GMO Internet Group, Inc.
Q2 Financial Results Briefing for the Fiscal Year Ending December 2023
August 9, 2023

Event Summary[Company Name]

GMO Internet Group, Inc.

[Company ID]

9449-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Q2 Financial Results Briefing for the Fiscal Year Ending December 2023

[Fiscal Period]

FY2023 Q2[Date]

August 9, 2023

[Number of Pages]

40[Time]

16:00 – 16:39(Total: 39 minutes, Presentation: 39 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers]

2
Masashi Yasuda
Noriko Inagaki

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Director, Executive Vice President and Group
CFO, Deputy to Group CEOGroup Executive Officer, General Manager ofGroup Financial Department

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Presentation
Moderator: Hello, everyone. Thank you very much for participating in GMO Internet Group, Inc.'s Q2 financial
results presentation today. We are delivering this earnings presentation from GMO GLOBAL STUDIO, locatedon the top floor of GMO Internet TOWER in Yoga, Setagaya-ku, Tokyo.
I will introduce to you the attendees of today's presentation. Today's presenters are Masashi Yasuda,
Executive Vice President and Group CFO, and Noriko Inagaki, Group Executive Officer, General Manager ofGroup Financial Department. Today, they will provide an overview of the financial results, followed by aquestion-and-answer session. Presentation materials regarding financial results are available on the
Company's website.
After the event, a link to the survey will be displayed, and we would appreciate it if you could answer it. We
thank you for your understanding.
Our CFO, Yasuda, will now explain the results.
Yasuda: This is Yasuda, CFO. Thank you very much for participating in our presentation for Q2 financial results
for the fiscal year ending December 31, 2023. Today's briefing will be delivered from GMO GLOBAL STUDIO,
newly established on the top floor of GMO Internet TOWER in Yoga, Setagaya-ku, Tokyo. This studio will be
used for our business development.
Now, this GMO GLOBAL STUDIO is a cutting-edge studio in Japan that responds to the age of video, utilizing
3DCG and VFX technologies with LED panels. There are two points that differentiate our studio from others.
The first is that this is a venue where the audience can gather in a live setting, allowing them to feel a senseof unity as well as an immediate reaction among them.
The second is that the studio has a high ceiling, 10 meters high, so it is possible to use 3DCG and VFXtechnologies to create powerful images, utilizing its high ceiling. As a hybrid event that crosses real and online,
it can be distributed to the entire world, from corporate conferences and in-house events to video creation
for YouTubers and TikTok creators. We are currently preparing to open the facility to the general public
starting next April. We hope you will use this service.

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Now, I would like to move on to the financial results. Since our fiscal year ends in December, I will explain our
financial results for the period from April through June. I appreciate your attention.
As you can see, here is today's agenda.

First, here is the summary of the financial results. As you can see, the figures show a decrease in both sales
and profit compared to the same period of the previous year.

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There were two main factors. First, in the previous year, the incubation business made a significant
contribution of more than JPY10 billion due to the sale of some investee stocks in the incubation business.
The second factor is that extraordinary factors pushed down the profit for the current period. I will explainthese extraordinary factors later. The larger decline in net profit was also due to the gain on the sale of sharesin equity-method affiliate in the previous year.

I will now provide a summary of each segment. The far right shows the qualitative evaluation by ourmanagement, along with that of Q1.
First, the infrastructure segment is rated as circle, good, not double circle, but circle. Expansion continued
with an overwhelming collection of number one services, and sales reached a quarterly high. Continuing from
Q1, face-to-face payment services drove the sales figures.
As for profit, however, the increase was limited to a single-digit percentage due to the recording ofapproximately JPY1 billion provision for bad debts in the FREENANCE business developed by GMO Pepabo.
Although the business momentum is extremely strong, we take this matter very seriously and have rated as
circle instead of double circle for the segment as a whole.
Advertising and media is rated as triangle, neither good nor bad. Both sales and profits were down. In-house
media performed well, but there was a reactionary decline in some industries in the advertising business. As
for profits, there were upfront costs associated with an increase in personnel due to the investment in humanresources in the previous year.
Next, finance is rated as circle, good. Both revenues and profits increased. In the financial services segment,
sales were at the second highest level following Q1, which was the highest.
FX is rated as circle, good, showing the effect of profitability improvement measures taken since Q4 of theprevious year. CFD is also rated as circle, good. Although it was negative compared to the previous year, when
the commodity-related business was brisk, it has remained strong and has become the second mainstay
product after FX. The overseas business is rated as x, bad. We have decided to record an additional allowance

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4for doubtful accounts of JPY900 million in our securities business in Thailand. We will strengthen our risk
management system and will diligently pursue collection, including filing lawsuits, seizure of collateral, andseizure of property.
The crypto assets business is rated as triangle, neither good nor bad. It recorded a decrease in revenue andloss. The number of accounts and shares of transactions in the exchange business by GMO Coin has remained
steady. Meanwhile, the market environment is still sluggish and transaction volume has declined across theindustry, despite signs of a turnaround, such as a rise in the bitcoin price. The utilization rate of the mining
business has also remained low. Although conditions remain challenging, we haven't changed our view thatthe crypto asset market still has potential. We will continue to enhance our internal structure to generate
profit when the time is right.
The incubation business is as shown. In the previous year, we sold a portion of our investment in Coda
Payments, which generated over JPY10 billion in profit.

Now, I will describe the analysis of changes in sales and profit for each segment. Sales are shown on the left
and operating profit is shown on the right.
Infrastructure finance generated sales profit, but extraordinary factors pushed it down, and the previous
year's large exit in the incubation business had an impact, resulting in a JPY5 billion decrease in consolidated
revenues and a JPY10.1 billion decrease in consolidated earnings.

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In this section, I would like to explain extraordinary factors for this quarter.
The first is an overview. FREENANCE, a factoring service for freelancers developed by GMO Pepabo's groupcompany and a margin transaction business operated by a group company of GMO Financial Holdings in
Thailand, both of these finance-related businesses have incurred nonperforming loans to large customers,
resulting in the posting of an allowance for doubtful accounts in the amount indicated above.

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6How did these problems come about? There are many factors, but we believe its essence lies in group
governance. We believe that this is the result of insufficient group governance due to the expansion of theGroup's scale.
In this regard, each group company where a problem has occurred must identify the factors and issues as wellas implement countermeasures. At the same time, from the perspective of group management, we have also
initiated preventive measures as an issue of group governance.
Regarding countermeasures, our first priority is to thoroughly implement GMO-ism, which is the Company
motto and corporate philosophy that GMO Internet Group places great importance on. Next, we enhance theGroup's administrative department, which is the management of GMO Internet Group itself, and as a project,
we have launched a project called a Business Risk Committee, which is not a static risk committee but rather
active one, to examine business risks in a proactive manner.
As you can see, GMO Pepabo and GMO Financial Holdings are working on these initiatives, and for details,
please refer to the financial results presentation materials of each company.

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7Here are the cumulative figures for the period from January to June.
The figures are as shown, with an increase in sales and a decrease in profit compared to the same period of
the previous year. The main reason is the same as explained earlier, the profit contribution from the
incubation business in the previous year and the downward pressure due to extraordinary factors in this fiscal
year.

Next, I would like to discuss shareholder returns. Our basic policy is to achieve a total return ratio of 50%, ofwhich, at least 33% is to be allocated for dividends and the remaining 17% for share repurchases.
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8This shows the trend of dividends per share. We will not disclose earnings and dividend forecasts for thecurrent fiscal year as well. For this reason, dividend announcement will be made on a quarterly basis. The
dividend for Q2 will be JPY7.5.

Finally, I would like to report on the progress of purchasing treasury stock. As shown here, we are making
steady progress toward our planned acquisition of JPY1.15 billion in total.

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Before I go into the details of our quarterly results, I would like to reiterate our group's strengths.
We have largely two strengths. Here is the first one. Our commitment to in-house development and operation.
We firmly believe that we must become a creative company that produces and operates its own products andservices in order to survive and deliver the number one services in the fast-changing Internet market.
What will be important are the people involved in making things, such as engineers, creators, and directors.
At the end of June 2023, the number of our partners exceeds 7,300, of which, 49.9% are those who are
involved in production.
The first time we set a goal for the producer ratio was in 2011. The target at that time was 50%. This value
was presented to investors in February 2014. At that time, the ratio was 37.1%. We got closer to the target of
50% in February of this year and raised it to 60%. The age of the Internet is the age of sensitivity. We believethat we need to increase the number of great creators and become known that GMO is a company of UI/UX
and creativity.
We also welcomed 58 new graduates as our partners in April. This will be the first year of our new graduate
under the program of hiring the number one talent in the region, with new graduate annual salary of JPY7.1
million, by selecting the best and brightest people. Together with our new colleagues, we hope to support theInternet in Japan.

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10Here is our second strength. This is our revenue model called "solid recurring revenues" in GMO Internet
Group terms.
We believe that the reason we were able to increase sales and profits for 14 consecutive years until the last
fiscal year is because we have been accumulating solid recurring revenue since our inception. It's the recurring
revenue gained from products that will not disappear and remain a necessity as long as the Internet exists,
with a recurring billing model.

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11Here is the trend of consolidated sales. As you can see, we have achieved sustainable growth since ourestablishment.

Here is a breakdown of sales for solid recurring revenue and others. The red-line graph represents solid
recurring revenue in terms of percentage of sales.
Solid recurring revenue includes both recurring billable revenues in the infrastructure business andtransactional revenues, with a solid recurring revenue base similar to the recurring billing model. As you cansee, that's solid recurring revenues that support our sustained growth.
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12Here is the solid recurring revenue broken down into unit price and number of contracts.
Both the unit price and the number of contracts continue to expand. Currently, solid recurring revenue of
JPY130.1 billion is generated from a number of contracts of approximately 13 million, multiplied by an annual
unit price of approximately JPY10,000.
The number of contracts is still growing, with 10,000 new applications every day. As there are somecancellations, the net increase base will be much smaller, but we expect that it will continue growing, as thevolume of information and transactions on the Internet expands.

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13Here is the status showing the number of infrastructure contracts.
It can be rephrased as the foundational base that supports our solid recurring revenues. At the end of June,
the total number of contracts was 14.17 million. The increase is not consistent due to changes in merchandisemix, but figures for past fiscal years show an incremental growth of approximately 810,000 contracts per year.
Considering that the unit price is on the rise, it is slightly more than JPY10,000, which, when multiplied
together, translates into annual sales of nearly JPY10 billion. Please stay tuned.
Next, we will explain our group overview. Ms. Inagaki, Group Executive Officer and General Manager of Group
Financial Department, will take this part.

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Inagaki: My name is Inagaki, Group Executive Officer and General Manager of the Group Financial Departmentof GMO Internet Group. Thank you for your attention. I will now explain the overall business situation of ourgroup and the situation by segment.
This is an overall picture of our business portfolio. The size of each business area indicates the sales
composition, the number of infrastructure contracts, as the solid recurring revenue base was just explainedby Yasuda, which is about 14.17 million. Along with that, FX, securities, and crypto asset accounts altogether
represent a total customer base of 16.71 million.

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15This is the market capitalization of the 10 listed companies in the Group and our equity ownership share. The
total market capitalization of the Group is JPY1.3 trillion, and our corresponding equity ownership is now over
JPY400 billion.

Here are the quarterly sales by segment. Although the revenue recognition rules have changed since the same
period last year, the growth trend continues, centered on the infrastructure, shown on the bottom with dark
blue.

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16Here is the quarterly operating profit trend by segment. Our view of sustainable growth through highly
profitable finance businesses based on solid recurring revenues for infrastructure has not changed at all.

Now, I will explain the infrastructure business. Here is the business description.
Domains, cloud hosting, ecommerce platforms, SSL server certificates, digital seals, cybersecurity, payments,
and access are all a collection of number one services that will never disappear and are indispensable to theInternet society.

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17This is the trend of quarterly net sales and their breakdown. As you can see, quarterly results reached record
high, with a strong 16% increase in this quarter. The main factor is the payment business, highlighted withlight blue. The face-to-face payment field developed by GMO Financial Gate performed well.

In addition to the contributions from large deals in Q1 and Q2, sales for long-tail items were also strong by
capturing cashless needs.
Here is the trend in the quarterly operating profit. The profit margin remained in the single digits due to bad
debt-related costs in the FREENANCE business.
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Now, I would like to report once again on the progress of our business in cryptographic security, GMO Sign,
which we are developing group-wide as a strategic business. As we have indicated, we are number one not
only in the number of contracts but also in the number of transmissions.

First, I will explain the status concerning the number of contracts. Since the groupwide "Sayonara Inkan"
campaign efforts initiated in May 2020 during the COVID-19 pandemic, the customer base has continued to
expand due to the so-called network effect and the synergistic effects of the Group. By the end of June, thenumber of user companies expanded to 1.46 million.

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As you can see, the adoption of our products by major companies is progressing steadily, and we believe that
we are still in the market expansion phase. We have also seen cases of customers switching from othercompanies due to our cost advantage from its very beginning.

Next is the number of transmissions. We view the number of transmissions as the most important KPI thatindicates the intensity of customer activities. Steady expansion of utilization by high-activity customers, suchas real estate businesses, has led to sales growth.

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As for GMO Sign, we are also strengthening our efforts in digital government initiative. It is already confirmed
to be adopted by more than 60 public organizations, and we aim to be the number one in the local government
market. We aim to achieve the triple crown, together with the number of contracts and the number oftransmissions, leading to further growth.

Here is the overall transaction volume of the ecommerce support business.

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It consists of ecommerce platforms deployed through COLOR ME SHOP and MakeShop and services such asminne, SUZURI, and FREENANCE. In the EC for merchandise sales, the industry as a whole has been sluggish,
and although MakeShop, the Group's high-priced product line, remained strong, overall sales remained weak.
However, in terms of our view of the EC market, the size of the transaction volume itself is larger than the
pre-COVID-19 period. We believe that this is an area where further growth can be expected in the medium
term. Approximately 40% of this transaction volume was generated using GMO Payment Gateway's payment
service, which we believe indicates the strong synergy between our EC platform and payment business. As for
FREENANCE, as I mentioned earlier, we will restructure our business strategy.

Finally, I will discuss price revisions and their impact.
GMO Internet Group's motto is to provide the number one service in all specifications and prices. However,with the recent surge in electricity prices, the ongoing depreciation of the yen, and the global shortage ofsemiconductors, it has become difficult to absorb this impact through cost reductions and other internal
efforts alone. Therefore, we have decided to revise the prices according to the details as shown here.
The service maintenance adjustment fee will be a kind of surcharge, rather than a permanent price increase,
and will be reviewed according to market trends. In terms of customer response, we have not seen any
particular impact on retention rates or new applications.
As for the impact on business performance, it is expected to be negligible, since the contracts will be graduallyswitched to the new contracts after the price revision at the time of renewal. Even after the switch, both sales
and expenses will be prorated over the contract period, and the effect will gradually become apparent.

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I will now explain the advertising and media business. Here is the trend of quarterly net sales and theirbreakdown.
While media in dark blue showed steady growth on the back of an increase in the number of PVs of our own
media, online advertising in light blue showed a reactionary decline in some sectors from the previous year,
when it was brisk, and remained weak due to a decline in unit prices of ad network advertisements.

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23This is the quarterly operating profit trend. As in sales, in-house media performed well, but there was a YoY
decrease in profit due to the absence of incentive payments in advertising business and related costs withheadcount growth.

Moving on to finance. Quarterly performance trends are as shown.
This quarter's sales were the second highest level after the record-high Q1, as FX trading remained strong andprofitability continued to improve due to enhanced internal initiatives.

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Meanwhile, profits increased by 28.9% YoY, despite a provision of allowance for doubtful accounts ofapproximately JPY900 million in this quarter, which has been recorded since Q4 of the previous year for theThailand securities business.

Here are the net sales trends by product.
As for FX, which is dark blue, sales increased due to improved profitability. CFD, light blue, has also become amainstay product, although trading volume declined in the last quarter, when there was a brisk trading incommodity-related indices. We will aggressively cross-sell by offering derivatives trading, which is one of ourstrengths, at each of our companies.

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25Here is a graph showing the relationship between sales and trading volume in the FX business.
Transaction volume declined in this quarter compared to last year's phase, in which transaction volume
expanded due to the depreciation of the yen, but sales increased due to profit improvement measures that
we have been working on since Q4 of last year. While profitability improved, transaction share declined. We
intend to increase our transaction share over the medium term through a strategy of increasing our
profitability and returning the profits to our customers, so that we can improve our services and attract morecustomers to do business with us.

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I will now explain the crypto asset business. It consists of three types of businesses shown here, mining,exchange, and payment.

Here is the trend of quarterly net sales and their breakdown. In the exchange business, sales decreased aswell as trading value amid a weak market environment. Despite global headwinds, the number of accounts
remained steady as we worked to add new issues and acquire new customers.

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27This is the quarterly operating profit trend.
Losses continued to be incurred in this segment as a result of the decline in sales. Crypto asset transaction
volume continues to decline, making it difficult to generate profits. In consideration of this situation, we willcontinue to manage our marketing investments in a controlled manner. We believe that the market
environment will continue to be challenging, but we will continue to pursue our internal measures in apersistent manner, so that we can build a profitable structure when the market is once again active.
This concludes my part on the status of each business. CFO Yasuda will explain the last part of the agenda,
topics.

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Yasuda: Finally, I will explain the topics. First, I would like to talk about our efforts in the area of security. "Safeand Secure Internet for Everyone," here is the slogan for the security business.
We have been talking about cyberattacks becoming an urgent social issue and management risk at our last
financial results briefing. The media has increasingly reported on the measures taken by national andinternational government agencies to strengthen countermeasures against cyberattacks. In order to meet theever-accelerating need for security in the future due to the progress of digital transformation and online
connectivity, we have adopted this as our slogan for our security business and will contribute to the realizationof a safe national society.

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Once again, we introduce the three areas of our security business, first, cryptographic security, such as SSL
using authentication technology, second, cybersecurity by Japan's most powerful white hacker group, and thethird one is brand security by domain trademark professionals.

Today, I will talk about the update of GMO Cyber Security by Ierae, the most powerful white hacker group in
Japan, which joined the Group last January.

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First, here is a list of customers who adopted our cybersecurity service. GMO Cyber Security by Ierae's greatest
strength is its technology. As you can see, companies in a wide range of industries and sectors, both domestic
and international, use vulnerability assessments conducted by white hackers who have an attacker's point ofview. In addition, based on our group synergies, we are steadily expanding our business with banks.

Here are our track records. In addition to being number one in national and international contests, Ierae is
assisting cybersecurity education and training of cyberunits in governments, National Police Agency, andMinistry of Defense, as they implement full-scale cybersecurity measures.

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We have received letters of appreciation for our technical support. In addition, this year, we established a
new vulnerability research and study team and won number one as a Japanese team in all four global security
contests we participated in. Also, as part of our efforts with public institutions, we received a letter ofappreciation from the Nagano Prefectural Police Headquarters for our cooperation in investigations with IoT
forensic technologies.
We will continue to hone our technical skills by challenging domestic and international security contests andcontribute to protecting Japan's national interests from cyberattacks through technical support in the field ofcybersecurity.

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32Here is the progress of our SaaS-type product, GMO Cyber Attack Net de Diagnosis, which we introduced at
the last briefing.
This GMO Cyber Attack Net de Diagnosis is a SaaS-type product that automatically checks the security holes
in the website when you enter the domain name and provides a scoring of the results. Anyone can easily
check the safety of a site with a high level of security.
Now, in May, the Ministry of Economy, Trade and Industry, METI, issued ASM implementation guidance. ASM
stands for attack surface management, and it is gaining attention as a method to protect corporate IT assets
from cyberattacks. Net de Diagnosis is a tool categorized under this ASM.
We are currently focusing on expanding our market share. For starters, the monthly fee is JPY980, but as we
mentioned previously, the service is free until the end of December this year. In addition, we are planning API
linkage with the Group's commercial products from September onward. We will work toward making Net deDiagnosis the next indispensable service. Please stay tuned.

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Finally, our adaption to AI. GMO Internet Group is currently adapting to AI based on the three themes listed
here.
The first is to save time and cost, the second is to improve the quality of existing services, and the third one isto provide new services to the AI industry. Whether it saves time and cost, whether it will improve the qualityof existing services and the customers who use them, alternatively, whether we, as a group of companies
providing Internet infrastructure, will provide new services related to the development of the AI industry, we
intend to work on specific issues related to these three themes.

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I will now share with you the current situation regarding these themes.
First, time and cost savings. We believe that to improve productivity, it is first important for all partners in theGroup to become familiar with AI and put it into practice in their work. In this regard, as a first step tostrengthen AI education, we have invited these two experts, who actively post and share information on SNS,
as advisors to hold in-house online seminars twice a month so as to deepen our understanding of the latest
trends and tools.
To promote the use of AI in business operations, we are holding "The ChatGPT Business Application Contest,
Let's AI Each Other!" with a total prize of JPY10 million and are soliciting ideas leading to internal AI initiatives
and new services. Along with that, we have decided to implement the AI test "GMO AI Passport" to check how
well all partners are utilizing AI in order to measure the AI literacy and whether AI is actually being used intheir business. Through these efforts, we will promote the awareness of AI use, thereby saving time and costs.

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The next is to improve the quality of existing services. We have started working on text-generative AI andimage-generative AI for infrastructure and advertising and media services in order to enhance theirfunctionality.

Finally, providing new services to the AI industry.
GMO Internet Group will continue to develop new services that utilize AI and also release services that will
become the infrastructure to support the AI industry.

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These are equivalent to jeans, shovels, and pickaxes in the Gold Rush era. For example, of our services shown
here, on the top left is our GPU hosting service, ConoHa for AI, which requires a lot of computational resources
for developing large-scale language models and generative AI models, and it requires a large initial investment
in servers, making capital investment a challenge.
In this regard, ConoHa for AI is a GPU hosting service equipped with NVIDIA's latest GPUs, based on our largescale infrastructure technology and know-how, cultivated over many years as a domestic hosting provider.
We are planning to provide a trial version in mid-August. We aim to provide the official version within thisyear.

GMO Internet Group will actively incorporate AI into its management under the slogan of "Become the No.1
AI-Application Corporate Group." In the age of AI, we will continue to provide our customers with the number
one services by improving productivity and reducing costs. Please stay tuned.

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That is all the explanation for today. Thank you very much for your participation. Internet for everyone.
[END]______________
Document Notes
1.
2.
3.
4.

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TollfreePortions of the document where the audio is unclear are marked with [Inaudible].
Portions of the document where the audio is obscured by technical difficulty are marked with [TD].
Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides ananswer from the Company, or [M] neither asks nor answers a question.
This document has been translated by SCRIPTS Asia.

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