FY2021/5 Financial Results

Gunosy Inc.
F i r s t S e c t i o n o f T h e To k yo S t o c k E xc h a n g e(Stock Code: 6047)
July 13, 2021

INDEX

1

Executive Summary

p. 3

2

Financial Results for FY2021/5

p. 6

3

FY2022/5 Outlook

p. 13

4

Business Overview by Division

p. 16

5

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

Overview of Gunosy Inc.

p. 25

1

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

FY2021/5 Full-Year Summary
Summary of Full-YearResultsFull-year net sales were in line with plan, and operating profit was significantly
higher than planned (+43.2%).
Net sales

8,910

million yen

Operating profit

Ordinary profit

717

642

million yen

million yen

Profit383

million yen

Compared to the plan

Compared to the plan

Compared to the plan

Compared to the plan

100.1%

143.2%

133.0%

151.4%

Other topics• Sales of Gunosy Ads showed a substantial growth (+28.3% QonQ) due tothe contribution of au Service Today and Gunosy's MAU ceasing to decline.
• The Game8 group reported record quarterly sales.
（C） Gunosy Inc. All Rights Reserved.

PAGE |

4

Development of “Medium-Term Management Plan”
See separate
material

Disclosed on thesame day"Medium-Term ManagementPlan", which outlines the growthstrategy of the Gunosy Group,

was disclosed.
2021/07/13（C） Gunosy Inc. All Rights Reserved.

PAGE |5

2

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

FY2021/5 Consolidated Results for Q4QonQ sales growth was achieved, driven by growth in Gunosy Ads as the performance of au Service
Today started to contribute to the business and Gunosy’s MAU ceased to decline. QonQ decline inoperating profit was due to the impact of the resumption of investment in Gunosy (an increase in advertisingexpenses by 166 million yen), which is a strategic move to spur renewed growth in the future.
(Million yen)

QonQ comparison

YonY comparison

FY2021/5 Q4FY2021/5 Q3

QonQ

FY2020/5 Q4YonY

Net sales

2,457

2,161

113.7%

2,696

91.1%

Gross profit

1,051960

109.4%

1,179

89.2%

Operating profit

153187

81.8%

359

42.7%

Operating margin

6.2%

8.7%

Ordinary profit

9517753.8%

354

26.9%

Profit attributable toowners of parent

6881

85.0%

167

41.3%

（C） Gunosy Inc. All Rights Reserved.

13.3%--PAGE |7

FY2021/5 Consolidated Results
Business remained strong, particularly in Gunosy Ads and Game8, resulting in an increase inprofits compared to plan.

(Million yen)Compared to the plan (full-year)
FY2021/5 plan

FY2021/5 results

Compared to the plan

Net sales

8,897

8,910

100.1%

Operating profit

500

717

143.2%

Operating margin

5.6%

8.0%

Ordinary profit

482

642

133.0%

Profit attributable toowners of parent253383

151.4%（C） Gunosy Inc. All Rights Reserved.

-PAGE |8

Total Number of Active Users (MAU)*With the release of au Service Today on April 1, 2021, the MAU showed a significant increase of
23.4% QonQ in Q4. With the resumption of investment, the performance of Gunosy is now showing
signs of having bottomed out.
Supplementary
information

Significant
contribution of auService Today
LUCRA
NewsPass+au Service Today
Gunosy

Q1

Q2

Q3

Q4

FY2018/5

Q1

Q2

Q3

Q4

Q1

FY2019/5

Q2

Q3

FY2020/5

Q4

Q1

Q2

Q3

Q4

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

PAGE |

9Breakdown of Net Sales*1

Sales of Gunosy Ads showed a substantial growth due to au Service Today starting to contributeto the business and Gunosy's MAU ceasing to decline.

(Million yen)

4,500

Others136

Game854

ADNW
Gunosy Ads*2148

280

256

178

POINT

19240

234

128

Gunosy Ads marked
remarkable sales
growth317

251
1,357

158

1,422

1,459

1,205

90

223

232

190

3,000
2206

334

2541,143

1,236

1,480

1,298

980

246

441
530

1,500

366
375

435

262

260

1,267

1,198

1,189

Q1Q2

Q3371

1,871
1,585

275

1,097

815

1,505221

203
320

1,935

1,894

1,960

2,030

2,119

1,964

267

1,960
1,594

1,541

1,526

0

Q1-7-38

Q2

Q3

Q4

FY2018/5

Q1

Q2

Q3

FY2019/5

Q4

Q1

Q2

Q3

FY2020/5

Q4Q4

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”, “au Service Today” and “LUCRA”（C） Gunosy Inc. All Rights Reserved.

PAGE |10

Cost Structure
Advertising expenses increased QonQ due to the resumption of investment in Gunosy.
QonQ increase in other costs is mainly due to costs related to revenue sharing etc. starting to berecorded as the au Service Today began to contribute to our results.
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

489

1,500

55

315

55
54

336

352
70396

420
103539777

54

414
102

92

917
822

637

526

31

2,048

1,072

782

838

1,047

526
146

157

541
134

757

7

193

24

86

153
94

131

814

977

1,091 1,027

Live video production expenses
22

153

535

125

22

318

Advertising expenses

8864

513

518

Rent expenses on land andbuildings
Personnel expenses

152

128

413
Q2

898
18

93

560
884

Q3

Q4

Q1

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

Q2

Q3

FY2019/5

Others

786

121

111

115

278

182

187

195

Q1

Q2

Q3

Q4

0

Q1

1,974

583
988

Increased advertisingexpenses

1,866
950

60

693

2,304

90

507
456

2,337

583
7251
55

109

55

574

1651
55

504

41

40

588

547
55

104

493
562

22
19806

39

447

1,055

Investment
in Gunosy
resumed.

952

1,160

678

1,997
547

3,781

Q4

Q1

Q2

Q3

FY2020/5Q4Server expenses
Ad network costs

FY2021/5

PAGE |

11

*Results of Game8

Net sales remained at a record level. The decline in operating profit was due to one-off factors,
including payment of year-end bonus following strong performance.
(Million yen)

500

売上高
Net sales

435

441

Operating profit
366317256234232

250190148
9071375320240

223206151

158

8091

95

111

116575450

Q4Q1Q2113

113

108

111

Q3Q4Q1Q2127

170Q1Q2Q3Q4FY2018/3

Q1Q2

Q3

FY2019/3

FY2020/3

Q3

Q4

FY2021/3* Non-consolidated results (before consolidated adjustment). Results of Smarprise, our subsidiary is not included. FY2021 Q4 results are for the period from January to March 2021 due
to a gap with the parent company's consolidated accounting period.

（C） Gunosy Inc. All Rights Reserved.

PAGE |12

3

FY2022/5 Outlook（C） Gunosy Inc. All Rights Reserved.

FY2022/5 Results Forecast (Consolidated)
We expect to post a loss in H1, mainly due to an increase of advertising investment by 486 million yenyear on year. If the impact of COVID-19 moves towards convergence as a result of progress in vaccinationand other factors, it is assumed to have a positive impact on our business performance in 2H and beyond(for further details, refer to the next page). We intend to determine the level of advertising investment inGunosy for the full year by assessing the said impact. Accordingly, we will only disclose our forecast for
H1 of the year.
(Million yen)

FY2021/5
H1 results

FY2022/5
H1 forecast

YonYNet sales

4,291

4,301

100.2%

Operating profit

376-324-

Operating margin

8.8%

-7.6%

-

Ordinary profit369-525-

Profit attributable to owners ofparent

233-575-（C） Gunosy Inc. All Rights Reserved.

PAGE |14

Our View on Business Forecasts
If there is a certain degree of convergence in the impact of COVID-19, it is assumed to have a positive, ifuncertain, impact on our advertising sales and user retention rates. We will assess the impact of thesefactors before determining the level of advertising investment in Gunosy from H2 onwards and forecasting
our full-year results.

For H2 and beyond, we will determine the level of advertising investment inGunosy after assessing changes in the macro environment and the impact
on KPIs, and calculate our forecasts accordingly.
Background to the policy
decision•Since the end of the emergency declaration in April 2020, the user retention rate for news apps has been on a downward trend.

•We assume that the fall in user retention rate is due to the macro factors of the COVID-19 expansion. (e.g. reduced appeal ofcoupons, weariness of COVID-19-related news).

•Therefore, we recognize that, as vaccination progresses and the above effects become less prevalent, there may be a positive
impact on advertising revenues and retention rates.

•In order to maximize our corporate value, we believe that we should determine the level of investment in Gunosy in a rationalmanner after carefully assessing the above impact.

•Therefore, in FY2022/5 H1, we intend to increase our investment in Gunosy only to the extent that the return on investment can be
firmly expected even with the current KPIs. We have adopted a policy to decide whether or not to make further investments while
carefully assessing changes in the business environment over H1.
（C） Gunosy Inc. All Rights Reserved.
PAGE | 15

4Business Overview by Division（C） Gunosy Inc. All Rights Reserved.

Summary of Media Business in FY2021/5 Q4
At Gunosy, we resumed advertising investment for renewed growth, while continuing toimprove our product.
au Service Today has been steadily accumulating MAUs since its release.
GunosyResumed advertising
investment forrenewed growth

Summary

Q4

Investment• Brush up marketingstrategy• Refine user interface• Continue to improve thealgorithm

NewsPass
au Service Today

LUCRA

au Service Today
released

Continued focus on
improving profitability• au Service Today
beginning to make apositive contribution• Refine user interface• Continue to improve thealgorithm• Continue to improve thealgorithm

Investment resumed in Gunosy

MAUProfitability peruser（C） Gunosy Inc. All Rights Reserved.

PAGE |17

ExistingBusiness

Status of Reinvestment in Gunosy.

Following the resumption of advertising investment, the downward trend in MAU on a monthly basis
ceased.

We will continue to verify the return on investment of our promotions as we look to increase the scale of ourinvestments.
Marketing measures implemented in Q4

Gunosy monthly MAU

Following the resumption of investment,

downward trend in Gunosy MAU ceased

Q4 Advertising
investment
Approx.

100million/ month(Monthly average)

Slight increase

Spent advertising expenses at a rate of 100
million yen/monthIn May, 150 million yen/month spent in Gunosy

1

Focus on verifying the effectivenessof promotions as we look to increase
our investments• User survey on new user interfaces etc.
• Verify return on investment by media• Verify advertising material

2

Focus on verification of digital ads
Dec

Jan
FY2021 Q3（C） Gunosy Inc. All Rights Reserved.

FebMarAprMay

FY2021 Q4

PAGE |18

ExistingBusinessGunosy Product Update

The number of headlines displayed on the topics tab changed from three to five articles, and thedesign of the tabs for other categories became more photo-oriented. We are working to develop
user interfaces that deliver information to users in a clear and understandable manner.
Developed functions to deliver news
quickly and clearly

POINT

Adopted a new layout where users search for the
information they want by photo

POINT

The headlines on theThe layout of thetopics tab changed fromtabs for other3 to 5 articles.

categories,

including

Deliver “importantentertainment andarticles” that users

sports, changed toshould read right now in

be more photo-a more stress-freemanner.

（C） Gunosy Inc. All Rights Reserved.

oriented and morevisually appealing

PAGE |

19

ExistingBusiness

au Service Today

Since its release on April 1, 2021, following its redesign, the number of users has successfullyincreased, which contributed to a significant sales growth of Gunosy Ads.

au Service Today

MAU (NewsPass + au Service Today)

With the release of au Service Today, MAU combinedwith NewsPass showed a significant growth.

Contributionof auST

Mar 2021（C） Gunosy Inc. All Rights Reserved.

Apr 2021

May 2021

PAGE |20

ExistingBusiness

Game8New BusinessWe are investing to solidify our existing businesses and to acquire new growth drivers.
Most recently, we announced our investment in Arii Inc, the operator of “Battle Dream”, a mobilee-sports app.
Investment details
New Business

Investment in Arii Inc, operator of“Battle Dream”
June 23, 2021

Investment in overseas businesses
Continue to invest in our overseas business (game8 in English version), which is steadily
increasing its PV as a new growth driver

Invest in humanresources to develop
new businesses
Investment in human resources aimed atdeveloping new solutions

Investment in Arii Inc, the operator of“Battle Dream”, a mobile e-sports app.

External investment
External investment and business
partnerships in areas peripheral to gamebusiness.

Existing
Business
Solidify our business through investment in human resources, including hiring
executives and engineers（C） Gunosy Inc. All Rights Reserved.

PAGE |21

ExistingBusiness

Ad Network (ADNW)In Q4, both number of impressions and CPM remained strong while maintaining high quality ad
examination and efficient business operations.
Number ofImpressions and 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¥21.10¥15.1430,00050,98838,61039,58536,33039,52938,87240,90038,39041,13843,325¥20¥12.5946,718¥11.87¥11.48 ¥11.91

34,54315,00029,432
22,48921,892

22,763

Q2

Q3

Q40

¥0Q1

Q2

Q3

Q4

Q1

FY2018/5

Q2Q3

FY2019/5

Q4

Q1

Q2

Q3

FY2020/5

Q4Q1

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

PAGE |22

New BusinessTrends of Our New Business - YOU IN

Product verification and PR activities made progress towards official release.
The brand website was launched in June 2021 and sales of subscription plans were started.
“YOU IN” was featured in a magazine (May 4, 2021)
Excerpts from thearticle

DIAMOND SIGNAL

Brand website launched

Sale of subscription plans started(June 2021)

Q

Why did Gunosy launch a D2C
business for tea?
A

https://signal.diamond.jp/articles/-/702

We wanted to create new value inthe D2C area as a way of reachingout to the users of information whoare exposed to drastic changes inenvironment and lifestyles due to thefast changing times of the current era
and the impact of the recent COVID-

19. That's the reason why we started
this business.

（C） Gunosy Inc. All Rights Reserved.

PAGE |23New Business

Investment

Closing for our follow-on investment in GaragePreneurs was done (announced on April 14,2021) and we completed the potential conversion into an equity-method affiliate. It is expected
to grow into a third pillar of earnings drivers for the Gunosy Group in the future.
Signing of the contract was completed
on May 31, 2021.

Background to potential conversion to an equitymethod affiliate
Although we belong to different industries, we have a strong
compatibility in our business models…

There is potential for future collaboration. Therefore
we believe it would be in our best interest to support
its growth as our equity-method affiliate.

Redesigning media
experiences“Optimally deliver information to people
around the world”

Value
provided(mission)

Digitalization of media
Provide a new experience of informationacquisition based on algorithm, using thesmartphone as a platform

Optimization based on data

Closing on June 11（C） Gunosy Inc. All Rights Reserved.

Accumulation of data on users' interests andanalytical skills to draw valuable suggestions
from itBusiness

Sources ofcompetitive
advantage

Redesigning financialexperiences“Redesigning your financial experience”

Digitalization of personalcreditProviding a new financial experience to young
people, using smartphones as a platform

Optimization based on data
Accumulation of data on users' credit andanalytical skills to draw valuable suggestions
from it

PAGE |24

5Reference Materials: Overview of Gunosy Inc.

（C） Gunosy Inc. All Rights Reserved.

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

Representative:

Shinji Kimura

Officers:

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

Yuya Taketani

Representative Director and President, Yuya
Taketani

Established:

November 14, 2012

Director and CFO, Hiroki Maniwa

Fiscal year end:May

Director, Kentaro Nishio

Capital:4,094 million yen (as of the end of May2021)
6047 (First Section of The Tokyo
Stock Exchange)

Director, Kazuhiro Gonsho

Stock Code:Director (Outside), Suguru Tomizuka
Director (Outside), Junichi ShiroshitaAudit corporation:

Ernst & Young ShinNihon LLC
Director (Outside), Hirokazu Mashita

Number ofemployees:215(as of the end of May 2021, on aconsolidated basis)

Corporate Auditor, Masakazu Ishibashi
Corporate Auditor (Outside), Kenji Shimizu

Head office:2-24-12 Shibuya, Shibuya-ku, Tokyo
Corporate Auditor (Outside), Noboru Kashiwagi

Business:

Development and operation of information
curation service and other media（C） Gunosy Inc. All Rights Reserved.

PAGE |26

Reposted
From FY2021/Q2

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 is widely
accepted by the world(Whether room for further growth created as a news media)

KPI

Improve quality ofcontent

Whether a high return on investment can beexpected
Whether the IRR of advertising investments exceeds the internal investment
criteria

Improve
profitability

Improve user
retention rate

• Improve reliability of articles• Renew user interface

deliveredMeasures• Improve reliability of ads• Add highly unique content that

• Improve algorithms• Renew content delivery
logic

matches trends.

（C） Gunosy Inc. All Rights Reserved.

PAGE |27

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.

PAGE |28

Optimally deliver information to people around the world