Financial Results Presentation
for the Fiscal Year ending May 31, 2016
(From June 2015 to May 2016)
Gunosy Inc.
July 14, 2016

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

Table of Contents

1. Quarterly Results
2. Full Year Results
3. Overview of Business and Strategies
4. Results Forecast
5. Supplementary Materials© Gunosy Inc.

3

1. Summary of Quarterly Results
Both sales and profits increased from the previous quarter, with rises in sales to 1,520
million yen and operating income to 200 million yen.

Sales

OperatingexpensesContinued to mark a record high and grew steadily.
 Sales in Gunosy Ads: 1,080 million yen QoQ: Up 15%

 Sales in Ad Network (ADNW): 388 million yen QoQ: Up 55%

Advertising expenses increased 100 million yen, mainly due
to strong sales.
 Advertising expenses: 504 million yen QoQ: Up 24%

All major KPIs exceeded the plans.
KPIs

 (Flat)Profitability per download (DL) remained as planned.

 (Strong) Both the cumulative total number of DLs and the numberof active users exceeded the plans.
 (Strong) Cost per acquisition (CPA) achieved the planby a large margin.

© Gunosy Inc.

4

1. Quarterly Results: Trends
 Achieved higher sales and profits for the third consecutive quarter with sales at
1,520 million yen (up 28% QoQ) and operating income at 200 million yen (up９％ QoQ).
(Million yen)

1,600

1,521

1,400
1,200
1,000

600

400 271

1,600

486
181

0-200-1,000©Gunosy Inc.

892790

800

349

- 124

- 997

FY2014/5

995

544

626

201

1,006

880
637

491

285
47

523

129

1,191

591

184

Sales
706

201

Operating income
plus
Advertisingexpenses
Operating income- 172

FY2015/5

FY2016/55

1. Quarterly Results: Consolidated Statement of Income
 Sales in Gunosy Ads increased 15％ quarter on quarter due to a steady increase in the numberof active users.
 Sales in ADNW rose 55% quarter on quarter, reflecting initiatives with external media partners,
and contributed significantly to the higher revenue.
FY2015/5
4Q*Sales(Gunosy Ads)
(ADNW)(Others)
Operating expenses
Operating income(Operating margin)
Non-operating income (expenses)
Ordinary income
Extraordinary income (losses)/ Income taxes
Net income

Cumulative total number of DLs at the period
end (10,000)© Gunosy Inc.

995(881)
(113)
(–)
709
285
29%-30255-15239977

3Q

1,191(939)
(251)
(–)
1,007
184
15%
-1183
-23160
1,302* The figures for 4QFY2015/5 are non-consolidated financial values.

4Q

1,521
(1,080)
(388)
(52)
1,319
201
13%
2204
85290
1,436

FY2016/5(Unit: Million yen)

YoY

+53%
(+23%)(+241%)(–)+86%-30%––-20%–+21%+47%

QoQ+28%(+15%)(+55%)
(–)
+31%
+9%
–
–
+11%
–+81%+10%6

1. Quarterly Results: Cost Structure Advertising expenses increased by 100 million yen, taking into account the recent statusof sales, etc. and the cost-benefit performance.
 Rents increased due to increased office floor space for accommodating a rise in thenumber of employees.
FY2015/54Q*3Q

4Q

Operating expenses

709

1,007

1,319

Server expenses

374037ADNW costs

59162

FY2016/5(Unit: Million yen)

YoY

QoQ

+86%+31%+0%-8%253+327%+56%

Personnel expenses

132

198

236

+79%

+19%

Advertising expenses

352

407

504
243

+43%+129%+24%

Number of employees atthe period end (persons)64

88

98+53%

Rents

Others

22106

24173

44+98%+81%+40%+11%* The figures for 4QFY2015/5 are non-consolidated financial values.
© Gunosy Inc.

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1. Quarterly Results: Trends in the Number of Downloads(Cumulative total in Japan at the end of each quarter) Steady increase in the number of downloads continued.
(10,000 DLs)
1,600
1,400
1,200
1,000
800

746

600
352

400
200
0

©Gunosy Inc.

91
1Q

144
2Q

866

977

1,084

1,191

1,302

1,436

515

185
3Q

FY2014/5

4Q

1Q

2Q

3Q

FY2015/5

4Q

1Q

2Q

3Q

FY2016/5

4Q
8

1. Quarterly Results: Status of Advertisers The number of active advertisers increased significantly as a result of the development of new agencies.
The composition ratios of “Beauty Care” and “Health” increased with the addition of advertisers associatedwith the new agencies.

Share of advertisers displaying advertisements(in value terms)

Number of active advertisers (quarterly)(Companies)
1,200
1,000
800

688

600
400

724

509

782

843

636

Real estate
2.3%

387

2000© Gunosy Inc.

Q4 of FY2016/5

1,098

1Q

2Q

3Q

FY2015/5

4Q

1Q

2Q

3Q

FY2016/5

4Q

Others30.4%

HealthHuman
10.6%
resources
2.8%
Apps(excluding games)
4.1%

Beauty care
23.6%Finance
14.8%
Games
11.5%

9

1. Quarterly Results: Active Affiliated Media in Ad Network Affiliated media continued to increase, making a significant contribution to the rise in sales.
Number of active affiliated media

Structure of Ad Network(Number of media)
Users

600

Media A

500

Media B

400

Media C

300

Advertiser
DMedia D

200

Advertiser
EMedia E

100

Advertiser
A

Displaying ads

Advertiser
B
Advertiser
CServer

Delivery

Delivery of ads to external partner media© Gunosy Inc.

0334386445495

536

261

101
35
1Q

2Q

3Q

FY2015/5

4Q

1Q

2Q3QFY2016/54Q
10

Table of Contents

1. Quarterly Results
2. Full Year Results
3. Overview of Business and Strategies
4. Results Forecast
5. Supplementary Materials© Gunosy Inc.

11

2. Full Year Results: Consolidated Statement of Income(Chronological Trends)

 Sales came to 4,590 million yen, up 45% year on year, attributable to growth in sales in ADNW, which
was launched in the previous term, in addition to steady growth in sales in Gunosy Ads.

 Operating income came to 560 million yen, up 196% year on year. The operating margin was 12%, animprovement of 6 percentage points from a year ago, attributable to an increase in marginal profit
associated with the growth in sales.

(Million yen)
5,000

4,599

4,000

3,165

3,000
2,000
1,000
0- 1,000- 2,000© Gunosy Inc.

12%

Sales
Operating margin

6%
0359

190

562

-44

FY2013/5*(1st fiscal year)-1,358FY2014/5*(2nd fiscal year)

FY2015/5*(3rd fiscal year)

Operating income

FY2016/5*(4th fiscal year)* The figures for the periods from FY2013/5 until FY2015/5 are non-consolidated financial values.

122. Full Year Results: Consolidated Statement of Income(Comparative Analysis) Operating income increased 370 million yen from a year ago, attributable to a significant increase in sales
and the impact of a reduction in advertising expenses, which was partially offset by increases in personnel
and other expenses.
 Operating income increased 150 million yen compared to the plan, attributable to a significant increase insales exceeding our forecast, which was partially offset by an increase in advertising expenses of 100
million yen.
Key factors of year-on-year changes(Million yen)

9003000© Gunosy Inc.

(Million yen)+218 -368

1,200600

Key factors of changes compared to plans+732

Increased
GunosyAds

Reducedadvertising Increased+213 expenses personnel
expenses
Increased
ADNW(net)*+39250-13

Amortizationof goodwill

225-408
Increased
otherexpenses

150+372
Increased
operatingincome75+146

Increased
GunosyAds-4-111

Reducedother+87 expenses Increased
personnel
expenses Increased
advertisingexpenses
Increased
ADNW(net)*+156

Increased
operatingincome0* Net amount after deducting ADNW’s costs of goods sold from ADNW’s sales

132. Full Year Results: Consolidated Balance Sheet Due to proactive investments for the purpose of overseas expansion and development into peripheralbusinesses, intangible assets (goodwill) and investments and other assets (investment securities)
increased.
(Unit: Million yen)Account item

End of previous
fiscal year*

End of current
fiscal year

-450
-941
+1,166-25+263+929

Investments and other assets

6,701
6,311
169
434121

Total assets

6,870

7,587+716

Total net assets

440－440
6,430

828
13
841
6,745+388+13+401+314

Total assets and liabilities

6,870

7,587+716

Current assets

Cash and deposits

Non-current assets

Property, plant and equipment
Intangible assets

Current liabilities

Non-current liabilities

Total liabilities

6,251
5,369
1,335
18267
1,050

Change* The figures for the end of the previous fiscal year are non-consolidated financial values.

© Gunosy Inc.

Breakdown

Goodwill of Game8: 262

Investment securities: 893

14

Table of Contents

1. Quarterly Results
2. Full Year Results
3. Overview of Business and Strategies
4. Results Forecast5. Supplementary Materials© Gunosy Inc.

15

3. Overview of Business and Strategies:
Expansion in User Scale (Collaboration with KDDI) “News Pass” has been developed as a business alliance with KDDI CORPORATION (“KDDI”). This productis more focusing on the users to read the formal news such as economic and politics.
 Making maximum use of KDDI’s broad touchpoints with customers, an approach to the user segments thatcannot be pursued through television commercials, etc. has been made possible.

Gunosy- Cumulative total number of DLs:
Over 14 million

Focus on the users
to read casual news
such asentertainment© Gunosy Inc.

News Pass- Number of au Smart Pass members:
Over 13 million- Number of au cell phone contracts:
Over 37 million- Number of au shops nationwide:
Over 2,500

Focus on the users to read formal news
such as economics and politics
163. Overview of Business and Strategies:
Increased Advertising Revenues (Alliances with Ad Tech Partners)
 Alliances with external ad tech partners, including CyberAgent, Inc. and Supership Inc., were aggressively
promoted with the aim of increasing advertising revenues for the optimization of advertisers and advertisinginventories.

Details ofalliance

Advertiser

Alliance partners

The Company

Advertisingproduct“Gunosy Ads”
“Gunosy Network Ads”
Advertising productinventory

Each advertisingproduct inventory

Delivery ofadvertisement

Delivery ofadvertisement“GunosyNetwork Ads”

Joint development of new products
Alliance
partners(examples)© Gunosy Inc.

Advertiser

17

3. Overview of Business and Strategies:
Overseas Expansion (Through Investments and Management Support)
 Commenced overseas expansion, building on investments to two overseas news app operators.
– Indonesia:
Acquired shares of Kurio’s stock and started supporting its business management– South Korea: Acquired shares of Pikicast’s stock

Commenced overseas
expansion, particularlyin the high-growth
Asian markets© Gunosy Inc.

18

3. Overview of Business and Strategies:
Medium- to Long-Term Image
 Aim to achieve high rates of growth in News Pass in addition to the existing businesses (Gunosy, ADNWand Game8).
 Allocate resources (human resources and funds) proactively to new businesses, including overseas
expansion, in order to build new pillars of revenues.
(Profits)

New businesses andoverseas expansion
Growth in News PassContinuing growth in the existing
businesses: Gunosy, ADNW and others© Gunosy Inc.

FY2016/5

FY2017/5 and onward

19

Table of Contents

1. Quarterly Results
2. Full Year Results
3. Overview of Business and Strategies
4. Results Forecast
5. Supplementary Materials© Gunosy Inc.

20

4. Results Forecast The forecasts on a consolidated basis are sales of 6,500 million yen (up 42% YoY), ordinary income of 860
million yen, (up 53% YoY) and net income of 750 million yen (up 24% YoY).
 Aim to achieve higher sales and profits for three consecutive years, while maintaining high growth.
Consolidated results forecast
FY2016/5

Sales

Operating income
Ordinary income
Net income

Forecast for FY2017/5

Full year

Cumulative first half

Full year

4,599
562
566
605

2,974
319
319
276

6,506
864
865
751

(Reference) Non-consolidated results forecast
FY2016/5

Sales

Ordinary income
Net income© Gunosy Inc.

Forecast for FY2017/5

Full year

Cumulative first half

Full year

4,547
565
611

2,876
383
339

6,244
1,022907(Unit: Million yen)
YoY change+42%+54%+53%+24%(Unit: Million yen)
YoY change+37%+81%+48%

21

Table of Contents

1. Quarterly Results
2. Full Year Results
3. Overview of Business and Strategies
4. Results Forecast
5. Supplementary Materials© Gunosy Inc.

22

Company Profile
Company name:Business:

Gunosy Inc.

Development and operation of information circulation 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

Capital:3,871 million yen (as of the end of May 2016)

Officers:Representative Director and CEO, Yoshinori Fukushima
Director, Yuya Taketani
Director, Mitsushige Ito
Director, Masakazu Ishibashi
Director (Outside), Tomohiko Katsuki
Director (Outside), Takashi Matsumoto
Director (Outside), Katsuya Yanagihara
Corporate Auditor (Outside), Osamu Aoki
Corporate Auditor (Outside), Tsutomu Arai
Corporate Auditor (Outside), Kenji Shimizu
Corporate Auditor (Outside), Noboru Kashiwagi

Number of employees: 98 (as of the end of May 2016, on a consolidated basis)
Fiscal year:
Listing:© Gunosy Inc.

Accounting auditor:

May

Mothers of the Tokyo Stock Exchange April 28, 2015

Ernst & Young ShinNihon LLC

23

Directors

Representative Director and CEO

Director and COO

Attended the Graduate School ofEngineering, the University of Tokyo.
Established the Company in November
2012 while he was in graduate school
by developing the “Gunosy” service, andbecame the representative director.
Became the representative director andCEO in November 2013. GeniusProgrammer/ Super-Creator in FY2012of IPA.

Graduated from the School of Creative
Science and Engineering, Waseda
University. Joined the Company afterworking for GREE, Inc. Became directorand COO of the Company in August
2013.

Yoshinori Fukushima

Yuya Taketani

Outside Director

Tomohiko Katsuki

Became the director of Jibun Bank Corporation after
joining DDI Corporation (now KDDI Corporation) in
1989. Currently working as the general manager of
the Financial and Commerce Business Division of theValue Business Sector at KDDI Corporation.
Became an outside director of the Company inDecember 2014.
©Gunosy Inc.

Director and CFO

Mitsushige Ito

Director and CTO

Graduated from the Graduate School ofEconomics, Waseda University. Joined
the Company after working in theBusiness Administration Division ofDream Incubator Inc. as the generalmanager, the Management Planning
Team of Fast Retailing Co., Ltd. and theAccounting and Tax Division of GREE,Inc. as the general manager. Became
director and CEO of the Company inApril 2014.

Outside Director

Takashi Matsumoto

Held positions such as the Deputy Director-General of theBudget Bureau of the Ministry of Finance and the Director
General and Vice-Minister of the Cabinet Office after joining
the Ministry of Finance in 1976. Currently working as anadvisor at Dai-ichi Life Research Institute Inc. and an outside
director at Innotech Corporation and Mitsubishi Materials
Corporation.
Became an outside director of the Company in August 2015.

Masakazu Ishibashi

Graduated from the Language andCulture Department of the Faculty ofLetters, the University of Tokyo. Joined
the Company after working for Square,Inc., Orega Inc. and Atlantis Inc. as
executive officer, etc. Became director
and CTO of the Company in August2013.

Outside Director

Katsuya Yanagihara

Currently working at Daiichi Law Office, P.C. since2007 after registering as an attorney in 2006 andbeing appointed as a public prosecutor in 1995.
Became an outside director of the Company inAugust 2015.

24

Business Model
We aggregate data on users’interests by delivering information
via our apps.
By using such data, we provideadvertisers with a cost-effective
advertisement product (GunosyAds). We also provide other various
marketing solutions that promote
the sales of our customers’
products or services.
We also deliver advertisements bybuilding an Ad Network specialized
for smartphones, based on the ideathat utilizing such data can improvethe effectiveness of advertisements
in other media.

©Gunosy Inc.

25

Business Model: ①Gunosy AdsRevenue•

Targeting advertisement delivery by•

Charging method•••interest cluster

Click-guaranteed (CPC = Cost per Click)

Impression-guaranteed (CPM = Cost per Mille)

Features•In-feed advertisements (ads inserted into•

Highly frequent contact••©Gunosy Inc.

articles) enhance visibility

Ads delivered according to interests

26

Business Model: ②Ad Network
Advertiser
A

Displayingads

Advertiser
B

Advertiser
C

Delivery

Users
Media AMedia BGunosy
Ad NetworkServer

Media C

Advertiser
DMedia D

Advertiser
E

Media EIn addition to delivering advertisements inside Gunosy (① Gunosy Ads),
we release Gunosy Ad Network service, which delivers ads to external
partner media.
Currently, more than 100 media outlets have introduced this service.
©Gunosy Inc.

27

Attributes of Users
 The largest segment is users in their 20s to 30s among both males and females.
It is possible to approach the user segment that cannot be reached by masscommunication such as TV by utilizing Gunosy.
Females

approx.
40%60ss and older
6% 10s
6%
50s

11%
40s
19%

20s

31%
30s

26%

©Gunosy Inc.

Males
approx.
60%
60s and older
7%
10s
50s
13%
12%
40s
17%

20s

30s

29%

22%

Source: Male-to-female ratio: User data of the CompanyAge: Survey on Gunosy users implemented (by Macromill, Inc.) in February 2016
(n=1000)

28