Q2 FY2018/5 Financial Results(Three months ended November 30, 2017)

Gunosy Inc.
January 15, 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. Forecast
3. Strategy and Actions
4. Company Profile©Gunosy Inc.

3

1. Summary of Quarterly Results
 Sales and operating income marked 2,707 million yen and 508 million yen, respectively
 Sales rose for the nine consecutive quarter. Both sales and operating income hit a new record highSales

OperatingExpenses

Sales rose for the nine consecutive quarter to a new record high Gunosy Ads:
1,574 million yen Up 5% QoQ
 Ads Network (ADNW): 974 million yen

Up 20% QoQ

Spent advertising expenses as planned Advertising expenses: 562 million yen

Up 3% QoQMajor KPIs were on the right truck as planned

Major KPIs

©Gunosy Inc.

 Profitability per download (DL) performed as expected The number of active users increased as planned due to thecontribution of Newspass
 Cost per acquisition (CPA) remains at efficient level41. Quarterly Results: Sales and Operating Income
 Sales marked 2,707 million yen (up 12% QoQ), reaching a new record high
 Operating income marked 508 million yen (up 22% QoQ), Operating income (excludingadvertising expenses) recorded 1,071 million yen, reaching a new record high(Million yen)
2,707

Sales
Operating Income

2,413

Operating Income (excluding advertising expenses)
1,959

1,982

2,117

1,680
1,521
1,191892880

790
486
271181FY2014/5

Q1637491201△997©Gunosy Inc.

544349

△124

Q4626

1,006

995

870
523

285
47591

706716129184

201

245

Q2

Q3

Q4

Q1376855891964464

431

416

Q3

Q4

Q1

1,071508

△172
Q2

Q3

FY2015/5

Q4Q1

FY2016/5

Q2

FY2017/5

Q2

FY2018/55

1. Quarterly Results: Breakdown of Sales Sales in Gunosy Ads rose 5% QoQ due to a steady increase in the number of active users
 Sales in ADNW increased 20% QoQ due to the increase in ad inventories of major media(Million yen)

Gunosy Ads*157

ADNW
92Others
81

3952

65

74

610

606

974

815
625

466

388
251
28
31271
Q4
FY2014/5

72

113
103

762

820

881

Q2

Q3

Q4

153

776853

939

Q1

Q2

Q3

1,080

1,175

1,283

1,300

Q2

Q3

1,411

1,505

1,574

Q1

Q2

455

Q1

FY2015/5

FY2016/5

Q4Q1

FY2017/5

Q4

FY2018/5*Sales comprises of Gunosy Ads, Newspass and LUCRA©Gunosy Inc.

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1. Quarterly Results: Cost Structure Variable costs (ADNW costs, costs of revenue sharing for KDDI) increased as sales
has grown Advertising expenses increased as LUCRA accelerated its marketing campaigns(Million yen)
2,198
1,997
1,686
1,582
1,435
1,319
308
253

1,007

832

877
90
53

56
39
146
22

176
22

443

394

162
40

37
236

44
251

44

80

504

471

243

Q4

413

43
262
56

47
274

60

Server expenses

336

Personnel Expenses

55

Rents

562

Advertisingexpenses

Other expenses

574

55

48

315

293

55555519824

ADNW costs

1,517
439

411

693

547
460

494

390314

336

389

447

489

278

Q1

Q2

Q3

Q4

Q1

Q2407

123

140

173

Q1Q2

Q3

FY2016/5

FY2017/5

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
 In addition to Gunosy and Newspass, started to acquire users of LUCRA

 The total number of DLs increased 2.84 million QoQ The cumulative number of DLs marked 27.99 million
Gunosy+1.34 MM DLsNewspass（10,000 DLs）LUCRA

600 (yen)

2,799

CPA (yen)
2,515*

500+0.81 MM DLs

2,268
2,043

+0.69 MM DLs

400

1,841
1,618
1,436300

1,302
1,084866

1,191977200746515

100

Q1Q2Q3FY2015/5

Q4Q1Q2Q3Q4

FY2016/5*Added 60,000 DLs of LUCRA to the number of total DLs of Q1 FY2018/5©Gunosy Inc.

Q1

Q2

Q3FY2017/5

Q4Q1

Q20FY2018/5
81. Quarterly Results: Active Users
 The number of active users* increased 41% YoY and 7% QoQFY2013～FY2017 Q1～FY2017 Q4～

Up 41％ YoY
Up 7％ QoQ

Q1

Q2

Q3

FY2015/5Q4

Q1

Q2

Q3

Q4

Q1

FY2016/5

Q2

Q3

FY2017/5

Q4Q1

Q2

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 about 6%Female

FemaleMale

42% 58%

44% 56%

FemaleMale

MaleFemale

Male
10s

Over 50s

20％

40s

20％
20s

19％30s

12％

29％

20s

10s

10s

Over 50s

15％

29％

20s

22％

8％

30s

Over 50s

18％

39％

40s

30s

16％

31％

1％

20s

11％

40s

18％

10s

1％

Over 50s

30s

16％

45％

40s

30％

*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 While the number of active advertisers increased, the number of major advertisers* slightly declined The share of Health and Apps (non-gaming) increased
Number of Active Advertisers

Segment of Advertisers（Clients）

1,600

100%
Major Advertisers*
1,388

Other Advertisers
Sales of Major
Advertisers

1,400
1,200

Q2 FY2018/5

1,396

1,343

1,098

1,000782800

843636600
400200221207

246261260

332345346350

Real estate1％
Recruitment
2％
Others90%
13％
Gaming5％
85%
Finance6％80%
Apps（non-gaming)
12％
75%
95%

1,253 1,273

1,211

Beauty care
22％

324

0Health
39％

70%
Q1

Q2

Q3

FY2016/5

Q4

Q1

Q2

Q3

Q4

FY2017/5

Q1

Q2

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

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

12

2. Forecast: Comparison with First-Half Forecast
 Sales reached 5,120 million yen, 106% of the forecast. Operating profits marked 925 million yen,
110% of the forecast. Net profits was 596 million yen, 107% of the forecast
Consolidated Results

Comparison withthe forecast(announced on 14/July/17)

Forecast forthe first-half(FY2018/5)

Sales

5,120 million yen

106％

4,812 million yen

Operating profits

925 million yen

110％843 million yen

Ordinary profits

925 million yen

110％

843 million yen

Net profits

596 million yen

107％

558 million yen

Progress 0％

25％

50％

75％

100％

Non-consolidated Results
Sales

4,892 million yen

106％

4,606 million yen

Ordinary profits

929 million yen

106％

880 million yen

Net profits

630 million yen

104％

607 million yen

Progress 0％©Gunosy Inc.

25％

50％

75％

100％
132. Forecast: Progress Compared with Full-Year Forecast The progress to the full-year forecast performed as planned. The full-year forecast has unchangedConsolidated Results (announced on 14/July/17)First-half outcome

Progress

Forecast for the full-year(FY2018/5)

Sales

5,120 million yen

48%

10,746 million yen

Operating profits

925 million yen

42%2,206 million yen

Ordinary profits

925 million yen

42%2,206 million yen

Net profits

596 million yen

40%

1,475 million yen

0％

25％

50％

75％

100％

Non-consolidated Results (announced on 14/July/17)First-half outcome

Progress

Sales

19million%
4,892yen48%

10,219 million yen

Ordinary profits

929 million yen

42%

2,218 million yen

Net profits

630 million yen

41%

1,531 million yen

0％©Gunosy Inc.

25％

50％

75％

100％14

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

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3. Strategy and Actions

Strategy

 Changed the strategy: “a single function on multi apps” from “ multi functions
on a single app”

Products

Actions ofproducts©Gunosy Inc.

User Experiences

Actions

Expected Effects

TV

Creating live videos

Higher DAU
Higher ARPU

Newspaper

Adding new functions

Higher DAU
Higher ARPU

Female magazines

Acceleratingpromotions

Higher DAU

Ad NetworkImprovingad delivery logic

Higher Profitability

Hints & Tips for game

Improvingad price per unit

Higher Profitability

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3. Strategy and Actions : Gunosy app
 Planning to create and broadcast “user-participating live videos” based on the solid
relationship with video production companies, aiming at improvement of DAU in existing users
and acquisition of new users
 For the first co-production, Gunosy and every, Inc. will co-create live videos

Production Scheme

Live Video

Live Video Image

Production
CompanyFirst Co-Production
Having know-how to create videosand promotion such as TIMELINE*every, Inc. created mobile apps above©Gunosy Inc.

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3. Strategy and Actions : Newspass Added a new function providing timely information on typhoon and earthquake Improving existing algorithms to enhance personalization of news delivery
 Awarded Top 5 apps in Users’ choice on “Google Play BEST OF 2017”
New Function
Sending information on natural disasters via push notification
 Showing videos explaining details on natural disasters©Gunosy Inc.

Achievement in Q2
Awarded Top 5 apps in Users’ choice on Google PlayBEST OF 201718

3. Strategy and Actions : LUCRA
 Started a campaign to acquire users from September and tested TV commercials
 Monetization left one month behind the schedule but still able to catch up in the second-half©Gunosy Inc.

Started airing TV commercials from Nov, 201719

3. Strategy and Actions : Game8
 Realized synergy effects with Gunosy by providing data analysis and ad technology
 Sales increased by 200% YoY due to the huge increase in PVs of hit games

Sales and PVs

Business ModelHints & Tips for game Information on game Video streaming

700,000,0

140,000

PVs： Up 111％ YoY*120,000

Sales：Up 200％ YoY*600,000,0500,000,0100,000

Advertisers

Ad prices

ContentsUsers

ＰＶAd Space

160,000

Sales

PVs

80,000400,000,0

300,000,0
60,000200,000,040,000
20,000Internalsystems

KPI control
Sales team

Q4

Q20100,000,00Q1

Q2

Q3

FY2016/5

Q1

Q3

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

Technicalsupport

Q4

Q1

Q2

FY2018/5
20

3. Research & Development: Cryptocurrency/Blockchain Started R&D on fundamentals and applications of blockchain technology
 From the second-half, starting R&D on cryptocurrency mining

R&D: Cryptocurrency MiningBlockchain Events©Gunosy Inc.

Gunosy holds events about blockchain technology

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3. Strategy and Actions: Medium- to Long-Term Picture Aim to achieve continued growth in existing businesses by enhancing personalization,algorithms and ad delivery logic

 Aim to achieve further growth by expanding business into the non-news domain(Profits)

New business /Global expansion

Growth through newdomains

Continued growth in theexisting businesses

FY2018/5©Gunosy Inc.

FY2019/5 and onward22

1. Quarterly Results
2. Forecast
3. Strategy and Actions
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:3,965 million yen (as of the end of November, 2017)

Number of employees: 130 (as of the end of November, 2017, on a consolidated basis)©Gunosy Inc.

Fiscal year:

May

Stock Code:6047 (First Section of The Tokyo Stock Exchange, December 21, 2017)

Accounting auditor:

Ernst & Young ShinNihon LLC
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Directors

Representative Director and CEO

Representative Director and COO

Director and CFO

Director and CROYoshinori 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 adirector of the Company. In August 2016,
became Representative Director and COO.

Graduated from the Graduate School ofEconomics 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. in
2011. Became a Representative Director of Gunosy Inc.
in 2013 and retired in 2014. Esablished AnyPay Inc. inJune 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, General Manager of
New Business Promotion division of Value Business
unit of KDDI Corporation. In August 2016, became an
Outside Director at Gunosy.

25

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 articles
evaluation system

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Business Model: Gunosy AdsRevenue 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

27

Business Model: Ad Network (ADNW)Users
Advertiser A

Displaying ads

Delivery ads

Advertiser B

Advertiser C

Media AMedia 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.

28