Alpha-Win Company Research ReportYRGLM Inc. (3690 TSE Growth)
Issued: 5/31/2024● SummaryAlpha-Win Capital Inc. Research Dept.
https://www.awincap.com/

Business Description
・YRGLM Inc. (hereinafter, the “Company”) plans, develops, and provides services related to Internet marketing. It islisted on the Growth Market of the Tokyo Stock Exchange. Its CEO, Susumu Iwata, started the business as a college
student and founded the Company in 2001.
・Its main product is its originally-developed Internet ad effectiveness measurement system (AD EBiS), which has anextremely high market share (top share in the market). While small in scale, it is a leading company in a niche category.
・ Its strengths are its technological capability enabling highly accurate data measurement, employees with DX
expertise, the big data that it has accumulated as a frontrunner in the field, and its network with more than 500
corporate partners.
・As its main business, it provides cloud services to mid-tier and large companies based on a subscription-based
business model. Therefore, its business has high continuity, stability, and profitability.
・Since 2016, it had been working on a business model shift and the selection/focus of its business portfolio. Thisbusiness restructuring has already come to an end of a phase and has improved its business foundation and earning
power. Currently, the Company’s business is based on two business segments: Marketing DX Support (formerly,“Marketing Platform”) and E-Commerce Support (formerly, “EC Platform”).
・Since its founding to the previous fiscal year, the Company has been hitting record-high sales for 23 consecutive
years (including the period during which results were non-consolidated). Since FY2020 (note that its fiscal year is
September-ending, i.e., FY2020 ended in September 2020), it has continued to stably post a profit and has been
increasing dividends.
Results for the First Half of This Fiscal Year and Forecast for This Full Fiscal Year・In the first half of the current fiscal year (H1 FY2024: the cumulative total through Q2, from Oct. 2023 to Mar. 2024),
sales increased by 2.2% year-on-year (YoY) to 1,851 million yen, operating profit decreased by 49.2% to 106 million
yen, and net profit decreased by 59.8% to 52 million yen, resulting in a slight increase in sales but a significant
decrease in profit. The forecast for the first half of the fiscal year is not disclosed, but the results appear to have all
been in line with the Company’s expectations.
・In the Marketing DX Support segment, sales (to external customers; the same applies hereinafter) decreased to 1,437
million yen (-3.7% YoY) and profit decreased to 78 million yen (-50.3% YoY). On the other hand, in the E-Commerce
Support segment, sales rose to 415 million yen (+29.8% YoY) and profit decreased to 25 million yen (-52.8% YoY).
・In the Marketing DX Support segment, sales of the Marketing Process category declined due to the gradual decreasein the number of accounts of the highly profitable AD EBiS up through the end of the previous fiscal year. In addition,
investments were made in the development of new services, resulting in the segment’s profit decline. However, thenumber of accounts of this category including AD EBiS (KPI) has bottomed out after Q4 FY2023 and has been
increasing for two consecutive quarters since the beginning of this fiscal year, thanks to new contracts for the lowend plan (GSP), growth of CAPiCO, and decreased churn rate. Meanwhile, in the Incubation category, the Company
saw a slight decline in sales.
・In the E-Commerce Support segment, sales increased significantly thanks to the E-Commerce Website Building &Operation category, but profits declined due to lower sales of the Platform category and upfront investments fororganizational strengthening.
・Financially, the Company is essentially debt-free, thanks to the accumulation of capital and cash & deposits due toprofits. The equity ratio and current ratio are at sufficient levels and its financial structure is sound.
・The Company has maintained the full-year forecasts that were announced at the beginning of the fiscal year, which
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 the use ofor 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 thisReport 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: 5/31/2024

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

are as follows: full-year sales of 4,100 million yen (+13.1% YoY), operating profit of 240 million yen (-24.7% YoY),
and net profit of 140 million yen (-28.9% YoY). It plans to maintain sales growth and achieve a new record high, butsince it will continue to invest in the second half to develop its future growth drivers and increase their sales, profits
are expected to fall for the second fiscal year in a row.
・The Company is targeting a consolidated dividend on equity ratio (DOE) of 2.5% for this fiscal year. It plans to pay
an annual dividend of 7.9 yen per share (an increase of 0.5 yen compared to the previous fiscal year).
・The Company’s forecasts for the second half (calculated by full-year forecast minus first-half result) are as follows:sales of 2,248 million yen (+23.9% compared to the second half of the previous fiscal year), operating profit of 133
million yen (similarly, +22.6%), and net profit of 87 million yen (similarly, +32.8%). Significant increases in bothsales and profits are expected. The operating margin is expected to be 5.9%, almost the same as in the second half ofthe previous fiscal year (+0.2% compared to 5.7% in the first half of the current fiscal year). It seems to be expecting
the E-Commerce Website Building & Operation category and the Marketing Process category to contribute to results.
・We, Alpha-Win Research Department, had previously forecasted sales of 4,000 million yen, which were 100 million
yen below the Company’s plan. However, taking into account the first-half results, the current monthly sales trend, theCompany’s second-half plan, the slowdown in Incubation’s growth, and the delay in releasing the paid version of the
new service, we have revised our forecast further downward by 150 million yen to 3,850 million yen (+6.2% YoY).
Accordingly, we have also lowered our operating profit forecast by 30 million yen to 210 million yen, while we kept
the dividend forecast at 7.9 yen (based on a DOE of 2.5%).
Business Strategy and Medium-Term Financial Forecast
・In addition to the current fiscal year, we also reviewed our previous forecasts for the next fiscal year and the fiscal
year after the next and have revised them downwards, especially for the Marketing DX Support segment. However,from next fiscal year onwards, we expect an annual sales growth rate of about 10%, an even higher profit growth rate,and increases in dividends, since we expect sales growth from Marketing DX Support’s new services, Advertising
Effectiveness Measurement, and E-Commerce Website Building & Operation.
・Businesses related to Internet marketing (where the Company is concentrating its management resources) and ecommerce have a high market growth potential over the medium to long term. Furthermore, the Company plans toactively pursue M&A as its growth strategy. Sales growth is therefore expected.

・Since the Company is currently in the phase of making upfront investments for future exponential growth, thebalance between profits and investment costs will be a key point in management. Once the current upfront
investments peak out, we believe that the Company will return to an upward profit trend due to sales growth andprofit margin improvement brought by the expansion of its conventional and new businesses in both segments.
・The Company aims for an early achievement of consolidated sales of 10 billion yen as a ‘Comprehensive Marketing
DX Support Business Group’ (the specific timespan for achieving this has not been announced). It will achieve thisthrough stable growth of its conventional businesses over the medium term and expansion of new services in twoareas (E-Commerce Website Building & Operation and Marketing Process; “creation of new growth drivers”).
Stock Price
・ In November 2023, the Company announced measures to increase shareholder returns (dividend increase,
reintroduction of the shareholder benefit plan, and share buyback), upon which the share price soared from below
500 yen to the mid-700 yen range. Since then, the share price has been hovering around 600 yen. There were no
surprises in the first-half results, so the share price was not significantly affected.
・The Company is a small, Internet-related stock with high volatility in share price. Based on the forecasts for this fiscal
year, there is no sign of undervaluation in the key valuations.
・However, depending on the expansion of and contribution to earnings by the new service of the Marketing Process
category (which is expected to become a growth driver) and the E-Commerce Website Building & Operation category,the momentum of the Company’s overall financial performance may recover and the share price may rise.
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 the use ofor 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 thisReport 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: 5/31/2024

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

・The key factors that may impact stock price are the number of accounts, unit price, churn rate, and sales growth rateof the Marketing Process category; the sales proportion and sales growth rate of the E-Commerce Website Building& Operation category; monthly sales trends (YoY for both segments); quarterly profit and loss trends; this full fiscal
year’s results and the profit outlook for the next fiscal year and beyond (the timing that profit will begin increasing
again, the profit growth or decline rate, and the profit margin); the strengthening of shareholder return measures andtheir level (DOE increase, share buybacks, etc.); and announcements of M&A and alliances.
【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)

2021

A

2,957

12.9

365

32.0

364

39.5

239

30.7

38.0

257.5

5.2

2022

A

3,334

12.7

392

7.4

399

9.8

236

-1.5

37.7

283.3

7.0

2023

A

3,626

8.8

318

-18.8

329

-17.6

197

-16.5

31.4

309.1

7.4

2024

Initial CE

4,100

13.1

240

-24.7

230

-30.2

140

-28.9

22.7

-

7.9

2024

New E

3,850

6.2

210

-34.0

210

-36.2

125

-36.5

19.9

321.5

7.9

2024

Old E (previous)

4,000

10.3

240

-24.5

230

-30.1

140

-28.9

22.3

323.8

7.9

2025

New E

4,250

10.4

250

19.0

250

19.0

150

20.0

23.9

337.4

8.5

2025

Old E (previous)

4,400

10.0

300

25.0

300

30.4

180

28.6

28.6

344.6

8.5

2026

New E

4,680

10.1

280

12.0

280

12.0

170

13.3

27.0

356.0

9.0

2026

Old E (previous)

4,850

10.2

350

16.7

350

16.7

210

16.7

33.4

369.5

9.1

2023

Q1 A

879

13.2

97

10.8

102

16.7

69

18.4

11.1

249.1

0.0

2024

Q1 A

928

5.6

49

-49.2

52

-48.4

23

-66.0

3.8

291.9

0.0

2023

Q2 A

933

8.1

113

5.3

110

8.2

62

-16.5

9.9

298.5

0.0

2024

Q2 A

923

16.0

57

27.5

55

24.5

29

34.6

4.7

302.6

0.0

2023

H1 A

1,812

14.6

210

19.2

212

20.7

131

25.5

20.9

298.5

0.0

2024

H1 A

1,851

2.2

106

-49.2

107

-49.5

52

-59.8

8.5

302.6

0.0

2023

H2 A

1,814

3.5

109

15.8

117

19.6

66

7.1

10.5

309.1

7.4

2024

H2 CE

2,248

23.9

133

22.6

123

4.9

87

32.8

14.1

-

7.9

(Notes) A: actual results. CE: the Company’s estimate (forecast). E: estimate (forecast) by Alpha-Win Research Dept.
Old (previous): previous forecast. New: current forecast. Q1: Oct-Dec. Q2: Jan-Mar. H1 (first half): Oct-Mar. H2 (second half): Apr-Sept.

【 Stock Price and Valuation Indicators: 3690 YRGLM Inc.】
Item
Stock Price (Y)Shares Outstanding (thou.)

Figure B

Item

5/31/2024

P/E

P/B

602

Last FY (actual)

19.2

6,372

This FY (est.)

30.3

Market Capitalization (million Y)

3,836

Next FY (est.)

25.2

Dilutive Shares (thou.)

0.0

FY after the next (est.)

22.3

Last FY's DOE

62.7%

This First Half's Equity Ratio

Dividend Yield

Dividend Payout Ratio

1.9

1.2%

23.6%

1.9

1.3%

39.7%

1.8

1.4%

35.6%

1.7

1.5%

33.3%

2.5% Last FY's ROE

10.6%(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

2,500

Stock price (left axis)

1.10

Price relative to TOPIX (right axis)

1.00
0.90
0.80

2,000

0.70
0.60

1,500

0.50
0.40

1,000

0.30
0.20
8

9

0

1

2

08
/1

08
/1

08
/2

08
/2

08
/2

3
(M
M
/Y
Y)

7
08
/1

08
/2

6

0.10

08
/1

500

(Note) From the fourth week of Aug. 2016 to the closing price of the fifth week of May 2024 (5/31)【Performance】
PeriodReturnvs. TOPIX
1 month-4.9%-5.9%
3 months
-5.9%
-9.2%
6 months-9.7%-22.7%
12 months
2.9%-20.9%(Note) Prepared by Alpha-Win Research
Dept. Reflects stock price and TOPIX
through the closing price of 5/31/2024 (mostrecent value). In the calculation of
performance for each period, the stock priceand TOPIX at the end of the last month ofeach period were compared with their mostrecent values. For example, the performance
during the 1-month period is the comparison
between the closing price of the last day ofApril and May 31. Similar for the rest.

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 the use ofor 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 thisReport 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: 5/31/2024

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

Disclaimer
This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc.
(hereinafter “Alpha-Win”) on the request of the company presented in this Report.
This Report is not to be construed as a recommendation or solicitation of investment. Alpha-Win shall not beliable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use of or
reliance on this Report. Investors who read this report must make their own decisions on all investment mattersand take full responsibility regarding their investment.
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MV2024-0607-0003

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 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 the use ofor 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 thisReport 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: 5/31/2024

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

Contents
1．Company Overview ........................................................................................................................ P6
A Leading Company in a Niche Market ............................................................................................ P6
2．Business Contents and Business Model ........................................................................................ P8
Business Portfolio .............................................................................................................................. P8
Business Details: I. Marketing DX Support Segment1 ........................................................................ P9
Business Details: II. E-Commerce Support Segment2....................................................................... P12
3．Shareholder Composition ............................................................................................................ P14
Major Shareholder Composition ..................................................................................................... P14
4．History of Growth ......................................................................................................................... P15
Past Transition in Financial Results ................................................................................................ P15
5．Market Environment .................................................................................................................... P16
Trends of Japan’s Advertising Market ............................................................................................ P16
Trends of Japan’s E-Commerce Market ............................................................................................ P16
6．Results for the First Half of This Fiscal Year and Full-Year Forecast .................................... P17
Financial Results for the First Half of FY2024 ................................................................................. P17
The Company’s FY2024 Financial Forecast for the Second Half and the Full Year ...................... P23
Alpha-Win Research Dept.’s Financial Forecast for FY2024 (full year).......................................... P25
7．Growth Strategy ........................................................................................................................... P26
The Company’s Medium- to Long-Term Business Plan and Strategy ............................................ P26
Medium- to Long-Term Financial Outlook by Alpha-Win Research Dept. ................................... P27
8．Analyst’s View ............................................................................................................................... P29
Shareholder Returns ........................................................................................................................ P29
Stock Price, Stock Trends, and Factors that May Impact Stock Price ............................................ P29(Notes)In this Report, figures for the same item may slightly differ from those disclosed by the Company due to rounding.
1

Previous “Marketing Platform Segment”

2Previous “EC Platform Segment”
・On June 30, 2023, the name of the consolidated subsidiary BOKUBLOCK INC. was changed to EC-CUBE Innovations Inc. Then,on January 1, 2024, EC-CUBE Co., Ltd. absorbed EC-CUBE Innovations Inc.
・Upon translating to English, when the page numbers differed from the original Japanese version, they were adjusted to those of the
English version of this Report. Note that the Company’s fiscal year is September-ending (i.e. FY2024 ends in September 2024).

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 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 fromthe 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. 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: 5/31/2024

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

w Comprehensive Marketing

DX Support BusinessGroup. Top share in theJapanese software market
for Internet ad effectivenessmeasurement and opensource e-commerce website
building.

w Ambitiously developing

1. Company Overview◆ A Leading Company in a Niche Market
Company Overview
YRGLM Inc. (hereinafter, the “Company”) is a comprehensive marketingDX1 support company which plans, develops, and provides services andsoftware related to Internet advertising and e-commerce.

new businesses throughM&As and in-housedevelopment. Its current
main service is its SaaS
(cloud service) for Internet
ad effectivenessmeasurement.

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 its business rapidly
through its originally developed software. It has the top market share withboth AD EBiS, an Internet advertising effectiveness measurement tool2, and
EC-CUBE, an open-source3 software series for building e-commerce
websites. It is a leading company in a niche category.

(1) DX (Digital
Transformation)：transformationand innovation of businesses andlifestyles using digitaltechnologies

Currently, its main service is its Internet advertising effectivenessmeasurement system, provided as SaaS4 (cloud service). However, it has been
evolving into a Comprehensive Marketing DX Support Business Groupthrough active pursuit of M&A in addition to in-house development.

(2) Internet advertising
effectiveness measurement tool:
Tool for comprehensively
measuring and evaluating theeffectiveness of various Internet
ads and SEO strategies.
w Founded by its CEO
Susumu Iwata. Listed on the
TSE Growth Market.
(3) Open source: The source
code, which is basically the
blueprint of software, is madeavailable free of charge, allowing
anyone to revise and redistributeit.
(4) SaaS (software as a service):
A service in which software isused via the Internet (mostly
synonymous with the cloud).
Does not require purchasing of
packaged products. Only thenecessary functions, contents,
and quantity of service are used
via the Internet and paid for.
w The Company’s group iscomposed of sevencompanies including theCompany.
w The performance of its
consolidated subsidiaries
has recovered and isremaining solid,
contributing to sales.

History
Susumu Iwata, the Company’s CEO, started a web design business in Osaka
as a college student. Following business expansion, he established theCompany in 2001. The Company became listed on the TSE Mothers Market
in September 2014 (now called the TSE Growth Market). It currently has two
main offices, one in Osaka and one in Tokyo.
Change in Company Name
In August 2019, the Company changed its name from the previous LOCKON
CO., LTD., to YRGLM Inc.
Consolidated Companies and Trends in Consolidated Results
The YRGLM Group consists of a total of seven companies: the Company,
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.).
During FY2019 (note that the Company’s fiscal year is September-ending),
the EC-CUBE business was carved out of the parent company (and became aconsolidated subsidiary after the carve-out). This had caused changes in thebalance between consolidated and standalone performance results. Due to the
profitability and solid financial performance of EC-CUBE Co., Ltd., sales
growth and profits have been maintained for the sum of the consolidated
companies excluding the parent (consolidated minus parent company) since
FY2019 (Figure 1 on page 7).
The subsidiaries, which became included in the consolidated results upon
their acquisition, have expanded their business after the acquisition and havebeen contributing significantly to the Group’s sales growth (however, themost recent profit and loss figures for each company are not disclosed). The
Company did not announce non-consolidated results for this first half.

6/31This 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 fromthe 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. 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: 5/31/2024

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

FY2014
1,360
1,360
0
1.00
233.6
245.2
-12
0.95

FY2015
1,437
1,437
0
1.00
352.0
359.0
-7
0.98

FY2016
1,613
1,613
0
1.00
250.3
252.1
-2
0.99

FY2017
1,719
1,719
0
1.00
106.3
106.8
-1
1.00

FY2018
1,804
1,804
0
1.00
-115
-110
-5
-

FY2019
2,204
2,010
194
1.10
79
19
60
4.16

FY2020
2,618
2,317
301
1.13
261
165
96
1.58

FY2021
2,957
2,532
425
1.17
364
278
86
1.31

FY2022
3,334
2,583
751
1.29
399
315
84
1.27

FY2023
3,626
2,476
1,150
1.46
329
232
97
1.42

(Ref) Prepared by Alpha-Win Research Dept. based on the securities report. (Note) Consolidated results starting in FY2014 (applies to the rest of this Report).

Financial Standing
There was a period of negative free cash flow (FCF) in the past due to M&As
and large-scale investments, but since the second half of FY2020, the FCF
has been generally improving and the Company’s capital and cash & deposits
have been accumulating (Figure 2). As of the end of March 2024, or the endof the first half of this fiscal year, its debt totaled about 520 million yen while
its cash & deposits were about 1,370 million yen. Therefore, the Company isessentially debtless.

w Continuing to be
essentially debtless【Figure 2】Semi-Annual Change in Cash Flow and Balance of Cash & Deposits
Units: million yen
Operating CF ①
Investing CF ②
Financing CF
FCF（①+②）
Cash and Deposits (on B/S)

FY2016
H1
H2
15
148
-5
-27
-3
0
9
121
666
787

FY2016
H1
H2
48
93
-80
-69
-16
3
-32
24
738
762

FY2017
H1
H2
121
23
-88
-106
-31
-0
33
-83
764
681

FY2018
H1
H2
7
9
-94
-118
169
542
-88
-110
760
1,194

FY2019
H1
H2
99
109
-368
-158
162
-262
-269
-50
924
774

FY2020
H1
H2
92
429
-409
-101
391
-56
-317
328
847
1,119

FY2021
H1
H2
241
333
-35
-313
-1
-23
206
20
1,342
1,392

FY2022
H1
H2
141
292
-262
-181
-195
-121
-121
111
1,214
1,321

FY2023
H1
H2
356
209
-100
-57
-178
-115
256
152
1,408
1,452

FY2024
H1
261
-69
-273
192
1,370

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

Its total assets are 3.0 billion yen and its market capitalization is 4.0 billion
yen, both relatively small. However, its equity ratio is 62.7% and current ratio
is 198%, indicating financial soundness (all figures are as of the end of March
2024, or the end of this first half).

w The equity ratio is about
60%, indicating financial
soundness.

Goodwill has increased due to the acquisition of companies and businesses,
but is now decreasing due to amortization. Since the balance of goodwill asof the end of March 2024 was 300 million yen, which is about 56% of theforecasted EBITDA for this full fiscal year, a lump-sum amortization of
goodwill is also possible (Figure 3). Intangible fixed assets, which is a sumof goodwill and 380 million yen in software and software in progress, total
700 million yen. Adding deferred tax assets of 50 million yen to this, the total
comes out to be 750 million yen, which is smaller than the net assets of 1,910
million yen (39%) and therefore does not pose an issue.

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

Also, the Company owns 90% of the shares of its subsidiary EC-CUBE CO.,Ltd. Based on the amount for which a portion of the subsidiary’s shares was
sold to Orient Corporation (the amount as of November 2020), the Company
is estimated to own shares worth 1.4 billion yen in market value and an
unrealized gain of 1.37 billion yen.

w Estimated to have an
unrealized gain of a little
greater than 1.3 billion yen
owing to its subsidiary’s
shares.

【Figure 3】Change in the Balance of Goodwill and Amount of Amortization
Yearly Goodwill
Goodwill (balance on B/S: million yen) ①
Annual amortization of goodwill (on CF statement: million yen) ②
Average period of amortization (years) ③＝①/②
EBITDA ④
EBITDA/goodwill ⑤=①/④

FY2014000273
0FY2015000373
0FY2016000286
0FY2017000174
0FY2018000
60

FY2019
109
16
7.0
247
0.4

FY2020
316
55
5.8
514
0.6

FY2021
450
84
5.4
638
0.7

FY2022
484
108
4.5
686
0.7

FY2023H1 FY2024
362
301
122
122
3.0
1.2
628
535
0.6
0.6

(Ref) Prepared by Alpha-Win Research Dept. based on information including the financial results summary and briefing materials. The italicized figures under
H1 FY2024 are annual forecasts made by Alpha-Win (estimated based on H1 results).

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 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 fromthe 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. 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: 5/31/2024

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

2．Business Contents and Business Modelw Worked on restructuring its

business portfolio. Withdrew
from non-core businesses andconcentrated businessresources on AD EBiS of theMarketing DX Support
segment. In recent years, it
has been expanding its
business again, including the
E-Commerce Support
segment, through acquisitionsof businesses and companies
in peripheral areas.

◆Business Portfolio
Restructuring and Strengthening the Business Portfolio
Since FY2016, the Company had been actively restructuring andstrengthening its business portfolio. It increased its focus on the corebusinesses (shifting to AD EBiS of the Marketing DX Support segment),
separated its non-core businesses (E-Commerce Support segment), andcarried out M&As (Figure 4). This business restructuring has reached the endof a phase, though, and the Company is now in the stage of rapidly expanding
its business for the next level of growth, especially with the new businesses.

【Figure 4】Business Restructuring and Segments (New services are highlighted in yellow)
Segment

Main Service (or company name)① AD EBiS (includes GSP) and CAPiCO: advertising
effectiveness measurement tool
① AdRepo: automatic report generation tool for advertising
analysis

Category / Business(1) Marketing Process:A. Ad Effectiveness Measurement
B. Advertising Agency DX
I. Marketing DX
Support(formerly, Marketing
Platform)

C. New service (name not announced yet)

① New service: Tool to create "a continous cycle for
improving the effectiveness of marketing strategies" throughSaaS and human support

Changes

Business acquisition (August 2018)

Currently focused on updating and increasing the users of the beta version.
The official (paid) version was scheduled to be released in Q4 FY2024, but thishas been postponed to FY2025 or later.

① AD HOOP: marketing-specialized matching

Started service in May 2020; changed name to ADHOOP in Jan 2021

③ Spoo: web media/design & management services

Acquired as a wholly owned subsidiary (Dec 2020)④ TOPICA: SNS and video marketing support

Consolidated

Acquired as subsidiary with about a 60% stake (July 2021)⑤ Far End Technologies: project management tool

(1) Platform(formerly, EC-CUBE)
II. E-Commerce
Support(2) E-Commerce Webiste Building & Operation（formerly, EC Platform)(formerly, E-Commerce Webiste Building &Operation Support)

Parentcompany

Official version released in July 2021; sale of service is currently suspended.
Service ended in May 2024.

② eZCX: e-commerce-specialized CX improvement PF(2) Incubation(formerly, New Services)

Notes

ADPLAN business (acquired in Jan 2020; merged) was ended in March 2021

Acquired as a wholly owned subsidiary (Jan 2022)

EC-CUBE and ec-cube.co: open-source e-commerce website
building① EC-CUBE Innovation (former BOKUBLOCK) ⇒(absorbed by) EC-CUBE Co., Ltd.: e-commerce webitebuilding & operation and solutions

Transferred to EC-CUBE Co., Ltd., in Jan 2019; about 10% of shares sold toOrico; absorbed EC CUBE Innovations in Jan. 2024 for vertically integrated
operation

Consolidated

Acquired as a wholly owned subsidiary (May 2022) → Changed name to EC
CUBE Innovations (June 2023) → Shares transferred to EC-CUBE Co., Ltd
by YRGLM → company closed

Consolidated(Ref) Figures 4-7 were prepared by Alpha-Win Research Dept. based on information including the financial results summary and briefing materials.
Words in red in Figure 4 indicate changes during this fiscal year.

[Figure 5] Sales and Profit Breakdownby Segment (first half of FY2024)
E-Commerce
SupportBusiness Composition
Currently, the Company has two business segments: I. Marketing DX
Support (formerly, Marketing Platform) and II. E-Commerce Support(formerly, EC Platform).

Marketing DX
Support
22.4%
77.6%
24.7%

H1 FY2024

Sales (outer circle)
Operating Profit(inner circle)

The Marketing DX Support segment accounted for about 78% of total sales
in the first half of this fiscal year (Figure 5). This segment has long been thedriver of the Company’s overall sales growth (change in sales by segment:
Figure 6).

75.3%【Figure 6】Change in Sales by Segment (Units: million yen) 【Figure 7】Change in Operating Profit by Segment(Million yen)

Marketing DX Support

4,000

E-Commerce Support(Million yen)

358

200

301

1,000

422
666

0

150

253

2,000

FY2013477
883
FY2014526
911
FY2015

539

1,074

465

1,255

1,530

1,951

214

100

275
2,318

2,599

2,924

2,923

320

415

50
0

1,492

1,437

142
75

107

210
38

FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023 H1 FY2023H1
FY2024
H1
H1
FY2024FY2023

22

46 39

280

247

199

153

136

78

119

256
108

67

158
54

78

26

-1

-50

-60

-100

FY2016

E-Commerce Support

250

410

3,000

Marketing DX Support

300

703

-121

-150
FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023(Ref) Prepared by Alpha-Win Research Dept. based on information including the financial results summary and briefing materials.

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 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 fromthe 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. 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.

H1
H1FY2023
FY2023

H1FY2024
FY2024
H1

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

Issued: 5/31/2024

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

Each segment’s change in operating profit over the years is as shown in
Figure 7 on page 8. Excluding FY2017 and FY2018, during which businessrestructuring was carried out, an operating profit (segment profit) has beenposted by both segments during each full fiscal year.
w Excluding the period ofbusiness restructuring, bothsegments have been
profitable.

The Company’s current business portfolio is as shown in Figure 8 (thenumbers assigned to each business in Figure 8 match the numbers in Figure
4 and in this section’s description of business contents).

【Figure 8】Business Composition (as of the end of May 2024)

I. Marketing DX Support Segment (Marketing)(1) Marketing Process

II. E-Commerce Support Segment (Commerce)(2) Incubation

A：①

③

①

(1) Platform& Operation
Creative Agency

Open platform for ecommerce

No. 1 sales share inAdvertising agency

Japanʼs ad

matching platform

effectiveness

Decentralized video
media management⑤

B：①
CX improvement
platform

Cloud-based ecommerce platform
No.1 open-source
software for e-

E-commerce-specialized
AdRepo①④measurement market1②(2) E-commerce
Website Building①

Developing and providing

commerce website

project management tools

building in Japan by
number of users2(Ref) Prepared and updated by Alpha-Win Research Dept. based on past financial results briefing materials with some edits and 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 DX Support Segment
The Marketing DX Support segment’s breakdown of sales and change in
profit over the years are as shown in Figure 9.

【Figure 9】Change in Sales and Operating Profit of the Marketing DX Support Segment
Sales (million yen)
I. Marketing DX Support Segment(1) Marketing Process
A. Ad Effectiveness Measurement① AD EBiS (including GSP)AD EBiS's sales growth rate (YoY: %)・ CAPiCO (since Aug. 2023)
THREe (withdrew)
B. Advertising Agency DX① AdRepo
Ad-Knowledge(C) New service(2) Incubation① AD HOOP② eZCX (service ended in May 2024)③ Spoo (Mar. 2021)④ TOPICA (Aug. 2021)⑤ Far End (Feb. 2022)
Segment's Operating Profit
Segment's Operating Margin (%)

FY2014FY2015FY2016FY2017FY2018FY2019FY2020
FY2021
FY2022
FY2023H1 FY2023 H1 FY2024
Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated
883
911
1,074
1,254
1,530
1,951
2,318
2,599
2,924
2,933
1,493
1,438
883
911
1,074
1,254
1,445
1,775
2,135
2,313
2,368
2,402
1,224
1,179
722
822
1,012
1,200
1,402
1,747
2,127
2,313
2,368
2,222
1,135
1,089
722
822
1,012
1,200
1,402
1,747
2,127
2,313
2,368
2,222
1,135
1,088
27.3%
13.9%
23.1%
18.6%
16.8%
24.6%
21.8%
8.8%
2.4%
-6.2%
-3.7%
-4.1%
0
0
1
161
89
62
54
43
28
8
0
0
0
0
0
124
152
182
175
180
89
90
(Business acquired in Oct 2018 →)
124
149
169
167
180
89
90
3
13
5
Withdrew
0
0
3
89
390
525
269
258
20
41
56
25
19
1
6
5
2
1
38
59
79
36
26
28
189
230
127
119
0
97
158
75
89
142
214
210
153
-121
46
199
247
280
256
158
78
16.1%
23.5%
19.5%
12.2%
-7.9%
2.4%
8.6%
9.5%
9.6%
8.7%
10.5%
5.4%

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials and interview.
(Note) Includes Alpha-Win’s estimates (italicized). Sales are toward external customers. AD EBiS includes GSP.

w The Marketing DX Support
segment is composed ofthree business categories.

I. The Marketing DX Support segment currently consists of the following two
main business categories as shown in Figure 8: (1) Marketing Process and (2)Incubation.
During the first half of this fiscal year, the breakdown of sales in this segment
was as shown in Figure 9 and Figure 10 on page 10. While the sales
proportion of AD EBiS has decreased compared to one time, it still accounted
for the majority of this segment’s sales.
9/31This 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 fromthe 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. 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: 5/31/2024

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18【Figure 10】Breakdown of Sales ofMarketing DX Support(2) Incubation

18%
Marketing
DX Support
Sales
Breakdown
H1 FY2024(1) Marketing Process

82%(Ref) Prepared by Alpha-Win Research Dept. based on
the financial results briefing materials.

w Its core business is AD
EBiS, an originallydeveloped Internet ad
effectiveness measurement
system. It has the top sharein the Japanese market andaccounts for the majority of
the Company’s entire sales.
Highly stable businessbased on subscriptions.

w (5) Subscription model: fees arepaid periodically for the rightto use the service for a certain
period.
(6) Programmatic advertising:An advertising method inwhich optimization of ads is
conducted automatically or
supported immediately. After
submitting an ad, it is
optimized, leading to better
results.

w Advertising Agency DX

consists of only AdRepo, atool for fully automating
the creation of reports inprogrammatic advertising.

Note that (1) Marketing Process covers (A) Advertising EffectivenessMeasurement and (B) Advertising Agency DX of the Marketing DX Support
segment.
Below are the current businesses of the Marketing DX Support’s businesscategories and their main products (service or product name is marked inbold and underlined).

I. Marketing DX Support Segment(1) Marketing Process Category(A) Advertising (Marketing) Effectiveness Measurement
AD EBiS accounts for most of the sales of the ad effectivenessmeasurement business (GSP is included with AD EBiS as its low-end
service, while CAPiCO is a separate service but generates an insignificant
amount of sales).
① AD EBiS・Internet advertising effectiveness measurement system
・The Company’s originally-developed, core product (incredibly strong
position in the Japanese market with the top share of 86.7%, according
to the Japan Marketing Research Organization’s summary of its survey
on competition in designated areas for the period ended June 2021).
・ Enables the collective management, measurement, analysis, andvisualization of the effectiveness of Web ads and helps users
understand the cost effectiveness of ads.
・Subscription-based business model5
・A business based on flat-rate, periodic payments by users. Its sales are
determined by average unit price times the number of active accounts.
Both numbers are important metrices that impact not only theperformance of the AD EBiS business but also of the entire company.
(B) Advertising Agency DX
This business targeting advertising agencies consists of only AdRepo (ADHOOP has been moved to the Incubation category and the Company has
withdrawn from the Ad-Knowledge business).
① AdRepo
・Fully automated report-generation tool for programmatic advertising6
・A cloud service that has been developed to reduce the workload of
advertising agencies
・The business was acquired from another company in August 2018. The
Company plans to continue to work on expanding this business.
② Ad-Knowledge
・An original, cloud-based project management system specialized foradvertising agencies
・ Aimed at supporting advertising agencies that use programmatic
advertising in improving their operation and efficiency
・Service was started in July 2020, provided as a subscription service(SaaS). However, the Company withdrew from this business in January
2023.
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 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 fromthe 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. 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: 5/31/2024

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

Ⅰ. Marketing DX Support Segment(2) Incubation Category(See Figure 23 on page 20 for the sales of each business)

w The Incubation category

consists of the Company’s
originally developed
product AD HOOP and
the businesses of the 3
consolidated subsidiaries
acquired through M&As.

① 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, and then moved from theAdvertising Agency DX business. Since March 2023, service domains
have been expanded significantly. Aiming to increase new contracts
and cross-selling.
② eZCX・E-commerce-specialized CX improvement platform
・Helps improve CX (customer experience) on websites with greater
efficiency in acquiring new customers.
・Service was released in May 2021, but ended in May 2024.

w Has been acquiring

companies in businesses
related to Internet
marketing as consolidated
subsidiaries.

The Company has also acquired consolidated subsidiaries as described
below that operate in businesses peripheral to Internet marketing. All threeof the most recently acquired companies have been expanding theirbusinesses by leveraging their respective strengths and synergies with the
YRGLM Group. They have expanded their business domain, acquired
more customers, and strengthened their competitive edge.
③ Spoo (Spoo! inc.): consolidated subsidiary (wholly owned)
・Web media and design company. Founded in March 2000 and was
acquired by the Company in December 2020. Contract-development
service provided by a small team. Recruitment has been a challenge.
・ Leveraging Spoo’s creativity and talents to integrate with theCompany’s data and technology. Plans to thereby create new values,
expand into more areas of business, and strengthen its competitive edge.
④ TOPICA: consolidated subsidiary (60% stake)・Founded in May 2016. Acquired in July 2021.
・Developing a marketing support business that utilizes SNS and videos(ranging from the planning and production of video contents to SNS
account management services)
・With the acquisition, the Company plans to 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 and technologies withTOPICA’s SNS marketing business to create and provide new services.
⑤ Far End Technologies Corporation (hereinafter, “Far End”):
consolidated subsidiary (wholly owned)
・Founded in September 2008. Provides Internet services (SaaS) and IT
security support services.
・Acquired in January 2022 as a wholly owned subsidiary

11/31
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 fromthe 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. 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: 5/31/2024

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

・Its main business involves the development of the globally well-known,
open-source project management software Redmine and the paid,
cloud version of the software, My Redmine.
・In recent years, as COVID-19 made remote work more widespread andcommon, there has been greater demand for project progress
management. The number of accounts has been increasing steadily andsignificant growth can be expected.

w The E-Commerce Support◆ Business Details: II. E-Commerce Support Segment
Previously, the E-Commerce Support segment had only consisted of the
Platform business (category) or EC-CUBE. However, with the acquisition of
the former BOKUBLOCK INC. (which was later renamed EC-CUBE
Innovations and then absorbed by EC-CUBE Co., Ltd.), the Company has
reentered the professional services7 market (E-Commerce Website Building& Operation) (consolidated starting in June 2022).

segment consists of the ECommerce Website
Building & Operation
category and the Platform
category.

(7) Professional services: A
general term for services otherthan cloud tools; includes
consulting, accountmanagement, and contractdevelopment.

The annual sales breakdown and profit trends of the E-Commerce Support
segment are shown in Figure 11. Thanks to large synergies with the Company
and its platform, E-Commerce Website Building & Operation has contributed
significantly to the segment’s performance.

【Figure 11】Change in Sales and Operating Profit of the E-Commerce Support Segment
Sales(million yen)
II. E-Commerce Support Segment(1) Platform
EC-CUBE's sales growth rate (YoY: %)① Payment processing fee② Subscription③ Other(2) E-Commerce Website Building & Operation(formerly, BOKUBLOCK)Previous: (3) SOLUTION (transferred/withdrew)
Previous: ① E-commerce contract development, ecommerce website consulting, etc.
Of which, DMP (transferred)
Segment's Operating Profit
Segment's Operating Margin

FY2014FY2015FY2016FY2017FY2018FY2019FY2020
FY2021
FY2022
FY2023H1 FY2023 H1 FY2024
Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated
477
526
539
465
275
253
301
358
414
709
320
415
245
230
219
208
254
253
301
358
331
355
174
158
18.3%
-6.1%
-4.8%
-5.2%
22.2%
-0.4%
19.0%
18.9%
-7.5%
7.3%
8.1%
-9.2%
290
253
261
136
125
12
29
37
19
19
54
50
56
19
29
0

83

353

145

257

232

296

319

257

20

0

0

0

0

0

0

0

232

296

319

257

20

0

0

0

0

0

0

0

38
7.1%

104
-60
-12.9%

22
8.2%

39
15.4%

78
26.1%

119
33.1%

108
26.1%

67
9.4%

54
17.0%

26
6.2%

107
22.5%

136
25.8%

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials and interview.
(Note) Includes estimates by Alpha-Win (italicized)【Figure 12】Breakdown of Sales of
E-Commerce Support
Platform

38％

First Half of
FY2024

62％

E-Commerce
WebsiteBuilding &Operation(Ref) Financial results briefing materials.

w In the platform business,
the Company provides
software for companies tobuild and manage ecommerce websites on theirown.
w Gained top share in theJapanese market.

II. E-Commerce Support Segment(1) Platform Category (EC-CUBE)
Service Overview
・ The platform category (EC-CUBE) accounts for 38% of the ECommerce Support segment’s sales (Figure 12) and 9% of companywide sales.
・EC-CUBE is a software platform whereby companies can build andmanage e-commerce (EC) websites on their own.
・The Company provides EC-CUBE as web design software for companies
to 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 customizability, and high usability, it has
the top share in the Japanese market and has become the standard
platform.
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 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 fromthe 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. 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: 5/31/2024
2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18(8) Freemium model:
Business Model and Sales Breakdown“Freemium” is a coined word
・EC-CUBE is based on a freemium model8 in which software is offeredthat combines “free” andfor free, but in return, revenue is earned from peripheral services.
“premium.” Refers to a・Revenue
comes from payment processing fees paid by official partners
business model that generates
using the software for their Internet businesses (largest source of revenue
revenue by offering basicin the Platform category), ec-cube.co’s monthly subscription income, andservices free of charge whilecharging fees for moreother revenue (function addition fees for plugins, or programs to add
sophisticated or specially addedfunctions to software).
related services.

w The E-Commerce Website
Building & Operation
category accounts for 62%of the E-Commerce Support
segment’s sales and 14% of
total sales.

II. E-Commerce Support Segment (2) E-Commerce Website
Building & Operation Category
・Through a M&A, the E-Commerce Website Building & Operation businessof the former BOKUBLOCK has become included in this segment startingin the third quarter of FY2022.
・The E-Commerce Website Building & Operation category accounts for
62% of the E-Commerce Support segment’s sales and 14% of companywide sales.
・Currently, the Company’s subsidiary EC-CUBE Co., Ltd., is working on
both the Platform and the E-Commerce Website Building & Operation
categories. Entering the professional services market in full scale incollaboration with EC-CUBE, this category provides a one-stop service
based on a vertically integrated model.

w Growing rapidly throughsynergies within theGroup.

・Sales of the E-Commerce Website Building & Operation category tend tochange depending on size of the orders received for website-building
projects and their progress. Since the acquisition, sales have been growing
significantly thanks to synergies within the Group, which have helped it tosuccessfully gain large contracts (in the range of dozens of millions of yen
to more than a hundred million yen per project).

13/31
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 fromthe 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. 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: 5/31/2024

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

3．Shareholder Composition◆ Major Shareholder Composition
Major shareholders as of the end of March 2024 are shown in Figure 13. The
following is supplementary information.
・The major shareholders have not largely changed.
・Susumu Iwata, the Company’s CEO, is the largest shareholder and owns
approx. 44%. This is followed by the Company’s former executive officers
at second and third place. Together, these three shareholders possess about
60% of all issued shares.

w No significant change tothe major shareholders.
Parties affiliated with theCompany (the CEO,former directors andexecutive officers, and theemployee stock
ownership plan) possess
about 60% of all shares intotal.

・There is only a small amount of investment made by institutional investors
such as investment trusts. Most of the investments are made by individual
investors. The shareholders ranked from seventh to tenth place are allindividual investors.

w The Company boughtback its own shares. Its
shareholding ratio is now
3.2%, making it the fourthlargest shareholder.

・In November 2023, the Company purchased approximately 100 million yenof its own shares (corresponding to 154.6 thousand shares). In January2024, however, it disposed of 36,100 shares as restricted sharecompensation. As of the end of March 2024, the Company held 204,935 of
its own shares. This amounts to 3.2% of the total number of shares issued,
effectively making it the fourth largest shareholder.
・ The Company may use the treasury shares in the future for stock
cancellation, M&A and alliance strategies, or stock-based compensation
for its executives and employees.
・The Company may also choose to flexibly buy back its own shares using
its available cash and deposits.

[Figure 13] Current Major Shareholders(Units in the figure: thousand shares for the number of shares and % for the ratios)
Susumu Iwata (president and CEO)Hiroichi Fukuda (former executive vice president)
Kanako Mataza (former director and senior executive officer)
YRGLM Employee Stock Ownership Plan
Hakuhodo DY Media Partners Inc.
Rakuten Securities, Inc.
Tomonori Yamada (indiv.)
Satoshi Hasegawa (indiv.)
Hitoshi Nakagawa (indiv.)
Kayoko Nagano (indiv.)
Yoshihisa Yamashita (indiv.)
Mitsugu Shirai (indiv.)
J.P. MORGAN SECURITIES PLC
Custody Bank of Japan (trust account)
Custody Bank of Japan (securities investment trust account)
Yukio Tanaka (individual investor)
SBI SECURITIES Co., Ltd.
UEDA YAGI TANSHI Co., Ltd.
au Kabucom Securities
Mitsubishi UFJ Morgan Stanley Securities
Japan Trustee Services Bank (former name)
BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)
Trust & Custody Services Bank (former name)
GOLDMAN SACHS INTERNATIONALUEDA YAGI TANSHI Co., Ltd.
Katsuyuki Ito (indiv.)
Akiko Takashima (indiv.)
Kenichiro Wade (former outside director)
Yoshio Takayama (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)(Percentage of treasury shares: %)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
―
―
24
―
―
―
―
―
―
―
―
―
―
―
60
60
―
―
―
―
29
28
―
―
―
―
―
0
0.00%

End of Sept.
2018

2,819
961
354
69
60
72
―
―
―
―
―
―
―
―
―
―
―
―
―
―
60
―
29
―
―
52
29
―
―
―
―
―
―
―
1
0.02%

End of Sept.
2019

2,822
801
353
68
60
64
―
―
―
―
―
―
―
―
―
―
―
―
―
―
333
―
123
284
113
―
―
―
―
―
―
―
―
―
81
1.28%

End of Sept.
2020

2,825
781
352
71
60
―
―
―
―
―
―
―
221
169
―
―
86
62
58
―
―
―
―
―
―
―
―
―
―
―
―
―
―
64
1.01%

End of Sept.
2021

2,827
817
329
66
60
―
33
―
―
―
54
―
35
128
82
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
58
0.91%

End of Sept.
2022

2,809
779
329
69
60
―
36
37
―
―
54
―
34
103
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
112
1.75%

End of Sept.
2023

2,753
805
329
79
60
―
53
37
―
―
68
36
34
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
84
1.34%

End of Mar.
2024

2,706
805
329
69
60
56
53
37
27
24

Shareholding
Ratio

43.88
13.05
5.33
1.11
0.97
0.90
0.85
0.59
0.43
0.38

205
3.22%

Ranking

1
2
3
4
5
6
7
8
9
10

Essentially 4th(Ref) Prepared by Alpha-Win Research Dept. based on materials including the securities report. Words in red indicate groups andindividuals affiliated with the Company, including its current and former directors/officers and the employee stock ownership plan.

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 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 fromthe 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. 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: 5/31/2024

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

4．History of Growth◆ Past Transition in Financial Results
Sales (Chronological description; the same applies throughout this section)

w Posting record-high sales for・ For 23 fiscal years since its founding, sales have been consecutively
increasing and hitting record highs every fiscal year. During the 14 years from
FY2009 to FY2023, for which financial performance figures are disclosed,
sales have increased by about 6.3x from 570 million yen to 3,620 million yen(annual compound rate of about +14%).
・The Company has grown rapidly by predicting and meeting the needs ofsociety ahead of others to develop and release unique products and services
that are differentiated from other companies, while also carrying out M&As
and increasing the number of employees. Its growth has been supported by
the release and expansion of cloud services, especially with the rapid growthof its originally developed service AD EBiS of the Marketing DX Support
segment, as well as by the growth of the e-commerce market which has
helped the E-Commerce Support segment’s EC-CUBE to stably grow.

23 fiscal years in a row since
its founding

w Developed and released
unique products and services
that differentiate theCompany from othercompanies. Has grown
rapidly by actively carryingout M&As and by predicting
and meeting the needs ofsociety ahead of others.

Profit・Regarding profit, the Company had stayed profitable both on a standalone
and consolidated basis up through FY2017.
・In FY2015, a record-high operating profit of 350 million yen and a recordhigh net profit of 231 million yen were achieved. However, starting in
FY2016, the Company’s active engagement in business restructuring andupfront investments had increased the expenses, leading to a consecutive
decline in profit despite increasing sales.
・In FY2018, the Company recorded a loss (an operating loss of 98 million
yen and a net loss of 88 million yen) for the first time since becoming listedon the market, due to upfront investments mainly to hire more employees fordevelopment and sales (Figures 14 and 15).
・In the following FY2019, the Marketing DX Support segment’s sales grewby 20% thanks to its main product AD EBiS, so the Company was able topost both an operating profit and a recurring profit for the full year in aturnaround. However, due to extraordinary losses, it posted a net loss for thesecond consecutive fiscal year.
・ In the following year or FY2020, consecutive growth of sales andimprovements in costs resulted in a 3x growth in operating and recurring
profits 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 FY2021, the Company posted record profits for the first time in six years,
and in FY2022, operating and recurring profits both hit record highs for aconsecutive year.

w In FY2015, record-high profits
of the time were posted.

w Starting in FY2016, theCompany had conductedbusiness restructuring andupfront investments,
prioritizing acceleration of
future business growth overprofit. Net losses wererecorded consecutively in
FY2018 and FY2019.

w Then, sales increased andcosts improved in a V-shaped
performance recovery. In
FY2021, sales and profits hit
record highs, and in FY2022,
operating and recurring
profit hit record highs for aconsecutive year.

【Figure 14】Transition in Past Financial Results andthe Company’s Forecast for This Fiscal Year

【Figure 15】Change in the Number of Employees(Units: persons)(Units: million yen or %)Sales (left axis: million yen)

4,500

300

Operating profit (left axis: million yen)

Operating margin (right axis: %)

4,000
3,500
3,000

80.0%

250

70.0%

200

60.0%

150

50.0%

2,500
40.0%
2,000

100
50

30.0%

0

1,500
20.0%

1,000

10.0%

500

0.0%

0
500

-10.0%
FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

FY2024 CE

Development

98
68

71

33

33

35

38

FY2014FY2015

42

122
58

141

149

Other

167

249

221

236

141

146

80

90

95

FY2022

FY2023H1 FY2024

184

67

83

102

120

56

64

74

66

65

64

FY2016FY2017FY2018FY2019FY2020

FY2021

154(Ref) Figures 14 and 15: Prepared by Alpha-Win based on the securities
reports, financial results summary, and financial results briefing materials.
(Note) Consolidated results starting in FY2014; nonconsolidated prior to this.
CE: the Company’s estimate/forecast.

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 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 fromthe 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. 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: 5/31/2024

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 2023 (calendar year; the same
applies to this entire section) hit a record high at about 7.3 trillion yen, having
increased by +3.0% from the previous year. This recovery has been driven by
the increase in on-site events and the revitalization of tourism and travel, both
domestically and internationally, as the COVID-19 situation became more
controlled. With this growth in Internet advertising expenditure supporting
the overall market, particularly with the digitalization of society, theenvironment remains favorable for the Company’s internet-advertisingrelated business.

w In 2023, Japan’s total

advertising expenditure
showed a steady increase of
3% compared to theprevious year,
consecutively hitting arecord high.

Internet Ad Market (Annual)With the digitalization of the society, the e-commerce market boom, andgreater demand for video ads, the Internet advertising market (sum of medium
cost and production cost) has grown, albeit at a slower rate of +7.8% YoY, toabout 3.3 trillion yen. From 2005 (point of comparison, set at 100) to 2023,
the market has grown rapidly by 8.8x (annual growth rate of about +13.1%,
on a simple average) (Figure 16). As a result, Internet advertising expenditure
now accounts for 45.5% of total advertising expenditure (43.5% in theprevious year) as the largest medium. Its share has been steadily increasing
by a few percent every year (source: Dentsu Inc.’s “2023 Advertising
Expenditures in Japan”).

w Internet advertisingexpenditure has been
continuing to grow at ahigh rate. It has become thelargest advertising
medium.

【Figure 16】Change in Advertising Expenditure by 【Figure 17】Change in the B2C E-Commerce Retail Market
Size and Change in the E-Commerce Penetration Rate
Medium (Indexation: the year 2005 is set to 100)
900%

(Trillion yen)

850%

Size of B2C e-commerce retail market (left axis)

16.0

800%
750%

Internet ads

700%

8.8%

E-commerce penetration rate (right axis)

14.0

8.1%

The four mass media

650%

12.0

Total advertising expenditure

600%

Promotional media

550%

10.0

5.4%

500%

8.0

450%
400%

6.0

350%
300%

3.9%
6.0

4.4%
6.8

4.8%
7.2

8.0

5.8%
8.6

6.2%
9.3

6.8%

13.3

9.1%

9.0%

14.0

12.2

200%

6.0%
5.0%
4.0%
3.0%
2.0%

2.0

150%
100%

1.0%

0.0

50%

8.0%
7.0%

10.1

4.0

250%

10.0%

0.0%
2013年

2014

2015

2016

2017

2018

2019

2020

2021

2022

0%
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

(Ref) Figure 17: Prepared by Alpha-Win Research Dept. based on Dentsu Inc.’s “2023 Advertising Expenditures in Japan”
Figure 18: Prepared by Alpha-Win Research Dept. based on the “FY2022 E-Commerce Market Survey” by the Ministry of Economy, Trade, and Industry.

◆ Trends of Japan’s E-Commerce Market
w Japan's B2C e-commercemarket continues toexpand. A follow-wind for
the Company's ECommerce Support
business.

Market Size and E-Commerce Penetration Rate by Business Type (Annual)
The e-commerce market, which is the business area of the Company’s ECommerce Support segment, is also continuing to grow, so there continues
to be a large potential for business expansion (the following data is from the“FY2022 E-Commerce Market Survey” published by the Ministry of
Economy, Trade and Industry). In 2022, the size of the domestic B2C ecommerce market was 22.7 trillion yen (+9.9% YoY), of which the market
for retail was 14 trillion yen (+5.4% YoY), with the e-commerce penetration
rate reaching 9.1% (+0.3 percentage points YoY) (Figure 17). Similarly, thesize of the B2B e-commerce market was 420.2 trillion yen (+12.8% YoY)
and its e-commerce penetration rate has grown to 37.5% (+1.9 percentage
points YoY).
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 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 fromthe 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. 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: 5/31/2024

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

6. Results for the First Half of This Fiscal Yearand Full-Year Forecast◆ Financial Results for the First Half of FY2024
Summary
Consolidated financial results for the first half of FY2024 (first half or H1:
October 2023 to March 2024) were as follows: sales increased by 2.2% YoY(+39 million yen) to 1,851 million yen, while operating profit declined by
49.2% YoY (-104 million yen) to 106 million yen. While sales grew slightly,
profit declined significantly (Figure 18). However, sales still surpassed therecord high for first-half sales set in the previous fiscal year.

w Profits halved in the firsthalf of the fiscal year,
despite a slight increase insales.

By business segment, the Marketing DX Support segment reported lower
sales and profits, while the E-Commerce Support segment reported higher
sales and lower profits. Both saw a decline in profit margins and lower profits
due to increased costs as a result of greater investment for growth. Since there
were no major nonoperating profit/loss or extraordinary gain/loss posted, net
profit resulted in a decrease of 59.8% YoY (-79 million yen) to 52 million
yen.

【Figure 18】Comparison of Quarterly and First-Half Results
FY2023

FY2024FY2023

FY2024(Units: million yen or %)Q1 (Oct-Dec)

Q2 (Jan-Mar)

Q1 (Oct-Dec)

Q2 (Jan-Mar)

879
742
138
554
63.1%
457
52.0%
97
71
27
11.1%
9.6%
19.5%
102
69

933
751
182
576
61.7%
463
49.6%
113
86
28
12.1%
11.5%
15.1%
110
62

929
712
217
524
56.5%
475
51.1%
49
33
17
5.3%
4.6%
7.8%
53
24

922
725
198
532
57.7%
474
51.5%
57
45
9
6.1%
6.3%
4.5%
55
28

Total Sales
Marketing DX Support Segment
E-Commerce Support Segment
Gross Profit
Gross Margin
SG&A Expenses
SG&A Expense Ratio
Operating Profit (by segment)
Marketing DX Support Segment
E-Commerce Support Segment
Operating Margin
Marketing DX Support Segment
E-Commerce Support Segment
Recurring Profit
Net Profit

H1 (Dec-Mar)
1,812
1,492
320
1,130
62.4%
920
50.8%
210
158
54
11.6%
10.6%
17.0%
212
131

H1 (Dec-Mar)
1,851
1,437
415
1,056
57.1%
949
51.3%
106
78
26
5.7%
5.4%
6.2%
107
52

H1 FY2024 (YoY)
Change in% Change /Amount
Diff.
39
2.2%
-56
-3.7%
95
29.8%
-74
-6.5%
-5.3%
30
3.2%
0.5%
-104
-49.2%-79-50.3%-29-52.8%-5.9%-5.1%-10.8%-105-49.5%-79-59.8%(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary and financial results briefing materials. Sales of eachsegment are sales toward external customers.

w The first half’s progress interms of achieving the fullyear plan for profit was
somewhat low, but in linewith the Company’s
expectations.

w The Marketing DX Support
segment saw a slightdecline in sales but asignificant decline in profit
due to worsened profit
margins.

Progress in the First Half
Progress during this first half in terms of achieving the full-year forecast was
as follows: 45.1% for sales (50.0% in the previous first half), 44.2% foroperating profit (66.0% in the previous first half), and 37.1% for net profit(66.5% in the previous first half). Compared to the previous fiscal year’s first
half, progress has been slow. The Company did not announce its forecasts forthis first half at the beginning of the fiscal year, but it has commented thatboth sales and profits were in line with expectations.
Financial Performance by Segment: I. Marketing DX Support Segment
By business segment, sales of the Marketing DX Support segment (toexternal customers; the same applies hereinafter) decreased by 56 million yen(-3.7% YoY) from 1,492 million yen in the first half of the previous fiscal
year to 1,437 million yen in the first half of the current fiscal year. Similarly,
the segment’s (operating) profit halved from 158 million yen to 78 million
yen (-79 million yen or -50.3% YoY).
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 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 fromthe 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. 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: 5/31/2024

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

As discussed in more detail below, the decline in sales of the highly profitable
AD EBiS was the main reason for this segment’s decline in sales and profits.
In addition, increased investment in the development of the new services was
also partly responsible for causing the profit decline rate to be significantly
worse than the sales decline rate.

w Decline in sales of AD
EBiS and upfront
investment in new service
development are the main
reasons for the decline inprofits.

Regarding Marketing Process’ number of accounts, it has been recovering in
the current fiscal year. Consequently, sales of the Marketing Process category
were greater in Q2 than in Q1 (Figure 19).

w In Q2, sales of Marketing
Process increased
compared to Q1 in aturnaround.

【Figure 19】Change in (Quarterly) Sales of the Marketing DX Support Segment
Marketing Process

Incubation

742

751

129

139

724

717

712

725

129

133

130

128

Flat

Sales
Growthfrom Q1 to Q2

Q1

Q2

Q3

FY2021

Q4

Q1

Q2

Q3

FY2022

Q4

613

612

595

584

582

598

Q1

Q2

Q3

Q4

Q1

Q2

FY2023

FY2024(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials. Includes estimates.

Financial Performance by Segment: I. Marketing DX Support Segment(1) Marketing Process – A. Advertising Effectiveness Measurement –① AD EBiSIn the Marketing DX Support segment, sales and profit growth used to bemainly driven by the increase in the average unit price of its core product AD
EBiS.
w From this fiscal year, theaverage unit price, numberof accounts, and churn rate
are disclosed for the entire
Marketing Process category
instead of AD EBiS alone.

However, the rate of increase in the average unit price has slowed (the unit
price of AD EBiS appears to have increased slightly in the first half of thisfiscal year and seems to be maintained at a high level), and the number ofaccounts of AD EBiS had been decreasing up through the previous fiscal year.
Consequently, sales of AD EBiS in this first half appear to have declined YoY(by -3% to -5% as estimated by Alpha-Win).
Also, it should be noted that starting in this fiscal year, the Company haschanged its disclosure standard. It used to disclose the average unit price,
number of accounts, and churn rate for AD EBiS alone, but it now discloses
each of these figures for the entire Marketing Process category (the sum of
the accounts of AD EBiS, CAPiCO [excluding combined use with AD EBiS],
the low-end plan GSP, AdRepo, and the new SaaS).
Only some of the past figures are disclosed retrospectively under the newstandard. Each figure for AD EBiS alone under the previous standard is nolonger disclosed.
18/31This 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 fromthe 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. 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: 5/31/2024

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

Under this new disclosure standard, the average unit price of the Marketing
Process category was 160,657 yen at the end of Q4 FY2023 ⇒ 161,904 yenat the end of Q1 FY2024 ⇒ 162,190 yen at the end of Q2 FY2024 (slight
YoY increase in both Q1 and Q2 of this fiscal year), indicating a solid trend
despite the increase in the proportion of the low-end plan GSP (GSP
constituted 54% of all new contracts in the first half of this fiscal year) (Figure
20).

【Figure 20】Change in Marketing
Process’ Average Unit Price (yen)180,000

160,657 161,904 162,190

160,000
140,000
120,000
100,000
80,00060,00040,00020,000
0

Q1
1Q

Q2
2Q

Q3
3Q

Q4
4Q

Q1
1Q

FY2021

Q2
2Q

Q3
3Q

Q4
4Q

Q1
1Q

FY2022

Q2
2Q

Q3
3Q

Q4
4Q

Q1
1Q

FY2023Q2
2Q

3Q

FY2024(Ref) Financial results briefing materials.

Meanwhile, the number of accounts had been on a declining trend, but it has
increased for two consecutive quarters from 1,198 in Q4 FY2023 ⇒ 1,205 in
Q1 FY2024 (+7 QoQ) ⇒ 1,236 in Q2 FY2024 (+31 QoQ) (Figure 21; therecord high was 1,666 in Q2 FY2020).
4Q

In addition, the churn rate had been staying around the mid-2% range since
FY2022, but it fell to 2.2% in Q2 of this fiscal year (Figure 22).
w The unit price hasremained flat at a highlevel, the number ofaccounts turned to net
growth, and the churn rate
has improved.

AD EBiS had been experiencing cancellations due to changes in the media
environment, such as the third-party cookie regulations9 causing greater
market domination by the major platforms (e.g., the migration to GA4, theGoogle Analytics 4 property for access analysis) and platforms shifting tointerfaces with simpler ad effectiveness measurement and ad management.

(9) Third-party cookie
Regulations: Regarding
privacy protection regulations,see page 23 of Alpha-Win’s
Company Research Reportpublished in December 2022.

However, the number of accounts rebounded to an increase in the first half of
this fiscal year, as the wave of cancellations subsided partly due tostrengthened customer support from the Customer Success Team and as new
customers were gained mainly for GSP.

【Figure 21】Change in Marketing Process’ Number of Accounts(# of accounts)
AdRepoAD EBiS + CAPiCO*

1,198 1,205 1,236

Q1
1Q

Q2
2Q

Q3
3Q

FY2020

Q4
4Q

Q1
1Q

Q2
2Q

Q3
3Q

FY2021

Q4
4Q

Q1
1Q

Q2
2Q

Q3
3Q

FY2022

Q4
4Q

Q1
1Q

Q2
2Q

Q3
3Q

FY2023

Q4
4Q

Q1
1Q

Expecting the number ofaccounts to significantly
grow starting in FY2025 alongwith the sales expansion of
the new SaaS:
Reach a new record high forthe number of accounts by
FY2027Q2
2Q
FY2024FY2025

FY2026FY2027(Ref) Figures 21 and 22 were prepared by
Alpha-Win Research Dept. based on thefinancial results briefing materials.

VISION 2027

Notes

3.0%

【Figure 22】Change in the Churn Rate

2.5%

2.4%

2.5% 2.5%

2.4%

2.5%

2.4%

2.3%

2.4% 2.4% 2.4%

2.5% 2.5%

2.4%

2.2%

2.0%
1.5%
1.0%
0.5%
0.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2FY2021

FY2022

FY2023

FY2024・Monthly churn rate =churn amount during themonth ÷ previous
month's sales
・Since there is seasonalvariability in cancellations
due to when fiscal years
end for customers, etc.,
the 12-months moving
average was used toillustrate trends.

(Notes) The number of accounts using either AD EBiS or CAPiCO alone have been counted. Accounts using CAPiCO in combination with AD
EBiS are not counted. Since these are figures for paid accounts only, they do not include the accounts of the beta version of the new SaaS.

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 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 fromthe 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. 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: 5/31/2024

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

Financial Performance by Segment: I. Marketing DX Support Segment(1) Marketing Process – B. Advertising Agency DX – ① AdRepo
Regarding AdRepo, which accounted for the entire sales of the Advertising
Agency DX business, its sales were about 6% of the Marketing DX Support’s
sales in the first half (same proportion as the previous fiscal year’s first half).
Its sales are estimated to have been about 90 million yen and seem to haveincreased slightly compared to the previous fiscal year. Regarding AdKnowledge, the Company withdrew from the business in January 2023.

w Sales of the Advertising
Agency DX business havestayed flat.

Financial Performance by Segment: I. Marketing DX Support Segment(2) Incubation
Steady progress has been made with the originally developed service AD
HOOP and with the PMI10 of the three consolidated subsidiaries that theCompany has acquired through M&As (Spoo, TOPICA, and Far End
Technologies). Up through the previous fiscal year, their sales had
contributed to the segment’s sales growth.

(10) PMI (Post-Merger
Integration): The businessintegration process after
acquisition

However, partly since the Company concentrated its management resources
on Marketing Process and E-Commerce Website Building & Operation in thefirst half of this fiscal year, sales of the Incubation category fell from 265
million yen in the first half of the previous fiscal year to 254 million yen in
the first half of this fiscal year, a decline of 11 million yen or 4%. As a result,its proportion of sales to the entire company fell from 15% to 14% (Figure23).

w Sales of Incubation wereflat in this first half.

The Incubation category seems to be continuing to post an overall loss andthe challenge would be to turn this category profitable in the next fiscal year
onwards.

w The challenge is to makethis category profitable.

【Figure 23】Comparison of the Incubation Businesses’ Sales in the First Half
Sales of Originally Developed Services(Since May 2020)

Sales of Subsidiaries Acquired Through M&A(Since July 2021)(Since Dec. 2020)(Since July 2021)

127(Since Feb. 2022)

119

Last H1: First half of the fiscal year ended Sept. 2023
This H1: First half of the fiscal year ending Sept. 2024
Units: million yen

89
75
36

25

19

（Million yen)

（Million yen)

Last H1

26

Service ended in May 2024

This H1

2

1

Last H1

This H1（Million yen)

（Million yen)

Last H1

This H1（Million yen)

Last H1

This H1

Last H1

This H1(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials with partial edits

20/31
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 fromthe 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. 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: 5/31/2024

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18
w Sales of the E-Commerce
Support segment werestrong.

w Platform’s sales were flatin the first half of thisfiscal year.

w Large sales growth in the
E-Commerce Website
Building & Operation
category.

Financial Performance by Segment: II. E-Commerce Support Segment
E-Commerce Support, which is the Company’s other business segment,
recorded sales of 415 million yen in the first half of the current fiscal year, asignificant increase of 28.6% compared to the previous fiscal year’s first half.
On the other hand, its profit fell by 52.8% to 26 million yen. This segment
accounted for 23% of company-wide sales and 25% of profit (Figure 12 on
page 12).
Financial Performance by Segment: II. E-Commerce Support Segment(1) Platform
Platform’s sales in the first half of this fiscal year are estimated to have fallen
by 18 million yen (-10%) to 158 million yen from 176 million yen in theprevious fiscal year (sales were flat in Q1 and Q2). Due to increased
competition, the high-margin revenue from payment processing fees has
declined, which was one of the factors that caused the decline in the profit of
the E-Commerce Support segment.
Financial Performance by Segment: II. E-Commerce Support Segment(2) E-Commerce Website Building & Operation
Meanwhile, in E-Commerce Website Building & Operation, orders for new
projects were strong and contributed to higher sales. Sales in the first half of
this fiscal year were estimated at 257 million yen, an increase of 113 million
yen or 78% from 144 million yen in the previous fiscal year (both Q1 and Q2
recorded a high level of sales, significantly exceeding the same period of theprevious fiscal year; Figure 24).
However, the profit and loss figures seem to have temporarily deteriorated
due to increased personnel expense associated with organizational
strengthening.

w Its strength in ECommerce Support is theone-stop service based ona vertically integrated
model.

The Company has been steadily expanding the scale of business, though, by
providing a one-stop service that leverages EC-CUBE’s strengths based on a
vertically integrated model (supporting e-commerce through logistics,
customer attraction, operation, development, e-commerce applications, ande-commerce website building systems).
The Company aims to increase E-Commerce Website Building &Operation’s competitive edge, sales, and service security through moreversatile solutions for this category that will improve productivity andefficiency, as well as through EC-CUBE Enterprise (a system for building
large-scale and high-access e-commerce websites; currently being
developed) and EC-CUBE Official Security Check. Therefore, once thecurrent upfront investment phase is completed, a recovery in profitability canbe expected.

【Figure 24】Change in Quarterly Salesof the E-Commerce Support Segment(Million yen)

EC-CUBE
Other(Units: million yen)

E-Commerce Website Building & Operation

209
183

217
197

177

160
140
70

93

94 86

122 135

116

52

12

82 89 87 89 91 87 82 82

Q1

Q2 Q3
FY2016

Q4

Q1

Q2 Q3
FY2017

Q4

Q1

Q2

Q3

FY2018

Q4

Q1

Q2 Q3
FY2019

Q4

Q1

Q2 Q3
FY2020

Q4

Q1

Q2 Q3
FY2021

Q4

Q1

Q2 Q3
FY2022

Q4

Q1

Q2 Q3
FY2023Q4Q1 Q2
FY2024(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials. Includes estimates.

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 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 fromthe 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. 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: 5/31/2024

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

Trends in Overall Profit Margin
The gross margin fell by 5.4 percentage points from 62.4% in the first half ofthe previous fiscal year to 57.0% in the first half of the current fiscal year,
due to an increase in outsourcing expense and personnel for development, as
well as due to the rise in various costs caused by inflation (Figure 25). The
SG&A expenses also rose by +3.2%, at a somewhat higher rate than the rateof sales growth (+2.2% YoY). The SG&A expense ratio consequently rose
by 0.5 percentage point from 50.8% to 51.3% during the same period. As aresult, the operating margin halved from 11.6% in the first half of the previous
fiscal year to 5.8% in the first half of the current fiscal year.

w Gross margin fell, the
SG&A expense ratio rose,and operating margin
halved.

【Figure 25】Change in SG&A Expense Ratio and Profit Margins (Units: %)Gross margin

（％）

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

66.5

63.8

42.1

45.4

64.7

49.3

65.3
59.9

Operating margin
71.4

70.8

65.9

66.9

SG&A expense ratio

70.0

59.4

68.9

67.8

56.6

56.0

10.6

12.4

11.8

FY2020

FY2021

FY2022

59.8

57.0

51.0

51.3

8.8

5.8

5.9

H1 FY2024

H2 FY2024 CE

24.4

18.3

15.4
5.4

3.9
-5.5

FY2014FY2015FY2016FY2017FY2018FY2019FY2023(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials. CE: theCompany’s forecast.

Analysis of Factors that Increased/Decreased This First Half’s Profit
Figure 26 shows an analysis of the factors that caused profit to increase or
decrease in the first half of this fiscal year. As already mentioned, the decline
in sales of the Marketing DX Support segment (-56 million yen YoY) was
offset by the increase in sales of the E-Commerce Support segment (+92
million yen YoY). However, profit declined, mainly due to the 105 million
yen increase in personnel expense (including outsourcing expense) for the
expansion of the E-Commerce Website Building & Operation category in the
E-Commerce Support segment.

w Profit decline was causedby the increase in upfront
investments, especially inpersonnel expense.

【Figure 26】Factors that Impacted Operating Profit in the First Half of FY2024 (YoY comparison)(Million yen)

300

Increase
92

250

3

Decrease

210

-13

200

150

-56
-105
100

2

-6
-16

-8

Transfer of
in-housedeveloped
assetsAdvertising
Purchase
Cost

6

107

Other
expenses

H1 FY2024
Operating Profit-3

Personnel expense (including
outsourcing expense) increased due tothe expansion of E-Commerce
Website Building & Operation.

50

0
H1 FY2023
MarketingOperating Profit
DX
Support's
Sales

ECancellation
CommerceofSupport's intersegment
Sales
sales

MarketingDX
Support's
personnel
expenseECommerce
Support's
personnel
expenseRecruitment
expenseServerAdvertising
maintenanceexpenseexpense(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials.

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 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 fromthe 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. 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: 5/31/2024

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

Quarterly Trends in Results
While sales increased by 5.6% YoY in Q1 of this fiscal year, they fell by
1.1% in Q2, which was the first decline in quarterly sales (YoY) since Q1
FY2018. Regarding operating profit, it has been around 50 million yen since
Q3 FY2023 (April to June 2023) and has shown declines for four consecutive
quarters (profits were halved YoY) (Figure 27).

w Profits were halved inboth Q1 and Q2 comparedto the previous fiscal year.

【Figure 27】Quarterly Change in Operating Profit
Marketing DX
Support Segment(Million yen)

140

100

Changedcompany
name

43
35

80
41

60

20

Growth Phase

24

22 19

28 35

9

33
22

11
4
67 69

36 41 35 41

36Strategic Investment Phase

Acquired
ADPLAN

Stepwise withdrawal
from e-commerce
contract dev. business

E-Commerce
Support Segment

120

40

Strategic Investment Phase

35

Acquired
AdRepo

38

21

46 30

27

39

19

26

17 16 34

13
77

45 50

60

52
25

0

-1

17

17

15

30 9 33

14 12-8 -11

-20

-38

-44

-37

-23

8

-15 -21
-1

-40

3

51 51

47 53

65 70 72

62

74 71

86

2

-4

-5

9

8
16

48 49

15

-3

-60

80

79

32

45

Profit increased due totransfer to assets associatedwith 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 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

FY2024(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials and financial results summary◆ The Company’s FY2024 Financial Forecast for theSecond Half and the Full Yearw The Company maintains
its initial full-year planand expects double-digit
sales growth and profit
declines. Sales are planned
to reach a new record high.

w Generally in line withbusiness strategy and plan.

Full-Year Forecast
The Company has not changed the full-year financial forecasts that wereannounced at the beginning of the fiscal year. It plans for a double-digit sales
growth but declines in profits of around 20-30%, with sales of 4,100 million
yen (+13.1% YoY), operating profit of 240 million yen (-24.7% YoY),
recurring profit of 230 million yen (-30.2% YoY), and net profit of 140
million yen (-28.9% YoY). Sales are expected to reach a consecutive record
high, but profits are forecasted to fall since it will continue to invest in growth.
Business Strategy
Although the launch of the SaaS (new service) is somewhat delayed, thebusiness strategy for the current fiscal year is generally being implemented
in line with the plan (Figure 28).

【Figure 28】Business Strategy for This Fiscal YearFY2024 Theme

KPI

Refine the growth drivers and strengthen the foundation for
accelerating sales growth starting in the next fiscal year

Entire Company

Sales proportion of the new services was removed from company-wide KPIs in linewith changes in strategy and business fields.

Marketing DX
Support

Number of accounts of Marketing Process (the first aim is to reverse the trend)

E-Commerce
SupportSales proportion of E-Commerce Website Building & Operation(further expansion)

FY2025 - FY2027

VISION 2023

Clearly identified the two growth drivers
Through FY2023

FY2024FY2024

Accelerated sales growth
FY2025

FY2026FY2027VISION 2027

(Ref) Financial results briefing materials.

23/31This 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 fromthe 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. 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: 5/31/2024

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

Financial Forecast for the Second Half
The Company plans for double-digit sales and profit growths in the second
half (second-half forecast was calculated by full-year forecast minus first-halfresults), with sales of 2,248 million yen (+23.9% YoY), operating profit of
133 million yen (+22.6% YoY), and net profit of 87 million yen (+32.8%
YoY) (operating margin of 5.9%; Figure 29). Compared to the first half ofthe current fiscal year, it expects an increase in sales (+397 million yen or+21.4%) and an increase in profit (operating profit: +26 million yen or+24.8%) in the second half.

w In the second half, theCompany plans to increase
sales and operating profit bymore than 20% YoY.

It seems to be expecting this rapid recovery in performance in the second half
due to the expected growth in the number of accounts of the Marketing
Process category, the recovery of Incubation, and sales growth from the
expansion of the E-Commerce Website Building & Operation category.

【Figure 29】Financial Forecast for This Fiscal Year’s Second Half
(Units: million yen or %)Total Sales
Operating Profit
Operating Margin
Recurring Profit
Net Profit

FY2023
H2 (Apr-Sept)
1,814
109
6.0%
117
66

FY2024 CE
H2 FY2024 (YoY)
H2 (Apr-Sept)
Change in Amount% Change / Diff
2,248
434
23.9%
133
25
22.6%
5.9%
-0.1%
123
6
4.9%
87
22
32.8%

(Ref) Financial results summary (Note) CE stands for the company forecast (full-year forecast minus first-half result)

Current Situation (monthly sales)
Figure 30 shows the monthly sales figures as disclosed by the Company. In
the current fiscal year so far (October 2023 to April 2024), sales on acompany-wide basis have either been increasing YoY at a single digit rate, or
else decreasing. Compared to data over the past few years, the sales
momentum has declined.

w The monthly sales
momentum (YoY) has
declined.
w Sales in April, the first monthof this second half, were 1.2%
lower than in the same monthof the previous fiscal year.
This deviates largely from theCompany’s expectation for a
24.0% sales growth in thesecond half.

In April, the first month of this second half, company-wide sales were 302
million yen, down 1.2% YoY. This is below the Company’s planned sales
growth rate of 24.0% in the second half (it forecasts a full-year sales growthrate of +13.1%, but the growth rate has been +1.7% up through April).
By business segment, monthly sales of the mainstay Marketing DX Support
segment have continued to decline YoY in the current fiscal year. The decline
in the number of AD EBiS’s accounts up to the end of the previous fiscal year
and the struggles with the Incubation category are presumed to be the main
reasons for this decline in sales, although the decline in accounts seems tohave stopped recently. On the other hand, the E-Commerce Support segment
is performing well, maintaining an overall increase in sales, except in
February, thanks to the expansion of the E-Commerce Website Building &Operation category (note that monthly sales and their rate of increase or
decrease tend to be impacted by whether or not large projects are booked).

w Sales of the Marketing
Support segment hascontinued to fall YoY. Salesof the E-Commerce Support
segment are generally
maintaining an upward trend.
(Ref. for Figure 30) Prepared by Alpha-Win Research
Dept. based on the monthly announcements postedon 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.

【Figure 30】This Fiscal Year’s Monthly Change in Sales (flash report)(Upper row is sales in units of thousand yen; lower row is YoY change in units of %)Calendar Year
Fiscal Year
Monthly Sales (thousand yen)
Marketing DX Support Segment
E-Commerce Support Segment
Entire Company

2023

2024

Cumulative for This
Fiscal Year So Far(Oct. 2023 to Apr. 2024)

FY2024
OctoberNovember

DecemberJanuary

February

March

April

232,034

242,656

236,897

238,831237,968

248,286

235,091

93.5

97.6

96.9

98.7

95.1

96.0

96.3

1,671,763
96.3

72,28065,67879,35067,98052,14877,601

66,700481,737

145.9

153.7

174.3

111.2

82.7

134.4

108.5

126.4

304,315

308,335

316,247

306,812290,117

325,887

301,792

2,153,505

102.2

105.8

109.1

101.2

92.6

103.0

98.8

101.7

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 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 fromthe 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. 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: 5/31/2024

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

u Alpha-Win Research Dept.’s Financial Forecast for
FY2024 (full year)
Revisions to This Fiscal Year’s Forecast
Based on the results of the first half, the current situation (monthly sales
trend), and interviews with the Company, we have revised our full-year sales
forecast downward by 150 million yen, from 4,000 million yen in ourprevious forecast to 3,850 million yen in our current forecast (the same orderapplies below; Figure 31). Our new forecast is 250 million yen below the
Company’s forecast.

w Our sales and profit forecasts
have been revised
downwards in light of thefirst-half results and thecurrent situation. We have
kept our dividend forecast
the same as our previous
forecast (the same amount as
the Company’s plan).

Accordingly, we have revised our operating profit forecast downward from
240 million yen to 210 million yen and our net profit forecast downward from
140 million yen to 125 million yen. The new forecasts are 30 million yen and
15 million yen lower than the Company’s plan, respectively.
In the second half of the fiscal year, the Company expects high rates of bothsales and profit growth. This plan may not be achieved, though, especially
due to stagnant sales in the Marketing DX Support segment (mainly with thestagnation of Incubation and the delay in the launch of the paid version of the
new service), and also due to the sluggish growth of the Platform category in
the E-Commerce Support segment.
The rebound in the number of accounts and the high average unit price being
maintained are positive factors. However, sales growth of GSP and CAPiCO(post-cookie solution) will most likely only have a limited impact on thisfiscal year’s results since they are mainly based on subscription models. The
same is true for the new services (including the one in the Marketing Process
category).
The Company’s operating margin assumption for the second half is 6.0%, thesame level as the second half of the previous fiscal year. It expects an
improvement of about 0.3% compared to the first half of the current fiscal
year. However, taking into account the concerns that the sales target may not
be achieved and that profit margins may deteriorate due to higher costs, wehave forecasted the margin to be 5.2% (our full-year forecast for operating
margin is 5.5%).
Note that in our forecasts for the current fiscal year, we have not factored inany new M&A.

【Figure 31】Alpha-Win Research Dept.’s Revised Forecasts for This Fiscal Year and the Medium Term
(Million yen)
Sales
I. Marketing DX Support Segment
II. E-Commerce Support Segment
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 DX Support Segment
II. E-Commerce Support Segment
Gross Margin (diff. from last FY)
SG&A Expenses (growth rate)
Operating Profit (growth rate)
Recurring Profit (growth rate)
Net Profit (growth rate)
EBITDAFY2022 Results

FY2023 Results

3,334
2,924
410
2,260
67.8%
1,867
56.0%
392
11.8%
399
12.0%
236
7.1%
12.7%
12.5%
14.4%
-1.2%
11.6%
7.4%
9.8%
-1.5%
677

3,626
2,923
703
2,169
59.8%
1,850
51.0%
318
8.8%
329
9.1%
197
5.4%
8.8%
-0.0%
71.4%
-8.0%
-0.9%
-18.8%-17.6%-16.5%
680

FY2024 CE
4,100
Not announced
Not announced
Not announced
Not announced
Not announced
Not announced
240
5.9%
230
5.6%
140
3.4%
13.1%

-24.7%-30.2%-28.9%FY2024 New E
3,850
2,950
900
2,130
55.3%
1,920
49.9%
210
5.5%
210
5.5%
125
3.2%
6.2%
0.9%
28.0%
-4.5%
3.8%
-34.0%-36.2%-36.5%
535

FY2025 New E
4,250
3,100
1,150
2,300
54.1%
2,050
48.2%
250
5.9%
250
5.9%
150
3.5%
10.4%
5.1%
27.8%
-1.2%
6.8%
19.0%
19.0%
20.0%
540

FY2026 New E
4,680
3,200
1,480
2,380
50.9%
2,100
44.9%
280
6.0%
280
6.0%
170
3.6%
10.1%
3.2%
28.7%
-3.3%
2.4%
12.0%
12.0%
13.3%
570

FY2024 Old E
4,000
2,950
1,050
2,240
56.0%
2,000
50.0%
240
6.0%
230
5.8%
140
3.5%
10.3%
0.9%
49.4%
-3.8%
8.1%
-24.5%-30.1%-28.9%
680

FY2025 Old E

FY2026 Old E

4,400
3,200
1,200
2,500
56.8%
2,200
50.0%
300
6.8%
300
6.8%
180
4.1%
10.0%
8.5%
14.3%
0.8%
10.0%
25.0%
30.4%
28.6%
760

4,850
3,500
1,350
2,800
57.7%
2,450
50.5%
350
7.2%
350
7.2%
210
4.3%
10.2%
9.4%
12.5%
0.9%
11.4%
16.7%
16.7%
16.7%
850

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary and briefing materials.
(Notes) CE: the Company’s forecast/estimate. E: Alpha-Win’s forecast/estimate. Old: previous forecast. New: current forecast.

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 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 fromthe 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. 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: 5/31/2024

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

7．Growth Strategy◆ The Company’s Medium- to Long-Term Business Planand Strategy
w Formulated a new mediumterm plan, VISION 2027

Medium-Term Business Plan (VISION 2027): Summary
The Company has created a new plan, VISION 2027 (for the four fiscal years
from FY2024 to FY2027). This fiscal year is the first year of the plan.

w The Company aims toachieve sales of 10 billion
yen at an early stage

The medium- to long-term goal is to “achieve 10 billion yen in sales as aComprehensive Marketing DX Support Business Group” (the Company aims
to achieve this early, but the timeframe has not been specified). The new
medium-term business plan will contribute to this goal through its theme to“draw a clear path for achieving sales of 10 billion yen through the two
growth drivers of marketing process support and e-commerce website
building & operation support.”

w Marketing process supportand e-commerce website
building & operation
support will be the two
growth drivers.
w It aims to achieve
accelerated growth throughfocused investment.

The Company aims to achieve accelerated growth through the stable growthof its conventional businesses (Marketing Process / Incubation / Platform)
and focused investment on its two areas of focus (E-Commerce Website
Building & Operation and the new services of Marketing Process) for theirstrengthening and expansion (Figure 32).
Unlike the previous medium-term plan, specific numerical targets including
sales, operating profit, operating margin, and dividend on equity ratio for the
final fiscal year have not been announced.

w Two KPI targets set in the
new medium-term plan.

However, the Company has set two KPIs: to break the record high for thenumber of accounts of the Marketing Process category by FY2027 (thecurrent record is 1,666 in Q2 FY2020), and to increase the sales proportionof E-Commerce Website Building & Operation in the E-Commerce Support
segment to over 80% by FY2027 (62% in the first half of this fiscal year).

【Figure 32】Image of Sales Growth in VISION 2027
Focus

1Marketing Process
New service
Focus

New Service Development
Support customer needs fora continuous cycle for
improving the effectivenessof marketing strategies

２
E-Commerce Website
Building & Operation
Platform

Expand E-Commerce
Website Building & Operation
Provide a one-stop service
specialized in e-commerce

Incubation
Create Stable Revenue Streams

Marketing Process

FY2024FY24

FY2025FY25

FY2026
FY26

Create stable revenue streams
in both Marketing DX and ECommerce Support

FY27
FY2027(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials.

26/31
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 fromthe 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. 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: 5/31/2024

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

The aims of VISION 2027 and areas of investment are shown in Figure 33.

【Figure 33】Aims of VISION 2027 and Areas of Investment
Focused investment in Marketing Process and E-Commerce Website Building & Operation
Aims of VISION 2027

Marketing DX
SupportCreate a society where companies cancontinuously improve the effectiveness of
their marketing strategies through an
improvement cycle, thereby solidifying ourposition as a pioneer in marketing process
support.

Key Investment Areas
・Release and continuous update of the new SaaSin the Marketing Process field
・Increase number of accounts and cross-selling throughsales promotion of the conventional services
・Develop and provide a human support service for solving
customersʼ problems that cannot be fully solved by SaaS・Expansion of services through M&A

E-Commerce
SupportSolidify our position as an enterprise ecommerce support company in theincreasingly complex e-commerce market byproviding a one-stop solution fordevelopment, operation, and marketing

・Development of EC-CUBE Enterprise Version
・Expansion of the development base in Japan and
Vietnam・Expansion of services to support operation andmarketing after building an e-commerce site(Ref) Excerpt from the financial results briefing materials, with partial edits.

◆ Medium- to Long-Term Financial Outlook by AlphaWin Research Dept.
w We reviewed and revised
downwards the forecasts
for the three fiscal years
starting this year.

Medium-Term Forecast
In addition to the current fiscal year, we have also reviewed our previous
forecasts for the next year and the fiscal year after the next, mainly regarding
the Marketing DX Support segment but also for E-Commerce Support.
Overall, we have revised them downwards (Figure 31 on page 25).
Our sales forecasts have been revised downwards as described below. We
have also revised the profit margin and profit forecasts downwards to take
into account the rise in various costs due to inflation, such as personnel andoutsourcing expenses, in addition to strategic upfront investment costs.
For FY2025 (the next fiscal year), we revised down sales from 4,400 million
yen to 4,250 million yen, operating profit from 300 million yen to 250 million
yen (operating margin from 6.8% to 5.9%), and net profit from 180 million
yen to 150 million yen.
Similarly, for FY2026 (the fiscal year after the next), we have revised down
sales from 4,850 million yen to 4,680 million yen, operating profit from 350
million yen to 280 million yen (operating margin from 7.2% to 6.0%), andnet profit from 210 million yen to 170 million yen.

w However, we expect a trendof increasing sales, profits,
and dividends starting in
the next fiscal year.

However, in both FY2025 and FY2026, we expect the Company to increase
sales and profits, increase dividends, and achieve record-high sales
consecutively. We have made these forecasts based on the following: thecompletion of the current phase of upfront investments; the launch of the newservice in the Marketing Process category (the release of the paid version of
the new SaaS and strengthening of the human support service); sales growthof the E-Commerce Website Building & Operation category’s conventional
business and EC-CUBE Enterprise through sales promotion; and sales growthof the conventional businesses of Marketing Process (due to the number of
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 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 fromthe 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. 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: 5/31/2024

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

accounts of AD EBiS bottoming out and contribution from GSP and
CAPiCO).
Regarding the new services planned for the current fiscal year, though, theextent of their impact on results in the next fiscal year and beyond is difficult
to rationally predict at this point. These include the Marketing Process
category’s new SaaS and human support service and the E-Commerce
Support segment’s EC-CUBE Enterprise and EC-CUBE Official Security
Check.
w At present, the contributionof the new services toperformance is notexpected to be significant
in the coming years.
w We plan to review our
medium-term forecasts
again in the next fiscal year
or later when the details
and trends of the newservices will most likely beknown.
w We expect a DOE of 2.5%
for the meantime.

For this reason, these new services have not been largely factored into oursales and profit forecasts for the next fiscal year and the fiscal year after thenext.
We would like to update our medium-term forecasts as appropriate in the next
fiscal year or later, when the content, price range, and performance of these
services will be known to some extent.
Regarding dividends, we assumed that the DOE will be 2.5%, or the same as
our previous forecast, over the medium term. In line with the change in our
profit forecasts, we have partly revised the expected amount of dividend, but
we have not changed our forecast that dividends will continue to be increased
along with the growth of profit.
If the profit growth trend becomes solid over the medium term, then the DOE
target may be raised again to the Company’s previous goal of 3.0%.
Long-Term Performance Outlook
Currently, the Company is in the stage of shifting resources to new or
peripheral areas of business by using its cash on hand and the cash flow fromits conventional businesses.
In addition to the organic growth of its conventional businesses, growth
could accelerate in the future if it can monetize the new businesses and carryout M&As that generate synergies.

w We expect an averageannual sales growth rate ofaround 10% over the longterm and an even greater
profit growth rate.

In the long term, the volatility of financial performance is likely to remainhigh due to the cyclical nature of investments, with investment periods for
growth followed by their payback periods. However, we believe that theCompany could increase sales by an average of around 10% per year and alsoachieve an even greater profit growth, all the while generally maintaining
profitability.

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 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 fromthe 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. 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: 5/31/2024

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

8． Analyst’s View◆
w This fiscal year, theCompany plans to increase
dividends for the fourthconsecutive year, targeting
a DOE of 2.5%.

Shareholder Returns

The Company plans to pay a dividend of 7.9 yen/share (+0.5 yen/share YoY)
based on a consolidated dividend on equity ratio (DOE) of 2.5% for thecurrent fiscal year, marking the fourth consecutive year of dividend increases
since resuming dividend payments in FY2020.
We have revised the current fiscal year’s forecasts (page 25) but have left thedividend forecast unchanged at 7.9 yen/share, which is the same amount as
the Company. For FY2025 and FY2026, we have adjusted the dividend inline with our forecast revisions, based on a DOE of 2.5%.

w We expect dividends tocontinue to be increased in
the next fiscal year andbeyond.

The YRGLM Group is in its growth stage, so we expect that from the next
fiscal year onwards, the investments made so far will pay off and the Groupwill return to a profit growth trend. As net assets will increase from the profits,
we expect dividends to continue to generally increase (Figure 34).

【Figure 34】Change in Dividend and Dividend Payout Ratio
Dividend (left axis)
Dividend payout ratio (right axis)
DOE (right axis)

(Y)

10.0
43.2

9.0

7.0

40.0

7.4
35.6
33.3

35.5

6.0
5.0

25.0

4.5
4.0

23.6

13.8

12.2

1.0

20.0

18.6

18.7

3.0

2.1

2.8

2.6

FY2015FY2016FY2017

35.0
30.0

5.2

5.0

4.0

0.0

45.0

7.9

7.0

2.0

50.0
9.0
8.5

8.0

5.0

（％）

0.0

0.0

0.0

0.0

0.0

0.0

FY2018FY2019

15.0

13.7

10.0
5.0

2.0

2.3

2.6

2.5

2.5

2.5

2.5

FY2020

FY2021

FY2022

FY2023

FY2024 E

FY2025 E

FY2026 E

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

◆ Stock Price, Stock Trends, and Factors that May
Impact Stock Pricew Volatility of share pricehas been highw Share price has been
fluctuating within anarrow range after a sharp
rise in response toincreased shareholder
returns.
(11) Ad Technology: A generalterm for information
technologies used in theadvertising business, referringto the digital technologies usedin Internet ads, etc.

Stock Price and Trends
The Company is a small-cap, Ad-Technology11-related stock listed on the
TSE Growth Market. Since becoming listed, the volatility of share price has
been high.
At the time of the announcement of the previous fiscal year’s results(November 2023), the Company announced three measures to increase
shareholder returns (dividend increase, reintroduction of the shareholder
benefit plan, and share buyback). In response, the share price rose sharply
from below 500 yen to the mid-700 yen range. Since then, the share price has
been hovering around 600 yen.
Since the beginning of the year, the Company has been outperforming the
TSE Growth and former Mothers, while underperforming the TSE Prime,Standard, TOPIX, and other major indices (Figure 35 on page 30).
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 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 fromthe 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. 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: 5/31/2024

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

The Company has been recognized as an AdTech/subscription-related growthstock oriented toward domestic demand. Its slowdown in profit growth ismost likely already becoming reflected in the share price.

【Figure 35】Comparison of Valuation and Performance
Closing price of May 31, 2024

Stock price or
index

YRGLM (3690): GRTThis fiscal year's
forecasted P/E

Actual P/B

Simple average ofdividend yield

Return since thebeginning of the year

Return sinceNov. 6, 2023

Return since
May 8, 2024

602

30.28

1.99

1.31

-5.49

16.44

TSE Prime Stock Average: PRM

1,427.16

16.27

1.39

2.29

17.21

17.47

2.5

TSE Standard Stock Average: STD

1,234.56

14.01

1.00

2.34

5.58

9.39

-1.3

TSE Growth Stock Average: GRT

796.23

46.41

3.00

0.63

-10.64

-8.43

-5.1

TOPIX

2,772.49

17.16

17.46

2.4

TSE Growth 250 (former TSE Mothers)

618.49-12.45-10.74-5.6

Nikkei Stock Average

38,487.90

15.01

17.67

0.7

16.52

1.48

1.80

-4.7

(Ref) Prepared by Alpha-Win Research Dept. Actual P/B for the Company is the value as of the end of the first half of FY2024 (the fiscal year
ending September 2024), and the rest are values as of May 31, 2024. The Company’s P/E is based on Alpha-Win’s forecast for EPS. Note that
November 6, 2023, is the when the Company announced the previous fiscal year’s results (including enhanced shareholder returns) and May 6,2024, is when it announced the first half’s results.

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

Valuation
Based on this fiscal year’s financial forecast, the Company’s valuation is asfollows: forecasted P/E of 26.54, actual P/B of 1.99, forecasted P/S12 of 0.94,
and a forecasted dividend yield of 1.31% (forecasts are based on the
Company’s plan).
Based on Alpha-Win's forecasts, the P/E is 30.3 for this fiscal year, 25.2 fornext fiscal year, and 22.3 for the fiscal year after the next. In the same order,
the P/B is 1.9, 1.8, and 1.7 and the dividend yield is 1.3%, 1.4%, and 1.5%.

w Resumed the shareholder
benefit program

In the reintroduced shareholder benefit program, shareholders holding at least
100 shares will receive Amazon gift certificates worth 1,000 yen twice a year,
in March and September, which would make the actual shareholder return
approximately 4.6% (when holding 100 shares).

w Valuation is higher than
the TSE Prime’s averageand lower than the TSE
Growth’s average.

The Company’s stock is somewhat overvalued compared to each average of
all stocks on the TSE Prime Market (P/E of 16.27, P/B of 1.39, and simpleaverage dividend yield of 2.29%). On the other hand, it is undervalued
compared to the average of all stocks on the TSE Growth on which it is listed(P/E of 46.41, P/B of 3.00, and simple-average dividend yield of 0.63%).
Its EV/EBITDA is estimated to be 5.6 for the current fiscal year, 5.5 for the
next fiscal year, and 5.2 for the fiscal year after the next (Alpha-Win’s
forecasts), which seem to be within the general range (about 2 to 8).

(13) PEG ratio: P/E ÷
Expected medium-term profit(EPS) growth rate (per year)
w Future share price will

depend on earnings
momentum and dividendlevels.

Also, although the PEG13 would be around 3.0 if we assume the mediumterm profit growth rate to be 10%, suggesting that the stock is not undervalued,
the PEG would be 1.5 if we assume the growth rate to be 20% and would
suggest that the share price is within an acceptable range.
Valuations are not extremely expensive or undervalued, and the share priceis expected to be linked to profit momentum in the next fiscal year and beyond,as well as to the dividend forecast.

30/31
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 fromthe 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. 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: 5/31/2024

2018/12/1820182018/12/1820152018/12/182018/12/182018/12/18
w Recovery of profit growthin the next fiscal year andbeyond is essential for theshare price to rise.

w The key factors that may
impact the share price are
the number of accounts,
unit price, churn rate,
M&A, and dividends, aswell as the contribution of
the new services and ECommerce Website
Building & Operation toearnings.

In particular, the success or failure of the two services that are expected to
become the growth drivers will be the major factors that may impact earnings.
If investors’ expectations for future profit growth recover, the share pricecould rebound.
Key Points Going Forward
・ The following are the factors that may impact stock price and areconsidered to be the key points to watch.
1.
2.
3.
4.
5.
6.
7.
8.
9.

Marketing Process’ number of accounts (KPI), unit price (amount andrate of increase), and churn rate
Details of the new services to be launched (the new SaaS and the human
support service) and their contribution to earnings
Proportion of E-Commerce Website Building & Operation’ sales to theoverall sales of the E-Commerce Support segment (KPI) and the
profitability of E-Commerce Website Building & Operation
Monthly sales trends (YoY change for both segments)
Quarterly trends in profit/loss (profit growth rate, profit margins,
EBITDA, and changes in each segment’s sales and profit)
The level of financial performance for this full fiscal year and the profit
outlook for the next fiscal year and beyond (the timing when profit will
begin increasing again, as well as the profit growth rate)
Shareholder return measures and their level
Announcements of a M&A or alliance
Strengthened regulations such as those for the protection of personal
information

Since it is a small-cap stock in the growth phase, the volatility of financial
performance and share price is likely to remain high.

w We will continue watch theCompany’s change infinancial performance as aniche, domestic-demandoriented growth stock inthe marketing DX supportand e-commerce support
businesses.

However, over the medium to long term, the Internet advertising market andthe e-commerce market are expected to continue to expand. The Company’sbusiness therefore has a high growth potential, including growth throughM&As using its cash on hand.
We hope to follow the Company’s business development, change in sales,
and change in profit growth rates as a domestic-demand-oriented growthstock in the business of marketing DX support and e-commerce support,
which is relatively resistant to direct impacts by COVID-19, global situations,interest rates, and exchange rate fluctuations.

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 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 fromthe 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. 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.