July 28, 2023
Drecom / FY03/2024 First Quarter Result

Drecom(TSE Code: 3793 / Sector: Information and communication)

FY03/2024 First Quarter Result

earnings by distributing its own IPs through its own

GIR View

channel.

Highlights
Drecom announced Q1 FY03/2024 results and revised

The new business in media segment is moving forward as

full-year FY03/2024 forecasts and dividend forecasts after

had planned.

the close of trading on July 27, 2023. Q1 results showed asignificant decrease in sales and profit, and the company

The poor performance of the most recently released titles

incurred an extraordinary loss due to the decision toand the withdrawal of the dividend forecast are

terminate "DACHIMEN DENSETSU G", a new title

disappointing news. That said, the company's downward

provided by its subsidiary. Considering this, the company

revision of its earnings forecast and its declaration of arevised downward its full-year forecasts: net sales by 3.5

quick shift to a more defensive management approach arebillion yen, operating income by 1.5 billion yen, recurring

commendable. Going forward, investors need to watch

income by 1.45 billion yen, and net income attributable tothe degree to which the company will be able to revitalize

owners of the parent (hereinafter "net income") by 1.1

its existing titles and a release date for its next key title

billion yen. The net income forecast is now zero yen, and"Wizardry Variants Daphne", together with its details of

the dividend forecast has been changed from 5 yen per

the joint project.

share to an undetermined amount.
Overview of the first quarter of the fiscal year
ending March 31, 2024

The downward revision was necessitated by the weak
performance of existing titles relative to expectations, theIn the first quarter (April-June), sales were 2.3 billion yen

slow start of new titles released recently ("GGGGG" and(-19.8% YoY), operating profit was 8 million yen (-99%"DACHIMEN DENSETSU G"), and a more cautious

YoY), recurring profit was 2 million yen (-99.7% YoY),

assumption for the next title in development, "Wizardry

and net loss was 440 million yen. Both sales and profits

Variants Daphne".

were down compared to the previous quarter.

In response to these changes in the environment, theThis is due to lower sales of some existing titles, higher

company will focus on reinforcing its business structure

advertising costs associated with the release of new titles,

this year. The company has decided to concentrate

and poor sales of new titles. Three of the 12 titles inmanagement resources, reduce costs, and seek business

operation are underperforming, but the unprofitability ofpartners who collaborate on new titles to be released in

new titles "GGGGG" and "DACHIMEN DENSETSU G"

the future (joint business), aiming for middle-risk/middle-

is particularly noticeable. The company is considering

return profile. This is a shift from the company's previous

modifications to the former, such as converting it to aaggressive management stance, which aimed to maximize

blockchain game, while it decided to terminate the latter

Please see the last page for disclaimer.

Global IR, Inc.

1

July 28, 2023
Drecom / FY03/2024 First Quarter Result

and recorded an extraordinary loss of 416 million yen due

BC-".

to impairment.
The company expects Q2 sales to be higher than in Q1,
Revision of Corporate Forecast and Dividend

partly because one title distributed by another company

Forecast for the Fiscal Year Ending March 31,

will be changed to in-house distribution, and operating2024

profit is expected to improve from Q1 due to cost

Considering the weak Q1 progress, the company has

reductions (according to the company's financial results

revised its business plan in a prudent manner, particularly

briefing material).

with regard to "Wizardry Variants Daphne", which is
A year of strengthening its business structurescheduled for release during this fiscal year. The company
will conduct a second round of its user test around fall

The company continues to aim for annual sales growth of2023 and evaluate the results before launching the game.

20% or more and an operating margin of 15% in the next

The timing of the launch will also be pushed back fromfiscal year and beyond. However, in light of the current

the previous plan.

challenging performance trends, the company intends tofocus on strengthening its business structure during thecurrent fiscal year.

As a result, the company revised its full-year sales
forecast downward by 3.5 billion yen to 11.5 billion yen,mainly due to the revision of the contribution from newThis includes not only reviewing development andtitles from the initial forecast of approximately 4.9 billion

investment plans, reducing costs, and strengthening the

yen to approximately 1.8 billion yen. Partially offsetting

profitability of existing businesses, but also selecting thethe lower sales forecast were cost reductions inmost appropriate partners for each new title project andadvertising and R&D (approx. 400 million yen each),

accepting investment in the form of joint venture. This isresulting in an operating profit forecast of 500 million yen

likely to improve the probability of success in launching(revised downward by 1.5 billion yen), recurring profit

new titles while reducing cost burden, resulting in a

forecast of 450 million yen (revised downward by 1.45

medium risk/medium return business profile. This is abillion yen), and net income attributable to owners of theshift from the company's previous policy of risk-taking byparent of zero yen (revised downward by 1.1 billion yen).

acquiring and distributing its own titles, but it is a swift

The annual dividend forecast was changed from 5 yen per

and sensible decision given the current situation in whichshare to undecided.

both two new in-house titles have fallen short of
expectations. The company keeps aiming at acquiring and“Evil Prince and the Puppet" will be released during thisnurturing in-house IPs as much as appropriate over mid-fiscal year, as previously planned. However, it will notterm horizon.

contribute to earnings until the next fiscal year or later.
In new business areas such as publishing, video, andWeb3, the company plans to continue its main projects,
including the launch of a comic/webtoon label andpreparations for the release of "Eternal Crypt - Wizardry

2
Global IR, Inc.

July 28, 2023
Drecom / FY03/2024 First Quarter Result

Future Highlights
The first point to watch going forward will be the resultsof the leverage of existing titles and the early realizationof the effects of cost reductions.
The more important point this fiscal year is the release of"Wizardry Variants Daphne". It is time to take a hard lookat whether the second user test will yield satisfactory
results and set a definite release date. Partners of its joint
venture and the associated economic conditions are also
critical.

3
Global IR, Inc.

July 28, 2023
Drecom / FY03/2024 First Quarter Result

Financial Data (Consolidated: Quarterly)
Figure 1 Statements of Income(Millions of yen)

FY
03/20

FY
03/21

FY
03/22

Q1-Q4

Q1-Q4

Q1-Q4

Q1

Q2

Q3

Q4

Q1-Q4

Q1

10,15011,841

10,528

2,927

2,873

2,579

2,420

10,8002,346

11,500

-5%

17%

-11%

10%

14%

-11%

-1%

3%

-20%

6%

2,192

3,997

3,797

1,308

1,321

1,058

871

4,558

684

YoY

53%

82%

-5%

26%

38%

3%

12%

20%

-48%

Net sales margin

21.6%

33.8%

36.1%

44.7%

46.0%

41.0%

36.0%

42.2%

29.1%

1,575

1,944

2,205

491

530

566

690

2,277

675

-22%

23%

13%

-8%

7%

-1%

14%

3%

37%

617

2,053

1,591

817

790

492

180

2,281

8

500

YoY

-

233%

-22%

62%

71%

9%

5%

43%

-99%

-78%

Operating income
margin

6.1%

17.3%

15.1%

27.9%

27.5%

19.1%

7.5%

21.1%

0.4%

4.3%

636

2,019

1,541

810

737

477

167

2,192

2

450

-

218%

-24%

64%

65%

9%

4%

42%

-100%

-79%

711

1,625

807

521

534

110

-7

1,159

-442

0

YoY

-

128%

-50%

74%

72%

-54%

Net Income Ratio

7.0%

13.7%

7.7%

17.8%

18.6%

4.3%

-18.8%

0.0%

Accounting period
Sales
YoY
Net sales

SG&A
YoY
Operating income

Ordinary income
YoY
Net income

FY03/23

FY03/24
Q2

Q3

Q4

CE

44%
-0.3%

10.7%

Source: Prepared by Global IR, Inc. based on company securities reports and company IR materials.
Note: CE=Company Estimate. Rounded to the nearest million yen, rounded to one decimal place *Calculated by Global IR, Inc.

Figure 2 Per Share Data

(Consolidated)Accounting period

FY 03/17

FY 03/18

FY 03/19

FY 03/20

FY 03/21

FY 03/22

FY03/23

Total number of shares issued andoutstanding (thousand shares)

14,371

28,742

28,81928,89428,97629,07329,130

EPS

29.7

-7.2

-60.5

25.0

57.0

28.3

40.7

EPS Adjusted

29.7

-

-

25.0

56.9

28.3

40.6

BPS

113.2

106.7

47.9

74.2

132.9

159.1

195.7

DPS

0.0

0.0

0.0

0.0

0.0

5.0

5.0

Source: Prepared by Global IR, Inc. based on company securities reports and company IR materials.
Note: Rounded to the nearest million yen, rounded to one decimal place *Calculated by Global IR, Inc.

4
Global IR, Inc.

July 28, 2023
Drecom / FY03/2024 First Quarter Result

Figure 3 Cash flows(Millions of yen)Accounting period

FY 03/17

FY 03/18

FY 03/19

FY 03/20

FY 03/21

FY 03/22

FY03/23

Depreciation and amortization

214

299

462

382

627

537

269

Cash flows from operating activities

846

-79

78

691

3196

1603

2666

Cash flows from investing activities-456-1,958

-123

-101

-1140

-1766

-2017

Cash flows from financing activities

1,345

2,288

-271

-1,188

969

-388

659

Source: Prepared by Global IR, Inc. based on company securities reports and company IR materials.
Note: Rounded to the nearest million yen, rounded to one decimal place *Calculated by Global IR, Inc.

Figure 4 Financial Data(%)

Accounting period

FY 03/17

FY 03/18

FY 03/19

FY 03/20

FY 03/21

FY 03/22

FY03/23

Return on Assets (ROA)

16.7

-0.4

-16.8

9.5

25.2

16.0

20.0

Return on Equity (ROE)

35.5

-6.6

-78.3

41.0

55.0

19.4

22.9

Capital adequacy ratio

47.0

33.2

19.6

32.9

39.5

46.9

45.6

Source: Prepared by Global IR, Inc. based on company securities reports and company IR materials.
Note: Rounded to the nearest million yen, rounded to one decimal place *Calculated by Global IR, Inc.

5
Global IR, Inc.

May 12, 2023

Sector: Information and communication

Drecom (3793)

FY03/2023 Fourth Quarter Financial Results
January 1 – March 31, 2023

GIR Earnings View

Summary of financial result
for the fourth quarter,
FY2023The company announced Q4 FY03/23 results and full-year FY03/24
forecasts after the close of trading on May 11, 2023. The sales and profits
exceeded the latest forecast that the company revised in the Q3 results
announcement.
Thanks to the strong performance of the mainstay IP title ONE PIECE
Treasure Cruise, full-year sales were 10.8 billion yen (+3% YoY), operating
income was 2.28 billion yen (+43% YoY), recurring income was 2.19 billion
yen (+42% YoY), and net income attributable to owners of the parent was
1.16 billion yen (+44% YoY). Operating income and ordinary income
reached record highs.
In the fourth quarter (January-March), sales were 2.4 billion yen (-1% YoY),
operating income was 180 million yen (+5% YoY), recurring income was
170 million yen (+4% YoY), and net income attributable to shareholders of
the parent company was a loss of 7 million yen. The company's profit wasup YoY, despite the high expenses that usually occur in the current quarter.
The company initially planned to release three new in-house distributed
game titles in the fiscal year, whose release dates were changed when it
announced results. Of these, GGGGG was released at the end of March.
Considering the profit/loss of each of the 11 titles in operation, thedisclosure materials indicate that the company is steadily generating profits
except for the latest title mentioned above. The annual dividend per shareremains 5 yen per share.

The company disclosed its full-year forecast for the fiscal year ending
March 31, 2024. No interim forecast was disclosed.
This is an increase in sales and a decrease in profit forecast. Specifically,
the company forecasts full-year sales of 15 billion yen (+39% YoY),
operating income of 2 billion yen (-12% YoY), recurring income of 1.9
billion yen (-13% YoY), and net income attributable to shareholders of theparent company of 1.1 billion yen (-5% YoY).
The contributors to the sales growth forecast are (1) the lifecycle
management of solid titles in operation for an extended period and (2)the release of the long-awaited new in-house distributed game titles. Of
these new titles, DACHIMEN DENSETSU G developed by subsidiary
Studiorex is scheduled for release in May, following the already released
GGGGG.

Please see the last page for disclaimer.

Company forecast for year
ending March 31, 2024

May 12, 2023
Global IR, Inc.

GIR Earnings View (cont.)

The remaining new title, Wizardry Variants Daphne , will be
released at a suitable time during the fiscal year. Although thecompany does not disclose the size of sales of each new title, we
believe that the contribution of this title is noteworthy.
Regarding the decrease in operating income, key factors are: (1)the increase in variable and fixed costs associated with the fullscale launch of new titles of games distributed by the company,and (2) the increase in upfront investment and R&D for new
businesses such as publishing, video, and Web3, which are
expected to grow continuously in the medium term.

Company forecast for year
ending March 31, 2024
(cont.)We believe that the company's plan for higher sales and lower
profits should not necessarily be unfavorable, as it is natural for a
growing company to allocate top-line growth to investments forsustained growth.

The company does not disclose quarterly company forecasts, but
its IR materials show outlook for the first quarter.

Outlook
for the first quarter ofthe fiscal year ending
March 31, 2024

This quarter's sales and operating income are likely to be lower
than usual as a percentage of the full-year forecast, due to thestart-up cost of GGGGG and DACHIMEN DENSETSU G and theincrease in costs related to new businesses. This is different fromprevious years.
In particular, it should be noted that the first quarter profit figuresin the previous fiscal year were strong, setting tough year-overyear comparison.
However, we would like to think that such advance guidance will
reduce the risk of major turmoil in the stock market.

Drecom (3793) FY03/2023 Fourth Quarter Financial Results

1

May 12, 2023
Global IR, Inc.

GIR Earnings View (cont.)
The first is the release date and revenue potential of new titles,
particularly Wizardry Variants Daphne. The title has been released inbeta and is in the finishing stages. Whether or not this will be acompetitive title and lead to revenue traction will be the biggest focusof this fiscal year.
Second is the progress of new business. Now that the light novel label
is on track, the company plans to launch a comic/webtoon label next.
It will be very interesting to see if this will be a success and open up
prospects for further visualization and game production. We also lookforward to the acquisition of knowledge and results in the search forWeb3-related commercialization.
Third is the development and release of future game titles. In
particular, Evil Prince and the Puppet is scheduled for release by theend of the fiscal year.

Future highlights

Fourth is risk management. In this regard, if the release schedule of asignificant game title distributed by the company were to change, or if
the response after release were to deviate from expectations, would
the company be able to strike a balance between revenue
management and development and continue its growth strategy? We
will also draw attention and have high expectations for the company
in risk management competency, including dialogue with the stock
market participants.

In this new fiscal year ending March 2024, the market will finallysee if the company will monetize its three new in-house distributed
game titles. The first key point is whether the company can achievesolid sales growth in line with its forecast.

Summary

If the monetization goes smoothly, the company will gain businessexperience and a financial foothold that would help push itself froma mobile game company to a diversified entertainment company
with original IPs and media mix capability. Another important point
is whether the business potential of the new business can befurther visualized.
If this scenario becomes more compelling, we would like to thinkthat the stock market would look beyond the company's forecast of
higher sales and lower profits.

Drecom (3793)FY03/2023 Fourth Quarter Financial Results

2

May 12, 2023
Global IR, Inc.

Financial Data (Consolidated: Quarterly)Statements of Income
Accounting period(Millions of yen)

FY
FY
03/2020 03/2021
Q1-Q4

Sales

FY03/2022

FY
03/24

FY03/2023

Q1-Q4

Q1

Q2

Q3

Q4

Q1-Q4

Q1

Q2

Q3

Q4

10,150 11,841

2,661

2,523

2,893

2,450

10,528

2,927

2,873

2,579

2,420

Q1-Q4

CE

10,800 15,000

-5.0%

17.0%

-19.0%-12.0%

-3.0%

-9.0%

-11.0%

10.0%

14.0%

-11.0%

-1.0%

3.0%

Net sales

2,192

3,997

1,040

957

1,023

776

3,797

1,308

1,321

1,058

871

4,558

YoY
Net sales margin
SG&A
YoY
Operating income
YoY
Operating income
marginOrdinary income
YoY
Net income
YoY
Net Income Ratio

53.0%

82.0%

-3.0%

8.0%

-9.0%

-16.0%

-5.0%

26.0%

38.0%

3.0%

12.0%

20.0%

21.6
1,575

33.8
1,944

39.1%
536

38.0%
494

35.4%
570

31.7
605

36.1%
2,205

44.7%
491

46.0%
530

41.0%
566

36.0%
690

42.2%
2,277

-22.0%.

23.0%.

21.0%.

7.0%

17.0%.

10.0%

13.0%.

-8.0%

7.0%

-1.0%

14.0%

3.0%

617

2,053

504

463

452

171

1,591

817

790

492

180

2,281

2,000

- 233.0%-19.0%

8.0%-28.0%-54.0%-22.0%

62.0%

71.0%

9.0%

5.0%

43.0%

-12.0%

18.9%

18.4%

15.6%

7.0%

15.1%

27.9%

27.5%

19.1%

7.5%

21.1%

13.3%

YoY

39.0%
-

6.1%

17.3%

636

2,019

492

448

439

160

1,541

810

737

477

167

2,192

1,900

- 218.0%-19.0%

6.0%-29.0%-56.0%-24.0%

64.0%

65.0%

9.0%

4.0%

42.0%

-13.0%

241

711

1,625

300

311

-45

807

521

534

110

-7

1,159

1,100

- 128.0%-36.0%-13.0%-49.0% -114.0%-50.0%

74.0%

72.0%

-54.0%

-

44.0%

-5.0%

11.3%

12.3%

8.3%

7.7%

17.8%

18.6%

4.3%

-0.3%

10.7%

7.3%

7.0%

13.7%

-1.8%

Source: Prepared by Global IR, Inc. based on company securities reports and company IR materials.
Note: Rounded to the nearest million yen, rounded to one decimal place *Calculated by Globl IR, Inc

Financial Data (Consolidated: Full Year)Per Share Data

(Consolidated)accounting period
Total number of shares issued andoutstanding (thousand shares)
EPS
EPS Adjusted
BPS
DPS

FY03/2017
14,371

FY03/2018
28,742

FY03/2019
28,819FY03/2020
28,894

FY03/2021
28,976

FY03/2022
29,073

FY03/2023
29,130

29.7
29.7
113.2
0.0

-7.2
106.7
0.0

-60.5
47.9
0.0

25.0
25.0
74.2
0.0

57.0
56.9
132.9
0.0

28.3
28.3
159.1
5.0

40.6
40.6
195.7
5.0

Cash flows(Millions of yen)accounting period
Depreciation and amortization
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

FY03/2017
214
846
-456
1,345

FY03/2018
299-79-1,9582,288

FY03/2019
462
78
-123
-271

FY03/2020
382
691
-101
-1,188

FY03/2021
627
3196
-1140
969

FY03/2022
537
1603
-1766
-388

FY03/2023
269
2666
-2017
659

FY03/2017
16.7
35.5
47.0

FY03/2018
-0.4
-6.6
33.2

FY03/2019
-16.8
-78.3
19.6

FY03/2020
9.5
41.0
32.9

FY03/2021
25.2
55.0
39.5

FY03/2022
16.0
19.4
46.9

FY03/2023
20.0
22.9
45.6

Financial Data(%)
accounting period

Return on Assets (ROA)
Return on Equity (ROE)
Capital adequacy ratio
Source: Prepared by Global IR, Inc. based on company securities reports.

Note: Rounded to the nearest million yen, rounded to one decimal place *Calculated by Globl IR, Inc.

Drecom (3793)FY03/2023 Fourth Quarter Financial Results

3

January 31, 2023

Sector: Information and Communication

Drecom (3793)

FY 3/2023 Third Quarter Result
October 1 – December 31, 2022

GIR Earnings View

Summary of Financial Result
forthe Nine Months Ended,
December 31, 2022

After the close of business on January 30, 2023, the company announced
Q3 FY03/2023 results and revised full-year forecasts (see below).
In the third quarter (October-December), sales declined 11% YoY to 2.58
billion yen, while operating income rose 9% YoY to 492 million yen.
Although sales growth was somewhat sluggish, operating income
increased steadily due to an improved sales mix, especially for mainstay
titles.
On the other hand, net income attributable to shareholders of the parent
company was 110 million yen, down 54% YoY. This was due to a partial
impairment loss on software assets related to one title in operation.
The IP title One Piece Treasure Cruise has been performing well since Q1of this fiscal year, but appears to have settled down in Q3. However, of the
11 game titles in operation, including this title, 10 titles are steadily posting
profits, and the loss from one unprofitable title appears to be minimal. As aresult, it can be said that the company has generally been accumulating
operating and ordinary income at a cruising speed.

The company has now revised its full-year forecasts. Sales and net
income were revised downward, while operating income and ordinary
income were revised upward.
The revision was due to the change in the planned release of three inhouse distributed game titles from this fiscal year to next, strong
performance of mainstay IP titles on the whole, and the implementationof impairment losses in the third quarter.
Full-year sales were revised downward by 2.3 billion yen from 13 billion
yen to 10.7 billion yen. The main reason for the downward revision was achange in the release dates of three new titles.
Operating income was revised upward by ¥200 million, from ¥2 billion to¥2.2 billion. This is due to the generally strong performance of existing
titles and a decrease in R&D expenses compared to the previous
forecast, although the contribution to profit from three new titles is
excluded. Ordinary income was also increased by 200 million yen.
Net income attributable to the parent company decreased by 100 million
yen from 1.2 billion yen to 1.1 billion yen. The decrease was due toimpairment losses incurred in the third quarter, despite the increase inordinary income.
After the revision, the company still expects to increase both sales andincome year-on-year, and the forecast for the annual dividend (year-end
dividend) of 5 yen per share remains unchanged.

Please see the last page for disclaimer.

Revision of Full-Year
Earnings Forecast

January 31, 2023
Global IR, Inc.

GIR Earnings View (cont.)

The outlook for the fourth quarter (January-March) is slightly weakerin light of the revised full-year forecast.
Sales will be at 2.32 billion yen, down 5% YoY; operating income to be
99 million yen, down 42% YoY; and net income attributable to ownersof the parent at 66 million yen loss, compared to a loss of 45 million
yen in Q4 FY03/2022.
We believe this is a generally reasonable assumption, mainly due tothe fact that the fourth quarter has fewer events for mainstay titles andsales are calmer than other quarters, and that R&D expenses are toincrease compared to the same period last year.
Next, we will inspect the status of the three in-house distributed game
titles whose releases were postponed.
First, GGGGG is undergoing an open beta test in Japan in January2023 to check its progress. 2023 (next fiscal year) release isscheduled.

Outlook forthe fourth quarter
FY2023

Second, Wizardry Variants Daphne is scheduled for market testing by
the end of March 2023, which is also making progress. This one isalso scheduled for release in 2023 (next fiscal year).
Third, Unannounced Title (developed by studiorex) had its release
date postponed, although no specific information was announced.
These were followed by the disclosure of two titles scheduled forrelease in 2023. One is the mobile game Evil Prince and the Puppet
and the other is Tokyo Stories for PC and consoles.

New businesses show steady progress.

New Business Progress

In the publishing business among new businesses, the light novel
label "DRE Novels" has been published monthly since October
2022. Of these, BLADE & BASTARD –Ashes are Warm, Labyrinths
are Dark- was published in December, and the response was sostrong that a reprint was decided. In February, Troubles withexorcist daughter Nicola will be published, which won the Drecom
Media Grand Prix "Gold Prize".
Rooot, a Twitter-based fan community promotion service,continues to expand steadily.
The search for commercialization in the Web3 area is also
continuing.

Drecom (3793) FY 3/2023 Third Quarter Result

1January 31, 2023
Global IR, Inc.

The company revised its full-year results in this earnings
announcement. Although the release of three in-house distributed
games have been postponed to the next fiscal year, the company islikely to achieve high profit margins and profitability this fiscal year,
supported by the strong performance of its mainstay IP titles.
Needless to say, the key to next fiscal year's performance will be themonetization of the three new game titles, which have been delayed.
If this goes well, it will become more realistic for the company todeliver sustainable top line growth of +20% or more together with a
15% operating margin, supported by improved visibility of subsequent
game pipeline and smooth ramp-up of new businesses. The
company's corporate value is expected to reach an important turning
point, and will likely attract increased attention.

Summary

Financial Data (Consolidated: Quarterly)Statements of Income
Accounting period

Sales
YoY
Gross Profit
YoY
Gross Profit Margin
SG&A
YoY
Operating income
YoY
Operating income
marginOrdinary income
YoY
Net income
YoY
Net income margin(Millions of yen)

FY
FY
03/2020 03/2021

FY 03/2022

FY 03/2023
Old
New
Q1-Q4CE Q1-Q4CE

Q1-Q4

Q1-Q4

Q1

Q2

Q3

Q4

Q1-Q4

Q1

Q2

Q3

Q4CE

10,150
-5%
2,192
53%
21.6%
1,575
-22%
617
6.1%

11,841
17%
3,997
82%
33.8%
1,944
23%
2,053
233%
17.3%

2,661
-19%
1,040
-3%
39.1%
536
21%
504
-19%
18.9%

2,523
-12%
957
8%
38.0%
494
7%
463
8%
18.4%

2,893
-3%
1,023
-9%
35.4%
570
17%
452
-28%
15.6%

2,450
-9%
776
-16%
31.7%
605
10%
171
-54%
7.0%

10,528
-11%
3,797
-5%
36.1%
2,205
13%
1,591
-22%
15.1%

2,927
10%
1,308
26%
44.7%
491
-8%
817
62%
27.9%

2,873
14%
1,321
38%
46.0%
530
7%
790
71%
27.5%

2,579
-11%
1,058
3%
41.0%
566
-1%
492
9%
19.1%

2,319
-5%

13,00023%

10,700
2%

99
-42%
4.3%

2,000
26%
15.4%

2,200
38%
20.6%

636
711
7.0%

2,019
218%
1,625
128%
13.7%

492
-19%
300
-36%
11.3%

448
6%
311
-13%
12.3%

439
-29%
241
-49%
8.3%

160
-56%
-45
-114%
-1.8%

1,541
-24%
807
-50%
7.7%

810
64%
521
74%
17.8%

737
65%
534
72%
18.6%

477
9%
110
-54%
4.3%

74
-54%
-66

1,900
23%
1,200
49%
9.2%

2,100
36%
1,100
36%
10.3%

Source: Global IR, Inc. based on company securities reports and company IR materials.

Drecom (3793) FY 3/2023 Third Quarter Result

2

-2.8%

January 31, 2023
Global IR, Inc.

Financial Data (Consolidated: Full Year)Per Share Data

(Consolidated)Year Ending

Total number of shares issued andoutstanding (thousand shares)
EPS

FY 3/2017

FY 3/2018

FY 3/2019

FY 3/2020

FY 3/2021

FY 3/2022

14,371

28,742

28,81928,89428,97629,073

29.7

-7.2

-60.5

25.0

57.0

28.3

EPS Adjusted

29.7

-

-

25.0

56.9

28.3

BPS

113.2

106.7

47.9

74.2

132.9

159.1

DPS

0.0

0.0

0.0

0.0

0.0

5.0

Cash flows from operating activities(Millions of yen)
FY 3/2017214

FY 3/2018299

FY 3/2019
462

FY 3/2020
382

FY 3/2021
627

FY 3/2022
537

846

-79

78

691

3196

1603

Cash flows from investing activities-456-1,958

-123

-101

-1140

-1766

Cash flows from financing activities

1,345

2,288

-271

-1,188969-388

FY 3/2017

FY 3/2018

FY 3/2019

FY 3/2020

FY 3/2021

FY 3/2022

Return on Assets (ROA)

16.7

-0.4

-16.8

9.5

25.2

16.0

Return on Equity (ROE)

35.5

-6.6

-78.3

41.0

55.0

19.4

Equity Ratio

47.0

33.2

19.6

32.9

39.5

46.9

Year Ending
Depreciation and amortization
Cash flows from operating activities

Financial Data(%)
Year Ending

Source: Prepared by Global IR, Inc. based on company securities reports
Note: Rounded to the nearest million yen, rounded to one decimal place * Calculated by Globl IR, Inc.

Drecom (3793) FY 3/2023 Third Quarter Result3

October 28, 2022

Sector: IT / Telecom

Drecom (3793)

FY 3/2023 Second Quarter Result
July 1st – September 30, 2022

GIR Earnings View
After the close of trading on October 27, 2022, the company announced
its financial results for the second quarter of the fiscal year ending March
31, 2023, which were favorable.
In the Q2 (July-September), sales increased 13.9% YoY to 2.87 billion yen
and operating income increased 70.7% YoY to 790 million yen, continuing
the strong performance of the first quarter. As a result, 1H operating
income, recurring profit, and net income attributable to shareholders of theparent company all reached record highs on a 1H basis.

Summary of Financial Result
forthe Six Months Ended,
September 2022

The IP title ONE PIECE Treasure Cruise appears to continue to drive
companywide earnings. Following the global anniversary events held in Q1,timely release of the movie “ONE PIECE FILM RED” in August, contributed
to the company's Q2 performance. Of the 11 game titles in operation, nine
have steadily posted profits, and two unprofitable titles have posted only
small losses. In contrast to this strong performance of the game business,the media business has been losing money despite an increase in revenue.
However, this is a business under development, and its financial impact on
the entire company was extremely limited.
Next, looking at the percentage of progress toward the company's initialfull-year forecasts, the profit side is particularly making a remarkable
headway. Operating income, recurring income, and net income attributableto owners of the parent are 80.4%, 81.5%, and 88.1%, respectively. The
sales progress rate was only 44.6%, but this was due to the fact that thecompany had factored in the effect of launching three in-house distributed
game titles that will post gross sales in the second half of the fiscal year.
The company did not disclose its 1H forecasts, but it is highly likely thatthey exceeded the company's internal plan.

Despite extremely strong advancement on the profit front, the company
maintained its full-year forecasts.
First, in terms of sales, the company expects that the strong performanceof existing games will continue to a certain extent in the second half ofthe fiscal year. However, the company decided not to revise its full-yearsales forecast at this time because the launch of some of the three inhouse distributed titles had been pushed back by about three months
from its previous forecast.

Please see the final page for important disclosures.

Forecasts forthe 3Q and beyond
for the year ending,March 31, 2023

October 28, 2022
Global IR, Inc.

GIR Earnings View (cont.)

In terms of profits, the company expects to sufficiently spend
advertising and promotional expenses when launching the new titles,
while associated revenue would be smaller than originally expected
due the delay. Together with steady profits from existing games
expected in the second half, the company has decided not to change
its full-year profit forecast at this time.
While the company left its full-year forecast unchanged in spite of theremarkable progress in first-half profits, we think this decision isreasonable and take it as positive news. Two points.
First, according to the company's explanation, the delay in launching
new game titles results from product quality improvement, so thisshould be regarded as positive. It is inferred that there are no negative
events occurring with neither existing games nor with new projects.
Second, we believe that by releasing the new titles with higher
perfection while there is a tailwind from the existing game titles,
chances are better for them to become the next earnings pillars,
generating sustained profit growth from this fiscal year to the next.

Forecasts forthe 3Q and beyond
for the year ending,March 31, 2023
(cont.)

Regarding the new titles, GGGGG is scheduled to be released during2022 according to the company’s press release dated September 20,
2022. The reservations have begun in the app store. Another title,
Wizardry Variants Daphne, is also scheduled for release by the end of
March 2023, according to the company's press release of October 26,
2022.

Steady progress can be seen in all areas.
First, in terms of new game titles, three titles are in full development
for release during FY03/2024.

New Game Titles and
New Business Progress

Second, in the publishing business, the company received over
2,000 submissions for the "Drecom Media Grand Prix," a novelist
award, and it awarded one gold and three silver prizes. Thesenovels will be developed into books, comic books, webtoons, voice
dramas, and other formats in 2023 and beyond. In addition, the lightnovel label "DRE Novels" launched three new titles on October 7.
A total of nine works are scheduled to be published by the end of
this year, and comic book adaptations are also planned. In addition,a collaboration with Korean company Contents Lab. Blue has been
decided in order to promote webtoon.

Drecom (3793) FY 3/2023 Second Quarter Result1October 28, 2022
Global IR, Inc.

In addition, "Rooot," a Twitter-based fan community promotion
service, continues to grow steadily, and the company is also
making progress in its search for commercialization in the Web3domain.

New Game Titles and
New Business Progress(cont.)

The company's Q2 and 1H results have been strong, driven by existing
game titles.
It should be noted that the launch of three new games is delayed andthat the full-year guidance was not revised. That said, we would like tonote that these new titles would deliver stedy earnings growth towards
the next fiscal yer and beyond, if they are completed to a high degreeof perfection and launched during the current fiscal year.

Summary

At the Q3 announcement, we would like to monitor wheather thecurrent year's earnings momentum does not change and the newgames are in good shape to drive solid profits going forward.

Financial Data (Consolidated: Quarterly)Statements of Income(Millions of yen)

Year Ending

FY03/2020

FY03/2021

Q1-Q4

Q1-Q4

FY03/2022
Q1

Q2

Accounting Standard
Sales
YoY
Gross Profit
YoY
Gross Profit Margin
SG&A
YoY
Operating income
YoY
Operating income margin
Ordinary income
YoY
Net income
YoY
Net income margin

FY03/2023

Q3

Q4

Q1-Q4

Q1

2,450
-8.7%
776
-15.7%
31.7%
605
9.6%
171
-53.6%
7.0%
161-56.0%-46-114.1%-1.9%

10,529-11.1%
3,797
-5.0%
36.1%
2,205
13.4%
1,591
-22.5%
15.1%
1,542-23.6%
807-50.3%
7.7%

2,927
10.0%
1,308
25.8%
44.7%
491
-8.4%
817
62.1%
27.9%
811
64.6%
522
73.5%
17.8%

Q2 Q1-Q4 CE

Japanese GAAP
10,150
-5.3%
2,192
52.9%
21.6%
1,575
-21.7%
617
6.1%
636
711
7.0%

11,841
16.7%
3,997
82.3%
33.8%
1,944
23.4%
2,053
232.7%
17.3%
2,019
217.5%
1,625
128.4%
13.7%

2,661-19.4%
1,040
-2.5%
39.1%
536
20.9%
504
-19.2%
18.9%
492-19.1%
301-35.6%
11.3%

2,524-12.4%
957
7.7%
37.9%
494
7.2%
463
8.1%
18.4%
449
6.1%
311
-13.3%
12.3%

2,893
-2.6%
1,023
-8.7%
35.4%
570
16.8%
453
-28.4%
15.6%
440-29.3%
241-49.0%
8.3%

Source: Global IR, Inc. based on company’s annual securities report
Note: CE=Company Estimate. Rounded under JPY mn. Rounded to one dicimal place. *Caluculated by Global IR, Inc.

Drecom (3793)FY 3/2023 Second Quarter Result

2

2,873
13.9%
1,321
37.9%
46.0%
530
7.2%
791
70.7%
27.5%
737
64.2%
535
71.8%
18.6%

13,000
23.5%
2,000
25.7%
15.4%
1,900
23.2%
1,200
48.6%
9.2%

October 28, 2022
Global IR, Inc.

Financial Data (Consolidated: Full Year)Per Share Data
Year Ending
Total number of shares issued andoutstanding (thousand shares)
EPS
EPS Adjusted
BPS
DPS
Cash flows from operating activities
Year Ending
Depreciation and amortization
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

FY 3/2017

FY 3/2018

FY 3/2019

FY 3/2020

FY 3/2021(Consolidated)
FY 3/2022

14,371

28,742

28,81928,89428,97629,073

29.7
29.7
113.2
0

-7.2
106.7
0

-60.5
47.9
0

25.0
25.0
74.2
0

57.0
56.9
132.9
0

28.3
28.3
159.1
5

FY 3/2017
214
846
-456
1,345

FY 3/2018
299-79-1,9582,288

FY 3/2019
462
78
-123
-271

FY 3/2020
382
691
-101
-1,188(Millions of yen)
FY 3/2021
FY 3/2022
626
537
3,196
1,603
-1,140-1,766968-388

FY 3/2017
16.7
35.5
47.0

FY 3/2018
-0.4
-6.6
33.2

FY 3/2019
-16.8
-78.2
19.6

FY 3/2020
9.5
41.0
32.9

FY 3/2021
25.2
55.0
39.5

Financial Data
Year Ending
Return on Assets (ROA)
Return on Equity (ROE)
Equity Ratio

Source: Prepared by Global IR, Inc. based on company securities reports
Note: Rounded to the nearest million yen, rounded to one decimal place * Calculated by Globl IR, Inc.

Drecom (3793)FY 3/2023 Second Quarter Result3(%)
FY 3/2022
16.0
19.4
46.9

July 29, 2022

Sector: IT/Telecom

Drecom (3793)

FY 2022 First Quarter Result
Apr 2022 - Jun 2022

GIR Earnings View
The company announced Q1 FY2022 results after the close of trading on
July 28, 2022. Q1 sales were 2.93 billion yen, up 10.0% YoY, and operating
profit was 817 million yen, up 62.1% YoY, a strong start.

Summary of Financial
Result for
the Three Months Ended,
June 2022

The anniversary event of the IP title ONE PIECE Treasure Cruise, whichmarked its 8th anniversary, was a success, mainly due to the globally unified
content distribution schedule. Other long-term operational titles also made astable contribution to earnings.
Sales and operating profit were 22.5% and 40.9% of the company's full-year
forecasts, respectively. Slightly low sales progress rate was expected, as
three new titles, including Wizardry VA (tentative), are scheduled for the
release in second half of the fiscal year. Operating profit may have exceeded
the company's forecast due to the increased revenues from the anniversary
event, but the company maintained its full-year forecast due to accelerated
R&D investment in new businesses and the need to assess the status of new
releases, which are more likely to occur in the second half of the fiscal year.

No new releases or major events are planned for Q2 (July-September), but
the company expects stable sales from titles under operation. Profits,
however, may be slightly below the previous year's level due to accelerated
R&D investments in new businesses such as the publishing business andthe Web3 domain.
Since the three new titles to be introduced in the second half of the fiscal
year will be appropriated as gross sales, sales are expected to increasesignificantly after their release. The development of additional features forsome of the titles is expected to be slightly pushed back from the scheduled
release dates, however the expected contribution to earnings from 2H
remains unchanged from the beginning of the term.

Please see the last page for disclaimer.

Forecasts forthe 2Q and beyond
for the year ending,March 31, 2023

July 29, 2022
Global IR, Inc.

GIR Earnings View(cont.)

The company's mid-term goal is to become a "comprehensive
entertainment company that provides a wide variety of digitalentertainment content globally with focus on IP."In the publishing business, the "Drecom Media Award," a novel
contest for newcomers, has attracted approximately 2,000 entries,
and although it is a new business, it is already attracting a high levelof attention. The company plans to publish more than 10 new titlesin the second half of the fiscal year and beyond.

New Business Progress“Rooot," a Twitter-based fan community promotion service,continued to grow sales steadily, with a 27.6% QoQ increase in Q1.
Both sales and profit for the Web3 domain is not expected to become
gainful during the current fiscal year, however the company issteadily advancing multiple projects simultaneously, including
blockchain game development and the NFT project for IP creation,in order to create long-term business opportunities.
Financial Data (Consolidated: Quarterly)Statements of Income(Millions of yen)

FY2019Year Ending

FY2020

1Q-4Q

1Q

2Q

3Q

FY20214Q 1Q-4Q

AccountingStandard
Sales

Q1

FY2022
1Q-4Q
Q1
CE

Q2

Q3

Q4 1Q-4Q

2,524

2,893

2,450 10,529

2,927 13,000-8.7% -11.1%

Japanese GAAP
10,150

3,303

2,882

2,971

-5.3%

46.6%

28.9%

19.7% -15.5% 16.7%-19.4% -12.4%

-2.6%

10.0%

23.5%

2,192

1,067

889

1,120

3,997

1,040

957

1,023

776

3,797

1,308

-

YoY

52.87%

87.1%

60.1%

90.8%

92.0% 82.32%

-2.5%

7.7%

-8.7% -15.7%

-5.0%

25.8%

-

Gross Profit
Margin
SG&A

21.6%

32.3%

30.9%

37.7%

34.3% 33.8%

39.1%

37.9%

35.4%

31.7%

36.1%

44.7%

-

1,575

443

461

488

1,944

536

494

570

605

2,205

491

-

YoY

-21.7%

0.3%

31.1%

25.7%

40.4% 23.4%

20.9%

7.2%

16.8%

9.6%

13.4%

-8.4%

-

617

624

428

632

2,053

504

463

453

171

1,591

817

2,000

- 386.4% 110.1% 218.3% 326.8% 232.7%-19.2%

8.1% -28.4% -53.6% -22.5%

62.1%

25.7%

18.9%

18.4%

15.6%

7.0%

15.1%

27.9%

15.4%

2,019

492

449

440

161

1,542

811

1,900

- 301.4% 194.6% 183.8% 200.8% 217.5%
711
467
359
473
326 1,625-19.1%
301

6.1% -29.3% -56.0% -23.6%
311
241
-46
807

64.6%
522

23.2%
1,200

1.6% 128.4%-35.6% -13.3% -49.0% -114.1% -50.3%

73.7%

48.6%

12.1% 13.7%

11.3%

17.8%

9.2%

YoY
Gross Profit

OperatingincomeYoY
Operatingincome margin
Ordinary income
YoY
Net income
YoY
Net income
margin

6.1%

18.9%

14.9%

21.3%

636

609

423

622

- 282.4% 291.7% 167.3%
7.0%

15.0%

13.0%

16.0%

2,685 11,841
921

552
369

13.7% 17.3%
366

2,661

12.3%

8.3%

-1.9%

7.7%

Source: Global IR, Inc. based on company’s annual securities report
Note: CE=Company Estimate. Rounded under JPY mn. Rounded to one dicimal place. *Caluculated by Global IR, Inc..

Drecom (3793) FY 2022 First Quarter Result1July 29, 2022
Global IR, Inc.

Financial Data (Consolidated: Full Year)Per Share Data

(Consolidated)
FY2021
28,97629,073

FY2016FY2017FY2018FY201914,371

28,742

28,81928,894

29.7
29.7
113.2
0

-7.2
106.7
0

-60.5
47.9
0

25.0
25.0
74.2
0

Cash flows from operating activities
accounting period

FY2016FY2017FY2018FY2019(Millions of yen)
FY2020
FY2021

Depreciation and amortization
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

214
846
-456
1,345

299
-79
-1,958
2,288

462
78
-123
-271

382
691
-101
-1,188626
3,196-1,140
968

537
1,603
-1,766-388

FY2016FY2017FY2018FY2019FY2020(%)
FY2021

16.7
35.5
47.0

-0.4
-6.6
33.2

-16.8
-78.2
19.6

9.5
41.0
32.9

25.2
55.0
39.5

16.0
19.4
46.9

accounting period
Total number of shares issued andoutstanding (thousand shares)
EPS
EPS Adjusted
BPS
dps

Financial Dataaccounting period
Return on Assets (ROA)
Return on Equity (ROE)
Capital adequacy ratio

Source: Prepared by Global IR, Inc. based on company securities reports

Note: Rounded to the nearest million yen, rounded to one decimal place * Calculated by Globl IR, Inc.

Drecom (3793)FY 2022 First Quarter Result2

FY2020

57.0
56.9
132.9
0

28.3
28.3
159.1
5

May 13, 2022

Sector : IT/Telecom

Drecom (3793)

FY2022 Full Year Results
April 1, 2021 – March 31, 2022

GIR Earnings View
The company announced its full-year results for the fiscal year ending March
31, 2022, after the close of trading on May 12, 2022. Full-year sales declined
11.1% YoY to 10.53 billion yen, operating profit fell 22.5% YoY to 1.59 billion
yen, and net income fell 50.3% YoY to 810 million yen. In the fourth quarter(January-March), sales declined 8.7% YoY to 2.45 billion yen, operating
profit fell 53.6% to 170 million yen, and net loss was 46 million yen.

Summary of Full Year
Financial Results for
the Fiscal Year Ending
March 31, 2022

Compared to the company's full-year forecast announced in January, net
sales fell short of the forecast by 3.4% (370 million yen), operating income
by 6.4% (110 million yen), and net income by 19.3% (190 million yen),respectively. The main reasons for the shortage were (1) the impact of lowerthan-expected sales of new titles, (2) the advance recording of 60 million yen
in operating expenses for the current fiscal year, that was at a risk ofoccurring in the next fiscal year, and (3) the recording of a total of 310 million
yen in extraordinary losses, including impairment losses on game-related
assets and losses on the revaluation of investment securities. This was mainly
due to the early handling of the problem caused by the softer performanceof new titles.
The announcement of the first dividend (5 yen) at the same time as the fullyear results is a noteworthy change, and can be seen as a sign of thecompany's confidence in its ability to generate cash in a stable manner.

The company's forecast for fiscal year ending March 31, 2023, announced
simultaneously with the current full-year results, calls for sales of 13.0
billion yen (+23.5% YoY), operating profit of 2.0 billion yen (+25.7% YoY),
and net income of 1.2 billion yen (+48.6% YoY). The company had
previously announced forecasts only for the following quarter, but switched
to a full-year basis in FY23/3. This is likely due to the fact that the company
has settled on a stable outlook for the game business.
The FY 23/3 is likely to get off to a solid start with the anniversary events ofmainstay titles coinciding in the first quarter. The company expects a totalof three new releases, including Wizardry VA (tentative), to contribute toearnings in the second half of the year. The company expects operating
income of 2.0 billion yen, close to its record high (2.05 billion yen in
FY21/3), despite increased expenses, including a 480 million yen increasein advertising costs associated with the release of new titles and a 390
million yen increase in R&D costs for new businesses.

See the final page for important disclosures.

Outlook for FY2023

May 13, 2022
Global IR, Inc.

GIR Earnings View (cont.)
As for new businesses, the publishing business plans to release morethan 10 new titles in 2H, and "Rooot," a Twitter-based fan community
promotion service, is expected to continue to grow steadily. Although
the company does not expect its Web3 businesses to produce revenue
this fiscal year, it has several projects underway, including thedevelopment of blockchain games and an NFT project, which aims tocreate IP.

Future Development

Outlook for FY2023(cont.)

The company's mid-term goal is “to become a comprehensive
entertainment company that provides a wide variety of digitalentertainment content globally with focus on IP.” As seen above, thecompany's forecast for FY23/3 is 13 billion yen in sales (+23.6%
YoY) and 2 billion yen in operating profit (operating profit margin of
15.4%). As shown in the chart below, the company plans to maintaina revenue growth rate of over 20% and an operating profit margin of
15%, by actively investing the cash generated from the gamebusiness while continuing to return profits to shareholders until
FY25/3. “Rooot" is already becoming profitable, and several
concrete projects are underway in the publishing and Web3
businesses. We will keep a close eye on future developments.

Entering performance expansion phase

Source: Global IR, Inc. from company data (Financial Results for the Fiscal Year Ended March 31, 2022),
p20 (https://drecom.co.jp/ir/140120220512542564.pdf)

Drecom (3793) FY2022 Full Year Results

1

May 13, 2022
Global IR, Inc.

Financial Data (Consolidated: Quarterly)
Income Statement(JPY mn)
FY20/03

Year Ending
AccountingStandard
Sales
YoY
Gross Profit

1Q-4Q

FY21/03
1Q

2Q

3Q

FY22/03
4Q 1Q-4Q

1Q

2Q

FY23/03

3Q

4Q
Q4 1Q-4Q 1Q-4Q
CE Actual
CE Actual

1Q-4Q
CE

Japanese GAAP
10,150

2,524

2,893

2,822

2,450

10,90010,52913,000-5.3% 46.6% 28.9% 19.7% -15.5%

3,303

16.7% -19.4% -12.4%

-2.6%

5.1%

-8.7%

-7.9% -11.1%

23.5%

2,192

3,997

921

2,661

1,023

-

776

-

3,797

-

YoY 52.87% 87.1% 60.1% 90.8% 92.0% 82.32% -2.5%
Gross Profit
Margin 21.6% 32.3% 30.9% 37.7% 34.3% 33.8% 39.1%
SG&A
1,575
443
461
488
552 1,944
536
YoY -21.7% 0.3% 31.1% 25.7% 40.4% 23.4% 20.9%
Operating
617
624
428
632
369 2,053
504
incomeYoY- 386.4% 110.1% 218.3% 326.8% 232.7% -19.2%
Operating
6.1% 18.9% 14.9% 21.3% 13.7% 17.3% 18.9%
income margin
Ordinary income
636
609
423
622
366 2,019
492

7.7%

-8.7%

- -15.7%

-

-5.0%

-

37.9%

35.4%

-

31.7%

-

36.1%

-

- 301.4% 194.6% 183.8% 200.8% 217.5% -19.1%
711

YoY

Net income
margin1,120

2,685 11,841

957

Net income

889

2,971

1,040

YoY

1,067

2,882

467

359

473

- 282.4% 291.7% 167.3%

326

-

605

-

2,205

-

-

9.6%

-

13.4%

-

463

453

280

171

1,700

1,591

2,000

8.1% -28.4% -24.1% -53.6% -17.2% -22.5%

25.7%

18.4%

15.6%

9.9%

7.0%

15.6%

15.1%

15.4%

449

440

268

161

1,649

1,542

1,900

6.1% -29.3% -26.6% -56.0% -18.3% -23.6%

23.2%
1,200

1.6% 128.4% -35.6% -13.3% -49.0% -55.0% -114.1% -38.4% -50.3%

48.6%

13.7%

301

570
16.8%

807

7.0% 15.0% 13.0% 16.0% 12.1%

1,625

494
7.2%

11.3%

311
12.3%

241
8.3%

147
5.2%

-46
-1.9%

1,000
9.2%

7.7%

9.2%

Source: Global IR, Inc. based on company’s annual securities report
Note: CE=Company Estimate. Rounded under JPY mn. Rounded to one dicimal place. *Caluculated by Global IR, Inc.

Financial Data (Consolidated, Full Year)
Per-Share Data
Year Ending
Total No. of Shares outstanding (,000)
EPS
Adjusted EPSBPSDPSCash Flow
Year Ending
Depreciation
Sales Cash Flow
Investment Cash Flow
Financial Cash Flow
Financial Data
Year Ending
ROA
ROE
Equity Ratio

FY 17/3

FY 18/3

FY 19/3

FY 20/3(Consolidated)
FY 21/3
FY 22/3

14,371
29.7
29.7
113.2
0

28,742
-7.2
106.7
0

28,819
-60.5
47.9
0

28,894
25.0
25.0
74.2
0

28,976
57.0
56.9
132.9
0

29,073
28.3
28.3
159.1
5

FY 17/3

FY 18/3

FY 19/3

FY 20/3

FY 21/3(JPY mn)
FY 22/3

214
846
-456
1,345

299
-79
-1,958
2,288

462
78
-123
-271

382
691
-101
-1,188626
3,196-1,140
968

537
1,603
-1,766-388

FY 17/3

FY 18/3

FY 19/3

FY 20/3

FY 21/3(%)
FY 22/3

16.7
35.5
47.0

-0.4
-6.6
33.2

-16.8
-78.2
19.6

9.5
41.0
32.9

25.2
55.0
39.5

16.0
19.4
46.9

Source: Global IR, Inc. based on company’s annual securities report.

Note: Rounded under JPY mn. Rounded to one dicimal place. *Caluculated by Global IR, Inc.

Drecom (3793)FY2022 Full Year Results2March 22, 2022

Sector : IT / Telecom

Drecom (3793)

Flash comment

GIR View
Drecom (3793) announced its entry into the Web3 business after the closeof business on Friday, March 18.

Entry into Web3 BusinessAnnounced

Web3, also known as Web 3.0, is gaining attention as a concept that follows
web1.0, in which information providers unilaterally convey information toviewers via websites, and web2.0, in which information providers and viewers
communicate interactively via SNS. The company defines Web3 as "anInternet distribution service realized via tokens.
This release states that the company has decided to enter the GameFi
domain, where it can take full advantage of its strengths, as an offshoot of its
Web3 initiatives. GameFi is a word created by combining the words "Game"and "Decentralized Finance (DeFi).

Specifically, the company has signed a basic agreement with theThirdverse Group, which its strength lays in the blockchain domain. Under
the agreement, Thirdverse Group will act as the publisher and Drecom willdevelop and operate blockchain games on behalf of the Thirdverse Group.
The company plans to produce two games for overseas markets, the firstof which will be an alpha version of a game licensed from Wizardry, an IP
owned by the company, to be released between winter 2022 and spring2023.
GameFi holds enormous potential, that at one point a GameFi called Axie
Infinity in Vietnam had 1 million DAUs and monthly sales of $342 million(¥40.6 billion). Depending on future developments, this could become agamechanger. GameFi is the first step in the company's Web3 initiative,
and the company plans to consider and implement business development
not only for GameFi, but for a wide range of other businesses as well.

Mission and mid-term
goals
Development consistentwith

See the final page for important disclosures.

In-house IP Blockchain
Contracted to develop
and operate games

Entertainment has a history of growing along with the development oftechnology. Drecom believes that as the technology continues to emerge in
Web3, more new developments is expected in the entertainment field overthe medium term span. The company's decision to enter the GameFi market
was based on the belief that these technology trend would contribute greatly
to the realization of the company's mission and vision.

March 22, 2022
Global IR, Inc.

Mission and mid-term
goals
Development consistentwith(cont.)

The company's mid-term goal is "to become a comprehensive
entertainment company that provides a wide variety of digital entertainment
content globally with focus on IP.” In addition to the already announced
launch of its publishing business, the aforementioned entry into the GameFi
business is also a positive step toward achieving this mid-term goal.

Drecom (3793) Flash comment2

January 27, 2022

Sector: IT / Telecom

Drecom (3793)

FY2022 Third Quarter Result
Oct 31, 2021 – Dec 31, 2021

GIR Earnings View

Summary of Financial
Results for
the Nine Months Ended
December, 2021

The company announced its Q3 FY2022 results after the close on January
27, 2022. Cumulative Q3 sales fell 11.8% YoY to 8.08 billion yen, operating
profit fell 15.7% YoY to 1.42 billion yen, and net income fell 34.3% YoY to 850
million yen. The decrease in sales compared to the previous year was mainly
due to the impact of the withdrawal from the titles and advertising businessthat were terminated in the previous year. In addition to the above-mentioned
decrease in sales, the main reason for the YoY decline in profit was a onetime cost of 130 million yen (recorded as a cost of sales) for a gameproduction project using a committee system.
Compared to the company's forecast announced in October, sales were1.0% above forecast and operating profit was 9.2% above forecast,exceeding expectations, but net profit was 5.2% below forecast due to an
extraordinary loss associated to withdrawal from offices. Sales exceeded theforecast due to the continued strong performance of several applications,especially the IP title ONE PIECE Treasure Cruise (currently distributed byBandai Namco Entertainment Inc.), which is in its seventh year of operation.
Despite the 130 million yen in one-time expenses related to theaforementioned game production project, the company's operating profit andrecurring profit were stronger than expected due to higher sales andreduction in fixed cost, so it can be said that the company's performance wasstronger than it appeared.

The company's forecast for the fourth quarter (cumulative total), announced
together with the third quarter results, was for net sales of 10.9 billion yen (7.9% YoY), operating income of 1.7 billion yen (-17.2% YoY), and net incomeof 1.0 billion yen (-38.4% YoY). Comparing the company's forecast for the
fourth quarter (January-March) with the third quarter (October-December),sales are expected to decline slightly by 2.5%. This decline of sales is partially
due to the loss of anniversary event sales of several titles that took place inQ3, but is lessen by the company’s plan to release New Japan Pro-Wrestling
Strong Spirits (to be distributed by Bushiroad Co., Ltd.) and mikonote Hare
Tokidoki Kegare in Q4. The 38.1% QoQ decline in operating profit is more
due to higher advertising costs for new titles and upfront costs forinvestments in the publishing business to generate IP rather than to theabove-mentioned decline in sales. There is no need to view this as a negative,
but rather as a positive decrease in profit.

See the final page for important disclosures.1

Forecast for the Fiscal
Period, 4Q, 2022

January 27, 2022
Global IR, Inc.

In addition to Wizardry VA (tentative), Evil Prince and the Puppets andthree location-based IP titles using “AROW”, the company plans threeunannounced original titles in the pipeline for next fiscal year andbeyond.
With regard to the launch of the Publishing Business Divisionannounced at the previous Q2 financial results briefing, the company
announced more specifically that it plans to sequentially release morethan 10 new titles from the Publishing Business from the second half of
FY2023 onward, and it seems to be starting up smoothly.

OutlookIn addition to the above, at the financial results briefing, the company
also announced that sales of its Twitter-based fan community promotion
service, "Rooot," have steadily expanded by 4.7 times compared to thesame period last year. We can see that the company is making steadyprogress toward its mid-term goal of becoming a comprehensive
entertainment company that provides a wide variety of digitalentertainment content globally with a focus on IP.

Performance Index (Consolidated, Quarterly)

Income statement
Year Ending

AccountingStandard
Sales(JPY mn)
FY03/20
1Q

2Q

3Q

FY 03/21
4Q 1Q-4Q

1Q

2Q

3Q

FY03/224Q 1Q-4Q

3Q

4QCE

1Q-4Q
CE

1Q

2Q

2,661

2,524

2,893

2,822 10,900

4.0% 14.6% -5.3% 46.6% 28.9% 19.7% -15.5% 16.7% -19.4% -12.4%
587
479 2,192 1,067
889 1,120
921 3,997 1,040
957

-2.6%
1,023

5.1%

-7.9%

280

1,700

Japanese GAAP
2,254

2,235

YoY -21.3% -17.1%
Gross Profit
570
556

2,483

3,178 10,150

3,303

2,882

2,971

2,685 11,841

YoY 57.0% 152.3% 102.7% -14.6% 52.9% 87.1% 60.1% 90.8% 92.0% 82.3%
Gross Profit
25.3% 24.9% 23.6% 15.1% 21.6% 32.3% 30.9% 37.7% 34.3% 33.8%
Margin
SG&A
442
352
389
393 1,575
443
461
488
552 1,944
YoY -43.4% -7.8% -6.6% -9.4% -21.7% 0.3% 31.1% 25.7% 40.4% 23.4%
Operating
128
204
198
86
617
624
428
632
369 2,053
IncomeYoY- -32.2%- 386.4% 110.1% 218.3% 326.8% 232.7%
Operating
Income 5.7% 9.1% 8.0% 2.7% 6.1% 18.9% 14.9% 21.3% 13.7% 17.3%
MarginOrdinary
152
144
219
121
636
609
423
622
366 2,019
IncomeYoY- 301.4% 194.6% 183.8% 200.8% 217.5%
Net income
122
92
177
321
711
467
359
473
326 1,625
YoY- 282.4% 291.7% 167.3% 1.6% 128.4%
Net Income
5.4% 4.1% 7.1% 10.1% 7.0% 14.1% 12.5% 15.9% 12.1% 13.7%
MarginSource: Global IR, Inc. based on company’s annual securities report
Note: Rounded to the nearest million yen and one decimal place, as determined by Global IR.

Drecom (3793) FY2022 Third Quarter Result

1

-2.5%

7.7%

-8.7%

39.1%

37.9%

35.4%

536

494

570

20.9%

7.2%

16.8%

504

463

453

-19.2%

8.1% -28.4% -24.1% -17.2%

18.9%

18.4%

15.6%

9.9%

15.6%

492

449

440

268

1,649

-19.1%
6.1% -29.3% -26.6% -18.3%
301
311
241
147 1,000-35.6% -13.3% -49.0% -55.0% -38.4%
11.3%

12.3%

8.3%

5.2%

9.2%

January 27, 2022
Global IR, Inc.

Financial Data (Consolidated: Full Year)

Per-Share Data
2017/3
14,371
29.7
29.67
113.2
0

2018/328,742
-7.2
106.7
0

2019/328,819
-60.5
47.9
0

2020/328,894
25.0
24.98
74.2
0

2021/3
28,97657.0
56.85
132.910

Fiscal Year2017/3
214
846
-456
1,345

2018/3299-79-1,9582,288

2019/3
462
78
-123
-271

2020/3382
691-101-1,188(JPY mn)
2021/3626
3,196-1,140968

Fiscal Year2017/3
11.9
35.5
47.0

2018/3
-2.2
-6.6
33.2

2019/3
-24.7
-78.3
19.6

2020/3
11.1
41.0
32.9

(%)
2021/3
19.1
44.8
39.5

Fiscal Year
Total No. of Shares outstanding (,000)
EPS
After EPS adjustment
BPS
DPS

Cashflow
Depreciation
Sales Cash Flow
Investment Cash Flow
Financial Cash Flow

Financial Data
ROA
ROE
Capital Adequacy Ratio

Source: Global IR, Inc. based on company’s annual securities report
Note: Rounded to the nearest million yen and one decimal place, as determined by Global IR.

Drecom (3793) FY2022 Third Quarter Result2January 24, 2022

Sector: IT / Telecom

Drecom (3793)

FY2022 Second Quarter Result
July 1, 2021 – September 30, 2021

GIR Earnings View

Summary of Financial
Results for
the Six Months Ended
September 30, 2021

In the first half of the fiscal year ending March 31, 2022, sales fell 16.2% YoY
to 5.18 billion yen, operating income fell 8.1% YoY to 970 million yen and net
income fell 25.9% YoY to 610 million yen. The main reason for the YoY decline
in sales and profits is believed to be the impact of the withdrawal from thetitles and advertising business that were terminated in the previous year.
Compared to the company's forecast announced in July, overall sales
exceeded the forecast by 3.7%, operating profit by 28.9%, and net profit by22.4%. As a result of the strong performance of several applications,especially the IP title ONE PIECE Treasure Cruise (currently distributed byBandai Namco Entertainment Inc.), which is in its seventh year of operation,
sales exceeded forecasts, and as a result, profits were markedly higher than
expected by absorbing fixed costs.

The company's cumulative total forecast for the third quarter, which wasannounced together with the second quarter results, is for net sales of 8.0
billion yen (-12.6% YoY), operating income of 1.3 billion yen (-22.8% YoY),
and net income of 0.9 billion yen (-30.7% YoY). Comparing the company's
Q3 (October-December) forecast with the Q2 (July-September) result, sales
are expected to increase by 11.6% QoQ, while operating profit is expected
to decrease by 20.1% QoQ. This is due to the fact that while the company
expects new titles to make a full contribution throughout the quarter, as wellas an increase in revenue from year-end and anniversary events, it also
expects a decrease in profit due to higher upfront advertising and operationalcosts for the new title, mikonote Hare Tokidoki Kegare, which is scheduled tobe released this winter.

Publishing Business
LaunchSee the final page for important disclosures.1

Forecast for the Fiscal
Period, 3Q, 2022

The company's mid-term goal is to become a comprehensive entertainment
company that provides a wide variety of digital entertainment content
globally, centered on IP. As part of this goal, the company announced thelaunch of a publishing division at its Q2 results briefing. The first step is tocreate hit titles in the areas of webtoon, light novels, and comics at an earlystage, accumulate know-how within the company and gain a reputation as ahit producer. After that, the company plans to monetize its IP in a repeatablemanner by expanding its hit webtoon, light novel, and comic works to othermedia such as games and animation. We will be watching this progress
closely.

January 24, 2022
Global IR, Inc.

Performance Index (Consolidated, Quarterly)

Income statement

FY03/20
1H
3Q

Year Ending

1Q
2Q
AccountingStandard
Sales
2,254 2,235 4,489
YoY -21.3% -17.1% -19.3%

4Q 1Q-4Q

1Q

2Q

FY 03/21
1H
3Q

4Q 1Q-4Q

1Q(JPY mn)
FY03/222Q
1H 3QCE

2,685 11,841

2,661

2,524

Japanese GAAP
2,483

3,178 10,150

4.0%

14.6%

3,303

2,882

6,185

-5.3% 46.6%

28.9%

37.8% 19.7% -15.5%

2,971

5,185

2,815

16.7% -19.4% -12.4% -16.2%

-5.3%

570
556 1,126587
479 2,192 1,067
889 1,956 1,120
921 3,997 1,040
957 1,998
Gross Profit
YoY 57.0% 152.3% 10.5% 102.7% -14.6% 52.9% 87.1% 60.1% 73.8% 90.8% 92.0% 82.3% -2.5% 7.7% 2.1%
Gross Profit
25.3% 24.9% 25.1% 23.6% 15.1% 21.6% 32.3% 30.9% 31.6% 37.7% 34.3% 33.8% 39.1% 37.9% 38.5%
Margin
442
352
794
389
393 1,575
443
461
904
488
552 1,944536
494 1,030
SG&A
YoY -43.4% -7.8% -31.7% -6.6% -9.4% -21.7% 0.3% 31.1% 13.9% 25.7% 40.4% 23.4% 20.9% 7.2% 14.0%
Operating
128
204
332
198
86
617
624
428 1,052
632
369 2,053
504
463
967
333
IncomeYoY- -32.2%- 386.4% 110.1% 216.8% 218.3% 326.8% 232.7% -19.2% 8.1% -8.1% -47.3%
Operating
Income5.7% 9.1% 7.4% 8.0% 2.7% 6.1% 18.9% 14.9% 17.0% 21.3% 13.7% 17.3% 18.9% 18.4% 18.7% 11.8%
MarginOrdinary
152
144
295
219
121
636
609
423 1,032
622
366 2,019
492
449
941
359
IncomeYoY- 301.4% 194.6% 249.5% 183.8% 200.8% 217.5% -19.1% 6.1% -8.8% -42.3%

Net income
YoY
Net Income
Margin

122

92

214

177

321

-

-

-

-

-

5.4%

4.1%

4.8%

7.1%

10.1%

711

467

359

826

473

- 282.4% 291.7% 286.4% 167.3%
7.0% 14.1%

12.5%

13.4% 15.9%

326

1,625

301

311

612

288

1.6% 128.4% -35.6% -13.3% -25.9% -39.1%
12.1%

13.7%

11.3%

12.3% 11.8% 10.2%

Source: Global IR, Inc. based on company’s annual securities report
Note: Rounded to the nearest million yen and one decimal place, as determined by Global IR.

Financial Data (Consolidated: Full Year)

Per-Share Data
2017/3
14,371
29.7
29.67
113.2
0

2018/328,742
-7.2
106.7
0

2019/328,819
-60.5
47.9
0

2020/328,894
25.0
24.98
74.2
0

2021/3
28,97657.0
56.85
132.910

Fiscal Year2017/3
214
846
-456
1,345

2018/3299-79-1,9582,288

2019/3
462
78
-123
-271

2020/3382
691-101-1,188(JPY mn)
2021/3626
3,196-1,140968

Fiscal Year2017/3
11.9
35.5
47.0

2018/3
-2.2
-6.6
33.2

2019/3
-24.7
-78.3
19.6

2020/3
11.1
41.0
32.9

(%)
2021/3
19.1
44.8
39.5

Fiscal Year
Total No. of Shares outstanding (‘000)
EPS
After EPS adjustment
BPS
DPS

Cashflow
Depreciation
Sales Cash Flow
Investment Cash Flow
Financial Cash Flow

Financial Data
ROA
ROE
Capital Adequacy Ratio

Source: Global IR, Inc. based on company’s annual securities report

Note: Rounded to the nearest million yen and one decimal place, as determined by Global IR.

Drecom (3793) FY2022 Second Quarter Result

1

May 13, 2021

Sector: IT / Telecom

Drecom (3793)

FY2021 Full Year Result

April 1, 2020 – March 31, 2021

GIR Earnings View

Summary of Financial
Results for the Fiscal
Year 2020, Ended
March 31, 2021

For FY2020, the company posted net sales of 11.84 billion yen, operating
income of 2.05 billion yen, and net income attributable to shareholders of theparent company of 1.62 billion yen. Operating income and net income
attributable to parent company exceeded the company's guidance,
announced on January 28, 2021, of 11.70 billion yen, 1.90 billion yen, and1.40 billion yen, respectively; and posted record high profit.
Results surpassed company guidance because IP titles performed better
than expected. The only title that was in the red for Q3 broke into the blackin Q4, but another title that was in the black for Q3 slid into the red in Q4.
Therefore, total number of titles in the red was one, unchanged QOQ. Bothtitles are expected to rebound during FY2021 H1

By April 2023, Drecom aims to transform itself into a comprehensive
entertainment company. The company plans to use the stable cash flow fromits gaming business to fuel growth to (1) continue expansion of its gaming
business, (2) diversification of IP owned by the company, and (3) apply knowhow acquired in the gaming business to other areas.
(1) Continue expansion of its gaming business
The number of development projects in the gaming business increased bythree during Q4, as 12 full-scale and prototype development are inprogress. Six new games in total are scheduled for release in FY2022.
(2) Diversification of IP owned by the company
As for the original IP 1 Evil Prince and the Puppets, development of a new
game is underway, and e-commerce has also started, making it an IP.
(3) Apply know-how acquired in the gaming business to other areas“AKROGLAM”, a service in the music domain, and "root", a twittermarketing service, have seen increases in fan communities and in thenumber of companies using their services – which also appear to be
expanding.

1Intellectual Property

See the final page for important disclosures. 1

Operational Progress

May 13, 2021
Global IR, Inc.

GIR Earnings View (cont.)
The company's guidance for FY2021 Q1 (April-June 2021) for salesof 2.70 billion yen and operating profit of 350 million yen, reflect theabsence of new releases, weakening of tailwinds from FY2020’s “stayhome” demand, and completion of cost efficiency improvements. The
company expects YOY revenue and profit declines. Among otherreasons for expected revenue declines are the withdrawal from theadvertising business and the closing of some titles.

Outlook for FY2021 Q1

The stock price has already factored-in stable fundamentals and islooking for new growth catalysts. Therefore, the stock price could
fluctuate depending on developments related to new titles, and it isentering a phase where expectations for earnings growth in FY2021
and beyond are leading the way.

Performance Index (Consolidated, Quarterly)(JPY mn)

Income statement
Year Ending

FY03/19
1Q

2Q

3Q

FY 03/20
4Q 1Q-4Q

1Q

2Q

3Q

FY03/214Q 1Q-4Q

1Q

2Q

3Q

4Q 1Q-4Q

Accounting
Japanese GAAP
Standard
Sales
2,865 2,695 2,387 2,773 10,720 2,254 2,235 2,483 3,178 10,150 3,303 2,882 2,971 2,685 11,841
YoY 11.4% -25.7% -38.5% -10.8% -18.7% -21.3% -17.1% 4.0% 14.6% -5.3% 46.6% 28.9% 19.7% -15.5% 16.7%
Gross Profit
363
220
290
561 1,434
570
556
587
479 2,192 1,067
889 1,120
921 3,997
YoY -54.5% -77.7% -64.6% 14.1% -53.7% 57.0% 152.3% 102.7% -14.6% 52.9% 87.1% 60.1% 90.8% 92.0% 82.3%
Gross Profit
12.7% 8.2% 12.1% 20.2% 13.4% 25.3% 24.9% 23.6% 15.1% 21.6% 32.3% 30.9% 37.7% 34.3% 33.8%
Margin
SG&A
781
381
416
434 2,012
442
352
389
393 1,575
443
461
488
552 1,944
YoY 2.2% -55.3% -35.5% -32.5% -30.8% -43.4% -7.8% -6.6% -9.4% -21.7% 0.3% 31.1% 25.7% 40.4% 23.4%
Operating-418 -161 -126
128 -577
128
204
198
86
617
624
428
632
369 2,053
incomeYoY- -32.2%- 386.4% 110.1% 218.3% 326.8% 232.7%
Operating-14.6% -6.0% -5.3% 4.6% -5.4% 5.7% 9.1% 8.0% 2.7% 6.1% 18.9% 14.9% 21.3% 13.7% 17.3%
income margin
Ordinary income -513 -311 -458
-67 -1,349
152
144
219
121
636
609
423
622
366 2,019
YoY- -69.9%- 301.4% 194.6% 183.8% 200.8% 217.5%
Net income-505 -151 -717 -340 -1,713
122
92
177
321
711
467
359
473
326 1,625
YoY- 21.8% 739.6%
Net income-17.6% -5.6% -30.0% -12.3% -16.0%
margin

-

-

5.4%

4.1%

Source: Global IR, Inc. based on company’s annual securities report
Note: Rounded under JPY mn. Rounded to one dicimal place.
*Caluculated by Global IR, Inc.

Drecom (3793) FY2021 Full Year Result

1

-

-

7.1% 10.1%- 282.4% 291.7% 167.3%

1.6% 128.4%

7.0% 14.1% 12.5% 15.9% 12.1% 13.7%

May 13, 2021
Global IR, Inc.

Performance Index (Consolidated,Full year)

Per-Share Data
2017/3
14,371
29.7
29.67
113.2
0

2018/328,742
-7.2
106.7
0

2019/328,819
-60.5
47.9
0

2020/328,894
25.0
24.98
74.2
0

2021/3
28,97657.0
56.85
132.910Year Ending

2017/3
214
846
-456
1,345

2018/3299-79-1,9582,288

2019/3
462
78
-123
-271

2020/3382
691-101-1,188(JPY mn)
2021/3626
3,196-1,140968

Year Ending

2017/3
11.9
35.5
47.0

2018/3
-2.2
-6.6
33.2

2019/3
-24.7
-78.3
19.6

2020/3
11.1
41.0
32.9

(%)
2021/3
19.1
44.8
39.5

Year Ending
Total No. of Shares outstanding (,000)
EPS
Adjusted EPSBPSDPSCash Flow
Depreciation
Sales Cash Flow
Investment Cash Flow
Financial Cash Flow

Financial data
ROA
ROE
Equity Ratio

Source: Global IR, Inc. based on company’s annual securities report
Note: Rounded under JPY mn. Rounded to one dicimal place.
*Caluculated by Global IR, Inc.

Drecom (3793) FY2021 Full Year Result2February 15, 2021

Sector: IT / Telecoms

Drecom (3793)

Initiation Report

GIR View
Japan's mobile gaming market – consisting mainly of games played on
smartphones – is huge, valued at more than ¥1.3 trillion. Globally, the mobile
gaming market is thought to have been worth about ¥8 trillion in 2020. The
Japanese market is the third largest in the world after those in China and the US,
and is not significantly smaller than either. With the wide uptake of smartphones,
the Japanese mobile gaming market grew rapidly until 2017, to over ¥1 trillion.
Since then it has continued to expand, at a slower pace, driven by the enjoyable
gaming experiences offered by companies in the sector. Market growth is likely
to have accelerated with the coronavirus pandemic.

In the fiscal year to March 31 2021, more than 90% of Drecom’s revenue will
come from mobile gaming, and the company expects to achieve record sales andoperating profit. The company was founded in 2001 and was listed on the Tokyo
Stock Exchange’s Mothers market in 2006. Several times in the past it has run ata loss, but Global IR, Inc. (GIR) believes that this has given it the knowledge of
how to be profitable and to manage itself in a way that controls its profitability.
One of Drecom's strengths is that since the era of feature phone games (ontraditional mobile phones) nearly a decade ago, it has had a distinctive gamemanagement style that emphasises continuous usage by players. It has also built
a relationship of trust with leading IP 1 holders. Drecom’s game management
style fits well with IP, which emphasizes long-term value such as brand and user
engagement.

Aiming at a stock-based business model, Drecom has set up a revenue structurethat grows sales and profits through having multiple game titles. In particular, it
releases IP-based games, on a Free-to-Play basis but in which players choose
to make in-game payments, over long periods, with good game management inplace. Games that sell less well point to the timing of reductions in operating
costs and the termination of operations, allowing preparation for the release of
new titles. The Japanese mobile gaming market has increasing barriers to entry,
but Drecom is one of the companies able to clear them. The market continues
to grow, and the mobile gaming business has become the company's cash cow.
In our view, Drecom is entering a period in which it will be able to create newrevenue streams.

1Intellectual Property

See the final page (p. 31) for important disclosures. 1

February 15, 2021
Global IR, Inc.

GIR View (continued)

The first reason for the increasing barriers to entry is rising development
costs. These have risen to more than ¥100 million per title, andsometimes more than ¥1 billion. The second issue is finding personnel
with the right skills. The mobile gaming business involves two different
functions: development, and also management, because the revenue
that players are charged comes from post-release game management.
These two functions require different skills and mindsets. Game
companies have to develop and retain the right human resources.

Third, there is a barrier to entry in the form of IP-centric inner circles within
the industry, known as ‘value circles,’ based on abilities and relationships.
IP has been adopted for most game titles as the mobile gaming market has
expanded. Intellectual Property (IP) in a game refers to well-known game
titles or characters. The use of this kind of IP extends across magazines,
merchandise, games, and industries, further enhancing its value.
Companies that use the IP therefore have to be part of the circle to be able
to contribute to the improvement in the IP’s value, and the interests of eachindustry stakeholder must be carefully taken into consideration.

As mobile games have become cash cows, on a consolidated basis
there is the prospect of retained earnings moving into positive territory.
Medium-term, Drecom aims to build new revenue streams inentertainment by deploying the management skills it has acquired in thegaming business and making the most of its management strengths.

Financial Data

Share price: ¥872 (as of February 12, 2021)

2017/3

Sales
(¥m)
8,388

2018/3

13,192

57.2

190

-79.7

-29

NA

-204

NA

-7.2

-

2019/3

10,720

-18.8

-577

NA

-1,349NA-1,712

NA

-60.5

-

2020/3

10,150

-5.4

617

NA

635

NA

711

NA

25.0

32.6

2021/3 (Co. est.)

11,700

15.3

1,900

207.9

1,800

183.1

1,400

96.8

49.1

16.6

Fiscal Year

YoY
(%)
28.3

Operating
Profit (¥m)
932

YoY
(%)
NA

in Millions of JPY

Drecom (3793)

2

Net Profit
(¥m)
844

YoY
(%)
NA

Recurring
Profit (¥m)
814

YoY
(%)
NA

EPS
(¥)
29.7

PER
(x)
-

February 15, 2021
Global IR, Inc.

FAQs from Meetings with Investors
Drecom holds meetings with overseas institutional investors on an ongoingbasis. Below we reproduce some common questions and responses fromthese meetings. The responses are based on the company's answers andinclude GIR commentary and additional information. The questions areordered according to issues that were of particular interest. For more
information on the answers, click “Answer” at the end of the question.

Drecom's Financial Performance
Q1: Why was there a loss in the year to March 31, 2019? -------------- <Answer>
Q2: However, Drecom turned a profit of ¥690 million in the fiscal year to
March 31, 2020. What was the background to this turnaround?
--------------------------------------------------------------------------- <Answer>
Q3: In the fiscal year to 31 March, 2021, sales and operating profit are
expected not just to have turned up, but to be at record highs. Can you
explain why? ----------------------------------------------------------- <Answer>
Q4: Please share your thoughts on the possible financial results for the fiscal
year ending March 31, 2022, and beyond ------------------------- <Answer>

About Drecom
Q5: Please tell us about the trends in revenue contribution from each title--------------------------------------------------------------------------- <Answer>
Q6: Are trends in billing and ARPU much affected by seasonal factors orentertainment events? ---------------------------------------------- <Answer>
Q7: What is the difference between the revenue structure of in-house IP and
third-party IP? --------------------------------------------------------- <Answer>
Q8: Can you explain why the billing amount and sales are different?
--------------------------------------------------------------------------- <Answer>
Q9: Please tell us how the differences beween the Apple, Google and enza
platforms impact your earnings ------------------------------------- <Answer>
Q10: Please tell us about your relationship with Bandai Namco Entertainment(7832) ---------------------------------------------------------- ---------<Answer>
Q11: Please give your thoughts on new businesses, investment such as M&A,
etc. ---------------------------------------------------------------------- <Answer>
Q12: Please explain your views on shareholder returns --------------- <Answer>

About the Gaming Market
Q13: How large is the market? --------------------------------------------- <Answer>
Q14: Please outline the trends in the market. --------------------------- <Answer>
Drecom (3793)

3

February 15, 2021
Global IR, Inc.

Table of contents
FAQS FROM MEETINGS WITH INVESTORS ...................................................................................................... 3
Drecom's Financial Performance ............................................................................................................................................................... 3
About Drecom .................................................................................................................................................................................................... 3
About the Gaming Market ............................................................................................................................................................................. 3

THE MOBILE GAMING MARKET .......................................................................................................................... 6
TRENDS IN THE MOBILE GAMING MARKET ................................................................................................................................... 6
The domestic mobile gaming market expanded rapidly until about 2017 ................................................................................ 6
Continued Moderate Growth in 2017 and Beyond ............................................................................................................................. 8

FEATURES OF THE MOBILE GAMING MARKET,HIGH BARRIERS TO ENTRY ...........................................................................11(1) High development costs; (2) The need to find personnel with different skill sets; (3) The existence of ‘value
circles’ based on capabilities and relationships ................................................................................................................................. 11
Mobile gaming moving towards a stock-based business model ................................................................................................ 12

DRECOM (3793) ..................................................................................................................................................... 14
CLEARS THE BARRIERS TO ENTRY, ALLIED WITH ‘VALUE CIRCLES’ ..................................................................................... 14
Company Profile .............................................................................................................................................................................................. 14
Revenue structure .......................................................................................................................................................................................... 15

DRECOM’S STRENGTHS ..................................................................................................................................................................... 17
Strengths nurtured since the company’s inception ......................................................................................................................... 17
1. Management experience with powerful IP and a relationship of trust with its users ................................................... 17
2. Building an organization that can successfully develop and manage multiple games, and establishing a
stock-based business model ..................................................................................................................................................................... 18
Drecom has relationships with leading companies, including Bandai Namco (BNE) ........................................................ 19
3. Sustainable and reproducible management practices gained from experience, including setbacks................... 19
4. Potential for further business development, not only in the game business. ................................................................. 20

DRECOM'S BUSINESS PERFORMANCE ..........................................................................................................................................21
Through conscious optimization of revenue, record profits likely for the fiscal year to March 31, 2021.................. 21

DRECOM'S GROWTH STRATEGY ....................................................................................................................................................24
1. Moving into entertainment fields other than mobile games .................................................................................................... 24
2. Acquisition, Creation and Development of IP ............................................................................................................................... 25
3. Taking existing titles into overseas markets: increased revenue from overseas .......................................................... 25
4. Diversification of the Revenue Model: Moving Away from Dependency on Free-to-Play......................................... 25

DRECOM AND ESG ...........................................................................................................................................................................26
S: Social .............................................................................................................................................................................................................. 26
G: Governance................................................................................................................................................................................................. 27

PERFORMANCE INDEX ........................................................................................................................................29

Drecom (3793)

4

February 15, 2021
Global IR, Inc.

CHART AND TABLES
Figure 1. 2020 Global Gaming Market By Segment, 2020 _______________________________________________________________ 6
Figure 2. 2020 Global Gaming Market By Region, 2020 ________________________________________________________________ 6
Figure 3. Smartphone Gaming Market Grew with the Uptake ofmartphones ___________________________________________ 7
Figure 4. Growth of the Domestic Gaming Market (Household & Online Platforms) ____________________________________ 7
Figure 5. Gender Balance of Players _____________________________________________________________________________________ 8
Figure 6. Age Breakdown of Game Players, in Years (Japan)____________________________________________________________ 9
Figure 7. Game Apps in Japan: Players, Time and Revenues (weekly averages) ________________________________________ 9
Figure 8. Changes in entertainment activity due to the effects of the coronavirus ____________________________________10
Figure 9. History of the Domestic and Home Video Game Market _____________________________________________________ 11
Figure 10. Comparison of Revenue Structures: In-House versus Third-Party IP _______________________________________ 16
Figure 11. Which Games are In Service, Which are Terminated _________________________________________________________ 18
Figure 12. Financial performance ________________________________________________________________________________________ 21
Figure 13. Profitablity of games in service ______________________________________________________________________________ 22
Figure 14. Trend in fixed costs __________________________________________________________________________________________ 23
Figure 15. Comparable companies______________________________________________________________________________________ 28

Drecom (3793)

5

February 15, 2021
Global IR, Inc.

The Mobile Gaming Market

Trends in the Mobile Gaming Market
The domestic mobile gaming market expanded rapidly until about
2017
The global mobile gaming market is estimated to have been worth about ¥8
trillion in 2020, and the Japanese market about ¥1.3 trillion, making it the thirdlargest in the world after China and the United States. However, the differencein size is relatively small: Japan’s mobile gaming market is huge.
Figure 1. 2020 Global Gaming Market By Segment, 2020

Source: Newzoo

Figure 2. 2020 Global Gaming Market By Region, 2020

Source: Newzoo

Drecom (3793)

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February 15, 2021
Global IR, Inc.

The domestic mobile gaming market expanded rapidly until around 2017 withthe uptake of smartphones. Since then, although growth has slowed, themarket has continued to expand moderately. According to the Famitsu GameWhite Paper, the domestic mobile gaming market exceeded ¥1 trillion yen invalue in 2017, and has continued to grow moderately since then.
Figure 3. Smartphone Gaming Market Grew with the Uptake ofmartphones
6,000

90
80

5,000
70
4,000

60
50

3,000
40
30

2,000

20
1,000
10
0

2010

2011

2012

2013

2014

2015

2016

Household ownership of smartphones, %

2017

2018

2019

0

Downloads (cumulative)

Source: GungHo Online Entertainment Co.; Survey of Trends in Communications Usage (通信利用動向調査), Ministry of Internal Affairs and Communications

Downloads of Puzzle & Dragons (Pazdora), a game released by GungHo in
January 2012, rose almost in line with the increase in the number ofsmartphones, and the overall market for smartphone games in the early
2000s expanded with the uptake of smartphones.
Figure 4. Growth of the Domestic Gaming Market (Household & Online Platforms)
Unit:¥bn
2,000

1,500

1,127.2

1,000

296.3

364.8

339.97303.14

494.3

999.4

1,038.6

698.3

788.6

291.16261.70230.11226.93

1,236.1 1,296.2

1,351.4 1,358.8

500

0305.41294.00191.00195.00263.21

277.30202.37170.09159.54201720182019 2020 E 2021E

Software in households, inc. online (¥bn)

Online platforms (¥bn)

175.59179.74177.98155.31

142.15130.05117.05

2010

2011

2012

2013

2014

2015

2016

Hardware in households (¥bn)

292.00244.08Source: Famitsu Game White Paper, 2020
Note: Data period: Dec 28, 2009 to Dec 29, 2019 Accurate figures for 2020 and 2021 areunavailable; from May 2020 they are estimates.

Drecom (3793)

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February 15, 2021
Global IR, Inc.

Continued Moderate Growth in 2017 and Beyond
There are three factors driving
continued moderate growth:(1) Improvement of the appeal ofgames, through the eﬀorts ofgame companies.
(2) Coronavirus acceleratingchanges in life and work trends.
3) The expansion of the base ofusers who have gaming
experience, and the gaming
generations’ transitioning into
adulthood.

As noted above, the mobile gaming market continues to expand, albeit at amore moderate pace. This is for a number of reasons, including: (1) the appeal
of a variety of mobile gaming experiences, as a result of game companies’
efforts; (2) the acceleration of existing trends in life and work, as a result of
the coronavirus pandemic, and thus an increase in the number of gaming
hours played; (3) the expansion of the base of users who have gaming
experience, and the gaming generations’ transitioning into adulthood.
As smartphones became more widespread, users grew accustomed to using
them for various functions, and they became a familiar gadget in everyday life
– that is, they became commoditized. At the same time, gaming companies
have optimized their smartphones for screen use, resolution, operability, andbehavior when games are played, while providing users with a variety of
gaming experiences. In this way, as the appeal of smartphone games is
improved, a virtuous cycle is generated in which these games attract moreusers.
Figures 5 and 6 show that there is little difference in the gender and age
composition of players. Overall. it can be inferred that the market of mobile
game players is growing.
Figure 5. Gender Balance of Players

Female45%

Source: Famitsu Game White Paper, 2020
Note: Data period: Dec 31, 2018 – Nov 3, 2019

Drecom (3793)

8

Unit:%

Male55%

February 15, 2021
Global IR, Inc.

Figure 6. Age Breakdown of Game Players, in Years (Japan)

Unit:%

60 – 69: 5% 5 – 9:5%
50 – 59: 9%
10 – 19:19%
40 – 49:
19%

20 – 29:23%
30 –39:20%
Source: Famitsu Game White Paper, 2020
Note: Data period: 31 Dec, 2018 – 3 Nov, 2019

Figure 7. Game Apps in Japan: Players, Time and Revenues (weekly averages)
Average no. of players
weekly (million)

2.563

Average weekly
playing time
(million hrs)

Source: Famitsu Game White Paper, 2020
Note: Data period: 31 Dec, 2018 – 3 Nov, 2019

8.485

Average weekly
ARPU / week (¥)
billing (¥m)

719.718280.80Furthermore, the constraints resulting from the coronavirus since Spring 2020
have accelerated changes in life and work patterns that were alreadyoccurring. As a result, it appears that more time is being spent on playing
games (see Figure 8 below). This is increasingly driving the mobile gaming
market.

Drecom (3793)

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February 15, 2021
Global IR, Inc.

Figure 8. Changes in entertainment activity due to the effects of the coronavirus

Q. Please tell us about changes in the time you spent on entertainment activities in March.

Source: Famitsu Game White Paper, 2020
Note: Percentage of respondents who answered that they had increased their activity. Video items include recording and viewing.
Eb-i Survey; survey date: April 6, 2020. n = 7.801

3) Concerning point 3 above, as shown in Figure 9, Nintendo's Family
Computer was launched in Japan in 1983. Following this, in 1989 came theGameboy. The Playstation, which appeared in 1994, appealed to an older userbase, and in recent years these players have become more interested in
mobile gaming. In addition, many users started to become familiar with games
for the first time around 2010, through social network service (SNS) mobile
games. The commoditization of smartphones and the increase in disposable
income as players became adult members of society also helped to establish
a lifestyle in which interaction with mobile games became part of everyday
leisure. The younger generation now own smartphones from an early age,
become paying users from about high-school age, and start to take part in themobile game market.

Drecom (3793)

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February 15, 2021
Global IR, Inc.

Figure 9. History of the Domestic and Home Video Game Market

Source: Global IR, Inc.

Features of the mobile gaming market,
high barriers to entry(1) High development costs; (2) The need to find personnel withdifferent skill sets; (3) The existence of ‘value circles’ based oncapabilities and relationships
Features of the mobile gaming
market:(1) High development costs:
More personnel needed, longlead times.
(2) Development andmanagement in the mobile gamebusiness are completely diﬀerent
functions, requiring personnel …
(3) The existence of ‘value
circles’ in the industry, consistingof abilities and relationships.

Developing mobile games is increasingly expensive. Development costs forfeature phone games typically ran to a few tens of millions of yen, but formobile games they are usually in excess of ¥100 million, and for some titles
are estimated to be more than ¥1 billion. The reason is that users have beenused to high graphics performance, 3D images, etc. since the days of
packaged software for home video-game consoles, so user expectations arehigh.
To give a clearer picture of the increase in development costs: developing
feature phone games required 10 to 20 people and took about six months tocomplete. For mobile games, it requires 50 to 100, and the lead time fromplanning to completion rises to 1.5 to 2 years. During this period, labor costs
are very high.
Mobile games are first developed, then – after release – managed. Sales are
realized through users choosing to make in-game payments. Game
Drecom (3793)

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February 15, 2021
Global IR, Inc.

management involves planning in-game events, promoting engagement
through interesting features or additions, responding to users' requests andcomplaints, and addressing problems such as defects and bugs.
Development and management of games being completely different types ofbusiness, mobile gaming companies need to nurture personnel with different
mental and other skill sets. Games are developed by specialized personnel –game creators – who design the games and add sound, graphics, etc.
Knowledge is built up not only by individual creators, but also as a team. By
contrast, game management requires close communication with users,
focusing on engagement through dialogue.
Mobile games have become a huge, ¥1 trillion-plus market, and the use of IP
has become standard. Intellectual Property in a game means the inclusion ofa well-known game title or character. The addition of IP to mobile games
increases the value of that IP, and at the same time brings in users and getsthem involved. For mobile games, the key to success is how long the player
can continue to enjoy a game after it has been released – that is, whether theplayers will continue to choose to make in-game payments.
The same IP might be used across a number of media other than games,
including magazines, videos, etc., so there are many stakeholders involved.
Companies that use the IP have to be able to contribute to the value of that IP,
so there is an informal inner circle of IP users known as a ‘value circle’.
Membership requires IP users not only to contribute to raising the value of theIP, but also to consider the other stakeholders in each industry.
The requirements for being in the game industry have expanded toencompass

not

just

development

capabilities,

but

also

successful

management and marketing, as well as being in a ‘value circle’ based on
abilities and human relationships. The requirements not only for financial
strength, but also a track record and credibility as a member of the circle, form
barriers that make it hard for prospective new entrants to the market

Mobile gaming moving towards a stock-based business model
Cleared barriers to entry, stocktype business model point tostable and rising earnings.

As tangible and intangible barriers to entry arise in the mobile gaming market,
companies are increasingly adopting one of the following strategies toincrease revenue:(1) Trying to create games that are big hits, using their own IP;(2) Building up billing revenue in multiple layers by releasing multiple titles
using other companies' IP, without focusing too much on one’s own.
With the second option, the release of a new game is very likely to secure acertain amount of sales over a given period of time through the use of IP. And
Drecom (3793)

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February 15, 2021
Global IR, Inc.

in addition to the release of new games as appropriate, billing sales will be
accumulated for each title. We believe that in this way it has become possible
to build a stock-type business model in the mobile game business.
In other words, while barriers to entry have risen in the mobile gaming market,
business models have been shifted to stocking. Companies that can clear thebarriers to entry and optimize stock-based business models are therefore
more likely to achieve relatively stable revenue growth.

Drecom (3793)

13

February 15, 2021
Global IR, Inc.

Drecom (3793)

Clears the barriers to entry, allied with‘value circles’
Company Profile
Founded in 2001; entered the gaming market in 2009
Drecom is a gaming company that clears the high barriers to entry in thecurrent mobile gaming market. The company is now expected to achieve
record operating profit in the fiscal year to March 31, 2021, which we believe
testifies to its recognition in the mobile gaming market and its experience overthe past few years, as well as its ability to control the market duration of its
game titles and to optimize its revenue.
Drecom was founded by Yuki Naito, the current president. While attending
Kyoto University, he set up Drecom with a group of university students
centered on Kyoto University, and in November 2001 established it as acompany.
Ever since it was founded, the company has been involved with entertainment
services based on people-to-people connections on the Internet. In 2003 it
developed a blog service, and in 2006 it was listed on the Tokyo Stock
Exchange ‘Mothers’ section, with business development centered on thisservice. At that time, Web 2.0, which allows users to create and collaborate
online, was a major new trend. Drecom’s IPO was in tune with the times.
The number of users of the blog service rose, but it proved hard to makeprofitable. The business fell significantly short of Drecom's expectations, andit was forced to rebuild from its management foundations. Rakuten (4755)
provided support, and after a capital and business alliance in 2008, including
a third-party allotment, Drecom expanded into mobile phone-related business.
2009: Moved into games onsocial network services. 2010:
Oﬀered games for mobile
phones; established its position.

On the other hand, entertainment services based on interpersonalconnections – the focus of Drecom’s business since its inception – emerged
from several social networking platforms, such as Faceook and Mixi, around2007-2008. These typically had an open-door policy on the provision ofgames – that is, anyone could become a game provider. In 2009, Drecom
offered games on social media. The following year, it also started offering
games for mobile phones. Onmyoji Heian Yokitan and Chokoto Farm won
acclaim and established a position in the social game market. Chokoto Farm
was launched in January 2011, has been on the market for 10 years and is stillavailable.

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During this period, the social gaming market expanded rapidly by providing
new gaming experiences using people-to-people connections on the more
popular feature phones. However, with the use of ‘Gacha’, which is a way ofmaking purchases within games through paid electronic draws, sometimes insequence, some game providers were viewed as having caused a social
problem by unduly raising the expectations of players in games requiring
payments. In 2013, the Consumer Affairs Agency alerted game providers topotential violations of the Act against Unjustifiable Premiums and Misleading
Representations. The event is commonly referred to as the ‘Illegal Kompu
Gacha problem’. The effect was to dampen the rapid market growth, but
lowering the risks arising from gamers’ highs and high billing turned into apathway to more smartphone-based gaming. In other words, the ‘Illegal
Kompu Gacha problem’ prompted the industry to accelerate its move into thesmartphone gaming market.

Revenue structure
The revenue structure of mobile game sales at Drecom differs for in-houseand third-party titles.
For in-house games (in-house IP), as shown in Figure 10, billed sales areaccounted as Drecom sales. From these are deducted fixed costs, and alsovariable costs in the form of fees paid to platforms and copyright fees. The
remainder is operating income.
Sales are handled differently in the revenue structure of IP distributed by third
parties. In this case, billed sales are revenue-shared with the partner company,
and Drecom’s share is accounted as its sales. In this case there are no variable
costs in the form of fees paid to platforms and copyright fees. Drecom’s
operating income from this source is calculated by deducting its fixed costs.
The operating profit margin on IP distributed by third parties is therefore high,but the actual billed sales of the company's titles distributed by third partiesare larger than the sales recorded by Drecom. GIR estimates that actual billed
revenue from Drecom’s IP distributed by third parties is approximately four tofive times higher.
Third-party platforms distributing Drecom’s IP include Bandai Namco
Entertainment (BNE)’s enza. Drecom has been involved with BNE since thelaunch of the enza platform (details on Page 19), and we believe it is
responsible for managing both the platform and games. This means that
Drecom may effectively have two sources of income from its distribution via
enza. If so, the company's profit margins from this relationship may be higher
than those from other platforms.
The business models for in-house (owned) IP and third-party (otherDrecom (3793)

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companies’) IP are different. In-house IP is a high-risk, high-return product for
which it is relatively hard to acquire users, because it does not have the namerecognition of other companies’ IP. However, once it has been adopted by
players and becomes a hit, it is profitable because there are no copyright feesto be paid out. On the other hand, while other IPs are low-risk, low-return,powerful IPs have a number of stakeholders, and unpredictable events can
incur intangible costs in the short term. For example, if the title does not
become a hit, but cannot be terminated easily, this is regarded as a hidden
cost.
Figure 10. Comparison of Revenue Structures: In-House versus Third-Party IP

Source: Global IR, Inc.

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Drecom’s strengths
Strengths nurtured since the company’s inception
1. Management experience with IP and a relationship of trust with its users;
2. Building an organization that can successfully develop and manage multiple
games, and establishing a stock-based business model;
3. Sustainable and reproducible management practices gained fromexperience, including setbacks;
4. Potential for further business development, not only in the game business.

1. Management experience with powerful IP and a relationship oftrust with its users
Drecom's strengths:

In the gaming market nearly 10 years ago, Drecom offered several games,(1) Managing IP, relationships
with IP holders

mainly for feature phones, including the aforementioned Onmyoji Heian(2) Establishing a stock-based
business model that can develop
and manage multiple titles.

company's games were not intended to persuade people to gamble; rather,(3) Sustainable and reproducible
management practices gained
from experience, including
setbacks.

a short period. But in addition to gaining a solid financial base to develop(4) Potential for development inother business areas.

Yokitan and Chokoto Farm, along with powerful IP. From the beginning thethe focus was on continuous use. This meant that Drecom was not the kind ofcompany that would grow so fast that its revenues would shoot up tenfold ingames for smartphones, the company has established a track record inbusiness, and strong relationships with leading IP holders such as Bandai
Namco Entertainment (BNE).
In game management, the focus on continuous use is player-oriented, but it
also fits with IP that emphasizes increases in value long-term, such as brandand royalties. In our view it was this that gave Drecom its strengths andcompetitive advantages in a mobile game market that was heading for rapid
expansion
In managing games using third-party IP, it is essential to have certain types ofknowledge that can only be obtained from experience – such as maintaining
appropriate communication across industries. It is also vital that individual
skills and abilities be shared with the organization or community as a whole.
Drecom began full-scale support for mobile games for smartphones in 2012.
After several transitional products, in 2014, Full Bokko Heroes, as well as
JoJo's Bizarre Adventure Stardust Shooters (from BNE), and ONE PIECE
Treasure Cruise (from BNE) were released and successfully converted forsmartphones.

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2. Building an organization that can successfully develop andmanage multiple games, and establishing a stock-based business
model
During the emergence of smartphone games, the game market featured
blockbuster titles by other companies, such as Puzzle & Dragons (GungHo
Online Entertainment (3765); released in February 2012) and Monster Strike(Mixi (2121); released in October 2013). Drecom followed this by working ongames using both its own and third-party IP. Fifteen smartphone games weredeveloped and released, under titles including Derby Stallion Masters and
Mingol (now distributed by ForwardWorks). Three of these are Drecom’s own
games, while 12 use other companies' IP (not including the enza titles
mentioned below).
Many of these games proved disappointing in terms of revenue. However, theprocess brought Drecom a wealth of experience and learning and resulted in
an organization that can develop and manage multiple games. This point can
now be identified as a factor in the company's strengths and competitive
advantages.
Figure 11 shows how Drecom is accumulating sales from multiple games using
a series of revenue optimization methods, including cost control, careful timingof withdrawal from service, and, based on the sales situation after a release,preparation for releases of new games. GIR believes that Drecom is putting
together a stock-type business model.
Figure 11. Which Games are In Service, Which are Terminated
Ｔitle

2010

2011

2012

2013

2014

2015

Onmyoji
Chocotto Farm
Bikkuriman
Kamen Rider Legend
Reign of Dragons
Fantasista Doll Girls Royale
Full Bokko Heroes
jojo's bizarre adventure stardust shooters
ONE PIECE TREASURE CRUISE
ONE PIECE TREASURE CRUISE (ENG/FRE Version)
Gakeppuchi Busters
ONE PIECE TREASURE CRUISE (KRN version)
Derby Stallion Masters
MINGOL
Weekly Shonen Jump ORE COLLECTION
LayereD Stories 0
Kirara Fantasia
World of Final Fantasy: Meli-Melo
THE IDOLM@STER SHINY COLORS
Digimon ReArise
Dragon Ball Z Bucchigiri Match
Pro Baseball: Famista Master Owners
Super Robot Wars DD
Jump Hero Taisen Ore Collection 2
DISGAEA RPG
Naruto X Boruto Ninja Tribes

TerminatedSource: Global IR, Inc. from company materials

Drecom (3793)

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In Service

2016

2017

2018

2019

2020

February 15, 2021
Global IR, Inc.

Drecom has relationships with leading companies, including
Bandai Namco (BNE)
Drecom has good relationships with leading companies such as BNE,
ForwardWorks, and Aniplex, a wholly-owned subsidiary of Sony MusicEntertainment, which itself is 100% owned by Sony (6758). In addition todeveloping and managing multiple games, including ONE PIECE Treasure
Cruise, Drecom was involved in the launch of a joint venture on the gameplatform ‘enza’, which was started in April 2018. While the joint venture will
become 100% owned by BNE in March 2020, Drecom’s involvement with enza
will continue.
So far, 12 games using BNE’s IP have been developed and managed by
Drecom, and five are still in service. Bandai Namco Holdings (7832), theholding company of BNE, held 19.1% of Drecom’s shares (as of September 30,2020), making it the company's second largest shareholder; these shareswere transferred from Rakuten in September 2018. The shareholding
demonstrates the good relationship between Drecom and BNE, and is likely
to strengthen it.
ForwardWorks is responsible for the mobile business under Sony Interactive
Entertainment, a multinational video game and digital entertainment company
that is a 100% subsidiary of Sony. Drecom is involved in ForwardWorks’ Mingol
and Makai War Record Disgaea RPG. Mingol is a mobile version of Minnan no
Golf, the main game on the Playstation, and for Makai War Record Disgaea
RPG, Drecom was involved in repairing defects and improving gamemanagement. Both games are good examples of the relationship of trust
between the two companies.
Drecom is also responsible for developing and managing Ira Fantasia,
distributed by Aniplex, and has a track record of more than three years since
this game was released. Drecom was also in charge of World of Final Fantasy
Merimero, distributed by Square Enix (9684), though the service of this gamehas now been terminated.
These specific development and management results – (1) managing powerful
IP and the relationship of trust with its holders, and (2) creating an organizationthat can develop and manage multiple titles, and with this the establishmentof a stock-based business model – function as strengths and competitive
advantages for Drecom.

3. Sustainable and reproducible management practices gained
from experience, including setbacks
The first setback that Drecom faced was the failure of its blogging business
immediately after the IPO. In addition the company was faced with the effects
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of its financial difficulties, as well as organizational challenges due toemployees being insecure about their futures.
Drecom recovered from these difficulties with the help of a capital injection
from Rakuten. The company’s various responses to the crises it went throughseem to have become transmuted into management expertise. Even after
focusing on the game business, the company was confronted with operating
losses – during the market transition from feature phones to smartphones(2013); the failure of its original titles (2015); and in the rush to release multiple
IP titles (2018) – but deficits did not become the norm, and the company
quickly recovered its profitability.
The upside of not having much cash is that financial constraints force an early
response to any crisis. Drecom is very conscious of optimizing revenue by
accurately gauging timing, monitoring failures, cutting costs by controllingoutsourcing costs, withdrawing if it cannot keep up, and preparing to launch
new titles.
Drecom’s experience in developing and managing multiple game titles has
enabled it to build a rich outsourcing network. It has effectively set up a systemthat enables it to double its development and game management capacity justby using outsourcing, or shrink it in the same way. With timely use of thissystem, Drecom can stay in control of costs and link these to demand.

4. Potential for further business development, not only in the gamebusiness.
Drecom’s history is generally described with a focus on gaming, but thecompany has not limited itself to this business. In addition to the blog businessit was working on at the time of the IPO, other major examples are ringtones
for feature phones and the educational content business that led to a joint
venture with Rakuten. The company has also worked on music distribution,
anime distribution, SNS services using location information, and other areas.
Given the size of the company, this is a wide variety of activities. Drecom does
not yet have a business with continuity in addition to its game business, but it
refers to itself as "an Internet shop before it is a game shop," so can be
expected to work on some kind of new business in the future. It is likely toapply the strengths it acquired in the game business to other fields in theentertainment industry, with the potential to create a second strong revenue
stream.
For new businesses, risk control
tighter, investment initiallylimited.

Although developing new businesses is always a risk, we believe that risk
controls are in place more than they were for the game businesses describedabove. Until the growth potential is confirmed, the scale of any investment islikely to be limited. As with the game business, the company will be looking tostart small and grow from there.

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Drecom's Business Performance
Through conscious optimization of revenue, record profits likely
for the fiscal year to March 31, 2021
In 2016–2018, as the rapid growth in the mobile gaming market was coming toan end, the company released 10 titles with the aim of expanding its market
share. However, competition was fierce, and sales of many games fell short of
expectations. At this period in mobile gaming, gamers were looking for a new
type of experience in addition to IP.
Withdrew non-monetizing titles,
became proﬁtable the following
year.

Drecom acknowledged this error and after 2018, withdrew titles that would
not monetize. For this reason, it recorded a net loss of ¥1.96 billion in the fiscal
year to March 31, 2019, but posted a net profit of ¥690 million in the fiscal year
to March 31, 2020.
Figure 12. Financial performance

Unit: ¥m

13,00013,00011,00011,000

9,000

9,000

7,000

7,000

5,000

5,000

3,000

3,000

1,000

1,000

-1,000Mar-16

Mar-17Mar-18
Sales (L)Mar-19Mar-20Mar-21-1,000OP (R)

Source: Global IR, Inc. from company materials
Note: Mar-21 figures are Drecom forecasts

Proﬁtability diﬀers by title; cost
control is tight, based on
experience.

Drecom outlines the earnings situation for each title in its results briefing
materials, though the exact details are not disclosed. In the third quarter ofthe fiscal year to March 31, 2021 (October-December), 11 of the 12 games inservice were in profit, and operating profits piled up.

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Figure 13. Profitablity of games in service

Only one title is unprofitable.
The extent of losses has also decreased
compared with Q2.
The aim is to break even or move into
profitability in the first half of next year.

Loss

ProfitSource: Global IR, Inc. from company materials
Note: Series games are counted under one title. The 3 enza titles are under Boku & Dragons.

In addition, billings tend to increase during the New Year, when users in theentire market have more time to play games, while they tend to decrease in
March and April, in July and August, during the summer vacation, and toward
the end of the year, when people are busier with life and leisure actvities
related to the end of school terms and to company activities. On the other
hand, for Drecom, the release anniversaries of games currently in service areconcentrated in the April-July and October-December quarters. Holding
anniversary and half-year anniversary events at these times makes it possible
to increase billings, and thus to smooth out fluctuations in sales to someextent.
As a result, we expect sales
and OP to reach record highs
in the ﬁscal year to March
2021.

In addition to there being relatively few sales days in the January-March
quarter, there were no major events other than New Year's events.
Furthermore, user in-game payments will not be made until April and May forthe anniversary events of the flagship titles. Therefore, January-March quarter
sales are expected to have fallen compared with those in the OctoberDecember quarter. October-December quarter sales were in any case strong,
driven by the anniversary and year-end events of the game Davimus.
On the other hand, costs have continued to decline since the April-Junequarter, as shown in Figure 14. This is due to management with an emphasis
on efficiency and efforts to review and control costs – mainly in theadministration department – as the development of multiple game titles takes
off and the capitalization of development costs progresses. Therefore, costsin the January-March are also expected to decline compared with those in the
October-December quarter.
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Drecom releases its earnings outlook only for the following quarter. This isbecause of factors that cannot be determined, such as the timing of game title
releases. The company announced its full-year earnings forecast for the year
to March 2021 when it released its October-December figures on January 28.
It expects full-year sales to increase 15.3% to ¥11.7 billion and operating profit
to be up 307.9%, to ¥1.9 billion. Although revenue is expected to have declined
quarter-on-quarter from the October-December quarter to the JanuaryMarch quarter, it had already grown 31.3% in the nine months through the
October-December quarter. Both Drecom and GIR therefore expect sales andoperating profit to reach record highs in the fiscal year to March 31, 2021.
Figure 14. Trend in fixed costs, FY to March 2021

Unit: ¥m

2,200
2,100
2,000
1,900
1,800
1,700
1,600
1,500

Q1

Q2

Q3
Fixed costs

Q4
FY2021/3

Source: Global IR, Inc. from company materials

Higher proﬁts likely in the nextﬁscal year by new title release.

In the fiscal year to March 31, 2022, GIR believes that Drecom is likely toachieve higher profits. First, looking at the sales side: 11 of the 12 titles alreadyin service in the fiscal year to March 31, 2021 have contributed to earnings,
and it is almost inevitable that sales from aging existing game titles will fall in
the next fiscal year. However, according to the earnings briefing on January
28, Drecom’s pipeline has 10 titles under development through to March 2023.
If so, at least one title can be expected to be released in the fiscal year to
March 31, 2022. There is a good chance that this will compensate for the aging
of existing titles and lead to a net increase in sales. Moreover, on the cost side,
the company will continue to focus on operational efficiency and cost
optimization. In addition, the amortization of goodwill generated by theacquisition of the BlasTrain game development company ends during thecurrent fiscal year. GIR believes that the costs in the fiscal year to March 31,
2022 are likely to be flat or less than those on a quarterly basis in the JanuaryMarch quarter of the current fiscal year.

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Stable proﬁt growth likely overthe medium term through stockbased business model.

Although there are differences in the profit contribution from each title,
Drecom takes its risk management very seriously. By accumulating multiple
titles, the company appears to be putting into place a stock-type businessmodel.
Consequently, it is therefore very likely that the company will be able tomaintain a relatively stable trend of increasing sales and profits over the
medium term.

Possibility of dividends within a
few years.

Though retained earnings posted a loss of ¥1.47 billion as of March 31, 2020,
as noted, the company is likely to post record high profits in the period toMarch 31, 2021. If it does, in GIR’s view the deficit in retained earnings is on
course to be eliminated and the company will be in a position to consider
paying dividends within a few years.

Drecom's Growth Strategy
Drecom's Growth Strategy:

In the results meeting materials for the July-September quarter of 2020

(1) Moving into otherentertainment ﬁelds using theknow-how acquired throughgame management.

Drecom gave an indication of its future direction. In addition to further(2) Expanding in-house IP.
(3) Domestic hit titles to be madeavailable overseas.
(4) Introducing a subscription
business model in areas otherthan mobile gaming.

increasing its strengths in developing and managing IP games, and expanding
its core game business, the company set out the following four areas to focus
on in terms of growth:
1. Moving into entertainment fields other than mobile games
2. Acquisition, creation and development of IP
3. Taking existing titles into overseas markets
4. Diversification of the revenue model

1. Moving into entertainment fields other than mobile games
Over the next three years, Drecom aims to transform itself from a “mobile
gaming company with strengths in developing and managing IP games” to a"comprehensive entertainment content company centered on IP.” Currently,
the company's offering consists mainly of mobile games, but it has announced
that it intends to develop and provide entertainment services in other fields,such as music, comics, and light novels, utilizing its own IP. In addition to being
able to utilize its know-how from IP game management to acquire fans andform fan communities in each field, in the past it has developed and provided
music streaming apps and manga apps, so it has long experience of businessdevelopment in these areas. In September 2020 it released AKROGLAM, IP in
the form of a musical drama, developed in-house. The service is growing – it
had more than 10,000 followers on Twitter by the end of September – andsales of CDs and other related items started in January 2021.

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2. Acquisition, Creation and Development of IP
To become a "comprehensive entertainment company", Drecom needs toincrease its in-house IP. The company has worked with other IP holders in thepast to develop and provide content, but in the future, in addition to creating
and developing its own IP in-house, it plans to increase the number of IPs it
owns by means including acquisitions from other companies. In the fiscal year
to March 31, 2020, Drecom acquired Boku & Dragons (and other properties)
from Ignis Co. (3989). When Ignis was choosing a company to sell to, Drecom’s
development and management of IP games, and its attitude regarding IP, wererated highly. Drecom’s integrity in matters concerning IP and the recognitionof its value are well-known within the industry, and this reputation can be
expected to work in its favor when it acquires IP from other parties. In
November 2020, it won a part of the copyright and trademark of thepioneering role-playing game Wizardry, and the music drama IP AKROGLAM
mentioned earlier was released. Titles utilizing the company's in-house IP are
currently under development in mobile games, and in addition to games thatutilize IP owned by other companies, the number of Drecom mobile games
using its in-house IP can be expected to increase.

3. Taking existing titles into overseas markets: increased revenue
from overseas
Drecom currently obtains most of its revenue from the domestic market, but
in future it aims to increase revenue from abroad by offering successful
Japanese titles in overseas markets, particularly the rapidly growing Chinese
market. ONE PIECE Treasure Cruise (distributed by Bandai Namco),developed and managed by Drecom, has been distributed worldwide since2015, and the company has an excellent track record in management foroverseas users. Worldwide distribution of Derby Stallion Masters and Makai
War Record Disgaea RPG (distributed by ForwardWorks) has already beenannounced for the fiscal year to March 31, 2022. In addition to this previous
experience, Drecom has close relationships with leading marketingcompanies overseas. These should prove to be strengths in the company's
overseas expansion.

4. Diversification of the Revenue Model: Moving Away from
Dependency on Free-to-Play
Drecom will also focus on diversifying its revenue model. Currently, almost all
revenue comes from in-game purchases within games that follow a Free-toPlay (F2P) model, but in future the company intends to introduce a
subscription model for areas other than mobile gaming. This should increase
revenue stability by moderating the volatility inherent in the F2P model. In
addition to a subscription model being expected to be introduced for theaugmented reality (AR) app construction platform ‘AROW’, mail-order sales ofDrecom (3793)

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related goods such as CDs have also started for the music drama IP
AKROGLAM mentioned above. Drecom aims to generate the same level ofrevenue as F2P in the next five years from business models other than theF2P model.

Drecom and ESG
With respect to ESG, Drecom is improving its non-financial disclosures to help
improve corporate value in the future. Its current initiatives are set out below.

S: Social
Creating a working environment that takes into account human rights,
diversity and flexibility
In addition to prohibiting discrimination in the workplace and implementing
appropriate labor management measures, Drecom is focusing on maintaining
the health of its employees, respecting employee life events and life stages –such as introducing remote working – and recommending that male
employees take parental leave.
Promoting employees’ health and nurturing their skills
The company tries to ensure that the working environment is one that enables
employees to stay healthy and fulfil their potential.
For example, it has rooms where employees can receive a low-costmassage:<https://newswitch.jp/p/17425>…and a café space, run in partnership with a popular café chain:<https://www.wantedly.com/companies/drecom/post_articles/173575>…as well as support for events that share knowledge and disseminate
technical information<https://tech.drecom.co.jp/>
Promoting an entrepreneurial community
Drecom seeks to be a pioneer of student entrepreneurship and IT-related
ventures., The company is working on initiatives to contribute to thedevelopment of younger entrepreneurs and the further revitalization ofentrepreneurship in Japan. These include:
Free lending of office space for study sessions and seminars"Shea Spe" (Share Space!)<https://drecom.co.jp/recruit/room/>

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G: GovernancePresident is the founder, CFO
worked at major securities
companies.

The founding president is Yuki Naito. He has steered the business andmanagement since it was founded. Drecom’s CFO is Hideki Goto, who has
experience as an analyst and investment banker at major securities
companies. Both the CFO and Hiroyuki Kono, a former investment banker inforeign securities and Head of the IR Office, can communicate with overseas
investors in English without the need for interpreters. In addition, around half
the company's employees are entitled to participate in a corporate shareownership scheme. This has proved a success in that they are very keen toparticipate in the improvement of operations and corporate value.
Further, to ensure that management functions soundly from a governance
perspective, Drecom is focusing on appointing a number of independent
outside directors from different professional backgrounds, on appointing
women as directors, and on holding regular meetings of the Board of Directors,
along with lively discussions.
Appointment of female directors – Female directors: 20%
Inside directors vs. independent external directors – External directors:
60%
Independent directors have diverse expertise – Backgrounds inaccountantcy, law, academia
Frequency of Board of Directors meetings – 28 meetings in the year to
March 2020; 24 in the year to March 2019

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Figure 15. Comparable companies
Company
DrecomSony
Nintendo
Konami Holdings
CapcomSquare Enix Holdings
DeNA
GungHo Online Entertainment
Mixi
ColoplAkatsuki
Klab
Gumi
DrecomMicrosoft
Activision Blizzard
Electronic Arts
Zynga
Tencent
NetEaseNexon
NCSoftNetmarble

Country

Stock code

Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
US
US
US
US
China
China
Korea (Japan)
Korea
Korea

3793
6758
7974
9766
9697
9684
2432
3765
2121
3668
3932
3656
3903
3793
MSFT
ATVI
EA
ZNGA
700_HKG
9999_HKG
3659
A036570_XKRX
A251270_XKRX

Source: Global IR, Inc. from interviews with Drecom
Note: As of 12 February, 2021

Drecom (3793)

28

Market Cap
($bn)
231
144,560
81,007
10,134
9,307
8,349
2,608
2,431
1,937
1,186
587
346
282
231
1,843,996
79,78942,375
12,926
936,841
457,699
28,05820,313
10,677

February 15, 2021
Global IR, Inc.

Performance Index
Profit and loss statement
Year Ending

Mar-2015

Mar-2016

Mar-2017

Mar-2018

Mar-2019

Accounting Standard
Sales
YoY
Gross profit
YoY
Gross profit margin
Operating income
YoY
Operating income margin
Ordinary (Pre-Tax) income
YoY
Net Income
YoY
Net income margin
Per-Share Data

7,298
2,274
31.2%
301
4.1%
279
-1
-

6,534
-10.5%
1,796-21.0%
27.5%
-206
-3.2%
-218
-618
-9.5%

Japanese GAAP
8,389
13,193
28.4%
57.3%
3,056
3,096
70.2%
1.3%
36.4%
23.5%
932
191
-79.6%
11.1%
1.4%
844
-29
810
-200
9.7%
-1.5%

10,720-18.7%
1,434-53.7%
13.4%
-577
-5.4%
-1,349-1,717-16.0%(

Mar-2015

Mar-2016

Mar-2017

Mar-2018

Mar-2019

Total No. of Shares outstanding (,000)
EPS
Adjusted EPS
BPS
DPS

13,8831.3
139.6
013,901
-39.4
101.8
0

14,371
29.7
29.67
113.2
0

28,742
-7.2
106.7
0

28,819
-60.5
47.9
0

Balance SheetYear Ending
Current Assets
Cash and Cash Equivalents
Tangible Fixed Assets
Intangible Fixed Assets
Investment and Other Assets
Total Fixed Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Debt
Net Assets
Interest-bearing Debt*

Mar-2015

Mar-2016

Mar-2017

Mar-2018

Mar-2019

3,486
2,360
102
633
458
1,194
4,680
1,866
600
2,466
2,214
1,391

2,326
1,310
91
353
530
974
3,300
1,336
311
1,647
1,653
800

5,661
3,003
108
666
385
1,158
6,819
3,202
252
3,455
3,365
1,192

6,192
3,303
300
1,017
1,588
2,905
9,097
3,240
2,596
5,836
3,261
3,591

5,191
2,866
252
773
731
1,756
6,946
3,873
1,650
5,523
1,423
3,348

Drecom (3793)

29(Consolidated, ¥m)
Mar-2021
Mar-2020
Co. est.

10,15011,700
-5.3%
15.3%
2,192
52.9%
21.6%
617
1,900
207.9%
6.1%
16.2%
636
1,800
183.1%
713
1,400
96.2%
7.0%
12.0%
(Consolidated)
Mar-2021
Mar-2020
Co. est.
28,894
25.0
49.1
24.98
74.2
0
0
(Consolidated, ¥m)
Mar-2021
Mar-2020
Co. est.
4,572
2,268
172
907
774
1,852
6,424
3,595
661
4,255
2,169
2,194
-

February 15, 2021
Global IR, Inc.

Cash Flow
Year Ending
Depreciation
Sales Cash Flow
Investment Cash Flow
Financial Cash Flow

Mar-2015

Mar-2016

Mar-2017

Mar-2018

Mar-2019

542
944
-680
638

460
54
-549
-574

214
846
-456
1,345

299
-79
-1,958
2,288

462
78
-123
-271

Financial data
Year Ending
ROA
ROE
Equity Ratio

Mar-2015

Mar-2016

Mar-2017

Mar-2018

Mar-2019

0.0
1.0
40.7

-18.7
-32.6
42.1

11.9
35.5
47.0

-2.2
-6.6
33.2

-24.7
-78.3
19.6

Source: Global IR, Inc. based on company’s annual securities report
Note: Rounded under ¥m. Rounded to one dicimal place.
*Caluculated by Global IR, Inc.

Drecom (3793)

30(Consolidated, ¥m)
Mar-2021
Co. est.
382
691
-101
-1,188-Mar-2020(Consolidated, %)Mar-2021
Mar-2020
Co. est.
11.1
41.0
32.9
-

February 15, 2021

Disclaimer
This report has been prepared by Global IR, Inc. (GIR) under a contractual arrangement with the company
described in this report (“the company”). The report is provided for informational purposes only. It is not intended
to solicit or recommend investment in the company’s securities. While the information and views contained inthis report have been obtained from sources that GIR believes to be reliable, or created on the basis of publicly
available information, no guarantee is offered with regard to their accuracy or completeness. Our analysis is inany case provided with an emphasis on accuracy and objectivity, and pays the utmost attention to neutrality andindependence. In addition, based ondiscussions with the relevant business owners, and others, and original on
research, perspectives that we consider important to investors have been provided, on the basis that they are
GIR's own opinions. GIR is not responsible for any loss or damage resulting from the use of this report.
Investment decisions in the relevant corporate stock are at the reader's own judgment and responsibility.

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