Alpha-Win Company Research ReportYRGLM Inc. (3690 TSE Mothers)
Issued: 5/24/2021● SummaryAlpha-Win Capital Inc. Research Dept.
http://www.awincap.com/

Business Description
・ YRGLM Inc. (hereinafter referred to as the “Company”) plans, develops, and sells software related to Internet
marketing. President Iwata started the business during his college years and then founded the Company in 2001.
・Its main product is its originally-developed Internet advertising effect measurement system (AD EBiS), which has an
extraordinarily high market share (No.1 in the market). It is a leading company in a niche field. Its services areprovided via the cloud to mid-tier and large companies.
・Its main business is based on a subscription-based business model and is therefore highly sustainable and stable.
Under this model, sales and profit can continue to expand through the increase in the unit price and the number ofcustomers, which are the KPIs.
・It had been working on a business model shift and the selection/focus of business portfolio. This business restructuring
and upfront investment have reached the end of a phase, though, and its earning power is starting to improve.
First-Half Results and Financial Forecast for This Fiscal Year・In the first half (H1) of this fiscal year (Q2 YTD FY 2021; note that the Company’s fiscal year is September-ending
so FY 2021 ends in September 2021), sales grew by 18.7% YoY to Y1,466 million, operating profit grew by 150.3%
YoY to Y178 million, and net profit also grew by 155.6% to Y116 million. Both sales and profit had grownsignificantly. Although the Company’s H1 forecasts are not disclosed, sales seem to have been as expected, while theprofits seem to have exceeded the forecast.
・Number of accounts of its core business, AD EBiS, had decreased. However, its average unit price had increased
thanks to improvement of functions in the full renewal and the acquisition of new contracts in high price ranges. AD
EBiS has been the backbone to the growth of the Marketing Platform (hereinafter, “PF”) Segment. Results of the EC
PF Segment have also improved sharply because of the EC boom due to the high stay-at-home consumption amidst
the COVID-19 crisis.
・Achievement of net profit has helped accumulate capital, leading to an increase in the equity ratio to 51.5%. The
Company is essentially debtless and financially sound.
・The Company has not changed its full-year forecast. It is expecting a large sales and profit growth: sales of Y3,000
million (+14.6% YoY), operating profit of Y330 million (+19.2% YoY), and net profit of Y210 million (+14.5%
YoY).
・Progress in H1 in terms of the full-year company plan was solid, at 48.9% for sales (45.7% in the previous H1) and
53.9% for operating profit (35.8% in the previous H1).
・In addition to solid H1 results, the recent monthly sales are also showing a positive trend. In the second half (H2), its
main product AD EBiS and EC-CUBE are expected to continue to grow, and the new services are also expected tocontribute to the results. Since the Company’s estimate for H2 profit margin seems conservative, Alpha-Win expects
the full-year profits to exceed the Company’s plan.
Business Strategy and Medium-Term Financial Forecast
・In addition to the sales expansion of its core product, the Company has also been working on developing related or
new businesses in which synergy can be expected, so that it can contribute to its customers’ DX through its PF
businesses and thereby achieve continuous growth under this “MXP (Marketing Transformation Platform) Strategy.”
It also plans to accelerate business growth by actively conducting M&As and building alliances with other companies.
・In its medium-term business plan, the Company has set out goals of achieving sales of Y5 billion, operating marginof 15%, and DOE of 3% or greater in FY 2023.
・The Company has been focusing its business resources on areas related to Internet marketing, which have a large
growth potential over the medium to long term. Consequently, the Company’s sales are expected to grow annually ata double-digit rate. Over the medium term, we believe that sales growth and profitability improvement from businessexpansion may enable the Company to also achieve an annual profit growth of about 20%.
1/30
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
property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

Stock Price
・The stock price had bottomed out with the recovery of financial results, and has been fluctuating within a boxed rageof Y1,000 to Y2,000 over the past four years. Thanks to the turnaround from net loss to net profit and the resumed
payment of dividend, the Company’s valuation can now be compared with a wider range of companies.
・The stock price seems to already reflect the market’s evaluation of the Company’s stock as an AdTech-related anddomestic-demand-oriented growth stock, at least to some extent. Consequently, based on this fiscal year’s figures, its
valuation does not indicate cheapness in terms of the main valuation indicators.
・However, considering the P/E over a three to five period and the PEG (= expected P/E divided by expected annual
profit growth rate), we believe that the stock price still has the potential to increase.
・Going forward, the following factors will likely affect the stock price: quarterly trends in profit/loss, announcementof M&As or alliances, medium-term forecast for profit, and the amount of profit returned to shareholders.
Return of Profit to Shareholders
・Since its shareholders’ equity had increased upon selling a part of its subsidiary’s shares, the Company announced
that it plans to increase its payment of dividend for this fiscal year from the initially planned Y4.5 to Y5.0/year/share.
Its current dividend policy is to maintain a DOE of 2%, but it plans to raise this to 3% or greater in FY 2023.
!3690 YRGLM Inc.

Sector: Information & Communication "#Figure A

FY

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)

To loss-14.02184.97

0.00

2018

A

1,804

5.0

-98

To loss-115

To loss

2019

A

2,204

2020

A

2,618

22.1

84

18.8

276

2021

CE

3,000

14.6

2021

New E

3,000

2021

Old E

2022

To profit79

To profit-34 Smaller loss

-5.54

168.68

0.00

226.1

261

230.5

183

To profit

29.09

202.20

4.00

330

19.2

320

22.5

210

14.5

33.26

14.6

350

26.8

340

30.3

225

23.0

35.61

231.37

5.00

3,000

14.6

330

19.2

320

22.5

210

14.8

33.24

229.31

4.50

E

3,390

13.0

400

14.3

390

14.7

260

15.6

41.15

268.48

7.00

2023

E

3,860

13.9

480

20.0

470

20.5

320

23.1

50.65

309.68

9.30

2023
2020
2021
2020
2021
2020
2021
2020
2021

Medium-term CE
Q1
Q1
Q2
Q2
H1
H1
H2
H2 CE

5,000
585
721
650
745
1,235
1,466
1,383
1,534

12.7
23.3
15.6
14.6
14.2
18.7
23.2
10.9

750
24
94
47
84
71
178
205
152

To profit
281.6
To profit
80.5
239.2
150.3
221.7
-26.4

25
95
45
82
70
177
191
143

To profit
279.8
To profit
80.2
310.4
151.0
208.3
-25.1

19
61
26
55
45
116
138
94

To profit
222.7
To profit
107.6
To profit
155.6
1,070.2
-32.4

3.04
9.77
4.22
8.75
7.26
18.52
21.83
14.74

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

5.00

180.25237.56

0.00
0.00
0.00
0.00
0.00
0.00
0.00
5.00

P/E

P/B

Dividend Yield

Dividend Payout Ratio

Stock Price (Y)1,255

Last FY (actual)

43.1

6.2

0.3%

13.8%

Shares Outstanding (thou.)

6,372This FY (est.)

35.2

5.4

0.4%

14.0%

Market Capitalization (million Y)

7,997

Next FY (est.)

30.5

4.7

0.6%

17.0%

Equity Ratio at End of Last FY

46.4%

Last FY's ROE

15.7%

0

Dilutive Shares (thou.)(Note)
A: actual results
CE: the Company’s estimate(forecast)
E: estimate (forecast) by
Alpha-Win Research Dept.
Q1: Oct-Dec
Q2: Jan-Mar
H1: Oct-Mar
H2: Apr-Sep
Note that the Company’s
fiscal year is Septemberending. For example, FY
2021 ends in Sept. 2021.

Figure B
Item

Stock price as of 5/21

-88

【 Stock Chart (end-of-week prices): 3690 YRGLM Inc.】(Note) Forecasts/estimates
were made by Alpha-Win
Research Dept.

Figure C

(Y)

3,000

1.20
Stock price (left axis)

1.10

Price relative to TOPIX (right axis)

2,500

2,000

-4.0%

0.90

3 months

-3.5%

-5.6%

0.80

6 months-31.8%-37.2%

12 months-5.5%-22.4%

0.50
0.40

7

7

8

8

9

9

9

0

0

11
/1

04
/1

09
/1

02
/1

07
/1

12
/1

05
/2

10
/2

1
(M
M
/Y
Y
)

7

06
/1

03
/2

6

01
/1

0.30

08
/1

500

vs. TOPIX

1 month

0.60

1,000

Return

1.00

0.70

1,500

【Performance】

Period-4.3%(Note) Prepared by Alpha-Win
Research Dept. Reflects stock priceand TOPIX values through the closing
price on 5/21/2021. In the calculationof performance for each period, themonth-end stock price and TOPIX ofeach period were compared with theirmost recent values.

(Note) From the fourth week of Aug 2016 to the second week of May 2021 (through the closing price on May 21)

2/30
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
property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

Contents

1．Company Overview ........................................................................................................................ P4
A Leading Company in a Niche Market ............................................................................................ P4
2．Business Description and Business Model .................................................................................... P6
Restructuring and Strengthening of Business Portfolio .................................................................... P6
Providing Originally Developed Software ........................................................................................ P6
Business Details (I) Marketing PF Segment ..................................................................................... P7
Business Details (II) EC PF Segment .............................................................................................. P12
3．Shareholder Composition ............................................................................................................ P14
Major Shareholder Composition ..................................................................................................... P14
4．History of Growth ......................................................................................................................... P15
Past Transition in Financial Results ................................................................................................ P15
5．Market Environment .................................................................................................................... P16
Trends of Japan’s Advertising Market ............................................................................................ P16
Competitors ..................................................................................................................................... P17
6．Topics ............................................................................................................................................... P18
Impact of COVID-19 and the Company’s Response ..................................................................... .P18
Impact of Strengthened Regulations on Personal Information Protection and the Company’s
Response ................................................................................................................................ P18
7．This Fiscal Year’s First-Half Results and Full-Year Forecast ................................................. P19
Results for Q2 FY 2021 (first half) ................................................................................................... P19
The Company’s Financial Forecast for FY 2021 (full year) ............................................................. P22
Alpha-Win Research Dept.’s Financial Forecast for FY 2021 (full year)......................................... P24
8．Growth Strategy ............................................................................................................................ P25
The Company’s Medium- to Long-Term Business Plan and Strategy ............................................ P25
Alpha-Win Research Dept.’s Forecast for Financial Results over the Medium Term .................... P27
9．Analyst’s View ............................................................................................................................... P28
Shareholder Return .......................................................................................................................... P28
Stock Price, Characteristics, and Factors that May Affect Stock Price ........................................... P28
Disclaimers ............................................................................................................................................. P30(Note 1) Values used in this report have generally been rounded to the nearest unit and may therefore differ from the Company’s official
disclosed values.
(Note 2) Upon translating to English, when the page numbers differed from the original Japanese version, they were adjusted to those of
the English version of this Report. Note that the Company’s fiscal year is September-ending (i.e. FY 2021 ends in September 2021).

3/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

1. Company Overview◆ A Leading Company in a Niche Market
Company Overview
YRGLM Inc. (hereinafter referred to as “the Company”) is a marketing
technology company that plans, develops, and sells software related toInternet advertising and e-commerce.

w Marketing technology

company. Top share in thedomestic software market
for Internet ad effectmeasurement and opensource EC site construction.

Under its vision to “become a company that supports corporate marketing
activities around the world through data and technology to bring happiness toboth the sellers and the buyers,” the Company has grown rapidly through its
originally developed software. It has the top market share with “AD EBiS,”
an Internet ad effect measurement tool1, and “EC-CUBE,” software for opensource2 EC site construction.

(1) Internet advertising effectmeasurement tool: Software forcomprehensively measuring
and evaluating the effect ofvarious Internet ads and SEO
strategies.

History
Susumu Iwata, the Company’s president, started a web design business inOsaka as a college student. Following business expansion, he established theCompany in 2001. The Company became listed on TSE Mothers in
September 2014. Currently, it has two headquarters, one in Osaka and one inTokyo.

(2) Open source: The source
code, which is basically the
blueprint for software, is madeavailable free of charge, letting
anyone revise and redistributeit.
w Founded by President
Iwata. Listed on TSE
Mothers.

Change in the Company Name
In August 2019, the Company changed its name from “LOCKON CO., LTD.”
to “YRGLM Inc.”

w Changed the company
name and logo in 2019. New
name: YRGLM Inc.

Consolidated Companies and Trends in Consolidated Financial Results
The YRGLM Group consists of a total of six companies: the Company, three
consolidated subsidiaries (EC-CUBE Co., Ltd., Spoo! Inc., and YRGLMVIETNAM Co., Ltd.), one nonconsolidated subsidiary (a dormant company
in the U.S.), and one equity method affiliate (SAI Co., Ltd.).

w Both sales and profit

In the past, the consolidated-to-parent-company ratio for both sales and profit
had been around 1 and the total recurring profit/loss of the consolidated
companies excluding the parent had been nearly zero (Figure 1). Since FY2019 (note that the Company’s fiscal year is September-ending, e.g., FY 2021
ends in September 2021), though, sales as well as recurring profit of theconsolidated companies other than the parent company (consolidated minus
parent company) have improved largely. This is because the EC-CUBE
business was separated from the parent company to a subsidiary in a carveout and because this subsidiary’s financial performance had also improved.

improved in terms of theconsolidated-to-parentcompany ratios, thanks tothe carve-out and financial
recovery of EC-CUBE.

【Figure 1】Comparison of Consolidated vs. Parent Company’s Sales and Recurring Profit by Fiscal Year
(Unit: million yen, %)Unit: million yen, %A
Consolidated sales
B
Parent company sales
Consolidated sales - parent
A-B＝C
company sales
Subsidiaries' sales / parent
C/B
company sales
Consolidated sales / parent
A/B
company sales
A
Consolidated R.P.
B
Parent company R.P.
Consolidated R.P. - parent
A-B＝C
company R.P.
Subsidiaries' R.P. / parent
C/B
company R.P.
Consolidated R.P. / parent
A/B
company R.P.

FY 2014
1,360
1,360

FY 2015
1,437
1,437

FY 2016
1,613
1,613

FY 2017
1,719
1,719

FY 2018
1,805
1,805

FY 2019
2,204
2,011

FY 2020
2,619
2,318

0

0

0

0

0

194

301

0.0%

0.0%

0.0%

0.0%

0.0%

8.8%

11.5%

1.00

1.00

1.00

1.00

1.00

1.10

1.13

234
245

352
359

250
252

106
107

-115
-110

79
19

261
165

-12

-7

-2

-1

-5

60

96

-4.7%

-1.9%

-0.7%

-0.5%

-

315.9%

58.3%

0.95

0.98

0.99

1.00

-

4.16

1.58

(Ref) Prepared by Alpha-Win
Research Dept. based on the securities
report(Note) Results are consolidated
starting in FY 2014 (the same applies
to the rest of this report). Results for
H1 FY 2021 are not disclosed.

4/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

・上場以来、初の借入金を計上するも実質的には無借金経営

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

Issued: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

w As of the end of March, it
was essentially debtless,with cash & deposits
exceeding its amount ofdebt. Equity ratio became
greater than 50%,
indicating financial
soundness. FCF also turned
positive.

Financial Standing
Thanks to the posting of profit and the completion of an investment phase,
its free cash flow (FCF) has turned positive. Having also sold a part of its
subsidiary’s shares, the Company has been making progress with theaccumulation of capital as well as cash and deposits. As of the end of March
2021, its long/short-term debt totaled about Y960 million, while its cash anddeposits had increased to about Y1,340 million. Therefore, the Company isessentially debtless.
Its total assets are about Y2.9 billion and its market capitalization is about
Y8.5 billion (based on the closing price of Y1,342 on 3/31/2021), both
relatively small. However, its equity ratio is 51.5% and current ratio is248.6%, indicating financial soundness.
The Company has intangible fixed assets of Y750 million, including goodwill(reflecting the acquisition of the AdRepo and ADPLAN businesses) andsoftware, and deferred tax assets of Y120 million, totaling Y870 million.
However, since this total is smaller than the Company’s net assets of Y1,520
million, there does not seem to be any issue.

w Estimated to have an
unrealized gain of a little
greater than Y1.3 billion
owing to its subsidiary’s
shares.

w Has earned a high public
reputation. Chosen as “BestCompany” in the “BestWorkplaces Ranking” forthe 9th consecutive year
and for a total of 10 awards.
(3) Great Place To Work®
Institute: An organization that
conducts surveys and presents“Great Places to Work” inabout 50 countries around theworld every year.

Also, the Company owns 90% of the shares of its subsidiary EC-CUBE Co.,
Ltd. Based on the amount for which the subsidiary’s shares were sold toOrient Corporation (10% of shares for Y155 million; Y152 million in gainon sales), the Company is estimated to have shares worth Y1.4 billion inmarket value and also Y1.37 billion in unrealized gain.
Awards and Reputation
The Company has won the Best Companies Award in the Japan division of
the “2021 Best Workplaces Ranking for Medium-Sized Companies (100 to
999 employees)” from the Great Place to WorkⓇ Institute3 Japan (winningan award for nine years in a row and for a total of ten awards). The
Company has also won various other awards from external organizations in
the past. This high reputation is valuable since it helps attract talents, which
are crucial to the Company’s nature of business.
Also, its originally developed Internet ad effect measurement tool AD EBiS
has won the “Leader” award in the “Access Analysis and Attribution”
division of the “ITreview Grid Award 2021 Spring” by the IT productreview platform “ITreview” operated by ITclowd Corp (headquartered in
Minato-ku, Tokyo; Genta Kurono as president). This is the third
consecutive award that it has received, following the “High Performer”
award that it had received in the “ITreview Grid Award 2021 Winter”(source: the Company’s website).

5/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

2．Business Description and Business Model◆ Restructuring and Strengthening of Business Portfolio
w Worked on restructuring

its business portfolio.
Withdrew from non-corebusinesses andconcentrated businessresources on AD EBiS of
the Marketing PF
Segment. Acquired andstrengthened business inrelated areas.

Since FY 2016, the Company had been actively restructuring andstrengthening its business portfolio. It had been increasing its focus on thecore businesses (shifting to AD EBiS of the Marketing Platform Segment)
and separating its non-core businesses (EC Platform Segment) (Figure 2; see
the report issued on 12/7/2020 for the specific measures for the restructuring
and strengthening of business over recent years).
This business restructuring has already reached the end of a phase, and theCompany is now in the stage of expanding its business for the next level ofgrowth (for details, please see the section on medium-term business strategy
on page 25).
Since the second quarter (Q2) of FY 2019, the Company (parent company)
has been specialized in the Marketing PF Segment, since it had transferred
the EC-CUBE business to EC-CUBE Co., Ltd. However, since EC-CUBE
Co., Ltd. is a consolidated subsidiary, on a consolidated basis, the Company’sbusiness is still classified into the same two segments as before.

【Figure 2】Business Restructuring and Segments (withdrew from the businesses highlighted in gray)Business Segment

Business Category(1) Marketing effect measurement(I) Marketing
Platform(2) Advertising agency support(3) New services*Other(1) EC-CUBE(II) EC Platform

EC contract dev. business

Main Service① AD EBiS➁ THREe① AdRepo➁ Ad-Knowledge③ ADHOOP (previous: "advertising agency referral")① Spoo!
➁ EZCX
Professional Service(↑ includes the previous DMP business)(EC-CUBE) (ec-cube.co)② SOLUTION → abolished(Previous DMP business)

Changes
ADPLAN (business acquired in Jan 2020): business closed in Mar 2021 after merging
Withdrew (end of March 2020)
Acquired the business (August 2018)
Started service in July 2020
Started service in May 2020. Changed name to ADHOOP in Jan 2021.
Acquired as wholly owned subsidiary (Dec 2020)
Service started in May 2021 with release of preliminary version
Will expand AD-EBiS-related software development(Transferred from SOLUTION and scaled down)

Notes

Parent company

Consolidated
Parent company

Transferred to EC-CUBE Co., Ltd., in Jan 2019; 10% of shares sold to Orico

Consolidated

Transferred to SAI Co., Ltd. (equity method) and Radical Opti Co., Ltd. (later removed
from equity method)
Transferred to SOLUTION

Equity method
Parent company(Ref) Prepared by Alpha-Win Research Dept. based on sources including the Company’s securities report, financial results briefing
materials, and website. Words in red indicate changes in recent years.

◆ Providing Originally Developed Softwarew B2B business. Providing
originally developed
software via the cloud.

w Has been developing
business around two PF
segments. The Marketing
PF is its main segment.

w Thanks to recent years’ EC
market boom, the EC PF
Segment has also rapidly
recovered.

The Company’s concept is that systems for solving issues automatically andefficiently on behalf of humans will also become necessary in the field ofInternet marketing as the population ages and declines. Based on this concept,
the Company has been developing original software as tools and providingthem mainly to companies.
Main Businesses
Currently, the Company develops business around two segments: (I) theMarketing PF (short for “platform”) Segment and (II) the EC PF Segment.
The Marketing PF Segment accounted for about 86.7% of the total sales in
the first half (H1) of this fiscal year. For many years, this segment has been
the driver of the Company’s overall sales growth (change in sales by PF
segment: Figure 3 on page 7).
Each PF segment’s change in operating profit over the years is as shown in
Figure 4 on page 7. Excluding FY 2017 and FY 2018, during which businessrestructuring was conducted, operating profit has been posted for both PF
segments during each full fiscal year.
6/30

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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18【Figure 4】Transition in Operating Profit by Business
Segment (unit: million yen)

【Figure 3】Transition in Sales by Business Segment(unit: million yen)(million yen)(million yen)

250

3,000

Marketing Platform

EC Platform

200
2,500

Marketing Platform EC Platform

300

150

253

2,000

1,500

539
1,000

666

0

112

2,317
1,951

883

911

FY 2014

FY 2015

1,074

75

195

422

500

142

50

465

526

477

214

100

275

198
153

1,123

22

46 39

FY 2018

FY 2019

38

-1

78

67

101
4

78

-60

-50

1,530

1,255

107

210
136

-121

1,271

-100
-150

0
FY 2013

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

H1
H1 FY
FY 20202020

H1
H1FYFY2021
2021

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2020

H1
H1FY
FY20202020

H1H1FYFY2021
2021(Ref) Figures 2 and 3 were prepared by Alpha-Win Research Dept. based on the Company’s financial results summary and financial
results briefing materials.

◆ Business Details (I) Marketing PF Segment
The change in the sales and profit of the Marketing PF Segment over the years
is as shown in Figure 5.

【Figure 5】Change in the Sales and Operating Profit of the Marketing Platform Segment
Sales(million yen)
I. Marketing Platform(1) ➀ AD EBiS + ADPLAN (acquired in Jan 2020)(1) ② THREe (withdrew)

FY 2012parent545
499
46(2) ① AdRepo(2) ➁ Ad-Knowledge(2) ③ ADHOOP(3) New services (incl. Spoo!)*Other: Professional Service (DMP)-61-11.2%

Segment's O.P.
Segment's O.P. Margin

H1 FY 2020
H1 FY 2021
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020parentconsolidated consolidated consolidated consolidated consolidated consolidated consolidated consolidated% of total
consolidated % of entire company
666
883
911
1,074
1,255
1,530
1,951
2,317
1,123
89.5%
1,271
86.7%
567
722
822
1,012
1,200
1,402
1,747
2,127
1,029
83.3%
1,157
78.9%
81
161
89
62
54
43
28
8
7
0.6%
0
0.0%
124
149
70
5.7%
102
6.9%
3
5
0.3%
3
8
0.5%
15
1.0%
84
51
27
17
1.4%
7
0.5%
-1
142
214
210
153
-121
46
198
67
93.8%
101
56.6%
% of total O.P. ↑
-0.1%
16.1%
23.5%
19.5%
12.2%
-7.9%
2.4%
8.6%
6.0% % of total O.P. ↑8.0%(Ref) Prepared by Alpha-Win Research Dept. from the Company’s financial results briefing materials and interview. Includes estimates.

w AD EBiS’s sales account for
about 80% of the Company’s
total.

【Figure 6】Breakdown of Sales of theMarketing PF Segment by Category1%(3) New services
8%(2) Business foradvertising agencies

MPF Sales
Breakdown

91％(1) Marketing effectmeasurement(existing service)(Q2 YTD FY 2021)(Ref) Prepared by Alpha-Win Research Dept. basedon the financial results briefing materials.

(4) Programmatic advertising:An advertising method where
optimization of ads is conducted
automatically or supported
immediately. After submitting
an ad, optimization isconducted, leading to better
results.

The Marketing PF Segment currently consists of the three main businesscategories described below, from (1) to (3). During H1 of this fiscal year, thesales breakdown was as shown in Figure 5 and 6. AD EBiS accounted for
91% of the Marketing PF Segment’s sales (79% of the Company’s entire
sales).
Below are the current business categories by PF type and their main products(service or product name is in parentheses; “Professional Service” isexcluded).
(1) Internet advertising effect measurement① AD EBiS (Internet ad effect measurement system; includes ADPLAN)(2) Advertising agency support① AdRepo (automatic report generation tool for programmatic advertising4)② Ad-Knowledge (project management tool for advertising agencies)③ ADHOOP (advertising agency matching platform)(3) New services
The newly acquired Spoo! inc., EC-specialized CX improvement
platform “eZCX” whose preliminary version was released in May, andother businesses that will be developed going forward.

7/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

The following are the business overview and characteristics of each category.
w AD EBiS is an originallydeveloped Internet ad effectmeasurement tool. It has the
top share in the market.

w The ADPLAN business wasmerged with AD EBiS andwas closed.

w Full renewal of AD EBiS.
Aiming for higher unit price,customer acquisition, andcancellation prevention.
w AD EBiS’s number ofaccounts and average unit
price are the KPIs.

Sales of AD EBiS
Number of
Accounts

×

Average
Unit Price(monthly)(1) ① AD EBiS + ADPLANAD EBiS, the Company’s Original Product
AD EBiS is the Company’s main product (top share in the domestic market).
It was originally developed and is an Internet advertising effect measurement
system that allows the collective management, measurement, analysis, andvisualization of the effect of Web ads, etc., to help users assess the costeffectiveness of ads. It provides a comprehensive, one-stop marketing
environment where users can “utilize” marketing data accumulated throughthe “effect measurement” function to maximize sales or acquire prospective
customers in proactive marketing.
Merging ADPLAN with AD EBiS
After acquiring the ADPLAN business in January 2020, the Company had
maintained its service for a while. However, to improve the efficiency ofsystem development and updates, it had gradually shifted and merged thebusiness with YRGLM’s AD EBiS, and finally closed the business in March
2021. The average unit price and the number of active accounts are disclosed
as a sum of the two businesses.
Release of the New AD EBiSIn January 2021, the Company conducted the first full update for AD EBiS
since the launch of the service. As the first round of updates, the following
main changes were made: 1) faster screen response (speed increased by 82%max), 2) complete renewal of the UI (user interface) to be optimized for data
analysis, including improvements in visual design and operability, and 3)
renewal of the analysis function lineup (more than 20 additions or
improvements of functions were conducted, significantly improving
productivity).
With this update, users can now intuitively and efficiently analyze data. By
enhancing product appeal, the Company hopes to acquire new customers,
raise the unit price, and prevent cancellation by the existing customers.
Additional updates are planned to be sequentially released.

w Business is based on a
subscription-based businessmodel with flat-rate, periodic
payment. Enables theCompany to make profit
continuously and stably.
(5) SaaS (software as a service): A
service where software is used via
the Internet (mostly synonymouswith the cloud). Does not needpurchasing of packaged products.
Only the necessary functions,contents, and quantity of service
can be used via the Internet andpaid for.

Business Model
AD EBiS is provided as SaaS5 based on a subscription-based business model6.
It is a business model based on flat-rate, periodic payments. Its sales are
determined by average unit price × number of active accounts. Both numbers
are key performance indicators (KPIs) for AD EBiS as well as for the entire
company.
Customers
It is a B2B business. AD EBiS’s main customers include WOWOW, Lion,
Kracie, sansan, Lifenet Insurance, PERSOL CAREER, Zwei, Z-KAI, andBridgestone Cycle. Many of the customers from the previous ADPLAN
service are large, blue-chip companies that sell branded products throughout
the country.

(6) Subscription-based businessmodel: A business model whereusers pay for the provided service
based on the duration of use.

8/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

Price System
AD EBiS’s pricing plan used to be a pay-per-use based on multiple
parameters. However, in June 2018, the Company introduced a new priceplan based on a flat-rate price table with basic functions and support packaged
together. Options (various external linkage functions for reporting, etc.) canbe added to a plan. New contracts have already been transferred to this newprice system, and pricing has also been changed along with version upgrades.
Change in the Average Unit Price (as sum of AD EBiS and the previous
ADPLAN)
Change in the average unit price as of the end of each quarter (end of the final
month of each period) is shown in Figure 7. There used to be a significant
seasonal variability between quarters, but after the transition to thesubscription-based business model, an upward and linear trend has been
maintained. The average unit price has been rising for 12 consecutive quarters
since Q2 of FY 2018.

w Due to the version upgrade,change in pricing due tothe addition of new
functions, and acquisitionof new customers with highunit price, AD EBiS’s unit
price per customer has been
increasing for 12
consecutive quarters.

The average monthly unit price grew from Y75,846 at the end of H1 FY 2018(end of Mar 2018) ⇒ Y98,042 at the end of H1 FY 2019 (+29.3% or+Y22,196 YoY) ⇒ Y120,070 at the end of H1 FY 2020 (+22.5% or+Y21,016 YoY) ⇒ and most recently, Y141,086 at the end of H1 FY 2021(+17.5% or +Y22,028 YoY) (Figure 7).
Most recently, the average unit price increased due to the change in pricing
and customers that occurred with the full renewal of AD EBiS (average unit
price of new customers are about Y150,000). The average unit price of its
current customers seems to be gradually increasing in Q3 of this fiscal year
too.

【Figure 8】Change in the Number of Active【Figure 7】Change in the Average Unit Priceof AD EBiS

Accounts of AD EBiS

Average unit price per customer is increasing for 12 quarters in a row.
Unit price of new customers increased with the pricing system revision.

(# of accounts)

Acquired
ADPLANbusiness(Y)

140,000

141,086
135,930

120,070
120,000

126,825

124,032
Change inpricingsystem

Q4→Q1
Seasonal
variability

100,000

1,543

1,500

1,569
1,518
1,513

1,400

1,516

1,467
1,451

1,438
1,433
1,425

1,300

1,363

1,413

1,200

107,143

1,100

98,042
86,621

1,000

84,918900

79,52560,000

pricing system

1,600

111,587

102,262

80,000

Number of accounts has still been gradually decreasing due to COVID-19.
Acquired ADPLAN
business
Change in

800
700

40,000Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020(Ref) Figures 7-8 were prepared by Alpha-Win Research Dept. based on the financial results briefing materials and securities report.

9/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

FY 2021

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

Issued: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

w AD EBiS’s number of active
accounts is on a gradually
declining trend due to theimpact of COVID-19. The
challenge will be to reducethe contract cancellationrate.

w Decline in the number ofaccounts of AD EBiS has
been offset by the rise in
the average unit price.
However, although adouble-digit growth insales (by amount) has been
maintained for AD EBiS,
the rate of growth issomewhat slowing down.

w AD EBiS has the top sharein the domestic market.
Gained an extraordinary
share through theacquisition of ADPLAN.

w Strengthening the 3businesses targeting
advertising agencies.

（注）サブスクリプションモデ
ル：提供するサービスに対して利用期間に応じで対価を支払う
w AdRepo
enables automatic
方式 of reports forcreationprogrammatic advertisingthrough automation
technology. The Company
intends to actively expand
this business to createsynergy with AD EBiS.

Number of Active Accounts
On the other hand, based on end-of-the-quarter figures, the number of active
accounts had been consecutively increasing until the end of Q1 FY 2019 (endof Dec. 2018), but then started to decline due to contract cancellations
following the pricing revision (Figure 8). In Q2 FY 2020, the number ofaccounts temporarily increased due to the acquisition of ADPLAN. However,the number then returned to a declining trend again. Impacted by COVID-19
as well, the number of accounts (only the sum of AD EBiS and the previous
ADPLAN service is disclosed) has been decreasing for four consecutive
quarters, with 1,413 accounts in Q1 FY 2021 (decreased by 38 accounts or
2.6% compared to 1,451 accounts in Q4 FY 2020) and 1,363 accounts in Q2(decreased by 50 accounts or 3.5% since Q1). The monthly contract
cancellation rate is estimated to have been about 2-3%, with no large
fluctuations.
Sales
Since the rise in the unit price fully offset the decline in the number ofaccounts, the Company was able to maintain a consecutive, double-digit YoY
sales growth for AD EBiS. Recently, though, the growth rate is starting tosomewhat slow down.
However, since the Company seems to be gaining a greater price leadership
through its extremely strong position in the domestic market, AD EBiS’s unit
price is expected to continue to rise with the addition of new functions andservices as well as through up-selling and cross-selling. Concerning thegradually declining trend for the number of active accounts, it will be key towatch when the trend will be reversed.
Market Share
Since its release in 2004, AD EBiS has been implemented by more than
10,000 users in total and has gained the top share in the domestic Internet
advertising effect measurement system market. Furthermore, according to theCompany, its share has been increasing year by year, and an extraordinary
share was acquired in FY 2019 thanks to the acquisition of the ADPLAN
business. This high share was most likely maintained in FY 2020 as well.

(2) Business for Advertising Agencies
Business for advertising agencies specifically consists of the following threebusinesses. This first half’s sales were Y102 million in total, which is 8% of
the entire Marketing PF Segment’s sales (sales for each of the three specificbusinesses are not disclosed).
(2) ① AdRepo
In August 2018, the Company acquired AdRepo, an automatic reportgeneration tool for programmatic advertising. It has been developing thisbusiness in full scale since the beginning of FY 2019.
AdRepo is a tool that fully automates the creation of reports. It is a cloudservice that has been developed to reduce the workload of advertising
agencies in creating reports for programmatic ads.
Its domestic market share is third from the top, behind ATOM (TechLoCoCo., Inc.; not listed) and glu (ATALA LLC: not listed; one of the Company’s
partners). Sales in H1 were about Y84 million, which is about 7% of theentire Marketing PF’s sales.

10/30This 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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

w Ad-Knowledge is a cloudbased project management
system for supporting theimprovement andstreamlining of operations
by advertising agencies thatmanage programmatic
advertising. Service isprovided as subscription.

(2) ② Ad-Knowledge
The Company newly developed this cloud-based project management system
for advertising agencies and launched its service in July 2020. Through thisservice, it supports the improvement and streamlining of the operation ofadvertising agencies that work with programmatic advertising.
In Japan, the mainstream for Internet ads is programmatic advertising with aflexible control of budget limit, distribution period, and distribution method,and many companies are indeed using this type of advertising. However,since its operation requires expertise, experience, time, and much workload,
companies often ask advertising agencies to manage the ads for them.
However, since advertising agencies normally manage a wide range ofadvertising projects at the same time, they have been experiencing muchworkload in project management, including the timely checking and tuningof advertising results, progress management, and invoice processing.
Therefore, utilizing the know-how gained from its years of experience with
the AD EBiS business, the Company offers Ad-Knowledge as a solution tothese issues and aims to contribute to the customer success of advertising
agencies. Like AD EBiS, this service is offered as a subscription-based
service (SaaS).
Sales in H1 were about Y5 million, which is about 0.4% of the entire
Marketing PF’s sales.

w ADHOOP is a service that
introduces the most suitable
advertising agency toadvertisers.

(2) ③ ADHOOP (previously, “Advertising Agency Referral Service”)
In May 2020, the Company released a new service in which it introduces themost suitable advertising agencies to Internet advertisers. Using its networkof more than 300 advertising agencies and information that it uniquely
possesses, the Company selects and introduces a candidate agency that suits
each advertiser in a one-stop support system. Through this service,advertisers can efficiently find an agency with the best matching and improve
the performance of Internet advertising.
Advertisers can use the service for free, but the Company receives a referral
fee from the advertising agency that it introduces when an appointment ismade between the two matched parties.
In January 2021, the Company changed the name of this service from theprevious “Advertising Agency Referral Service” to “ADHOOP.” Since its
launch, the service has been steadily gaining more corporate customers. A
renewal of the service was conducted in March, and the Company intends todevelop this business in full scale through acceleration of its DX support aspart of its strategy to acquire new customers.
Sales in H1 were about Y8 million, which is about 0.6% of the entire
Marketing PF’s sales.

11/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18
w Acquired the company
Spoo and released the new
originally developed
product eZCX. Started a
new area of business withnew services.

(3) New Services
The Company hopes to strengthen this new area of business as its mediumto long-term growth driver. The new services have only just begun, and theirsales in H1 were still only 1% of the total (about Y13 million). This includes
the Y10 million in sales (from Jan-Mar 2021) made by the newly acquiredcompany Spoo! inc. (hereinafter, “Spoo”; headquartered in Shoto, Shibuyaku, Tokyo; Kazuya Kawasaki as president; a total of seven employees).
On December 30, 2020, the Company acquired Spoo as a wholly owned
subsidiary (consolidated subsidiary). Spoo was founded in March 2000 andis in the business of web media and design. Its customers include ADK
Marketing Solutions and Sapporo Real Estate.
Going forward, the Company plans to integrate Spoo’s creativity and humanresources with the Company’s data and technology to create new values,
expand into wider areas, and strengthen competitiveness.
For the moment, the Company has not officially announced the details of its
business development with Spoo yet, so we will need to wait for theannouncement.
Also, in May, the Company released a preliminary version of a new service
called “eZCX” (expected to be reflected in financial results starting in Q3).
This service supports the improvement of CX (customer experience) on
websites. The Company has joined the CX market, which has been growing
annually by 30%, with this EC-specialized CX improvement platform“eZCX” under the concept of “anyone can easily use.”
Using the user behavior data that the Company has accumulated through its
AD EBiS business, the service will analyze the users’ feelings to provide themost suitable experience to users at the most appropriate timing, and thus
help improve the acquisition of new customers.
The preliminary version has received positive feedback from its corporate
users, as companies that have used the version have experienced a maximumof 10% improvement in CVR (conversion rate; rate of successful contractsmade). The Company plans to further improve its functions before theofficial version is released. The full contribution of this business to sales is
expected to start next fiscal year or later.

w EC PF Segment is
specialized in EC-CUBE.

◆ Business Details (II) EC PF Segment
Until FY 2018, the EC PF Segment had been composed of ①EC-CUBE and②SOLUTION (already withdrew from this business). Currently, only the
EC-CUBE business remains (Figure 9).

【Figure 9】Change in Sales and Operating Profit of the EC Platform Segment
Sales(million yen)
EC Platform➀ EC-CUBE

FY 2012parent323
150

Payment Settlement Fee
Subscription
Other② SOLUTION

174

(DMP)
Segment's O.P.
Segment's O.P. Margin

98
30.5%

H1 FY 2020
H1 FY 2021
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020parentconsolidated consolidated consolidated consolidated consolidated consolidated consolidated consolidated% of total
consolidated % of entire company
422
477
526
539
465
275
253
300
112
9.1%
195
13.3%
207
245
230
219
208
254
253
300
112
9.1%
195
13%
162
11%
6
0%
27
2%
214
232
296
319
257
20
0
0
0
0.0%
0
104
0.0%
75
107
136
38
-60
22
39
78
4
6.2%
78
43.4%
% of total O.P. ↑
17.8%
22.5%
25.8%
7.1%
-12.9%
8.2%
15.4%
26.1%
4.0% % of total O.P. ↑39.7%(Ref) Prepared by Alpha-Win Research Dept. from the Company’s securities report, financial results briefing materials, and interview.
Includes estimates.

12/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

w The EC-CUBE businessprovides software forcorporate users to buildand operate EC websites on
their own.
w In addition to thedownload version, thecloud version has beenreleased.
w Gained top share in thedomestic market.
(7) Freemium Model:“Freemium” is a coined wordthat combines “free” and“premium.” Refers to abusiness model that generates
revenue by offering basic
services for free while charging
fees for more sophisticated or
specially added related services.

① EC-CUBE
Service Overview
EC-CUBE is a software platform whereby corporate users can build andoperate EC (e-commerce) websites on their own.
The Company provides EC-CUBE as an open-source software package forweb design to companies that will begin selling and providing products orservices online. It is provided as either as a download version (EC-CUBE) or
cloud version (ec-cube.co).
Characterized by low cost, high customization, and user-friendly interface, it
has the top share in the domestic market and has become the standard
platform.
EC-CUBE is based on a Freemium Model7 where software is offered for free
but in return revenue is earned from accessory services. Specifically, theCompany makes revenue through royalties received from official partners in
the Internet business that use this platform (payment settlement agencies,
hosting businesses, etc.), function-addition fees for plug-ins (programs to add
functions to software), and revenue from selling commercial licenses.
On the other hand, “ec-cube.co” is currently mainly based on monthlysubscription-based revenue (3% of the entire sales of the EC PF) like AD
EBiS. The Company plans to eventually shift this service toward making
more revenue from payment settlement fees, like EC-CUBE.
Sales Breakdown
Breakdown of sales in H1 is described in Figure 10. Sales from payment
settlement fees (commissions received from partnered payment settlement
agencies through EC-CUBE’s payment settlement plugin) accounted for 83%
of the entire EC PF Segment’s sales.

w Formed a capital andbusiness alliance with Orico.
Will focus on the cloud.
Aiming to raise revenue frompayment settlement fees.

Business Development
Orico purchased 10% of EC-CUBE Co., Ltd.’s shares from the Company andformed a capital and business alliance. Going forward, the Company plans to
expand the sales of the cloud version, “ec-cube.co,” through Orico’s customer
network (provide support in starting EC to Orico’s 830,000 member stores)
and sales power.

【Figure 10】Breakdown of Sales of the EC PF Segment by Business(Unit: %, million yen)
14%

Other
3%

w アドレポの顧客は、広告代理店。
自動化により運用型広告レポート
自動作成が可能。
w アドレポ事業は、アドエビスとのシナジーを狙い積極的に事業を拡大する意向。

EC PF
Sales
Breakdown

83%

Sales from payment
settlement fees
EC-CUBE(Q2 YTD FY 2021)

Subscription sales(Ref) Prepared by Alpha-Win Research Dept. from the Company’s financial results briefing materials.

13/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

3．Shareholder Composition
w No significant changes tothe major shareholders.
Parties affiliated with theCompany (former andpresent executive officers
plus the employee stock
ownership plan) possess
about 60% of all shares intotal.
w Invested by several
domestic stock investment
trusts.

◆ Major Shareholder Composition
The major shareholders as of the end of March 2021 are shown in Figure 11.
The following is supplementary information. The major shareholders havenot largely changed.
・As of December 18, 2020, the “Japan Emerging Equity Open” managed
by Nikko Asset Management owned 103,500 shares (1.37% of the fund’s
AUM). Also, as of February 24, 2021, “MHAM Emerging Growth StockOpen” (also called “J-Frontier”) managed by Asset Management One(hereinafter, “AMO”) owned 100,000 shares (0.46% of the fund’s AUM).
“The 2020 Vision” managed by Commons Asset Management owned 49,900
shares (0.96% of the fund’s AUM) as of December 18, 2020.
・Former executive officers of the Company have been gradually selling theirshares. Instead, securities firms have been buying more shares. The
investment purposes of Rakuten Securities at fourth place, JPMorgan
Securities Japan at nineth place, and SBI Securities at tenth place areunknown, but are predicted to be related to their customers’ positions.

w Treasury shares are a little
less than 1% of all
outstanding shares.

・As of the end of March 2021, the Company owned 53,941 treasury
shares (about 0.85% of all outstanding shares). The Company intends to usethem for M&As and alliance strategies as well as stock-based compensation
for its executives and employees in the future.

【Figure 11】Current Major Shareholders
Susumu Iwata (president and CEO)Hiroichi Fukuda (former executive vice president)
Kanako Mataza (former director and senior executive officer)
Rakuten Securities, Inc.
Custody Bank of Japan (trust account)
Custody Bank of Japan (securities investment trust account)
YRGLM Employee Stock Ownership Plan
Hakuhodo DY Media Partners Inc.
JPMorgan Securities Japan Co., Ltd.
SBI SECURITIES Co., Ltd.
UEDA YAGI TANSHI Co., Ltd.
au Kabucom Securities
Mitsubishi UFJ Morgan Stanley Securities
Japan Trustee Services Bank (former name)
BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)
Trust & Custody Services Bank (former name)
GOLDMAN SACHS INTERNATIONALUEDA YAGI TANSHI Co., Ltd.
Tomonori Yamada (indiv.)
Katsuyuki Ito (indiv.)
Akiko Takashima (indiv.)
Kenichiro Wade (former outside director)
Yoshio Takayama (indiv.)
Kayoko Nagano (indiv.)
SEPTENI CO., LTD
Matsui Securities Co., Ltd.
Japan Securities Finance Co., LTD
Yoichi Nishikawa (indiv.)
Akio Shiojiri (former director: audit committee member)(Number of treasury shares: thousands of shares)(Ratio of treasury shares over all issued shares: %)(Unit for number of shares: thousand shares) (Unit for ratios: %)End of Sept2015

End of Sept2016

End of Sept
2017

2,851
1,071
415
―
―
―
76
60

2,817
1,021
415
―
―
―
39
60

2,817
1,021
352
―
―
―
48
60

End of Sept
2018

2,819
961
354
72
―
―
69
60

End of Sept.
2019

2,822
801
353
64
―
―
68
60

End of Sept
2020

2,825
781
352
―
221
169
71
60

―
―
―
―
―
―
―
―
―
―
―
―
39
―
―
62
―
30
34
26
0

―
―
―
―
59
―
―
―
―
―
―
―
29
―
―
62
36
35
―
―
0

―
―
―
―
―
60
60
―
―
28
―
―
29
28
24
―
―
―
―
―
0.045
0.00%

―
―
―
―
60
―
29
―
―
―
52
29
―
―
―
―
―
―
―
―
0.983
0.02%

―
―
―
―
333
―
123
284
113
―
―
―
―
―
―
―
―
―
―
―
81
1.28%

―
86
62
58
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
64
1.01%

End of Mar
2021

2,827
701
329
219
193
88
67
60
53
37

←Shareholding
percentage

44.73
11.09
5.21
3.47
3.05
1.38
1.06
0.94
0.83
0.57

←Ranking

1
2
3
4
5
6
7
8
9
10

54
0.85%

(Ref) Prepared by Alpha-Win Research Dept. based on materials including the securities report. Words in red indicate YRGLM’s former andcurrent members, employee stock ownership plan, and other groups or individuals affiliated with the Company.

14/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

4．History of Growth◆ Past Transition in Financial Results
From FY 2010 to FY 2013, during which account settlement wasnonconsolidated, the Company had increased sales for four consecutive fiscal
years. From FY 2014, when consolidated account settlement began, to FY
2020, the Company has been achieving record-high sales consecutively forsix fiscal years (according to the available disclosure materials, sales havebeen hitting record highs for at least 10 consecutive fiscal years). During thisperiod, sales had increased by about 3.6x from Y730 million to Y2,620
million. This achievement was due to the rapid growth of the Marketing PF’s
AD EBiS as well as the steady growth of the EC PF’s EC-CUBE andSOLUTION.

w Developed and released
unique products that can bedifferentiated from othercompanies. Has grown rapidly
by predicting and meeting theneeds of society ahead ofothers.

w In FY 2015, record-high profits
were recorded. Meanwhile,
the Company has been
continuing to achieveconsecutive record highs forsales.

Regarding profit, the Company had stayed profitable both on anonconsolidated and consolidated basis up through FY 2017. In FY 2015, a
record-high operating profit of Y350 million and a record-high net profit ofY231 million were achieved. However, since FY 2016, the Company’s active
business restructuring and upfront investments had been increasing theexpenses, leading to a consecutive decline in profit despite increasing sales(Figure 12).

w Since FY 2016, the Company
had been conducting businessrestructuring and upfront
investments, prioritizing
accelerated future businessgrowth over current profit. A
net loss was recorded in FY
2018.

In FY 2018, the Company recorded a net loss (of Y88 million) for the firsttime since becoming listed on the market, due to upfront investments mainly
to hire more employees for development and sales (Figure 13).
In FY 2019, the Marketing PF’s sales grew by 20% thanks to its main product
AD EBiS, and the Company posted both an operating profit and a recurring
profit for the full year in a turnaround. In FY 2020, too, consecutive growthof sales and further improvements in cost had led to a 300% growth inoperating and recurring profit compared to the previous fiscal year. The
Company posted a net profit for the first time in three fiscal years, achievinga clear, V-shaped recovery.

w In FY 2019, posted an
operating profit and recurring
profit in a turnaround thanks
to the large sales growth. In FY
2020, both profits grew by 3xcompared to the previous FY,
and a net profit was posted ina V-shaped recovery.

【Figure 12】Transition in Past Financial Results and Forecast【Figure 13】Change in the Number of Employees(Unit: million yen, %)(Unit: persons)

Sales (left axis: million yen)
Recurring profit (left axis: million yen)
EBITDA (left axis: million yen)
Recurring margin (right axis: %)

3,500
3,000

30.0%
25.0%

2,500

20.0%

2,000

15.0%

1,500

10.0%

1,000

5.0%

500

0.0%

0

-5.0%

-500

-10.0%FY 2009

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021CE

Development

S&M

SupportAdministration

172

New business developmen t

144
98
68

71

11
8
14

11
10
12

35

38

FY 2014

FY 2015

13
15
14

151
21

12
25

122

20

18
15

21

29

36

29

35

34

25

56

64

74

66

65

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020(Ref) Figures 12 and 13 were prepared by Alpha-Win Research Dept. from the Company’s securities report, financial resultssummary, and financial results briefing materials.
(Note) Consolidated results starting in FY 2014; nonconsolidated prior to this. CE: the Company’s estimate/forecast.

15/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

5．Market Environment◆ Trends of Japan’s Advertising Market
Total Advertising Expenditure
Total advertising expenditure in Japan in 2020 (calendar year; the same
applies to this entire chapter) was about Y6.2 trillion, having decreased by
11.2% from the previous year. Due to the emergency declaration in response
to COVID-19, travel and movement of people were restricted, and theeconomy was largely negatively impacted. As a result, the advertising market
was also negatively affected. A negative growth was observed for the firsttime in nine years since the Great East Japan Earthquake in 2011.

w Due to the impact of
COVID-19, Japan’s total
advertising expenditure
decreased at a double-digit
rate compared to theprevious year.

Internet Ad Market
Although total advertising expenditure has been decreasing largely, the EC
market has been experiencing a boom due to increased stay-at-homeconsumption amidst the COVID-19 crisis. As a result, Internet advertisingexpenditure increased by 5.9% compared to the previous year. Infact, from2005 (point of comparison, set at 100) to 2020, Internet advertisingexpenditure grew significantly by about 5.9 times (annual growth rate ofabout 12.8%, on a simple average) (Figure 14).

w Internet advertisingexpenditure grew by about
5.9x in 15 years from 2005 to
2020. The average annual
growth rate (simple
average) is about 12.8%.

Internet advertising expenditure (sum of medium cost and production cost),
which is about Y2.2 trillion, accounts for about 36% of the total advertisingexpenditure. This proportion has been steadily increasing by several percent
every year. It is not only as significant as the four mass-media advertising(newspaper, magazine, radio, and television), but it has exceeded the shareof television (27%), which is the largest among the four, to become thelargest advertising media (ref: Dentsu Inc.’s “2020 Advertising
Expenditures in Japan”).

【Figure 14】Change in Advertising Expenditure by Medium 【Figure 15】Change in Monthly Sales of Internet Ads(Index: the year 2005 is set to 100)
600%

(100 million yen)

（%）

1,400

30.0

Internet ads

550%

25.0

1,200

The four mass media

500%

Total advertising expenditure450%

Promotional media

20.0
1,000

400%

15.0
10.0

800

350%

5.0

300%

600

0.0

250%

-5.0

400

200%
150%

Internet sales (left axis)
YoY growth (right axis)
YoY decline (right axis)

200

-10.0
-15.0

100%

0%
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2019

(Ref) Figure 14: prepared by Alpha-Win Research Dept. from Dentsu Inc.’s “2020 Advertising Expenditures in Japan” (published every February).
Figure 15: prepared by Alpha-Win Research Dept. from the “Survey of Selected Service Industries” by the Ministry of Economy, Trade, and Industry.

w Despite the COVID-19
crisis, the Internet admarket was able to returnto growth. After the crisis
settles down, the market ispredicted to return to astable, double-digit growthagain.

Current Situation
The COVID-19 crisis had caused the entire Internet advertising market toshrink on a year-on-year comparison (based on the sales of the advertisingindustry as announced by the Ministry of Economy, Trade, and Industry)
since the beginning of 2020, but the market has recently been back to growthagain (Figure 15). Although the total advertising expenditure seems to be held
down due to the third wave of COVID-19, the continued EC boom from thehigh stay-at-home consumption seems to be helping the Internet advertising
16/30

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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Jan

Jul

2020

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

2018

Oct

Jan

Apr

Jul

2017

Oct

Jan

Apr

Jul

2016

Oct

Jan

Apr

Jul

2015

Oct

Jan

Apr

Jul

2014

Oct

Jan

Apr

Jul

2013

Oct

-20.0
Jan

50%

Apr

0
2021

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

Issued: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

market grow solidly. Once the COVID-19 crisis settles down, Internet usage
is predicted to further expand along with the development of technology,
leading to a rapid, double-digit annual growth of Internet advertisingexpenditure for the market. Therefore, the business environment is predicted
to remain advantageous for the Company’s business for the meanwhile, interms of Internet ad effect measurement and utilization as well as the
expansion of the EC-related markets.
w For advertising effectmeasurement tools, there
are no competitors with asimilar service price range
among major corporations.

(8) Google Analytics: A website
access analysis tool provided by
Google targeting SMEs.
Analysis is only conductedwithin Google’s website, andmostly the free version is
popular. The high-spec, paidversion seems to be in the highprice zone.
(9) Adobe Analytics: An accessanalysis tool used by manylarge websites. It can analyze
complicated and large amountsof data, is highly customizable,
and has multiple and highquality functions, but the priceis rather high.

w With the open platform forbuilding EC websites(shopping cart system usedby online stores withmonthly sales of Y10
million or more), it has the
top share, but there aremany rivals andcompetition is intense.

w The Company’s targets are
its top customers. Will
increase investment toraise competitiveness.

◆ Competitors
There seems to be no similar listed Japanese company that could be directlycompared with the Company.
Advertising Effect Measurement Tools
Concerning AD EBiS, its biggest rival had been ADPLAN provided by thelisted company OPT HD, but since the Company has already acquired thisbusiness, there is no longer any major competitor with a similar service pricerange.
For advertising effect measurement and analysis tools, the competingproducts are Google Analytics8 and Adobe Analytics9 that are widely used bydomestic SMEs (small/medium-sized enterprises), and also the privatecompany beBit’s “Web Antenna” (implemented by more than 600 companies,
including major companies as well as ventures). However, these companies
are not specialized in the field like the Company, and their products’ function,measurement targets, contents of analysis, and support systems are limited.
In comparison, the Company's products are superior in terms of specifications,development system, and support system, which explains its No. 1 positionin the market with an extraordinarily high share.
The Company’s target customer zone is the middle zone, encompassing midtier companies as well as listed companies. This is different from the highend zone targeted by the paid versions of Google Analytics and Adobe
Analytics (with price settings that are estimated to be about ten times greaterthan the Company’s).
EC Platform (packaged software for building EC websites)
EC-CUBE has earned a high evaluation in an online store trend survey (themost used shopping cart system in Japan by online stores with monthly salesof 10 million yen or greater). For EC platforms, the following companies
seem to be the competitors among listed companies (in the order of
product/service name, operating company or group, market, and securitiescode).
・BASE: BASE, TSE Mothers, 4477
・ecbeing: SOFT CREATE HD, TSE First Section, 3371
・Commerce21: Estore, JASDAQ, 4304
・ebisumart: Interfactory, TSE Mothers, 4057
・futureshop: Commerce One Holdings, TSE Mothers, 4496
Currently, competition in this area is intense. Therefore, the Company plans
to focus its target on its top customers and increase investment so that it canincrease its products’ competitiveness as well as enhancing support for its
users’ development environments.

17/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

6．Topics◆ Impact of COVID-19 and the Company’s Response
w Conducting business on
remote work, targeting all
employees

w Only minimal impact fromCOVID-19

w Some customers of travel,
restaurant, and other service
industries were impacted
by COVID-19 and hadcancelled AD EBiS.
Meanwhile, there has beenhigh stay-at-homeconsumption, which has
increased contracts withcustomers in EC-related
businesses. This has mostly
offset the above
cancellations.
(10) Tightened regulations: To
strengthen privacy protection,
the EU adopted the GDPR
(General Data Protection
Regulation).
(11) A tracking preventionfunction was added to Apple’s
Safari. Google also plans toeliminate the use of third-party
cookies from its Chrome in
2022.
(12) Tracking: Identifying
visitors of websites or users of
online services on the Internet
to record and track their visiting
history or activities within
websites.
(13) First-party cookie: Cookies
directly issued by the domain(website) visited by the user.

Response
The Company has prepared the environment for all employees to be able towork from home. Almost all business activities including sales, customer
success, customer support, development, and management are being
continued online. So far, its operation has been smooth and there have been
no issues, since the Company is highly compatible with remote work due tothe nature of its business. The Company believes that it can sustain growtheven in conditions like this.
ImpactFinancial results in H1 indicated a steady progress, with no large impact fromCOVID-19 at all. Some cancellations of AD EBiS contracts were seenamong customers in industries such as travel, restaurants, leisure, worker
dispatching, and bridal service that were impacted by the COVID-19 crisis.
Meanwhile, due to the high stay-at-home consumption, contracts withcompanies in the EC industry and SaaS-related businesses had increased andnearly completely offset the cancellations.
Because the Company’s flagship product AD EBiS is a tool for optimizing
costs through ad effect measurement, the current situation may be more of abusiness chance since the shift in consumption toward EC amidst the
COVID-19 crisis will increase the demand for ad effects that can more
efficiently appeal to customers.

◆ Impact of Strengthened Regulations on Personal
Information Protection and the Company’s Response
Response
With the global trend of strengthening regulations on personal information
protection10, Japan too strengthened the Personal Information Protection Law.
Google and Apple have also subsequently placed or will place regulations on
their browsers11 against the use of third-party cookies (cookies issued bydomains other the website that a user is visiting) which enable the tracking12
of a user’s browsing history across websites. As a result, measurement of ads
through those means has become difficult.
In response to this, the Company has already begun providing a measurement
method for AD EBiS where measurements using first party cookies13 can bemade on behalf of customers. Since its release, about 700 companies seem tohave installed it. In the new measurement method, highly accurate
measurements of advertising effectiveness can be made without using third
party cookies, which have raised many issues, and while protecting user
privacy.
ImpactThere seems to be many companies in general, as well as competitors, thatwill not be able to meet the demands of the strengthened regulations on
personal information protection. Specialized in advertising effectmeasurement, the Company’s ability to develop technology and adjust tochanges is strong. Therefore, we believe that the Company will gain a greater
competitive advantage relative to other companies in this business area.
18/30

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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

7. This Fiscal Year’s First-Half Results andFull-Year Forecast◆ Results for Q2 FY 2021 (first half)
Overview
Consolidated financial results for Q2 FY 2021 (October 2020 - March 2021;
the first half or “H1”) were as follows: sales had increased by 18.7% YoY to
Y1,466 million and operating profit had increased by 150.3% YoY to Y178
million (Figure 16). Both sales and profit had increased significantly.

w Record-high H1 sales andprofit achieved.

There was no significant nonoperating profit/loss or extraordinary profit/loss
recorded, and net profit had increased by 155.6% to Y116 million. H1 record
highs were achieved for sales and net profit.
Progress in H1
Progress in H1 in terms of the full-year forecast was 48.9% for sales(previous H1: 45.7%) and 53.9% for operating profit (previous H1: 35.7%).
Although the Company’s financial forecast for H1 is not disclosed, operating
profit seems to have exceeded the Company’s expectations.

w H1 profit seems to havebeen higher than the
Company had expected.

Trends in Financial Performance by Segment
By segment, sales of the Marketing PF Segment increased by13.2% from theprevious H1’s Y1,122 million to Y1,271 million in this H1. Similarly, its
operating profit increased significantly by 51.0% from Y67 million to Y101
million.

w Rise in unit price of AD
EBiS contributed to thelarge profit growth of theMarketing PF.

This was mainly due to the increase in the average unit price of AD EBiS, itscore business (see Figures 7 and 8 on page 9). The ADPLAN business, which
had been acquired in January 2020, also fully contributed to the results(unlike the previous fiscal year, its sales for Q1 or Oct-Dec were recorded
this year and contributed positively).

w Previous M&A and new
businesses also contributed
to the results.

Also, although the monetary impact had been small, the new acquisition of acompany (three months’ sales of Spoo) and the launch of new businesses (sixmonths’ sales of Ad Knowledge and ADHOOP were added on a YoY
comparison) have also contributed positively to the results.

【Figure 16】Comparison of Quarterly and Semi-Annual Results
Q1 (Oct-Dec), Q2 (Jan-Mar),Q2 YTD (Oct-Mar)(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 2020

FY 2021

Q1 (Oct-Dec)
Q2 (Jan-Mar)
585
650
524
599
62
51
407
432
69.5%
66.5%
382
386
65.2%
59.3%
25
47
16
51
9
-4
4.2%
7.2%
3.0%
8.5%
14.5%
-8.8%
25
46
19
27

Q1 (Oct-Dec) Q2 (Jan-Mar)
722
744
622
649
100
95
505
496
70.0%
66.7%
411
412
56.9%
55.4%
95
84
48
53
47
31
13.1%
11.3%
7.7%
8.2%
46.5%
32.6%
95
82
62
55

FY 2020

FY 2021

Q2 YTD, FY 2021 (YoY)

Q2 YTD
1,235
1,123
112
839
67.9%
767
62.1%
71
67
4
5.8%
6.0%
4.0%
71
46

Q2 YTD
1,466
1,271
195
1,002
68.3%
823
56.1%
179
101
78
12.2%
8.0%
39.7%
177
117

Amount% Change / Diff.
231
18.7%
148
13.2%
83
73.8%
163
19.4%
0.4%
55
7.2%
-6.0%
107
150.3%
34
51.0%
73
1643.3%
6.4%
2.0%
35.8%
107
151.0%
71
155.7%(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary

19/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

Meanwhile, in the EC PF Segment, sales had increased largely by 73.8%
from the previous H1’s Y112 million to Y195 million in this H1 thanks to
the EC transactions boom. Since the segment is based on a business modelwith a high marginal profit ratio, the segment’s operating profit had also
increased sharply by 1,643.3% from Y4 million to Y78 million.

w Profit of the EC PF Segment,
which has a high marginal
profit ratio, increased by 17x
YoY due to the sales growth.

Trends in Margins and Profit/Loss
The gross margin slightly improved from 67.9% in the previous H1 to 68.3%
in this H1 (Figure 17). Furthermore, since the SG&A expenses only increasedby 7.2%, which is much smaller than the sales growth rate (+18.7%), the ratioof SG&A expenses to sales decreased by 6.0 percentage points from 62.1%
to 56.1% in the same order as above. As a result, H1 operating margin
improved by 6.4 percentage points from 5.8% to 12.2%.

w SG&A expenses ratio
became smaller, leading to asignificant improvement in
operating margin.

【Figure 17】Transition in SG&A Expenses Ratio and Profit Margins (Unit: %)Gross margin

（％）

80.0
70.0

63.8

66.5

O.P. margin

64.7

65.3

60.0
50.0
40.0
30.0
20.0

59.9
45.4
18.3

SG&A expenses ratio
71.4
65.9

70.8
66.9

49.3

70.0

59.4

42.1

68.3

56.1

24.4
15.4
5.4

10.0

3.9

10.6

12.2

FY 2020H1 FY 2021

-5.5

0.0
-10.0
FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary and financial results briefing materials

w Profit increased thanks tosales growth and cost
control. Both PFs
contributed to thisachievement.

Analysis of Factors that Increased/Decreased Profit in H1
The factors that increased or decreased profit in H1 are summarized in Figure
18 on page 21. The sales growth of the Marketing PF Segment (+Y148
million YoY) and the EC PF Segment (+Y83 million YoY) both contributed
significantly to the profit growth.
Regarding costs, the following were the main factors that decreased profit:
Y64 million from the decrease in the amount transferred to proprietary assets( ⇒ increase in expenses recorded during the period), increase indepreciation and goodwill amortization expenses by Y31 million, andincrease in personnel expenses by Y45 million.
The increase in goodwill amortization was due to the acquisition ofbusinesses including ADPLAN, and the increase in personnel expenses wasfrom increasing employees for the new businesses. Both expenses were
upfront investments and were for positive reasons.
Meanwhile, profit increased due to the following decrease in costs: the reviewof the sales agency system had led to a decrease in fees paid to sales agencies
by Y21 million, travel expenses decreased by Y16 million due to COVID-19,
and advertising expenses decreased by Y10 million.
20/30

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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18【Figure 18】Factors that Affected Operating Profit in the First Half of FY 2021 (YoY comparison)
Increase

Decrease(million yen)

350

83

300

Expenses decreased
with fewer travel
due to COVID-19
and review ofcommuting expense

Decreased due tochange in items
transferred tosoftware assets-7

With therevision of thesales agency
system, fees
paid decreased
YoY

250

148

-45
-31

200

100

71

178

10

-64

-9

-15

Costs such assystem costs for
adoption of
remote work
increased

50

0

YoY
16

21

Due to M&A
conducted in Last
FY's H1, goodwill
amortization
increased

150＋150.3％

EC PF
sales
growth

FY 2020 Marketing
PF salesH1
growthOperatingprofitIncreased
server cost

Increased
personnel
expenseIncreasd
Increased
depreciation expenses
and goodwill related toamortization transfer to
expenses
proprietary
assetsIncreeased
supplies
expenseDecrease in Decreased
otheradvertisingexpenses
expenseDecrease in Decreased
travelfees paid tosales agencies expense

FY 2021
H1
Operatingprofit(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials

w Record-high sales and net
profit in both Q1 and Q2.

Quarterly Change in Results
In both the first quarter (Q1) and the second quarter (Q2) of this fiscal year,
sales grew YoY at a double-digit rate and record-high sales and profit wereachieved.

w Since achieving an
operating profit in aturnaround for the first timein 7 quarters, it has been
maintaining an operating
profit for 9 consecutive
quarters.

Also, the quarterly change in operating profit (Figure 19) shows that theCompany had posted losses from Q4 FY 2017 (Jul-Sep 2017) to Q1 FY 2019
(Oct-Dec 2019). However, in Q2 FY 2019, it posted a profit for the first timein seven quarters. Since then, it has been maintaining an operating profit fornine consecutive quarters through Q2 FY 2021 (Jan-Mar 2021). This has been
due to the improvement in gross margin and SG&A expenses ratio caused by
the sales growth of AD EBiS, withdrawal from the non-core businesses,
improvement in EC-CUBE’s profit, acquisition of promising businesses,
transition in business model from pay-per-use to flat-rate subscription, cost
control, and other factors.

w Shifted its business plan
toward emphasizing growthin terms of profit. Positive
results seen from thebusiness restructuring andthe shift to the fixedpayment business model.

【Figure 19】Quarterly Transition in Operating Profit(million yen)

Strategic Investment Phase

140

Growth Phase
Solid revenue from payment
settlement fees thanks to the ECboom admist the COVID-19 crisis

Marketing Platform Segment

120

Gradualwithdrawal fromEC contract dev.
business

EC Platform Segment

100

35

80

40
20

24

28

22 19

43
9

Change incompany
nameAcquired
AdRepo41

60

Q2 Operating
Profit

35

33

11

22
67 69

35 36 41 35 41

38

46

30

13
77

4
36

Acquired
ADPLAN＋80.5%
YoY

45 50

52
25

0

17

17
60

-1

30

15

14 12

-8 -11-38 -44 -37

-20

-23

-15
-1

33
9
3

79
8

51 51

15

-21

-4

-5

Increased
profit due toasset transfer
following
major function
development

-40

-3

47 53

Decreased profit
due to change in
items
transferred toassets-60
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials

21/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18
w Positive FCF maintainedfor 2 consecutive quarters.

Semi-Annual Change in Cash Flow
Looking at semi-annual results, we can see that free cash flow (FCF) had been
negative during the period that the Company had been actively making
investments. However, with profit growth and the completion of theinvestment phase, FCF has turned positive (Figure 20).

【Figure 20】Semi-Annual Change in Cash Flow
Unit: million yen
Operating CF ①
Investing CF ②
Financing CF
FCF（①+②）
Cash and Deposits (on B/S)FY 2015
H2
15
148
-5
-27
-3
0
9
121
666
787

H1

FY 2016
H1

FY 2017
H2

48
-80
-16
-32
738

H1
93
-69
3
24
762

FY 2018
H2

121
-88
-31
33
764

23
-106
-0
-83
681

H1

FY 2019
H2

7
-94
169
-88
760

9
-118
542
-110
1,194

H1
99
-368
162
-269
924

FY 2020
H2
109
-158
-262
-50
774

H1
92
-409
391
-317
847

H2
429
-101
-56
328
1,119

FY 2021
H1
241
-35
-1
206
1,342

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary◆ The Company’s Financial Forecast for FY 2021 (fullyear)
w No change to this fiscal
year’s financial forecast.
Expecting record-highsales and double-digit
profit growth for the fullyear.

Full-Year Forecast
The Company has not changed its forecast for the full year that it will achievea double-digit sales and profit growth: sales of Y3,000 million (+14.6%
YoY), operating profit of Y330 million (+19.2% YoY), recurring profit of
Y320 million (+22.5% YoY), and net profit of Y210 million (+14.5% YoY).
This means that sales are expected to increase consecutively for 12 fiscal
years, and each of the profit is expected come close to their record highs.
Current Situation (monthly sales)
As described previously, the impact of the COVID-19 crisis on financial
results has been small because demand for non-face-to-face businesses such
as EC has been firm, the Company’s business is mostly based on a
subscription-based business model, and its business operations are highly
compatible with remote work.

w Solid sales maintained in
April, the first month of
H2, as well. Minimal
impact of COVID-19.

Figure 21 on page 23 shows the monthly change in sales over recent years
that the Company has disclosed. Sales in April alone, the first month of thesecond half, were Y249 million for the entire company. This was a 15.0%
growth from the same period of the previous fiscal year, indicating that theCompany has maintained a double-digit growth rate. Although stagnation
has been seen in economic activities due to another emergency declarationin response to the COVID-19 crisis, the Company’s fundamentals haveremained solid.
By segment, the main Marketing PF Segment’s sales had increased by 8.3%
YoY in April, somewhat slowing down in growth speed. On the other hand,the EC PF Segment’s sales had grown significantly by 86.2% YoY in April.
The sum of all sales during this fiscal year so far from October 2020 to April
2021 (sum of flash-report monthly sales values) for the entire company was
Y1,716 million, a 18.2% growth YoY. This growth rate exceeds theCompany’s expected sales growth rate of 14.6% for the full year.
Also, sales during the same period of the previous fiscal year were Y1,452
million, and progress in terms of the actual full-year sales was 55.4%. Thisfiscal year’s progress has been slightly faster during this same period, at
57.2% of the Company’s full-year plan.
22/30

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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18【Figure 21】Recent Monthly Change in Sales (flash report)(Upper row: sales; unit = thousand yen, with decimal places cut off)
(Lower row: YoY change; unit = %)Calendar Year

2020

2021

Fiscal Year
Monthly Sales
MarketingPlatform

EC Platform

Entire Company

FY 2021 YTD(Oct 2020 Apr 2021)

FY 2021
Oct

Nov

Dec

Jan

Feb

Mar

Apr

203,942205,256

212,307

206,412

216,511

226,457

214,535

121.8

118.5

116.0

102.8

109.8

112.7

108.3

112.5

35,69936,38628,356

39,511

29,247

26,297

34,582230,078

1,485,420

136.4

206.7

157.4

151.4

181.4

311.2

186.2

175.7

239,641

241,642

240,664

245,924

245,758

252,755

249,118

1,715,502

123.8

126.6

119.7

108.4

115.2

120.7

115.0

118.2

(Ref) Prepared by Alpha-Win Research Dept. from the monthly announcements posted on the Company’s website.
(Note) The values shown are preliminary data before an audit by an auditor and may be revised in the future.

Plan for H2
Concerning the business plan for this fiscal year, the Company has stated that“in the first year of the medium-term business plan, VISION 2023, we will
focus on accelerating the growth of the existing services as well as creatinga new growth driver.”In H2, the Company plans to continue cost control while also putting
resources into areas whose competitiveness needs improvement and in areasof growth. It also plans to actively invest in new business development.

w In H2, the Company
expects sales to grow by
10.9% YoY and operating
profit to decline
significantly by 26.4% YoY.
w Compared to H1, sales
growth and profit decline
are expected.
w In H2, the Company plansto actively invest, mainly in
new businessdevelopment. As a result,operating margin is
expected to slightly
worsen.

Goals for H2
The Company’s forecast for H2, calculated by subtracting the H1 resultsfrom the full-year forecast, is as follows: sales of Y1,534 million (+10.9%
YoY), operating profit of Y151 million (-26.4% YoY), recurring profit ofY143 million (-25.1% YoY), and net profit of Y93 million (-32.4% YoY).
Compared to this H1, the Company is expecting sales to increase by 4.6%
and operating profit to decrease by 15.4% in H2 (compared to H1, +Y67
million in sales and -Y28 million in profit). It is also expecting operating
margin to worsen from 5.8% in the previous fiscal year’s H1, 14.9% in theprevious fiscal year’s H2, and 12.2% in this H1, to 9.9% in this H2.
As explained previously, these predictions are mostly due to the Company’s
expectation that gross margin will worsen and SG&A expenses ratio will risein H2 following the enhancement of the existing businesses, development of
new businesses, and upfront investment for future growth.

23/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18◆ Alpha-Win Research Dept.’s Financial Forecast for FY
2021 (full year)
w Alpha-Win revised the profit
forecast for this full fiscal
year upward. The Company’s
estimates seem conservative.

w Regarding full-year estimatesfor AD EBiS, the number ofaccounts was revised down
while the unit price wasrevised up.

Revisions to This Fiscal Year’s Forecast
We believe that the Company is highly likely to achieve its planned sales andprofit for this full fiscal year. Considering the H1 results, the current situation,and interview with the Company, we made revisions to our full-year forecast
for profit (Figure 22). The reasons are listed below.
1. H1 results were solid, and profit seems to have exceeded the Company’splan. Progress rate for operating profit was also high, at 53.9%.
2. Additionally, a steady growth of 15% was seen in the sales of the entire
company in April.
3. The Company’s estimated profit and profit margin for H2 seem
conservative compared to the previous fiscal year’s H2 and this fiscal
year’s H1.
Since the number of active accounts of AD EBiS had been smaller than we
had expected, we revised down our estimate of its annual average. On theother hand, we revised the estimated average unit price upward. Since we
had also revised up the predicted sales of the business for advertising
agencies and the new businesses, this downward revision was mostly offset,
resulting in only a slight downward revision of the Marketing PF’s sales(from the previously predicted Y2,630 million ⇒ current forecast ofY2,550 million; the same order applies below).
Since the EC PF has been extremely solid in contrast, we revised its sales
upward (Y370 million ⇒ Y450 million). There is very little concern thatthe planned profit will not be achieved, especially since the Company has
been continuing to control costs within a target range.

w Sales of EC PF have been
extremely strong.

In sum, we have kept our forecast for full-year sales the same (Y3,000
million), but revised our forecast for operating profit upward by Y20 million(previous forecast of Y330 million → new forecast of Y350 million). We
also raised our forecast for recurring profit and net profit accordingly.
w In making the financial
forecast, we assumed that
there will be no large M&A
in H2.

Company or business acquisitions will bring factors of uncertainty regarding
sales and various costs, but we have assumed that there will be no new large
M&As during H2.

【Figure 22】Alpha-Win Research Dept.’s Revised Forecast for This Fiscal Year and Medium-Term Forecast(million yen)
Sales
Marketing PF
EC PF
Gross Profit
Gross Margin
SG&A Expenses
Ratio to sales
Operating Profit
Ratio to sales
Recurring Profit
Ratio to sales
Net Profit
Ratio to sales
KPI
AD EBiS: # of active accounts% change for the above
AD EBiS: average unit price (yen)% change for the above
Sales (YoY growth rate)
Marketing PF
EC PF
Gross Margin (diff. from last FY)
SG&A Expense (growth rate)
Operating Profit (growth rate)
Recurring Profit (growth rate)
Net Profit (growth rate)

FY 2018 A

FY 2019 A

1,805
1,530
274
1,190
65.9%
1,289
71.4%
-98
-5.5%
-115
-6.4%
-89
-4.9%
Annual Average (A)
1,476

2,204
1,951
253
1,561
70.8%
1,476
66.9%
85
3.9%
79
3.6%
-35
-1.6%
Annual Average (A)
1,486
0.7%
98,517
24.8%
22.1%
27.5%
-7.6%
4.9%
14.5%
To profit
To profit
Smaller loss

78,9385.0%
21.9%-41.1%-0.3%
25.1%
To loss
To loss
To loss

FY 2020 CE
2,700

200
7.4%
190
7.0%
130
4.8%

FY 2020 E

FY 2020 A

2,650
2,400
250
1,830
69.1%
1,630
61.5%
200
7.5%
190
7.2%
130
4.9%
Annual Average (E)
1,500
0.9%
125,000
26.9%
20.2%
23.0%
-1.3%
-1.7%
10.5%
135.5%
140.4%
To profit

2,618
2,318
301
1,832
70.0%
1,555
59.4%
276
10.5%
261
10.0%
183
7.0%
Annual Average (A)
1,475
-0.7%
120,629
22.4%
18.8%
18.8%
18.8%
-0.8%
5.4%
225.0%
230.3%
To profit

FY 2021 CE
3,000

330
11.0%
320
10.7%
210
7.0%

FY 2021 E

FY 2022 E

FY 2023 E

3,000
2,550
450
2,080
69.3%
1,730
57.7%
350
11.7%
340
11.3%
225
7.5%
Annual Average (E)
1,350
-8.5%
142,000
17.7%
14.6%
10.0%
49.6%
-0.6%
11.3%
26.8%
30.3%
23.0%

3,390
2,890
500
2,380
70.2%
2,000
59.0%
400
11.8%
390
11.5%
265
7.8%
Annual Average (E)
1,360
0.7%
155,000
9.2%
13.0%
13.3%
11.1%
0.9%
15.6%
14.3%
14.7%
17.8%

3,860
3,310
550
2,750
71.2%
2,270
58.8%
480
12.4%
470
12.2%
320
8.3%
Annual Average (E)
1,400
2.9%
165,000
6.5%
13.9%
14.5%
10.0%
1.0%
13.5%
20.0%
20.5%
20.8%

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary.
(Note) CE: the Company’s forecast/estimate. E: Alpha-Win’s forecast/estimate. Alpha-Win’s estimates for AD EBiS’s average unit priceand number of active accounts are annual averages and therefore they differ from the Company’s estimates (which are averages of the endof the last month of each quarter). Actual results (A) are simple averages of end-of-the-quarter figures.

24/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

8．Growth Strategy◆ The Company’s Medium- to Long-Term Business Planand Strategy

w Working on the MXPStrategy to support the DXof customers.

Medium-Term Business Plan
The Company set out a plan called the MXP Strategy (MXP stands for“Marketing Transformation Platform”) strategy. In this strategy, theCompany plans to evolve its business into a platform business that supports
the marketing DX of companies in Japan.

w Expanding the services foradvertising agencies andthe new services in
addition to the existing
businesses.

In the MXP Strategy, the Marketing PF Segment is divided into three
categories (the existing businesses, services for advertising agencies, and newservices), and the Company will work on expanding business in each area
(Figure 23). In addition to further developing its current areas of strength, ordata measurement and analysis, it will leverage these strengths, as well as
releasing originally developed products and conducting M&As, to develop
multiple new services. Also, to accelerate its progress with the advertising
agency business, it will support the DX and streamlining of operation by
advertising agencies.

w Strategy to increase theaverage unit price andnumber of customers.

In each business area, the Company plans to increase sales along two
directions: increasing the number of customers (target customers) and raising
the average unit price through cross-selling and up-selling.

【Figure 23】MXP Strategy
Aim for higher average unit price and more customers
Higher average unit price(3) Development of multiple new services
・Original
development
・M&A(2) Accelerated
growth of services
for advertising
agencies

Business area

Cross-selling to existingcustomers(1) Expansion of existing services

Target customer

More corporate
customers(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials,
with partial revisions.

w Ambitious goals for the
medium term.
w Aiming for sales of Y5
billion, operating margin of
15%, and DOE of 3% orgreater for the final year of
the medium-term plan or
FY 2023.

The Company has announced its medium-term business plan (VISION 2023).
In its final year or FY 2023, the Company plans to achieve the following
targets: sales of Y5 billion (Y3 billion planned for this fiscal year; +66% or+Y2 billion in sales from this fiscal year), operating margin of 15% (+4%from this fiscal year’s plan of 11%; the target operating profit is greater than
Y750 million, meaning that it is expected to grow by Y420 million or 127%
from the Y330 million expected for this fiscal year), and dividend on equity
ratio (DOE) of 3% or greater (2% planned for this fiscal year) (Figure 24 on
page 26).
These are high goals compared to this fiscal year’s plan. To achieve the goals,
the Company plans to work on accelerating growth by developing its existingcore businesses and the new businesses that it is currently focusing on, as wellas through the creation of a new platform business.
25/30

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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18【Figure 24】Medium-Term Business Plan

VISION 2023

5B yenConsolidated
operatingmargin15%

Dividend on
equity (DOE)

3% orgreater

EC PF

Marketing PF (3)New services
Marketing PF (2)Services for advertising agencies
Marketing PF (1)Existing services

FY 2021

FY 2023

Business area expansion

Consolidated
sales

FY 2030(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials, with partial additions and revisions.

Cost of the Marketing PF, the main segment, is controlled through thefollowing five categories, with medium-term cost goals set for each (in termsof the ratio to sales): “marketing and sales,” “development,” “customer
success,” “other indirect expenses,” and “new business development” thatwas newly added this fiscal year. For operating margin, which reflects theresult of cost control, the Company is aiming to achieve 10-20% for theMarketing PF. An operating margin of 12.1 % has already been achieved inthis fiscal year’s H1, and the full-year forecast of 11% is also within the target
range.

w Over the medium to longterm, growth of theMarketing PF Segment’s
new services is expected tocontribute significantly toresults.

w In achieving the goals,
M&A and alliances are also
possible options. Results
will be affected by whether
there will be M&As andwhether they will succeed.
Over the medium to longterm, the Company hopes
to maintain profit growth
while also improving the
top line. ROIC will also be
key going forward.

Long-Term Plan
According to the most recent financial results briefing materials, the target
period of the long-term business plan has been extended by four years fromthe previous “FY 2021 to FY 2026” to “FY 2021 to FY 2030” (right-handside of the graph in Figure 24). The basic trend of the growth curve has notchanged, but compared to the previous version, the proportion of the expected
growth of the new services in the Marketing PF segment has become larger.
Breakdown of sales and other specific goals and measures have not beenclarified. However, judging from the graph’s scale (the Company hadcommented that the graph was created so that its scale is close to realistic
figures), it seems that the Company is expecting the total sales in FY 2030 tobe about Y16.5 billion, or more than three times greater than the sales goal
for FY 2023 (percent of total sales for the Marketing PF Segment’s existing
services, services for advertising agencies, and new services and for the EC
PF Segment is estimated to be 45, 10, 35, and 10, respectively).
If the economic situation normalizes, the Company will most likely not only
accelerate growth through organic growth but also consider other possibilities
such as active engagement in M&As and alliances.
Going forward, the balance between investment for growth and future return,or return on invested capital (ROIC), will likely become key to each project.

26/30
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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18◆ Alpha-Win Research Dept’s Forecast for Financial

Results over the Medium Termw Alpha-Win revised theforecast for the medium
term, starting next FY. We
expect double-digit sales
and profit growth next FY
as well as the year after thenext.

w Over the medium term, we
expect a profit growth rateof 20% per year.

Medium-Term Forecast
The domestic DX market for corporate Internet marketing activities, which
the Company is focusing on, has a high growth potential. Therefore,
assuming that the impact of COVID-19 will gradually become smaller andthe economy will also normalize, we expect the Company to achieve adouble-digit growth in sales and profit in FY 2022 as well as FY 2023.
In its main segment, or the Marketing PF Segment, up-selling and crossselling of AD EBiS are expected to help raise the unit price so that AD EBiS
will continue to be the growth driver. In addition, in the Marketing PF
Segment, continuous improvements in profit are expected from theCompany’s control of operations based on medium-term goals for cost ratios
and also as a result of its past measures.
Currently, the cash flow of the existing businesses is improving and theCompany is in the stage of shifting resources to new or related areas ofbusiness. Going forward, growth is expected to accelerate with thedevelopment of the new businesses as well as active engagement in M&As
and business alliances with other companies. Over the medium term, we
believe that the Company may potentially maintain an annual profit growthof about 20%.
We only revised up the profit forecast for next fiscal year, and kept the sales
for next fiscal year and all forecast for the fiscal year after the next the same
(Figure A on page 2 and Figure 22 on page 24).

w For next FY, we only
revised profit upward.
Record-high profit is also
possible. Kept the forecast
for the year after the next
the same.

Like the forecast for this fiscal year, we also revised down the expected
number of active accounts of AD EBiS and the predicted sales of AD EBiS
for FY 2022. However, this downward revision to sales was offset by the
upward revision to the sales of the EC PF Segment.
In the EC Platform Segment, we believe that business will be solid since theEC market is expected to continue to grow at a high, stable rate and theCompany is expected to create synergy with Orico in the alliance and start
new strategies for new value creation.
Although there will be costs related to upfront investment for new businesses,
profit margins are expected to be improved through cost reduction (server
costs, etc.). Consequently, we revised operating profit upward from Y380
million to Y400 million. We also raised our forecast for recurring profit andnet profit accordingly.
Next fiscal year, we believe that the Company may achieve record-highprofits for the first time in seven fiscal years (operating profit of Y350 million
and net profit of 230 million achieved in FY 2015). If that is achieved, thendividend may also be raised.
For FY 2023, we only made a downward revision to the number of active
accounts of AD EBiS. However, since the Marketing PF Segment’s businessfor advertising agencies is expected to make a full contribution to results andthe new services will begin to yield results as well, we revised our sales
forecast for those two businesses upward. In sum, there is no change to theoverall forecast (sales and profits).
27/30

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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

9． Analyst’s View◆

Shareholder Return

The Company had been paying dividend since becoming listed on the market,
but in FY 2018 and FY 2019, it stopped paying dividend due to theconsecutive posting of net loss. It also abolished the shareholder benefit
program at the same time.

w This FY, dividend wasrevised upward.

Due to the recovery of financial performance, the Company had resumed
dividend in FY 2020 (4 yen / share) and had also initially planned to increase
dividend to 4.5 yen per share during this fiscal year. However, because
shareholders’ equity had increased due to the sales of 10% of its subsidiary
EC-CUBE’s shares, it announced that it will now increase this fiscal year’s
dividend to 5.0 yen per share (Figure 25). This dividend hike reflects theCompany’s current policy to set dividend so that the consolidated dividendon equity ratio (DOE) is 2%.

w Over the medium term,
DOE is planned to beraised from 2% to 3%.

One of the Company’s goals is to raise DOE to 3% or greater in FY 2023.
Additionally, the Company is still in the growth phase and a profit growthtrend is expected. Due to these two factors, dividend is expected to increaseover the medium term.
In response to the increase in the Company’s expected dividend for this fiscal
year, Alpha-Win also raised the expected dividend for this fiscal year from
4.5 yen per share to 5 yen per share. For FY 2022, we had previously
predicted that the DOE will be 2%, but we now expect the Company togradually raise the DOE toward the 3% goal for FY 2023. Consequently, werevised the expected DOE to 2.5%. As a result, we raised the expected
dividend from the previous 5.3 yen per share to 7 yen per share.

【Figure 25】Change in Dividend and Dividend Payout Ratio
(Y)

（％）

50.0

10.0

45.0

9.0

44.0

Dividend

40.0

8.0
Dividend payout ratio

9.30

35.0

7.0

30.0

6.0
7.00

25.0

5.0

20.0

4.0

18.6

15.0
10.0

13.8
4.50

12.9

5.00

18.4
3.0

14.0

2.0

4.00

0.00
FY 2015

FY 2016

FY 2017

1.0

0.0
0.00

0.0

w Volatility of stock price ishigh. Recent stock pricehas been somewhat
bearish due to correctionsin the stock price of smallcap stocks in general.

17.0

5.00

5.0

(14) AdTech (ad technology):
A generic term for
information technology usedin advertising business, it
refers to the digital technology
used in Internet ads, etc.

5.00

FY 2018

FY 2019

0.0
0.0
FY 2020

FY 2021 E

FY 2022 E

FY 2023 E(Ref) Prepared by Alpha-Win Research Dept. E: Alpha-Win’s forecast/estimate.

◆ Stock Price, Characteristics, and Factors that May
Affect Stock Price
Stock Price and Trends
The Company’s stock is a small-cap, AdTech14-related stock listed on TSE
Mothers. Since becoming listed, the volatility of stock price has been high(max of 5,260 yen in May 2016 and min of 677 yen in August 2015). Stockprice was bearish during the period that the Company’s financial performance
had been worsening. However, with profit recovery, it had bottomed out and
28/30

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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18

has been fluctuating within a boxed range of 1,000 to 2,000 yen over the past
four years.
Despite the severe economic environment amidst the COVID-19 crisis, theCompany’s financial performance has been solid and its stock price had been
rising since March 2020. However, in a reactionary fall from this heightened
price as well as due to the market’s preference for economically sensitive
stocks and the worsening of stock demand that has caused the market to bebearish for small-cap growth stocks in general, the Company’s stock pricehas been underperforming the TSE Mothers, TOPIX, and other various
indices since the beginning of the year (Figure 26).

【Figure 26】Comparison of Performance Since the Beginning of the Year (based on closing price)
YRGLM
TSE Mothers
TOPIX

12/30/2020
1,628.00
1,196.49
1,804.66

5/21/2021
1,255.00
1,128.66
1,904.69

Performance-22.9%-5.7%
5.5%(Ref) Prepared by Alpha-Win Research Dept.

w No cheapness to valuation
based on this fiscal year’s
figures.

(15) P/S: Ratio of stock price tosales = market capitalization /sales

w Considering its PEG andmedium-term financial
results, the current stock
price is at a level that could
be considered forinvestment.

Valuation
As reference, the overall size, business, and valuation of 28 listed companies
in Ad-Tech-related or partially similar businesses, including the Company,
were compared (Figure 27 on page 30; financial forecasts are from eachcompany’s most recent announced figures).
When compared based on this fiscal year’s forecasted financial results, there
is no cheapness to the Company’s valuation (P/E of 36.9, P/B of 5.2, P/S15 of
2.6, and dividend yield of 0.4%). Valuation seems expensive compared to theaverage of the First Section of the TSE (P/E of 16.0, P/B of 1.3, and dividend
yield of 1.8% on a simple average), but this is most likely because
anticipation of profit growth over the medium term is reflected in the stock
price to some degree.
The Company’s PEG is about 1.8 (expected P/E for this fiscal year ÷ annual
profit growth rate estimated by Alpha-Win = 35.2 ÷ 20%). Since this PEG
ratio is smaller than 2, the Company can be considered as a possible
investment target with regards to growth potential (the estimated P/E basedon Alpha-Win’s financial forecast is 30.5 for next fiscal year and 24.8 for theyear after the next).
Key Points to Watch Going Forward
Going forward, stock price may be affected by the following factors: trends
in monthly sales (YoY), quarterly changes (profit growth rate, profit margins,
and AD EBiS’s average unit price and number of active accounts), the final
financial results for this fiscal year, announcement of M&As or alliances,announcement of new functions, and the release of new services and products
and their contribution to financial results.

w Should watch the stock as
an AdTech- and EC-related
growth stock that isoriented toward domestic
demand.

Over the medium to long term, the Company's business has a large growthpotential since the Internet advertising market and the EC market are
expected to continue to expand. We are hoping to see its growth as an
AdTech- and EC-related growth stock that is oriented toward domestic
demand and not directly largely influenced by COVID-19, trade wars, andexchange rates.
29/30

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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of 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: 5/24/2021

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18【Figure 27】Comparison with Similar Companies (AdTech-related companies)
AdTech-Related Companies
Code
2159
2389
2461
2491
3134
3655
3688
3690
3853
3923
4293
4395
4751
4784
6038
6045
6081
6094
6175
6533
6553
6562

Markets: TSE1=TSE 1st Section, TSE2=TSE 2nd Section, TM=TSE
Mothers, JQS=JASDAQ

Company NameBusiness Area

Full Speed

Internet marketing / AdTech (Internet Ad distribution tech)MarketTSE2

DIGITAL HD

Internet ad agency / ad measurement tool

TSE1

Affiliate (pay-per-performance) ad

TSE1
TSE1

F@N Communications
ValueCommerce

Affiliate (pay-per-performance) ad

Hamee

Mobile accessories / EC cloud support

BrainPad

Internet marketing / data analysis

CARTA HD

Ad platformYRGLM Inc.

Internet ad measurement tool

Asteria

Packaged software

RAKUS

Cloud service / Email delivery / IT engineer dispatching

SEPTENI HD

Internet ad agency / smartphone marketing support

TSE1
TSE1
TSE1

TM
TSE1
TM
JQS

AccreteSMS delivery service

TM

CyberAgentInternet ad agency / smartphone / games

GMO AD Partners

Internet ad agency and related platform

TSE1
JQS

iiD

Contents marketing platform

Rentracks

Pay-per-performance Internet ad service

Allied Architects

SNS-related marketing support

FreakOut HD

Internet ad delivery (DSP)

Net Marketing

Pay-per-performance ad agency

Orchestra HD

Digital marketing for companies

SoldOut

Web marketing support for mid-tier companies/SMEs

GenieeAutomatic trading of media ad space / AdTech biz

TM
TM
TM
TM
TSE1
TSE1
TSE1
TM

Simple average of 22 AdTech-related companies (which have not forecasted a net loss)
Average of TOPIX (closing price on 5/21/2021)
6026
6550

GMO TECH

App-installation-type charging ad / SEO

Fringe81

Internet ad agency, media monetization support

TM
TM

Markets: TSE1=TSE 1st Section, TSE2=TSE 2nd Section, TM=TSE
Mothers, JQS=JASDAQ
CodeCompany NameBusiness Area
MarketEC website dev. package / selling merchandise to companies
3371
SOFT CREATE HD
TSE1
EstoreEC website development / online shopping support
4304
JQS
Cloud commerce platform
4057
InterfactoryTM
4496
Commerce One Holdings EC website mgmt support for mid-tier/SME EC website mgmt companies
TM
Simple average of 4 EC-platform-related companies (which have not forecasted a net loss)
E commerce platform / online settlements
4477
BASE
TM

EC-Platform-Related Companies

Unit: million yen
Market Cap.
6,649
49,35029,849109,101
25,06740,884
44,598
7,997
14,675
369,681
65,985
7,630
1,092,326
8,747
4,466
4,514
13,232
25,574
7,651
30,15817,12521,44190,759Sales
20,200100,000
28,90032,70012,832
7,125
24,5003,000
ND
ND
21,5002,171
600,000
35,500
ND
2,224
5,160
27,00014,40014,20022,60013,582
51,979

2,430
5,249

2,800
1,985

Unit: million yen
Market Cap.
33,308
11,322
8,741
17,183
17,639
182,878

Sales
19,200
5,900
2,121
2,841
7,516
10,143

Ratio

%
O.P.
700
12,000
2,720
7,400
1,778
770
3,800
330
ND
ND
4,000
373
60,000
410
ND
618
520
200
400
870
470
740
5,163

O.P. Margin
3.5
12.0
9.4
22.6
13.9
10.8
15.5
11.0
18.6
17.2
10.0
1.2
27.8
10.1
0.7
2.8
6.1
2.1
5.4
10.6

P/S
0.33
0.49
1.03
3.34
1.95
5.74
1.82
2.67
3.07
3.51
1.82
0.25
2.03
2.56
0.95
0.53
2.12
0.76
1.58
1.92

-1,000
-235

-35.7
-11.8

0.87
2.64

%
O.P.
O.P. Margin
3,550
18.5
1,020
17.3
205
9.7
632
22.2
1,352
16.9
-1,181
-11.6

P/E
15.33
15.10
34.08
19.36
73.66
18.34
37.73
21.07
29.64
43.61
29.91
14.39
28.33
55.84
31.17
16.04
NA
NA

%
P/B
1.55
1.49
1.46
7.90
4.13
9.17
1.76
5.28
2.46
47.13
3.45
5.69
10.90
1.52
1.43
1.98
6.55
3.77
2.64
7.42
5.82
8.08
6.43
1.29

4.90
1.36
0.52
0.00
2.86
0.40
0.09
0.74
0.46
1.69
0.00
1.77
0.00
0.00
1.16
0.26
1.01
1.80
(weighted 2.02)
3.02
0.00
18.13
0.00

Ratio
P/S
1.73
1.92
4.12
6.05
3.46
18.03

P/E
16.07
63.69
39.73
39.83
NA

Dividend Yield

%
P/B
2.52
4.48
9.47
9.49
6.49
11.25

Dividend Yield
1.24
1.53
0.00
0.00
0.69
0.00

Closing Price（ 5/21 ）Stock Price
427
2,072
388
3,165
1,546
5,500
1,747
1,255
839
2,040
475
1,354
2,160
522
891
566
939
1,511
517
3,080
1,634
1,188
1,904.69
2,208
440
Closing Price（ 5/21 ）Stock Price
2,418
2,097
2,222
2,284

(Ref) Prepared by Alpha-Win Research Dept. from the companies’ websites, securities reports, financial results summaries, and financial
results briefing materials.
(Note) Generally, each company’s forecasted values from their latest financial results disclosure (latest quarterly financial results) or themost recent actual results (BPS, etc.) were used (based on disclosed data available as of May 14). For forecasts disclosed as ranges, as a
general rule, the median was used for calculations. For the Company, Alpha-Win Research Dept.’s forecast was used. For other companies,
when sales, operating profit, EPS, or expected dividend were not disclosed, they were marked by “ND” (not determined) or “-”. The average
was calculated using only valid figures.

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Disclaimers
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MV20210531-1500

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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 inthis Report 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 basedon 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 the use 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 theirinvestment. Intellectual property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

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