Fiscal Year 2022 Second Quarter Consolidated Financial Results (Japanese GAAP)
August 8, 2022
Name of Listed Company: GMO Internet, Inc.
Exchange Listing: Tokyo Stock Exchange
Stock Code: 9449
URL: https://www.gmo.jp/en
Representative: Masatoshi Kumagai, Founder, Chairman and Group CEO
Official Contact: Masashi Yasuda, Director, Executive Vice President and Group CFO,
Deputy to Group CEO, Head of Group Management Division
Contact Number: +81-3-5456-2555
Date of Quarterly Report Release: August 12, 2022 Start Date of Dividend Payout: September 20, 2022
Supplementary documents available pertaining to quarterly financial results: Yes
Quarterly results briefing: Yes (live stream only and Q&A session for institutional investors)(all amounts rounded down to the nearest million yen)
1. Second Quarter Financial Results in the Year Ending December 2022 (01.01.2022- 06.30.2022)(1) Consolidated Operating Results (cumulative)(percentages shown represent year-on-year % change)
Profit Attributable to
Net Sales
Operating Profit
Ordinary Profit
Owners of the
ParentSix months ended¥ millions%¥ millions%

Net Profit per
Share

Net Profit per Share(Diluted)¥ millions%¥ millions%

June 30, 2022
125,556
4.2
30,94136.8
33,48241.8
15,50559.8
June 30, 2021
120,480
13.1
22,62037.8
23,62047.4
9,703 132.0(Note) Comprehensive Income: June 30, 2022: 44,366 million (122.9%), June 30, 2021: 19,904 million (113.5%)

Six months ended

June 30, 2022
June 30, 2021¥¥

143.9788.76

143.0888.27(2) Consolidated Financial Condition
Total Assets
As ofShareholders’ Equity
Ratio

Net Assets¥ millions¥ millions%

June 30, 2022
1,433,731
172,489
5.5
December 31, 2021
1,418,936
140,402
5.2(Reference) Shareholders’ Equity: June 30, 2022: ¥78,904 million; December 31, 2021:¥73,548 million
2. Dividends
Annual Dividends
End of Q1

Year Ended 12/2021
Year Ending 12/2022
Year Ending 12/2022 (forecast)End of Q2

End of Q3

End of Term

Total

¥

¥

¥

¥

¥

17.10
19.60

12.20
28.00

10.80

12.60

52.70

―

―

―

3. Consolidated Results Forecast for the Year Ending December 31, 2022 (01.01.2022 – 12.31.2022)

As the Group's business “Internet Finance business,” "Cryptoassets business" and “Incubation
business” are affected by economic conditions, financial markets, cryptoassets and other market
conditions, it is difficult to forecast business performance, and therefore we do not disclose
consolidated business results and dividend forecast. GMO Financial Holdings Co., Ltd., our subsidiary,
discloses sales indicators, such as foreign exchange transaction volume, stock brokerage trading
value, CFD trading value, cryptoasset trading value and the number of customer accounts, andoperating revenue on a monthly basis.

*Notes(1) Changes to significant subsidiaries in the current term: No(2) Special accounting treatments used in preparation of the quarterly consolidated financial statements:
None(3) Changes in accounting policy, changes in accounting estimates, restatements
1. Changes resulting from revisions to accounting standard, etc.: Yes
2. Changes other than those specified above: None
3. Changes in accounting estimates: None
4. Restatements: None
(4) Number of Outstanding Shares (Common Shares)(Unit: shares)

1. Outstanding shares at period end (inc. treasury)

Q2 FYE 12/2022

110,704,401

FYE 12/2021

111,893,046

2. Treasury shares at period end

Q2 FYE 12/2022

3,979,516

FYE 12/2021

2,283,361

3. Average number of shares during the period

Q2 FYE 12/2022

107,696,104

Q2 FYE 12/2021

109,308,892*Quarterly financial results are not subject to quarterly review by independent auditors.
*Note regarding the appropriate use of result forecasts and other items
Although the Company aims to pay dividends quarterly with a payout ratio of 33% to net income
attributable to owners of the parent, because it is difficult to forecast business performance, the amountof dividend forecast is yet to be determined at this time. We will promptly disclose dividend forecast when
it becomes available.
On August 8, 2022, we plan to stream a financial results briefing live. The presentation and explanation(voice) along with explanatory materials used on the day will be posted on our company website(https://ir.gmo.jp/en/) promptly after the meeting.

Contents
1. Qualitative Information Related to Financial Results. ............................................................................... 2(1) Operating results ................................................................................................... 2(2) Financial condition............................................................................................... 10(3) Consolidated results forecast and other forward-looking information ............... 10
2. Quarterly Consolidated Financial Statements and Major Notes ............................................................. 11(1) Quarterly consolidated balance sheet.................................................................. 11(2) Quarterly consolidated statements of income and comprehensive income ........ 13(3) Notes regarding the quarterly consolidated financial statements ..................... 15
Notes regarding the going concern assumption........................................................ 15
Notes regarding changes impacting shareholders’ equity........................................ 15
Changes in accounting policies ................................................................................. 15
Segment information ................................................................................................. 17
Significant subsequent event .................................................................................... 18―1―

1. Qualitative Information Related to Financial Results(1) Operating results◆ Overview of the Financial Results for the Six Months Ended June 30, 2022
(Unit: ¥millions)

Previous Q2

Current Q2

Change% Change

Net Sales

120,480

125,556

5,075

4.2%

Operating Profit

22,62030,941

8,320

36.8%

Ordinary Profit

23,62033,482

9,862

41.8%

Profit Attributable to Owners of the Parent

9,703

15,505

5,802

59.8%

Under the corporate slogan “Internet for Everyone,” GMO Internet Group has consistently focusedresources on the service to provide internet and service infrastructure since its foundation in 1995.
With the increased usage of the Internet, the volume of information available on the Internet and thevolume of transactions conducted over the Internet have increased exponentially, which has opened
new business opportunities for the Group one after another and the Internet infrastructure businesswith the recurring business model has been leading revenue growth; and as a result, the Group
reported increases both in net sales and profit for the year ended December 31, 2021, marking its
13th straight yearly increase.
While there are signs of economic recovery following the implementation of the countermeasures
to prevent the spread of COVID-19, the progress of Digital Transformation (DX) and the spread of
stay-at-home and online consumption have been becoming an irreversible trend and there is anincreasing need for services provided by the Group.
Amidst such a business environment, (1) the Internet Infrastructure segment, a collective of No. 1
products, showed steady growth mainly in Payment and Security. (2) In the Online Advertising &Media segment, transactions with customers in certain industries showed strong growth as economic
activities are gradually resuming, and our own media also showed strong growth. (3) In the Internet
Finance segment, OTC FX faced a challenging business environment in terms of profitability due tocontinued weakness in the yen against the U.S. dollar although transaction volume increased due toconsolidation of Gaika ex byGMO. On the other hand, CFD showed strong growth thanks toincreased volatility in the commodity market. (4) The Cryptoassets segment showed sluggish growthcompared to FY2021 Q2 which enjoyed active trading, due to a significant decrease in transaction
value caused by lower volatility. (5) The Incubation segment sold some investment securities.
As a result, for the six months ended June 30, 2022, the Company recorded net sales of ¥125,556
million (up 4.2% year-on-year), operating profit of ¥30,941 million (up 36.8% year-on-year), ordinary
profit of ¥33,482 million (up 41.8% year-on-year) and net profit attributable to owners of the parent of¥15,505 million (up 59.8% year-on-year). The impact of applying the accounting standard for revenue
recognition was decreases in net sales and operating profit of ¥15,895 million and ¥30 million,
respectively, and operating results under the previous accounting standard would have also been
increases in net sales and profit from a year ago.

―2―

Net Sales and Operating Profit by Segment for the Six Months Ended June 30, 2022
(Unit: ¥millions)Internet Infrastructure
Net Sales
Operating Profit
Online Advertising & MediaNet Sales
Operating Profit
Internet Finance
Net Sales
Operating Profit
Cryptoassets
Net Sales
Operating Profit
Incubation
Net Sales
Operating Profit
Other
Net Sales
Operating Profit
Adjustment
Net Sales
Operating Profit
Total
Net Sales
Operating Profit

Previous Q2

Current Q2

Change% Change

68,573
9,680

71,425
11,869

2,851
2,189

4.2%
22.6%

26,413
1,071

16,405
1,474-10,008403-37.9%
37.6%

15,144
5,231

21,160
6,626

6,015
1,395

39.7%
26.7%

12,581
6,369

3,357
-238

-9,223-6,608-73.3%－

898
506

13,392
10,414

12,494
9,907

－
－

757
-185

1,700
-93

943
92

124.5%－-3,888-53-1,886
887

2,002
941

－
－

120,480
22,620125,556
30,941

5,075
8,320

4.2%
36.8%

◆Overview of Financial Results for the Three Months ended June 30, 2022
(Unit: ¥millions)

Net Sales
Operating Profit
Ordinary Profit
Profit attributable to Owners of
the Parent

Previous Q2
59,233
10,141
10,076

Current Q2
69,49019,812
21,382

4,046

9,074

Change% Change
10,256
17.3%
9,671
95.4%
11,306112.2%
5,027

124.2%

During the three months ended June 30, 2022, the Cryptoassets segment showed sluggish growthcompared to FY2021 Q2 which enjoyed active cryptoassets trading due to a decline in volatility
resulting in a significant decrease in trading value in the cryptoassets exchange business.
Meanwhile, the Internet Infrastructure segment showed steady growth mainly in Payment andSecurity services while making strategic investment in e-contract service GMO Sign and promotion
investment in ecommerce solutions service. The Online Advertising & Media segment also continued
to be on a recovery trend mainly in in-house products. The Internet Finance segment reported
increases in both net sales and operating profit mainly due to consolidation of Gaika ex byGMO. In
addition, the Incubation segment sold some investment securities, hitting record high quarterly
earnings.

―3―

Net Sales and Operating Profit by Segment for the Three Months ended June 30, 2022
(Unit: ¥millions)
Previous Q2

Current Q2

Change% Change

34,661
4,936

36,666
5,586

2,005
650

5.8%
13.2%

12,741
429

8,512
547

-4,228118-33.2%
27.6%

6,913
2,129

10,363
2,975

3,450
846

49.9%
39.8%

5,723
2,347

1,294
-397

-4,428-2,745-77.4%－

675
432

12,856
10,162

12,180
9,729

－
－

439
-105

865
-3

426
101

97.1%
－

-1,920-28-1,068
941

851
969

－
－

59,233
10,141

69,49019,812

10,256
9,671

17.3%
95.4%

Internet Infrastructure
Net Sales
Operating Profit
Online Advertising & MediaNet Sales
Operating Profit
Internet Finance
Net Sales
Operating Profit
Cryptoassets
Net Sales
Operating Profit
Incubation
Net Sales
Operating Profit
Other
Net Sales
Operating Profit
Adjustment
Net Sales
Operating Profit
Total
Net Sales
Operating Profit―4―Segments results for the three months ended June 30, 2022 are as follows.
1) Internet Infrastructure
The Internet Infrastructure segment provides basic and service infrastructure for customers operating
business in an online environment. Domain, hosting & cloud, ecommerce solutions, payment andsecurity - the five major businesses in this segment – are all developed and offered in-house andeach holds top share in their respective markets in Japan. In addition, the segment includes
consumer Internet provider services. The following is a breakdown of results in each of thebusinesses comprising this segment.
Effective January 1, 2022, in light of the future business development of our service using
authentication technologies to provide secure and safe Internet, including electronic authentication,
cybersecurity and trademark management, we changed the name of a sub-segment and restructured
segmentation. Namely, “Digital certificate and eSignature” was changed to “Security,” and the brandsecurity business previously included in “Domain” was transferred to “Security.” Accordingly, year-onyear comparison is performed using the figures under the new segmentation.
i. Domain
Positioned as a gateway to the Group’s infrastructure segment, the domain business has steadilygrown its customer base with a low-pricing strategy mainly through the Company and GMO Pepabo.
While the number of domain registration and renewals during the three months ended June 30, 2022
decreased to 1.32 million (down 1.7% year-on-year), the total number of domains undermanagement as of June 30, 2022 increased to 7.08 million (up 7.8% year-on-year) and continued
strong overseas sales in .shop also contributed to earnings. As a result, net sales were ¥2,244 million(up 3.0% year-on-year).
ii. Hosting & cloud
The hosting & cloud business responds to growing diversification of client needs through shared,
dedicated, VPS and cloud-based offerings under a multi-brand strategy mainly through the Company,
GMO GlobalSign Holdings and GMO Pepabo. Thanks to the favorable growth in sales of retailserver, the number of web hosting contracts as of June 30, 2022 was 1,095 thousand (up 6.8% yearon-year) and net sales were ¥4,569 million (up 15.8% year-on-year).
iii. Ecommerce solutions
Ecommerce solutions are offered mainly by GMO Pepabo and GMO MAKESHOP and comprises EC
platforms that provide platforms for online stores, minne, a C2C handmade market, SUZURI, an
original merchandise production/sales service, and O2O support service. In EC platform, the numberof contracts of Color me shop for a free plan that allows to open an online store without a monthly fee
increased, so while the number of paid stores as of June 30, 2022 decreased 6.5% year-on-year to
59 thousand, total transaction volume showed solid growth at ¥119.1 billion (up 4.6% year-on-year)
mainly in MakeShop which offers high-price plans. For minne, the total transaction volume decreasedby 1.8% year-on-year to ¥3.6 billion as a reaction to stay-at-home consumption as economic
activities resumed despite an effort to reinforce sales campaigns. The effect of the change inaccounting standard was a decrease in net sales of ¥694 million, and as a result, net sales were
¥3,622 million (down 13.7% year-on-year).
iv. Security
This business offers security services to provide secure and safe Internet for everyone, including
digital certification security such as SSL server certificates and e-contract service GMO Sign
provided mainly through GMO GlobalSign Holdings, cybersecurity provided by GMO Cybersecurity
by Ierae, and brand security provided by GMO BRAND SECURITY Inc. Results of GMO
Cybersecurity by Ierae have been included in the consolidated results from the three months ended
June 30, 2022. SSL server certificate service returned to a favorable growth trend as the effect of theshortened certificate lifespan from two years to one year to improve security fully subsided. econtract service GMO Sign has steadily expanded its customer base and increased the number oftransmission. As a result, this sub-segment reported net sales of ¥3,090 million (up 50.7% year-onyear).

―5―

v. Payment
Payment services are mainly operated by GMO Payment Gateway and offer comprehensive
payment-related service and finance-related services. In the payment-related service,
online/recurring payments in the Ecommerce market showed strong growth, and sales of a nextgeneration payment platform “stera” terminal in the face-to-face payments also increased in
response to an expansion of cashless payment market. In finance-related services, the transaction
volume of a deferred payment service “GMO Payment After Delivery” showed favorable growth. As aresult, the number of transactions and the transaction volume increased, and net sales increased to¥12,657 million (up 15.3% year-on-year).
vi. Provider
In this sub-segment, the Company offers Internet provider services for consumers. During the threemonths ended June 30, 2022, the mobile line service which had been on a downward trend appears
to have bottomed out due mainly to product improvement. The fixed line service showed steady
growth despite a slowdown in teleworking-related demand. As a result, the number of subscriptions
at June 30, 2022 was 2.26 million (up 2.2% year-on-year). The effect of the change in accounting
standard was a decrease in net sales of ¥881 million, and as a result, net sales were ¥9,606 million(down 9.3% year-on-year).
Overall, the Internet Infrastructure segment recorded net sales of ¥36,666 million (up 5.8% year-onyear) and operating profit of ¥5,586 million (up 13.2% year-on-year). The effect of applying the
Accounting Standard for Revenue Recognition was decreases in net sales and operating profit of¥2,168 million and ¥40 million, respectively.
2) Online Advertising & MediaThe Online Advertising & Media segment provides marketing solutions for online businesses. The
following is a breakdown of results in each of the businesses comprising this segment.
i. Online advertisingThis sub-segment provides comprehensive Internet advertising services such as advertising agency
and ad platform mainly through GMO AD Partners and GMO TECH. In the advertising agency
service, transactions with customers in certain industries grew steadily as economic activity resumed
following the gradual easing of the COVID-19 restrictions. The affiliated ads also showed favorable
growth. On the other hand, in-house AdTech products such as AkaNe, an ad network forsmartphones, and ReeMo, an ad distribution platform (DSP) specialized in collecting users most
likely to be interested in the contents, showed sluggish growth due to competition in media buying.
The effect of the change in accounting standard was a decrease in net sales of ¥5,418 million, andas a result, net sales amounted to ¥4,937 million (down 40.7% year-on-year).
ii. Internet media
This sub-segment provides advertising space through operation of our own media and the marketing
support services mainly through GMO Media. Advertising revenue increased due to a favorable unit
price movement and increased pageviews. The effect of the change in accounting standard was adecrease in net sales of ¥1,244 million, and as a result, net sales were ¥2,401 million (down 31.9%
year-on-year).
Overall, the Online Advertising & Media segment recorded net sales of ¥8,512 million (down 33.2%
year-on-year), and operating profit of ¥547 million (up 27.6% year-on-year). The effect of applying the
Accounting Standard for Revenue Recognition was a decrease in net sales of ¥6,663 million and anincrease in operating profit of ¥ 8 million, and operating results under the previous accounting
standard would have been increases in both net sales and operating profit.
3) Internet Finance
The Internet Finance segment provides online financial services for retail investors mainly through
GMO Click Securities, a consolidated subsidiary of GMO Financial Holdings. The customer base―6―

expanded, with the number of OTC FX accounts increasing to 1,397 thousand (up 50.5% year-onyear) due to consolidation of Gaika ex byGMO in the three months ended September 30, 2021 andthe number of securities accounts increasing to 494 thousand (up 5.1% year-on-year). The OTC FX
posted an increase in net sales due to consolidation of Gaika ex byGMO while continued weaknessof the yen against the U.S. dollar led to an increase in transaction volume and a decline inprofitability. CFD showed favorable growth thanks to increased volatility in the commodity market.
The securities business in Thailand also continued to show steady growth.
Overall, the Internet Finance segment recorded net sales of ¥10,363million (up 49.9% year-on-year)
and operating profit of ¥2,975 million (up 39.8% year-on-year).
4) Cryptoassets
The Cryptoassets segment operates businesses pertaining to “mining,” “exchange” and “payment” ofcryptoassets. Performance of each business is as follows.
i. Cryptoassets mining
The Cryptoassets mining business runs mining centers. Net sales amounted to ¥394 million (down
74.4% year-on-year) due to declines in the operating rate of mining facilities and cryptoassets prices.
ii. Cryptoassets exchangeThis sub-segment is engaged primarily in spot trading and leveraged transactions of cryptoassets
mainly through GMO Coin, a consolidated subsidiary of GMO Financial Holdings. The customer base
expanded with the number of customer accounts as of June 30, 2022 increasing to 526 thousand (up24.0% year-on-year). On the other hand, the transaction value decreased significantly compared to
FY2021 Q2 which reported strong results thanks to the brisk market. As a result, net sales decreased
to ¥890 million (down 78.5% year-on-year). We will continue to reinforce our internal efforts including
introduction of new currency pairs.
Overall, the Cryptoassets segment reported net sales of ¥1,294 million (down 77.4% year-on-year)
and operating loss of ¥397 million (operating profit of ¥2,347 million for the three months ended June30, 2021).
5) Incubation
This segment is engaged in investing in domestic and overseas internet related companies aimed at
capital gains, supporting business expansion, and supporting corporate value improvement mainly
through GMO Venture Partners. Net sales were ¥12,856 million (¥675 million for the three months
ended June 30, 2021), and operating profit was ¥10,162 million (¥432 million of operating profit for thethree months ended June 30, 2021) due to sales of some foreign investment securities.
(Reference1)

Changes in Operating Results and Financial Condition by Quarter

Net sales
Operating profit
Ordinary profit
Profit attributableto owners of the parent
Total assets
Shareholders’ equity(Unit: ¥millions)
Q2 2022
69,49019,812
21,382Q2 2021
59,233
10,141
10,076

Q3 202156,4718,012
8,601

Q4 202164,494
10,464
11,171Q1 202256,065
11,12812,099

4,046

3,597

4,227

6,431

9,074

1,134,787
70,7001,369,409
73,094

1,418,936
73,5481,487,484
70,415

1,433,731
78,904―7―

(Reference2)
Table: Quarterly Results by Segment
I Net Sales by Segment
Internet Infrastructure
Provider (ISP)
DomainHosting & cloud
Ecommerce solutions
Security
Payment
Other
Total
Online Advertising & Media
Online advertisingInternet media
Internet research & other
Total

Internet Finance
Total
Cryptoassets
Cryptoassets exchange
Cryptoassets mining
Cryptoassets payment
Total
Incubation
Total
Sub total
Other
Adjustment
Net Sales(Unit: ¥millions)Q1 2022
Q2 2022

Q2 2021

Q3 2021

Q4 2021

10,593
2,179
3,946
4,195
2,050
10,979716
34,661

10,002
2,132
4,107
4,197
1,978
11,323593
34,335

9,825
2,188
4,226
4,262
2,599
12,013736
35,852

9,420
2,221
4,484
3,559
2,534
12,025512
34,759

9,606
2,244
4,569
3,622
3,090
12,657874
36,666

8,328
3,526
886
12,741

7,759
3,302
996
12,058

8,602
3,788
1,208
13,599

3,831
2,707
1,353
7,892

4,937
2,401
1,174
8,512

6,913

7,386

11,368

10,796

10,363

4,142
1,537
42
5,723

2,023
1,653
0
3,677

1,740
1,864
770
4,375

1,078
856
127
2,062

890
394
10
1,294

675
60,715439-1,92059,23364
57,523437-1,48956,471607
65,804396-1,70564,494536
56,047835-817
56,065

12,856
69,693865-1,06869,490Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

4,936
429
2,129
2,347
432
10,274-105-28
10,141

4,021
251
2,628
1,482
-33
8,350
-197
-141
8,012

5,530
-136
3,856
1,241
311
10,803-239-99
10,464

6,283
927
3,650
159
252
11,272-90-53
11,128

5,586
547
2,975
-397
10,162
18,874-3
941
19,812II Operating Profit by Segment
Internet Infrastructure
Online Advertising & MediaInternet Finance
Cryptoassets
Incubation
Sub total
Other
Adjustment
Operating Profit―8―

(Reference3)
Description of businesses in each segment
Business Segment
DomainHosting & cloud

Ecommerce
solutionsInternet
Infrastructure

Security

Payment

OnlineAdvertising &Media

Provider・GMO TokuToku BB and other Internet provider services.

Onlineadvertising・Comprehensive online advertising service including listing, mobile andad networks, reward advertising, affiliate advertising.
・Advertising planning and production

・Operation of online media such as community site for teenage girls“prican,” programming educational portal “coeteko,” point site “Point
Town,” game platform “gesoten,” joint purchase coupon site “Kumapon”
Internet media
and aesthetic medical ticket purchase site “KIREIPASS,” life informationsite for career women “michill” and ad distribution to own media
・SEM Media: Sales of SEO.
Internet research ・Provision of Internet research systems, management and operation of& other
online research panel including GMO Research Cloud PanelInternet FinanceInternet finance

Cryptoassets

Cryptoassets
exchange
Cryptoassets
miningCryptoassets
payment

Incubation

Main Operations
・Domain registry services including “shop” and “tokyo”
・Domain registrations services: Onamae.com, MuuMuu Domain, and
VALUE-DOMAIN
・Provision, operation, management, and maintenance of shared, VPS,
dedicated and cloud-based web hosting services including Onamae.com
Rental Server, ConoHa by GMO, Z. com Cloud, GMO Cloud VPS,GMO Cloud ALTUS, GMO Cloud Private, Lolipop!, heteml, and 30days
Album・SaaS based services for online store building including Color me shopand operation of EC platform to set up net shop offered by MakeShop.
・Operation of C2C handmade marketplace “minne”
・Operation of production/sales service of original merchandise including
SUZURI and canvath・Operation of ecommerce/O2O support services, etc.
・Operation of OMAKASE, reservation management service forrestaurants
・Web design, operational support and system consulting, etc.
・DomainSSL, OrganizationSSL, and other SSL certificates, code signing
certificates, PDF document signing, client certificates and other digital
certificate services
・e-contract service “e-contract service GMO Sign”
・Cybersecurity service including vulnerability assessment of web andsmartphone applications, penetration test, security incident response
・Brand security service including brand protection measures, detectionand elimination of fake products, provision of trademark management
system, and acquisition and management of domain name
・PG Multi-Payment Service for mail order and ecommerce business,
comprehensive payment processing services for public sector, andfinance-related service including early payment service, transaction
lending, and GMO payment after delivery

Venture capital・Operation of online securities trading, FX trading, CFD trading, etc.
・Spot trading and leveraged transactions of cryptoassets, etc.
・Operation of mining centers
・Issuance and redemption of stablecoin “GYEN” and “ZUSD”
・Investment in private Internet startups―9―

(2) Financial condition
Assets, Liabilities and Net Assets
Assets
As of June 30, 2022, total assets increased ¥14,795 million from December 31, 2021 to ¥1,433,731
million. Major factors included an increase of ¥40,471 million in cash and deposits, an increase of¥31,478 million in various assets due to fluctuations in customer assets in the Securities segment(deposits, margin transaction assets, loan secured by securities, short-term guarantee deposits andvariation margin paid) and an increase of ¥56,665 million in cryptoassets under custody.
Liabilities
As of June 30, 2022, liabilities decreased ¥17,290 million from December 31, 2021 to ¥1,261,242
million. Major factors included a decrease of ¥56,827 million in deposits received for cryptoassets
and an increase of ¥41,805 million in various liabilities due to fluctuations in customer assets in the
Securities segment (deposits received, margin transaction liability, guarantees received, variation
margin received, and loans payable secured by securities).
Net Assets
As of June 30, 2022, net assets increased ¥32,086 million from December 31, 2021 to ¥172,489
million. Major factors included an increase of ¥7,258 million in earned surplus (consisting of anincrease from recording profit attributable to owners of the parent totaling ¥15,505 million, adecrease from dividend payments of ¥3,478 million, a decrease from retirement of treasury stock of¥2,352 million and a decrease of ¥2,416 million in the beginning balance of earned surplus as aresult of application of Accounting Standard for Revenue Recognition), an increase of ¥26,744
million in non-controlling interests, a decrease of ¥4,482 million due to acquisition and retirement oftreasury stock and an increase of ¥3,134 million in foreign currency translation adjustments.

(3) Consolidated results forecast and other forward-looking information
For the fiscal year ending December 31, 2022, the Group plans to increase both net sales andoperating profit, mainly in Internet Infrastructure segment. Meanwhile, there are certain factors thatcannot be reasonably predicted at this point, including: (1) fluctuation of cryptoasset prices andglobal hash rate trends in Cryptoassets business, (2) potential impact of economic situations andmarket conditions in Internet Finance segment, and (3) when and how much capital gains will be
realized in Incubation segment. Accordingly, we do not disclose the consolidated results forecast for
the fiscal year ending December 31, 2022.

―10―

2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheet
Previous Fiscal Year(As of Dec 31, 2021)(Unit: ¥millions)
2nd Quarter
Current Fiscal Year(As of June 30, 2022)

AssetsCurrent Assets
Cash and deposits

240,136

280,607

Trade notes and accounts receivable

27,382－－

31,339Trade notes, accounts receivable and contract
assets

8,449

9,950

Cryptoassets under custody

115,97359,308

Securities segment deposits

478,489

493,198

Securities segment margin transaction assets

134,732

133,343

Securities segment loan secured by securities

9,626

7,581

Securities segment short term guarantee deposits

67,862

68,024

Securities segment variation margin paid

70,51290,553Other

143,655

132,114

Operational investment securities

Provision for doubtful debts
Total Current Assets-3,835-4,136

1,292,984

1,301,883

44,78845,004

Fixed Assets
Tangible fixed assets
Intangible fixed assets
Goodwill

14,25121,058

Software

10,181

10,864Other

15,132

15,352

Total intangible fixed assets

39,56647,275Investment securities

28,60527,741

Deferred tax asset

2,328

4,097

Other

11,362

8,492

-699

-763

Investments and other assets

Provision for doubtful debts
Total investments and other assets
Total Fixed Assets
Total Assets―11―

41,59739,568125,952

131,848

1,418,936

1,433,731

Previous Fiscal Year(As of Dec 31, 2021)(Unit: ¥millions)
2nd Quarter
Current Fiscal Year(As of June 30, 2022)

Liabilities
Current Liabilities
Trade notes and accounts payable

11,921

11,093

Short term debt

172,995

190,235

Amount payable

45,22839,731

Deposits received for cryptoassets

116,161

59,334

Securities segment deposits received

55,392

52,374

Securities segment margin transaction liability

30,55425,785

Securities segment guarantees received

519,131555,298

Securities segment variation margin received

7,677

16,768

Securities segment loans payable secured by securities

20,61424,948

Accrued corporate tax, etc.

4,731

6,295

Allowance for bonuses

2,948

2,036

Allowance for bonuses to directors

1,452

847

Advance payment received

11,082－Contract liabilities－

20,842

Deposits received

110,817

96,913

Other34,272

19,9101,144,982

1,122,419

Corporate bonds

45,00051,000Convertible bonds with equity warrants

20,99020,880Long term debt

55,67850,305

Deferred tax liability

1,568

6,280

Other

9,390

9,420

132,627

137,886924

937

Total Current Liabilities
Fixed Liabilities

Total Fixed Liabilities
Statutory Reserve
Financial instruments transaction liability reserve

924

937

1,278,533

1,261,242

Capital stock

5,000

5,000

Capital surplus

34,32833,674

Earned surplus

35,75643,014

Treasury stock-5,684-10,166

Total Shareholders’ Equity

69,40071,522

3,559

3,668

Total Statutory Reserve
Total Liabilities
Net Assets
Shareholders’ Equity

Accumulated Other Comprehensive Income
Other securities valuation differences
Deferred hedging profit (loss)－-9

Foreign currency translation adjustments

588

3,723

4,147

7,381

52

37

Total Accumulated Other Comprehensive Income
Equity Warrants
Non-controlling Interests

66,80293,546

Total Net Assets

140,402

172,489

1,418,936

1,433,731

Liabilities, Net Assets Total―12―

(2) Quarterly consolidated statements of income and comprehensive income
Quarterly consolidated statement of income
2nd Quarter (cumulative)(Unit: ¥millions)
2nd Quarter
Previous Fiscal Year
(6 months to June 2021)
120,480

2nd Quarter
Current Fiscal Year
(6 months to June 2022)
125,556

Cost of Sales

56,42145,468Gross Profit on Sales

64,05980,087

Sales, General & Administrative Expenses

41,43849,146

Operating Profit

22,62030,941Net Sales

Non Operating Revenue
Dividends received

383

589

Foreign exchange gain

986

2,148

Gain on investments in partnership

143

152

Other

422

439

1,935

3,330

Interest paid

222

396

Equity method investment losses

356

229

Other

356

162

Total Non Operating Expenses

935

788

23,62033,482

Total Non Operating Revenue
Non Operating Expenses

Ordinary Profit
Extraordinary Profit
Gain from business transfer

126－

Gain on sale of investment securities
Reversal of financial instruments transaction
liability reserve
Other

－

19,830

106

－

13

13

Total Extraordinary Profit

247

19,844－13

Extraordinary Loss
Provision of financial instruments transaction
liability reserve
Compensation for customer’s loss－

241

Impairment loss－

340

Loss on disposal of fixed assets

15

5

Other

－

17

15

617

Net Profit before Adjustment for Tax, etc.

23,851

52,709Corporate, Municipal and Enterprise Taxes

7,115

9,365

Corporate Tax etc. Adjustment

1,145

4,050

Total Corporate Taxes, etc.

8,260

13,415

Net Profit

15,59139,293

Profit Attributable to Non-controlling Interests

5,888

23,788

Profit Attributable to Owners of the Parent

9,703

15,505

Total Extraordinary Loss

―13―

Quarterly consolidated statement of comprehensive income
2nd Quarter (cumulative)(Unit: ¥millions)

Net Profit

2nd Quarter
Previous Fiscal Year
(6 months to June 2021)
15,591

2nd Quarter
Current Fiscal Year
(6 months to June 2022)
39,293

3,525

-929

Other Comprehensive Income
Other securities valuation differences
Deferred hedging profit (loss)

23-9Foreign currency translation adjustments

694

6,181

Share of other comprehensive income (loss) of associates
accounted for using equity method

69

-169

4,313

5,072

Comprehensive Income

19,90444,366(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

13,421
6,482

18,73925,626

Total other comprehensive income―14―(3) Notes regarding the quarterly consolidated financial statements(Notes regarding the going concern assumption)
Not applicable.
(Notes regarding changes impacting shareholders’ equity)
Pursuant to the resolutions at the Board of Directors meetings held on February 12, 2021 andFebruary 10, 2022, the Company acquired 1,287,200 shares of treasury stock for ¥3,261 million and
1,597,600 shares of treasury stock for ¥4,253 million, respectively.
Also, pursuant to the resolution at the Board of Directors meeting held on February 10, 2022, theCompany retired 1,188,645 shares, which resulted in decreases in capital surplus of ¥680 million,
earned surplus of 2,352 million and treasury stock of ¥3,032 million.
As a result, capital surplus, earned surplus and treasury stock as of June 30, 2022 were ¥33,674
million, ¥43,014 million and ¥10,166 million, respectively.
(Changes in accounting policies)(Application of Accounting Standard for Revenue Recognition)
On January 1, 2022, the Company applied “Accounting Standard for Revenue Recognition”(Accounting Standards Board of Japan (“ASBJ”) Statement No.29, March 31, 2020, “AccountingStandard for Revenue Recognition”), etc., and recognizes revenue at an amount that it expects toreceive in exchange for the promised goods or services when the control of the goods or services istransferred to a customer.
Accordingly, we identified performance obligations in the contracts with customers and changed themethod to recognize certain initial cost revenue in the Internet Infrastructure segment from recognizingat the commencement of service to recognizing over the service contract period. In addition, themethod to recognize revenue for services which the Group is deemed to have provided as an agent
was changed from recognizing at gross amount to recognizing at net amount.
We applied the Accounting Standard for Revenue Recognition, etc. from January 1, 2022 pursuant
to the transitional treatment provided for in the proviso of Paragraph 84 of the Accounting Standard for
Revenue Recognition, with the cumulative effect of the retrospective application, assuming the new
accounting policy had been applied to periods prior to January 1, 2022, adjusted to the beginningbalance of earned surplus as of January 1, 2022.
As a result, net sales for the six months ended June 30, 2022 decreased by ¥15,895 million, cost of
sales decreased by ¥14,370 million, sales, general and administrative expenses decreased by ¥1,493
million, and operating profit, ordinary profit and net profit before adjustment for tax etc. decreased by¥30 million, respectively. Also, the beginning balance of earned surplus decreased by ¥2,416 million.
As a result of the application of the Accounting Standard for Revenue Recognition, etc., “Trade notes
and accounts receivable” which was presented in “Current Assets” on the consolidated balance sheet
as of December 31, 2021 is included in “Trade notes, accounts receivable and contract assets” fromJanuary 1, 2022. Also, “Advance payment received” which was presented in “Current liabilities” and“Unearned revenue” included in “Other “ in “Current liabilities” are included in “Contract liabilities” fromJanuary 1, 2022.
Pursuant to the transitional treatment stipulated by Paragraph 89-2 of the Accounting Standard for
Revenue Recognition, the Group did not reclassify figures for the year ended December 31, 2021 toconform to the new presentation method. Also, pursuant to the transitional treatment provided for in
Paragraph 28-15 of the “Accounting Standard for Quarterly Financial Reporting” (ASBJ Statement No.
12, March 31, 2020), information on the breakdown of revenue arising from contracts with customers
for the six months ended June 30, 2021 is not presented.

―15―

(Application of Accounting Standard for Fair Value Measurement)
On January 1, 2022, the Company applied “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No. 30, July 4, 2019, “Accounting Standard for Fair Value Measurement”), etc., and the new
accounting policies specified in the Accounting Standard for Fair Value Measurement, etc. are applied
prospectively pursuant to the transitional treatment prescribed in Paragraph 19 of the AccountingStandard for Fair Value Measurement and Paragraph 44-2 of the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10, July 4, 2019). The impact on the Quarterly Consolidated
Financial Statements is insignificant.

―16―

(Segment Information)
I 2nd Quarter of Previous Fiscal Year (01.01.2021-06.30.2021)
1. Information relating to net sales and profit or loss by reportable segment(Unit: ¥millions)
Reportable Segment
Other
(*i)

Adjustment Consolidated(*ii)
P/L (*iii)

Internet
Infrastructure

Online Ad& MediaInternet
Finance

Sales to unaffiliatedcustomers

68,032

23,20915,144

12,581

898

119,866

614－

120,480

Internal transactions
or transfer

541

3,203

－

－

－

3,745

143

-3,888－

Total

68,573

26,413

15,144

12,581

898

123,611757-3,888120,480

Segment Profit/Loss

9,680

1,071

5,231

6,369

506

22,860-185-53

22,620

Cryptoassets Incubation

Total

Net Sales*Notesi. “Other” represents mobile entertainment and other businesses not included in reportable segments.
ii. The segment profit or loss adjustment (¥-53 million) is an elimination of inter-segment transactions.
iii. Segment profit/loss is based on operating profit in the quarterly consolidated statement of income.
II 2nd Quarter of Current Fiscal Year (01.01.2022-06.30.2022)
1. Information relating to net sales and profit or loss by reportable segment(Unit: ¥millions)
Reportable Segment

Adjustment Consolidated(*ii)
P/L (*iii)

Total

Other
(*i)

13,392

124,012

1,543－

125,556

－

－

1,729

156

-1,886－21,1603,357

13,392

125,741

1,700-1,886

125,556

6,626

-238

10,41430,147-93887

30,941

Internet
Infrastructure

Online Ad& MediaInternet
Finance

Sales to unaffiliatedcustomers

70,856

15,257

21,1483,357Internal transactions
or transfer

569

1,147

12

Total

71,425

16,405

Segment Profit/Loss

11,8691,474

Cryptoassets Incubation

Net Sales*Notesi. “Other” represents mobile entertainment and other businesses not included in reportable segments.
ii. Segment profit/loss adjustment (¥887 million) is an elimination of inter-segment transactions.
iii. Segment profit/loss is based on operating profit in the quarterly consolidated statement of income.
2. Information on changes in reportable segments, etc.
As described in Changes in accounting policies, following the application of the AccountingStandard for Revenue Recognition, etc. on January 1, 2022, the Group changed the accounting
treatment for revenue recognition and also the method to measure segment profit (loss) accordingly.
Compared to the previous method, for the six months ended June 30, 2022, in the Internet
Infrastructure segment, net sales and segment profit decreased by ¥4,453 million and ¥82 million,
respectively; in the Online Advertising & Media segment, net sales decreased by ¥13,393 million andsegment profit increased by ¥51 million; and in the Internet Finance segment, net sales decreasedby ¥12 million and there was no impact on segment profit. There was no impact on the Cryptoassets
and Incubation segments. Also, “Adjustment” for Internal transactions or transfer decreased by¥1,963 million and there was no impact on the adjustment for segment profit.
3. Information on impairment losses on fixed assets by reporting segment―17―

(Impairment loss on fixed assets)
For the six months ended June 30, 2022, the Online Ad & Media segment, the Cryptoassets
segment and Other recognized impairment loss on fixed assets of ¥34 million, ¥12 million and ¥293
million, respectively.
(Significant change in goodwill)
For the Internet Infrastructure segment, in regard to the business combination with GMO
Cybersecurity by Ierae, Inc. that took place at the end of the consolidated accounting period for the
1st quarter of the Fiscal Year 2022, the amount of goodwill was a provisionally calculated amount as
the allocation of acquisition cost was not completed. During the three months ended June 30, 2022,
the allocation of acquisition cost was completed, and the tentative accounting treatment wasdetermined, which resulted in the change in the amount of goodwill from ¥7,724 million (aprovisionally calculated amount) to ¥7,555 million.
(Significant subsequent event)Not applicable―18―