FY2021/5 Financial Results for Q3

Gunosy Inc.
First Section of The Tokyo Stock Exchange
April 14, 2021

INDEX

1

Executive Summary

p. 3

2

Financial Results for FY2021/5 Q3

p. 17

3

FY2021/5 Outlook

p. 23

4

Business Overview by Division

p. 25

5

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

Overview of Gunosy Inc.

p. 36

1

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

FY2021/5 Q3 Financial Summary (1/2)

For details, refer topage 5-1Phase to build the foundations of Gunosy completedMove to the reinvestment phase from Q4 as planned
Plan to return to MAU regrowth trajectory by resuming advertising investment

For details, refer topage 10-２

Started operation of "au Service Today”, an all-in-one applicationthat combines a variety of useful functions serving
as a portal to various au services (April 4 )thAcquire a huge user base and a growth driver in the medium to long term

For details, refer topage 13-３＊ "slice", a digital lending
Decided to make a follow-on investment in
platform in India (April 14 )th

The role of the service as a social infrastructure and its high growth potential were highly evaluatedConsidering the possibility of future collaboration, we decided to invest in the company to convert it to our affiliated company* slice is the name of the service provided by GaragePreneurs Internet Pvt. Ltd. (hereinafter referred to as GaragePreneurs)（C） Gunosy Inc. All Rights Reserved.

PAGE |

4

FY2021/5 Q3 Financial Summary (2/2)
While the trend for Gunosy Ads was not reversed in Q3, we expect revenue to turn into an increasein Q4 as advertising investment in Gunosy resumes and the new collaborative app with KDDI (auService Today) begins to contribute to revenue.
Two factors contributing to
the increase

Gunosy Ads: Sales

Turning into an increase in Q4
1

The effects of various measures reflected in
Gunosy Ads

Full-scale resumption ofadvertising investment by
Gunosy in Q4
Decision made to resume advertising
investment as we were able to confirm theimprovement in media value and the recovery
of profitability per user through algorithm
improvement.

Increase2“au Service Today” starts tocontribute to revenue in Q4

Q1

Q2

Q3
FY2021/5（C） Gunosy Inc. All Rights Reserved.

Q4(Forecast)

Both DAU and sales have been growing
steadily since its release. It won first place in
the Google Play store rankings in Japan on
April 5th.

PAGE |

5

Reinvestment

Status of Media Value Improvement

Gunosy's article quality, advertising quality, and usability fundamentally transformedby improvement of media and advertising reliability and user interface (UI)
innovations promoted since the beginning of the period.
Revamp

Revamped UI

Improveadvertisingreliability

Improve media
reliability

OLD

Focus on user click-through rates(resulting in a bias towards entertainment articles)

Examination quality at industry average level
An advertising experience that is not optimized to suit the user's
perspective

Information cannot be obtained without
clicking the article(Stress generated before getting the information needed)

To make themedia more
acceptable to
the world

NEW

Article quality
Advertising quality
Useability

Focus on social/individual values
Article experience that focuses on timeliness andpersonalized interests on a deeper level

Top-class examination quality inthe industry

Revampalgorithm

Strict advertisingexamination(Providing a secure advertising experience)

Grasp the news at a glance(Get the information needed without the stress)

Revamp UI and
UX

6Reinvestment

Milestones toward the Re-growth of Gunosy (Reposted)
Progress on milestones

The milestones up to Q3 disclosed in FY2021/5 Q1 were mostly completed as planned. As the growth potential
expanded by increased media value and profitability improved, advertising investment was resumed in Q4 inorder to return to the regrowth trajectory.

As planned

FY2020

FY2021
Q1

Q4

Move toreinvestment
Macroenvironment
phase
1
2

Improve media
reliability
Launch new content

Q2

FY2022 and after
Q3

Q4

Groundwork phase

Q1〜Q4
Reinvestment phase

Assuming that the deterioration of the advertising market due to COVID-19 will continue for the time being
Measures to regain reliability of the media are almost complete in Q1. Verification process for the
full-scale launch of audio content also making progress

Strict advertising examination ■Reduce clickbait content■
Test audio content ■Full-fledged launch ■From Q2 onwards, we will focus on measures to improve profitability and lay the groundwork forreinvestment.

Renewal of content delivery logic ■3 Improve profitability

Renewal of ad delivery algorithm ■Media acceptedby more users
Improving reliability of
media and providing
content which matches thetimes

Renewal of UI to improve average time on page and frequency of app use ■* As to details on milestones, refer to "FY2021/5 Financial Results for Q1" (p.7).

（C） Gunosy Inc. All Rights Reserved.

PAGE |

7

Reinvestment

Review of Marketing Strategy
Future marketing strategy

In line with the improvement of media value, we will review the conventional
strategy emphasizing the CPI (cost per install) (coupon strategy, etc.). We aim to acquire
users with a high retention rate who prefer quality media and to establish amarketing approach focusing on the rebuilding of our brand image.

Before COVID-19

Marketenvironment

Important KPIs

Policy to build
brand equity(O2O strategies such as couponsconsidered to be effective)

Focus on the “CPI (cost per
install)”With/After COVID-19(Reconsideration of conventional winning patterns required)

Focus on “user retentionrate”
In line with the increased value as the news media, we will focus on(Low-cost acquisition, leveraging ourstrength in the entertainment area à
Recover investment in the short term)

the acquisition of quality users who value quality media, regardlessof the higher CPI. We aim to transform our model into one that pays
back our investments through long-term cash flow.

Preference was given to
approaches with excellent CPIrelated KPIs

Focus on rebuilding our brandimage along with the revamp ofour media values（C） Gunosy Inc. All Rights Reserved.

PAGE |

8

Reinvestment

Policy on the Amount of Advertising Investment

In the future, we plan to increase the size of our advertising investment as KPIs related to returnon investment improve through algorithm improvements, user-interface revamps and the discovery
of winning marketing patterns.

ROI on advertising1
Profitability(per user)

Improvement of
KPIs

2

３

Retention rate

CPI
(per user)

Increase ininvestment

FOCUS

FOCUS

Revamp algorithm

Revamp UI and UX

Improve media reliability

Marketing（C） Gunosy Inc. All Rights Reserved.

Continued focus on ultimate return on investment (IRR)
In particular, a shift in marketing strategy from thetraditional approach (focus on cost per acquisition) to focus
on 'retention rates"
PAGE |

9

Business alliancewith KDDI

New Business Alliance with KDDI: “au Service Today”
Released“au Service Today” was released on April 1st, 2021 as the new collaborative app, which is aredesigned version of the au portal site, "au Service TOP".

au Service Today

Special features of the “auService Today”

An all-in-one application serving
as a gateway for au users
Pre-installed onAndroid devices

au users

Cooperation with various auservices

au portal site

Portal site operated by one of
the largest
telecommunications
companies in Japan

Progress in collaboration

The service was released successfully, as
originally planned.
2021/1/14
Business allianceagreement signed

Preparation period（C） Gunosy Inc. All Rights Reserved.

2021/4/1
Released

Development and test
periodOperation
periodPAGE |

10

Business alliancewith KDDI

Impact on Performance

Taking over the user base of its predecessor "au Service TOP", the same level of DAU as
NewsPass was achieved within a week of its renewal and release. Monetization began in April
through revenue sharing.
DAU status (as of April 8th)

Large DAU base achieved immediately after
releaseExpected to be reflected onrevenue starting in FY2021 Q4

Business model

Monetization throughrevenue sharing

Contributes to revenue through the same
scheme as existing collaborative media(NewsPass)

DAU: the same level as NewsPass
was achieved within a week of its
renewalBusinessalliance

Development
and operation

User base

au ServiceToday

NewsPass（C） Gunosy Inc. All Rights Reserved.

au Service
Today

Revenuesharing

Revenue mainly
from advertising

Revenuesharing

PAGE |

11

Business alliancewith KDDI

Future Growth Image

In the short term we aim to achieve sales growth by focusing on improving profitability based on
Gunosy's expertise. Once the improvement in profitability is confirmed, we will work with KDDI toachieve further growth.

1

Applying Gunosy's know-how to boost
profitability and product value

2

Phase to achieve sales growth throughimprovement of basic KPIs

MAU growth

Achieve growthin collaboration
with KDDI

MAU in short term

MAU over medium to long termPhase to establish the foundation

Phase to expand

Pre-installation
Improving our products to ensure theirsustained use while increasing profitability（C） Gunosy Inc. All Rights Reserved.

Pre-installation & Measures in collaboration with KDDI
Achieving growth in collaboration with KDDI

PAGE |

12sliceFollow-on investment in GaragePreneurs

We decided to make a follow-on investment worth USD 15 million in GaragePreneurs, which runs “slice”, adigital micro-lending platform for young people / credit card issuing service in India. Cumulatively,
more than*
20% of potential voting rights have been acquired. It is expected to become an equity-method affiliate of
Gunosy in the future.
*All investments (including past investments) have been made through the acquisition of Compulsory Convertible Debentures (CCDs). It is assumed that the said
CCDs (including past ones) are converted into shares of the company.

Capturing the rapid growth of India

Fast-growing Indian start-up
company to become ouraffiliate
Cumulatively, more than 20% of potential
voting rights have been acquired. It is
expected to become an equity-method
affiliate of Gunosy in the future.

（C） Gunosy Inc. All Rights Reserved.

PAGE |

13sliceOutline of the Services“slice” provides services such as micro-lending and credit card issuance through the app to young people inIndia who would otherwise find it difficult to get credit in the traditional methods. It is a product that willcompletely change the personal financial experience, offering coupons, EC payments etc.
Details of businesses
Digital micro lending, credit settlement and credit card
issuing services via smartphone
Based on its exclusive credit model, provides easy access to credit to young
people (students and working people) in India who would otherwise find it
difficult to access credit.

Fin Tech

Payment

Credit card

Features１

Micro-lending service provided
easily with only a smartphone２

Coupons provided in the app

3

Supports EC payments etc.

４

Users' credit score provided visually

ResultVery highactivation rate
Marked several times thatof a normal banking app(Score changes depending on usage)（C） Gunosy Inc. All Rights Reserved.

PAGE |

14sliceKey Financials

Despite the impact of the COVID-19 crisis, continued high monthly growth has been recorded. Based on its
excellent positioning in the market and the nature of its services, which highly contribute to social
infrastructure, it is expected to grow steadily over the medium to long term.
Changes in key KPIs

User attributes

Recorded high monthly growth
despite volatile market conditions

85% of users are under 26 yrs. old

In spite of the recent impact of COVID-19, the company has succeeded in growing its loanbalance, mainly among existing good users, while holding down the bad debt rate.

40%
45%

Load balance

40% 18-22 yrs. old
45% 23-26 yrs. old

Operating profit

Growth driver(1) Excellent positioning in the market"slice" is a service that combines the convenience of a smartphone with theeasy access to a micro-lending platform, and is highly popular among young
people (students and working people) which is the largest customer segment
in India. (Traditional financial institutions provide credit to customers with ahigh profile (those employed by large companies, etc.), mainly based on aface-to-face and a stringent paper-based assessment.)(2) High contribution of the service to thesocial infrastructure
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2020（C） Gunosy Inc. All Rights Reserved.

The business of slice (giving credit to young people) is a high-value
service that contributes to social infrastructure, through which it can aim
for stable growth over the medium to long term.

2021

PAGE |

15

sliceInvestment Strategy

The “slice” business is the top focus in our external investment portfolio, which is expected to growinto a third pillar of our business. Its mission is highly compatible with our business, which implies
potential for future collaboration. Given this, we see GaragePreneurs as a potential affiliate and are keen
to support its growth.
The position of this investment
GaragePreneurs is positioned as
the top focus in our external
investment portfolio

Background to potential conversion toan equity-method 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 an equity-method Affiliate

It is expected to grow into athird pillar of our business(First pillar = news media Second pillar = Game8)

Growth of existing businesses

Investment portfolio

Redesigning media
experiences

Internal development of new
businessThis
investment

External investments(Investments /M&A)（C） Gunosy Inc. All Rights Reserved.

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

Sources ofcompetitive
advantage

Redesigning financial
experiences“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 |

16

2

Financial Results for FY2021/5 Q3（C） Gunosy Inc. All Rights Reserved.

FY2021/5 Consolidated Results for Q3
QonQ sales increased driven by the strong performance of the Game8 Group (G8 and Smarprise)business. Note that the decrease in operating profit is attributable to a one-off increase indepreciation expenses (152 million yen) resulting from the office relocation.
(Million yen)

QonQ

YonY

FY2021/5 Q3
FY2021/5 Q2

QonQ

FY2020/5 Q3

YonY

2,161

2,082

103.8%

3,705

58.3%

Operating profit

187

216

86.7%

343

54.6%

Operating margin

8.7%

10.4%

Ordinary profit

177

213

83.2%

352

50.3%

Profit attributable toowners of parent

81

154

52.6%

91

88.4%

Net sales（C） Gunosy Inc. All Rights Reserved.

-

9.3%

-

PAGE |

18

*Total Number of Active Users (MAU)

Number of active users continues to decline due to continued investment restraint.
Estimated MAU for Q4
and beyond

1

MAU is expected to increase by capturing the user base of "au Service Today".

2

MAU decline at Gunosy is expected to bottom out as investment resumes atGunosy.

QonQ

-6.7%

LUCRA
NewsPass
Gunosy

Q1

Q2

Q3

Q4

FY2018/5

Q1

Q2

Q3

FY2019/5

Q4

Q1

Q2

Q3

FY2020/5

Q4

Q1

Q2

Q3

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

PAGE |

19

*1

Breakdown of Net Sales

Despite a decline in MAUs, sales of Gunosy Ads remained unchanged backed by improved
profitability per user. Game8 posted its record quarterly sales for the fifth consecutive quarter.

(Million yen)

4,500

Others
Game8
ADNW

54

Gunosy Ads*2

190

3,000
2

148

158

206

1,422

178

19

280
223

232
256

1,205

90

334

254

136

1,459

1,143

240

234

128
317

251
1,236

1,357

1,480

1,298

203
246

275

375

435

262

260

1,267

1,198

1,189

Q1

Q2

Q3

320
980

1,097

815

530

1,500

366
371

1,505

1,585

1,871

1,935

1,894

1,960

2,030

2,119

1,964

1,960
1,594

1,541

0
△7

Q1

Q2

△38

Q3

Q4

Q1

FY2018/5

Q2Q3

FY2019/5

Q4

Q1

Q2

Q3

FY2020/5

Q4

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” and “LUCRA”（C） Gunosy Inc. All Rights Reserved.

PAGE |

20

Cost Structure
Personnel expenses and server expenses continued to decline QonQ. The QonQ increase in otherexpenses was due to a one-off increase of depreciation and other costs of 152 million yen
related to the office relocation.
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
1,997
489

547

547

315

55

504
55
54

55
55

40

104

588
562

336
60

352
70

396

420
103

693

782

39

539

838

41

777

22

414
102

1,047

16

917
822

637

72

51
55

456

814

526
507

31

526
146

157

2,048
1,866

541

786
7

193
134

86

977

1,027

153

Q3

Q4

Q1

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

Q2

Q3

FY2019/5

Q4

22

22

153

88

Advertising expenses
Rents

513

Personnel expenses
Server expenses
Ad network costs

152

535
128

Q1

Q2

Q3

FY2020/5

Q4

OthersLive video production expenses

583

125

413
Q2

898

93

121

111

278

182

187

Q1

Q2

Q3

0

Q1

757
24
94

560
884

1,974

One-off increase dueto the office relocation

950
90

131

1,091

Supplementary
information

2,337

583

51

54

109

988

952

1,160
19

92

55

574

1,055

806

493

447

1, 500678

3,781

FY2021/5

PAGE |

21

*

Game8

Game8 posted its highest quarterly sales/operating profit, achieving the highest sales for the fifth
consecutive quarter.
Net sales(Million yen)

500

435million yen

売上⾼Net sales

YonY+37.2%

Operating profit

375

366
317

256
234

232

250
190
148
90

71

206

223

320

240

151

158

80

91

95

111

116
57

54

50

Q4

Q1

Q2

113

113

108

111

Q3

Q4

Q1

Q2

17

0
Q1

Q2

Q3

FY2018/5

Q4

Q1

Q2

Q3

FY2019/5

FY2020/5

Q3

FY2021/5* Non-consolidated results (before consolidated adjustment). Results of Smarprise, our subsidiary is not included. FY2021 Q3 results are for the period from October to December 2020
due to a gap with the parent company's consolidated accounting period.

（C） Gunosy Inc. All Rights Reserved.

PAGE |

22

3

FY2021/5 Outlook（C） Gunosy Inc. All Rights Reserved.

FY2021/5 Results Forecast (Consolidated)
The full-year forecast for operating profit was already achieved in Q3. As advertising investment
resumes in Q4, we anticipate a temporary drop in profits. Accordingly, the full-year forecast remains
unchanged.
(Million yen)

FY2021/5
Q1-Q3

FY2021/5
Full-year forecast

Progression rate

Net sales

6,453

8,897

72.5%

Operating profit

563

500

112.6%

Operating margin

8.7%

5.6%

-

Ordinary profit

546

482

113.2%

Profit attributable to owners ofparent314

253

124.2%（C） Gunosy Inc. All Rights Reserved.

PAGE |

24

4

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

Summary of Media Business in FY2021/5 Q3
In each of our media businesses, algorithm improvements to increase profitability is
progressing. In Gunosy and NewsPass, the media value is steadily increasing throughthe user interface innovation.
GunosyNewsPass

LUCRA

Focus

Focus on innovating user interface
to improve retention rate

Summary

Q3

Investment• Revamp the userinterface• Prepare for the
expansion of original
radio content• Continue to improve thealgorithm• Revamp the userinterface• Continue to improve thealgorithm

Continued focus on
improving profitability• Continue to improve thealgorithm• Promote test releasesof D2C products

the uncertainty in the advertising market, we will
Restrain Given
continue to significantly curb advertising expenses.

MAU
Profitability（C） Gunosy Inc. All Rights Reserved.

PAGE |

26

ExistingBusiness

Status of User Interface Innovation

In Q3, the topic tabs which are shown when launching the apps were redesigned for both Gunosy
and NewsPass. It allowed a stress-free information acquisition experience so that users cangrasp important news at a glance.

GunosyKey features introduced in Q3

NewsPass
1

The specification changed todisplay the most popular
articles in a fixed position.

2

Highly visible borders
added to topic tabs to
improve the article/ad
experience

3

Optimized text and image
sizes based on the needs ofthe main user group1

3
2

Gunosy new UI（C） Gunosy Inc. All Rights Reserved.

NewsPass new UIPAGE |

27

ExistingBusiness

Enhanced Radio Content

In Q3, we produced original content to enhance the audio experience on Gunosy. During Q4, weplan to launch a series of original programs featuring popular YouTubers, idol groups, etc.

Expand original content available only on Gunosy.

1

QuizKnock(3/22~)

YouTubeチャンネル登録者
数160万⼈を超える⼈気クイズメディアQuizKnockのメンバーとのコラボ番組のシーズン2が決定（C） Gunosy Inc. All Rights Reserved.

２

あの(3/26~)

３

ふぉ〜ゆ〜(4/1~)

若い世代を中⼼に絶⼤な⼈気を誇る「あの」ジャニーズ事務所所属の4⼈組男性アイドルグループ

⾳楽活動のみに留まらず⼥優・モデルとマルチに活動

ステージを中⼼に確実にファンを拡⼤し続けている
注⽬ユニットPAGE |

28

Existing Business

New Business

Growth Strategy (Game8)

Next year, we plan to make upfront investments in order to achieve sustained high growthover the medium to long term. While ensuring the solidity of the existing businesses, we will focus
on developing new growth drivers, particularly overseas.
Estimated sales/operating profit for the next fiscal year
(Game8 non-consolidated)

2,000

1,800

Investment for medium
to long-term growth800

New Business

Reinvest profits from existing
businesses to build a medium- tolong-term growth driver

Investment in overseas businesses

1,600

Sales
Assumed value if noinvestment made

1,400

Operating
1,200

Investment details

profitPlanned 400
value if

1,000

investment made800

Continued investment in overseas business (gamewalkthrough wiki), which is steadily increasing its PV, as a new
growth driver

Investment in
human resources
for new businessdevelopment
Investment in humanresources for thedevelopment of new
solutions

600

External investment
External investment andbusiness partnerships in theareas peripheral to games

400

Existing
business

200

0

0

FY2020

FY2021

FY2022(Result)(Forecast)(Plan)（C） Gunosy Inc. All Rights Reserved.

Solidify the business through investment in humanresources, including increased recruitment ofexecutives and engineers
PAGE |

29

ExistingBusiness

Ad Network (ADNW)Sales are showing signs of bottoming out, but the impact of the revised advertising guidelines is
expected to continue for the time being. Given the difficulties in establishing medium- to long-term
growth prospects, we will promote the optimization of our operating structure (see next page).
Number of Impressions
and CPM(million imp)
60,000imp\36.84CPM\30.70\40\35.75\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\12.5946,71834,54315,000\11.91\20\11.4829,432
22,48921,892

Q2

Q3

0

\0

Q1

Q2

Q3

Q4

FY2018/5

Q1

Q2

Q3

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 |

30

ExistingBusiness

Integration of the Ad Network Business.

We decided to integrate resources previously invested in the ADNW business into Gunosy Ads. We
aim to optimize profit growth over the medium to long term by integrating resources into
Gunosy Ads. (Sales of ADNW and Gunosy Ads will continue to be disclosed separately in the "Breakdown of Net Sales"
information in the next quarter and beyond.)

Advertisers

Business resources
Engineer

Media

Sales

ADNW

Integrated into
Gunosy Ads

Integrated into
Gunosy Ads

Corporations(Advertisers)

Gunosy Ads

Engineers

Sales

Media

Integration on the back of thelarge advertising inventory heldby au Service Today

Integrate ADNW business into Gunosy Ads
Enhance effectiveness and experience of the advertisements
placed by advertisers while maintaining existing media
partnerships（C） Gunosy Inc. All Rights Reserved.

PAGE |

31

New
Business

Trends of Our New Business - YOU IN

We are promoting "YOU IN", our D2C brand.
Crowdfunding has been conducted as part of the PMF**
validation process. As a positive feedback has been obtained, we will continue to explore thepossibilities of full-scale commercialization.
YOU INA wellness brand that offers a lifestyle thatmatches the changing moods of the user at any
moment.

First release: Mood Pairing Tea
Our tea blends (carefully selected from over 300
different raw materials) that embody the conceptof YOU IN product are designed to enhance thenine moods of everyday life.

The status of crowdfunding
The target amountreached within 1 hour and19 minutes of the start ofthe sale, thanks to the
support of 100 people.

The feasibility
study is wellunderway.
* Product Market Fit（C） Gunosy Inc. All Rights Reserved.

PAGE |

32

New
Business

Investment in XTech 2 Investment

We invested in XTech 2 Investment Limited Partnership (announced in February 2021).

Investment Background

Name

XTech 2 Investment Limited Partnership

Investment stage

Mainly seed and early stage (including pre-IPO)

Total value of fund

Up to 10 billion yen（C） Gunosy Inc. All Rights Reserved.

1

Contribute to the start-up
industry using Gunosy's
technology

2

Approach startups selected from
XTech's extensive network thatare active in areas highly
compatible with Gunosy, andseek opportunities forinvestment and futurebusiness partnerships.
The existing fund, XTech 1
Investment Limited Partnership ,raised a total of 5.2 billion yen
which has been invested inaround 40 startups.

PAGE |

33

Office relocation to WeWork Shibuya Scramble Square on
May 1st, 2021

"Gunosy Workstyle (Gunosuta)" launched to respond to working styles in the new normal
and to transform the organization into a place where people can work productively even after
the pandemic has settled.

Combine ＊remote andonsite work

Diverse working
stylesEven after COVID-19 has come under

We will provide optimal office location /While encouraging working from home, we aim

control, we will continue to handle tasks

environment for creative issues suchto create an organization that allows flexible

remotely where it is more efficient to do

as generating ideas, sharing know-

work styles, including core hours and flexible

so.

how, etc.

working hours.

Promote working
from home.

* For the time being, work schedule will be（C） Gunosy Inc. All Rights Reserved.

adjusted appropriately according to the status
of COVID 19 infection.

PAGE |

34

Image of “Gunosy Workstyle”
Working style in the new normal allows you to decide whether to work from home or work from officedepending on the task or situation. We provide proactive support for both work-from-home and workfrom-office to maximize the performance of our employees.
Work from Office (WeWork)Work from Home

Working style in
the new normal

Tasks

Tasks

• Generate ideas through discussions• Share know-how and knowledge that is difficult to beconveyed remotely• Motivate members through interaction with each other• Perform tasks that require focused attention• Routine tasks that do not require commuting to theofficeSupport fromthe company

Support fromthe company

To help staff to feel comfortablecoming to work, we secured highquality, commuter friendly, state of
the art shared offices.

Provide a range of support forworking from home（C） Gunosy Inc. All Rights Reserved.

(e.g. investment in tools, allowance for working from
home, allowance for facilitating online
communication)

PAGE |

35

5

Reference Materials: Overview of Gunosy Inc.

（C） Gunosy Inc. All Rights Reserved.

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

Representative:

Shinji Kimura
Yuya Taketani

Established:

November 14, 2012

Fiscal year end:

May

Capital:4,094 million yen (as of the end of
February 2021)
6047 (First Section of The Tokyo
Stock Exchange)
Ernst & Young ShinNihon LLC

Officers:

Representative Director and Chairman, Group
Chief Executive Officer (CEO), Shinji Kimura
Representative Director and President, Yuya
Taketani
Director and CFO, Hiroki Maniwa
Director, Kentaro Nishio
Director, Kazuhiro Gonsho

Stock Code:
Audit corporation:
Number of
employees:
Head office:Business:219(as of the end of February 2021, on aconsolidated basis)
Ark Mori Building, 1-12-32 Akasaka,
Minato-ku, Tokyo
Development and operation of information
curation service and other media（C） Gunosy Inc. All Rights Reserved.

Director (Outside), Suguru Tomizuka
Director (Outside), Junichi Shiroshita
Director (Outside), Hirokazu Mashita
Corporate Auditor, Masakazu Ishibashi
Corporate Auditor (Outside), Kenji Shimizu
Corporate Auditor (Outside), Noboru Kashiwagi

PAGE |

37

ExistingBusiness

Composition of Advertisers

The percentages for "beauty" and "health" categories continue to decline.
Aiming to serve a wider range of advertisers, we will continue to revamp our algorithms.

Percentage change of major categories(YoY)

FY2021/5 Q3

The percentages for "beauty" and "health"categories marked substantial decline YoY.

Beauty14%

Health

10%

76%

80%
70%
60%

Others

50%

76%

40%

40%
31%

29%

30%
20%
10%

66%

14%

10%
17%

17%

HealthBeauty0%

BeautyHealth（C） Gunosy Inc. All Rights Reserved.

Others

FY2020 Q3

FY2021 Q1

FY2021 Q2Others
FY2021 Q3

PAGE |

38

Reposted
From FY2021/Q2

Capital Allocation

Aim for medium- to long-term growth by promoting internal and external investments for the regrowth of existing businesses and for the establishment of new earnings drivers.
Resources:
Investment
Objectives

Portfolio

Human

Expected results

Capital

Key investment items

Q2 highlights• Investment for the re-growth of Gunosy

1. Reinvestment in Gunosy due
to improved profitability• New business alliance with KDDI

2. A new business allianceagreement signed with KDDI• Capture the growth of the game market

3. Contribution by Game8 as thesecond pillar of revenue

Growth ofexisting
businesses• Gunosy• NewsPass• LUCRA• G8 (domestic)• ADNW

Develop new
businesses
internally• G8 (overseas)• D2C• Otokul• GTL

Establish a new pillar to
generate revenue• Challenge growth opportunities thatmatch the current trends especially in
the DX area

External
investment*(Investment /M&A)• Startups inIndia and inJapan• Investment VC
as a limited
partner

Discontinuous growth bycapturing high growthareas• Minority investment in tech startups inIndia and in Japan

Return tostockholders

Generate solid cash as apillar of business• Game8's business overseas• Capital alliance and M&A with growing
companies

1. Steady growth of G8's
business overseas
2. D2C business launched fortest marketing

1. Follow-on investment inpromising partners andinvestment in domestic
startups and major VCs

Based on the investment status and stock price, etc., we are considering share buybacks as an option at theappropriate time.

* Plan to invest approx. ¥4.5 billion in cash on hand over two years from the current fiscal year.

（C） Gunosy Inc. All Rights Reserved.

PAGE |

39

Reposted
From FY2021/Q1

Milestones in the re-growth of media

In Q1, we have nearly completed the groundwork for greater user acceptance of our media by
and reliability. From Q2 onwards we intend to strengthen the improvement of profitability.
Once we have achieved certain improvement in profitability, we plan to make growthPresent
investments for re-expansion.
FY2020

FY2021Q1Q4Q2FY2022 and after
Q3

Q4

Groundwork phase

Macroenvironment

1
2

Improve media
reliability
Launch new content

Q1-Q4
Reinvestment phase

Assuming that the deterioration of the advertising market due to COVID-19 will continue for the time being
Measures to regain reliability of the media are almost complete in Q1. Verification process
for the full-scale launch of audio content also making progress.
Strict advertising examination■
Reduce clickbait content■
Test audio content ■Full-fledged launch■

From Q2 onwards, we will focus on measures to improve profitability and lay thegroundwork for reinvestment.
Renewal of content delivery logic■

3 Improve profitability

Renewal of ad delivery algorithm■

Media accepted bymore users
Restoring reliability of
media and providing
content which matches thetimes

Renewal of UI to improve average time on page and frequency of app use ■KPI

Number of active
users

KPI

Profitability ofmedia

Due to stay home

Restrain
investment

Market deterioration &Strict examination

Market deterioration
continues（C） Gunosy Inc. All Rights Reserved.

Curb advertising investment until a certain level of profitability isachieved

Expected to improve by measures (1) (2) and (3) even if market
conditions continue to deteriorate

High Return on
Investment
A certain level of
improvement in
profitability achieved

PAGE |

40

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

KPI

Resume investment to expand user scale and aim for renewed growth as amedia company
Whether the service iswidely accepted by theworld(Whether room for further growth created as a news media)

Improve quality ofcontent

Complete in Q1• Improve reliability of articles delivered• Improve reliability of ads

Measures

Complete in Q1• Add highly unique content that matches
trends.

Progression rate: 95%（C） Gunosy Inc. All Rights Reserved.

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

Improve
profitability• Improve algorithms
Sales / DAU improved by
14.1% QoQ in Q2

Improve user
retention rate

Preparations
under way in Q3• Renew user interface• Renew content delivery
logic
Preparations

under way in Q3

Complete in Q2

Progression rate: 75%

Progression
rate: 50%

PAGE |

41

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 |

42

Optimally deliver information to people around the world