Alpha-Win Company Research ReportYRGLM Inc. (3690 TSE Growth)
Issued: 6/6/2022● 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 incredibly high market share (No.1 in the market). It is a leading company in a niche field. Its services are provided
in cloud format to mid-tier and large companies.
・The Company's strengths are its employees with high technological capabilities and expertise in DX (enabling highly
accurate data measurement), its big data that it has been accumulating as the frontrunner in the field, and its networkof more than 500 partner companies.
・Its main business is based on a continuous and stable subscription model. Under this model, sales and profit can beincreased continuously through the increase in AD EBiS’s unit price and number of customers, which are its KPIs.
・It had been working on a business model shift and the selection/focus of business portfolio, but this businessrestructuring has been completed and its earning power has started to improve. As a result, in recent years, it has been
growing sales at a double-digit rate and stably posting profit.
First-Half Results and Financial Forecast for This Fiscal Year・Consolidated financial results for the first half of this fiscal year (first half or Q2 YTD of FY 2022: note that theCompany’s fiscal year is September-ending, i.e., FY 2022 ends in September 2022) were as follows: sales increasedby 7.8% YoY to Y1,581 million, operating profit decreased by 1.3% YoY to Y176 million, and net profit also
decreased by 10.5% to Y104 million. Sales increased but profits declined. Although the forecast for the first half is
not announced, both sales and profits seem to have been below the Company’s internal plan.
・This was because (1) in the Marketing PF segment, the unit price of its core business AD EBiS had increased forthe 16th consecutive quarter, but the amount and rate of increase had slowed down and the acquisition of new
customers was less than expected and (2) in the EC PF segment, the shopping settlement fee of EC-CUBE, which
has a high profit margin, ended up smaller than expected due to intensifying competition, and costs had also increased
due to strengthened investment.
・The net profits have helped accumulate capital, causing the equity ratio to rise to 54.0% as of the end of March 2022.
The Company is essentially debtless and financially sound.
・Based on the results of the first half, the Company revised down its full-year financial forecast from the forecast
made at the beginning of the fiscal year. Sales were revised from Y3,600 million (+21.7% YoY) ⇒ Y3,400 million(+15.0% YoY), operating profit was revised from Y470 million (+28.6% YoY) ⇒ Y340 million (-7.0% YoY), andnet profit was revised from Y320 million (+33.5% YoY) ⇒ Y210 million (-12.4% YoY). Contrary to the initialexpectation of profit growth, profits have now been revised to decrease. Since the Company is aiming for a DOE of
2.5% for this fiscal year, it also reduced the annual dividend per share from 7.5 yen ⇒ 7.0 yen. However, this stillmeans a 1.8 yen increase in dividend compared to the previous fiscal year.
・Alpha-Win Research Department had predicted that, compared to the Company’s initial plan, sales would be Y100
million smaller at Y3,500 million and operating profit would be the same at Y470 million. However, the Company’s
revised plan is now lower than these, most likely because the number of accounts of AD EBiS and the sales from the
shopping settlement fee of EC-CUBE had decreased more than expected. Also, although we had judged that the profit
plan should be achievable through cost control, the Company is now increasing investments for future growth.
Considering the new company plan and the current situation, we too decided to revise our forecast downward to about
the same level as the Company’s forecast (new forecasts: sales of Y3,365 million / -35 million yen compared to thecompany plan, operating profit of Y350 million / +10 million yen, and dividend of 7.0 yen / +0 yen).
・Progress in the first half in terms of the full-year company plan (after revision) was 46.5% for sales (49.6% in thefirst half of the previous fiscal year) and 51.8% for operating profit (similarly, previously 48.8%).
1/31This 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 Growth)

Issued: 6/6/2022

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

・Calculating from these figures, the Company seems to be planning a sales growth and profit decline in the second
half as follows: sales of Y1,819 million (+22.0% YoY), operating profit of Y164 million (-12.4% YoY), and net
profit of Y106 million (-14.1% YoY). In the second half, it plans to provide the largest major update ever for its main
product, AD EBiS, in order to increase the number of accounts and increase sales. In addition, for EC-CUBE, it plans
to increase sales through synergy and growth of new business from the acquisition of BOKUBLOCK. However, costs
are expected to increase due to upfront investments, causing a decrease in profit.

Business Strategy and Medium-Term Financial Forecast
・In addition to working on increasing the sales of its core product, it has been working on the MXP (Marketing
Transformation Platform) strategy in which continuous growth will be achieved by developing related or new
businesses in which synergy can be expected and contributing to its customers’ DX through its PF business. It alsoplans to accelerate business growth by actively conducting M&As and building alliances with other companies.
・It has continued to work on the goals that it has set out in its medium-term business plan, which are sales of Y5
billion, operating margin of 15%, and DOE of 3% or greater by FY 2023. Depending on whether the Company willconduct M&As and succeed in PMI, its financial results may change significantly.
・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, its sales are expected to grow annually at a doubledigit rate. Once the forward-looking, upfront investment for business reinforcement is completed, we believe that
the Company will be able to return to a double-digit annual profit growth starting next fiscal year by increasing sales
and improving profit margins through the expansion of the existing and the new businesses of both segments.
Regarding the forecasts for the next fiscal year and the fiscal year after the next, we have reviewed our previous
forecasts and made revisions somewhat cautiously.
Stock Price
・Stock price had bottomed out with the recovery of financial results, and had been fluctuating within a boxed rage ofY1,000 to Y2,000 over the past five years. However, due to global stock price corrections, the downward revision offinancial results for the current fiscal year, and the announcement of downward revision of dividend, its stock priceis currently fluctuating in the 700-yen range.
・Its valuation already generally reflects the fact that it is a domestic-demand-oriented growth stock related toad-tech and subscriptions. Based on the revised forecasts for the current fiscal year, its key valuation measures seemto be within a mostly reasonable range. Its stock price has fallen sharply, though, close to a level at which investment
can be considered based on the PEG ratio which takes into account the medium-term growth potential.
・Going forward, the following factors will likely affect the stock price: KPIs (especially AD EBiS’s number ofaccounts and unit price), monthly sales trend (YoY change for both PF segments), quarterly trends in profit/loss(especially the sales growth rate and the impact of the acquired companies on profit), profit forecasts for this and thenext fiscal year, the level of profit returned to shareholders, and announcement of M&As and alliances.
Return of Profit to Shareholders
・Its dividend policy for this fiscal year is to maintain a consolidated dividend on equity (DOE) of 2.5%, but it plansto raise this to 3% or greater in FY 2023. Future dividend hikes are likely, and the future level of dividend and stock
splits are also key points.
【3690 YRGLM Inc.

Sector: Information & Communication 】

FY

Figure A

Sales

YoY

O.P.

YoY

R.P.

YoY

N.P.

YoY

EPS

BPS

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

(%)

(Y)

(Y)

(Y)

2019

A

2,204

22.1

84

To profit79

To profit-34

Improved loss

-5.5

168.7

0.0

2020

A

2,618

18.8

276

226.1

261

230.5

183

To profit

29.1

202.2

4.0

2021

A

2,957

12.9

365

32.0

364

39.5

239

30.7

38.0

257.5

5.2

2022

Initial CE

3,600

21.7

470

28.6

460

26.3

320

33.5

50.0

2022

Revised CE

3,400

15.0

340

-7.0

340

-6.7

210

-12.4

33.5

2022

E

3,365

13.8

350

-4.1

350

-3.8

218

-8.8

34.8

2023

Mid-Term Plan CE

5,000

47.1

750

120.6 OPM=15%

2023

E

4,320

28.4

500

42.9

500

2024

E

4,740

9.7

580

16.0

2021

Q1

721

23.3

94

281.6

2022

Q1

776

7.6

87

-7.1

2021

Q2

745

14.6

84

2022

Q2

805

8.1

2021

H1

1,466

2022

H1

2021

H2

2022

H2 CE

7.5
7.0
289.3

7.0
DOE≧3%

42.9

320

46.8

51.1

333.4

9.3

580

16.0

95

279.8

87

-8.2

380

18.8

60.7

384.8

10.8

61

222.7

9.8

207.7

0.0

58

-5.1

9.3

249.1

80.5

82

0.0

80.2

55

107.6

8.8

89

5.3

89

8.2

46

-16.5

7.4

18.7

178

150.3

177

151.0

116

155.6

18.5

237.6

0.0

1,581

7.8

1,491

7.8

176

-1.3

176

-0.6

104

-10.5

16.7

260.3

0.0

187

-9.2

187

-1.9

123

-10.8

19.4

1,819

22.0

0.0

164

-12.4

164

-12.4

106

-14.1

16.8

0.0

0.0
0.0

(Note) A: actual results.
CE: the Company’s
estimate (forecast).
E: estimate (forecast) by
Alpha-Win Research
Dept.
Note that the Company’s
fiscal year is Septemberending. For example, FY
2022 ends in Sept. 2022.
Q1: Oct-Dec.
Q2: Jan-Mar.
H1: Oct-Mar.
H2: Apr-Sept.

2/31
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 Growth)

Issued: 6/6/2022

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18【 Stock Price and Valuation Indicators: 3690 YRGLM Inc.】
Item

Figure B

Item

Stock Price on 6/3

P/E

P/B

Dividend Yield

Dividend Payout Ratio

Stock Price (Y)736

Last FY (actual)

19.4

2.9

0.7%

13.7%

Shares Outstanding (thou.)

6,372This FY (est.)

21.1

2.5

1.0%

20.1%

Market Capitalization (million Y)

4,690

Next FY (est.)

14.4

2.2

1.3%

Dilutive Shares (thou.)

0.0

Equity Ratio at End of This First Half

54.0%

Last FY's ROE

18.2%
16.5%

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

【 Stock Chart (end-of-week prices): 3690 YRGLM Inc.】

Figure C

(Y)

3,000

1.20
Stock price (left axis)

1.10

Price relative to TOPIX (right axis)

2,500

1.00
0.90

2,000

0.80
0.70

1,500

0.60
0.50

1,000

0.40
0.30
7

7

7

8

8

9

9

9

0

0

1

1

2

06
/1

11
/1

04
/1

09
/1

02
/1

07
/1

12
/1

05
/2

10
/2

03
/2

08
/2

01
/2

(Note) From the fourth week of Aug 2016 to the closing price on the last day of
the first week of June 2022

(M
M
/Y
Y
)

6

01
/1

0.20

08
/1

500

【Performance】

Period1 month
3 months
6 months
12 months

Return-23.7%-20.8%-37.5%-37.4%

vs. TOPIX-25.0%-22.7%-37.6%-37.7%(Note) Prepared by Alpha-Win Research
Dept. Reflects stock price and TOPIX
values through the closing price on
6/3/2022 (most recent values). The
performance during each period is thecomparison of the stock price and TOPIXat the end of the month with the mostrecent values. For example, theperformance during the 1-month period isthe comparison between the closing priceon the last day of April and June 3. Similar
for the rest.

＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊

Disclaimers
This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc.
(hereinafter “Alpha-Win”) on the request of the company presented in this Report.
This Report is not to be construed as a recommendation or solicitation of investment. Alpha-Win shall not beliable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use of or
reliance on this Report. Investors who read this report must make their own decisions on all investment
matters and take full responsibility regarding their investment.
This Report has been prepared with a focus on objectivity and neutrality based on the analysis of generally accessible
public information and supplemental information including interview(s) by the analyst. Alpha-Win, the writer,
and/or other persons involved in the publication of this Report may already hold, or buy and sell in the future, thestock of the company presented in this Report.
Contents of this Report are based on information current as of the issue date and are subject to change
without notice. For the latest (updated) report, please see our website (http://www.awincap.com/). We also do
not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate, or fit
for any purpose and do not accept any responsibility or liability.
Copyright of this Report belongs to Alpha-Win and no part of the publication may be copied, photocopied, cited, ortranslated without our consent. For inquiries regarding this Report, please send us an e-mail to info@awincap.com.
However, Alpha-Win and the writer of this Report do not have any obligation to reply to inquiries. MV2022-0614-1200
3/31
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 Growth)

Issued: 6/6/2022

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

Contents

1．Company Overview ........................................................................................................................ P5
A Leading Company in a Niche Market ............................................................................................ P5
2．Business Description and Business Model .................................................................................... P7
Business Portfolio .............................................................................................................................. P7
Business Details (I) Marketing PF＊ Segment .................................................................................... P8
Business Details (II) EC PF＊ Segment .......................................................................................... P11
3．Shareholder Composition ............................................................................................................ P12
Major Shareholder Composition ..................................................................................................... P12
4．History of Growth ......................................................................................................................... P13
Past Transition in Financial Results ................................................................................................ P13
5．Market Environment .................................................................................................................... P14
Trends of Japan’s Advertising Market ............................................................................................ P14
6．Topics (M&As) .............................................................................................................................. P15
Past M&As ...................................................................................................................................... P15
Recent M&A (acquisition of BOKUBLOCK INC.) ...................................................................... P16
Strategy for Future M&As .............................................................................................................. P17
7．This Fiscal Year’s First-Half Results and Full-Year Forecast ................................................. P18
Results for Q2 FY 2022 (first half) ................................................................................................... P18
The Company’s Financial Forecast for FY 2022 (full year / second half) ........................................ P22
Alpha-Win Research Dept.’s Financial Forecast for FY 2022 (full year)......................................... P25
8．Growth Strategy ............................................................................................................................ P27
The Company’s Medium- to Long-Term Business Plan and Strategy ............................................ P27
Alpha-Win Research Dept.’s Forecast of Financial Results over the Medium Term ..................... P28
9．Analyst’s View ............................................................................................................................... P30
Shareholder Return .......................................................................................................................... P30
Stock Price, Trends, and Factors that May Affect Stock Price ....................................................... 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, etc. *PF stands for “platform.”(Note 2) Upon translating to English, when the page numbers differed from the original Japanese version, they were adjusted to thoseof the English version of this Report. Note that the Company’s fiscal year is September-ending (i.e. FY 2022 ends in September2022).

4/31
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 Growth)

Issued: 6/6/2022

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

1. Company Overview◆ A Leading Company in a Niche Market
w Marketing DX support

company. Top share in theJapanese software market
for Internet ad effectmeasurement and opensource EC site construction.
(1) Internet advertising effectmeasurement tool: Software forcomprehensively measuring andevaluating the effect of various
Internet ads and SEO strategies.
(2) Open source: The source
code, which is basically the
blueprint of software, is madeavailable free of charge, allowing
anyone to revise and redistributeit.

w Ambitiously developing
new businesses through inhouse development andM&As.
w Founded by its president
Susumu Iwata. Listed on the
TSE Mothers (currently the
TSE Growth Market).

w Changed the company nameand logo in 2019. The newname is YRGLM Inc.

w The Company’s group iscomposed of sevencompanies including theCompany.

w Financial performance of theconsolidated companies(excluding the parent) also
recovered and has beensolid. The financial recoveryof the carved-out EC-CUBE,
as well as the acquired
subsidiaries, contributed tosales.

Company Overview
YRGLM Inc. (hereinafter referred to as “the Company”) is a marketing DX
support company that plans, develops, and sells software related to Internet
advertising and e-commerce.
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, itsInternet ad effect measurement tool1, and EC-CUBE, its open-source2
software series for building EC sites.
In addition to developing new businesses through in-house development, theCompany has also been ambitious in expanding into related businesses
through M&As.
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 (currently
the TSE Growth Market) in September 2014. Currently, it has twoheadquarters, one in Osaka and one in Tokyo.
Change in the Company Name
In August 2019, the Company changed its name from “LOCKON CO., LTD.”
to “YRGLM Inc.”
Consolidated Companies and Trends in Consolidated Financial Results
The YRGLM Group consists of a total of seven companies: the Company, its
five consolidated subsidiaries (EC-CUBE Co., Ltd., YRGLM VIETNAM Co.,
Ltd., and the three acquired companies Spoo! Inc., TOPICA Inc., and Far End
Technologies Corporation), and one equity method affiliate (SAI Co., Ltd.).
Note that HOWDY Co., Ltd. (a dormant subsidiary of TOPICA) andCloudFine Co., Ltd. (a wholly owned subsidiary of Far End Technologies
Corporation which plans and sells giveaways for companies) are not includedin the consolidated results due to their insignificance.
During FY 2019 (note that the Company’s fiscal year is September-ending),
the EC-CUBE business was separated from the Company (parent company)
in a carve-out (became a consolidated subsidiary after the carve-out), whichchanged the balance between the parent company’s results and consolidated
results. Due to the profitability and solid financial performance of EC-CUBE
Co., Ltd. as well as the positive impact of the acquisition of several companies
on sales, sales growth and profit have generally been maintained for the
consolidated companies excluding the parent (consolidated minus parent
company) since FY 2019 (Figure 1 on page 6). Note that the actual numericalresults of the parent company have not been disclosed for the first half.

5/31This 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 Growth)

Issued: 6/6/2022

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18【Figure 1】Comparison of Consolidated vs. Parent Company Sales and Recurring Profit by
Fiscal Year (Units: million yen and %)
A
B
A-B＝C
A/B
A
B
A-B＝C
A/B

Unit: million yen, %Consolidated sales
Parent company sales
Consolidated sales - parent company sales
Consolidated sales / parent company sales
Consolidated R.P.
Parent company R.P.
Consolidated R.P. - parent company R.P.
Consolidated R.P. / parent company R.P.

FY 2014
1,360
1,360
0
1.00
233.6
245.2
-12
0.95

FY 2015
1,437
1,437
0
1.00
352.0
359.0
-7
0.98

FY 2016
1,613
1,613
0
1.00
250.3
252.1
-2
0.99

FY 2017
1,719
1,719
0
1.00
106.3
106.8
-1
1.00

FY 2018
1,804
1,804
0
1.00
-115
-110
-5
-

FY 2019
2,204
2,010
194
1.10
79
19
60
4.16

FY 2020
2,618
2,317
301
1.13
261
165
96
1.58

FY 2021
2,957
2,532
425
1.17
364
278
86
1.31

(Ref) Prepared by Alpha-Win Research Dept. based on the securities report(Note) Consolidated results starting in FY 2014 (applies to the rest of this report). First-half results for each company are not disclosed.

w As of the end of March
2022, it was essentiallydebtless, with cash &deposits exceeding its
amount of debt. Equity
ratio is greater than 50%,
indicating financial
soundness.

w Intangible fixed assets
including goodwill havebeen smaller than the net
assets.

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 highreputation. Chosen as aGreat Places to WorkCertified Company.
(3) Great Place To Work®
Institute: An organization that
conducts surveys and presents“Great Places to Work” inabout 50 countries around theworld every year.

Financial Standing (see page 16 for details)
Although the Company has continued to conduct M&As, thanks to theposting of profit and the completion of the large investment phase, its free
cash flow (FCF) turned positive for some period and its capital as well as
cash and deposits has been accumulating. As of the end of March 2022, its
long/short-term debt totaled about Y940 million, while its cash and deposits
were about Y1,210 million. Therefore, the Company is essentially debtless.
Its total assets are about Y3 billion and its market capitalization is about Y6.5
billion (based on the closing price of Y1,019 on March 31, 2022), both
relatively small. However, its equity ratio is 54.0% and current ratio is194.1%, indicating financial soundness.
The Company has intangible fixed assets of Y930 million, which includes
Y480 million in goodwill (from past acquisitions of companies, businesses,etc.) and Y430 million in software and software in progress. Adding thedeferred tax assets of Y110 million, they total Y1,040 million. However, thisdoes not pose an issue since this total is smaller than the Company’s net assets
of Y1,650 million.
Also, the Company owns about 90% of the shares of its subsidiary ECCUBE Co., Ltd. Based on the amount for which the subsidiary’s shareswere sold to Orient Corporation (sold about 10% of the shares for Y155
million in November 2020; Y152 million in gain on sales), the Company isestimated to have shares worth Y1.4 billion in market value and an
unrealized gain of Y1.37 billion.
Awards and Reputation
The Company has been chosen as a Great Places to Work-Certified
Company in Japan's Great Places to Work 2022 selected by the Great Place
to WorkⓇ Institute3 Japan. It has also been chosen as a Best Company fromthe same organization for ten times and has also won various other awards
from other external organizations as well. This high reputation is valuable
since it helps attract talents, which are crucial to the Company’s type ofbusiness.
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 2022 Spring” on the IT productreview platform ITreview managed by ITclowd Corp (headquartered in
Minato-ku, Tokyo; Genta Kurono as president) for the fifth time in a row(according to the Company’s website).

6/31
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 Growth)

Issued: 6/6/2022

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

2．Business Description and Business Model◆Business Portfolio

w Worked on restructuring its

Restructuring and Strengthening of Business Portfolio
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).
This business restructuring has already reached the end of a phase, and theCompany is currently in the stage of expanding its business for the next levelof growth.

business portfolio.
Withdrew from non-corebusinesses andconcentrated businessresources on AD EBiS of
the Marketing PF segment.
In recent years, it had
acquired and strengthened
businesses in related areas.

【Figure 2】Business Restructuring and Segments (businesses that it withdrew from or significantly
scaled down are shown in highlight)
Segment Name

Main Services

Business Categories(1) Advertising effectmeasurement

Changes①AD EBiS(2) Advertising agency DX
I. Marketing
Platform➁THREeWithdrew (end of March 2020)①AdRepoBusiness acquisition (August 2018)➁Ad-Knowledge

Started service in May 2020; changed name to AD HOOP in Jan 2021

②eZCX

Official version released in July 2021

③Spoo

Acquired as a wholly owned subsidiary (Dec 2020)④TOPICA

Acquired as a wholly owned subsidiary (Jan 2022)

Former "Professional Service" (DMP business)(EC-CUBE) (ec-cube.co)①BOKUBLOCK(2) Professional services
II. EC Platform(3) SOLUTION → withdrew

Consolidated

Acquired as subsidiary with about a 60% stake (July 2021)⑤Far End Technologies*Other(1) EC-CUBE

Parent company

Started service in July 2020

①AD HOOP (former "Advertising agency referral service")(3) New services

Notes

ADPLAN business (acquired in Jan 2020; integrated) was closed in March 2021

①EC contract dev. + consulting, etc.

(Former "SOLUTION"; transferred from SOLUTION and scaled down)

Parent company

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

Consolidated

Acquired as a wholly owned subsidiary (end of May 2022)

Consolidated

Transferred to SAI Co., Ltd. (equity method; kept) and Radical Opti Co., Ltd.
(removed from equity method after transfer)

Equity method

Transferred to Marketing Platform's *Other

Parent company(Of which, DMP business)(Ref) Figure 2-5 were prepared by Alpha-Win Research Dept. based on sources including the Company’s financial results summary and financial results
briefing materials. Words in red indicate changes during the current fiscal year.

[Figure 3] Sales Breakdown by Business
Segment (first half of FY 2022)

Business Composition
Currently, the Company’s business is composed of two segments: I.
Marketing PF (short for “platform”) and II. EC PF.

EC Platform
Segment

10.2%

The Marketing PF segment accounts for about 90% of the total sales (Figure3) and has been the driver of the Company’s overall sales growth over many
years (change in sales by PF segment: Figure 4).

Marketing Platform
Segment

89.8%【Figure 5】Transition in Operating Profit by Business
Segment【Figure 4】Transition in Sales by Business
Segment (Unit: million yen)
(Million yen)

3,000

Marketing Platform

300

EC Platform
358
301

1,000

477

539

883

911

1,074

1,255

150

195
2,318

1,530

161

142

50

2,599

0

1,270

214

100

1,420

75

107

210

FY 2014

FY 2015

FY 2016

38

22

FY 2018

FY 2019

FY 2020

FY 2022
FY 2021 2021/9期
FY 2021 2022/9期
First
上期Half First
上期Half

46

39

78

119

101 77

142
33

-1

-50

-60

-100

FY 2017

247

199

153

136

-121

-150

FY 2013EC Platform

200

275

1,951

422
666

0

526

465

Marketing Platform

250

253

2,000

(Million yen)

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2021期
2021/9
First
Half
上期

7/31
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 2022期
2022/9First Half
上期Alpha-Win Company Research ReportYRGLM Inc. (3690 TSE Growth)

Issued: 6/6/2022

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

Each PF segment’s change in operating profit over the years is as shown in
Figure 5 on page 7. Excluding FY 2017 and FY 2018, during which businessrestructuring was conducted, operating profit (segment’s profit) has beenposted for both PF segments during each full fiscal year.

w Excluding the period ofbusiness restructuring, bothPF segments have been
posting operating profits.

The Company’s current business portfolio is shown in Figure 6 (the numbers
in front of businesses in Figure 6 match the numbers in this section’s
description of businesses).

【Figure 6】Business Composition (as of end the of May 2022)
Marketing DX Support Business(1) Advertising
EffectMeasurement

I. Marketing Platform Segment

II. EC Platform Segment(2) Advertising
Agency DX(1)(3) New Services

EC open platform

①
①

③

①

Creative Agency

Programmatic ad automatic
Advertising effectreport generation tool

Advertising agency“AdRepo”

matching platform

measurement platform

No.1 EC site building opensource software in Japan by
number of users2

Decentralized video media
management service②
No. 1 sales share in
Japanʼs ad effectmeasurement
market1

Cloud-based EC platform

④

②

NEW

⑤

Project management tool

EC-specialized CX

for advertising agencies

improvement platform“Ad-Knowledge”(2)

Creates and provides
project management toolsNEW

A wide range of solutions related to
e-commerce(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials with some additions.
*1: According to the Japan Marketing Research Organization’s summary of its June 2021 survey on competition in designated areas*2: According to Information-technology Promotion Agency, Japan’s “3rd Open-Source Software Utilization Business Survey”◆ Business Details I. Marketing PF Segment
The change in the sales and profit of the Marketing PF segment over the years
is shown in Figure 7.

【Figure 7】Change in the Sales and Operating Profit of the Marketing Platform Segment
Sales (million yen)
I. Marketing Platform(1) Advertising Effect Measurement(1) ➀AD EBiS + former ADPLAN (businessacquired in Jan 2020)①AD EBiS's sales growth rate (YoY: %)② THREe (withdrew)(2) Advertising Agency DX(2) ①AdRepo➁Ad-Knwoledge(3) New Services(3) ①AD HOOP, ②EZCX, ③Spoo, ④TOPICA⑤Far End*Other: Professional Service (DMP)
Segment's Operating Profit
Segment's Operating Margin (%)

FY 2012parent545
545

FY 2013
FY 2014
FY 2015parentconsolidated consolidated
666
883
911
648
883
911

FY 2016
consolidated
1,074
1,074

FY 2017
consolidated
1,255
1,254

FY 2018
FY 2019
consolidated
consolidated
1,530
1,951
1,445
1,775

FY 2020
FY 2021
consolidated consolidated
2,318
2,599
2,135
2,313

H1 FY 2022
consolidated
1,420
1,176

499

567

722

822

1,012

1,200

1,402

1,747

2,127

2,313

1,176

46

13.7%
81

27.3%
161

13.9%
89

23.1%
62

18.6%
54

16.8%
43

24.6%
28
124
124

21.8%
8
152
149
3
3

8.8%
0
182

104

1.6%
0
85
82
3
153

3

104

153

27
199
8.6%

247
9.5%

143
10.1%

(Business acquired in Oct 2018 →)(Spoo acquired in Dec 2020; TOPICA acquired in July 2021; AD HOOP transferred from advertising agency DX starting in FY 2021; Far End acquired in
Jan 2022 →)(Professional Service, transferred from EC PF →)-61-11.2%

-1
-0.1%

142
16.1%

214
23.5%

210
19.5%

153
12.2%

84
-121
-7.9%

51
46
2.4%

(Ref) Prepared by Alpha-Win Research Dept. based on financial results briefing materials and interview. Includes estimates. H1 = first half.

w The Marketing PF segment
is composed of threebusiness categories.

I. The Marketing PF segment currently consists of the three main businesscategories described below, from (1) to (3). During the first half of this fiscal
year, the sales breakdown was as shown in Figure 7 and Figure 8 on page 9.
AD EBiS accounted for 83% of the Marketing PF segment’s sales (72% of
the Company’s entire sales).
8/31This 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 Growth)

Issued: 6/6/2022

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18【Figure 8】Breakdown of Sales of theMarketing PF Segment by Category(2) Advertising agency DX*Other(1) Ad effect measurement

611％(3) New services

MarketingPF
Sales
Breakdown(H1 FY 2022)

83％(Ref) Prepared by Alpha-Win Research Dept. based on thefinancial results briefing materials. H1 = first half.

w Its core business, AD EBiS,
is an originally developed,
Internet ad effectmeasurement system. It has
the top share in the market
and accounts for about 70%of the Company’s entire
sales. Highly stablebusiness based onsubscriptions.
(4) Subscription model: fees arepaid periodically for the rightto use the service for a certain
period.
(5) Programmatic advertising:An advertising method inwhich optimization of ads is
conducted automatically or
supported immediately. After
submitting an ad, optimizationis conducted, leading to better
results.
w The business foradvertising agencies
consists of 2 businesses:
AdRepo, which fully
automates the creation ofreports for programmatic
advertising, and AdKnowledge, a cloud-based
project management
system specialized foradvertising agencies.
w The new services consistof the businesses acquired
through the M&As of 3
companies and its
originally developed
products AD HOOP and
eZCX. Will rapidly expand
this business category as
its future growth driver.

Below are the current business categories of the PFs and their main products(service or product name is in bold).
(1) Marketing Effect Measurement① AD EBiS・Internet ad effect measurement system
・ AD EBiS is the Company’s originally-developed core product(incredibly strong position in the Japanese market with top share of
86.3%, according to the Japan Marketing Research Organization’ssummary of its June 2021 survey on competition in designated areas)
・ Enables the collective management, measurement, analysis, andvisualization of the effect of Web ads, etc., and helps understand thecost effectiveness of ads.
・Subscription-based business model4
・Business based on flat-rate, periodic payments. Its sales are determinedby average unit price × number of active accounts. Both numbers are
key performance indicators (KPIs) for AD EBiS as well as for theentire company.
(2) Advertising Agency DX
The business targeting advertising agencies consists of the two businesses
described below (AD HOOP has been moved to the new businesses category).
This first half’s sales were Y85 million in total, which is 6% of the entire
Marketing PF segment’s sales. Although the sales of each of the twobusinesses are not disclosed, most of the sales come from AdRepo.
① AdRepo
・Fully automatic report-generation tool for programmatic advertising5
・Cloud service that has been developed to reduce the workload of
advertising agencies in creating such reports
・Acquired from another company in August 2018. The Company plans
to continue to focus on expanding this business.
② Ad-Knowledge
・ A newly developed, cloud-based project management system
specialized for advertising agencies
・Supports advertising agencies that work with programmatic advertisingin improving operation and efficiency
・Service started in July 2020. Provided as a subscription service (SaaS).
Its growth currently seems somewhat slow.
(3) New Services① AD HOOP
・Marketing-specialized matching platform that introduces the optimum
solution partner to corporate advertisers to solve their problems andmeet their needs. Released in May 2020. Moved from the advertising
agency DX category due to its expansion of business area.
・Business has been steadily expanding. Since April, a matching service
between EC site production companies and EC companies has also
begun.
② eZCX・EC-specialized CX improvement platform
9/31

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 Growth)

Issued: 6/6/2022

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

w Has been acquiring
companies in businesses
related to Internet
marketing as
consolidated
subsidiaries, at a pace ofabout 1-2 companies per
year.
w All three acquiredcompanies have beensteadily expanding theirbusinesses.

・Improves CX (customer experience) on websites. Leads to greater
efficiency in acquiring new customers.
・Based on the concept of “anyone can easily use”
・Using the user behavior data that the Company has accumulated
through its AD EBiS business, the service analyzes the users’
thoughts to provide the most suitable experience at the mostappropriate timing.
・Released in May 2021, but growth has been slow.
③ Spoo (Spoo! inc.): consolidated subsidiary
・Web media and design company. Founded in March 2000 and was
acquired in December 2020. Steady development. Employee
recruitment has been a challenge.
・ The Company plans to leverage Spoo’s creativity and humanresources to integrate the Company’s data and technology. It will thus
create new values, expand into more areas of business, and strengthen
its competitive edge.
④ TOPICA: consolidated subsidiary
・Founded in May 2016. Acquired in July 2021 with a stake of about
60%.
・Developing a marketing support business that utilizes SNS and videos.
Provides a series of services ranging from the planning andproduction of video contents to SNS account management services.
・With the acquisition, the Company will expand its business domain
into the rapidly growing social media marketing market and cross-sell
TOPICA’s services to its current client companies (around 1,300
companies). In addition to this, it plans to integrate its data andtechnologies with TOPICA’s SNS marketing to create and provide
new services. This business has been solidly expanding.
⑤ Far End Technologies Corporation (hereinafter, “Far End”): consolidated
subsidiary・Established in September 2008. Provides Internet services (SaaS) andIT security support services.
・Acquired in January 2022 as a wholly owned subsidiary
・Its main business involves the development of the globally wellknown, open-source project management software Redmine andproviding the paid, cloud version of the software, My Redmine.
・In recent years, due to increasing remote work in response to the
COVID-19 crisis, there has been greater demand for project progress
management. The number of accounts has been increasing steadily
and a large growth can be expected.
・By leveraging and integrating YRLGM and Far End’s technologies
and expertise, the Company plans to expand business domains,
increase its competitive edge, and provide new value to customers.
For details on each business of I. Marketing PF segment’s (1)-① through (3)-④,
please see pages 13-19 of our report published on December 13, 2021. Regarding(3)-⑤ Far End Technologies, please see pages 7-8 of the report published on
February 14, 2022.

10/31
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 Growth)

Issued: 6/6/2022
2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18
w In the first half, the EC PF◆ Business Details: II. EC PF Segment
segment only consisted ofCurrently (in the first half), the EC PF segment only consists of EC-CUBE
EC-CUBE. With theacquisition of(Figure 9). The Company, though, has acquired BOKUBLOCK INC. and will
BOKUBLOCK, themake a reentry into the professional services6 market. The subsidiary will
Company will reenter the
become consolidated as part of the EC PF starting in June 2022.
professional services
market.

【Figure 9】Change in Sales and Operating Profit of the EC Platform Segment
Sales(million yen)
II. EC Platform(1) EC-CUBE
EC-CUBE sales growth rate (YoY: %)①Shopping settlement fee②Subscription③Other(2) SOLUTION (transferred / withdrew)① EC contract development, EC site consulting, etc.
Of which is DMP (transferred)
Segment's operating profit
Segment's operating margin

FY 2012parent
323
150

174
174
98
30.5%

FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021H1 FY 2022
parentconsolidated consolidated consolidated consolidated consolidated consolidated consolidated consolidated consolidated
422
477
526
539
465
275
253
301
358
161
207
245
230
219
208
254
253
301
358
161
38.1%
18.3%
-6.1%
-4.8%
-5.2%
22.2%
-0.4%
19.0%
18.9%
-17.6%
290
126
12
13
54
23
214
232
296
319
257
20
0
0
0
0
214
232
296
319
257
20
0
0
0
0
104
75
107
136
38
-60
22
39
78
119
34
17.8%
22.5%
25.8%
7.1%
-12.9%
8.2%
15.4%
26.1%
33.1%
20.9%

(Ref) Prepared by Alpha-Win Research Dept. based on the securities report, financial results briefing materials, and interview. Includes estimates.

(6) Professional services: A
general term for services otherthan cloud tools, such as
consulting, accountmanagement, and contractdevelopment.
w The EC-CUBE businessprovides software forcompanies to build andmanage EC sites on theirown.
w In addition to thedownload version, thecloud version has beenreleased.
w Gained top share in theJapanese market.
(7) Freemium Model:“Freemium” is a coined wordthat combines “free” and“premium.” Refers to abusiness model that generates
revenue by offering basic
services free of charge whilecharging fees for moresophisticated or specially added
related services.

① EC-CUBE
Service Overview
・EC-CUBE is a software platform whereby companies can build and manage
EC (e-commerce) sites on their own.
・The Company provides EC-CUBE as web design software for companies
that will begin selling and providing products or services online. It is provided
as either as the open-source, packaged download version EC-CUBE or the
cloud version ec-cube.co.
・Characterized by low cost, high customization, and user-friendly interface,it has the top share in the Japanese market and is the standard platform.
Business Model and Sales Breakdown
・EC-CUBE is based on a Freemium Model7 in which software is offered forfree but in return revenue is earned from accessory services.
・Revenue comes from shopping settlement fees from official partners using
the software for their Internet businesses (78% of total sales of this PF in thefirst half of this fiscal year), ec-cube.co’s monthly subscription income(similarly, 8% of total), and other revenue (function addition fees for plugins,or programs to add functions to software; similarly, 14% of total) (Figure 10).
・Starting in the second half, the Company plans focus on expanding theprofessional services.

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

Other

14％
Subscription

w Planning to expand theprofessional services

8％

10％

Subscription

EC PF
Sales
Breakdown

Shoppoing
settlement
fees

78％

10％
EC PF
Sales Breakdown

40％(Company forecast
for FY 2022)

Shopping
settlement
fees

40％

(H1 FY 2022)

Professional services(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials. H1 = first half.

11/31This 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 Growth)

Issued: 6/6/2022

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

3．Shareholder Composition◆ Major Shareholder Composition
w No significant change 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
Japanese stock investment
trusts.

w Treasury shares haveincreased to 1.75% of all
outstanding shares due toshare buybacks.

The major shareholders as of the end of March 2022 are shown in Figure 11.
The following is supplementary information. Other than the individual
shareholder at eighth place (a major shareholder of several listed companies),
the major shareholders have not changed.
・The top three shareholders are Susumu Iwata, the Company’s president,
followed by the Company’s executive officers (including former executive
officers). Together, they possess more than half of the outstanding shares.
・The banks and securities companies are most likely investing as custodiansof the below investment trusts, etc., or in relation to their customers.
・ Regarding shares owned by Japanese investment trusts, the “Japan
Emerging Equity Open” managed by Nikko Asset Management owned 81.5
thousand shares as of December 20, 2021 (decreased from 103.5 thousand
shares about an year ago). “MHAM Emerging Growth Stock Open” (alsocalled “J-Frontier”) managed by Asset Management One owned 100
thousand shares as of February 24, 2021, but then sold all shares. “The 2020
Vision” managed by Commons Asset Management owned 49.9 thousand
shares as of December 18, 2020, and has bought additional shares to a totalof 161 thousand shares as of December 20, 2021.
・As of the end of March 2022, the Company owned 111,580 treasury shares(about 1.75% of all outstanding shares), having conducted share buybacks in
November and December 2021. In the past, the Company used a portion of
the treasury shares as transfer-limited, stock-based compensation, and it will
likely use treasury shares in the future for stock cancellation, M&A andalliance strategies, and stock-based compensation for its executives andemployees.

【Figure 11】Current Major Shareholders
Susumu Iwata (president and CEO)Hiroichi Fukuda (former executive vice president)
Kanako Mataza (former director and senior executive officer)
Custody Bank of Japan (trust account)
Custody Bank of Japan (securities investment trust account)
Rakuten Securities, Inc.
YRGLM Employee Stock Ownership Plan
Yukio Tanaka (individual investor)
Hakuhodo DY Media Partners Inc.
SBI SECURITIES Co., Ltd.
Yoshihisa Yamashita (indiv.)
J.P. MORGAN SECURITIES PLC
Tomonori Yamada (indiv.)
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.
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)(Treasury shares: thousand shares)(Proportion of treasury shares: %)(Unit for number of shares: thousand shares) (Unit for ratios: %)End of Sept.
2015

End of Sept.
2016

End of Sept.
2017

2,851
1,071
415
―
―
―
76
―
60
―
―
―
―
―
―
―
―
―
―
―
―
―
―
39
―
―
62
―
30
34
26
0

2,817
1,021
415
―
―
―
39
―
60
―
―
―
―
―
―
―
59
―
―
―
―
―
―
29
―
―
62
36
35
―
―
0

2,817
1,021
352
―
―
―
48
―
60
―
―
―
28
―
―
―
―
60
60
―
―
―
―
29
28
24
―
―
―
―
―
0.045
0.00%

End of Sept.
2018

2,819
961
354
―
―
72
69
―
60
―
―
―
―
―
―
―
60
―
29
―
―
52
29
―
―
―
―
―
―
―
―
0.983
0.02%

End of Sept.
2019

2,822
801
353
―
―
64
68
―
60
―
―
―
―
―
―
―
333
―
123
284
113
―
―
―
―
―
―
―
―
―
―
81.423
1.28%

End of Sept.
2020

2,825
781
352
221
169
―
71
―
60
―
―
―
―
86
62
58
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
64.493
1.01%

End of Sept.
2021

2,827
817
329
128
82
―
66
―
60
―
54
35
33
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
57.8250.91%

End of Mar.
2022

←Shareholding % ←Ranking

2,829
779
329
100
70
69
65
61
60
38

45.22
12.46
5.26
1.60
1.11
1.09
1.04
0.97
0.95
0.60

1
2
3
4
5
6
7
8
9
10

111.580
1.75%(Ref) Prepared by Alpha-Win Research Dept. based on materials including the securities report. Words in red indicate YRGLM’s
former and current members, employee stock ownership plan, and other groups or individuals affiliated with the Company.

12/31
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 Growth)

Issued: 6/6/2022

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

4．History of Growth◆ Past Transition in Financial Results

w Developed and released
unique products thatdifferentiate the Company
from other companies. Hasgrown rapidly by predicting
and meeting the needs ofsociety ahead of others.

From FY 2009 to FY 2013, during which account settlement wasnonconsolidated, the Company increased sales for four consecutive fiscal
years. Even as consolidated account settlement began in FY 2014, theCompany has continued to achieve record-high sales consecutively for sevenfiscal years through FY 2021 (according to the available disclosure materials,
sales have been hitting record highs for at least 11 consecutive fiscal years).

w Continuing to post record-highsales for 11 fiscal years in arow

During the 12 years from FY 2009 to FY 2021, sales grew by 5.2x from Y570
million to Y2,960 million. This 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.

w In FY 2015, record-high profits

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 record-high net profit ofY231 million were achieved. However, starting in FY 2016, the Company
began to actively restructure its business and conduct upfront investments,
which caused costs to increase and profit to consecutively decline despite
increasing sales (Figure 12).

were recorded.

w Starting in FY 2016, theCompany conducted businessrestructuring and upfront
investments, prioritizing
acceleration of future businessgrowth over current profit. Net
losses were recorded in FY
2018 and FY 2019.

w In FY 2020, operating profit

grew by 3x compared to theprevious FY, and a net profit
was posted in a V-shaped
recovery.

w Posted record-high sales andprofits in FY 2021

In FY 2018, the Company recorded a loss (net loss of Y88 million) for the
first time 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 was able to post both an operating profit and arecurring profit for the full year in a turnaround. However, due toextraordinary losses, it posted a net loss for the second consecutive fiscal year.
In the following year or FY 2020, consecutive growth of sales andimprovements in cost led to a 300% growth in operating and recurring profit
compared to the previous fiscal year. The Company posted a net profit for the
first time in three fiscal years in a clear, V-shaped recovery. In FY 2021, sales
and profits both hit their record highs.

【Figure 12】Transition in Past Financial Results and theCompany’s Forecast for FY 2022 and FY
2023 (Unit: million yen, %)【Figure 13】Change in the Number of Employees(Unit: persons)

250

Sales (left axis: million yen)
Operating margin (right axis: %)6,000

Development

Operating profit (left axis: million yen)
30.0%

Other

200

25.0%

5,000

20.0%

4,000

15.0%

3,000

5.0%

1,000

50

0.0%

0

-5.0%

-1,000

0

149

167

122
98

100

10.0%

2,000

141

150

68

71

33

33

35

38

FY 2014

FY 2015

42

58

67

83

102

184

120

FY 2012FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022
CE

127

56

64

74

66

65

64

74

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021FY
H12022FY
H1
2022-10.0%FY 2011201

FY 2023
CE(Ref) Figures 12 and 13 were prepared by Alpha-Win Research Dept. based on the securities report, financial results summary, and financial results briefing
materials.
(Note) Consolidated results starting in FY 2014; nonconsolidated prior to this. CE = the Company’s estimate/forecast. H1 = first half.

13/31This 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 Growth)

Issued: 6/6/2022

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 2021 (calendar year; the same
applies to this entire chapter) was about Y6.8 trillion, having increased by+10.4% from the previous year. The advertising market has recovered rapidly
with the relaxation of the COVID-19 situation and in a rebound from theprevious year.

w In 2021, Japan’s total

advertising expenditure
increased at a double-digit
rate compared to theprevious year.

Internet Ad Market (Yearly Trend)With the growth of overall advertising expenditure, digitalization of thesociety, the EC market boom, and greater demands for video ads, the Internet
advertising market grew by +21.4%, a much higher rate than the overall
growth. Since 2005 (point of comparison, set at 100), Internet advertising
grew significantly to about 7.2x in 2021 (annual growth rate of about +13.3%,
on a simple average) (Figure 14).

w Internet advertisingexpenditure has been
continuing to grow at ahigh rate. It surpassed thefour mass media as thelargest medium foradvertising.

Internet advertising expenditure (sum of medium cost and production cost),
which was about Y2.7 trillion, accounted for about 39.8% of the total
advertising expenditure. This proportion has been steadily increasing byseveral percent every year. In 2021, it surpassed the four mass-media
advertising (newspaper, magazine, radio, and television) for the first time tobecome the largest medium for advertising (source: Dentsu Inc.’s “2021Advertising Expenditures in Japan”).

【Figure 14】Change in Advertising Expenditure
by Medium (Index: the year 2005 is set to 100)

【Figure 15】Change in Monthly Sales of Internet Ads(100 million yen)

（％）

1,600
800%

50
Internet sales (left axis)
YoY growth (right axis)
YoY decline (right axis)

1,400

750%

40

1,200

700%
650%
600%

20

The four mass media

550%

30

1,000

Internet ads

800
10Total advertising expenditure

500%

600

Promotional media

450%

0

400

400%

-10

300%

0

250%

Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar

200

350%

2013

200%

2014

2015

2016

2017

2018

2019

2020

2021

-20

2022

150%
100%
50%
0%
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

w Despite the COVID-19

crisis, the Internet admarket was able to returnto growth compared theprevious year (monthly
growth). Growth is solid
but the momentum is
declining.

2015

2016

2017

2018

2019

2020

2021

(Ref) Figure 14: prepared by Alpha-Win Research Dept. based on Dentsu Inc.’s “2021Advertising Expenditures in Japan”
Figure 15: prepared by Alpha-Win Research Dept. based on the “Survey of
Selected Service Industries” by the Ministry of Economy, Trade, and Industry.

Internet Ad Market (Monthly Trend)
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 came back to growth in Octoberof the same year (Figure 15). With the EC boom caused by high stay-athome consumption and strong at-home demand, the Internet advertisingmarket has been growing solidly. However, the momentum (sales growthrate) seems to have settled down and has been declining on a monthly basis.
Over the medium to long term, the business environment is predicted toremain advantageous for the Company’s Interned ad business due to further
digitalization.
14/31

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 Growth)

Issued: 6/6/2022

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

6．Topics (M&As)◆ Past M&As
w Ambitiously conducting
M&As for future growth.
However, the acquiredcompanies currently seemto only be contributing
limitedly to profit.

M&A History
Figure 16 summarizes the recent M&As and business acquisitions. The
Company does not disclose the synergy effects of acquisition in actual
numbers or the individual financial results of each acquired company. While
the acquisitions are indeed contributing to the Company's sales growth, theircontribution to profits have presumably been limited so far considering theamortization cost of goodwill.

w The risks are low since theacquisition prices were
small and acquisitions
involved related businesses
that the Company alreadyknows well about.

The costs of acquisition and financial results of some of the acquiredcompanies (or businesses) are not disclosed. However, the risks seem low
since the acquisitions are aimed at synergistic effects in businesses related tothe current businesses or in knowledgeable areas, companies with large
deficits have not been involved, and the price of each acquisition is estimatedto have been around Y300 million at the highest (mostly less than one-tenthof the total assets).

w Acquired 6 companies(businesses) over the past 3
and a half years.

Over the past three and a half years, the Company has acquired six companies(including business acquisitions) (Figure 16). In a simple sum (including
estimates by Alpha-Win Research Department), the acquisition price isestimated to have totaled around Y1 billion, the amount of goodwill at thetime of acquisition totaled Y500-600 million, sales at the time of acquisition(for the latest period disclosed for each company) totaled about Y800 million,
and there was a small net profit (close to zero) in total.

【Figure 16】Past M&As (including business acquisitions, etc.）
II - (2) BOKUBLOCK

I - (3)⑤ Far End Technologies

I - (3)④ TOPICA

I - (3) ③ Spoo

Form of acquisition

Company acquisition

Company acquisition

Company acquisition

Company acquisition

Business acquisition

Stockholding ratio(before⇒ after acquisition)

0%⇒100%0%⇒100%0%⇒60.05%

0%⇒100%Finished integration (words initalics below are about OPT Inc.)

Finished integration (words in italics
below are about EVRRISE CO., LTD.)

Date of acquisition
Location

May 31, 2022
Chiyoda-ku, Tokyo

February 1, 2022
Matsue-shi, Shimane

July 1, 2021
Shinjuku-ku, Tokyo

December 30, 2020
Chiyoda-ku, Tokyo

January 1, 2020
Chiyoda-ku, Tokyo

October 1, 2018
Minato-ku, Tokyo

Representative

Masataka Hayashi, president

Go Maeda, president

Shunsuke Fumoto, president

Hirohisa Hayashi, president

Seiya Kurimoto, president and CEO

Hiromasa Kurata, president

Founded date
CapitalNovember 5, 2007
Y10 million

September 9, 2008
Y8 million

May 20, 2016
Y37 million

March 9, 2000
Y10 million

April 1, 2015
Y100 million

July 3, 2006
Y35 million

Description of its businessEC site design / cloud-based EC
service

Internet services, IT security
support services, network systemdesign and development, softwaredevelopment, etc.

Video marketing business・Management of video media

Web media / production

Purpose of acquisition

Strengthen EC PF; integration
with EC-CUBE; reentry into
professional services
Divided work ⇒ Divided work +vertical integration

Strengthen services for supportingclient companies in marketing DX

Expand business in the social
media marketing market

Provide new value and expand
business; strengthen competitiveedge

Strengthen competitive edge in themarket of ad effect measurement

Strengthen competitive edge in themarket of ad effect measurement

Integrated with AD EBiS

12 months

Consolidated period during thisfiscal year
Acquisition price
Estimated goodwill(at the time of acquisition)
Financial standing and results forthe most recent period(before acquisition)
Net assets
Total assets
Sales
Operating profit
Recurring profit
Net profit
Dividend per share
Management indicator
Operating margin
ROE = Net profit / average net
assets
ROA = Recurring profit / average
total assets
Equity ratio
Valuation of acquisition price
P/B = Acquisition price / net assets
P/E = Acquisition price / net profit
P/S = Acquisition price / sales
Dividend yield

4 months

I - (1)①ADPLAN business(OPT Inc.)I - (2)① AdRepo business(EVERRISE CO., LTD.)
Business acquisition(absorption-type split)

Company name /unit = million yen or %Developing ADPLAN, a system for Providing services for automaticallye-marketing effect measurement, creating reports for programmatic ads
and providing the service(AdRepo is the tool for this)

8 months

12 months

12 months

Y135 million

Y220 million (market capitalizationof Y350 million)

Not disclosed (estimated to be
several dozen million yen)

Y315 million

Y200 million

Approx. Y9 million

Approx. Y250 million

Approx. Y121 million

Fiscal year ended December 2021
(from the most recent official
gazette)Fiscal year ended December 2018
(for this business)

Fiscal year ended June 2018
(for this business)

Y286 million
Y95 million

Y63 million--

Not disclosed (estimated to beabout 150-200 million yen)
(Estimated to be about 50-70
million yen)

Approx. Y76 million

Fiscal year ended September 2021

Fiscal year ended May 2021

Fiscal year ended April 2021

Y63 million
Y171 million
Y139 million-Y7 million
Y0 million
Y0 million-

Y29 million
Y77 million
Y117 million
Y10 million
Y11 million
Y8 million-

Y21 million
Y83 million
Y156 million
Y4 million
Y4 million
Y4 million
-

-5.0%

8.5%

2.6%

0.0

32.0%

21.1%

0.0
36.8%

44.0%
37.7%

21.1%
25.3%

(Estimated to be about 3)
N.A.
(Estimated to be about 1.5)
-

4.1
15.0
1.0
-

10.0
52.5
1.3
-

Y15 million

Small profit
-

33.2%

-

1.1
-

3.2
-

(Ref) Prepared by Alpha-Win Research Dept. based on the news release, etc. Since some of the acquisition prices and amounts of goodwill
have not been disclosed, they have been estimated by Alpha-Win based on sales, net assets, total assets, level of profit, etc. The estimateshave not been confirmed by the Company.

15/31
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 Growth)

Issued: 6/6/2022

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

Goodwill Balance and Progress with Amortization
The year-end balance of goodwill has been on the rise due to acquisitions ofcompanies and businesses. Since the Company uses the Japanese accounting
standards and have been amortizing goodwill at a fixed amount in principle,
the amortization amount of goodwill has also been on the rise. Simply
dividing the remaining balance of goodwill by the annual amount of goodwill
amortization shows that it would take about five more years to complete
amortization (Figure 17). Also, when the annual EBITDA8 is divided by theamount of goodwill (balance), the ratio for the most recent period comes out
to be about 1.2-1.3x (even if goodwill was amortized in a lump sum, apositive annual EBITDA can be maintained). Both factors indicate that there
is no particular concern at this point.

w Goodwill is increasing but
is not at a concerning level.
(8) EBITDA = Operating
profit + amount ofdepreciation + amount of
goodwill amortization【Figure 17】Change in Yearly Goodwill Balance and Amortization
Annual Goodwill
Amount of goodwill (on balance sheet: million yen) ①
Annual amount of goodwill amortization (on CF statement: million yen) ②
Average amortization period ③＝①/② : year(s)EBITDA ④
EBITDA / (amount of goodwill) ⑤=④／①

FY 2014

FY 2015

FY 2016

FY 2017

0
0
0
273
0

0
0
0
373
0

0
0
0
286
0

0
0
0
174
0

FY 2018000
60

FY 2019
109
16
7.0
247
2.3

FY 2020
316
55
5.8
514
1.6

FY 2021 FY 2022 (H1)
Notes
450
478 ⇐ H1 balance84
49 ⇐ actual amount in H1
5.4
4.8 ⇐ calculated into full year638
640 ⇐ Full-year company forecast
1.2
1.3 ⇐ calculated into full year

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary. H1 = first half. ③ and ⑤ for FY 2022 (H1) have been
calculated into annual values (in italics). Similarly, EBITDA for FY 2022 (H1) is based on the Company’s full-year forecast (in italics).

w Due to active investments,
FCF became negative again
during this fiscal year’s
first half.

w Several M&As can be
conducted using its
available cash & deposits.

Semi-Annual Change in Cash Flow and Cash & Deposits
FCF turned positive in the second half of FY 2020 as profitability recovered
and investments passed their peak. In FY 2021, despite M&As, FCF
remained positive in both the first and the second half. During this fiscal
year’s first half, though, the FCF became negative again because of thedecrease in operating CF and the increase in investments due to theacquisition of Far End (Figure 18).
In addition, since the Company also conducted share buybacks and repaid
some of its long-term debt, its cash & deposits decreased from Y1,392 million
at the end of the previous fiscal year to Y1,214 million. Although it would
depend on the size of acquisitions, estimating the normal working capital tobe about two to three months of monthly sales, the Company should be able
to conduct several M&As of similar sizes as the past using its available cash
and deposits.

【Figure 18】Semi-Annual Change in Cash Flow and Cash & Deposits
Unit: million yen
Operating CF ①
Investing CF ②
Financing CF
FCF（①+②）
Cash and Deposits (on B/S)FY 2015
H1
H2
15
148
-5
-27
-3
0
9
121
666
787

FY 2016
H1
H2
48
93
-80
-69
-16
3
-32
24
738
762

FY 2017
H1
H2
121
23
-88
-106
-31
-0
33
-83
764
681

FY 2018
H1
H2
7
9
-94
-118
169
542
-88
-110
760
1,194

FY 2019
H1
H2
99
109
-368
-158
162
-262
-269
-50
924
774

FY 2020
H1
H2
92
429
-409
-101
391
-56
-317
328
847
1,119

FY 2021
FY 2022
H1
H2
H1
241
333
141
-35
-313
-262
-1
-23
-195
206
20
-121
1,342
1,392
1,214

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary. H1 = first half. H2 = second half.

w Acquired BOKUBLOCK, a
company that build EC
sites, as its consolidated
subsidiary. Will strengthen
the EC PF and expand into
new business areas.

◆ Recent M&A (acquisition of BOKUBLOCK INC.)
BOKUBLOCK INC.
Since the last research report (after the acquisition of Far End Technologies),
the Company has acquired BOKUBLOCK INC. (hereinafter,“BOKUBLOCK”), a company which builds EC sites and provides cloudbased EC services. The Company acquired 100% of its shares on May 31 asa wholly owned, consolidated subsidiary.
16/31

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 Growth)

Issued: 6/6/2022

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

Until now, the Company had mainly been conducting M&As for theMarketing PF, its area of expansion. However, due to market saturation andintensifying competition of the open-source EC site platform business, it
decided to acquire BOKUBLOCK to strengthen the EC PF and expand into
new business areas.
Among the EC-CUBE Integrate Partners, BOKUBLOCK is a PlatinumPartner, which is the highest rank (of the 143 partner companies, only nine
are Platinum Partners). It engages in a wide range of business, from building
highly unique EC sites using EC-CUBE to supporting operation.

w Provide a one-stop service
optimized for EC throughcollaboration between
companies
w Will reenter the
professional services
marketPreviously, the Company had been working with BOKUBLOCK as its
Integrate Partner under a divided-work business model. However, theacquisition will enable them to become vertically integrated in providing
open platform software for EC site building, as well as building EC sites andproviding marketing support.
Through collaboration between the two companies, it will become possible
to provide a one-stop service optimized for EC (the rivals would be EC-being
and ec-force). In addition, the Company will aim to reenter the professional
services market by leveraging BOKUBLOCK’s expertise and humanresources, create new solutions, and thus further expand business domains
and profits. In expanding business into the professional services, theCompany may also possibly conduct acquisitions in the field of EC contractdevelopment in the future.

◆ Strategy for Future M&As
w Will strengthen businessportfolio through in-housedevelopment and M&As

w Will continue to actively
conduct M&As forcontinued growth – a factor
that may cause changes inbusiness performance.
(9) LTV: Lifetime value orcustomer lifetime value. The
amount of profit generated bya customer during his or her
entire lifetime.

As a comprehensive marketing DX support company, the Company plans tobuild crucial components of its business portfolio by continuing toambitiously conduct M&As to incorporate businesses, expertise, and humanresources from the outside the company and thereby complement andstrengthen its existing businesses.
With the expansion of business domain through the two approaches of inhouse development of technologies and M&As, the Company will be able toprovide optimal, combined services to its client companies. It will thus aim
to maximize the LTV9. In both the Marketing PF and the EC PF, continuous
growth would require raising the added value, competitive edge, andsynergistic effects of the existing businesses and developing new areas ofbusiness. To achieve this, the Company will most likely continue to actively
engage in M&As, alliances, and more. Acquisitions of related businesses atabout 1-3 acquisitions per year, each at about 200 to 300 million yen, areexpected.
The YRGLM Group’s business performance may change significantly
depending on whether there will be M&As, the scale of the M&As, andwhether it will succeed in PMI (Post Merger Integration, the post-M&A
integration process which consists of three stages: management integration,business integration, and awareness integration). Going forward, the balance
between investment for growth and future return, or return on invested capital(ROIC), will likely become key to each project.

17/31
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 Growth)

Issued: 6/6/2022

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 2022 (first half)
Overview
Consolidated financial results for Q2 FY 2022 (the first half; October 2021 March 2022) were as follows: sales increased by +7.8% YoY (+115 million
yen) to Y1,581 million and operating profit decreased slightly by -0.9% YoY(-2 million yen) to Y176 million (Figure 19). Although sales and profits ofthe EC PF decreased, they were offset by the large sales and profit growth of
the Marketing PF.

w Sales hit a record high forthe first half, but profit
declined slightly.

There was no significant nonoperating profit/loss or extraordinary profit/loss
posted, and net profit ended up decreasing by 10.3% (-12 million yen) toY104 million. A record high for first-half sales were achieved.

【Figure 19】Comparison of Quarterly and First-Half Results
FY 2021(Units: million yen, %)Total Sales
Marketing Platform
EC Platform
Gross Profit
Gross Margin
SG&A Expenses
SG&A Expenses Ratio
Operating Profit (segment's)
Marketing Platform
EC Platform
Operating Margin
Marketing Platform
EC Platform
Recurring Profit
Net profit

FY 2022

Q1 (Oct-Dec) Q2 (Jan-Mar) Q1 (Oct-Dec) Q2 (Jan-Mar)
721
745
776
805
622
649
697
723
100
95
80
81
505
496
505
564
70.1%
66.6%
65.1%
70.0%
411
412
417
475
56.9%
55.3%
53.7%
59.0%
94
84
87
89
48
53
70
73
47
31
18
16
13.0%
11.3%
11.2%
11.1%
7.7%
8.2%
10.1%
10.0%
46.5%
32.6%
22.1%
19.7%
95
82
87
89
61
55
58
46

FY 2021

FY 2022

H1 (Oct-Mar)
1,466
1,271
195
1,002
68.3%
823
56.1%
178
101
78
12.1%
8.0%
39.7%
177
116

H1 (Oct-Mar)
1,581
1,420
161
1,069
67.6%
892
56.4%
176
143
34
11.2%
10.1%
20.9%
176
104

H1 FY 2022: comparison withprevious FY
Difference % Change / Difference
115
7.8%
149
11.7%
-34
-17.5%
67
6.7%
-0.7%
69
8.4%
0.3%
-2
-0.9%
42
41.3%
-44
-56.7%-1.0%
2.1%-18.9%-1-0.6%-12-10.3%(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary and financial results briefing materials

w In the first half, sales andprofits have presumably
been lower than expected.

w The new services
contributed to theMarketing PF’s results.
Profit margin improved,and sales and profits grewat double-digit rates.

Progress in the First Half
Progress in the first half in terms of the full-year, revised forecast was 46.5%
for sales (previous first half: 49.6%) and 51.8% for operating profit (previous
first half: 48.8%). Although the Company’s financial forecast for the firsthalf has not been disclosed, sales and operating profit both seem to havefallen short of the Company’s expectations.
Trends in Financial Performance by Segment: I. Marketing PF Segment
By segment, sales of the Marketing PF segment increased by Y149 million(+11.7% YoY) from the previous first half’s Y1,271 million to Y1,420
million in this first half. Similarly, its profit (operating profit) increased
significantly by Y42 million (+41.3% YoY) from Y101 million to Y143
million.
Profit increased due to sales growth owing to the M&As and the growth of
AD HOOP (new services), as well as improved profit margin owing to thetransfer to in-house developed assets and the costs cuts including the
reduction of server management costs (operating margin: 8.0% ⇒ 10.1%).

18/31
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 Growth)

Issued: 6/6/2022

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

Trends in Financial Performance by Segment: Marketing PF Segment (1) AD
EBiS
Until recently, the sales and profit growth of the Marketing PF had been
driven by the increase in the average unit price of AD EBiS, its core business(Figure 7 on page 8 and Figure 20). However, as the rate of increase in the
average unit price slowed down, the number of accounts also continued to
decline. AD EBiS’s sales in the first half ended up only slightly higher thanthe previous fiscal year (estimated by Alpha-Win Research Dept. to be+1.0%) (Figure 23).

w AD EBiS’s unit priceincreased at a double-digit
rate YoY but the growth rateis slowing down. On theother hand, its net numberof accounts has been
decreasing, resulting inalmost no change in AD
EBiS’s sales.

The average unit price was Y152,136 as of the end of the Q4 FY 2021(+25,311 yen or +20.0% YoY) ⇒ Y152,236 as of the end of the Q1 of thisfiscal year (+16,306 yen or +12.0% YoY) ⇒ 157,321 as of the end of Q2 ofthis fiscal year (as of the end of this fiscal year’s Q2, +16,235 yen or + 11.5%
YoY) (Figure 20). In the same order, the number of active accounts was 1,290⇒ 1,281 ⇒ 1,244 (as of the end of this fiscal year’s Q2, -119 or -8.7%
YoY), continuing a downward trend (Figure 21). This is because theacquisition of new customers had been less than expected and there wereseveral cancellations by customers in the low price range in Q2. However,the churn rate had decreased from 2.5% ⇒ 2.4% ⇒ 2.3% in the same order(2.9% in the Q2 of the previous year – improvement by 0.6 percentage points),
improving mostly as planned (Figure 22).

w Churn rate is decreasing
mostly as planned.

【Figure 21】Change in the Number of Accounts【Figure 20】Change in the Average Unit Priceof AD EBiS(Y)of AD EBiS

157,321160,000

1,600
152,236
141,086 152,136

140,000

1,500

146,310ADPLAN acquired

1,513

120,070
111,587

100,000

80,000

1,438
1,433
1,425

124,032

Change inprice system

1,543

1,516

1,300

126,825

1,464
1,451

1,363
1,244

1,413

1,200

107,143

Q4→Q1
seasonal
variability

acquired

1,569
1,518

1,400

135,930
120,000

ADPLAN

Change inprice system(# of accounts)

1,311
1,290
1,281

1,100

102,262

1,000

98,042
86,621
84,91879,52560,000

900
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 Q3 Q4 Q1 Q2

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 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2015

FY2022

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022(Ref) Figures 20-23 were prepared by Alpha-Win Research Dept. based on the financial results summary and financial results briefing materials.

【Figure 22】Change in the Churn Rate of

AD EBiS【Figure 23】Change in Sales of the Marketing PF by Business(quarterly)(Million yen)

3.5%
3.0%

2.8% 2.7% 2.9% 2.7%

2.5%

Definitions
2.5% 2.4%

2.3%

2.0％

2.0%
1.5%
1.0%
0.5%
0.0%

Q4
FY 2020

Q1

Q2

Q3

FY 2021

Q4

Q1

Q2

Q3

Q4

FY 2022 Result & Forecast

Service categories created722

Marketing PF (3) New Services
Marketing PF (2) Advertising Agency DX
Marketing PF (1) Ad Effect Measurement

・Monthly churn rate =churn amount during themonth ÷ previous month's
sales

649

Other*

・Since there is seasonalvariability in cancellations
due to when fiscal years
end for client companies,
etc., the 12-months moving
average was used to depict
trend.
1Q
Q1

2Q
Q2

3Q
Q3

FY 2016

4Q
Q4

1Q
Q1

2Q
Q2 3Q
Q3
FY 2017

4Q
Q4

1Q
Q1

2Q
Q2

3Q
Q3
FY 2018

4Q
Q4

1Q
Q1

2Q
Q2

3Q
Q3

FY 2019

4Q
Q4

1Q
Q1

2Q
Q2

3Q
Q3

4Q
Q4

1Q
Q1

FY 2020

2Q
Q2

3Q
Q3

4Q
Q4

1Q
Q1

FY 2021*Includes the THREe business that it withdrew from at the end of March 2020 and the previous Professional Service business (DMP business)

19/31
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.

2Q
Q2

3Q

FY 20224Q

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

Issued: 6/6/2022

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

Trends in Financial Performance by Segment: Marketing PF Segment (2)Advertising Agency DX
Sales of AdRepo, which account for most of the sales of this businesscategory, stayed about the same in the first half compared to the previous
fiscal year, but are expected to recover starting in the second half. On theother hand, the Company has not been actively working on increasing thesales of Ad-Knowledge, which have been on a gradually declining trend.

w The advertising agency
DX business has beensolid.

w M&As and the newservices contributed tosales and profit
improvements.

Trends in Financial Performance by Segment: Marketing PF Segment (3)New Services
Sales and profits increased (loss was improved) thanks to the contribution tosales by the three companies acquired in M&As (Spoo, TOPICA, and FarEnd) and the expansion of the new services such as AD HOOP. The
proportion of the new services in the total consolidated sales has also risen
steadily from 3% in the previous full fiscal year ⇒ 10% in the first half of
this fiscal year (estimated sales of Y89 million ⇒ Y156 million in the sameorder).

w Since the EC-CUBE’s
business model ischaracterized by a highmarginal profit ratio, thesales drop led directly to a
profit drop.

Trends in Financial Performance by Segment: II. EF PF Segment
On the other hand, the other segment or the EC PF segment’s sales decreased
by Y34 million (-17.5%) from Y195 million in the first half of the previous
fiscal year to Y161 million in this fiscal year’s first half due to some of its
customers ending their use of the Company’s EC platform because of
intensifying competition. Since this segment’s business model has a highmarginal profit ratio, the segment’s (operating) profit also decreased by Y44
million (-56.7%) from Y78 million to Y34 million.

w Due to the decrease of thegross margin and increaseof the SG&A expenses
ratio, operating margin
dropped slightly.

Trends in Overall Profit Margin
The gross margin fell by 0.7 percentage point from 68.3% in the first half ofthe previous fiscal year to 67.6% in the first half of this fiscal year (Figure24). On the other hand, SG&A expenses increased by +8.4%, slightly
exceeding the sales growth rate (+7.8%), and the SG&A expenses ratio
increased by 0.3 percentage point from 56.1% to 56.4% in the same order as
above. In sum, the operating margin in the first half fell by 1.0 percentage
point from 12.2% to 11.2%.

【Figure 24】Transition in SG&A Expenses Ratio and Profit Margins (Unit: %)Gross margin

（％）

90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
-10.0

63.8

66.5

64.7

O.P. margin

65.3
59.9

45.4
18.3

42.1
24.4

SG&A expenses ratio

71.4
65.9

49.3

70.8
66.9

15.4
5.4

3.9

70.0

68.9

67.6

56.6

56.4

10.6

12.4

11.2

FY 2020

FY 2020

H1FYFY2022
2022
H1

59.4

△5.5
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. H1 = first half.

20/31This 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 Growth)

Issued: 6/6/2022

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

Analysis of Factors that Increased/Decreased Profit in the First Half
Figure 25 shows an analysis of the factors that caused profit to increase or
decrease in the first half. As already mentioned, the increase in sales of theMarketing PF segment (+149 million yen YoY) and the increase in thetransfer to in-house developed assets (+54 million yen YoY) had helped
increase profit. On the other hand, factors that decreased profit included thesales decline of the EC PF segment (-34 million yen YoY), increase inpersonnel expense related to M&As and the existing businesses (+67 million
yen and +53 million yen, respectively), and the increase in expenses such as
advertising expense. The positive and negative factors nearly completely
offset each other, resulting in a profit decline of Y2 million since the previous
fiscal year.

w In the first half, profit
decline from the increasein personnel expense andsales decline of the EC PF
was nearly completely
offset by profit growthfrom the Marketing PF’s
sales growth and increasein the transfer to in-housedeveloped assets, resulting
in a slight profit decline.

【Figure 25】Factors that Affected Operating Profit in the First Half of FY 2022 (YoY comparison)(million yen)

400

54

350

4

149

300

-34

-67

250
200

-53

178

176

-36

Increase

150

-13

-3

Decrease100
50
0FY 2021
H1
OperatingprofitMarketingPF sales
growthEC PF
sales
declineIncrease in Decrease in Increased Increasedtransfer to depreciation personnel personnel
expenseexpensein-house
expensedue todue todeveloped
M&As
existing
assetsbusinesses

Increase in Increase in FY 2022
advertising goodwill
H1
expense amortization Operating
profitIncreasein otherexpenses(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials. H1 = first half.

Quarterly Change in Results
In both the first quarter (Q1) and the second quarter (Q2) of this fiscal year,
sales grew by about 8% YoY and hit record highs in a row. Also, thequarterly change in operating profit (Figure 26) shows that after posting a
profit in Q2 FY 2019 (January – March 2020) for the first time in sevenquarters, it has been maintaining an operating profit for 13 quarters in a row
through Q2 FY 2022 (January – March 2022).

w Hit record-high sales in bothQ1 and Q2.
w Since posting an operating
profit for the first time in 7
quarters, the Company has
maintained an operating profit
for 13 consecutive quarters.

【Figure 26】Quarterly Transition in Operating Profit(million yen)

Growth Phase

140
Stepwise
withdrawal fromEC contract dev.
business

120
100

43
35

80
41

60
40
20

24
28

22

19

35

36

9

33

11

22
67
41

35

41

69

36

77
45

Acquired
AdRepo

50

60

-40

EC Platform Segment

17

17
52
25

-1

Marketing Platform Segment

35

Changedcompany
name

38

19
46

30

47

53

21

17

16

65

70

72

13

4

0
-20

Acquired
ADPLAN

-8

15

14

-11
-38

-44 -3730

12-23 -15 -21
-1

9

3

33

8

51

15
-4

-5

-3

-60

80

79
51

Profit increased fromtransfer to assets due
to major function
development

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 Q3 Q4 Q1 Q2
FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary

21/31
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 Growth)

Issued: 6/6/2022

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18
w Shifted its business plan
toward emphasizing the
growth of profit. Positive
results generated from thebusiness restructuring andthe shift to thesubscription businessmodel.
w Over the past 2 years,
quarterly operating profit
has fluctuated within aboxed range.

w Initially expected asignificant sales and profit
growth.

w Revised this fiscal year’s
forecast downward. The
amount of increase individend was also revised
downward.

w The downward revision
was due to the acquisitionof new customers of AD
EBiS falling short of plan,
the less-than expectedsales from EC shopping
settlement fees, andincrease in cost fromstrengthened investment.

This has been due to the improvement in gross margin and SG&A expenses
ratio brought by the sales growth of AD EBiS, withdrawal from the nonprofitable businesses, improvement in EC-CUBE’s profit, acquisition ofpromising businesses, development of new businesses, business model shift
from pay-per-use to flat-rate subscription, cost control, and other factors.
However, operating profit for the last eight quarters has remained mostly thesame, staying within the range of Y83 million to Y114 million.

◆ The Company’s Financial Forecast for FY 2022 (full year
/ second half)
Full-Year Forecast
At the beginning of the fiscal year, the Company had planned for double-digit
sales and profit growth for the full year as follows: sales of Y3,600 million(+21.7% YoY), operating profit of Y470 million (+28.6% YoY), recurring
profit of Y460 million (+26.3% YoY), and net profit of Y320 million(+33.5% YoY). Sales had been expected to increase for the 12th consecutive
fiscal year to hit a record high, and each profit was expected to hit their record
highs for the consecutive year.
However, at the time of the announcement of the first-half financial results(May 6, 2022), the Company revised downward its annual sales forecast forthis fiscal year by Y200 million to Y3,400 million (+15.0% YoY; planningfor record-high sales). In addition, operating profit was revised downward by
Y130 million to Y340 million (-7.0% YoY), recurring profit was revised
downward by Y120 million to Y340 million yen (-6.7% YoY), and net profit
was also revised downward by Y110 million to Y210 million (-12.4% YoY).
Along with this, dividend per share was reduced from 7.5 yen to 7.0 yen(however, this is still a +1.8 yen rise in dividend compared to the previous
fiscal year).
The downward revisions were mainly due to the following two reasons.
・In the Marketing PF, sales of the new services were strong, but the rate ofincrease in the unit price of AD EBiS has slowed down and there was lessacquisition of new customers than expected, resulting in sales of AD EBiSthat were smaller than expected.
・In the EC PF, due to intensifying competition of EC platforms, somecustomers stopped using the Company’s platform, resulting in a decrease in
the sales of shopping settlement fees which have a high marginal profit ratio.
Investment was also increased.
Current Situation (monthly sales)
As described previously, the impact of the COVID-19 crisis on financial
results has been small since the Company’s business is mostly based on a
subscription-based business model and its business operations are highly
compatible with remote work.

w In April, the first month of
the second half, sales grewby 17.2% YoY (expecting
22.0% sales growth in thesecond half).

Figure 27 on page 23 shows the change in monthly sales for this fiscal year
as announced by the Company. Although the momentum of sales growth has
declined compared to the past few years, sales have still continued to increaseby around 6-10% YoY during this fiscal year. Overall sales for the first monthof the second half, or April, were Y260 million, having increased YoY at ahigh rate of 17.2% (+5.3% since the previous month or March), partly due tosome temporary factors. However, this growth rate is still below the rate
expected for the second half.
22/31This 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 Growth)

Issued: 6/6/2022

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18【Figure 27】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

2021

2022

Fiscal Year
Monthly Sales(thousand yen)
MarketingPlatform

This Fiscal
Year YTD(Oct 2021 Apr 2022)

FY 2022
Oct

Nov

Dec

Jan

Feb

Mar

Apr

233,052

231,281

232,702231,333

244,921

246,739

259,809

1,679,837

114.3

112.7

109.6

112.1

113.1

109.0

121.1

113.1

31,47323,73924,57534,69524,222

22,49432,168

193,366

88.2

65.2

86.7

87.8

82.8

85.5

93.0

84.0

264,526

255,021257,278

266,028

269,143

269,233

291,977

1,873,206

110.4

105.5

106.9

108.2

109.5

106.5

117.2

109.2

EC Platform

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

w In April, Marketing PF’s
sales growth rate increased
and EC PF’s sales decline
rate was improved.

w Progress with cumulative
sales of this fiscal year has
so far been slow compared
to its plan.

w Starting in June, theacquired company
BOKUBLOCK willcontribute to the sales of the
EC PF.

w The Company sees thesecond half as a time ofopportunity and will carryout large-scaletransformations of the main
services of both PF
segments.

w Will provide a major updateof the AD EBiS

By business, sales of its main Marketing PF segment have continued toincrease at a nearly double-digit rate, partly thanks to the new services andthe acquired subsidiaries. April’s sales were strong, having grown by +21.1%
YoY. On the other hand, in the EC PF segment, although cancellations by apart of the customers had caused the double-digit decline in sales to continue,
this decline phase has settled down and the rate of decline has been improving.
Partly due to some temporary factors, sales in April recovered to a decline of-7.0% YoY. Whether this recovery will continue would be a key point.
Cumulative overall sales for the first seven months of this fiscal year from
October 2022 to April 2022 (preliminary sum of monthly sales) were Y1,873
million, having increased by +9.2% YoY. This is below the full-year sales
growth rate expected by the Company (+15.0%). Progress for sales (in termsof the Company’s revised full-year forecast) was 55.1%, which is slightly
lower than 58.0% in the previous fiscal year compared to the actual full-year
result.
The sales of the acquired company, BOKUBLOCK, are expected to be added
to the EC PF starting in June. Assuming that BOKUBLOCK’s sales for thisfiscal year will be the same as the sales achieved in FY 2021 (ended
September), or Y139 million, dividing this value evenly over the year would
yield an estimated sales contribution of Y46 million for the four-month period(June-September 2022). This would increase the (monthly) sales growth rateby 4-5% in estimate during the relevant period.
Strategy for the Second Half
The Company regards the second half of this fiscal year as its greatest turning
point and opportunity since its founding. Toward further growth starting in
the next fiscal year, it plans to carry out large-scale transformations of themain services of both PF segments ahead of schedule (Figure 28 on page 24).
In the Marketing PF segment, the Company plans to sequentially provide thelargest major update of the main product AD EBiS (development and sales
promotion of the new version AD EBiS Sync) for its evolution into an
unparalleled service.
In addition, regarding the acquired company Far End’s project management
software Redmine (open source), the Company plans to work with Far End
23/31

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 Growth)

Issued: 6/6/2022
2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18
w Plans to promote sales of theto promote sales of My Redmine, the cloud-based subscription version. With
cloud-based, subscription
the increasing popularity of remote work and the promotion of DX, theversion of the project
management software of Far
demand for project management tools has rapidly increased, along with rapid
End, its acquired company.
growth in the number of users of My Redmine.
w AD EBiS Sync will
significantly raise usability
Regarding AD EBiS Sync, usability will be significantly improved by adding
through multiple functions.
The price will be kept thea media sync function10 that automates the retrieval and integration of media
same to achieve a net
data, as well as a unique function that automates ad management, which
increase in the number ofwould prevent data aggregation errors, improve operation efficiency, andaccounts.
(10) Media sync function: the firstfunction ever in the market toautomatically retrieve
measurement data of eachadvertising media (ad cost,
impressions, etc.) and integratewith the measurement data of ad
effect measurement tools. Will help
improve the efficiency of ad
performance reporting.
(11) Automatic advertising
function: a function that helps
reduce the amount of workload in
inputting various parameters formeasurement into each advertising
media (URL for ad submission,etc.). Currently pending for patent.
(12) Addition of options for index
import: increasing the types ofindexes that could be
automatically retrieved from a
media account. Expected to
improve usability and increaseusage among advertisers and ad
agencies.

facilitate constant sharing of information among a group of people. The
update will be conducted sequentially in three steps: the media sync function
has already been added in late April, the automatic advertising function11 isplanned for August, and the addition of more options for index import12 will
be done by the end of the year.

By keeping the price unchanged while significantly improving the functions(standard functions), the Company hopes to hold down the churn rate andacquire new customers. It expects the average unit price of AD EBiS in thesecond half to stay about the same as the first half. However, it is aiming fora net increase of 100 more accounts of AD EBiS by the end of the fiscal year
and a churn rate (KPI) of 2.0% (most recent rate: 2.3%). Currently, the switchof existing customers to AD EBiS Sync has been smooth, and future progressin gaining customers will be the key point.
In the EC PF segment, the Company plans to boost business by reentering theprofessional services market through the M&A of BOKUBLOCK andthrough synergy between the existing businesses and new profit opportunities
in the new areas of business. For the time being, the number of projects forbuilding/developing EC sites with EC-CUBE is expected to increase.

w Will develop the
professional services bycooperating with theacquired company
BOKUBLOCK【Figure 28】Strategy for This Fiscal Year (change in strategy regarding priority measures for eachservice category)I. Marketing PF

Strategy forthe 2nd Half

InitialStrategy(1) Ad Effect Measurement

Focus

Reduce churn rate byincreasing customer
success

Priority

Incredible
evolution of the
AD EBiS

I. Marketing PF

I. Marketing PF(2) Ad Agency DX(3) New Services

Create thefoundation forgrowth bystrengthening
the productCreate thefoundation forgrowth bystrengthening
the productII. EC PFStrengthened Investment
Focus
Create new services
Greater development
through in-houseof the new services
development and M&As
started in FY 2021

Strengthened Investment
Focus
Greater developmentof the new services
started in FY 2021

Create new services
through in-housedevelopment and M&As

Improve usability fordevelopers bystrengthening the productImproveusability fordevelopers bystrengthening
the productEnter theprofessional
services
market(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials with partial additions

24/31
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 Growth)

Issued: 6/6/2022

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18
w The Company expects a sales
growth of 22.0% YoY andoperating profit decline of
12.4% YoY in the second halfof this fiscal year.
w Compared to the first half,
too, sales growth and profit
declines are expected.
w In the second half, operating
margin is expected tosomewhat worsen due toupfront investment costs suchas those for sales promotion
and development of new
businesses.

w In both PFs, sales growth isplanned in the second half.
Positive effects of AD EBiS
Sync and growth in areas
such as the new businesses
are expected.

Plan for the Second Half
The Company’s forecasts for the second half, calculated by subtracting thefirst-half results from the full-year forecast, are as follows: sales of Y1,819
million (+22.0% YoY), operating profit of Y164 million (-12.4% YoY),
recurring profit of Y164 million (-12.4% YoY), and net profit of Y106
million (-14.1% YoY).
Compared to the first half of this fiscal year, it is expecting sales to increaseby about 15% in the second half, while the operating profit is expected todecrease by about 7% (sales are expected to increase by Y238 million
compared to the first half, while profit is expected to decrease by Y12 million).
Regarding the operating margin, which was 12.1% in the first half of theprevious fiscal year, 12.5% in the second half of the previous fiscal year, and11.1% in the first half of this fiscal year, the Company expects it to worsen
to 9.0% in the second half of this fiscal year.
This is because in the second half, as already mentioned, the Company plans
to strengthen its existing businesses (increased development and advertisingexpenses for the major update of AD EBiS) and have greater costs related to
upfront investments for future growth (M&A costs, etc.) such as those fordeveloping new businesses. It presumably expects the gross margin to worsen
and the SG&A expenses ratio to rise.
By PF, sales in the second half are planned to be Y1,590 million (+262
million yen or +19.7% YoY) for the Marketing PF due to positive effects
from AD EBiS Sync and other factors, and Y229 million (+66 million yen or+40.4% YoY) for the EC PF thanks to BOKUBLOCK. Sales growth isplanned for both PFs. Compared to the first half of this fiscal year, too, salesof the Marketing PF are expected to increase by Y170 million (+12.0%) andsales of the EC PF are expected to increase by Y68 million (+41.9%).
The proportion of the new services in the total sales for the full year is
expected to rise significantly to 14% (sales of about Y476 million) compared
to 3% in the previous fiscal year (sales of about Y89 million) and 10% in thefirst half (sales of about Y158 million).

◆ Alpha-Win Research Dept.’s Financial Forecast for FY
2022 (full year)
w We revised our forecast
downward for this full fiscal
year’s sales and profits toabout the same level as theCompany.
w The Company’s revised
forecast for this fiscal year
seems to be within a mostly
achievable range.

Revisions to This Fiscal Year’s Forecast
Based on the results of the first half, the current situation, and interview with
the Company, we revised our forecast for full-year sales and profits
downward to about the same as the company plan (Figure 29 on page 26).
In the order of our previous forecast ⇒ current forecast, the sales for thisfiscal year have been revised from Y3,500 million ⇒ Y3,365 million,
operating profit has been revised from Y470 million ⇒ Y350 million, andnet profit has been revised from Y320 million ⇒ Y215 million. Comparedto the Company’s revised forecast, we predict that sales will be Y35 million
smaller while profits will be achievable and end up slightly higher.
Company or business acquisitions will be the factors of uncertainty regarding
sales and various costs, but we have assumed that there will be no new, large
M&A during the second half other than BOKUBULOCK.
We used the following estimates/assumptions in preparing the forecast forthis fiscal year.
25/31

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 Growth)

Issued: 6/6/2022

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18(1) Sales in the second half are based on a slightly ambitious assumption thatthey will increase by +22% compared to the second half of the previous
fiscal year. Considering the monthly sales growth rate, too, sales may
end up slightly lower than expected. The estimated operating margin forthe second half seems somewhat conservative, though, and there is stillroom for cost control. Therefore, even if sales fall slightly short of plan,
the risk of another downward profit revision seems small.

w Considering the first-halfresults and future strategy forsales/marketing, we revised
down the estimated average
unit price and number ofaccounts of AD EBiS for thesecond half and the full year
and revised our forecast.

(2) In the Marketing PF segment, we revised downward our estimate for theannual average unit price of the core business, AD EBiS, from 157,000
yen ⇒ 156,300 yen. Because the Company’s strategy is to keep theprice unchanged for AD EBiS Sync, even if some cross-selling andupselling as well as a change in the customer mix occur, we estimate thatthe average unit price at the end of the fiscal year will be 158,000 yen,which is about the same as the end of Q2 with only a +679 yen or +0.4%
increase (+5,864 yen or +3.9% compared to the end of the previous fiscal
year). Regarding the number of accounts, it has been lower than we had
expected and has been continuing to decline. However, the introductionof AD EBiS Sync with unchanged price and significantly improved
functions is expected to lead to customer acquisition and cancellation
prevention thanks to improved usability. Estimating that the number ofaccounts at the end of the fiscal year will be 1,315 (company plan is 1,344
which is +100 compared to the end of Q2), we revised the annual average
number of accounts downward from 1,355 ⇒ 1,280. In consequence,
we also revised AD EBiS' sales forecast downward from Y2,500 million⇒ Y2,400 million.

w AD EBiS Sync, the newservices, and BOKUBLOCK
are expected to contribute tosales starting in the second
half.

(3) Due to the incorporation of the acquired companies (Far End,BOKUBLOCK, etc.) into the consolidated financial results, we expect
sales to increase by about a little more than Y100 million compared tothe second half of the previous fiscal year (assuming their sales to be thesame level as the previous fiscal year), calculating based on an even
distribution over the year. In addition, we expect the current new
businesses to increase sales and improve the profit/loss in the second half.

【Figure 29】Alpha-Win Research Dept.’s Revised Forecast for This Fiscal Year and Medium-Term Forecast(Million yen)

FY 2018 A

Sales
I. Marketing PF
II. 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
Sales (YoY growth rate)
I. Marketing PF
II. 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)
EBITDAKPIAD EBiS: # of active accounts% change for the above
AD EBiS: average unit price (yen)% change for the above
I. (1) Ad Measurement (AD EBiS): Sales

FY 2019 A

FY 2020 A

FY 2021 A

1,805
2,204
2,618
2,957
1,530
1,951
2,318
2,599
274
253
301
358
1,190
1,561
1,832
2,039
65.9%
70.8%
70.0%
69.0%
1,289
1,476
1,555
1,673
71.4%
66.9%
59.4%
56.6%
-98
84
276
365
-5.5%
3.8%
10.5%
12.3%
-115
79
261
364
-6.4%
3.6%
10.0%
12.3%
-89
-34
183
239
-4.9%
-1.5%
7.0%
8.1%
5.0%
22.1%
18.8%
12.9%
21.9%
27.5%
18.8%
12.1%
-41.1%
-7.6%
18.8%
19.2%
0.7%
4.9%
-0.8%
-1.0%
25.1%
14.5%
5.4%
7.6%
To loss
To profit
226.1%
32.2%
To loss
To profit
230.5%
39.5%
To loss
Improved loss
To profit
30.7%
5
247
513
638
Annual Average (A) Annual Average (A) Annual Average (A) Annual Average (A)
1,476
1,486
1,475
1,344
0.7%
-0.7%
-8.9%
78,93898,517
120,629
143,866
24.8%
22.4%
19.3%
1,402

1,747

2,127

I. (2) Advertising Agency DX: Sales

FY 2022 Initial CE

FY 2022 Revised CE

3,600
3,220
380
2,450
68.0%
1,980
55.0%
470
13.1%
460
12.8%
320
8.9%
21.7%
23.9%
6.0%

3,400
3,010
390

340
10.0%
340
10.0%
210
6.2%
15.0%
15.8%
8.8%

28.6%
26.3%
33.5%
770

-7.0%
-6.7%
-12.4%
640

FY 2022 Old E

FY 2022 New E

3,500
3,365
3,150
3,000
350
365
2,460
2,310
70.3%
68.6%
1,960
1,960
56.0%
58.2%
470
350
13.4%
10.4%
460
350
13.1%
10.4%
320
218
9.1%
6.5%
18.4%
13.8%
21.2%
15.4%
-2.3%
1.8%
0.3%
-0.3%
17.2%
17.2%
28.8%
-4.1%
26.4%
-3.8%
33.9%
-8.8%
770
650
Annual Average (E) Annual Average (E)
1,355
1,280
0.8%
-4.8%
157,000
156,300
9.1%
8.6%

FY 2023 CE

FY 2023 Old E

FY 2023 New E

FY 2024 Old E

FY 2024 New E

5,000
4,590
410

4,600
4,320
5,300
4,740
4,220
3,870
4,900
4,260
380
450
400
480
3,220
2,950
3,710
3,280
70.0%
68.3%
70.0%
69.2%
2,570
2,450
2,930
2,700
55.9%
56.7%
55.3%
57.0%
750
650
500
780
580
15.0%
14.1%
11.6%
14.7%
12.2%
620
500
750
580
13.5%
11.6%
14.2%
12.2%
420
320
510
380
9.1%
7.4%
9.6%
8.0%
47.1%
31.4%
28.4%
15.2%
9.7%
52.5%
34.0%
29.0%
16.1%
10.1%
5.1%
8.6%
23.3%
5.3%
6.7%
-0.3%
-0.4%
0.0%
0.9%
31.1%
25.0%
14.0%
10.2%
120.6%
38.3%
42.9%
20.0%
16.0%
34.8%
42.9%
21.0%
16.0%
31.3%
46.8%
21.4%
18.8%
1,000
820
1,140
910
Annual Average (E) Annual Average (E) Annual Average (E) Annual Average (E)
1,400
1,310
1,450
1,350
3.3%
2.3%
3.6%
3.1%
168,000
157,000
178,000
158,000
7.0%
0.4%
6.0%
0.6%

2,313

2,520

2,550

2,400

2,820

2,470

3,100

182

196

200

170

250

210

300

2,560
240

I. (3) New Services: Sales

104

504

476

400

430

1,500

1,150

1,190

1,500

1,460

I. Sum of Sales of (1) Ad Measurement + (2) Advertising Agency DX

2,495

2,716

2,534

2,750

2,570

3,090

3,070

2,680

3,400

2,800

2,599

3,220

3,010

3,150

3,000

4,590

4,220

3,870

4,900

4,260

I. Marketing PF (1) + (2) + (3)

1,530

1,951

2,318

(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 price and number of active
accounts are annual averages and therefore they differ from the Company’s estimates (which are averages of the end of the last month of each quarter). Actual
results (A) are simple averages of end-of-the-quarter figures.

26/31This 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 Growth)

Issued: 6/6/2022

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 Aiming for acomprehensive marketing
DX support businessw In addition to accelerating
growth of its current
businesses, it plans todevelop multiple newservices through in-housedevelopment and M&As.
w By the final year of themedium-term plan (FY2023), it plans to achievesales of Y5 billion,
operating margin of 15%,and DOE of 3% or more.
w Currently no change to theambitious goals for the
medium term.

Medium-Term Business Plan (VISION 2023): Strategy
There have been no changes to the medium-term business plan. The
Company has set out a plan called the MXP (“Marketing Transformation
Platform”) strategy. In this strategy, the Company plans to evolve its business
to not only provide specific services to its client companies but also provide
the optimal service as a comprehensive marketing DX support business.
Leveraging the strengths that it has built, the Company plans to accelerate thegrowth of the existing services and develop multiple new services in theMarketing PF and EC PF segments through in-house development andM&As. It will thus aim to maximize its group assets and synergies.
Medium-Term Business Plan (VISION 2023): Numerical Targets
In the final year of its medium-term business plan (VISION 2023) or FY 2023
(next fiscal year), the Company plans to achieve the following targets: salesof Y5 billion (Y3.4 billion planned for this fiscal year; +47% or +1.6 billion
yen in sales growth compared to this fiscal year), operating margin of 15%(+5% compared to this fiscal year’s plan of 10%), operating profit of greaterthan Y750 million (+410 million yen or +121% compared to Y340 million
planned for this fiscal year), and DOE of 3% or greater (+0.5% or morecompared to 2.5% planned for this fiscal year) (Figure 30). Although theseare very high goals compared to this fiscal year’s revised plan, they have notbeen changed.

【Figure 30】Numerical Targets of the Medium-Term Business Plan
Consolidated sales

Consolidated
operating margin

DOE

10.6％

2.0％

New services'
proportion of sales

Y2.95 billion

12.4％

2.3％

3.0％

FY 2022 Forecasts

Y3.4 billion

10.0％

2.5％

14.0％

FY 2023 Goals

Consolidated
sales

Consolidated
operating margin

DOE

New services'
proportion of sales

FY 2020 Results

Y2.61 billion

FY 2021 Results

Y5 billion

15％3％ or more

30％(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials
with partial additions/edits.

w Set the proportion of the
new services in the total
sales as its new KPI.

To achieve its goals, the Company plans to accelerate growth by creating new
businesses through M&As in addition to the growth of its existing and new
businesses. As its new KPI, it has introduced the proportion of the newservices (sum of the new services of the Marketing PF and the EC PF) in the
total consolidated sales. The proportion was 3% in the previous fiscal year,
8% in this fiscal year’s Q1, and 10% in this fiscal year’s first half, but isplanned to be raised to 14% for this full fiscal year and 30% in the next fiscal
year (FY 2023) (Figure 31 on page 28).
27/31

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 Growth)

Issued: 6/6/2022

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18
w Expecting sharp growth of
the new services.

w In the next fiscal year,
expecting the new services
to turn from loss to profit.

According to this plan, sales of the new services will need to increase sharply
from Y89 million ⇒ Y476 million ⇒ Y1,500 million in the order of FY
2021 ⇒ FY 2022 ⇒ FY 2023. Next fiscal year, sales growth of the newservices (+1,024 million yen compared to this fiscal year) is planned toaccount for 64% of the Company’s entire sales growth (+1,600 million yen
compared to this fiscal year).
Similarly, the overall operating margin is planned to improve by 5% from
10% to 15% in the next fiscal year. This is because the Company expects toachieve sales growth from AD EBiS Sync, the ad effect measurement service,in addition to improving the results of the Marketing PF’s advertising agency
DX business and new services from their current losses to profits.

【Figure 31】Numerical Targets of the Medium-Term Business Plan
MPF ①Ad Effect Meas.
MFP ②Ad Agency DX
MPF ③New Services
EC PF

Percentage of New Services(including M&As)

30％

MPF: abbreviation for Marketing PF

Percentage of New
Services (including
M&As)

10％
8%

3％

14％
FY 2022(Forecast)

Y3,480FY 2022(First-Half Result)million

FY 2022(Q1 Result)

Y1,580 million

FY 2021(Result)
Y2.95 billion

Y780 million

MPF: Y2.59 billion
EC PF: Y350 million

MPF: Y700 million
EC PF: Y80 million

MPF: Y1,420 million
EC PF: Y160 million

MPF: Y3,010 million
EC PF: Y390 million

FY 2023(Goal)

Y5

billion

MPF: Y4.59 billion
EC PF: Y410 million(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials with partial additions/edits.

◆ Alpha-Win Research Dept’s Forecast of Financial
w We predict that there will
be double-digit sales andprofit growths in both FY
2023 and FY 2024.
Expecting consecutive
postings of record-highsales and profits.
w We reflected the effects ofthe company acquisitions
in our forecast.
w We changed our mediumterm forecasts for AD
EBiS’s unit price andnumber of accounts too.

Results over the Medium Term
Medium-Term Forecast
The DX market for Internet marketing by Japanese companies, which is theCompany’s focus, has a high growth potential. In addition, although themacroeconomy is unforeseeable worldwide, the COVID-19 restrictions aregradually becoming relaxed, so we assumed that Japan’s economic activities
will also return to normal.
We expect double-digit sales and profit growth in FY 2023 and FY 2024, as
well as consecutive postings of record-high sales and profits, due to anincrease in the number of accounts owing to the full effect of AD EBiS Sync
and due to sales growth from the M&As and the new services in both PFs.
However, in the main Marketing PF segment, the Company has shifted its
strategy toward prioritizing the increase in the number of accounts of AD
EBiS while keeping its unit price unchanged. Therefore, we changed ourestimate of the unit price (annual average) for next fiscal year and the fiscal
year after the next from Y168,000 ⇒ Y157,000 and Y178,000 ⇒Y158,000, respectively. Similarly, we changed the estimated number ofaccounts (annual average) from 1,400 ⇒ 1,310 and 1,450 ⇒ 1,350 in thesame order.
28/31

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 Growth)

Issued: 6/6/2022

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

Along with this change, we also revised downward our forecast for the salesof the advertising effect measurement business. However, although the rateof growth will slow down, we predict the sales growth trend of this businessto continue. Going forward, depending on the change in the number ofaccounts of AD EBiS, the Company may possibly reconsider changing its
pricing strategy (expansion of low-priced service lineup, etc.). Whether it canmaintain the sales growth trend for advertising effect measurement would be
the key point.
w We revised upward oursales forecast for the EC PF,
expecting positive effectsof the acquisitions.
w Our profit margin forecasts
have been revised
downward.

w 当部では中期業績予想を修正。

The sales forecasts for this PF's advertising agency DX and new services havenot been significantly changed since sales so far have mostly been as expected.
In the EC Platform segment, we revised upward the sales for the next fiscal
year and the fiscal year after the next in anticipation of sales growth of theprofessional services due to the acquisition of BOKUBLOCK and synergy
with this company.
Regarding the profit margin, it was revised downward for the Marketing PF
segment compared to our previous forecast considering the change in theestimated unit price and the upfront investments for the new businesses. For
the EC PF segment, too, we revised the profit margin downward due to the
expected incorporation of BOKUBLOCK into the consolidated results(BOKUBLOCK's actual operating margin in the fiscal year ended September
2021: -5%) and upfront investments such as those for the professional
services. However, we predicted that the SG&A expenses ratio will decrease
through cost control and that the operating margin will still improve in boththe next fiscal year and the fiscal year after the next.
Overall, we have revised our forecasts for FY 2023 downward: sales havebeen revised from Y4,600 million ⇒ Y4,320 million (compared to ourforecast for FY 2022, a sales growth rate of +28.4%), operating profit has
been revised from Y650 million ⇒ Y500 million (similarly, profit growthrate of +42.9%; change in operating margin from 14.1% ⇒ 11.6%), and net
profit has been revised from Y420 million ⇒ Y320 million (similarly, a
profit growth rate of +46.8%) (Figure 29 on page 26).

w We expect profit growth tolead to dividend hikes overthe medium term.
w M&As and alliances are
possible ways that theCompany may use toachieve its goals. Whether
there will be M&As andwhether they will be
successful are the factorsthat may cause the results
to change.
w Over the medium term, wepredict an annual profit
growth rate of 15-20%.

We also revised our forecasts for FY 2024 downward: sales from Y5,300
million ⇒ Y4,740 million (compared to our forecast for FY 2023, a sales
growth rate of +9.7%), operating profit from Y780 million ⇒ Y580 million(similarly, a profit growth rate of +16.0%; operating margin from 14.7% ⇒
12.2%), and net profit from Y510 million ⇒ Y380 million (similarly, a
profit growth rate of +18.8%).
Regarding dividends, we assumed a DOE of 3% for both fiscal years. In linewith the change in the profit forecast, we revised the expected dividend
downward, but we have not changed our forecast that dividend will continue
to be increased along with the growth of profit.
Currently, the Company is in the stage of shifting resources to new or relatedareas of business by using the cash flow from its existing businesses. Goingforward, in addition to organic growth of the existing businesses, accelerated
growth is expected through the development of the new businesses, active
engagement in M&As, and synergies created from them. Over the medium
term, we believe that the Company may be able to maintain an annual profit
growth of about 15-20%. Whether there will be M&As and whether they will
be successful are the factors that may cause changes in financial results.
29/31

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 Growth)

Issued: 6/6/2022

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

9． Analyst’s View◆

w Dividend has been
generally increasing sincedividend payment was
resumed.
w Revised the amount ofdividend for this fiscal year
downward, but dividend is
still planned to be greaterthan the previous fiscal
year.

w Plans to raise DOE from
2.5% to 3% in the next
fiscal year. Dividend hikes
are possible in the next
fiscal year and onward too.

Shareholder Return

The Company resumed dividend payment (4 yen/share) in FY 2020 with therecovery of its business performance, and has been generally increasing
dividend since then. At the beginning of this fiscal year, it had planned toincrease dividend to 7.5 yen/share (compared to 5.8 yen in the previous fiscal
year: +2.7 yen/share). However, as already mentioned, due to the downward
revision of the financial forecast, the Company also reduced dividend to 7.0
yen/share (compared to the previous fiscal year: +1.2 yen/share) to adjust to
its policy to set this fiscal year’s dividend based on a consolidated dividendon equity ratio (DOE) of 2.5%. In FY 2023, it plans to raise the DOE to 3%
or more.
In response to the decrease in the Company’s expected dividend for this fiscal
year, Alpha-Win also decreased our forecast for this fiscal year’s dividend
from 7.5 yen/share to 7.0 yen/share. We also revised our financial forecast
for FY 2023 and FY 2024 and revised their expected dividend based on a
DOE of 3%.
However, since the YRGLM Group is still in the growth stage, we predictthat it will return to a profit growth trend starting in the next fiscal due toresults generated from its investment, which would lead to dividend hikes(Figure 32).

【Figure 32】Change in Dividend and Dividend Payout Ratio
Dividend (left axis)(Y)

Dividend payout ratio (right axis)

DOE (right axis)

12.00

50.0
10.80

43.2
10.00

9.30

35.0
7.00

6.00

5.00

4.00

13.8

12.2
2.8

2.6

FY 2015

FY 2016

FY 2017

25.0
20.0

4.00

20.1

18.7

2.1

30.0

5.20

5.00

4.50

0.00

45.0
40.0

8.00

2.00

（％）

0.00

0.00

0.0

0.0

0.0

0…

FY 2018

FY 2019

18.2

17.8

13.7

2.0

2.3

FY 2020

FY 2021

15.0
10.0

2.5

3.0

3.0

5.0
0.0

FY 2022 E FY 2023 E FY 2024 E(Ref) Prepared by Alpha-Win Research Dept. E: Alpha-Win’s forecast/estimate.

w Volatility of stock pricehas been high(13) Ad-technology: A genralterm for information
technology used in advertisingbusiness, referring to thedigital technologies used inInternet ads, etc.

◆ Stock Price, Trends, and Factors that May Affect Stock
Price
Stock Price and Trends
The Company’s stock is a small-cap, ad-technology13-related stock listed on
the TSE Growth Market. Since becoming listed, the volatility of stock pricehas been high (max of 5,260 yen in May 2016 and min of 677 yen in August2015). Stock price had been weak during the period that the Company’s
financial performance was worsening. However, with profit recovery, itbottomed out and had been fluctuating within a boxed range of 1,000 to 2,000
yen over the past five years or so.
30/31This 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 Growth)

Issued: 6/6/2022

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18
w Its recent stock price has
been weak due to thecorrections of small-cap
growth stocks in generaland the recent
announcement of
downward revisions.

Despite the difficult economic environment due to the COVID-19 crisis,business performance was strong and stock price had been rising since March
2020. However, small-cap growth stocks have become generally weak aslarge corrections occur in the stock market in response to the war in Ukraine,
China's lockdown, and monetary tightening against global inflation. In
addition, the announcement of the downward revision of business results forthe current fiscal year had become a negative surprise, causing the Company's
stock to sharply fall, hitting a new low for this year. However, after the selloff
phase, the stock price seems be starting to settle down at a low of about 700
yen. Since the beginning of the year, the stock price has been
underperforming the TSE Mothers and TOPIX indexes (Figure 33).

【Figure 33】Comparison of Performance Since the Beginning of the Year (based on closing price)
YRGLM
TSE Mothers
TOPIX

December 30, 2021
1,204987.94
1,992.33

June 3, 2022
736
670.37
1,933.14

Performance-38.9%-32.1%-3.0%(Ref) Prepared by Alpha-Win Research Dept.

w Judging from this fiscal
year’s forecast based on thestock price after
corrections, the key
valuation measures seem
somewhat high but withina mostly reasonable range.
(14) P/S: Ratio of stock price tosales = market capitalization /sales(15) PEG: P/E ÷ Expected
medium-term profit (EPS)
growth rate (per year)
w Considering its PEG andmedium-term financial
forecasts, the current stock
price is at a level that could
be considered forinvestment.

Valuation
Based on this fiscal year’s forecasted financial results, the Company’svaluation is as follows: P/E of 21.1, P/B of 2.5, P/S14 of 1.4, and dividend
yield of 1.0%. Valuation seems expensive compared to the average of the
TSE Prime Market (P/E of 13.9, P/B of 1.2, and dividend yield of 2.3% on asimple average). On the other hand, its valuation is cheap compared to theaverage of the TSE Growth Market (P/E of 110.1, P/B of 3.5, and dividend
yield of 0.3% on a simple average).
The EV/EBITDA ratio is within the average range, predicted to be 10.5 forthis fiscal year, 8.3 in the next fiscal year, and 7.5 in the fiscal year after the
next (Alpha-Win’s forecasts). Regarding the PEG15, it is less than 2, at about
1.1 to 1.4. Since the stock does not seem overpriced, if the excessive caution
against growth stocks in the entire stock market becomes corrected, the profit
growth potential over the medium to long term suggests that investment could
be considered (the expected P/E based on our revised financial forecast is
14.4 for the next fiscal year and 12.1 for the fiscal year after the next).

w Key points regarding stock
price are the number ofaccounts of AD EBiS, its
unit price, next fiscal year’s
results, and M&As.

Key Points Going Forward
Going forward, stock price may be affected by the following factors: KPIs
(especially AD EBiS’s average unit price, number of active accounts, andchurn rate, as well as the proportion of the new services in the total
consolidated sales), EBITDA, trends in monthly sales (YoY), quarterly
changes (profit growth rate and profit margins), the final financial results forthis full fiscal year, change in forecast for the next fiscal year, announcementsof M&As or alliances, announcement of new functions, the release of newservices and their contribution to results, measures to return profit toshareholders, and strengthened regulations such as those for the protection of
personal information.

w We will continue to watch
its growth as a domesticdemand-oriented growthstock in the marketing DX
support business.

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 hope to watch the Company’s growth,
including its change in sales and profit growth rates, as a domestic-demandoriented growth stock in the business of marketing DX support that is notdirectly largely impacted by COVID-19, inflation, and exchange rates.
31/31This 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.