FY2019/5 Financial Results for Q1
Gunosy Inc.

First Section of The Tokyo Stock Exchange
Stock (Code: 6047)
October 12, 2018

INDEX

Financial Results for FY2019 Q1

1 FY2019/5 Financial Results for Q1

P3

FY2019 Outlook

2 FY2019/5 Results Forecast

P15

Business Overview by Division

3 Business Overview

P17

APPENDIX

4 Reference Materials: Overview of Gunosy Inc.

(C) Gunosy Inc. All Rights Reserved.

P27

1

Financial Results for FY2019 Q1

FY2019/5 Financial Results for Q1(C) Gunosy Inc. All Rights Reserved.

Highlights of Financial Results
Outline of P/L for Q1 of the fiscal year ending in May 2019
YonY

Net sales

3.70 billion yen+1.28 billion yen (+53.3%)

Operating profit

0.79 billion yen+0.37 billion yen (+90.3%)

Ordinary profit

0.79 billion yen+0.37 billion yen (+90.3%)

Profit0.54 billion yen+0.27 billion yen (+100.5%)

NewsPass, LUCRA, ADNW and all subsidiaries have grown more than expected.

GunosyNewsPass

LUCRA

ADNW

Subsidiaries

SteadySignificant
increase inrevenueSignificant
increase inrevenueSignificant
increase inrevenueSignificant
increase inrevenue

Advertising expenses:
under control
DAU: Stable(C) Gunosy Inc. All Rights Reserved.

PAGE |

4

Summary
Topics• We had reduced the advertising expenses for Gunosy by 300 million yen annually since last year andanticipated a decrease in DAU.
• However, acquisition on a new promotional strategy was steady, and DAU remained stable.
• The existing businesses of NewsPass, LUCRA, ADNW and subsidiaries have grown as new pillars.
• Video ADNW, blockchain and other businesses have been launched.

Existing

New

Accumulateknowledge(C) Gunosy Inc. All Rights Reserved.

PAGE |

5

FY2019/5 Consolidated Results for Q1
With the contribution of the growth of new business pillars other than Gunosy, sales increased by 53.3% year
on year.
As a result, the progression rate of operating profit is good, at 31.7%.
(Million yen)

Quarter
FY2018/5
Q1

Full year

FY2019/5
Q1

2018/7/12
Full-year forecast

YonY

Progression
rate

Net sales

2,413

3,700

+53.3%

13,96026.5%

Operating profit

416

792

+90.3%

2,503

31.7%

Operating margin

17.3%

21.4%

-

17.9%

-

Ordinary profit

416

792

+90.3%

2,503

31.7%

Profit attributable toowners of parent

271

544

+100.5%

1,650

33.0%

(C) Gunosy Inc. All Rights Reserved.

PAGE |

6

FY2019/5 Factors for Increase in Profit in Q1
More than the decrease in advertising expenses for Gunosy, sales growth in Gunosy Ads and ADNW,
including NewsPass and LUCRA, made a significant contribution to the increase in profit.

(Million yen)-414

800000000

582

-373
330

78

43

400000000

127

792
416
0

FY2018 Q1
operating profit

GunosyadvertisingexpensesGunosy Ads
sales

ADNW sales

ADNW cost of
sales

Gunosy cost of
Game8 nonDigwell nonFY2019 Q1
main bodyconsolidated
consolidated
operating profit(Including
operating profit operating profit
internaltransaction
adjustment)** Mainly increase in costs for revenue sharing and advertising expenses for LUCRA(C) Gunosy Inc. All Rights Reserved.

PAGE |

7

Financial Results (Quarterly)
Net sales set a record high for 12 consecutive quarters, at 3.70 billion yen.
Operating profit was 0.79 billion yen, a significant increase from the record-high amount in FY2018 Q4.

Net Sales and Operating Profit
FY2019 Q1

3.70 billion yen(Million yen)

3,322

3,500

2,707 2,758
2,413
1,959 1,982
1,521
1,500

790
271

△997

Q4

892

486

995

201

285

Q3

Q4

880

1,006

2,117

1,680

1,191

47

129

184

201

245

Q1

Q2

Q3

Q4

Q1

376

464

431

416

508

444

Q2

Q3

Q4

Q1

Q2

Q3

568

792

△124 △172

Q1

Q2

FY2015FY2016FY2017FY2018Q4Q1FY2019* For the quarters up to FY2016 Q2, the figures are from the non-consolidated results.

(C) Gunosy Inc. All Rights Reserved.

PAGE |

8

Breakdown of Net Sales
All the net sales of Gunosy Ads, ADNW and Game8 Inc. set record highs, which means that thediversification of profits is progressing.

(Million yen)

258

4,000

Others(Game8)(ADNW)(Gunosy Ads)*1

151

208

3

52
388
153

39
466

5

12

16
2,000

103

47

9

75

49

62

610

606

1,411

Q4

148

167
1,182

89
974

1,067

1,505

1,574

1,476

Q1

Q2

Q3

815

939

1,080

1,283

853

1,175

776

Q1

Q2

Q3

Q4

Q1

Q2

Q3

1,398

625

251
1,300

201

1,786

1,835

Q4

Q1

0

FY2016FY2017FY2018FY2019*1 Sales of Gunosy Ads are the total of Gunosy, NewsPass and LUCRA.
*2 For the quarters up to FY2016 Q2, the figures are from the non-consolidated results.

(C) Gunosy Inc. All Rights Reserved.

PAGE |

9

Cost Structure
Variable costs (ADNW costs, costs for revenue sharing with KDDI) increased, mainly associated with the risein net sales. The cost structure remained stable.

Cost Structure(Million yen)

2,908

3,000

2,753

2,198
1,997
489

1,582
1,435

1,500

1,319

314
278

1,007
832

877

123

140

443

0

394

471

173
504

22
146
39
56

22
176
53
90

24
198
40
162

Q1

Q2

Q3

FY2016

80
44
236
37
253

Q4

251
44
308

Q1

678

547

104

447

1,517
389
336

390

562
547
55

55

55

315

262

274

293

55

43

47

48

411

413

439

Q2

Q3

Q4

574

Q1

504
55
54

55

460

56

FY2017806

Other expenses

40

Live video production expenses

493

Advertising expenses

55

Rents

420

Personnel expenses

103

Server expenses

988

Ad network costs

588

243
494

407

1,686

2,313

396
352

336
70

92

60

693

782

838

Q2

Q3

Q4

FY2018Q1
FY2019* For the quarters up to FY2016 Q2, the figures are from the non-consolidated results.

(C) Gunosy Inc. All Rights Reserved.

PAGE |

10

Cumulative Total of Downloads
CPA was at its lowest during the period from FY2015 due to the significant increase in the number ofdownloads of NewsPass and LUCRA.

36.37 million DLs(10,000 DLs)
4,000

LUCRA
News Pass
Gunosy
CPA

(Yen)
450

3,354
3,084
2,799
2,515

300

2,268
2,043
1,841

2,000

746

866

977

1,084

1,191

1,302

1,436

1,618
150

515

0

0

Q1

Q2

Q3

FY2015

Q4

Q1

Q2

Q3

FY2016

Q4

Q1

Q2

Q3

FY2017(C) Gunosy Inc. All Rights Reserved.

Q4

Q1

Q2

Q3

FY2018Q4Q1FY2019PAGE |

11

Total Number of Active Users*1
The total number of active users of Gunosy, which reduced its advertising expenses, remained stable due to
new content, etc.
The MAU of NewsPass has grown to the same level as Gunosy, and diversification is also progressing interms of active users.
Rose

38.7% YoY

LUCRA
News Pass
GunosyStableQ1

Q2

Q3

FY2015

Q4

Q1

Q2

Q3

FY2016

Q4

Q1

Q2

Q3

Q4

FY2017Q1Q2Q3FY2018Q4Q1FY2019

*1 Average for each quarter of MAUs (monthly active users) of Gunosy, NewsPass and LUCRA.
*2 The percentage of overlapped MAUs (monthly active users) of both Gunosy and NewsPass is within 10%. Source: Estimates of Gunosy Inc.

(C) Gunosy Inc. All Rights Reserved.

PAGE |

12

Advertisers
The number of advertisers decreased because we focused on sales activities for the existing major
advertisers* with the aim of increasing the unit costs for customers.
Along with the growth of LUCRA, the share of the Health and Beauty care segments continued to increase.

Number of Active Advertisers(Companies)
1,600

100%
Other advertisers

1,388 1,396

Major advertisers*
Percentage of sales of major
advertisers (right axis)

1,343
1,253 1,273

1,211

1,210

1,098

1,239

95%

Real estate
1%

1,076

90%
843

Games 1%
Human
resources 2%

Others 7%

Finance 3%

782

800

Segment of Advertisers (FY2019 Q1)

636

85%

Apps
(excluding
games) 4%

Health45%80%

332 345 346 350 324 310 355 311
221 207 246 261 260
075%

Beautycare
37%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
FY2016FY2017FY2018FY2019* The number of advertisers whose advertising budget is 1 million yen or more.

(C) Gunosy Inc. All Rights Reserved.

PAGE |

13

Ad Network (ADNW)
To acquire good advertising inventories, we strengthened sales activities and improved the delivery algorithm.
As a result, CPM* improved significantly, which contributed to increased sales.
Number of Impressions and CPM(Million imp)
45,000

¥40

imp

CPM

¥36.84
38,61039,52939,58538,87236,33033,68030,78830,000¥30.7030,142¥30.7027,348¥25.1015,000¥19.50¥19.80

Q2

Q3

YoY

CPM：+75%¥21.10¥20¥18.40¥16.900¥0Q1

FY2017

Q4

Q1

Q2

Q3
FY2018Q4Q1FY2019* CPM: Cost Per Mille; unit price per 1,000 views of advertisements(C) Gunosy Inc. All Rights Reserved.

PAGE |

14

FY2019 Outlook

2

FY2019/5 Results Forecast（C） Gunosy Inc. All Rights Reserved.

FY2019/5 Results Forecast
Reflecting the good performance in Q1 and the sales forecast of investment securities in Q2, we corrected
the intermediate and full-year forecasts.
The performance forecasts in Q2 and onwards remained unchanged, anticipating investments in new media.
(Million yen)Intermediate forecast
Rise in Q1
resultFull-year forecast

2018/7/12
Initial forecast

2018/10/12
Corrected
forecast

Increase

2018/7/12
Initial forecast

2018/10/12
Corrected
forecast

Increase

Net sales

+501

6,524

7,026

+501

13,96014,462+501

Operating profit

+218

1,122

1,341

+218

2,503

2,722

+218

-

17.2%

19.1%

-

17.9%

18.8%

-

+160

752

1,261

+509

1,650

2,159

+509

OperatingmarginProfitattributable toowners of parent

Most of the increase comes fromgain on sales of securities(C) Gunosy Inc. All Rights Reserved.

PAGE |

16

3

Business Overview by Division

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

Wholecompany

Enhancement of Management TeamTo promote separation between management and execution, we strengthened
our outside executives.

Director (Outside)

Director (Outside)

Director (Outside)

Suguru Tomiduka

Hiroki Teshima

Hirokazu Mashita

Joined Recruit Co., Ltd. (now Recruit
Holdings Co., Ltd.) in 1988. Served as
Corporate Officer and Representative
Director of Recruit Holdings groups andengaged in internet media business andmanagement. In 2018, founded Tommy Inc.
At present, Representative Director of
Tommy Inc. and Outside Director of eole Inc.
In August 2018, became an Outside Directorof Gunosy.

Joined Hakuhodo Inc. in 1999. In 2006,
Director of Interspire, Inc. (now UNITED,Inc.) as a founding member. After two times
business integration, served as Director of
UNITED, Inc. in the end of 2012. Outside
Director of Mercari, Inc. which investing in2013. Has experiences on abundant
management and internet related business. In
August 2018, became an Outside Director of
Gunosy. In September 2018, became Cofounder and General Partner of XTech
Ventures.

Joined Nomura Securities Co., Ltd. in 1991.
Master of Business Administration (MBA)from Duke University Fuqua School ofBusiness in 1996. Served as Director of
HIKARI TSUSHIN, INC. and Representative
Direcotr of e-machitown Co., Ltd. Founded
m&s partners Pte.Ltd. In 2013 and Director atpresent. Has experiences of global
management and investments both in Japanand overseas. In August 2018, became an
Outside Director of Gunosy.

（C） Gunosy Inc. All Rights Reserved.

PAGE |

18

Highlights by Division• Acquisition on the new promotional strategy remained good in Gunosy, and fullscale promotion will take place in Q2 and thereafter.

Media Business Unit

Advertising Business Unit

BC Business(blockchain)• The development of new applications other than NewsPass and LUCRA
progressed strongly, and it is anticipated that some of them will be released during
this quarter.

• Monetization through tie-up advertisements using live videos remained good.
• VIDPOOL for video ADNW commenced delivery in Gunosy.

• We participated in a project for creating a marketplace utilizing the blockchain
together with Tsukuruba Inc., with which we performed a collaborative project.

• We founded a company in Singapore.

Investment Business• It is planned that the investment size in the first fiscal year will be approx. 2 billion
yen.

（C） Gunosy Inc. All Rights Reserved.

PAGE |

19

MediaBusiness(1) Gunosy

Diversification of content, improvement of quality and cutting out of applications progressed well.

Diversification of content• Since coupons were newly introduced to Gunosy and it
was proved that they were effective for acquiring newusers, we will begin enhancing its promotion in Q2.

Cutting out of applications• Gunosy Sports is planned to be released in Q2.
• We are considering further cutting out of applications.

(C) Gunosy Inc. All Rights Reserved.

PAGE |

20

MediaBusiness(2) NewsPassStrengthening of content such as disaster information and enhancement of services by utilizing KDDI assets
progressed well.

Strengthening of essential functions as
a news application• The function that reads out all disasters and otherimportant news was added.

Improvement of quality• We are planning to improve quality by using a user
feedback function.

Differentiation from other services, taking
advantage of the assets of KDDI Corporation• Wow! Super Points were distributed via lottery.
• We are creating mock-ups of applications for Smart
Device Link (SDL).

Feedback function(C) Gunosy Inc. All Rights Reserved.

Lottery
Wow! Super Points

PAGE |

21

MediaBusiness(3) LUCRALUCRA also continued to undertake information diversification and the release of new functions.

Information diversification

Improvement of quality• Live programs are still broadcast, andnew programs are in planning.

• The Media Follow-up and Tab
Features were released.

• New non-article content such as
fortune-telling is under development.

• Personalization logics were improved.

(C) Gunosy Inc. All Rights Reserved.

PAGE |

22

(4) Game8Media
Business

Both sales and operating profit continued to set record highs, with operating sales reaching 95 million yen.
In future, we will accelerate growth by expanding the functions other than game strategy articles.

Sales and Operating profit

New Driver for Growth

Sales: Up 129%*
206

Operating profit: Up 459%*

190

148

Actively expand content other thangame strategies.

158(Million yen)

Sales
75

12
Q1

71

62

52
40

39

2
Q3

FY2016

Q4

Q1

95

80

Q2

8

11

Q3

Q4

17

Q1

Q2

FY2017• Add an application pre-release reservation
function.
• Add an application review function withwhich favorite applications can berecommended.

49

22

Q2

91

90

Operating profit

Q3

FY2018Q4Q1FY2019*1 Non-consolidated results (before consolidated adjustment)*2 The sales and operating profit increase rates are the year-on-year values.

(C) Gunosy Inc. All Rights Reserved.

PAGE |

23

Advertising
Business

Existing Advertisers

Monetization through tie-up advertisements using live videos has started smoothly.
The profit of ADNW was greatly improved due to the improved delivery algorithm.

Tie-up Advertisements Using Live Videos

Improvement of ADNW Delivery Algorithm

Brand AA new product with which users can participate actively inadvertisements. A single broadcast produced better results
than TV CM.

Improve

Brand B

UP

AD

Since customers actively entered comments with thecampaign name we want to advertise and remembered it very
well, the name, Gunosy Q, ranked high even in the store
survey.

Algorithm(C) Gunosy Inc. All Rights Reserved.

Appropriate
advertisement

Click rate

PAGE |

24

Advertising
Business

New Advertisers (digwell and VIDPOOL)

Affiliate advertising orders remained good, and the sales of the subsidiary, digwell, increased.
The new company, VIDPOOL, launched a video advertising network business. We will strengthen sales
activities with the aim of expanding delivery media.

Sales of affiliate advertising are growing smoothly.

As the first step, we commenced delivery via Gunosy.
We will continue to expand into theother areas in the future.

News
Delivery in
Gunosy inAugust 2018

Sales

Food

1Q

2Q
FY20183Q

4Q

1Q

Entertainment

Sport

Fashion

FY2019(C) Gunosy Inc. All Rights Reserved.

PAGE |

25

BC Business

LayerX

We participated in Cryptorealty, a project for creating a marketplace utilizing the blockchain, together with
Tsukuruba Inc., with which we performed a collaborative project.

Project
Partner company

Partner company

Representative Director Yoshinori
Fukushima is involved in the project
as a technical advisor.

Representative Director & CEO
Hiroki Murakami is involved in the
project as a strategic advisor.

Cryptorealty is a project for creating a marketplace targeting theSoutheast Asia region by utilizing blockchain technology, which is run
by Property Access Asset Pte. Ltd. in Singapore.

(C) Gunosy Inc. All Rights Reserved.

PAGE |

26

Appendix

Reference Materials: Overview of Gunosy Inc.

(C) Gunosy Inc. All Rights Reserved.

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

・Officers:Representative Director and CEO,Yuya Taketani

・Representative:

Yuya Taketani

・Established

November 14, 2012

・Fiscal year:

May・Capital:

4,000 million yen(as of the end of August 2018)

・Stock Code:6047 (First Section of The
Tokyo Stock Exchange)

Director (Outside), Toshifumi Tsukada

・Audit corporation:

Ernst & Young ShinNihon LLC

Director (Outside), Hiroki Teshima

・Number of
employees:

164 (as of the end of August
2018, on a consolidated basis)

Director (Outside), Hirokazu Mashita

・Head office:Roppongi Hills Mori Tower,
6-10-1 Roppongi, Minato-ku,
Tokyo

Corporate Auditor (Outside),
Kenji Shimizu

・Business:

Development and operation of
information curation service
and other media

Representative Director and COO,
Tetsuya Nagashima
Director, Yoshinori Fukushima
Director, Shinji Kimura
Director (Outside), Suguru Tomiduka

Corporate Auditor, Masakazu Ishibashi

Corporate Auditor (Outside),
Noboru Kashiwagi（C） Gunosy Inc. All Rights Reserved.

PAGE |

28

Directors

Representative Director and CEO

Director and COO

Director

Director

Yuya Taketani

Tetsuya Nagashima

Yoshinori Fukushima

Shinji Kimura

Graduated from the Department of Industrial andManagement Systems Engineering of the School of
Creative Science and Engineering of Waseda
University. Joined GREE, Inc. and then Gunosy Inc. In
August 2013, became COO of the Company,
Representative Director and COO in August 2016, andthen Representative Director and CEO in August 2018.

Graduated from the Faculty of Science andTechnology of Keio University. Served as an Executive
Officer at AUN Consulting, Inc. Joined GREE, Inc. andthen Gunosy Inc. Became a Director of the Company inAugust 2016, CRO in August 2017, and then COO in
August 2018.

Graduated from the Graduate School of Engineering of
the University of Tokyo. While in school, developed the
Gunosy service. Founded the Company in November
2012 and became Representative Director. In
November 2013, became Representative Director andCEO. In FY2012, certified as an IPA MITOH Super
Creator. In August 2018, moved to subsidiary company,
LayerX Inc. to focus on Representative Director of
LayerX Inc.

Graduated from the Department of Physics, Faculty of
Science of the University of Tokyo. Joined the Dream
Incubator Inc. Founded Atlantis Inc. (now GlossomInc.), and then sold the business to GREE, Inc. in 2011.
Became a Representative Director of Gunosy Inc. in2013 and retired in 2014. Established Anypay Inc. in
2016, becoming a Director of Gunosy in August 2017.

Outside Director

Outside Director

Outside Director

Outside Director

Toshifumi Tsukada

Suguru Tomiduka

Hiroki Teshima

Hirokazu Mashita

Joined DDI Corporation (now KDDI Corporation) in
1986. Served as President of Mediba, Inc. andPresident of WebMoney Corp. At present, General
Manager, Advanced Business Development Division ofKDDI Corporation. In August 2016, became an Outside
Director of Gunosy.

Joined Recruit Co., Ltd. (now Recruit Holdings Co.,
Ltd.) in 1988. Served as Corporate Officer andRepresentative Director of Recruit Holdings groups
and engaged in internet media business andmanagement. In 2018, founded Tommy Inc. At present,
Representative Director of Tommy Inc. and Outside
Director of eole Inc. In August 2018, became an
Outside Director of Gunosy.

Joined Hakuhodo Inc. in 1999. In 2006, Director ofInterspire, Inc. (now UNITED, Inc.) as a founding member.
After two times business integration, served as Director of
UNITED, Inc. in the end of 2012. Outside Director of
Mercari, Inc. which investing in 2013. Has experiences onabundant management and internet related business. In
August 2018, became an Outside Director of Gunosy. In
September 2018, became Co-founder and General Partnerof XTech Ventures.

Joined Nomura Securities Co., Ltd. in 1991. Master ofBusiness Administration (MBA) from Duke University
Fuqua School of Business in 1996. Served as Directorof HIKARI TSUSHIN, INC. and Representative Direcotrof e-machitown Co., Ltd. Founded m&s partners
Pte.Ltd. In 2013 and Director at present. Has
experiences of global management and investments
both in Japan and overseas. In August 2018, became
an Outside Director of Gunosy.

（C） Gunosy Inc. All Rights Reserved.

PAGE |

29

Business Model: Gunosy Ads
News

Revenue

Interests
GunosyTargeted advertisement delivery
by interest cluster
Users

AD

Impressionguaranteed

Click-guaranteed(CPC = Cost per Click)(CPM = Cost per Mille)

Features1. In-feed advertisements (ads inserted
into articles) enhance visibility
2. Highly frequent contact
3. Ads delivered according to interests
Ad on list page

Ad in an article（C） Gunosy Inc. All Rights Reserved.

PAGE |

30

Business Model: Ad Network
In addition to delivering advertisements inside Gunosy (Gunosy Ads), we release Gunosy Ad Network
service, which delivers ads to external partner media.
Currently, more than 600 media outlets have introduced this service.

Advertiser A

Media A

Advertiser B

Media B

Advertiser C

Media C

Advertiser D

GunosyAd Network
ServerAdvertiser E

Media DMedia E(C) Gunosy Inc. All Rights Reserved.

PAGE |

31

Disclaimer

Forward-looking statements contained in these materials are prepared from
judgments and assumptions based on information available at the time of
preparing the materials, and do not guarantee their accuracy.
Please note that actual results may differ materially from the forecasts due tovarious uncertainties included in these judgments and assumptions and changes
in risk factors and the economic environment.

(C) Gunosy Inc. All Rights Reserved.

PAGE |

32

Optimally deliver information to people around the world