目次

OPT Holding, Inc.
Consolidated results for the 2019 Q1
May 13, 2019

Disclaimer
This English translation is only for reference. When there are any
discrepancies between the original Japanese and English translation, theoriginal Japanese always prevails.
The information contained in this material is carefully scrutinized before presentation as it
is intended to facilitate your understanding of the Company’s business, management
policies and plans, financial position, etc. However, we do not guarantee its accuracy,completeness, effectiveness, or security.
None of the information herein is prepared to solicit investment. The final decision on
investing should be made by you, under your own responsibility. We will not be responsible
or liable for any consequences resulting from investments made by you in reference to, or
by use of, the information.
Any information herein other than past or present facts represents our future outlook
developed based on the input currently available, and includes various risks anduncertainties. Thus, please note that actual business results released at a later date may
differ due to such factors.

1

Table of Contents

1

2019 Q1 Results2

Update on Large Corporation Segment ofMarketing Business3

Update on Local SEMs of Marketing Business

4

Our Plan

52019 Full-year Earning Forecasts

6

References212019 Q1 Results

1-1. Key Management KPIs: Non-GAAP Indicators
OPT Holding, Inc., and its subsidiaries and affiliates (hereinafter, the Group) adopt Japanese generally accepted accounting principles(J-GAAP) and disclose its financial statements in accordance with J-GAAP reporting format; however, the Group uses following nonGAAP indicators in order to more accurately evaluate its results of operations and financial position. Please refer to the definition ofeach Non-GAAP indicator as stated below. Also reconciliation of GAAP to Non-GAAP indicators of EBIT, EBITDA and Free cash flow
are stipulated in this material.

【Definition and formula of Non-GAAP metrics】
１．EBIT(Earnings before Interest and Taxes)=Net income before taxes + interest payment – interest income
２．EBITDA(Earnings before Interest, Taxes, Depreciation and Amortization)=EBIT+Other financial gain/loss+depreciation of noncurrent tangible assets+amortization of
intangible assets+depreciation of long-term prepaid expense+non-cash gain/loss
３．FCF(Free cash flow)=Operating cash flow＋ investment cash flow± one-off cash flow items
４．FMV(Fair Market Value)=an estimated market value of a property or a liability, based on third-party transaction between aknowledgeable and willing buyer and a knowledgeable and willing seller
５．IRR(Internal Rate of Return)= an investment return computed assuming subject securities in our portfolio were sold at the end of thereporting period.
６．AUM(Assets Under Management)= aggregate amount of (1) book value of subsidiaries’ and affiliates’ stocks and (2) FMV of operational
investment securities and invested securities
Note; The Group discloses those Non-GAAP metrics as important management KPIs from 2018.
4

1-2. Key Management KPIs: Supplementary Notes【Adjustments for past financial results】
Consolidated results for 2018 include earnings from the video streaming business of relaido, Inc. (former SkillUp Video Technologies, Inc.), belongs to Large Corporation Segment of Marketing Business, and also includes
costs and gains incurred by its company-split and business transfer.

In this material, consolidated results and Marketing Business segment results are compared to the adjusted
previous year’s results in which the earnings and other related costs and gains related to the transferredbusiness of the former Skill-Up Video Technologies, Inc. were excluded.



Results for 2019 Q1 are not adjusted, as the business was already transferred in 2018.
2019 Q1

Unit: JPY million

Adjusted YoY（%）

Actual2018 Q1
YoY（%）a
Adjusteda-b
Adjusted
amountb
ActualRevenue

21,555(3.0)%(5.3)%

22,215

22,773(558)

Gross profit

4,178(7.5)%(10.0)%

4,516

4,640

(124)

Operating income

406(60.5)%(59.7)%

1,028

1,007

21

EBIT

443

(51.5)%(50.4)%

913

893

20

EBITDA

685(42.5)%(45.8)%

1,192

1,265

(73)

Quarterly net
incomeattributable toowners of parent

242(56.3)%(52.9)%

555

515

40

5

2019 Q1 Results Highlights
Revenue
EBITDA
MarketingBusiness（Adj)

Synergy
Investment
Business

Consolidated
Results(Adj)

JPY 20,298million YoY 1.9% down
JPY
970million YoY 39.7% down

• Large Corporations• Part of our major clients shrank their advertising budgets. Our personnel cost went up as we haveincreased staffs• Recent New Business Wins will translate into sales from Q2 or later• Local SMEs:• In addition to lower business from major clients, incentive income decreased and staff costs increased.

Revenue
EBITDA
AUM
IRR

JPY 1,260million YoY 18.5% down
JPY
157million YoY 280.4% up
JPY 30,035million JPY 8,816million increase from 2018 Q4
15.7%
1.7pt up from 2018 Q4• Revenue: Declined compared to 2018 Q1 mainly due to deconsolidation of Writeup, etc.
• EBITDA: Improved due to sale of marketable securities and liquidation of overseas subsidiaries, etc.
• AUM/IRR: Increased from last quarter due to higher market value of operational investment security such as
Raksul.

Revenue JPY 21,555million YoY 3.0% down
EBITDA JPY
685million YoY 42.5% down
• Revenue: Marketing Business, the core business of the Group, recorded negative growth YoY basis• EBITDA: Corporate Function costs also increased in addition to declined EBITDA of marketing business
units

Notes)EBITDA by business segment is shown before allocation of Corporate Function costs

62019 Q1 Key Consolidated Financials(Unit: JPY million)

2019 Q1

2018 Q1
Adjusted

ChangeAmountYoY（%）

2018 Q1
w/o adjChangeAmount YoY（%）

Revenue

21,55522,215(660)(3.0)%

22,773(1,218)(5.3)%

Gross profit

4,178

4,516

(336)

(7.5)%

4,640

(461)

(10.0)%

Operating income

406

1,028

(601)

(60.5)%

1,007

(601)

(59.7)%

EBIT

443

913

(470)

(51.5)%

893

(450)

(50.4)%EBITDA

685

1,192

(506)

(42.5)%

1,265

(579)

(45.8)%

Quarterly net income
attributable to owners ofparent

242

555

(270)

(52.7)%

515

(272)

(52.9)%ROE(LTM)※1※2

7.2%

5.8%

1.4pts-Free cash flow

(327)

79

(406)

-

Earnings per share
EPS (in yen)

10.60

22.79

(12.19)-Diluted earnings per share(in yen)

10.59

22.60

(12.01)-※1 ROE=Net income attributable to owners of parent (LTM) ÷ (Average equity amount as of March 31, 2018 and 2019)
2 LTM=Last Twelve Months

7

2019 Q1 Breakdown by Segments (Adjusted)

Reporting segment(Unit: JPY million)

MarketingBusiness

Synergy
Investment
Business

Othes
Corporate
Function
Cost

Total

Consolidated

Other

Revenue

20,2981,260

21,558-(3)

21,555Gross profit

3,564

617

4,181

-

(3)

4,178

SG&A

(2,709)(531)(3,240)(538)

7(3,771)

Operating income

855

86

941

(538)

3

406

EBIT

859

115

974

(534)

2

443

EBITDA

970

157

1,127

(441)

0

685

Note: Operating income/EBIT/EBITDA：Before Corporate Function cost allocation

8

Non-GAAP KPI： Free Cash Flow/EBITDA[Free cash flow](Unit: JPY million)

2019 Q1

2018 Q1

AmountYoY（%）

Operating cash flow

(131)

486

(618)

-

Investing cash flow

(373)

878

(1,251)

Free cash flow

(505)

1,364

(1,870)Adjustments*

177(1,285)

1,463-

Adjusted Free cash flow

(327)

79

(406)

None: Adjustments: One off cash flow item
• 2019 Q1: Penalty payment regarding the company-split business transfer of vide streaming business of relaid, Inc., (Formally Skill-up
Video Technologies, inc.,• 2018 Q1：Aplication deposts fand return for derivative contract of own shares and gain from the derivative’ settlement.
(Unit: JPY million)[EBITDA]

2019 Q1

2018 Q1

AmountYoY（%）

438
6
(1)
443
1

886
8
(1)
893
43

(447)
(2)
0
(450)
(41)

(50.5%)(29.7%)
16.8%(50.4%)(97.9%)

Amortization of intangible
assets(＋)
Depreciation of long-term prepaid expense (＋)

45

241

(195)

(81.3%)

01

0(40.7%)

Non-cash profit/loss (＋)

195
685

87
1,265

108
(579)

124.4%(45.8%)

Income before Taxes
Interest paid (+)
Interest received (－)
EBIT
Depreciation (+)

EBITDA9

2019 Q1 Results of Marketing Business (Adj)• Revenue declined year-on-year basis mainly as some clients shrank their advertisingbudget.
• EBIT/EBITDA decreased year-on-year basis due to an increase in HR related costs(hiring, training, promotion, etc).

Large Corporations• Revenue growth in 2019 Q1 is lower than the past due to decreased businesses from specificclients.
• Same as Large Corporation segment, EBIT/EBITDA decreased due to an increase in HR
related costs (hiring, training, promotion, etc).

Local SMEs

Large Corporations(Unit: JPY million)

2019 Q1

2018 Q1

Amountof% of changechangeLocal SMEs

Segment Total ※2019 Q1

2018 Q1

Amount ofchange% ofchange2019 Q1

2018 Q1

Amount% ofofchangechangeRevenue

16,177

16,902 (725)(4.3)%

4,263

3,969

293

7.4%

20,29820,697 (398) (1.9)%

Gross profit

2,725

2,911 (185)(6.4)%

839

835

3

0.5%

3,564

3,742 (178) (4.8)%

SG&A(1,958)(1,721) (236)(13.7)%

(758)

(591)

(167) (28.2)%(2,709)(2,308) (400) (17.3)%

Operating income

767

1,169 (401)(34.4)%

81244(163) (66.8)%855

1,434 (578) (40.3)%

EBIT

771

1,188 (417)(35.1)%

81247(165) (67.0)%859

1,435 (576) (40.1)%

EBITDA

848

1,312 (463)(35.3)%

121296(174) (58.9)%970

1,608 (638) (39.7)%

Note: 1. Operating income/EBIT/EBITDA：Before Corporate Function cost allocation
2. Segment total: figures include inter-segment reconciliation between Large Corporation and Local SMEs sub-segment

10

2019 Q1 Results of Synergy investment Business
Revenue• Decreased year-on-year basis due to deconsolidation of Writeup and sales/liquidations ofoverseas subsidiaries.

EBIT/EBITDA• Gross profit was declined due to the deconsolidation, China cross-border EC business’s
earnings deterioration and inventory devaluation.
• EBIT and EBITD were increased by the increased gain from equity method company
and gain from overseas funds.

(Unit: JPY million)

2019 Q1

Amount ofchange2018 Q1% of change

Revenue

1,260

1,546

(286)

(18.5)%

Gross profit

617

773

(156)

(20.2)%

SG&A

(531)

(738)

207

(28.1)%

Operating income

86

32

53

166.1%

EBIT

115

(40)

155

-

EBITDA

157

41

116

280.4%

Note: Operating income/EBIT/EBITDA：Before Corporate Function cost allocation

11

AUM (FMV)/IRR[AUM*1 (FMV*2)]
AUM at the end of 2019 Q1 : JPY 30,035 million[IRR (Internal Rate of Return)](JPY 20,418 million increase from acquisition cost; up 212.3%)

Improved by Raksul’s market value increase• Increased by JPY 8,817 million from 2018 Q4 due tohigher market value of operational investment security
such as Raksul.
(Unit: JPY million)

25,000Share of subsidiaries
子会社株式30,035

IRR of invested assets is disclosed for improving transparency of
our return from investments

2019 Q1(Reference)
2018 Q4

15.7%

14.0%

関連会社株式
Share of affiliates
Investment securities
投資有価証券

20,000Operational investment
営業投資有価証券
securities

26,30515,00010,000[Other topic]
In March 2019, the first closing of OPT Ventures
No.2 Investment Partnership, created in December
2018, has completed.

9,616
6,301

5,000

0

2,273

2,701

1,042

1,027

Acquisition cost

Fair market value

取得価額

公正価値（FMV）

Note; 1. AUM：Aggregate amount of (1) book value of subsidiaries and affiliates’ stock and(2) fair market value (FMV) of operational investment securities and invested securities

2. FMV : an estimated market value of a property or a liability, based on third-party transaction
12
between a knowledgeable and willing buyer and a knowledgeable and willing seller

Synergy Investment Business
Update on Reorganization of Overseas Marketing Business Portfolio

Synergy
Investment
Segment

Current Situation
Reorganization of overseas ad agency businesses

Oversea
Marketing2018 Liquidated-TOKYO GETS Co., Ltd-GRASIA Bangkok Co., Ltd.（Thailand）
2019 Currently in process of liquidation/sales-eMFORCE Inc.（Korea）-Chai Communication Co., Ltd.（Korea）-GRASIA Pte., Ltd. (Singapore）-OPT SEA Pte., Ltd.（Singapore）-OPTOK Co., Ltd.（Thailand）etc.,132019 Q1 Corporate Function cost
SG&A costs increased due to investments on human resources (hiring and training) for mid-term
growth, to enhancing group-wide management systems, and to amortization of restricted stocks
granted to selected employees.

(Unit: JPY million)

2019 Q1

2018 Q1

Change amount

SG&A

(538)

(447)

(91)

Operating income

(538)

(443)

(94)

EBIT

(534)

(487)

(46)

EBITDA

(441)

(459)

17

Definition of Corporate Function cost
The definition of this Corporate Function cost has changed since 2018 as
follows.

* Reasons for the discrepancy between SG&A costs and EBIT include non-Operating
income and losses.

✓Personnel cost at administrative division at OPT Holding* Reasons for the discrepancy between EBIT and EBITDA include costs of stockcompensation plan (since 2018 Q3).

✓Overhead cost to manage OPT Holding’s administrative division except
personnel cost.

* For comparison, gain on valuation of derivatives is excluded from 2018 Q1
EBIT/EBITDA.

Expense for several services provided to Group companies by OPT Holding
is included.

14

2019 Q1 Consolidated EBITDA Analysis（Adjusted）
Marketing Business

Synergy Investment
Business

Decreased mainly due to declined revenue in both Large Corporation and Local SMEs
and to higher HR related costs (hiring/training/promotion, etc.)
Increased by drop in SG&A from restructuring/liquidation of overseas subsidiaries
and improvement in non-Operating income from gain in overseas funds, although
Gross profit is reduced by deconsolidation of Writeup.

1,400

(507)

(Unit: JPY million)

1,200

1,000

(638)
800

15
600

116

1,192

400

685

200

0
調整後
2019年Q1
2018
Q1

マーケティング事業
MarketingBusiness* EBITDA: Before allocation of Corporate Function costs

シナジー投資事業
Synergy
Investment

その他/内部取引transaction
Other/Internal

2019年Q1
連結合計
2019
Q1

15

2019 Q1 Marketing Business EBITDA Analysis(Adjusted）
Large
corporations
Local/ SMEs

• Revenue declined year-on-year basis mostly because some clients of certain industries shrank
their advertising budget• HR related costs (hiring, training, promotion, etc.) increased year-on-year basis..
• Growth in 2019 Q1 revenue is lower than the past due to decreased revenues from specificclients.
• Same as Large Corporation segment, HR related costs (hiring, training, promotion, etc.)
increased.

(638)

1,800

(Unit: JPY million)

1,600
1,400

(463)

1,200

(174)

1,000
800

(1)

1,608

600

970

400
200
0
2018
Q1
調整後
2019年Q1

Largeマーケ大手領域
Corporations* EBITDA: Before allocation of Corporate Function costs

Local
SMEs
マーケ中小領域

Other/Internaltransaction
内部取引

2019年Q1
連結合計
2019 Q1

16

2019 Q1 Marketing Business EBITDA Breakdown (Adjusted)
EBITDA YoY (39.7)% down
Gross profit was lower by JPY 178 million from 2018 Q1 as revenue decreased.
SG&A increased partly due investments on human resources (hiring, training, etc.)••(in million yen)
1,800
1,600

(178)
1,400

(400)

1,200

(60)

1,000
800

1,608

600

970
400
200

0
2018年Q1(調整後)2018 Q1 (Adj)

売上総利益
Gross
profit* EBITDA: Before allocation of Corporate Function costs

販売管理費
SG&A

その他transaction
Other/Internal

2019年Q1
2019 Q1

17

2019 Q1 Synergy Investment Business EBITDA Breakdown（Adjusted）
Business Development

Large project sales by SIGNATE

Financial Investments

Gains on overseas funds

China/cross-boarder
EC

Deterioration in Gross profit margin andinventory devaluation

Overseas Marketing

Decreased loss by restructuring/liquidation of nonprofitable businesses

(116)

180

(Unit: JPY million)

160

2

140

120

100

100

95

(113)

80

157

60

33

40

20

41

0
2018年Q1
2018 Q4

事業開発
Businessdevelopment

中国/越境EC
China
Crossboarder EC* EBITDA: Before allocation of Corporate Function costs

Financial
金融投資
Investment

Overseas
海外マーケティング
Marketing

Other/Internal
内部取引
transaction

2019年Q1
2019 Q1

18

2

Update on Large Corporation
Marketing Business Segment

Daisuke Kanazawa:
Head of Marketing Business for Large Corporation Segment

Born in 1980 (38 years old)
2005:
2008:
2010:
2013:
2015:
2017:
2019:

Joined OPT Inc. as a part-timer
Head of the Sales
General Manager of the Sales
Marketing Executive Officer
President & CEO of OPT Inc.
Head of Marketing for Large Corporations,
OPT Holding Inc.
Group Executive Officer, responsible to Digital Shift
SupportMajor achievements and future direction•
Formulated “Vision” as the first attempt•
Expanded to its business domain and launch non-ad services•
Enhanced organizational capability through dramatically hire and train engineers
and marketing specialists•
Appoint executives with diverse background and shift simple organization, withfewer layer s.
•
Head to be “Innovation Agency” by offering the best marketing solutions byclient by client.
20MarketStrategy×
Dynamism✔ Strategy for New Client Acquisition✔ Strategy for Product/Service Development✔ Strategy for Human Resource Development

21

Improved Presence of Digital Ad Agencies
Increase in inquiries and invitation to competitions
Direct Agenda (Conference)

Retail Agenda (Conference)

Win Best Agenda Award, appraised ourknowledge and practical know-how on direct
marketing

Did a presentation of the integrated marketingat the conference for domestic /international
marketers from retail to manufacturing industry

Direct Agenda is a study conference where top 250 marketers get together

Senden Kaigi (study group)
Organize a study group of O2O marketing with
Senden Kaigi Marketing Research lab

O2OTech (Seminar)
Did a presentation at seminar event “O2O Tech”
for clients from retail and manufacturing industry
on how to leverage LINE.

Senden Kaigi is the Japanese external research institute for marketing

Covered topics are the newest O2O strategy of LINE and future O2O
marketBrand Summit (Conference)

Marketing Technology Fair

Participated in an international conference todiscuss brand value enhancement and marketing
innovations. Participants are decision makers atadvertisers and top experts.

Did a presentation at the largest scale marketing
event focusing on combining technology andknow-how
Covered topics at the fair was to introduce a project with local
government.

22

Case Studies
Increasing Digital Solutions
Behavior analysis x Location information

JINS Apps to analyze customer data andleverage O2O

Joint development with clients

Claim Service on LINE account by SOMPOJAPANAPI for LINE’s messaging apps

Providing new service on LINE through offering technicalsupports for LINE’s Messaging API. OPT is a partnercompany of LINE’s Biz Solutions Partner Program.

Automatically receive push notification to the Apps users who are approaching thearea where real store or shops located.

23

Internal Digital Talent Development
Enhanced/accelerated training to develop internal digital talents at“OPT HR Development Center”
Internal training programs leveraging group-wide knowledge/know-how to accelerate development of talents.
Improved quality and delivery of service to clients by our talents backed by group-wide knowledge management system.

[# of internal trainees (accumulated)][# of lecture programs (accumulated)]
120

3,000

100

2,500

80

2,000

60

1,500

40

1,000

20

500

0

2018Q2

2018Q3

2018Q4

2019Q10
2018Q2

2018Q3

2018Q4

2019Q124

３Marketing Business for Local SMEs

Takeshi Ogiｗara:
Head of Marketing Business for Local SMEs

Why I founded SoldOut, Inc?
Experiences that change myself
•
•
•
•
•
•
Takeshi Ogiwara, MBA(Marketing)
Representative Director, Chairman,
and CGO of SoldOut, Inc.

Bankruptcy of my fathers’ business when I was 10 years old
Fail to run a small business started with friends after college
graduation
Learn from experience that sales expansion is the biggest
issue for SMEs
Become to believe Internet is fair marketplace for SMEs
Recognize my SMEs’ orientation not large enterprise as myown business
Accumulated knowledge on Web marketing for 10 years

I founded SoldOut with a determination to set myown mission; to support SMEs to grow throughsolving the SMEs owners’ problems and challenges
that I have had the same experience.

26

SoldOut’s Vision for Company and Society

To be No.1 player in marketing support for local SMEs
（Targeted market share:10％）

Society where SMEs fully use the Internet, andSociety where SMEs double their productivity

100,000 job creation（through our clients）

27

Strengths of SoldOut Group Established 21 sites across Japan
 Strong ties to clients

 Find clients with ambition forgrowth and establish long-term
relationship Accumulated know-how for local
SMEs to realize better ROI
through advertisement

Strength (1)Strength (2)Talk directly

Smart client development

Strength (3)Strength (4)Comprehensive approach

Business alliances Capable to address
management agenda frommultiple approaches including
IT and HR service besides
digital marketing No 1 in local SMEs market
regarding ties with major
platformers; Yahoo Japan, LINE,
and Facebook, etc.

28

KPIs
KPIs on track; Continuously aim for high growth[Duration of contract (continuity)][# of companies ×Unit Price]

・Portion of long-term contract is increasing. (YoY +13.3pts)
・Make efforts to increase sales categorized by “new” and“existing”• # of companies is steadily increasing (YoY +7.9%)• Average price per a client is decreased affected by declined
sales from big clients (YoY (3.9)%)(Among mid-range price clients, unit price moves upwardly)

300

Long-term
長期

Average
総単価

clients

100%

総売上
Sales*

price

250

Newly acquired
新規

Distribution by length of contracted period

Trend of total sales, # of company, and price(2016=100)# of
社数

Existing
既存

237.3

229.0

200

179.3
166.3

50%

150
137.7

132.3

100

50

0%
Q1

Q2

Q3

2016
FY16
2016年

Q4

Q1

Q2

Q3

Q4

Q1

2017
FY17
2017年

Note: Sales of ad operating support service, one of pillar digital business

Q2

Q3

2018
FY18
2018年

Q4

Q1

2019
FY19
2019年

Q1

Q2

Q3

FY17
2017年
2017

Q4

Q1

Q2

Q3

FY18
2018年
2018

Q4

Q1

FY19
2019年
2019

29

4

Our Plan

Transformation to Ad Agency + Digital Shift Company“Digital Shift (DS)”: How we envision?

①Support “digital shift”

For clients②Innovate through“digital shift”

With clients

Provide DS support for overall corporate activities
covering people, resources, financing, knowledge andinformation in addition to ad businessCommit ourselves to clients’ digital shift; support
digital companies created with/by clients with ourown group resources③Create “digital shift”

By ourselves

Implement digitalization of existing companies
Create digital business from zero to one

31

Our Strategic Map of Digital Shift

Extend coverage ofservices and products

Digital Ad Agency plus Digital Shift Company①DS Support
For clients
Expand to 7P*2③DS Creation
By ourselves
Digital shift existing
companies by ourselves

１

２

1P

②DS Innovation
With clients（Current position）

Marketing Business
Synergy Investment
Business

１

Lead clients’ new digitalcompanies

Diversify business model
OPT Group’s Core Asset

Approx. 6,000 client base/Approx. 1,600 digital talents
Strong connection to China/Established network with startups/No.1 in AI talent pool in Japan andadvanced technologies
Note; Definition of 7P：Promotion, Product, Price, Place, Personnel, Process, and Physical Evidence32

Progresses to Date on Our Strategy
Transformation to Ad Agency + Digital Shift Company（１）Branding as Digital Shift Company（２）Leadership Structure and Digital Shift KPIs
（３）Our Strength in China Business（４）Our Strength in AI Business（５）Our Strength in Venture Investments

（１）Digital Shift Branding

1. Start to issue “Digital Shift Times”•

Issue newsletters featuring most recent social and business movements related to“Digital Shift” (Plan to start in June 2019)

2. Publish a book focusing on Digital Shift•Will be on store in Fall 2019

3. Start “Digital Shift Academy” and Digital Shift
Workshop•

Start a full-range support service to develop clients’ future CDO/CDTO, and to realize
digital shift at client companies (Plan to start in July 2019)

4. China Tech Tour•Started unique study tours to see and experience China cutting-edge digital technologies

Note; CDO: Chief Digital Officer, CDTO: Chief Digital Technology Officer

34

（２）Leadership Structure and KPIs
Established group-wide strategic organizational structure for Digital Shift(Digital Shift KPIs are planned to be disclosed)Group CEO Noboru Hachimine
Group COO Atsushi Nouchi

Group Digital Shift Strategy Segment•

Digital Shift
Strategy

Digital Shift
Support

Digital Shift
Creation

Digital Shift
Innovation

AI BusinessTakayuki Kato

DaisukeKanazawa

Yosuke Yoshida

Yasushi Ishihara

Shu Saito

Executive Officer of OPT
Holding (responsible forfinancial investment,
business development andoverseas business inSynergy Investment
Segment)•••

CEO of OPT Inc.
Responsible for Large
Corporation Business inMarketing Segment
Executive Officer of OPT
Holding•

Executive Officer of OPT
Holding (responsible for
China business in Synergy
Investment Segment)••

Executive Officer of OPTInc., (responsible forbusiness development)
Executive Officer of OPT
Holding••

CEO/CDO of SIGNATE Inc.,
Executive Officer of OPT
Holding35

（３）Our Strength: China Business
1.

OPT is the only one non-Chinese company to participate in
China national digital advertising project• Chinese government approved to participate the project by evaluating our business achievement in Japan andbusiness development plan in China .
• The official name of the project is “Shenzhen New Media and Advertising Industrial Park Introduction”

2. Co-invested in TechTemple Shenzhen which operates
venture incubation facilities• TechTemple group already have 10 sites. 500 companies are using its facilities, and also user companies can use
tech temple networks and other benefits

3.

China tech tour
• China is the most innovative place, superior to Silicon Valley• China・tech tour, leveraging our strong connection with Chinese business, is very popular. Tours are currently
conducted multiple times per year, for clients like Japanese auto and retail industries.

4.

Created OPT China(established on April 1, 2019)• Plans to sell goods and services in China as a sole agent for Japanese SME manufacturers• Cross-boarder e-Commerce business to general trading36

（４）Our Strength in AI Business
Established a new company in April 2018 and started full-range operations

Participating in large-scale social infrastructure projects
Membership on our AI platform

SIGNATE: Reasons to be chosen

Reached to 17,000 engineers
registered in 2019
(Approx. 20% up from Dec. 2018)

20,000①Want to know who is excellent AI
service provider or competent engineer

18,000SIGNATE’s AI platform provides
transparent and accurate
information by its original scoring
system

16,00014,00012,00010,000②Talent shortage in Japan for AI
development

8,000
6,000

Support through SIGNATE AI platform
which has the largest registration numberof data scientists

4,000
2,000
# of engineers

0
2015年
2015

2016年
2016

2017年
2017

＊As of the end of March 2019

2018年
2018

2019年
2019

37

（５）Our Strength in Venture Investment
１) Created OPT Ventures #2 Fund・ JPY 10 billion size, completed the first closing

２）Investments grow steadily, and AUM increases•

Raksul’s stock price rose after their IPO and other major investments are also in growth
phase[AUM (Fair market value)]
25,00020,000Shares of subsidiaries
子会社株式
Shares of affiliates
関連会社株式Investment securities
投資有価証券
Operational investment
営業投資有価証券
securities

From acquisition
15,00010,00030,035••26,305Investing in startups which offers sharing economy
related service
Portfolio include many startups with high growthpotential
Major Investments（TSE 4384）

212.3% Up

9,616
6,301

5,000

2,273

In million yen

0

1,042
Acquisition cost

2,701
1,027
AUM（FMV）

Note: AUM is aggregate amount of (1) book value of subsidiaries and affiliates’ stocks and (2)fair market value of operational investment securities and invested securities38

52019 Full-year Earnings Forecast

Earnings Forecast for Full-year 2019: No Change in
guidance as of Today
Marketing Business：（In JPY million)

Revenue

EBIT

EBITDA

2019 Q1(Actual)20,298859

970

2019 Fullyear(Forecast)

93,500% ofProgress

Outlook for 2019 Q2 or later Sales from a part of existing clients,
whose sales were stagnant, is expected
21.7%
to recover.

5,000 Strong new business wins throughcompetitions; will start to translate into
sales from 2H of 2019.
17.2%

5,550

 Aggressive investments on humanresource (hiring and training) started
from 2018 would bring benefits in 2019
2H or later.
17.5%

Synergy Investment Business and Corporate Function Cost:
No major changes from the guidance as of today
40

6

References

2019 Q1 Consolidated Revenue Analysis (Adjusted）
Large Corporations: Revenue fell YoY, as some clients shrunk their advertising budgets

MarketingBusiness

Local SMEs: Revenue growth for 2019 Q1 was smaller than past, due to declined number of billings
from some client

Synergy
Investment
25,000Decreased due to deconsolidation of Writeup and sale/liquidation of overseas subsidiaries(660)(Unit: JPY million)

(39８)

(286)

25

20,00015,00010,00022,21521,5555,000

020182019年Q1
Q1
調整後

MarketingBusiness
マーケティング事業

Synergy
Investment
シナジー投資事業

Other/Internaltransaction
その他/内部取引2019 Q1
2019年Q1
連結合計

42

2019 Q1 Consolidated Gross profit Analysis (Adjusted）
MarketingBusiness

Decreased by lower revenue in both Large Corporations and Local SMEs

Synergy
Investment

Declined by earnings deterioration as well as inventory devaluation in China cross-borderbusiness in addition to deconsolidation of Writeup

(336)

5,000

4,500

(178)

（156）

4,000

(Unit: JPY million)

（２）

3,500

3,000

2,500

4,515

4,178

2,000

1,500

1,000

500

0
調整後
2019年Q1
20182018
Q1
2018Q1
Q1

マーケティング事業
MarketingMarketingBusinessBusiness

シナジー投資事業
Synergy
Investment
Synergy
Investment

その他/内部取引
Other/Internaltransaction
Other/Internaltransaction

2019年Q1
連結合計
2019
Q1
2019
Q1

43

2019 Q1 Consolidated EBIT Analysis (Adjusted）
MarketingBusiness

Declined due to revenue decrease in Large Corporations and Local SMEs and increased staff costs(hiring/training/promotion, etc.)

Synergy
Investment

Increased by improved profitability of equity method company and gain on investment partnership in
spite of Writeup deconsolidation, offsetting lower revenues and deteriorating Gross profit
deterioration by inventory devaluation in China cross-border business.

1,000

(470)

(Unit: JPY million)

900

800

700

(576)

600

500

913

155

400

(49)

300

443

200

443

100

0
調整後
2019年Q1
2018
Q1
2018
Q1

マーケティング事業
MarketingBusiness

シナジー投資事業
Synergy
Investment

その他/内部取引transaction
Other/Internal

2019年Q1
連結合計
2019 Q1

44

2019 Q1 Breakdown of Marketing Business
Breakdown of Revenue (Adjusted）
Large
Corporations
Local SMEs
25,000

Revenue declined mainly due to some clients shrank their advertising budgets

Revenue growth slowed due to declined number of billings from some clients.

(Unit: JPY million)

(398)
(725)

20,000294

33

15,00010,00020,697

20,298

5,000

0
調整後
2019年Q1
2018
Q1

マーケ大手領域
Large
Corporations

マーケ中小領域
Local SMEs

内部取引
Other/Internaltransaction

2019連結合計
Q1
2019年Q1

45

2019 Q1 Synergy Investment Business：
Breakdown of Revenue（Adjusted）
Business Development

Revenue expanded by large projects by
SIGNATE

Financial Investments

Declined due to deconsolidation of Writeup

China/cross-boarderEC

Decreased revenue by switching thebusiness model from cross-border EC togeneral trade

Overseas Marketing

Decreased by restructuring/liquidation of nonprofitable businesses(Unit: JPY million)

(286)
1,800

129

1,600

(58 )
(179)

1,400

(178)

1,200
1,000
800

1,546
1,260

600
400
200
0
2018 Q1
2018年Q1

Business
Development
事業開発

China/cross-boarder
中国/越境EC EC

Financial
Investment
金融投資

Oveseas Marketing
海外マーケティング

2019 Q1
2019年Q1

46

OPT Inc. Quarterly Revenue Movement by Client Segment
in million yen
18,000

長期顧客
Longtermclients*1

Switched to
新規から既存顧客
long-term fromnewly acquiredclients*2

Newly
新規顧客

16,00014,000acquiredclients*3

Non-long term
非継続(スポット等)
contracted clients(spot billing,etc)*4

96

68
103

2,280

96

2,034
94

1,650
12,000
1,537
10,000

1,902

44

83
1,271

1,899

1,350

1,757

3,372

110
1,286

1,950

1,729

3,206

2,463

[New clients]■ Brand advertisers,
retail and fashion

1,795
2,381
2,016

8,000

6,000

11,582
10,724

10,64910,434
9,416

9,121

9,157

Q2

Q3

Q4

11,175

9,753

4,000

[Royal clients]■Finance, HR, Real Estate,
Cosmetics

2,000

-

Q1

2017

Q1

Q2

Q3
2018

Q4

Q1
2019

The category above is defined based on service period; *1: More than 24 months *2: 12 months ~ 24 months,*3: 1 month~12 months, *4: Less than 1 month47

OPT Inc., Revenue Growth Rate by Products
SNS ads and LINE ads continued to grow thanks to focus on strategic targets (brands/O2O), but
video ads were down YoY(Unit: JPY million)[Video Ad][SNS Ad][LINE Ad]

YoY:(9.2)%

YoY：+14.8%

YoY：+27.2%

1,400

2,000

800

1,800
700

1,200

1,600
600

1,000

1,400
500

1,200

800

1,000
600

400

800
300
600

400

200

400
200

100

200
0

0
2014Q1 2015Q1 2016Q1 2017Q1 2018Q1 2019Q1

2014Q1 2015Q1 2016Q1 2017Q1 2018Q1 2019Q1

Note: All figures are results of OPT Ind., belongs to Marketing Business, large Corporation segment0
2015Q1

2016Q1

2017Q1

2018Q1

2019Q1

48

OPT Inc., Revenue Growth Rate by Products[Listing Ad][Ad-network Ad]

YoY：(5.5)%

Declined affected by decreased billing from a
HR service clients

Declined associated with the decreased billings fromreal estate clients and HR related service clients

5,000

4,500

4,500

4,000

4,000

YoY：(6.3)%(Unit: JPY million)

3,500

3,500
3,000
3,000
2,500
2,500
2,000
2,000
1,500
1,500
1,000

1,000

500

500

0

0

2014Q1

2015Q1

2016Q1

2017Q1

2018Q1

2019Q1

2014Q1

2015Q1

2016Q1

2017Q1

2018Q1

2019Q149

Quarterly Consolidated SG&A Movement
Continued investment on human resources (hiring/training) for mid-term growth and enhancing group-wide
management system increasing SG&A.
(Unit: JPY million)
in million yen
5,000

19.2%

18.6%

4,500

17.6%

4,079

17.0%

4,000

3,500

20.0%

19.4%

15.6%

3,262

3,000

426

2,500

204
106
154
38
258

3,791
3,569

3,557

3,897

16.0%

3,632

562

463

493
423

422

183
117
158
62
261

209
118
156
42
271

505
263
134
157
43
261

256
114
154
47
252

301

280

140
155
89
260

126
145
46
242

17.5%

17.1%

3,969

3,771

16.0%

512

14.0%

463
283
146
75
102
239

279
159
69
30
234

2,000

12.0%

10.0%

8.0%

1,500

1,000

18.0%

6.0%
2,077

2,353

2,350

2,441

2,306

2,595

2,572

2,661

2,490
4.0%

500

2.0%

0

0.0%
Q1

Q2

Q3

Q4

Q1

Q2

FY2017# of Employees
1,513
Consolidated

1,639

Q3

Q4

FY201920219年

FY2018

1,641

1,573

Note; Employee include regular employees and contractors.

1,652

1,667

Q1

1,616

1,631

1,645

50

Computation of Fair Market Value for AUM
1) Shares of consolidated Subsidiaries and affiliates: book value.
2) Operational investment securities and other investment securities; calculated depending on theclassification
Classification

Valuation method① Notes and securities of whichinvestment amount is small

Acquisition cost

② Listed companies’ shares

Closing price at the end of March 2019③ Securities (except ① or ②) with therecent financing

Based on value on the recent financing④ Securities except above

CMV*1, DCF*2, or net asset method*3 depending on eachcompany’s status.

*1: CMV (comparable multiple valuation) method
Applied to issues for which competitors are set in SPEEDA, an information analysis tool.
*2: DCF (discounted cash flow) method
Applied to issues for which competitors are not set in SPEEDA and with reasonable business plans using KPIs or any other basis
for calculation are available. If there are any discrepancies between the actual performance and the business plan, it will be
adjusted by the plan achievement ratio.
*3: Net asset method
Applies to issues for which: (i) no specific business plan is available, (ii) a company with going concern, or (iii) the FMV estimate
by the CMV or DCF method falls below shareholders’ equity attributed to us.

KPMG AZSA LLC has provided us with guidance and advice in calculating FMV for theinvestment business.
51

IRR (Internal Rate of Return) Calculation
item

Investment

contents

Those invested in or after 2003

Reference date for calculation End of reporting period

MethodImpairedinvestment

Calculated as if they were sold at the net asset value after impairment.

Investment withrecent financing

Calculated as if they were sold at the refinance valuation.

IPOed investment

Calculated as if they were sold at the market value as of the reference
date.

Fund

Calculated with the amount collected until the end of the reporting
period and the book value as of the end of reporting period.

OthersAny other investment with no change in their acquisition cost due tosale, impairment, financing, IPO or the like are calculated as if they
were sold on the reference date at the acquisition cost.

Income taxes

Income taxes are included.

52

THE LEADER
in DIGITAL SHIFT～Support, Innovate, and Create Digital Revolution～

53