Fiscal Year 2024 Second Quarter

Results Presentation
GMO Pepabo, Inc.
Stock code: 3633 (TSE Standard Market)

Summary of Results in Q2 FY2024
Significant increase in profit compared with the previous year when bad debt-related expenses were recordedl We will make strategic investments in new businesses and new services, aiming for business growth from the next fiscal year andbeyondl

Hosting business

E-commerce Support business andHandmade Products business

Financial Support business(servers, domains)(e-commerce site building, original goods and handmade goods)(factoring for FREENANCE)

Strong performance due tothe effects of price revisions
and a higher ratio of highunit price plans

Decline in gross merchandise value in
non-recurring businesses in response
to slumping e-commerce market

Significant contraction inextent of losses due to decline
in bad debt-related expenses• Effects of price revisions for Lolipop!
continued, and the ratio of high unit priceplans increased• At MuuMuu Domain the effects from theintroduction of service maintenanceadjustment expenses continued to be felt

• Production outsourcing sales utilizing IT subsidies atColor Me Shop increased year on year
• Year-on-year decline in gross merchandise value
occurred at SUZURI and minne non-recurringbusinesses due to a slumping e-commerce market• Increased profit was secured through the efficientmanagement of promotional costs

Decline in sales reflecting decrease in amountof purchases of invoices due to stricter
purchase criteria

Other

We made approaches to the streaming sector
and provided GMO SOKURESU AI, helping tosolve social issues and contributing to thedevelopment of the creator economy
2

AGENDAl Summary of Results in Q2 FY2024

Page 4l Detailed Results by Segment

Page 10l FY2024: Report on the Current Situation and
Future Policy

Page 21・ Approach to streaming culture

Page 24

・ GMO SOKURESU AI

Page 28

Summary of Resultsin Q2 FY2024

4

Consolidated Results in Q2 FY2024l

Net sales were 97.1% compared with the same period last year, as a result of a decrease in the amount of purchases of invoices
due to stricter purchase criteria in the Financial Support business
However, operating profit increased significantly thanks to a decline in bad debt-related expenseslDespite making steady progress towards the FY2024 forecast for operating profit of 700 million yen, from the second half of theyear and beyond we expect increases in new business investment and promotional costs(Million yen)

Item

Q2 FY2023(six months)

Q2 FY2024(six months)

ChangeYoY

Net sales

5,523

5,365

-158

97.1%

Operating profit

-825

496

+1,322-

Ordinary profit

-746

493

+1,240-

Profit attributable toowners of parent

-892

325

+1,217-

5

Trends in Consolidated Results (by Quarter)l

Quarterly net sales decreased due to a decline in the amount of purchases of invoice in the Financial Support business. However,net sales increased year on year when the Financial Support business is excluded.

lQuarterly operating profit has remained stable since the recording of bad debt-related expenses in Q2 of FY2023
Net sales

Operating profit

Other than Financial Support(100 million yen)

Financial Support business

260 million yen(100 million yen)

2,780 million yen

2,710 million yen

30
1.9

1.0

4

-860 million yen

2

25
0
20
△2
15
26.1

25.9
10

△6

5

0

△4

△8

2Q

2022

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q

△10

2Q
2022

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q

6

Net Sales (Recurring-Type Business)l

In the recurring-type business, quarterly net sales grew moderately, positively affected by the price revision in the hosting
business.

l

We will provide the MuuMuu Server and Lolipop! for Gamers services with the aim of securing new revenue opportunities(100 million yen)
Hosting business

20

1,780 million yen

1,680 million yen

E-commerce Sup port b usiness (Color Me Shop)

18
16

4.9
4.9

14
12
10
8
6

12.8

11.9

4
2
0
1Q
2020

2Q

3Q

4Q

1Q
2021

2Q

3Q

4Q

1Q
2022

2Q

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q

2Q

2024

7

Analysis of Change in Operating Profit (Q2)lIn the Financial Support business bad debt-related expenses declined and profit increased considerably year on year, reflecting
reduced recruitment costs due to the use of AI and the effective management of promotional costs

Change in costs(Million yen)+133
+1,329+77
Reduced personnel
expenses due to theuse of AI

Change in net sales

-58

-158

Increase in other costs
Effective management ofpromotional costs

Decrease in sales due tolower amount of purchasesof invoices in the Financial
Support business, etc.

496
Operating profit
in Q2 FY2024-825

Operating profit
in Q2 FY2023

Decline in bad debt-related
expenses in the Financial
Support business88

Results by Segment in Q2 FY2024l

Looking at net sales, the effects of price revisions in the Hosting Business and an increase in the ratio of high unit price plans drove performance. However, theE-commerce Support and Handmade Products businesses were impacted by a downturn in the e-commerce market and stricter purchase criteria in the
Financial Support business reduced the amount of purchases of invoices. As a result, sales declined.

l

Operating profit was driven by strong performance in the Hosting business, while bad debt-related expenses declined in the Financial Support business. This
led to a significant increase in operating profit.
(Million yen)

Item

Q2 FY2023 (six months)

Q2 FY2024 (six months)

5,523

5,365

-158

97.1%

Hosting business

2,791

3,041

+249

108.9%

E-commerce Support business

1,522

1,433

-88

94.2%

Handmade Products business

761

684

-76

89.9%

Financial Support business

448

205

-243

45.8%

-825

496

+1,322-

Hosting business

902

1,054

+152

116.9%

Operating E-commerce Support businessprofit

391

392

+0

100.3%

Handmade Products business

41

51

+10

123.9%-1,172-0+1,172-

Net sales

Segment

Financial Support businessChangeYoY* Excluding head office costs, etc.

9Detailed Resultsby Segment

10

Hosting businessl

The Hosting business recorded increases in sales and profit. The effects of price revisions persisted, and the number ofsubscriptions for high unit price plans increased.

lLolipop! for Gamers, which launched in Q2, had a minor impact on performance, but has started to record sales.
Trend in Hosting Business results

Q2 FY2023 Q2 FY2024
Difference(Million yen) (six months) (six months)

Net sales

2,791

3,041

+249

108.9%

Lolipop!

1,216

1,292

+76

106.3%

MuuMuu Domain

1,130

1,294

+163

114.5%

902

1,054

+152

116.9%

Lolipop!

634

648

+13

102.2%

MuuMuu Domain

122

226

+103

184.7%

Hosting business(Million yen)

1,518 million yen

Net sal es

1,600

Operating profit

1,422 million yen

YoY

1,400

Operating profit
1,200

Hosting business

1,000
800

514 million yen

475 million yen

600

Net sales

400
200
0
2Q
2022

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q

Operatingprofit• Lolipop! recorded increased sales thanks to the ongoing effects of price revisions
and a higher ratio of high unit price plans• MuuMuu Domain saw ongoing effects from the introduction of service
maintenance adjustment expenses• Factors due to higher net sales• Looking at profit on a per-service basis, some costs were shifted from MuuMuu
Domain to Lolipop! as a result of optimizing personnel allocations inside thesegment11

Trend in Hosting Business KPIs, Server Salesl

In server sales, demand continued to expand for high-specification servers and sales of high unit price plans increased to accountfor 27.8% of total salesl

Due to the effects of price revisions and the higher ratio of high unit price plans, spending per customer increased for Lolipop! andMuuMuu Domain
Server sales trend(Million yen)
700

60.0%
Low un it price plans

560
520

High unit price plans

600

Lolipop! Spending per customer

(Yen)

50.0%

Ratio of high unit price p lans

480
440

500

400
40.0%
360
1Q
2022

400

2Q

3Q

4Q

1Q

2Q

3Q

4Q

2023

1Q

2Q

2024

30.0%

MuuMuu Domain: Average price ofdomains under contract

(Yen)

300

210
20.0%
200

200
190
180

10.0%

100

170
160
150

0

0.0%
1Q
2020

2Q

3Q

4Q

1Q
2021

2Q

3Q

4Q

1Q
2022

2Q

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q

140
2Q
2022

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q
12

Hosting Business: Recently Launched Servicesl

Our aim is to gain new subscriptions for Lolipop! for Gamers, which generates higher spending per customer than previous plans,in order to accumulate salesl

The number of new MuuMuu Server subscriptions has increased, with the number reaching 2,857 for the first six months of
FY2024.
Lolipop! for gamers unit price comparison
Lolipop!

Lolipop! for Gamers

Average spending per
customer (Q2)

Average spending per
customer (Q2)521 yen

2,310 yenPrice plan

Game servers supported• Economy• Light• Standard• High speed• Enterprise• Palworld
Launched onJune 11

Launched onJune 19• Minecraft• ARK• Rust• Soulmask• 7Days to Die

Number of new MuuMuu server subscriptions

For FY2024 we aim to gain
5,000 new subscriptions

5,000

2Q

2,857 new

1Q

subscriptions were
gained in the first six
months of FY2024

Targets Results202413E-commerce Support businesslDespite a year-on-year increase in production outsourcing sales utilizing IT subsidies from the Color Me Shop, sales for the Ecommerce Support business declined year on year due to some gross merchandise value from SUZURI slipping to subsequent
periodsl

Operating profit remained flat thanks to efficient management of promotional costs, despite incurring 35 million yen in costs due
to SUZURI T-shirt sales shipping times slipping to Q3.
Trend in E-commerce
Support business results(Million yen)
1,000

◼ Net sales◼ Opera+ng proﬁt

821 million yen

Q2 FY2023 Q2 FY2024(sixmonths) (six months) Difference(Million yen)

Net sales

YoY

2,791

3,041

+249

108.9%

Color Me Shop

1,048

1,050

+1

100.2%SUZURI

465

382

-82

82.4%

902

1,054

+152

116.9%

Color Me Shop

395

412

+17

104.4%SUZURI

19

-1

-21

-

E-commerce Support business

767 million yen

800

Operating profit

E-commerce Support business

600

400

228 million yen

231 million yen
Net sales

200

0

2Q

2022

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q

Operatingprofit• Color Me Shop recorded increased sales for production outsourcing utilizing IT
subsidies• At SUZURI, despite some distribution related to the T-shirt sale slipping to Q3,
sales declined due to the drop in gross merchandise value• Profit increased thanks to the efficiency management of promotional costs for
Color Me Shop
• 35 million yen in costs were incurred due to some shipments from the SUZURI Tshirt sale being delayed to Q3
14

Trend in E-commerce Support Business KPIs (Color Me Shop)l

Quarterly gross merchandise value was 106.1% of the same period the previous yearlAverage spending per customer calmed somewhat as the effects of price revisions ran their course, but quarterly grossmerchandise value per store is on the rise and we will continue to provide new functions and gain subscriptions to expand themerchandise moved by subscribing stores

Trend in gross merchandise value

Quarterly GMV per store(10,000 yen)(100 million yen)

200

600

47,500 million yen

50,500 million yen

180
160

500

140
120

400

100
2Q

3Q

4Q

2022

300

2Q

3Q

4Q

1Q

2Q

2024

Spending per customer for paid stores

(Yen)

200

1Q

2023

6,000

100

5,000

4,000

0
2Q
2022

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q

3,000
2Q

2022

3Q

4Q

1Q

2023

2Q

3Q

4Q

1Q

2Q

2024
15

Trend in E-commerce Support Business KPIs (SUZURI)l

Some shipments related to the t-shirt sale were delayed to Q3l

We launched a new features for creators including "Takurami," which allows users to request illustrations or other content fromcreators, and the "3D Goods Creation Tool" We are contributing to the creator economy by providing creators with opportunities
for success through skill sharing, and providing support for output in virtual spaces
Launched on

Trend in gross merchandise value(100 million yen)

New "Takurami" feature

9

750 million yen

8

550 million yen

7

July 9Against the backdrop of an expanding sharing
economy market, we have launched a feature enabling
creators to offer paid illustrations and other content,
and are creating opportunities for creators to achieve
new successes through skill sharing

6
5
Launched on

July 11

4

New "3D Goods Creation Tool" feature

3

Against the backdrop of an expanding metaverse
market driven by the spread of VR equipment, we havelaunched a feature that enables users to create and sell
3D models and 3D goods without requiring expert
knowledge or skill

2
1
0
2Q
2022

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q

2Q

2024
16

Handmade Products businessl

Net sales declined due to a year-on-year decrease in gross merchandise value in response to a slumping e-commerce marketl

As a result of efficiently managing promotional costs, operating profit increased
Trend in Handmade Products
business results

Handmade Products business(Million yen)
500

Q2 FY2023 Q2 FY2024
Difference(Million yen) (six months) (six months)

Net sales◼ Net sales◼ Opera+ng proﬁt

minne

347 million yen

400

YoY

2,791

3,041

+249

108.9%

761

684

-76

89.9%

902

1,054

+152

116.9%

41

51

+10

123.9%

325 million yen
Operating profit

Handmade Products business

300

minne
200

Net sales

100

0

14 million yen
2Q
2022

3Q

4Q

1Q
2023

2Q

3Q

20 million yen
4Q

1Q
2024

2Q

Operatingprofit• Gross merchandise value declined, with sales reaching 89.9% of the same period
the previous year
• The "minne PLUS Artist Standard Plan" was launched as a subscription-based
plan• As a result of efficiently managing promotional costs, operating profit increased17

Trend in Handmade Products Business KPIsl

Gross merchandise value declined year on year in response to a slumping e-commerce marketl

We launched the "minne PLUS Artist Standard Plan as a subscription-based plan to support artist and brand sales promotion andmarketing activities

Trend in gross merchandise value(100 million yen)

Launched on

May 154540

3,200 million yen

minne PLUS Artist Standard Plan

2,800 million yen

35
30
25
20
15
10
5
0
2Q
2022

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q

We launched a subscription-based plan that enables
handmade product articles and brands to conduct sales
promotion and market activities directly aimed atfollowers.

18

Financial Support businessl

Sales declined, reflecting a decrease in the amount of purchases of invoices due to stricter purchase criteria. This will mitigate
business risks leading to a stable performance.

l

The extent of losses contracted due to a significant decrease in bad debt-related expenses. We are continuously recovering
overdue receivables(Million yen)
300

Trend in Financial Support business results

Q2 FY2023 Q2 FY2024
Difference(Million yen) (six months) (six months)

Net sales

Financial Support business◼ Net sales◼ Opera+ng proﬁt

196 million yen

FREENANCE

200

YoY

2,791

3,041

+249

108.9%

761

684

-76

89.9%

902

1,054

+152

116.9%

41

51

+10

123.9%

106 million yen
Operating profit

100

Financial Support business
0

FREENANCE

6 million yen
-100

-200

Net sales

Sales declined year on year, reflecting a decrease in the amount of purchases of
invoices due to stricter purchase criteria

OperatingprofitAs a result of efforts to collect receivables, bad debt-related expenses for overdue
receivables declined significantly-300-1,078 million yen-1,100
-400

2Q
2022

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q
19

Trend in Financial Support Business KPIsl

The amount of purchases of invoices declined due to stricter screening criteria introduced from Q3 of FY2023

l

Operating profit benefits from the positive impact of declining bad debt-related expenses and efforts to collect overdue
receivables(100 million yen)

Trend in amount of purchases of invoices(100 million yen)

50

10%Amount of purchase s (quarterl y)

Commi ssion rate

2

7.6%

40

Impacts of bad debt-related expenses
on operating profit

7.0%

8%

33 million yen

102,550 million yen

30

6%
-1

20

1,280 million yen

4%

-2

-3
10

2%
-4

0

0%
2Q
2022

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q

-1,090 million yen

-11
-5
2Q

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q
2024

2Q

20

Year ending December 31, 2024

Report on the Current Situation
and Future Policy

21Trend in Sales and Business Expansionl

We provide services that lower the hurdles for people to engage in expressive activities, including the servers and domains used tooperate websites, the building of e-commerce sites, the creation and sale of original goods, the operation of a handmade
products market, and financial support services for freelance workers.
GMO SOKURESU AI
Rolling out a newservice in thestreaming ﬁeld

E-commerce-related services

Financial Support
business

Financial Su ppo rt busin ess
Handmade Products bus iness
E-commerce Support business

Handmade
Products
business

Hos ting bu siness

E-commerce
Support business

Hosting business

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

* Figures for 2021 and 2020 are unaudited following the application of the accounting standard for revenue recognition.

2021

2022

2023

22

Environmental Changes to Existing Services and Future Policyl

The environment has undergone signiﬁcant change, with the maturity of existing markets and challenges faced by small
businessesl

We deliver services tailored to the needs of users engaged in expressive activities with a greater focus on vertical areas and highprice segments

Hosting

E-commercerelated
serviceslServerl

Domainl

E-commerce sitebuildinglHandmadeproductslOriginal goods

Environmental
changes

Increasing maturity of existing markets

Future policies

Developing new server demand and expanding into markets withgrowth potential

Environmental
changesSlump in the overall e-commerce market and challenges faced bysmall businesses

Future policies

Shift of users to high unit price plans and development of new areas

新しいサーバー需要の開拓や成長が見込める市場への進出

23

Approach to Streaming Culture24Providing Services to Market Underpinning the Creator Economy (Current Status)
Creator economy
Where creators are active
Products / content / skills
Products
Server/domains

Engagement

Content
Videos / Live streaming

Skills

Text

Illustrations / photos

Music / audio

GamingEC

Handmade products

Creator support services
FinancingSupport for production

Sales support* Source: Mitsubishi UFJ Research and Consulting "Domestic Creator Economy Research Results (2023)"[Figure 1] Created by GMO Pepabo by referencing examples of well-known companies and services for each platform and service typeOperation

Agent

25

Providing Services to Market Underpinning the Creator Economy (Future)
Creator economy
Where creators are active
Products / content / skills
Products
Server/domains

Engagement

Content
Videos / Live streaming

Skills

Text

Illustrations / photos

Music / audio

GamingEC

Handmade products

Creator support services
FinancingSupport for production

Sales support* Source: Mitsubishi UFJ Research and Consulting "Domestic Creator Economy Research Results (2023)"[Figure 1] Created by GMO Pepabo by referencing examples of well-known companies and services for each platform and service typeOperation

Agent

26

Approach to Streaming Culturel

We provide services to the streaming culture sector that is expected to experience expanded demand in the creator economyl

We lower the hurdles to expressive activities through streaming, create opportunities for expansion into new businesses, and help
creator output

Output throughstreaming

Interactive tools
for streaming
Recording andattracting
customers

Avatar creation

Design of
backgrounds
and audio27

GMO SOKURESU AI

28

Productivity Improvements to Address the Declining Worker Populationl

The Japanese working population is expected to face a shortage of 6.44 million people by 2030lWith these labor shortages, improving productivity by utilizing AI is an urgent challenge

The Japanese working population will face a shortage ofHow do we fill the 6.44 million-worker shortfall?

6.44 million people by 2030
Worker shortage

Increasing
employment of
women

Increasing
employment ofsenior citizens

Increasing
employment offoreign workers

Improvingproductivity

2.98
Labor demand70.73 million
peoplemillion people

Labor supply
64.29 million
people6.44

0.81

million people

million people

1.63
million people

1.02
million people* Source: Persol Research and Consulting Co., Ltd. and Chuo University, Rodo Shijo no Mirai Suikei 2030 (estimation of future labor market 2030)

29

Use of AI at CompanieslCompanies that have introduced AI or implemented demonstration testing of AI are still at a low level - just 34%l

There is a shortage of human resources with basic knowledge of AI and the ability to conduct data analysis that can be leveraged
in businessState of AI adoption in companies (2023)

Issues with the introduction of AI

Other
1%

62.4%

Shortage of personnel familiar with AI

47.0%

Insuﬃcient knowledge inside the company

No plans

43%

Introduced
or underdemonstration
testing

Unsure of the benefits to be gainedby adopting AI

41.9%
35.9%

Shortage of case studies regarding AI adoption

34%
Development of learning data is difficult

Under consideration

22%

28.8%

Do not possess or have notaccumulated learning data

26.6%

High adoption costs

26.3%

No services that can be easily introduced* Source: Created in-house based on "DX Trends 2024" from the Information-technology Promotion Agency, Japan

24.9%

30

Provision of Services to Solve Social IssueslWe will solve the challenge of boosting productivity to address the decline in the working population with AIl

We will provide expertise in the introduction and operation of AI to handle inquiries to companies, and help them solve theircorporate issues

Social issues inJapan

Corporate issues

Using inquiry-based AI to solve issues
31Changes to Organizational Structurel

Productivity has improved with the utilization of AI, and on August 1, we made organizational changes and transferred partners
from the Customer Service Department to respective business divisions.

As a result of employing AI, productivity in the Customer Service
Department was improved*This enabled the transfer of staff to operating divisions,and the optimization of human resources through changes to job roles* Productivity improvement as of Q1
Number of Color Me Shop inquiries answered by humans:
47.1% reduction
Number of staff in the department:
Reduced by 17% compared with Q1 of the previous year

The Customer Service Department
was dissolved on August 1, with staﬀ
transferred to other divisions
32

Market Environmentl

To solve the issues of the declining worker population and lack of human resources familiar with AI in corporate roles, welaunched GMO SOKURESU AI for the domestic DX marketl

We provide new services tailored to streaming culture in the market that underpins the creator economy

Domestic DX market forecast (2030 forecast)

8.3* Source: "2024 Digital Transformation Market Future Outlook" from Fuji Chimera Research InstituteMitsubishi UFJ Research and Consulting "Domestic Creator Economy Research Results (2023)
Company estimated based on Grand View Research "Japan Live Streaming Market Size & Outlook"(calculated based on a rate of USD1 = JPY150)

Domestic livestreaming market forecast (2030 forecast)annualtrillion yen (Average
growth rate: 10.4%)

2.5(Average annual

trillion yen growth rate: 24.7%)

Domestic DX market forecast (2030 outlook)

4.1

Domestic live streaming market (2032)
trillion yen

GMO SOKURESU AI

534.5 billion yen
New services that caterto streaming culture
33

Future Policy (Summary)

Hosting

E-commercerelated services

New ArealServerl

Domainl

E-commerce sitebuildinglHandmade productslFuture policieslSolving social issueslBusiness tailored tochanges in expressive
activities

Environmental
changes

Increasing maturity of existing markets

Future policies

Developing new server demand and expanding into markets
with growth potential

Environmental
changesSlump in the overall e-commerce market and challenges facedby small businesses

Future policies

Shift of users to high unit price plans and development of newareas

Environmental
changes

Productivity improvements and changers in expressive
activities and means of expression• New business leveraging our expertise in customer service asa strength
Future policies• Provision of services that lower the hurdles to expressive
activities in streaming
34

GMO Pepabo, Inc.
Stock code: 3633

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Reference Materials

37Consolidated Statement of Income (Q2)(Million yen)

FY2023 Q2(six months)

FY2023 Q2(six months)

YoY

Net sales

5,523

5,365

97.1%

2,477

2,549

102.9%

3,045

2,815

92.4%

3,871

2,319

59.9%

590

457

77.4%

△825

496

ー

ー

9.3%

ー

Ordinary profit

△746

493

ー

Profit before income taxes

△746

493

ー

Profit attributable to owners of parent

△892

325

ー

Cost of sales
Gross profit
Selling, general and administrative
expenses
Of SG&A expenses, promotion cost*
Operating profit(Operating profit margin)* Promotion cost is the sum of advertising expenses, promotion expenses, and provision for point card certiﬁcates.

38

Consolidated Balance Sheet(Million yen)

FY2023

FY2024 Q2Change

8,568

8,669

＋ 101

Cash and deposits*

4,360

4,524

＋ 163

Accounts receivable

2,185

2,065

△ 119

Accounts receivable - other

1,620

1,491

△ 128

2,306

2,194

△ 111

10,874

10,864

△ 10

7,913

7,782

△ 131

Accounts payable ‒ other

1,860

1,671

△ 189

Advances received

4,292

4,412

＋ 119

Non-current liabilities

1,150

980

△ 169

Net assets

1,811

2,101

＋ 290

10,874

10,864△ 10

Current assets

Non-current assets
Total assets
Current liabilities

Liabilities and net assets* Cash and deposits include deposits paid to subsidiaries and associates.

39

Statement of Cash Flows(Million yen)

FY2023 Q2

FY2024 Q2

Operating cash flow

734

564

Investing cash flow

△134

△221

Financing cash flow

△28

△179

Increase (decrease) in cash and cash equivalents

571

163

4,181

4,524

Balance of cash and cash equivalents* Cash and deposits include deposits paid to subsidiaries and associates.

40

Analysis of Change in Operating Profit (in Detail)（Million yen）

500

474

450

400

350
306
300

288
275

284

283

246

250

229

233
223

200

150

100

50

0
1Q
2022

2Q

3Q

4Q

1Q
2023

2Q

3Q

4Q

1Q

2Q

2024

41

Company Profile

42

Company Information
Company Name GMO Pepabo, Inc.
Established January 10, 2003
Share capital 262.22 million yen
Representative Director and CEO Kentaro SatoTOKYO

Head office Cerulean Tower, 26-1 Sakuragaoka-cho, Shibuya-ku, Tokyo
Branch Tenjin Prime, 2-7-21 Tenjin, Chuo-ku, Fukuoka, Fukuoka

Prefecture
Office Dai-2 NT Building 3-1 Uearatacho, Kagoshima, Kagoshima

Prefecture

FUKUOKA

Subsidiaries GMO Creators Network, Inc.
Stock exchange Tokyo Stock Exchange (Standard Market) (stock code:3633)
Share capital 262.22 million yen
Number of employees (consolidated) 412 (347 full-time employees, 71 temporary employees)

KAGOSHIMA(As of June 30, 2024)
43

Corporate Philosophy“Make it more playful”
Creative activities on the Internet are changing and the range of them is expanding. In thisenvironment, we want to continue to take on challenges to create more interesting things. Thatpassion is implied in our corporate philosophy.
We can make innumerable things more interesting. We can create interesting services and plans.
We can enable users to have interesting experiences. We can work out ways to enjoy our jobs.
We will create more interesting things and make our jobs more interesting. We will continue to
evolve ourselves.

Mission

Increase the output ofhumanity
We harness the power of the Internet and technology to lower the barriers to
information sharing, amplifying all kinds of outputs globally.
By continuing to create products that encourage the output of humanity, we at GMO
Pepabo have incorporated the resolve to evolve and expand together with our users
into our mission.
45

History
November 2001●

Starts to provide Lolipop!

January 2003●

Established paperboy&co. Y.G. in Fukuoka.

March 2004●

Becomes a consolidated subsidiary of GMO Internet, Inc.

May 2004●

The head office moves to Tokyo.

February 2005●

Starts Color Me Shop, which provides an online shop opening/creation service.

December 2008●

Listed on JASDAQ (stock code: 3633)

January 2012●

Starts minne, a handmade products market.

April 2014●

Renamed GMO Pepabo, Inc.

April 2014●

Starts SUZURI, which provides an original goods creation and sale service.

February 2019●

Makes GMO Creators Network, Inc. a consolidated subsidiary.

December 2019●

Listed on the Second Section of the Tokyo Stock Exchange

December 2020●

Assigned to the First Section of the Tokyo Stock Exchange

April 2022●

Assigned to the Section of the Tokyo Prime Market

April 2022●

Starts GMO Renshu, which provides liaison and collection service for teams and classrooms.

October 2023●

Assigned to the Section of the Tokyo Standard Market.

March 2024●

Starts "GMO SOKURESU AI" which provides an inquiry response support service with AI
46

Business Segments and Main Services
Pepabo offers a wide range of web services and smartphone applications to support creative expression.
These services are categorized as follows

Hosting Business

E-commerce Support
Business

Handmade Products
Business

Financial Support
Business

47

Hosting Business 「Lolipop!」
One of Japan's largest rental server services

Ready to use, ready to go the distance. You canachieve whatever you set out to do.
This service offers low-cost, high-performance servers
for those who want to pursue their passions, whether it'sbuilding websites or creating email addresses. We
support individuals who use technology on the Internet
to engage in creative expression.

Rate plans

99 yen~ / month

Main Users

Individuals and small and medium-sized corporations

Number of contracts

0.40 million※ As of June 30, 2024
※Rate plans：Economy 99 yen~、Light 264 yen~、Standard 495 yen~、High Speed 550 yen~、Enterprise 2,200 yen~48

Hosting Business 「Muu Muu Domain」
Domain name acquisition agency

The gateway to every form of self-expression on theInternet.
This service enables you to acquire and manage yourdesired domain name from a selection of over 400 types.
We support the business and creative endeavors of thoselooking to build their own unique websites and online
stores.

Rate plans*

85 yen~ / year

Main Users

Individuals and small and medium-sized corporations

Number of contracts

1.08 million※ As of June 30, 2024
※Service maintenance and adjustment fees are charged separately in addition to the usage fees49E-commerce Support Business 「Color Me Shop」
Creation of online shops

Supporting businesses of all sizes and enhancing thediversity of e-commerce.
Whether you're just starting out or already running a growing
business, this service enables you to build an e-commerce site thatcan scale with your needs, regardless of your product or businesssize. We offer a wide range of features and dedicated support tohelp you succeed in your business endeavors.

Rate plans*

FREE / Regular / Large / Premium

Main users

Individuals and small and medium-sized corporations

Number of contracts

50,000※ As of June 30, 2024
※Rate plans：FREE 0 yen~、Regular 4,950 yen~、Large 9,595 yen~、Premium39,600 yen~50E-commerce Support Business 「SUZURI」
Creation and sale of original goods

Creating is easy for everyone, Reaching as many
people as possible with what you've made.
This service enables users to easily create and sell high-quality
original items like T-shirts, phone cases, and mugs using their own
illustrations and photos. We help creators expand the possibilitiesof their creative work.

Annual gross merchandise value

2.4 billion yen (2023 result)

Number of creators

0.83 million

Number of members

1.84 million※ As of June 30, 2024
51

Handmade Products Business「minne」
One of Japan's largest handmade products markets

Expanding the possibilities of making and creating aworld where everyone can express their creativity.
Itʼs a handmade marketplace that connects 'people who want tobuy' with 'people who want to sell' their handmade creations. As acomprehensive platform for craftsmanship, we support artists andbrands in expanding the possibilities of their craft.

Annual gross merchandise value

12.9 billion yen (2023 result)

Number of creators and brands

0.91 million

Number of works

17.49 million

Number of app downloads

15.04 million※ As of June 30, 2024

52

Financial Support Business「FREENANCE」
Support sole proprietors' business activities by providing immediatepayment (factoring) and liability insurance.

Providing immediate payment (factoring) and indemnity
insurance to support the activities of sole proprietors.
Creating a future where freelancers can thrive. We support theactivities of freelancers and sole proprietors with financial andinsurance solutions, empowering individuals with expertise to work
confidently, energetically, and freely, allowing them to focus onwhat they do best.

Minimum amount of invoice purchase10,000 yen〜

Commission rate

3%-10% of invoice face value

Main services

Immediate payment / GMO Freelance factoring / insurance, etc.

Amount of purchases of invoices

8.4billion yen（FY2023）※ As of June 30, 2024

53

Sustainable Activities (ESG/SDGs)
Identification of three material sustainability issues: addressing social challenges and enhancing corporate value throughbusiness activities

Under the corporate philosophy of "Make it more playful," we increase the output of humans through business activities
and seek to enhance corporate value and solve social issues with every stakeholder to help achieve a sustainable society.

Consideration for the global environmentand conservation of it through reduction ofenvironmental impact

Please find our sustainability activities andconcrete efforts on the websites below.

Support for people from all walks oflife to increase human output

Strengthening governance for soundand transparent corporate
management

Sustainability at GMO Pepabo https://pepabo.com/sustainability/
Sustainability data

https://pepabo.com/sustainability/data/54

Number of Persons Enjoying Support in Output
Remove obstacles to creative activities for output and increase the output of humanity

8.10(10,000 persons)
900

millionenjoying support in output*

800

700

600

500

400

300

200

100

0
2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

* Number of persons who have enjoyed support including other services and services that were transferred in the past

2015

2016

2017

2018

2019

2020

2021

2022

2023

55

Sustainability (ESG) Activities through Services- Support for Kagoshima and other provincial regions
Collaboration with local governments in Color Me Shop andorganization of online shop seminars for local retailers- Launch of an SDGs award
Honoring shops selling sustainability-conscious
products in the Color Me Shop Award 2023

- Special features on environmental works
Showcasing on the website sustainable handmade works created inconsideration of the global environment and resources- Setup of the minne College
Founding a business school with a focus on manufacturing towiden the range of re-skilling and skill sharing
56

Value Creation Process
Management capital and strengths

Financial results and value offered to society

GMO Pepabo's business activities and offering of value

Outcomes

Output

Input

Offering of value through companies andservices

Material ESG/SDGs issues

Human Capital
Expertise accumulated with a corporate
culture encouraging output and internal
production
A portfolio of diverse personnel withadvanced engineering skills and design
knowledge

Environmental (E)Give consideration to the global environmentand conserve it by reducing the environmental
impactHosting business
Lolipop!
MuuMuu Domain

Enlarge the business network consisting ofcreators and users to make it moreinteresting

Social and Relationship Capital
A business network generated bycreators enjoying multiple services andtheir fans

E-commerce
Support businessColor Me Shop
SUZURI

Social (S)Support for people from all walks of life toincrease human output

Intellectual Capital

Remove entry barriers against output creationand support the distribution anddevelopment of creative activities

Pepabo R&D Institute, theWeb3 Promotion Officeand other technologicalresearch and investments

Corporate Philosophy

Finantial Capital

Make it more playful

Handmade
Products businessMissionminne

Increase the output of humanity

Fulfill the medium-term management planand continuously increase corporate value

Constant acquisition of stablerevenue based on recurring revenue
and solid financial foundations

Governance (G)Financial
Support business

Natural CapitalStrengthening governance for sound andtransparent corporate management

FREENANCE

Support for lowering obstacles tocreative activities and reduce theenvironmental impact▶ Execute a business strategy and make investments on the basis of realization of
the big picture▶ Take actions towards new technologies with the use of research anddevelopment organizations and assets▶ Support Kagoshima and other provincial regions and invest in strengthening thecorporate brand

Building appropriate corporate value (share price)through the value creation process

57

Shareholder Return
Dividends
2021

2022

2023

2024 (Forecast)

Annual dividends
per share (yen)

68.00

50.00

0.00

40.00

Payout ratio (%)

50.3

51.9

ー

50.0

Shareholder benefits*Continuous shareholding conditions will be applied to shareholder benefits from the end of June 2024 onward (see corporate website for details)*Preferential benefits will be offered to shareholders who have continuously held at least one unit of shares for six months or more under the same shareholder number.

Benefit1

Points and coupons that can be used forservices provided by the Company, etc.

• Holding one unit (100 shares)

Worth 1,500 yen• Holding two units (200 shares)
or moreWorth 3,000 yen

BenefitCashback equivalent to a commission fee if a2shareholder buys or sells certain securities at GMO
CLICK securities• Cashback on buying commission fees(limited to purchases of shares in the Company)• Cashback on trading commission fees
• Holding one unit (100 shares)

1,500 yen maximum• Holding two units (200 shares) or more

3,000 yen maximum58

FY24 Q1̲Results̲Presentation̲DataSheet(Million yen)

Business Results by Segment/Service (Quarterly) *1
FY22Q1
Consolidated

Q4

Q1

Q2

Q2

2,735

2,788

2,701

2,677

2,647

2,718

1,319

1,343

1,391

1,384

1,369

1,422

1,466

1,500

1,522

1,518

Lolipop

551

575

583

584

594

621

638

648

650

642

MuuMuu Domain

544

547

581

573

553

577

598

618

644

650

Other*3

224

221

227

227

222

224

230

234

228

226

664

699

769

710

700

821

761

713

665

767

442

442

467

501

511

536

494

524

504

546

212

247

293

204

184

280

264

188

161

221

Other*3

10

10

9

5

5

5

3

0

0

0

minne

460

398

373

417

413

347

370

359

359

325

FREENANCE

90

129

166

207

251

196

104

103

99

106

Q2

FY23
Q3

Q4

Q1

Q2

FY24
Q3

Q4

Q1

Q2

225

22

322

161

36

-861

243

241

234

262

451

478

509

452

426

475

508

511

539

514

Lolipop

308

334

331

309

307

327

351

346

344

304

MuuMuu Domain

71

69

97

75

45

77

89

91

109

116

Other*3

72

75

81

68

74

71

68

74

86

94

175

1

260

225

163

228

194

170

160

231

176

174

206

228

202

192

151

173

188

223

6

-167

61

4

-29

49

56

8

-18

17

Other*3

-7

-6

-7

-7

-10

-13

-13

-11

-10

-9

minne

49

17

2

12

27

14

-0

22

30

20

FREENANCE

-4

-11

20

-30

-93

-1,078

32

75

-6

6

Operating Profit*2

E-commerce Support Color Me Shopbusiness
SUZURI
Handmade Products
business
Financial Support
business

Q1

2,721

Q1

Hosting business

Q4

2,702

FY22

Consolidated

FY24
Q3

2,570

E-commerce Support Color Me Shopbusiness
SUZURI
Handmade Products
business
Financial Support
business

FY23
Q3

2,535

Net Sales*2

Hosting business

Q2※For details, please refer to "Fiscal Year 2024 1st Quarter Data sheet" on our IR page.
*1 Quarterly are rounded down to the million yen *2 Excluding sales and operating profit of others (office expenses, etc.)*3 Figures subtracted from business totals

59

FY24 Q1̲Results̲Presentation̲DataSheet
KPI by Segment/Service (as of end of quarter)
FY22

Q1
3/31
Lolipop
Hosting business

MuuMuuDomainColor Me Shop

E-commerce Support
business

Handmade Products
business

SUZURI

minne

Q2
6/30

FY23

Q3
9/30

Q4
12/31

Q1
3/31

Q2
6/30

FY24

Q3
9/30

Q4
12/31

Q1
3/31

2Q
6/30

Number of contracts(Numbers)
Number of contracts(Numbers)
Number of contracts(Numbers)

426,074

426,651424,528

422,596

419,605

417,710415,394

412,781410,474

410,474

1,166,641

1,162,930

1,155,961

1,186,748

1,139,334

1,125,732

1,114,075

1,102,604

1,085,334

1,085,334

48,12349,27750,28250,66350,53750,33750,26450,37950,32050,320

Number of creators(ten thousands users)

59

62

65

67

69

72

75

77

80

80

Number of members(ten thousands users)

113

122

130

135

141

149

156

163

172

172

Number of products(ten thousands items)

1,484

1,531

1,568

1,596

1,625

1,656

1,687

1,710

1,729

1,729

Number of creators(ten thousands users)

82

83

84

85

87

88

89

90

91

91

1,351

1,371

1,392

1,411

1,428

1,442

1,454

1,473

1,492

1,492

Number of app downloads(ten thousands DLs)

KPI by Segment/Service (Quarterly)
FY22

Q1
3/31
Hosting business
E-commerce
Support business

Handmade
Products business

Financial Support
business

Q2
6/30

FY23

Q3
9/30

Q4
12/31

Q1
3/31

Q2
6/30

FY24

Q3
9/30

Q4
12/31

Q1
3/31

2Q
6/30

Lolipop

Spending per customer(yen)

431

449

457

461

471

495

511

522

527

527

Color Me Shop

Spending per customer(yen)*1

3,705

3,850

4,250

4,778

5,014

5,213

5,233

5,492

5,391

5,791

6.0

6.8

7.9

5.9

5.2

7.5

6.4

5.1

4.3

5.5

41.9

36.3

34.1

38.3

37.8

32.1

27.7

31.1

31.7

28.0

121.7

101.1

93.7

99.5

102.2

83.6

73.3

77.4

81.6

69.8

Average price of orders(yen)

3,600

3,622

3,743

3,919

3,823

3,888

3,901

4,071

4,051

4,117

Amount of Purchases of Invoices(100 million yen)

12.1

18.9

26.0

29.7

31.2

25.5

14.1

14.0

13.0

12.8

Number of invoices(Invoices)

4,086

4,805

5,407

6,012

6,006

6,204

5,146

5,076

4,733

5,255

Average invoice purchase(Thousand yen)

296

394

482

495

519

412

275

276

275

244

Number of users(users)

2,306

2,593

2,848

3,154

3,298

3,459

3,246

3,110

2,919

3,157

Gross merchandise value(100 million yen)
Gross merchandise value(100 million yen)
Number of orders(ten thousands orders)

SUZURI

minne

FREENANCE※For details, please refer to "Fiscal Year 2024 1st Quarter Data sheet" on our IR page.

60

Notes on the Use of This Material• This material is intended to offer insight into our Company and is not for the purpose of soliciting
investment.
• We have taken reasonable care to ensure the accuracy of this material. However, there are inherent
uncertainties in forward-looking statements, and we do not guarantee them.
• We accept no liability for any effects or losses caused by relying on information in this material.
• We own all rights to this material. We ask you not to fabricate or change it without permission,
regardless of method or purpose.

Contact information

GMO Pepabo, Inc.
Please use GMO Pepabo AI Chat

https://pepabo.com/contact/

Corporate site

https://pepabo.com/
IR information

https://pepabo.com/ir/
Pepabo's official X account@pepabo61