Alpha-Win Company Research ReportYRGLM Inc.
(3690 TSE Mothers)

Issued: 3/2/2020

Research Dept., Alpha-Win Capital Inc.
http://www.awincap.jp/● Flash Report on Performance◆ A leading company in Internet advertising effect measurement systems
・The main product of YRGLM Inc. (hereinafter referred to as the “Company”) is its originally developed Internet
advertising effect measurement system (AD EBiS) that is provided in cloud format to companies. The Company isa leading company in this niche field. Over the past few years, the Company has been conducting businessrestructuring and upfront investment, which temporarily resulted in a net loss in FY 2018 (Figure 1) (note that all
fiscal years or FY in this Report end in September; e.g. FY 2018 ends in September 2018). However, thanks to thefocus on the subscription-based business model and the past investments that have begun to produce positive results,
last fiscal year, the Company achieved record-high sales and an improvement from operating loss to operating profit.
Going forward, while aiming to expand the sales of its core products, the Company also plans to develop the Internet
Marketing Robot business on a global scale through synergy with the acquired companies and by utilizing theinformation assets that it has accumulated over the years. The Company has also been actively conducting M&As
and plans to select and focus its business as well as expanding its business content.

◆ This FY’s Q1 results: double-digit sales growth, net profit, and clear trend of recovery
・The Company’s results for Q1 FY 2020 (Oct-Dec: hereinafter, “Q1”) are as follows: sales of Y585 million (+12.7%
YoY), operating profit of Y24 million (last Q1: loss of Y26 million), recurring profit of Y25 million (last Q1: lossof Y29 million), and net profit of Y19 million (last Q1: loss of Y36 million). Both sales and profit grew, and theCompany turned a profit. Of the Company’s two business segments, the main segment or the marketing platformsegment bolstered the overall sales with its 13.8% sales growth. The segment’s operating profit also grew from aloss of Y21 million to a profit of Y16 million. Similarly, the EC platform segment’s sales grew slightly by 3.9% andits operating profit grew from a loss of Y5 million to a profit of Y9 million. Both segments are showing improvement.
・Since FY 2016, the Company has been actively carrying out business restructuring and upfront investment. As aresult, despite growing sales, the cost burden had been pulling down profit to cause consecutive profit declines. On
a quarterly basis, as shown in Figure 2, an operating loss had been consecutively posted since Q4 FY 2017. However,after reaching the bottom in Q1 FY 2018, the operating profit/loss has been improving. Recently, the Company has
been starting to stably maintain a profit, having posted an operating profit for four consecutive quarters.

【 Figure 1 】Transition in Full-Year Results【 Figure 2 】Transition in Quarterly Operating Profit

Sales (left axis: million yen)

ReturnPhase(million yen)

Recurring profit (left axis: million yen)

3,800

30.0%

Investment Phase120

Recurring margin (right axis: %)
3,300

25.0%

2,800

20.0%

100

35

80
60

2,300

15.0%

1,800

10.0%

20

1,300

5.0%

0

800

0.0%

300

-5.0%

-200

-10.0%

40

43

9

33
22

11
67 69 4

35 41

36

13
77

45 50

25 15

30

14 12

-1 -8
-23 -15 -21-11 -38 -44 -37
-1

-20

FY
2012

FY
2013

FY
2014

FY
2015

FY
2016

FY
2017

FY
2018

FY
2019

FY
FY
FY
2020 2021 E 2020 E
CE

33 9
16

3

-3

-60

FY
2011

9

-5

-40

FY
2010

17

17

60 52

Q1

Q2

Q3

FY 2015

Q4

Q1

Q2

Q3

FY 2016

Q4

Q1

Q2

Q3

FY 2017

Q4

Q1

Q2

Q3

FY 2018

Q4

Q1

Q2

Q3

Q4

FY 2019(Ref) Figure 1 and 2 were prepared by Alpha-Win Research Dept. based on the Company’s financial results summary and financial
results briefing materials. CE is the Company’s forecast and E is Alpha-Win’s forecast. The same applies to all figures below.

Performance Report

1/7This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or
fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from theuse of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual propertyof this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Q1
FY
2020

Alpha-Win Company Research ReportYRGLM Inc. (3690 TSE Mothers)

Issued: 3/2/2020

Sales and profit breakdown by segment
・The marketing platform segment accounts for 89% of the total Q1 sales. In this segment, the core business AD
EBiS’s growth and the acquired business AdRepo seem to be especially contributing to the sales and profit growth.
・AD EBiS’s number of active accounts rose by 174 (12.5%) from 1,395 in the Q1 of the fiscal year before theprevious to 1,569 in the previous fiscal year’s Q1. Then, due to the change in the pricing system, the number ofaccounts decreased by 131 (8.3%) to 1,438 during this Q1. However, the wave of cancellations following the pricing
system change has mostly ceased and the number of accounts in Q1 shows a slight increase (+13) compared to themost recent quarter or Q4 FY 2019 (Figure 3).
・Due to the change in the pricing system, AD EBiS’s average unit price increased from Y75,461 to Y86,621 in thesame order as above (+Y11,160 or +14.8%) and then further increased during this Q1 to Y111,587 (+Y24,966 or+23.8%) (Figure 4). While the low-price-range contracts became cancelled, as an increasing number of the existingcustomers switched to higher-added-value contracts and as new contracts were acquired, the unit price rose.
Consequently, the decrease in the number of accounts was compensated, resulting in a sales growth. Since thisbusiness has a high marginal profit ratio, the sales growth and improvement in efficiency caused an improvement in
the segment’s profit, letting the Company turn a profit (Figure 2 on page 1 and Figure 6 on page 3).

【 Figure 4 】Quarterly Change in AD EBiS’s
Average Unit Price (unit: Y)【 Figure 3 】Quarterly Change in AD EBiS’s
Number of Active Accounts (unit: # of accounts)(Y)(number of accounts)

1,600
1,500

111,587

120,000

1,569
1,516

110,000

1,433 1,438

1,395

107,143
100,000

1,400

1,425

102,262

1,300

90,0001,200

98,042

Q4→Q1
seasonal
variability

80,00086,62175,461

1,100
70,0001,000

Change in pricing system

Change in pricing system

60,000900
50,000800

40,000

700
Q1

Q2

Q3

FY 2015

Q4

Q1

Q2

Q3

FY 2016

Q4

Q1

Q2

Q3

FY 2017

Q4

Q1

Q2

Q3

Q4

Q1

FY 2018

Q2Q3

FY 2019

Q4

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Q1

FY 2015

FY2020

FY 2016

FY 2017

FY 2018

FY 2019

・Meanwhile, in the EC platform segment, sales had been declining due to the transfer of the SOLUTION businessto affiliated companies and the transfer of the DMP business between segments. However, sales have started to growduring this Q1. The segment’s sales are only about 11% of this Q1’s total sales, but its operating profit/loss has
shown improvement – the previous operating loss has turned into a profit. The EC-CUBE business, which remains
in the segment, has been succeeded by a consolidated subsidiary that is 100% owned by the Company and is growing
steadily thanks to the new software version and the growth of the EC market (Figure 6 on a later page).
・This Q1’s progress rate against the full-year target was 21.7% for sales (last Q1’s actual progress rate: 23.6%) and12.4% for operating profit (last Q1: a loss was posted). Note that starting in January, ADPLAN will be reflected in
the sales. The sales progress rate during this fiscal year’s October to January is approx. 30.1%, which is about thesame level as last Q1’s 31.9% (Figure 5).

【 Figure 5 】Monthly Changes in Sales (unit: thou. yen, %)(Ref) Prepared by Alpha-Win Research Dept. basedon the news release on the Company’s website.
(Note) Values shown are preliminary data before an
audit by an auditor and may be revised in the future.
The AdRepo business which was acquired in anabsorption-type split in October 2018, as well as the
ADPLAN business that was acquired in a business
transfer on January 2020, is included in themarketing platform segment.

Performance Report

FY 20202019 Q1

Sales

Cumulative
for this FY:
Oct-Jan

2020

Oct

Nov

Dec

Jan

Thousand Yen

167,418

173,197

183,085

200,850

724,550% Change YoY

112.2

115.1

114.1

126.9

117.2

Thousand Yen

26,164

17,60218,01926,04187,826

Marketing Platform

EC Platform

Entire Company% Change YoY

119.8

94.2

95.2

103.9

103.9

Thousand Yen

193,583

190,799

201,105

226,891

812,378% Change YoY

113.2

112.8

112.1

123.7

115.6

% Diff. from
Forecasted Sales

7.2

7.1

7.4

8.4

30.1

2/7

This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or
fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from theuse of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual propertyof this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

FY
2020

Alpha-Win Company Research ReportYRGLM Inc. (3690 TSE Mothers)

Issued: 3/2/2020

Overall profit and loss
・The overall gross margin for this Q1 had increased by more than three points to 69.5% from 66.1% in the Q1 of theprevious fiscal year and the year before the previous. The number of employees only slightly increased YoY (fromlast Q1 ⇒ this Q1: 147 ⇒ 151), so that the personnel expense stayed about the same. Advertising expenses were
held down and other various expenses were controlled. Consequently, the SG&A expenses increased only by 3.1%
YoY from Y370 million in the previous Q1 to Y382 million during this Q1. Thanks to the sales growth (+12.7%)
and the control of expenses, the SG&A expenses ratio (in the order of Q1 of the year before the previous ⇒ lastyear’s Q1 ⇒ this year’s Q1) improved consecutively from 77.1% ⇒ 71.3% ⇒ 65.2%.
・The overall operating profit and the factors contributing to the Y50 million profit growth are described below. In
addition to the sales growth of the marketing platform segment (+Y63 million YoY) and the EC platform segment(+Y2 million YoY), the decreased advertising expense (-Y13 million YoY) helped offset the increase in various
expenses including the depreciation expense, server cost, and rent. As a result, although an operating loss of Y26
million was posted in last fiscal year’s Q1, this fiscal year’s Q1 resulted in an improvement to an operating profit of
Y24 million. No significant non-operating or extraordinary profit/loss were posted. A net profit was also obtained(improved from a loss of Y36 million to a profit of Y19 million).

【 Figure 6 】Transition in Q1 Results(unit: million yen)
Total Sales
Marketing Platform
EC Platform

Gross Profit
Gross Margin
SG&A Expenses
SG&A Expenses Ratio
Operating Profit (segment)
Marketing Platform
EC Platform

Operating Margin
Marketing Platform
EC Platform

Recurring Profit
Net Profit

FY 2018

FY 2019

FY 2020

Q1 (Oct-Dec)

Q1 (Oct-Dec)

Q1 (Oct-Dec)

433
353
80
286
66.1%
334
77.1%
-48
-44
-3
-11.0%-12.5%
-4.2%
-47
-32

520
460
59
344
66.1%
370
71.3%
-27
-21
-5
-5.1%
-4.6%
-9.2%
-30
-36

585
524
62
407
69.5%
382
65.2%
25
16
9
4.2%
3.0%
14.5%
25
19

Q1 FY 2020 YoY
Difference% Change / Amount

66
64
2
63

12.7%
13.8%
3.9%
18.4%
3.3%
3.1%
-6.0%

12
51
37
14

To profit
To profit
To profit
9.3%
7.7%
23.6%

55
55

To profit
To profit(Note) Due to rounding during calculations, etc., values for the same item may differ in the text and figures of this Report.

・Regarding the balance sheet, cash and deposits decreased due to the payment of acquisition costs and other factors(in the order of the Q1 of the year before the previous ⇒ last year’s Q1 ⇒ this year’s Q1: Y1,194 million ⇒Y875 million ⇒ Y873 million). Meanwhile, goodwill was recorded as part of intangible fixed assets (in the sameorder: Y0 million ⇒ Y121 million ⇒ Y105 million; note that the cash and deposits and goodwill attributed to
ADPLAN have not been reflected on the B/S as of the end of Q1). This goodwill comes from the acquisition of
AdRepo and is planned to be amortized over eight years on a straight-line basis (approx. Y16 million per year).
Furthermore, on 1/1/2020 (this Q2), the Company acquired the ADPLAN business from OPT (TSE First Section:
securities code 2389) with Y315 million (in cash). Additional goodwill (amount and amortization period not
determined yet) and advisory expense (approx. Y3 million) were incurred due to this purchase. The Company has
already raised capital on long- and short-term loans (Y1,184 million remaining), so there currently seems to be no
problem with liquidity even after the payment of acquisition costs (more than approx. Y500 million is estimated toremain in cash and deposits). The equity ratio at the end of this Q1 was 42.9%.

◆Full-year financial forecast announced: large sales and profit growth, record-high sales,
and net profit
・As with the previous fiscal year, the Company announced its full-year financial forecast at the same time as the
Performance Report
3/7This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or
fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from theuse of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual propertyof this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research ReportYRGLM Inc. (3690 TSE Mothers)

Issued: 3/2/2020

announcement of this fiscal year’s Q1 results. It is expecting a significant sales and profit growth, with sales targetedat Y2,700 million (+22.5% YoY) and operating profit targeted at Y200 million (+135.5% YoY). Last fiscal year,
due to an extraordinary loss and other factors, a net loss of Y34 million was posted. This fiscal year, though, theCompany expects to achieve a net profit of Y130 million, which would entirely clean out the loss carried forwardin accounting. The segment’s sales and profit forecast for the full year as well as its H1 forecast have not been
disclosed. Also, the Company has stated that dividend payment is undetermined.
・This fiscal year, while increasing sales through subscriptions, the Company plans to increase profit by allocating
more resources to the development of new businesses and at the same time improving the cost ratios of the existing
businesses. The Company believes that sales growth and margin improvement will lead to a profit growth. Also, it
still plans to achieve the target of Y3 billion in sales this fiscal year, the final year of the medium-term business plan.
・Also, the Company has stated, “this fiscal year, we plan to take more and more actions that will take us to the nextstage.” Specifically, in the advertising effect measurement service, it plans to establish a firm position throughM&As, develop products that will pioneer in the market’s change, and enhance support for leading agencies. In
addition, the Company plans to shift its employees to new business development, take in related needs, provide new
subscription services, and find M&A opportunities in related fields.
・The net increase in the Company’s number of employees has been starting to slow down, with 98 employees at theend of FY 2016 ⇒ 122 at the end of FY 2017 ⇒ 144 at the end of FY 2018 ⇒ 151 at the end of FY 2019. It hadplanned to actively recruit mainly engineers and sales professionals but did not hire as much as it had anticipated –consequently, the personnel expense was controlled. This fiscal year, the Company does not plan to largely increase
the number of employees, but rather plans to improve the efficiency of the existing businesses and shift its employees
to the development of new businesses (eight employees are working on this task as of the end of Q1).

◆ Financial forecast for this FY and over the medium term (Alpha-Win Research Dept.)
・The results announced by the Company were close to our forecast with regards to sales, operating profit, andrecurring profit. As for the net profit, we had forecasted that it will be Y165 million, which is about Y35 million
different from the Company’s forecast of Y130 million. This difference is mainly due to the difference in theestimated carried-forward tax loss. We revised the net profit to about the same level as the Company’s forecast,which is based on the effective tax rate (we also revised the net profit for next fiscal year and later based on theeffective tax rate). Taking into account the Company’s plan and the current situation (Q1 results show that financial
performance has been similar to our prediction), as well as the fact that the Company will likely continue to control
cost to achieve its target, we have mostly kept our full-year forecast the same, with no change to sales and operating
profit from the previous forecast. We also believe that dividend payment will be resumed next fiscal year or later.
・Also, when this January’s sales (which includes ADPLAN’s sales) are added to the actual Q1 sales, and then simply
adjusted and multiplied to match the eight-months period from February to September, this fiscal year’s sales comeout to be about Y2,628 million. This value is equivalent to 97.2% of the Company’s target of Y2,700 million. The
Company’s full-year sales target, which does not seem to take into account the effect of M&As during this year andwhich seems to be a simple prediction based on the extension of the current results, is somewhat conservative andis expected to be achieved with a high likelihood. We also have the same impression regarding the full-year forecasts
for the gross margin and the costs. As a side note, in recent years, the Company has been announcing its full-year
forecast at a timing when reasonable predictions can be made. Track record suggests that the Company’s forecast ishigh in accuracy (please refer to Figure 27 on page 27 of the initial report).
・We expect that sales and profit will grow for both segments. In the main marketing platform segment, we expect
sales to continue to grow at a brisk pace thanks to AD EBiS’s rise in the average unit price and its net increase in
the number of accounts. The investments that the Company had been actively conducting are also expected to begin
producing positive results and contribute to the sales growth. In addition to the growth of the AdRepo businessacquired during last fiscal year, the switching of customers from the ADPLAN business acquired in a business
transfer during this fiscal year is expected to help increase AD EBiS’s number of accounts and may also raise theunit price. Also, in Q2, the average unit price has been maintained at over Y110,000 and the average unit price of
new contracts has been greater than Y120,000. There also seems to be a general net increase in the number of active
accounts in Q2.
Performance Report

4/7

This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or
fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from theuse of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual propertyof this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research ReportYRGLM Inc. (3690 TSE Mothers)

Issued: 3/2/2020

・Meanwhile, in the other segment or the EC platform segment, we expect a slight increase in the sales and profit,
since its sales are expected to continue to grow at a steady pace with the new version of EC-CUBE and the expansionof the EC market (Figure 7).
・In our financial forecast, we estimated that the amortization of goodwill related to ADPLAN will be Y250 million
in total (amortized over five years on a straight-line basis; Y50 million per year). Also, at the current stage, we are
not expecting any significant costs due to additional M&As, non-operating profit/loss, or extraordinary profit/loss.
In the case that additional M&As or the sale, retirement, or revaluation of assets occur, we will review our forecaston the final profit and loss.
・Over the medium to long term, we expect that sales will increase by about 15-30% per year since the Internet
Marketing Robot business, the Company’s main point of focus, has a high growth potential. We believe that theCompany will be able to maintain a double-digit sales and profit growth over the medium to long term throughorganic growth of the current businesses as well as active engagement in M&As, although the result would dependon the success of cost control (progress with upfront investment, recruitment, etc.).

【 Figure 7 】Past Full-Year Results and Forecast on Financial Performance for the Medium Term
Sales
(million yen)
Marketing Platform➀ AD EBiS② THREeFY 2012
Stand-alone
545
499
46

FY 2013
Stand-alone
666
567
81

-61
-11.2%
323
150
174

-1
-0.1%
422
207
214

98
30.5%
FY 2012
Stand-alone
868
37
4.3%
40
6

75
17.8%
FY 2013
Stand-alone
1,090
75
6.8%
75
42

FY 2014
FY 2015
FY 2016
Consolidated Consolidated Consolidated
883
911
1,074
722
822
1,012
161
89
62

③ (DMP)④ AdRepo⑤ ADPLAN
Segment's Operating Profit

Segment's Operating Margin
EC Platform➀ EC-CUBE② SOLUTION

142
16.1%
477
245
232

214
23.5%
526
230
296

（ DMP）

Segment's Operating Profit
Segment's Operating Margin(million yen)
Sales (total - same below)
Operating Profit
Operating Margin
Recurring Profit
Net Profit

107
136
22.5%
25.8%
FY 2014
FY 2015
Consolidated Consolidated
1,360
1,437
249
350
18.3%
24.4%
234
352
138
231

FY 2017
FY 2018
FY 2019
Consolidated
Consolidated
Consolidated% Share
1,255
1,530
1,951
87.6%
1,200
1,402
1,747
78.5%
54
43
28
1.3%
(Business transfer→)
84
51
2.3%
(Business acquired in Oct. 2018)
124
5.6%(Business acquired on 1/1/2020)
210
153
-121
46
19.5%
12.2%
-7.9%
2.4%
539
465
275
274
12.3%
219
208
254
274
12.3%
319
257
20
0
0.0%
104 (Business transfer↑)
0.0%
38
-60
22
39
7.1%
-12.9%
8.2%
14.2%
FY 2016
FY 2017
FY 2018
FY 2019
Consolidated
Cosolidated
Consolidated
Consolidated
1,613
1,719
1,805
2,225
248
93
-99
85
15.4%
5.4%
-5.5%
3.8%
250
106
-115
79
169
73
-88
-35

FY 2020 CE
Consolidated

FY 2020 Old E
Consolidated
2,470

280
280

FY 2020 CE
FY 2020 Old E
Consolidated
Consolidated
2,700
2,750
200
200
7.4%
7.3%
190
200
130
165

FY 2020 New E
Consolidated
2,470
2,110
10
20
140
190
155
6.3%
280
280
0
0
45
16.1%
FY 2020 New E
Consolidated
2,750
200
7.3%
190
130

FY 2021 E
Consolidated
2,840
2,585
0
0
155
100
250
8.8%
310
310
0
0
50
16.1%
FY 2021 E
Consolidated
3,150
300
9.5%
290
200

◆ Situation with and effect of tightened personal information protection regulations
・As described in the previous report (12/13/2019), regulations regarding the handling of data on personal information
are becoming strengthened and tightened in Japan too from the viewpoint of privacy protection. The Japanese
government’s Personal Information Protection Commission reviewed the Personal Information Protection Law andannounced an outline of its draft amendment in November 2019 (this amendment is expected to be passed by thisyear’s summer). In this amendment, the right to stop the use of personal information will be expanded. Also, whenproviding information such as the browsing history of an Internet site to other companies (providing to a third party),
the user's consent is required if the individual can be identified in connection with the personal information held by
the third party to whom the information was provided.
・Traditional systems utilizing third-party cookies, allowing measurement across multiple websites and identificationof users (individuals), can compromise user privacy. Therefore, their usage is becoming more and more restricted
and tightly regulated. As a countermeasure, the Company has already released CNAME Tracking (first party cookie
measurement) in October 2019 in cloud format (as of 1/14/2020, 310 companies are using this tool – its customer
base is expanding steadily). CNAME Tracking is a new measurement tool that collects and retains information only
for the domains that have been approved by the advertiser, enabling highly accurate advertising effect measurement
while protecting user privacy.
・Currently, there is no issue with utilizing first party cookie measurements as long as personal cookie information is
obtained as a primary acquisition, is limited in its use, and the purpose of acquisition is appropriately disclosed. Also,
since the Company is in the business of providing tools for other companies, such as advertising companies, it does
not fall under the criteria of a “third party” and will not be directly affected. In addition, the Company aims tobecome a reliable brand for both the client advertising companies and the users (individuals) by maintaining
Performance Report

5/7This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or
fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from theuse of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual propertyof this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

FY 2022 E
Consolidated
3,280
3,060
0
0
170
50
325
9.9%
320
320
0
0
55
17.2%
FY 2022 E
Consolidated
3,600
380
10.6%
370
255

Alpha-Win Company Research ReportYRGLM Inc. (3690 TSE Mothers)

Issued: 3/2/2020

transparency and accountability toward both regarding the possession and utilization of personal information as a
responsible member of society.
・Since protective regulations are expected to be further tightened in the future, we need to keep a close eye on thechange in the regulations on obtaining and using cookies. Demand for highly accurate advertising effectmeasurement that makes consideration for user privacy is expected to grow, and increasingly sophisticatedtechnologies are also expected to become required. Since the Company is specialized and has the number-one
technology development capability and support system in the industry, we believe that it can differentiate itself fromother companies that will have difficulty in catching up in technology (many of the competitors are predicted to facedifficulties in meeting the demands for new technology) and thus gain a competitive advantage. Therefore, the tighter
regulations will have a relatively positive effect on the Company and would be more of a business chance.

◆ Stock Price・After reaching the lowest stock price in late December 2018, the stock price rebounded in anticipation of a recovery
in financial performance. As an Internet-related, small-cap stock, the volatility of the Company’s stock is high amidst
the current overall stock market sentiment. Over the past year, the Company’s stock has been underperforming
indexes such as the TOPIX and TSE Mothers.
・The valuation is generally somewhat high. Compared to the average of the First Section of the TSE, the Company’s
P/B is 5.2 whereas TSE’s is 1.1 and dividend yield is 0% whereas TSE’s is 2.3%. We expect P/E (in the order ofthis fiscal year → next fiscal year → fiscal year after the next) to be 48.0 → 31.2 → 24.5 compared to TSE’s
approx. 14.4. However, since the Company is expected to maintain a net profit and increase profit at a double-digit
annual rate in the future, considering the P/E over a three-to-five-year span and the PEG ratio (= expected P/E
divided by expected annual profit growth rate), we believe that the stock price may rise over the medium to longterm.
・Going forward, we expect that the stock price will reflect the restricted usage of cookies from the tightening of
regulations pertaining to personal information protection, the change in the periodically disclosed monthly sales andquarterly profit, AD EBiS’s average unit price and number of active accounts which are important indicators (KPIs)
directly linked to financial performance, the timing when dividend payment is resumed, the announcement of M&Aor business alliance and their effect on profit, and the level of profit over the medium term.

【3690 YRGLM Inc.
FY

2017
2018
2019
2020
2020
2021
2022
2019
2020

CE
E
E
E
Q1
Q1

Sector: Information & Communication 】 Figure A

Sales

YOY

O.P.

YOY

R.P.

YOY

N.P.

YOY

EPS

BPS

Dividend(million Y)(%)(million Y)(%)(million Y)(%)(million Y)

(%)

(Y)

(Y)

(Y)

-56.8
To profit
To profit
53.8
27.5
To profit

11.56-14.02
-5.54
20.72
20.40
31.39
40.02
-5.72
3.04

195.60184.97168.68

1,719
1,804
2,204
2,700
2,750
3,150
3,600
519
585

6.6
5.0
22.1
22.6
24.8
14.5
14.3
20.0
12.7

92
-98
84
200
200
300
380
-26
24

-62.6
To profit
135.5
135.5
50.0
26.7
To profit

106
-115
79
190
190
290
370
-29
25

-57.5
To profit
140.4
140.4
52.6
27.6
140.4
To profit

72
-88
-34
130
130
200
255
-36
19

186.92
218.31
258.33

5.0
0.0
0.0
ND
0.0
0.0
5.0
0.0
0.0

(Note) CE: the Company's forecast. E: Alpha-Win Research Dept.'s forecast. Q1 (first quarter): Oct-Dec. ND: not determined.

【 Stock Price and Valuation Indicators: 3690 YRGLM Inc.】

Figure B

2/28/2020

Item

P/E

Stock Price (Y)980

Last FY (actual)―

Shares Outstanding (thou.)

6,372This FY (est.)

48.0

Market Capitalization (million Y)

6,245

Next FY (est.)

31.2

4.5

0.0%

Equity Ratio at Last FY-End

51.4%

Last FY's ROE

Item

Dilutive Shares (thou.)0

P/B

Dividend Yield

Dividend Payout Ratio

5.8

0.0%

0.0%

5.2

0.0%

0.0%
0.0%
-3.1%

(Note) Forecasts/estimates were made by Alpha-Win Research Dept.

Performance Report

6/7This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or
fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from theuse of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual propertyof this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research ReportYRGLM Inc. (3690 TSE Mothers)

Issued: 3/2/2020【 Stock Chart (end-of-week prices): 3690 YRGLM Inc.】

Figure C

(Y)

3,000

1.20
Stock price (left axis)

2,500

1.10

Price relative to TOPIX (right axis)
1.00
0.90

2,000

1,500

0.80

【Performance】
PeriodReturn vs. TOPIX
1 month-21.4%-12.4%
3 months-24.3%-14.8%
6 months-33.2%-33.2%
12 months-29.5%-25.0%

0.70
0.60

1,000

0.50
0.40
0.30
(M
M
/Y
Y
)

08
/1
6
11
/1
6
02
/1
7
05
/1
7
08
/1
7
11
/1
7
02
/1
8
05
/1
8
08
/1
8
11
/1
8
02
/1
9
05
/1
9
08
/1
9
11
/1
9

500

(Note) Stock price and index values areshown up through 2/28/2020.
Performance for each period compares
the values on 2/28/2020 with the values atthe corresponding month-end. For
example, the 1-month period compares
the closing prices at the end of Januarywith the closing prices on 2/28/2020.

(Note) From the fourth week of August 2016 to the fifth week of February 2020＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊

Disclaimers
This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital
Inc. (hereinafter “Alpha-Win”) on the request of the company presented in this Report.
This Report is not to be construed as a recommendation or solicitation of investment. Alpha-Win shall not beliable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use of or
reliance on this Report. Investors who read this report must make their own decisions on all investment mattersand take full responsibility regarding their investment.
This Report has been prepared with a focus on objectivity and neutrality based on the analysis of generally
accessible public information and supplemental information including interview(s) by the analyst. Alpha-Win,
the writer, and/or other persons involved in the publication of this Report may already hold, or buy and sell in
the future, the stock of the company presented in this Report.
Contents of this Report are based on information current as of the issue date and are subject to change without
notice. For the most recent (updated) version of this Report, please see our website (http://www.awincap.com/).
We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or
fit for any purpose and do not accept any responsibility or liability.
Copyright of this Report belongs to Alpha-Win and no part of the publication may be copied, photocopied, cited,or translated without our consent. We have aimed to write this Report from a neutral stance as much as possible
based on interviews and objective facts. Furthermore, we have aimed to distinguish between forecasts or decision
made by the company and forecasts or decisions made by Alpha-Win and clarify the difference in this Report.
For inquiries regarding this Report, please send us an e-mail to info@awincap.com. However, Alpha-Win andthe writer of this Report do not have any obligation to reply to inquiries. 20200302-20

Performance Report

7/7This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or
fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting from theuse of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual propertyof this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.