Q3 FY2018/5
Financial Results

April 13, 2018

Disclaimer

Forward-looking statements contained in these materials are preparedfrom judgments and assumptions based on information available at thetime of preparing the materials, and do not guarantee their accuracy.
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 the economic environment.

©Gunosy Inc.

2

1. Quarterly Results

2. Strategy and Actions
3. Forecast
4. Company Profile©Gunosy Inc.

3

1. Summary of Quarterly Results
 Sales marked 2,758 million yen, rose for the ten consecutive quarter Operating income marked 444 million yen, declined QoQSales rose for the ten consecutive quarter to a new record highSales

 Gunosy Ads:

1,476 million yen

Down 6% QoQ

 Ads Network (ADNW):

1,067 million yen

Up10% QoQ

214 million yen

Up36% QoQ Others:

OperatingExpenses

Advertising expenses decreased 10% QoQ due to lowering advertisingexpenses on Gunosy app
 Advertising expenses:
504 million yen
Down 10% QoQGunosy app declined while Newspass and LUCRA performed wellMajor KPIs

 The number of active users of Gunosy app declined due to the weak
active rate of newly downloaded users. Advertising expenses alsoreduced

 Newspass performed as planned ARPU of LUCRA lagged behind the plan due to delayed monetization.
Other KPIs of LUCRA remain on track©Gunosy Inc.

4

1. Quarterly Results: Sales and Operating Income
 Sales marked 2,758 million yen (up 2% QoQ), reaching a new record high
 Operating income marked 444 million yen (down 13% QoQ), Operating income (excluding(Million yen)advertising expenses) recorded 948 million yen, down from previous quarter
2,707

2,758

Sales
2,413

Operating Income
Operating Income (excluding advertising expenses)
1,959 1,982

2,117

1,680
1,521
1,191

790

271
181

486
349

544

892
626

995

1,006
880

637
491

201

△997Q4FY2014/5©Gunosy Inc.

Q1

523

591

706

855

891

1,071
948

716
376

285
47

△124870

964

129

184

201

245

Q2

Q3Q4Q1464

431

416

Q3Q4Q1508

444

△172

Q2

Q3

FY2015/5Q4Q1

FY2016/5

Q2

FY2017/5

Q2Q3

FY2018/55

1. Quarterly Results: Breakdown of Sales
 Sales in Gunosy Ads declined 6% QoQ due to the weak number of active users of Gunosy app

 Sales in ADNW increased 10% QoQ due to the increase in ad inventories of major media
 Sales in Others rose 36% QoQ, contributed by well-outcomes of Game8(Million yen)
157

Gunosy Ads*ADNWOthers

214

92
81

39
52

65

74

610

606

1,283

1,300

Q2Q3974
815

1,067

625

466

388

251
2831271
Q4

FY2014/5

72113103762820881

Q2Q3Q4776853939

Q1

Q2

Q3

1,080

1,175

1,411

1,505

1,574

Q1Q2

1,476455

Q1

FY2015/5*Sales comprises of Gunosy app, Newspass and LUCRA©Gunosy Inc.

153

FY2016/5

Q4Q1

FY2017/5

Q4Q3

FY2018/5
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1. Quarterly Results: Cost Structure Variable costs (ADNW costs, costs of revenue sharing for KDDI) increased as sales has grown.
The ratio of variable costs has not changed significantly.
 Expenses on listing to Tokyo Stock Exchange 1st section totaled 23 million yen as one-off(Million yen)expenses
2,313

2,198
1,997
782

ADNW costs

6070

Server expenses

336

352

Personnel expenses

5554Rents

562

504

Advertisingexpenses

693
1,686

1,582
1,435

1,319
253
1,007
832
56
39
146
22

877
90
53
176
22

162
40
198
24

443

394

407

37
236
44
504

123

140

173

Q1

Q2

Q3

411
308
44251
80
471

43
262
56

1,517
439
413
47
274

55

48

315

293

55

55

55

547
460

494

390

336

389

447

489

524

Q3

Q4

Q1

Q2

Q3243

278

314

Q4

Q1

Q2

FY2016/5574

FY2017/523

Expenses onlisting to Tokyo
Stock Exchange
1st section
Other expenses

FY2018/5*Q1 and Q2 of FY2016/5 shows only non-consolidated outcome©Gunosy Inc.

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1. Quarterly Results: Number of Downloads
 Advertising expenses of Gunosy app reduced due to the decline in retention rate of newly
acquired users（10,000 DLs）

 The number of DLs of Newspass and LUCRA increased as planned
Gunosy+1.08 MM DLs

Newspass

LUCRA

3,084

600 (yen)

CPA (yen)
2,799+0.82 MM DLs

500

2,515
2,268+0.95 MM DLs
2,043400

1,841
1,618300

1,436866977

1,084

1,191

1,302200746515Q1100Q2Q3FY2015/5©Gunosy Inc.

Q4Q1Q2Q3FY2016/5Q4Q1Q2Q3

FY2017/5

Q4Q1Q2Q30

FY2018/58

1. Quarterly Results: Total Number of Active Users* Gunosy app declined. Newspass and LUCRA increased as expected. Total number of activeusers was up 34% YoY and 2% QoQ

 Aiming at recovery of Gunosy app by promoting live video streaming
FY2013～
FY2017 Q1～
FY2017 Q4～

Up 34％ YoY
Up 2％ QoQ

Q1Q2Q3

FY2015/5

Q4Q1Q2Q3Q4Q1

Q2

FY2016/5

Q3

FY2017/5Q4

Q1

Q2

Q3

FY2018/5* The quarterly average DAUs (daily active users) of Gunosy, Newspass and LUCRA** DAUs of FY2017/5 do not include DAUs of LUCRA
Source: Estimates of Gunosy Inc.
©Gunosy Inc.

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1. Quarterly Results: Demographics of Users
 The overlapped part* of MAUs of Gunosy and Newspass was 10% or lessFemaleFemale48% 52%

FemaleOver 50s

16％MaleOver 50s

18％20s

30s

17％

32％

40s

19％

6％

20s

25％

Over 50s

1％30s

10s

1％
6％ 30s13％20s30s17％Over 50s

43％

16％

Male

10s

20s

11％

29％

40s

Female

10s

10s

17％

Male

41% 59%

Male

40s

33％

51％

40s

29％

*The percentage of overlapped MAUs (monthly active users) of both Gunosy and Newspass
Source: Estimates of Gunosy Inc.
©Gunosy Inc.

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1. Quarterly Results: Advertisers Both number of active advertisers and major advertisers* decreased The share of Healthy products and Beauty care segments remained significant
Number of Active Advertisers

Segment of Advertisers（Clients）
1,600

100%

Q3 FY2018/5

Major Advertisers*
1,400

Other Advertisers

1,200

Sales of Major
Advertisers(%)

1,388 1,396
1,253 1,273

1,211

1,343
1,210

1,098

1,000782800
600

Real estate1％
Recruitment
1％90%Gaming
3％
95%

843

85%

636
80%

400
75%

200221

207

246

261

260

332

345

346

350

324

310

0Others
13％

Healthy
products
40％

Finance6％

Apps（Non-gaming)
13％

Beauty care
23％

70%

Q1

Q2

Q3

FY2016/5

Q4

Q1

Q2

Q3

FY2017/5

Q4

Q1

Q2

Q3

FY2018/5* The advertisers whose advertising budget is 1 million yen or more©Gunosy Inc.

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1. Quarterly Results

2. Strategy and Actions
3. Forecast
4. Company Profile©Gunosy Inc.

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2. Strategy and Actions : Outline
 Aiming at acquiring new type of users by accelerating the shift to live video streaming services
 Increasing active rate and developing new ad products by introducing live video streaming in allapps that Gunosy Inc. provides, beside existing marketing promotions
 Withdrew from Bazzary app due to underperformed KPIs. Using those resources to other products
Products

User Experiences

Current Issues

TVAcquiring new type of usersActions

Improvingpersonalization

Newspaper
Increasing user baseAcceleratingpromotions

Female magazine

Stopped service

Price comparison©Gunosy Inc.

Expanding
live videostreaming

Ad Network

Increase inad inventories

Hints & Tips for game

Expandingrevenue channels

Ad technology

Expanding business

Increasing ad products

Reinforcing sales team13

2. Strategy and Actions : Live Video Streaming Improving user acquisition, retention rate, ARPU and ad products by “user-participating live videos”
such as “Gunosy Q” and other video contents
 Newspass and LUCRA are also planning to launch their live video streaming services

 Creating new user experience with“user-participating live videos”

Live Video Contents

Current Situation and Next Actions
 Broadcasted TVCMs in some regions andUser
created effective TVCMs. Planning toAcquisition
launch them nationwide
RetentionARPU Retention rate of video users was higher
than text-based users
 Created ad-products for live videos.
Planning to sell them more

 Planning to launch original live videos ofboth Newspass and LUCRA©Gunosy Inc.

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2. Strategy and Actions : Game8
 Sales soared 154% YoY
 While the number of PVs declined from previous quarter, sales increased due to branding ads

Sales and PVs

Business Model

Running websites about Hints and Tips for games

Generating online ads revenues from gaming companies 160,000

180,000

Hints & Tips for game
Information on game Video streamingPVs： Up 54％ YoY*

600,00

Sales：Up 154％ YoY*

500,00120,000

400,00100,000

Sales

PVs
Advertisers

Ad prices

Contents

Users

ＰＶAd Space

140,000

700,0080,000300,0060,000200,0040,000KPI control
Sales teamInternalsystems

20,000
00

Q1

Q2

Q3

FY2016/5

Q4

Q1

Q2

Q3

FY2017/5* PVs and Sales explain the growth rate in YoY©Gunosy Inc.

100,00Technicalsupport

Q4

Q1

Q2

Q3

FY2018/515

2. Strategy and Actions: Medium- to Long-Term Picture Aim to achieving continued growth in existing businesses by enhancing personalization,algorithms and ad delivery logic and growing live video streaming Aim to achieving further growth by expanding business into the “non-news markets”(Profits)
New business /Global expansion
Growth through new markets*Continued growth in theexisting businesses

FY2018/5* AdAsia Holdings changed its corporate name in January, 2018
©Gunosy Inc.

FY2019/5 and onward
161. Quarterly Results

2. Strategy and Actions
3. Forecast
4. Company Profile©Gunosy Inc.

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3. Forecast: Progress Compared with Full-Year Forecast The progress of revenue to the full-year guidance performed as planned, while that ofoperating profit lagged behind the full-year guidanceConsolidated Results (announced on 14/July/17)
Accumulation to Q3

Progress

Forecast for the full-year(FY2018/5)

Sales

7,878 million yen

73%

10,746 million yen

Operating profits

1,370 million yen

62%2,206 million yen

Ordinary profits

1,370 million yen

62%2,206 million yenNet profits

881 million yen

60%

1,475 million yen

0％

25％

50％

75％

100％

Non-consolidated Results (announced on 14/July/17)
Accumulation to Q3

Progress

Forecast for the full-year(FY2018/5)

Salesmillion yen
197,530%

74%

10,219 million yen

Ordinary profits

1,379 million yen

62%

2,218 million yen

Net profits

949 million yen

62%

1,531 million yen

0％©Gunosy Inc.

25％

50％

75％

100％
18

1. Quarterly Results

2. Strategy and Actions
3. Forecast
4. Company Profile©Gunosy Inc.

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Company Profile
Company name:Gunosy Inc.

Business:Development and operation of information curation service and other media

Corporate philosophy: “Optimally deliver information to people around the world”
Established:

November 14, 2012

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

Board members:

Representative Director and CEO, Yoshinori Fukushima
Representative Director and COO, Yuya Taketani
Director and CFO, Mitsushige Ito
Director and CRO, Tetsuya Nagashima
Director, Shinji Kimura
Director (Outside), Katsuya Yanagihara
Director (Outside), Toshifumi Tsukada
Corporate Auditor, Masakazu Ishibashi
Corporate Auditor (Outside), Tsutomu Arai
Corporate Auditor (Outside), Kenji Shimizu
Corporate Auditor (Outside), Noboru Kashiwagi

Capital:

3,970 million yen (as of the end of February, 2018)

Number of employees: 137 (as of the end of February, 2018, on a consolidated basis)©Gunosy Inc.

Fiscal year:

May

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

Accounting auditor:

Ernst & Young ShinNihon LLC
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Directors

Representative Director and CEO

Representative Director and COO

Director and CFO

Director and CRO

Yoshinori Fukushima

Yuya Taketani

Mitsushige Ito

Tetsuya Nagashima

Graduated from the Graduate School ofEngineering of Tokyo University. While inschool, developed the service of Gunosy.
Founded the Company in November 2012and become Representative Director. In
November 2013, became Representative
Director and CEO. In FY2012, was certified
as an IPA MITOH Super Creator.

Graduated from the Department ofIndustrial and Management Systems
Engineering of the School of Creative
Science and Engineering of Waseda
University. Joined GREE, Inc. and then
Gunosy Inc. In August 2013, became a
director of the Company. In August 2016,
became Representative Director and COO.

Graduated from the Graduate School of
Economics of Waseda University. Served as
the General Manager of Business
Administration Division of Dream Incubator
Inc. Joined the Management Planning Teamof Fast Retailing Co., Ltd. Served as theManager of the Accounting and Tax Affairs
Department of GREE, Inc. Joined Gunosy
Inc., and in April 2014, became Director andCFO.

Graduated from the Faculty of Science andTechnology of Keio University. Served as
an Executive Officer at AUN Consulting,
Inc. Joined GREE, Inc. and then Gunosy
Inc. In August 2016, became a Director atthe Company. In August 2017, becameCRO.

©Gunosy Inc.

DirectorDirector (Outside)

Director (Outside)

Shinji Kimura

Katsuya Yanagihara

Toshifumi Tsukada

Graduated from the Department of Physics, Faculty ofScience of the University of Tokyo. Joined the Dream
Incubator Inc. Founded Atlantis Inc. (now Glossom Inc.)in March 2007 and sold the business to GREE, Inc. in2011. Became a Representative Director of Gunosy Inc.
in 2013 and retired in 2014. Esablished AnyPay Inc. In
June 2016. Became a Director of Gunosy in August
2017.

Became a public prosecutor in 1995. Registered as
an attorney in 2006. Joined Daiichi Law Office,P.C. in 2007 and has been a partner at the office.
In August 2015, became an Outside Director atGunosy Inc.

Joined DDI Corporation (present KDDI Corporation).
Served as President of Mediba, Inc. and President ofWebMoney Corp. At present, Administrative Officer,General Manager, Advanced Business Development
Division at KDDI Corporation. In August 2016,
became an Outside Director at Gunosy Inc.

21

Algorithm for Content Distribution

Thousands ofarticles per day

Choosing articles by using an algorithm

Creating a list
To users

Publisher A

Publisher B

Publisher C(Collaboration withover 600 mediacompanies)©Gunosy Inc.

● Gathering articles(crawling)● Classification● Determining the sameevents● Considering user
attributes● Real time articlesevaluation system

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Business Model: Gunosy Ads

Revenue Targeting ads delivery by interest clusters
 Pricing methods− Click-guaranteed (CPC: Cost per Click)− Impression-guaranteed (CPM: Cost per Mille)

Features In-feed advertisements (ads inserted into articles)
attract more user’s attention
 Highly frequent access to users
 Ads delivered based on user’s interests

Ads on list page

©Gunosy Inc.

Ads in an article

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Business Model: Ad Network (ADNW)
Users
Advertiser A

Displaying ads

Delivery ads

Advertiser B

Advertiser CMedia A

Media B

GunosyAd NetworkServer

Media C

Advertiser D

Media D

Advertiser E

Media EIn addition to Gunosy Ads, Gunosy provides Ad Network (ADNW), which delivers
ads to external media
Currently, more than 600 media outlets have introduced ADNW service©Gunosy Inc.

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