy Capital

•
•

LLM
YOU INNew

Data accumulated since the inception of the company
Knowledge of algorithms
Media and advertising expertise, etc.

（C） Gunosy Inc. All Rights Reserved.

6

Growth Image

Increase corporate value through growth of existing businesses anddevelopment of new businesses

Aim for group-wide growth with a market
to long-term target

Investment

capitalization of 100 billion yen as a medium-Game
8Media business

Established（C） Gunosy Inc. All Rights Reserved.

7

Executive Summary
FY2023/5
Financial
Highlights(Full Year & Q4)（C） Gunosy Inc. All Rights Reserved.

8

(Full Year) FY2023/5 Full-Year Summary

FY2023/5

Net sales

8,052

million yen

vs. forecast 97.6％

YoY

89.5％

-268

million yen

vs. forecast

-

YoY

-

(full-year)
Operating profit

By company

GunosyGame8Others

Net sales

5,633million yen

1,666 million yen

751 million yen

Operating profit-376 million yen

287 million yen-178 million yen

Investment in Gunosy was implemented as planned and operating profit wasin line with the consolidated financial forecast.

Summary

Product KPIs in Gunosy remained strong throughout the year, with DAUs
increasing from the beginning of the year, but net sales fell short of theconsolidated forecast, mainly due to weakness in eCPM in Q4.
“slice” is back on growth track with new products that comply with RBI
guidelines.

（C） Gunosy Inc. All Rights Reserved.

9

(Q4) FY2023/5 Q4 SummaryMediabusiness

DAUs increased to 107% QoQ as retention rate of Gunosy
app improved

Game8

Business remained strong despite a slowdown in thepositive impact of major titles.

Investment“slice” back on growth track（C） Gunosy Inc. All Rights Reserved.

10

(Q4) Sales Increase / Decrease
Gunosy app DAUs increased due to product improvement and investment in advertising. On the other hand, S/D
for Gunosy Ads as a whole remained weak, resulting in lower sales due to slower than expected eCPM for programmatic
advertising and the difficulty in capturing demand for direct media buying.
Details of sales increase/decrease

FY2023/5
Q4 result*1

Gunosy Ads

1,197(Million yen)

Difference
YoY

-295

Factors behind increase/decrease

QoQ

-12

Gunosy Ads
The YoY drop in sales was primarily due to weaker-than-usualldemand for direct media buying during the Marchadvertising demand period, as well as a YoY decline in DAUs
in NewsPass and au Service Today.
l Overall Gunosy Ads sales also declined on a quarterly basis,

ADNW

119

-138

-21

due to weakness in the eCPM of programmatic advertising.
However, investment in advertising for Gunosy is
progressing steadily and DAUs are on an upward trend due to

Game8

445

-11

-24

the acquisition of new users and improvement in the retention
rate.
ADNW
Despite cross-selling with Gunosy Ads, sales declined both YoY and QoQ
due to lower CPM and impressions.

Others

244

51

-51

Game8
Business remained strong despite a slowdown in the positive impact ofmajor titles.

Others

Total

2,006

-393

-109

Sales continued to grow YoY, driven by strong performance at Smarprise.
Sales declined QoQ due to the exclusion of Grill from the scope of
consolidation.

*1: Sales of Gunosy Ads are the total of "Gunosy", "NewsPass", "au Service Today" and "LUCRA".
（C） Gunosy Inc. All Rights Reserved.

11

Executive Summary

Gunosy（C） Gunosy Inc. All Rights Reserved.

12

Gunosy

Business Model of the Gunosy App

In the Gunosy app, we obtain content from external media (“content partners”) and offer the service tousers free of charge. We provide advertising space to advertisers to serve ads to users, and we receive
revenue from advertisers.

Provide content

Content partner¥

Revenuesharing

Provide ad
space

Advertiser

GunosyBrowse content /Create ad space

Provide content /advertising

¥

User

Pay ad fee

Purchase/use goods/services, etc.

（C） Gunosy Inc. All Rights Reserved.

13

Progress Summary of Gunosy's Key KPIs

GunosyIn FY2023/5, we have made significant progress in improving retention rates, which we have beenworking on throughout the year. Advertising investments were executed as planned and DAUs
increased both on a QoQ and YoY basis. On the other hand, both direct media buying andprogrammatic advertising struggled and S/D declined YoY and QoQ.
Gunosy sales

Improved

*1

DAUs
YoY

101％

QoQ

107％

*2

Cumulative downloads

Retention rate

Needs
improvement

Sales/DAU
YoY

82％

90％

QoQ

Significantly
improved

YoY

105％

YoY

108％

QoQ

101％

QoQ

111％

AdImp/DAU

*3

*4

CPM

(Not disclosed)(Not disclosed)

Product side

Sales side

MarketingSales activities*1: Daily Active Users*2: The app retention rate refers to the percentage of newusers who activate the app after a certain period of time.

*3: Number of ads served per daily active user
*4: Cost Per Mille（C） Gunosy Inc. All Rights Reserved.

14

Gunosy's Key KPIs (1/2)

GunosyDAUs increased QoQ and YoY due to an improved retention rate and the resumption of full advertising
investment from Q3. Sales/DAU declined QoQ and YoY, reflecting weak sales activity during the Marchadvertising season and lower eCPM from April

DAU

Product side
YoY

101％

Sales/DAU (profitability per user)

107％

QoQ

Sales side

82％

YoY

90％

QoQ

DAUs increased QoQ due to KPI
improvements and increased advertising
investment.

S/D down due to weaker-than-usual direct
media buying sales in March and eCPM
weakness since April

Q3

Q3

Q4

FY2021/5

Q1

Q2

Q3

FY2022/5

Q4

Q1

Q2

Q3

FY2023/5

Q4Q4

FY2021/5

Q1

Q2

Q3

FY2022/5

Q4

Q1

Q2

Q3

Q4

FY2023/5（C） Gunosy Inc. All Rights Reserved.

15

Gunosy's Key KPIs (2/2)

GunosyRetention rate is improving due to product improvements such as push notifications and article
algorithms. On the product side, we expect to see an improved return on investment in new user
acquisition.

Cumulative downloads
YoY

105％

Product side

Retention rate

101％

YoY

QoQ

User acquisition costs are on track and weare steadily adding users

Q3

Q4

FY2021/5

Q1

Q2

Q3

FY2022/5

Q4

Q1

Q2

Q3

FY2023/5

Q4

Product side

108％

111％

QoQ

Retention rate improving QoQ and YoY due
to product enhancements such as push
notifications and article algorithms.

Q3

Q4

FY2021/5

Q1

Q2

Q3

FY2022/5

Q4

Q1

Q2

Q3

Q4

FY2023/5（C） Gunosy Inc. All Rights Reserved.

16

Gunosy

Advertising Expenses and Estimated IRR

Due to the improved retention rate and strong user acquisition efficiency, estimated IRR remained
above the investment criteria in Q4, despite S/D decline.

Estimated IRR and advertising expenses

Advertising expenses (actual)
Estimated IRR(Three-year IRR estimated from acquisition costs (CPI)and estimated marginal profit per user)

POINT

Despite a decline in
S/D, the estimated
Criteria

IRR remained above
the investment criteria,
supported by thestrong performance ofthe product KPIs.
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
2022

2023

（C） Gunosy Inc. All Rights Reserved.

17

Gunosy

Advertising Investment in Gunosy

In Q4, we invested in advertising, taking into account return on investment and other factors. Although theamount of investment was less than planned, the number of users increased as planned due to astrong retention rate.

Plan

Results + Scenario with increased ad
expenses

6⽉
Jun

FY2023
Status of media

7⽉
Jul

8⽉
Aug

Q1

10⽉
Oct

11⽉
Nov

Q2

12⽉
Dec

1⽉
Jan

Q3

2⽉
Feb

3⽉
Mar

4⽉
Apr

5⽉
May

Q4

Next FY
and beyond

It was believed that various KPIs had been
improved and that it was possible to expand the

Improved retention rates and successful
advertising investments increased ROI and

PolicyContinued

scale of users.

created an environment for user growth.

expansion of user

Implemented
accelerated use

Decision made to increase advertising investment

advertising

2H advertising budget
spent ahead of schedule

Increase of approx. 370 million yen for the full year(including budget used ahead of schedule)

investment

Examined accelerated use

Measures

9⽉
Sep

Amount of investment to beconsidered in a flexible
manner while monitoring thereturn on investment

Investment
implemented
Investment adjusted
based onperformance
conditions

Advertising expenses (Plan and Results + Forecast scenario)

Examined the use of 2H
advertising budget
ahead of schedule.

base through（C） Gunosy Inc. All Rights Reserved.

18

Hypothesis of S/D Decline and Status of Improvement

GunosyThe system for monitoring sales-related KPIs was inadequate, resulting in delays in detecting a decline in the numberof new contracts acquired. As a result, the number of advertising contracts declined, leading to a drop in S/D. We will focus
on acquiring new deals after reorganizing monitoring system for sales-related KPIs. Following the reorganization of the KPI
monitoring system in sales, we will focus on winning new contracts. We expect the number of advertising contracts to recoverby the end of July and S/D to return to pre-decline levels from August.

Number of ad serving deals

Inadequate sales KPI monitoring
system resulted in delayed detectionof declining new business acquisition
volume and product ID declines.

1

By increasing our sales efforts to acquire
new contracts, we have been able to securea backlog of orders that will be executed
prior to the expected upturn in S/D.
The assumed level required for S/D
recovery is expected to be achieved by theend of July, with sequential ad deliveries by
the end of July.
(Expected)

2

Causes of S/D decline
Inadequacies in the sales KPI
monitoring system caused
delays in detecting a decline
in new contracts. As a result,the number of ad serving
projects decreased and S/Dfell short of expectations.

Actions for improvement

Dec

2022

Jan

Feb

Mar

Apr

May

2023

Jun

• Re-establish sales KPIs andmonitoring system• Maximize activities to win new
business• Improve the quality of customer
success from order to delivery
Jul

Jul

2
weeks

4
weeks

S/D is expected to return topre-decline levels beginningin August as the number ofcontracts recovers.

（C） Gunosy Inc. All Rights Reserved.

19

Valuation as an Investment Opportunity

GunosyGunosy's retention rate has improved and its product potential has expanded. Although S/D is currently below plan, we
expect this to be a short-term issue that can be resolved by strengthening the sales operations. We continue to view
Gunosy as an important growth driver and will continue to invest in advertising in the next fiscal year, aiming toachieve both consolidated and non-consolidated operating profits in FY2025/5.

Product

Excellent

KPIs such as DAUs and retention rates
remain strong
Opportunity
Product-related KPIs are strong, and growth isexpected to come from a steady increase in the userbase due to advertising investment.

•
•

Sales

Needs
improvement

Sales/DAU are currently weaker thanplanned.
Risk
S/D are currently slow, but are expected to improveas the sales force is strengthened.

While there are some short-term challenges to S/D, profitability among new users is high andthe estimated IRR of new investments remains above the investment criteria. Accordingly, we
continue to view Gunosy app as an important growth driver.
In FY2024/5, we plan to resolve short-term operational issues and continue to invest inadvertising to the extent that our estimated IRR exceeds our investment criteria. We will growsales to a level that will allow us to achieve consolidated and non-consolidated
operating profitability in FY2025/5.
（C） Gunosy Inc. All Rights Reserved.

20

Executive Summary

Game8（C） Gunosy Inc. All Rights Reserved.

21

Game8Game8As expected, the positive impact of the major titles launched in 3Q subsided to some extent, but profits
remained at a high level and made a significant contribution as a pillar to the Group's overall profit
for the full year. We will continue to operate existing businesses in a stable manner while investing tocreate new business pillars.

(Million yen)

500

451
435 441

Net sales
Operating profit

390

366 375420457

470 445369 381317 320

250

223

240

113
54

113 108 111

151

127

136

50

97

109

129

123
28

0
Q1

Q2

Q3

FY2020/3

Q4

Q1

Q2

Q3

FY2021/3

Q4

Q1

Q2

Q3

Q4

FY2022/3* Nonconsolidated results (before consolidated adjustment). Results of Smarprise, our subsidiary is not included.
FY2023 Q4 results are for the period from January to March 2023 due to a gap with the parent company's consolidated accounting
period.

Q1

87

48
Q2

Q3

Q4

FY2023/3（C） Gunosy Inc. All Rights Reserved.

22

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

23

sliceServices provided by "slice"“slice” provides a financial platform that allows easy borrowing and flexible repayment for the Indian
market.

slice UPI

slice borrowslice mini（C） Gunosy Inc. All Rights Reserved.

24

"slice" and Gunosy - Major Events to Date

slice

Since our initial investment in September 2019, we have made multiple investments to provide maximum
support for slice's business expansion.

2015 Jun

GaragePreneurs Internet Pvt Ltd., which operates"slice" established
Percentage of ownership by the
Gunosy Group17%2019 Sept

Initial investment

2020 Jun

Second investment

2021

Jun

Third investment (approx. 15 million USD)

Nov

"slice" achieved unicorn status by raising
significant funds in its Series B funding round

Became our affiliate

4th investment (approx. 10 million USD)

Our CIO was dispatched as2022 Feb
Jun

Became an equity method investee of Gunosy by dispatching a
director“slice” raised approx. $50 million in its Series B1 round

Sep

Digital Lending Guidelines issued by RBI *1

Dec

New products released in compliance with Digital Lending
Guidelines (December 1-)

Aprapprox.

Enterprise value exceeds$1.5 billion in Series B1 rounda director.

Director and Chief
Investment Officer (CIO)

Yuki Maniwa

Strengthening thecollaboration between
the two companies,“slice” became an
equity-method investeeof the Gunosy Group.

*1: For more information on regulations governing personal credit, see:https://rbidocs.rbi.org.in/rdocs/notification/PDFs/GUIDELINESDIGITALLENDINGD5C35A71D8124A0E92AEB940A7D25BB3.PDF（C） Gunosy Inc. All Rights Reserved.

25

*1

slice

Status of Compliance with Digital Lending Guidelines

To comply with the Digital Lending Guidelines issued by the Reserve Bank of India (RBI), changes to the
product experience were required by the end of November 2022, and the new product release wascompleted within the deadline.

September 2, 2022

Digital Lending Guidelines issued

November 30, 2022

Deadline for updates to adhere to the Guidelines

From December 1,
2022

New product experience launched that complies with theDigital Lending Guidelines*1: For more information on regulations governing personal credit, see:https://rbidocs.rbi.org.in/rdocs/notification/PDFs/GUIDELINESDIGITALLENDINGD5C35A71D8124A0E92AEB940A7D25BB3.PDF（C） Gunosy Inc. All Rights Reserved.

26

sliceProgress on KPIs

"slice" entered a period of re-growth after the completion of the product release that complied with theDigital Lending Guidelines. Since the product relaunch, "slice" has been cautiously extending credit tocreditworthy users and has achieved organic growth with very low marketing costs.
AUM

Focus on growth while controlling risks
Producttransition
periodAUM (outstanding loan balance)

AUM recorded a temporary

Organic growth achieved

decline following the productrelaunch in December.

Then turned to growth
in January.
R

ro
eg

h
wt

a
ph

se

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

2021

2022

2023
（C） Gunosy Inc. All Rights Reserved.

27

sliceOur View on slice’s Growth Potential- Nov 2022
Response to RBIRegulations- June 2022
Accelerated growth

Rapid
growthResponse
complete“slice” has experienced explosive growth bytapping into the need for deferred payments
and credit cards in the Indian market, and is
now one of India's leading fintech unicorns.

Temporary decrease in AUM due tocompliance with the Digital Lending
Guidelines- Dec 2022
Regrowth

Following the productrelaunch, monthly
losses have beensignificantly reduced
and this trend is
expected to continue.
Entering a phase of stable value
growth through organic growth

Although growth has temporarily slowed in the current period due to the regulatory
response, the growth potential remains extremely high.
Assessment ofgrowth potential• India is expected to continue to experience significant economic growth• Financial needs such as deferred payments and credit cards remain extremely high
• Strong support from youth, the volume segment of the population

Our stance

We will continue to work closely with “slice” to help
them realize their full growth potential as they seek
to grow in the new regulatory environment.
（C） Gunosy Inc. All Rights Reserved.

28

Financial Results for FY2023/5（C） Gunosy Inc. All Rights Reserved.

29

FY2023/5 Consolidated Results for Q4
As for net sales in FY2023, Gunosy's DAUs grew steadily from the beginning of the year, but sales
declined year-over-year due to the sluggish performance of ADNW as well as the weaker-than-usual
performance of direct media buying. In addition to the decline in sales, an operating loss was recorded inadvance due to advertising investments for Gunosy's re-growth.
(Million yen)

QoQ comparison

FY2023/5 Q4

Net sales
Operating profit
OperatingmarginOrdinary profit

1

Profit attributableto owners of parent

2

1

2

2,006
-112
-472
-657

FY2023/5 Q3

QoQ

2,116

94.8%

6

-

0.3%

-

-304

-

-332

-

YoY comparison

FY2023/5
Full-year

FY2022/5
Full-year

8,052
-268
-1,705-1,150

YoY

8,998

89.5%

412

-

4.6%

-

191

-

130

-

Share of loss of entities accounted for using equity method: A loss of 373 million yen was recorded upon finalizing theaccounting treatment of the PPA (purchase price allocation) related to "slice", which had been pending, and therecognition of profit/loss. Of this amount, 85 million yen was temporarily recorded upon the finalization of the PPA.
• Loss on valuation of investment securities: A loss on valuation of investment securities of 111 million yen was recordedon two issues held solely for investment purposes, taking into account their individual financial conditions.
• Impairment of non-current assets: Based on the medium- to long-term plan, which takes into account the loss incurred
upfront from the advertising investment in Gunosy, and after review in accordance with the "Accounting Standard for
Impairment of Non-Current Assets," an impairment loss of 65 million yen was recorded for non-current assets.
（C） Gunosy Inc. All Rights Reserved.

30

Total Number of Active Users *(MAUs)
Due to the successful advertising investments in Gunosy, MAUs bottomed out and turned into an
expansionary trend throughout the period.

LUCRA (Service ended in February 2023)
NewsPass + au Service Today
GunosyQ1

Q2

Q3

FY2020/5

Q4

Q1

Q2

Q3

FY2021/5

Q4

Q1

Q2

Q3

Q4

FY2022/5*Average for each quarter of MAUs (monthly active users) of "Gunosy", "NewsPass", "au Service Today" and "LUCRA".

Q1

Q2

Q3

Q4

FY2023/5（C） Gunosy Inc. All Rights Reserved.

31

Breakdown of Net Sales *1
Overall, net sales remained stable compared to the previous quarter, supported by strong product KPIs.
On a YoY basis, however, sales declined due to sluggish growth in Gunosy Ads, mainly driven by weak uptake indirect media buying demand, in addition to poor performance in ADNW. Our challenge going forward is tostrengthen sales operations and achieve stable sales growth in line with the growth in product KPIs.

Others
Game8
ADNW
*2
Gunosy Ads(Million yen)

4,500
178

223
3,000

19

240

1,357 1,480

128

317

1,298

251

320

530
1,500

203

366

371
2,119 1,964 1,960

1,594

221
246

375

262

275

435

260

441

267

168

451

254

153

390

227

194

420

247

192

457

257

142

369

201

203

381

168

295

470

140

244

445

119

1,267 1,198 1,189

1,526 1,403 1,334 1,352 1,492

1,214 1,248 1,209 1,197

Q1

Q4

Q1

0

Q1

Q2

Q3

FY2020/5

Q4

Q2

Q3

FY2021/5

Q1

Q2

Q3

FY2022/5

Q4

Q2

Q3

Q4

FY2023/5*1: Sales of Gunosy Ads, ADNW and Game8 are presented on a nonconsolidated basis. Internal trade adjustments are included in Others*2: Sales of Gunosy Ads are the total of “Gunosy”, “NewsPass”, “au Service Today” and “LUCRA” (Service ended in（C） Gunosy Inc. All Rights Reserved.
February 2023).

32

Cost Structure
Costs continued to be tightly controlled. Personnel costs decreased sequentially. Other costs increased
due to one-off expenses such as PPA costs related to slice and recruitment costs.

3,646 3,781
3,362(Million yen)

3,000

1,111

1025
983
2,337

822

1,500

51
526
157

917
72
526
146

2,048

583
90
541
134

957
193
86
560

977 1,091 1,027 125

0

Q1

Q2

Q3

FY2020/5

2,304
1,866

1,090

810
153
94
583

1,974

779

920

153
93

152
88

535

2,135 2,085 2,187 2,176
540

515

537
348

580

2,010 2,080
561

2,110 2,118
Others

550

639

668

331

301

307

Advertising expenses
Rent expenses on

370

334

318
64

375
36

371
39

389
39

227
39

197
37

288
40

282
39

297
36

513

518

515

538

575

607

629

624

630

603

419

330

413

128
278

121
182

111
187

115
195

109
186

118
168

114
181

114
186

107
146

120
125

116
102

116
87

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2021/5

FY2022/5

Revenue sharing *land and buildings
Personnel e xpenses
Se rver expe nse s

FY2023/5* “Revenue sharing” included in “Others” in FY2021/5 and earlier, but separated from “Others” from FY2022/5 Q1.
“Live video production expenses” is included in “Others” from FY2022/5 Q1.

（C） Gunosy Inc. All Rights Reserved.

33

FY2024/5 Outlook And Policy（C） Gunosy Inc. All Rights Reserved.

34

Business / Investment Policy Updates
In the existing businesses, the growth of the Gunosy app and the Game8 business in particular will be key
to strengthening profit generation in the short to medium term. We continue to value "slice" as a
medium to long-term growth driver, while being mindful of risk management in terms of the consolidatedbalance sheet. On the new business front, new developments from LLM and Game8 Group are very promising.

Growth opportunities

Business issues

Business policy/Investment policy

Improved retention rates
and high profitability fromnew users• Stabilize revenue-related
KPIs with focus on
strengthening advertisingsales operations• Continue to improve product
KPIs for dramatic growth• Subject to the strengthening of our operational structure
and the increased solidity of our business plan, we willcontinue advertising investments until we reach a sales
scale that allows us to achieve sufficient capital efficiency
as Gunosy Inc. (We aim to achieve consolidated and nonconsolidated operating profitability in FY2025/5.)(game walkthroughmedia)

Higher cost per media unit

• Improve productivity ofarticles• Invest in areas where existing media strength and customer
base can be leveraged and actively consider M&A
opportunities, leveraging Game8's own strong financial
base.

NewsPass / au
Service Today

Provide more value to au
users• Achieve stable sales growtheven in the face of declining
DAUs for NewsPass without
new user acquisition• Continue to work with KDDI to invest a certain level in theareas of development and promotion to improve theproduct.

slice

Strong demand for deferredpayments, credit cards anddigital payments in the
Indian market• Concentration of exposurein overall consolidated B/S• Close asset management to support the realization ofslice's extremely high growth potential and to implement astrict risk management approach to the concentration of
exposures within the consolidated B/S.

LLM

Social implementation of
new solutions based on
innovative technologies• Commercialize our coretechnology, Gunosy AI(tentative name)• Establish a framework that enables rapid trial and error forsocial implementation in order to accumulate knowledge
and evaluate business feasibility. Initially, we plan to startwith a minimum investment of less than 100 million yen per
year.

Other newbusinesses

New business development in
Game8, new initiatives such as“YOU IN”, “colleize”, etc.

• Refine the business toinvestment grade status where
there is a rationale for theinvestment.

• Make individual investment decisions based on future
growth potential, capital efficiency, risk, and other factors
while monitoring business progress.

GunosyExisting
business

Game8

New
business（C） Gunosy Inc. All Rights Reserved.

35

Policy for FY2024/5: Overall Summary
Aiming to achieve consolidated and non-consolidated operating profitability in FY2025/5, FY2024/5 will be ayear of investment. We will continue to invest in advertising for Gunosy app, aiming for a revenue scale that willallow the company to be profitable on a non-consolidated basis, while continuing to invest in new businesses suchas LLM and Game8, and continuing to manage the assets of "slice" closely in the medium to long term.

Medium to longterm

Increase market capitalization to 100 billion
yen

FY2025/5

Achieve consolidated and non-consolidated
operating profitability

FY2024/5

An operating loss of 500 million yen was recorded upfront in FY2024/5,
which we view as an "investment year," in order to achieve
consolidated and non-consolidated operating profitability in FY2025/5.

Mainly impacts
FY2025/5

Existing
businesses

Areas that will serve as stable revenue streams andenable us to achieve sustainable growth

Mainly medium tolong-term impactNewbusinesses
Cultivate and sow seeds for discontinuous growth

GunosyAdvertising investment
amountFY2023/5: 930 million yen
FY2024/5: 1.09 billion yen

Game8

Game8

(Existing business)(New business)

Slice &
Investment

LLM(+ other new businesses)（C） Gunosy Inc. All Rights Reserved.

36

Operating Profit Trends
In FY2024/5, we will work to improve sales and gross profit by making upfront investments in the
Gunosy app, and to improve operating margin by strengthening productivity throughout the organization,in order to achieve consolidated and non-consolidated operating profitability in FY2025/5. Furthermore, we willachieve growth toward a market capitalization of 100 billion yen by using new businesses as growth drivers.
FY2023/5

FY2024/5(actual)(plan)

Operating profit-268
Million yen

Started investingin Gunosy from
2H, posting losses

Operating profit-500
Million yen

FY2025/5(plan)

Mid- to long-term goals

Achieve consolidated
and non-consolidated
operating profit

Profit growth aimingfor 100 billion yen
market capitalization

Achieve consolidated andnon-consolidated operating
profitability by increasing

Ensure a level of capitalsales and gross profit
through the upfront
investment in Gunosy andbillion yen market

improving operating margin
by increasing productivity
throughout the organization.

businesses and by using

Execute upfront investment
in Gunosy for full year.

upfront.

0efficiency and profit
sufficient to achieve 100
capitalization throughstable growth in existing
new businesses as growth
drivers.

（C） Gunosy Inc. All Rights Reserved.

37

Sales Forecast by Business
The Gunosy app is expected to achieve sales growth of over 10% due to upfront investments, and Game8 isalso expected to achieve stable growth. Although overall sales will decline due to the underperformance ofsome businesses, we expect to maintain gross profit levels by improving gross profit margins through anincrease in the sales ratio of the Gunosy app and other factors.
(Million yen)

FY2023/5(result)*1

Gunosy Ads

4,869

FY2024/5(plan)

4,592

Difference
Increase/
Decrease-277

PercentagechangeFactors behind increase/decrease
Gunosy Ads-5.7%

Although the Gunosy app is expected
to grow both sales and gross profit bymore than 10% YoY, sales are expected

ADNW

Game8

629
1,666

369
1,855

-260
189

-41.4%
11.4%

to decline YoY due to lower News Pass
DAUs

ADNW
Switch to operating with a minimum
workforce as the businessenvironment is expected to remain

Others

886

1,063

177

20.5%

challenging.
Game8
Plan to expand primarily throughTotal
Gross profit(Gross profit
margin)

8,052

7,880

3,106

3,098

(38.6%)(39.3％)

-172
-8

-2.1%
-0.3%

existing game walkthrough media
business.
Gross profit
Maintain gross profit level despite YoY
sales decline through improved grossprofit margins*1: Sales of Gunosy Ads are the total of “Gunosy”, “NewsPass”, “au Service Today” and “LUCRA” (Service ended in February 2023).
（C） Gunosy Inc. All Rights Reserved.

38

FY 2024/5 Full-Year Outlook (Consolidated)
As for ordinary profit, we plan to record a non-cash loss due to share of profit/loss of entities accounted forusing equity method related to “slice”.
With the re-growth of AUM, the above profit/loss is expected to improve significantly YoY.

(Million yen)

FY2023/5 full-year(result)

FY2024/5 full-year(plan)

8,052

7,880

97.9%

-268

-500

-

-

-

-

Ordinary profit-1,705-999-

Profit attributable toowners of parent-1,150-1,070-Net sales
Operating profit
Operating margin

YoY（C） Gunosy Inc. All Rights Reserved.

39

FY 2024/5 Full-Year Outlook (Consolidated – 1H and 2H)
Net sales and profit/loss in each category are expected to improve in the second half of the fiscal year. In
particular, ordinary profit and profit/loss are expected to improve significantly in the second half
compared with the first half, mainly due to the continued improvement in slice's loss.

(Million yen)

FY2024/5 full-year(forecast for 1H)

FY2024/5 full-year(forecast for 2H)

3,841

4,038

196

-351

-148

203

-

-

-

Ordinary profit

-823

-175

648

Profit attributable toowners of parent

-871

-198

673

Net sales
Operating profit
Operating margin

Difference（C） Gunosy Inc. All Rights Reserved.

40

Balance Sheet Status
A strong financial foundation is in place and sufficient cash and deposits are maintained to allow for flexible
investment. Existing investments are primarily in slice and are expected to generate high returns. Whilestrengthening the ability to generate short-term cash flow, mainly through growth investments in Gunosy, there is alsosufficient capacity for medium to long-term growth investments, including new businesses such as LLM and M&A.

Balance sheet as of the end of FY2023/5
Cash and cash equivalents management
policy- Non-consolidated loss of 500-600
million yen expected to be recorded
upfront in FY2024/5 due to advertising
investment in GunosyàSales growth rate of over 10% isplanned.
‧ The rest will be pooled for stableworking capital, investment in new
business (LLM, etc.), promotion of
investment business, and provision for
flexible M&A.
Of this amount, Game8 has 1.3 billion
yen in cash and deposits. In addition toexisting and new investments, growththrough M&A will be actively considered.
Investment securities: 4.9 billion yen- slice: over 3.0 billion yen→Significantly exceeded initialinvestment amount
Estimated valuation & future growthpotential(Million yen)

(Cash financed undercommitted credit lines)

Committed credit lines
reserved for contingencies

A working capital facility of 3
billion yen reserved forcontingencies

Current assets

7,272

Liabilities

1,466

Only business liabilities. Debtfree and in sound financial
condition.

Cash and deposits

5,925

Net assets

10,857

Solid financial foundation built on
past fundraising and earnings
history

Non-current assets

5,051
Total assets: 12,324（C） Gunosy Inc. All Rights Reserved.

41

Initiatives in LLM（C） Gunosy Inc. All Rights Reserved.

42

Activity Results for FY2023/5

LLM*1
We recognized the emergence of LLM as
an innovative technology and started developing LLM-based
services early on. After repeated trial and error, we have completed releases for three projects. We havebeen actively involved in research and development from the earliest stages.

Verification of concept and implementation
AI-based video
summarization

Resolve implementation
issuesNewsPresso

Gunosy AI (tentative name)Automatically summarize video
content into a few lines of text
and create articles

NewsPresso (beta), a news appthat presents international news
articles and directs users tointernational news sites, waslaunched.

Development of Gunosy AI, a
new system using GPT-4, waslaunched.

Aim(tentative name)

Aim

Aim

• Validate implementation of content
summarization• Validate the need for video
summarization content• Released on a trial basis to validate
the possibility of solving social
issues in the news domain• Develop general-purpose systems toenable social implementation• Respond to future B2B solution
opportunities

February 17, 2023

May 19, 2023

June 27, 2023

*1: Large Language Models (LLMs) are natural language processing models trained on large amounts of text data.

（C） Gunosy Inc. All Rights Reserved.

43

Hypotheses about the LLM in its Early Years And Insights
Gained to Date

LLM

While we recognize that LLM poses certain risks to existing businesses, we also see it as a technologythat offers significant business opportunities for both existing and new businesses. Among thechallenges for social implementation of LLM, we focused on our core competence, where we can leverage
the strengths of our technology, and developed a solution, "Gunosy AI ( tentative name)".

Opportunities
Business
improvement

Media
Game8

Improve productivity by automatingtasks, etc.
Deliver new media experiences
Enhance productivity and user
experience

Risks
Certain risks are recognized in existing media
businesses• Lower barriers to entry into the media business• Decreased profitability of existing content providers
due to increased content volume• LLM is expected to play a major role in solving social problems, reforming existing businessInsights

models, and in many other areas. In many cases the major implementation hurdles are (1)outputting high-quality responses in a natural interactive format, (2) addressing security concerns,and (3) integrating with the service itself.
• Our core competence in effectively addressing these issues will help us manage various risks andcapitalize on key growth opportunities.

（C） Gunosy Inc. All Rights Reserved.

44

Gunosy AI (tentative name)

LLM

Gunosy AI is a system that uses LLM (Large-scale Language Model). It mimics human processes andgenerates appropriate responses based on data held by companies. It can be deployed directly as a web
service or on other platforms through API-compatible tools such as LINE and Slack.

Gunosy AI (tentative name)Gunosy AI (tentative name)Started development ofGunosy AI, a new system(tentative name)utilizing GPT-4

1

Resolves the issue of legitimacy ofanswers, which is considered aconcern for ChatGPT.
By properly passing the basic data of the service in which
Gunosy AI is implemented to GPT, it is possible to returnthe correct answer while maintaining a naturalconversation.

2

Protect input information
Gunosy AI, accessed through the GPT-4 API, is designed
so that input information is not used for learning andimprovement.

Aim• Develop general-purpose systems toenable social implementation• Respond to future B2B solution
opportunities

We aim to commercialize the productas a B2B solution in the future.

June 27, 2023

（C） Gunosy Inc. All Rights Reserved.

45

LLM

Structure to Promote LLM

Kentaro Nishio, Director of Gunosy and founder of Game8, has been appointed Director in charge of thecommercialization of Gunosy AI (tentative name). After establishing a new department, we plan to increase thenumber of development trials and accumulate knowledge for internal use and as a B2B solution.

Business Promotion Structure
Kentaro Nishio, Director of Gunosy,
appointed Director in charge

Director

Current policy

1.

Build a system that allows us to do trial and error
for social implementation at high speed toaccumulate knowledge and evaluate businessfeasibility.

2.

Increase opportunities to take on new businesschallenges by actively using AI internally andimproving the productivity of existing businesses.

3.

We envision our position in this area as a providerof software that acts as an intermediary between
users and LLMs.

4.

We will use Gunosy AI (tentative name) toformulate our own businesses and startbusinesses with collaborative partners.

Kentaro Nishio
Co-founded Labit Inc. while a student at Tokyo
Metropolitan University and became Representative
Director in 2013. After transferring the business to a
subsidiary of Recruit Holdings, founded Game8 andcurrently serves as Representative Director andChairman. Joined Gunosy in 2015 after Game8 becamea subsidiary of Gunosy. Became Director of Gunosy inAugust 2020, after having served as Corporate Officer
and General Manager, Media Business Division of
Gunosy since September 2018.

（C） Gunosy Inc. All Rights Reserved.

46

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

47

Media Business

GunosyA special tab was made available for the WBC (World Baseball Classic), which attracted a lot of
attention. Proactively addressing users' needs for "information they want to know" also contributed tothe increase in active users.
Special tab was made available for the WBC (March 6 – 23)

Gunosy's original content published incollaboration with partner media companies.
Articles produced in collaboration
with partner media

Our original articles

Contribute to an increase in active users
through the provision of "information
they want to know".
（C） Gunosy Inc. All Rights Reserved.

48

Media Businessau Service Today

Measures are being taken to further expand user contact points on au Service Today, a portal site forau users. Continuous efforts are being made to improve the user experience in obtaining information andto enhance the user interface.
Measures to further expand user contact
pointsSpecial features of the “au Service Today”

An all-in-one application thatserves as a gateway for au
users
Au users
Pre-installed onAndroid devices

Portal site
operated by oneof the largest
telecommunicati
ons companies
in JapanConnected to various au services（C） Gunosy Inc. All Rights Reserved.

49

Media Business

Ad Network (ADNW)

Despite efforts to increase cross-selling with Gunosy Ads, both impressions and CPMs remainedsluggish due to changing market conditions.

Number of Impressions and CPM(Million imp)

60,000¥40¥31.3345,000¥29.06imp¥27.7030,00043,32550,988CPM¥15.1446,71834,54315,000¥20¥12.5929,432¥11.48 ¥11.91 ¥11.87¥11.14 ¥11.22¥11.86¥10.8722,489 21,892 22,763 23,165 20,493 21,037 23,941¥7.99 ¥7.25¥6.81 ¥6.58

25,228 23,513 20,915 18,392

0

¥0

Q1

Q2

Q3

FY2020/5

Q4

Q1

Q2

Q3

Q4

Q1

FY2021/5* CPM (cost per mille): Price per 1,000 impressions of advertisement

Q2

Q3

FY2022/5

Q4

Q1

Q2

Q3

Q4

FY2023/5（C） Gunosy Inc. All Rights Reserved.

50

Investment

Investment*1

The overall cumulative investment remains in the range of approximately 5 billion yen. There was no
major change in the overall portfolio.
* Investments made since October 2018, when the investment project was launched, are included in the following:

Share

Main investee companies

Early

FintechEducation
Exit
executedIndia

Mid-to-lateInvestment asa limitedpartnerApproxCommerce

MaaS

FintechFintechReal estatetechCommerce

Audio
deliveryFintech

75%

Early
Japan

Exit
executed

Mid-to-late

Approx25%

Organic EL

HR techInvestment asa limitedpartner*1: Includes balances committed to investments, such as investments as a limited partner.

（C） Gunosy Inc. All Rights Reserved.

51

Status of the Estimated Value ofthe Investment Portfolio

Investment

FY2019/5

FY2020/5

FY2021/5

FY202/5

FY2023/5

0.98

0.99

1.11

5.36

5.16

Investment
ratio(Million yen)

Accumulated investment“Accumulated
investment” and“Estimated value + Sale
price”

26,54625,741*1

Estimated value + Sale price *2

253

249

813

808

1,867 2,068

5,140

4,805

Investm
ent

Japan

30

259

770

880

1,090

(accumulat
ed)

India

223

553

1,097

3,924

4,049

Market
value

Japan

30

259

776

1,037

1,357

(accumu
lated)

India

218

547

1,291

24,70325,188*1. Accumulated investment: Calculated in yen at the exchange rate at the time of investment. Includes investments in issues already sold.
*2. Estimated value: Value that we estimated as the price at which shares, etc. would be transferred in an arm's-length transaction, based on the following method. Note that such estimatedvalue is generally not based on the results of a valuation report by an external third party or an audit by an accounting auditor, but is calculated by us at our own discretion.
(1)
(2)
(3)

Issues that raised funds in a recent funding round: The estimated valuation is the valuation at the time of the relevant round, with a 20.7% illiquidity discount applied.
Issues for which an external third-party valuation was previously obtained: The estimated valuation is based on such valuation.
Other issues: Valued at book value at the time of investment. For those acquired in foreign currency, the value is converted at the most recent exchange rate.

（C） Gunosy Inc. All Rights Reserved.

52

New Business

YOU IN

Gift demand remained strong and purchases by foreign tourists were solid in store in May, suggestingthat demand in the inbound market is also strong. Sales continue to grow.

Offline sales@all day place shibuya(May 20-21, 2023)

Sales

Sales continue togrow

Growth+91%

FY2022/5

FY2023/5（C） Gunosy Inc. All Rights Reserved.

53

Reference Materials: Overview of Gunosy Inc.

（C） Gunosy Inc. All Rights Reserved.

54

Overview of Gunosy Inc.

Basic Information
Company name:Gunosy Inc.

Representative:

Shinji Kimura

Representative Director and Chairman,
Officers: Group Chief Executive Officer (CEO),
Shinji Kimura

Yuya Taketani

Representative Director and President,
Yuya Taketani

Established:

November 14, 2012

Director and Chief Investment Officer (CIO),
Yuki Maniwa

Fiscal year end:May

Director, Kentaro Nishio

Capital:Director, Takuya Sawada

Stock Code:4,099 million yen(as of the end of May 2023)
6047 (TSE Prime)

Audit corporation:

Ernst & Young ShinNihon LLC

Director (Outside), Junichi Shiroshita

Number of
employees:

252(as of the end of May 2023, on aconsolidated basis)2-24-12 Shibuya, Shibuya-ku, Tokyo

Director (Outside), Hirokazu Mashita

Head office:Business:

Development and operation of information
curation service and other media

Director (Outside), Suguru Tomizuka

Director (Outside), Lei-Isabelle Nakao
Corporate Auditor, Masakazu Ishibashi
Corporate Auditor (Outside), Kenji Shimizu
Corporate Auditor (Outside), Noboru Kashiwagi（C） Gunosy Inc. All Rights Reserved.

55

Our Management TeamThe management structure for FY2023/5 is as follows. We are continuing to strengthen our governance,
including the transition from a non-statutory Compensation Committee to a non-statutory Nomination
and Compensation Committee in December 2021.

(*) N&C

N&C

N&C

Representative Chief Director andChairman, Group Chief Executive
Officer (CEO)

Representative
Director andPresident

Shinji
KimuraDirector and Chief
Investment Officer (CIO)

Director

Director

Yuki
ManiwaKentaroNishioTakuyaSawadaYuya
Taketani
N&C

Director (Outside)

SuguruTomizuka

N&C

Director (Outside)

Junichi
Shiroshita

N&C

Director (Outside)

Hirokazu
Mashita

Director (Outside)

Lei-Isabelle
Nakao（C） Gunosy Inc. All Rights Reserved.

56

From “Gunosy Way” to “Gunosy Pride”
The concept of "Gunosy Way", which had been defined as a milestone for Gunosy to follow, wasredesigned as "Gunosy Pride“, which inherits the original thoughts and concepts.

1“Triple win” philosophy
Benefit the customer, the user, and the world. Benefit yourself, others, andyour fellow employees. We will continue to create a cycle of goodness not
only outside the company and society, but within our company as well.

2

Creating opportunities with science
We will use data and technology to accelerate innovation with facts. We will
also use science to solve social issues.

3

Centennial quality
We do not stop working until we feel that this is the best we can do, rather
than thinking that this is good enough. We will face the work in front of us
with sincerity and honesty, seeking quality that will endure for a hundredyears.

4

Respond to adversity in a positive way
There are as many adversities as there are challenges. However, we
believe that it is the adversity that brings us the opportunity for growth. We
will not run away from the obstacles in front of us, but rather we will
aggressively pursue our business in adversity.

（C） Gunosy Inc. All Rights Reserved.

57

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.

58

Optimally deliver information to people around the world