Ｍay 22, 2023

FY3/23 Financial Results

Estore Corporation

Estore GroupSummary
Up in sales and down in profits: Sales increased owing to the consolidation of the acquired company. Profits decreased dueto the upfront investment in R&D for EC support services.
Net sales: 9,449 million yen (Up 64.4％)

Operating profit: 899 million yen (Down 14.5％)

Up in sales anddown in profits

Increase incosts

Consolidation of theacquired company

Commerce21
andSHIFFON

Upfront
investment in
R&D
Functions for Shopserve large shops(CRМ, auto-scaling, etc.)

PMI costs

HOI Business: Double-digit growth in sales

Consolidated sales by segment

HOI (Hands-on Incubation) Business:
It is a joint business that focuses on M&A and aims for development through collaboration. By providing the knowledge, expertise, and funds accumulated byour company over the past 23 years in the D2C (Direct-to-Consumer) industry, we facilitate the growth of target companies.

売上EC事業
EC Business
Sales

HOI
Business
Sales
売上
ＨＯＩ事業

10,000

9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

FY3/21v
2021年3月期

FY3/22
2022年3月期

SHIFFON・Acquired in this period＝HOI Business
Commerce21
・Acquired in 2021＝Favorable performance(Million yen)

Sales

EC Support
HOI

FY3/23
2023年3月期
FY3/21

FY3/22

FY3/23

5,415

5,746

9,449

5,415

5,746

5,932

ー

ー

3,516
2

Down in profits due to upfront investment inEC systems, etc. (1/2)

Consolidated operating profit
by segment

Shopserve
If no investment was made

1,200

1,000

EC
Business
EC事業

HOI Business
ＨＯＩ事業

800

600

400

200

0

2021年3月期
FY3/21

Shopserve- Implemented a price increase for all customers(¥1,000 flat rate).
- Higher price range for new service plans.
- Implemented CRM functionality.
- Implemented TLS mail.
- Implemented auto-scaling.

2022年3月期
FY3/22(Million yen)

Operating
EC Support
profitHOI

2023年3月期
FY3/23

FY3/21

FY3/22

FY3/23

906

1,051

899

906

1,051

621

ー

ー

278
3

Down in profits due to upfront investment inEC systems, etc. (2/2)(Million yen)
Increase due toconsolidation of
SHIFFON

Increase inoutsourcing
costs forspecific
projects
M&A-related
expenses

Operating profit
analysis on changes

Development of features toincrease customer revenue(including outsourcing
costs)
Staffing costs forindividuals
responsible forincreasing customer
revenue.

Increase in sales
personnel

OthersUpfront
investments

FY3/22

FY3/234

Up in sales thanks to the expansion of the HOI Business
Down in profits due to upfront investments(Million yen)

FY3/23Results

Expectation for FY3/24 results

FY3/24
Plan

YoY

9,449

12,498+32.3%EC Business

5,932

6,165

+3.9 %

HOI Business

3,516

6,332

+80.0%

899

835

-7.2%

EC Business

621

486

-21.7%

HOI Business

278

349

+25.5%Net sales

Operating profit

Ordinary profit

751

Profit attributable toowners of parent

307

Due to the difficulty in making reasonable predictions
regarding factors such as exchange rate fluctuations, wehave not disclosed the non-operating income and expenses
at this point.

5

May 22, 2023

Review of the Medium-term Business Plan

Estore Corporation

Estore GroupSummary•

The methods of generating synergy after M&A have a 50-50 success rate.

•

The initial strategy of cross-selling our in-house technology (payment, marketing, etc.) to external customers to
expand payment revenue has failed.

•On the other hand, the strategy of providing our in-house technology to our own customers (M&A target
companies) to enhance their value (Hands-on Incubation/HOI) has been successful.

•

Therefore, going forward, we will steer our direction significantly towards the HOI strategy, which has a high rateof replicable success.

External sales of our
in-house technology
have failed

No progress inpayment sales toCommerce21

No increase in GMV
through marketing
sales

Internal provision of
our in-house
technology has beensuccessful

Defined the strategy of acquiring
operating companies throughM&A and supporting their digitaltransformation as the HOI
strategy.

Failure: External sales of our in-house technology

Progress of
Medium-term Plan: 1• In the mid-term business plan, we aimed to provide payment functionality from E-Store toCommerce21 and expand marketing support from WCA, as well as cross-selling toexternal customers in the EC support business. However, we did not achieve theexpected results.
• The reason for the failure is that with the market expansion after COVID-19, competitionin the EC support sector has intensified due to increased entry by competitors, which hashindered the provision of payment and marketing services and cross-selling efforts toexternal customers.
• We expect the external environment and trends to remain unchanged and further intensify
in the future.
• Therefore, we are moving away from the policy of actively selling our in-house technology(payment and marketing) to external customers.

Synergy strategy in the medium-term plan:
1. Provide E-Store's payment function to Commerce21 after M&A.

□ Material announced on May 15

2. Expand marketing support from WCA.
8

Success: Internal provision of our in-house technology.

Progress of
Medium-term
Plan: ２•On the other hand, the performance of the two companies we acquired through M&A, Commerce21
and SHIFFON, has grown significantly.

•

The reason for this is that the target companies clearly lacked know-how, human resources, andmanagement resources for EC growth, and by leveraging our know-how and resources (bothpersonnel and funding), we were able to fill the obvious growth potential.

SHIFFON: EC support, management support.
Commerce21: Management support.
•

Additionally, through this PMI (Post-Merger Integration) process, we have identified clear methods forvalue enhancement that are easy to replicate and have a high success rate. As a result, we havestrong confidence in the success of the strategy of providing our in-house technology to our own
customers and achieving value enhancement through the HOI (Hands-on Incubation) approach.
The HOI Business strategy, which accelerates growth through EC support forgroup companies, has achieved its plan two years ahead of schedule.
••

Commerce21, which we acquired, achieved a five-fold growth in operating profit
before the M&A.
SHIFFON, a subsidiary of the HOI Business, has shown expected performance
growth.

□ Material announced on
May 15

9

SHIFFON: shows steady growth and successful
new business expansion

M&A casestudiesAcquired as a subsidiary in August 2022, SHIFFON promotes new businesses related to cross-border e-commerce in addition to systemdevelopment, operation, and marketing support for existing EC (e-commerce) businesses. In terms of management, support is provided forthe company's organizational development aiming for an IPO.

Net sales/Operating profit(100 million yen)

Net
売上高
sales

Support details

Operating
営業利益
profit

70.0

6.0

•

Formation of a team to execute
HOI for the company's EC
Business, providing
comprehensive support including
EC shop construction andmarketing.

•

Promoting new businesses related
to cross-border e-commerce.
SHIFFON handles planning andprocurement, while the Estore
Group provides support in systemdevelopment and marketing.

•Comprehensive support for thecompany's organizational
development aiming for an IPO,
including not only accounting work
but also the establishment ofaccounting standards, internal
controls, and negotiations withauditing firms and securities
companies.
10

Existing

60.0

5.0

50.0
4.0

Business
growthsupport

40.0
3.0

New

30.0
2.0
20.0

1.0

10.0

Management
support0.0

0.0
FY3/21
FY3/24
FY3/20FY3/22
FY3/232020年3月期
2021年3月期
2022年3月期
2023年3月期
2024年3月期* The pre-consolidation figures are unaudited reference values.

M&A casestudiesCommerce21: experiences rapid growth after M&A

After being acquired from Yahoo in January 2020, Commerce21 underwent business strategy and operations review by the management team dispatchedfrom our company, resulting in a 1.5-fold increase in net sales. Operating profit increased approximately five-fold through improved project management.

Net sales

Operating profit/Operating profit margin
600

20.0%

180

160

500
15.0%

140
400

120

100
300

10.0%

80

154

60

479

200

5.0%
40
100
20

100

100

0

0
FY3/192019年3月期* The figure for FY3/19 is set as 100

FY3/23
2023年3月期

0.0%
FY3/192019年3月期

FY3/23
2023年3月期* The figure for FY3/19 is set as 100

11

May 22, 2023

Future Business Strategy and

Outlook of the Medium-term Business Plan
Estore Corporation

Estore GroupFuture Business Strategy

With confidence in profit growth through the HOI Business,a shift in focus is planned.

Summary

By prioritizing management resources towards the HOI Business, we aim for significant growth as awhole company.

EC support business remains as
cash cow:

Shifting the focus to the HOI Business:

While D2C (Direct-to-Consumer) is expected toaccelerate in the future, the market is highly
competitive, making substantial profit growthdifficult.

Instead of providing support as an EC support
business, we will commit to our own businessand capture all business profits.

Therefore, our company focuses on providing
services to large, high-profitability customers,
leveraging our strengths. The period from March2023 to March 2024 is considered aninvestment period for the development ofservices targeting major customers.

By leveraging our unique strengths, significant
profit gains can be achieved while maintaining acertain level of risk control.
Investment in companies with a unique positionin the market (M&A, joint ventures, revenue
sharing) is prioritized.

Afterward, stable sources of income will beestablished.

EC support business aims for stable growth,targeting significant growth as a hands-on business:
14

EC support business as a cash cow

EC Support
Business

EC Business market environment:- The growth of the DX (Digital Transformation) demand remains, while EC support is already highly
competitive.
- The CAGR (Compound Annual Growth Rate) of the IT market from 2022 to 2027 is 2.9%, indicating moderate growth.
- The number of companies entering the EC support market increased by approximately 20% from 2016 to 2021, intensifying
competition.
- The average price in the EC support market decreased by approximately 10% from 2016 to 2021, leading to lower profitability.
- Shortage of IT personnel supply, with a gap of 450,000 IT personnel demand and supply by 2030, resulting in a shortage of
personnel and rising labor costs.
IT Services Market Forecast, Ministry of Economy, Trade and Industry's survey on IT personnel supply and demand.

•

•
•
•
•

In the future, we do not anticipate significant growth in the EC support business (assuming stability with some
additional growth).
However, we have successfully differentiated ourselves in providing EC support for large clients, and this is an area
where we see potential for growth.
The ongoing development investments we are making are essential systems for expanding payment revenue fromlarge clients (auto-scaling: a system to prevent missed sales during peak times, CRM: strengthening email
magazine distribution).
In addition to contributing to improved customer satisfaction and preventing customer churn, this area has a highlikelihood of increasing payment commission revenue through increased transaction volumes. We have determinedthat the investment return justifies the cost.
After the completion of these initial investments, the EC support business will become a cash cow.
15

HOI Businessの強化

HOI, which stands for capturing the entire businessprofit generated from EC support.

HOI Business-What is HOI

Moving forward, we will further shift our focus to the HOI Business model, where we directly invest in companies that offer unique products
and services and capture the entire business profit generated from EC support (including revenue sharing, joint ventures, M&A, etc.).

Previous state:

Future goals:

•

•

•

We have been providing only EC support andearning a certain fee income regardless of the
profitability of the supported companies. It is a lowrisk, low-return business model.
Although there is room for an increase in thenumber of cases as D2C (Direct-to-Consumer)
accelerates, it is difficult to expect significant profit
growth due to intensifying competition.

•

We will dive into business investments in companies
that offer unique products and services, capturing all
the business profits generated from EC support
through revenue sharing, joint ventures, M&A, etc.
• By leveraging our unique strengths and committing
to business growth, we can achieve significant profit
gains while mitigating risks.

Business modelBusiness Investment(including EC support)

EC Support■: Customer profit■: Estore profit

Mass company

Mass company

Mass company

Unique company

Unique company

Unique company

16Market Conditions Tailwind for HOI Business (1/2)

HOI Business
Assumptions

We anticipate that real-world activities and consumption will become more active.
As values diversify, there is an increasing focus on unique products with distinctive technology andstories.
The era where simply purchasing and owning something represents wealth is passing, and in the
future, it will be difficult to survive without being a company that deals with products that people canfind value in.
In our company, we aim to expand the revenue of target companies and simultaneously grow our own
business by investing our DX knowledge and funds into companies with unique products.
We anticipate that companies with unique products that align with each individual's values will form andgrow their respective markets.

Taking advantage of this situation, we will strengthen ourinvestments in the HOI Business and promote businessexpansion throughout the group.

17Market Conditions Tailwind for HOI Business (2/2)

HOI Business
Assumptions

Expansion of 'premium consumption', where people pay more for added value
they like, even if it is expensive.
In the HOI Business, we target companies that offer unique products, and these companies have an advantage in amarket environment where premium consumption is on the rise.

Source: NRI "Survey of 10,000 Consumers" (2000, 2003, 2006, 2009, 2012, 2015, 2018, 2021) Copyright © Nomura Research Institute, Ltd. All rights reserved.

18

Growing together as partners with unique companies

HOI Business
TargetCompanies

The HOI Business targets companies that will grow together as partners.

Desirable company profile:1) Companies involved in manufacturing, production, or other areas related to tangible products or services.
2) These products or services have uniqueness and distinctiveness, aiming to be "the only one" rather than simply being the number one(which aligns well with our expertise in D2C).
3) They are interested in working together as partners to achieve business growth, including expanding and improving their business,
performance, impact, and worldview.
4) They are interested in expanding their performance and business scale, rather than focusing on revival, succession, or exit (with thecondition that the president and employees remain in the company).
5) They already have self-sustainability and consistently generate profits.
6) We will not pursue 100% M&A as our goal is to sweat together and share the rewards (we anticipate acquiring more than 50% up to
80% of shares).
* Existing shareholders will exit by selling a portion of their shares, and then we will work together as partners to develop the businessand enjoy the fruits of success.
* If possible, we aim for an IPO, and if not, we will pursue a long-term dividend sharing model to grow and earn together.
* The main image is companies with annual sales of 1 to 5 billion yen, with a profit margin of 10% or more, cash and deposits accountingfor 20% or more, and interest-bearing debt accounting for less than 30%.

19

HOI is an extension of the EC support we have developed in thepast and our strengths can be used.

HOI Business Our UniqueStrengths

Our mission has always been to maximize client performance through the EC Support business, andthis remains unchanged to this day.
In fact, HOI Business is an extension of the EC Support business, a strategy that aims to grow thebusiness by mobilizing all of the Group's people, goods and money.
People (Know-how and Human Resources)

Planning/businessdevelopment•

Product planning(licensing, etc.)• Branding

Manufacturing• Cost reduction in
manufacturing

Sales (Channel
development)

Sales (Strategy
enhancement)

Management
support• EC site construction • Web marketing• Wholesale channels • Offline sales
promotion• Facility expansion

・Establishingmanagement
control systems(IPO support)

Funding

Support function

Support for business growthNote: Red text represents areas where our company excels, while blue text indicates areas of cross-industry enhancement.

20

①
Sourcing
Capabilities
強み１
当社周辺に、HOIニーズは多数存在

HOI Business- Our UniqueStrengths

・Deep understanding of the needs of target companies
We have identified that many of our main customers in the hands-on segment, with annual sales ranging from 500
million to 5 billion yen, are struggling with a lack of expertise in EC systems and human resources. As a result, wehave a high resolution of the needs of these target companies.

・Well-established unique routes cultivated over the years inbusiness development− Our customer base (over 7,000 companies)− Strategic partners− Business owners and advisory networks

・Extensive sourcing networks− Financial institutions, advisors, funds− Operating companies− Our customer base21

② Ability to Judge

HOI Business- Our UniqueStrengths

・Discerning companies based on extensive results in EC growth
supportDuring due diligence, we focus on verifying:
1) Growth potential of the target company's products2) Uniqueness of the products
3) Independence of the organization
4) Contribution potential of our company (synergy)

・Ability to present persuasive improvement plans based onabundant results in EC growth support
In negotiations with potential acquisition targets, we can differentiate ourselves by offering our EC support
expertise and resources.

22

③ Value Enhancement Capability

HOI Business- Our UniqueStrengths

・Comprehensive value enhancement that cannot be replicated by othercompanies, thanks to our extensive expertise from systems to marketing in EC
supportMany companies have not fully implemented basic EC measures, leaving significant room for improvement throughour support.

・We provide support not only for business operations but also for strengthening
management systems, including IPO preparations.
By fully providing our expertise and resources to the acquired companies and committing to EC improvement, we
can consistently generate an average of around 2 in profit improvement (achieving investment returns).

・Acquisition of SHIFFON provides comprehensive insights into the apparelindustry. In the future, we plan to apply similar approaches in other industries
such as the food industry.
By utilizing the resources of the apparel business, including branding, manufacturing, and sales channels held by
SHIFFON, we can achieve value enhancement beyond EC improvement through management support for ourclients and future acquisition targets.
Similar utilization of acquired expertise in other industries can also contribute to the enhancement of customer andacquisition target value.
23

HOI Businessの強化(Reprinted) HOI, which stands for capturing the entire
business profit generated from EC support.

HOI Business-What is HOI

Moving forward, we will further shift our focus to the HOI Business model, where we directly invest in companies that offer unique products
and services and capture the entire business profit generated from EC support (including revenue sharing, joint ventures, M&A, etc.).

Previous state:

Future goals:

•

•

•

We have been providing only EC support andearning a certain fee income regardless of the
profitability of the supported companies. It is a lowrisk, low-return business model.
Although there is room for an increase in thenumber of cases as D2C (Direct-to-Consumer)
accelerates, it is difficult to expect significant profit
growth due to intensifying competition.

•

We will dive into business investments in companies
that offer unique products and services, capturing all
the business profits generated from EC support
through revenue sharing, joint ventures, M&A, etc.
• By leveraging our unique strengths and committing
to business growth, we can achieve significant profit
gains while mitigating risks.

Business modelBusiness Investment(including EC support)

EC Support■: Customer profit■: Estore profit

Mass company

Mass company

Mass company

Unique company

Unique company

Unique company

24

HOI Businessの強化
グループとして目指す姿

EC support as a cash cow
Significant growth expected through the HOI Business
Areas to be Strengthened in the Future

Current major areas

Internal Clients (=Hands-on)

External
Clients(=Conventional
EC Support)

Medium and Small Scale

Medium and Small Scale

Medium and Small Scale

Service Fees +Payment
Revenue

Medium and Small Scale

Revenue
Model

Medium and Small Scale

Conventional
client baseLarge Scale

Medium and Small Scale
Medium and Small Scale

TargetClients

Vision as aGroup

SHIFFON

Business
Companies
throughFuture M&A①

Business
Companies
throughFuture M&A②

Profit Sharing, Joint Venture, M&A

25

Outlook for Medium-term Business PlanOperating profit of ¥2 billion achievable in theMedium-term Plan

Projected figures
for Medium-term
Business Plan

Achieving operating profit of ¥2 billion in the Mid-term Plan through the expansion of HOI

Business
EC Support Business- No significant growth expected in
e-commerce support- Preceding investments largely
completed by FY3/24 → Reductionof investment costs and expansionof revenue- Growth expected in services forlarge-scale clients

HOI Business- SHIFFON is expected to achieve
an operating profit of ¥600-700
million by March 2025
- Multiple M&A projects currently
underway for HOI

At the time of
disclosure

Projection

２０

２０

HOI
Business

５

EC Support
Business

１５

１２～１３

７～８

27

Aiming for operating profit of ¥5 billion

Future Outlook

By further actively promoting the expansion of HOI Business, aiming for a growth
to an operating profit of ¥5 billion by FY3/31
EC

HOI

Investments
投資

50

20

FY3/20FY3/21

FY3/22

FY3/23Results

FY3/24

FY3/25

Plan

Outlook

FY3/31
Image
28

Considering shareholder returns while prioritizing HOI investments andmaintaining a balance

Capital Policy

Investment for growth through cash flow and leverage of existing businesses. Prioritizing HOI investments for longterm maximization of corporate value and considering shareholder returns through internal reserves and balance.

Fundraising✓
Current
Situation✓

Allocation

Stable cash flow generated from existing
businesses (E-commerce Support)
Healthy financial structure even afterlarge-scale acquisition of SHIFFON
Investment✓✓
Future✓Policy to address the funding needs oflarge-scale M&A and others throughleverage-based fundraisingWith the group's growth, the overallborrowing capacity of the group is
expected to improve
Planned promotion of IPOs for groupcompanies (SHIFFON, Commerce21,
etc.)

Shareholder
Returns✓ Investment in HOI Business forlong-term maximization of
corporate value✓ Prioritize internal reserves
necessary for HOI investments✓ Consideration of surplus
amounts based on the above

29

The content of this presentation material is based on the information and judgments available at the time of the presentation. Ifchanges occur in the future due to events or other factors, the company is not obligated to update or modify the content.
Furthermore, please note that the future outlook contained in this presentation and accompanying materials includes uncertain factors,
and actual performance may differ from these projections due to various changes and other factors.

30