目次

OPT Holding, Inc.
Consolidated results for the 2019 Q3
Nov 14, 2019

Disclaimer
This English translation is only for reference. When there are any
discrepancies between the original Japanese and English translation, theoriginal Japanese always prevails.
The information contained in this material is carefully scrutinized before presentation as it
is intended to facilitate your understanding of the Company’s business, management
policies and plans, financial position, etc. However, we do not guarantee its accuracy,completeness, effectiveness, or security.
None of the information herein is prepared to solicit investment. The final decision on
investing should be made by you, under your own responsibility. We will not be responsible
or liable for any consequences resulting from investments made by you in reference to, or
by use of, the information.
Any information herein other than past or present facts represents our future outlook
developed based on the input currently available, and includes various risks anduncertainties. Thus, please note that actual business results released at a later date may
differ due to such factors.

1

Table of Contents

1. 2019 Q3 Results
2. Growth Strategy
3. References2

1. 2019 Q3 Results

1-1. Key Management KPIs: Non-GAAP Indicators
OPT Holding, Inc., and its subsidiaries and affiliates (hereinafter, the Group) adopt Japanese generally accepted accounting principles(J-GAAP) and disclose its financial statements in accordance with J-GAAP reporting format; however, the Group uses following nonGAAP indicators in order to more accurately evaluate its results of operations and financial position. Please refer to the definition ofeach Non-GAAP indicator as stated below. Also reconciliation of GAAP to Non-GAAP indicators of EBIT, EBITDA and Free cash flow
are stipulated in this material.

【Definition and formula of Non-GAAP metrics】
１．EBIT(Earnings before Interest and Taxes)=Net income before taxes + interest payment – interest income
２．EBITDA(Earnings before Interest, Taxes, Depreciation and Amortization)=EBIT+Other financial gain/loss+depreciation of noncurrent tangible assets+amortization of
intangible assets+depreciation of long-term prepaid expense+non-cash gain/loss
３．FCF(Free cash flow)=Operating cash flow＋ investment cash flow± one-off cash flow items
４．FMV(Fair Market Value)=an estimated market value of a property or a liability, based on third-party transaction between aknowledgeable and willing buyer and a knowledgeable and willing seller
５．IRR(Internal Rate of Return)= Investment return computed assuming the securities (including securities of subsidiaries) held in our
portfolio have been sold at the end of the reporting period.
６．AUM(Assets Under Management)= aggregate amount of (1) book value of subsidiaries’ and affiliates’ stocks and (2) FMV of operational
investment securities and invested securities
Note; The Group discloses those Non-GAAP metrics as important management KPIs from 2018.
4

1-2. Key Management KPIs: Supplementary Notes【Adjustments for past financial results】
Consolidated results for 2018 include earnings from the video streaming business of relaido, Inc. (former SkillUp Video Technologies, Inc.), which belongs to Large Corporations Segment of Marketing Business, and also
includes costs and gains incurred by its company-split and business transfer.

In this material, consolidated results and Marketing Business segment results are compared to the adjusted
previous year’s results in which the earnings and other related costs and gains related to the transferredbusiness of the former Skill-Up Video Technologies, Inc. were excluded.



Results for 2019 Q3 are not adjusted, as the business was already transferred in 2018.
2019 Q3

Unit: JPY million

2018 Q3

Adjusted YoY（%）

Actuala
Adjusted

YoY（%）

a-b
Adjusted
amountb
ActualRevenue

20,877

4.5%

2.8%

19,97020,314(343)

Gross profit

3,152(20.1)%(21.8)%

3,944

4,031

(87)

Operating income

(420)

-

-

161

134

27

EBIT

(44)

-

-

40

520

(479)

EBITDA

622(13.4)%(71.4)%

719

2,176

(1,457)

Quarterly net
income attributableto owners of theparent

(16)

-

-

62

56

5

5

2019 Q3 Results Highlights

MarketingBusiness（Adj)• Large Corporations: Results were weaker than expected, as certain existing clients continued toreduce ad budgets, even though new client acquisitions contributed to the revenue recovery trend.
Gross profit margin continued to decline, even though SG&A expenses were reduced.
• Local SMEs: Revenue increased, as existing clients increased ad budgets and new clients wereacquired, even though profit decreased as personnel costs increased due to increased new hires.

Revenue
EBITDA

Synergy
Investment
Business

Consolidated
Results(Adj)

JPY 20,576 million YoY 7.8% up
JPY 768 million YoY 22.1% down

• AUM: Decreased from the previous quarter mostly due to the decline in market value of Raksul Inc.
• IRR: Decreased from the previous quarter mostly due to the decline in market value of SoldOut Inc.

AUM
IRR

JPY 25,320 million JPY 1,684 million decrease from 2019 Q2
11.3 %
1.7 ptdown from 2019 Q2• Consolidated revenue increased by 4.5% YoY, as revenue in the Marketing Business increased,
but deconsolidation of overseas subsidiaries decreased revenue.
• Consolidated EBITDA decreased by 12.6% YoY, as profit decreased in the Marketing Businesseven though extraordinary gain was recognized on sale of overseas subsidiary.

Revenue JPY 20,877 million YoY
EBITDA JPY
622 million YoY JPY

Notes)EBITDA by business segment is shown before allocation of Corporate Function costs

4.5 % up
13.4% down

6

2019 Q3 Key Consolidated Financials(Unit: JPY million)

2019 Q3

Change2018 Q3
Adjusted

AmountYoY（%）

2018 Q3
w/o adjChangeAmount YoY（%）

Revenue

20,877

19,970906

4.5%

20,314563

2.8%

Gross profit

3,152

3,944

(792)

(20.1)%

4,031

(879)

(21.8)%

Operating income

(420)

161

(581)

-

134

(554)

-

EBIT

(44)

40

(84)

-

520

(564)

-

EBITDA

622

719

(96)

(13.4)%

2,176(1,554)(71.4)%

Quarterly net income
attributable to owners ofparent

(16)

62

(79)

-

56

(73)

-

ROE(LTM)※1※2

1.2%

7.0%

-

(5.8)pts

Free cash flow

(1,599)1,554(3,153)-

Earnings per share
EPS (in yen)

(0.72)

2.51(3.23)-

Diluted earnings per share(in yen)(0.75)

2.05(2.80)-※1 ROE=Net income attributable to owners of parent (LTM) ÷ (Average equity amount as of September 30, 2018 and 2019)※2 LTM=Last Twelve Months

7

2019 Q3 Breakdown by Segments (Adjusted)

Reporting segment(Unit: JPY million)

MarketingBusiness

Synergy
Investment
Business

OthersCorporate
Function
Cost

Total

Consolidated

Others

Revenue

20,576320

20,897-(8)

20,877Gross profit

3,437

(278)

3,158

-

5

3,152

SG&A

(2,767)(267)(3,034)

(535)

(2)

(3,573)Operating income

669

(545)

124

(548)

3

(420)

EBIT

592

(96)

495

(543)

3

(44)

EBITDA

768

311

1,080

(460)

3

622

Note: Operating income/EBIT/EBITDA：Before Corporate Function cost allocation

8

Non-GAAP KPI： Free Cash Flow/EBITDA[Free cash flow]

2019Q3Operating cash flow

2018Q3(2,008)YoY (Unit: JPY million)(811)(1,196)

Profit (loss) before income taxes

(49)

513

(562)

Income taxes paid

(682)

(419)

(263)

Change in working capital ＊1

(688)

(244)

(444)

Other, net

(587)

(661)

73

409

2,366

(1,956)

544

180

364

30

378

(347)

0

2,164

(2,164)

292

0

292

(457)

(355)

(101)

(1,599)1,554(3,153)---(1,599)1,554(3,153)

Investing cash flow
Proceeds from sales of investment
securities
Proceeds from refund of investment securities
Proceeds from sale of businesses
Proceeds from sales of shares of subsidiaries resulted
in the change in scope of consolidation
Other, net
Free cash flow
Adjustments＊2

Adjusted Free cash flow

＊1:Increase / decrease in trade receivables + Increase / decrease in inventories ＋Increase / decrease in trade payables ＋ Increase / decrease in accrued consumption taxes＊2: Adjustments: One off cash flow item

[EBITDA]

2019 Q3

Income before Taxes

2018 Q3(49)

AmountYoY（%）

513

(562)

-

Interest paid (+)

6

8

(1)

(21.6%)

Interest received (－)

(1)

(1)

-

(19.7%)

EBIT

(44)

520

(564)

-

Depreciation (+)

20

37

(17)

(45.5%)

Amortization of intangible assets(＋)

114

223

(109)

(48.9%)

Depreciation of long-term pre-paid
expense (＋)

0

1

-

(45.5%)

Non-cash profit/loss (＋)

531

1,394

(856)

(61.9%)EBITDA

622

2,176(1,548)(71.4%)

92019 Q3 Results of Marketing Business (Adj)

LargeCorporations• Results were weaker than expected, as certain existing clients continued to reduce ad budgets, even though new clientacquisitions contributed to the revenue recovery.
• Operating income decreased due to a decline in gross profit margin even though SG&A expenses were reduced.
• EBIT increased as impairment (approximately JPY 277 million) was recognized in the same period of the previous year.
• EBITDA decreased by JPY 67 million as compared to EBIT, due to the reversal of the impairment loss recorded in the same
period of the previous year.

Local SMEs

• Revenue increased, as existing customers increased ad budgets and new clients were acquired.
• Gross profit margin declined as transactions with low profits margins from projects other than the operational agency
services were included.
• EBIT/EBITDA decreased as cost increased due to continued investment into human resources (hiring, training, and pay
increase).

Large Corporations(Unit: JPY million)

Segment Total ※Local SMEs

Amountof% of changechange2018 Q3

Amount ofchange

3.1%

5,268

4,238

1,030

24.3%

20,576

19,080 1,496(6.1)%

965

880

84

9.6%

3,437

3,526

(89) (2.5)%

71

3.5%

(760)

(653)

(107) (16.4)%(2,767)(2,744)(22) (0.8)%

554

(89)

(16.1)%

204

227(23) (10.2)%669

782 (112) (14.4)%

471

194

277

142.4%

121

231(110) (47.6)%

592

423

538

735 (197)(26.8)%

230

257(26) (10.4)%768

987 (218) (22.1)%

2018 Q3

Revenue

15,452

14,983469

Gross profit

2,465

2,626 (160)

SG&A(1,999)(2,071)

Operating income

465

EBIT
EBITDA% ofchangeAmount% ofofchangechange2019 Q3

2019 Q3

Note: 1. Operating income/EBIT/EBITDA：Before Corporate Function cost allocation
2. Segment total: figures include inter-segment reconciliation between Large Corporations and Local SMEs sub-segment2019 Q3

2018 Q3

169

7.8%

39.9%

10

2019 Q3 Results of Synergy investment Business
Revenue

EBIT/EBITDA•

Revenue decreased YoY due to the sale of an overseas subsidiary eMFORCE Inc.

•

EBIT deteriorated mainly due to the impact from the loss on valuation of fund investments even thoughextraordinary gain was recorded from sale of an overseas consolidate sub eMFORCE Inc, and overseas affiliate
Chai Communication Co., Ltd (approximately JPY 432 million).
EBITDA improved by JPY 413 million mainly due to the reversal of loss on valuation of fund investments.

•(Unit: JPY million)

2019 Q3

Amount ofchange2018 Q3% of change

Revenue

320

920

(599)

(65.1)%

Gross profit

(278)

444

(722)

-

SG&A

(267)

(598)

331

(55.4)%

Operating income

(545)

(154)

(390)

-

EBIT

(96)

57

(154)

-

EBITDA

311

141

169

119.4%

Note: Operating income/EBIT/EBITDA：Before Corporate Function cost allocation

11

AUM (FMV) and IRR[AUM*1 (FMV*2)]
AUM at the end of 2019 Q3 : JPY 25,320 million(JPY 16,031 million increase from acquisition cost; up 172.6%)

・Decrease of JPY 1,684M from 2019 Q2 mainly due to change
in market value of Raksul Inc. and impairment losses ofoverseas investments.

[IRR (Internal Rate of Return)]
Decreased from 2019 Q2 mainly due to the decline in themarket value of SoldOut Inc.

(Unit: JPY million)
30,000

子会社株式
Share of subsidiaries

27,004
Share of affiliates
関連会社株式25,3202019 Q3(Reference)
2019 Q2

11.3%

13.0%

25,000Investment securities
投資有価証券
20,00015,00010,0005,000

0From 2 nd quarter of 2018, IRR of invested
assets is disclosed for improving transparency
of return on investments

Operational
営業投資有価証券
investmentsecurities

24,12622,705

9,288
6,607

2,041
640

2,134

Acquisition
cost

2019Q2
Fair market value

743

2,098
515
2019Q3
Fair market value

Note; 1. AUM：Aggregate amount of (1) book value of subsidiaries and affiliates’ stock and(2) fair market value (FMV) of operational investment securities and invested securities

2. FMV : an estimated market value of a property or a liability, based on third-party transaction
12
between a knowledgeable and willing buyer and a knowledgeable and willing seller2019 Q3 Corporate Function cost
SG&A costs increased due to investments for mid-to-long term growth on human resources(hiring and training), group-wide management systems, and granting of restricted stocks to
selected employees.

(Unit: JPY million)

2019 Q3

2018 Q3

Change amount

SG&A

(535)

(450)

(85)

Operating income

(535)

(450)

(85)

EBIT

(531)

(322)

(208)

EBITDA

(448)

(288)

(160)

Definition of Corporate Function cost
The definition of this Corporate Function cost has changed since 2018 as
follows.
✓Personnel cost at administrative division at OPT Holding* Reasons for the discrepancy between SG&A costs and EBIT include non-Operating
income and losses.
* Reasons for the discrepancy between EBIT and EBITDA include costs of stockcompensation plan (since 2018 Q3).

✓Overhead cost to manage OPT Holding’s administrative division except
personnel cost.
Expense for several services provided to Group companies by OPT Holding
is included.

13

Summary of Subsequent Events and Impact on Business Results

 Sale of a part of the shares of RAKSUL INC. held by the Group in theoverseas market resolved at the Board of Directors meeting on
November 13, 2019.

Summary of Sale






Company name: RAKSUL INC.
Number of shares to be sold: 1,087,200 shares
Sale price decision date: November 14, 2019
Settlement date: November 18, 2019

Impact on Business ResultsThe estimeted impact on 2019 Q4 results•
Increase in revenue JPY 3,631 million•
Increase in operating income JPY 2,886 million



AUM/IRR is expected to decrease in the future as the fairmarket value of shares of RAKSUL INC. will havesignificant impact on AUM/IRR.

14

Major Q&A on Subsequent Events
Q

A

Background of the sale

Having been considering the opportunity of the sale, decided to sell apart of the shares of RAKSUL this time.

Reason not to sell on IPO

Decided it was not appropriate time in view of various factors such as
stock valuation.

Number of shares to be sold at thistimingDetermined based on the stock price movement of RAKSUL and its
impact on our business results.

The remaining shares

No decision has been made at this point.

Use of cash proceeds from capital
gain

Growth investments to achieve our goal of digital shift.

Shareholder return from the sale ofRakusul shares

The returns to shareholders based on the one-time capital gain will bedeliberately considered.

Exit plan for capital gain investment

Basic policy is to sell at the time of the investee’s IPO or at a time
deemed to be appropriate.

15

2. Growth Strategy
1) Marketing Business Growth Strategy
2) AI Platform Business Growth Strategy

２-1．Marketing Business Growth Strategy
Use group assets to solve marketing issues for all types of clients
size

Large
Corporations

Local SMEs

Small Businesses
Number of entities17２-1．Marketing Business Growth Strategy
size

Improve profitability through group collaboration leveraging“productivity improvement,” “know-how sharing,” and "joint solution
development.”

Large
Corporations

Local SMEs
Small Businesses
Number of entities
Increaseproductivity

Aggressive investment for standardized
and efficient operations

Towards automation

Shareknow-how

Accumulate latest
industry cases &know-how

Towards automation

Developjoint
solution

Bundle know-how as a
package
OPT Group’s assets ×

Client assets

× Issues/Needs

18

2-1．Large Corporation：Segment Basic strategy

Investments to drive growth
AI Investment on process automation/efficiency optimization (with Signate)
Digital talents hiring/training and enhanced workforce development(Professionalization and expertise improvement)

Expected results：Strengthened client relationships andimproved quality of services
New client development

Expansion of digital shift
support services forexisting clients

Joint peoduct/service
with development
clients

19

2-1． Local SMEs Segment：Basic strategy

Investments to drive growth
Strengthen Local Support Structure(Alliances/local hub openings)
Partnering with platformers(Further strengthened position of the No. 1 partner in Local SMEs)

Expected results： Expansion of market sharein local SMEs segment
Sustain high revenue
growth rate

Rapidly deploy latest
technology to local
regions

Assist in revitalizing
local regions

Stimulate local SMEs through digital shift202-1．Small Businesses Segment ：Basic strategy

Investments to drive growth
Strengthen software development capabilities(Expand engineer pool)

Accumulate know-how in digital marketing “to bring in more clients”

Expected results：Provide digital marketing to wider client base
Automated digitalmarketing by using
Ad/SNS
Deploy SaaS

Reach out to small
businessse with small
marketing budget who
cannot afford digitalmarkething

Structurally change
business model intohigh profit margin
model“Cascade-down the ability to generate profit to all areas of Japan”
through Digital Shift21

2-2． AI Platform ：Members decomposed
The biggest data scientist/AI engineer registered platform in Japan# of engineers

25,000Over 23,000 registrants(Increased about 13% from the end ofJune 2019)

DATA
02

DATA
Unspecified5%

20,000Student
25%

other
20%

15,000

CorporateEmplo
yees
75%

Python users
75%

DATA
03

10,000

DATA
04
PhD7%

other
10%

Other
22%

5,000
Master40%

Bachelor
75%

Science and technology,
information science
78%

0
2015年

2016年

2017年

2018年

2019年

＊As of the end of September 201922

2-2．AI Platform Business: Business Model
Three business pillars: AI system development, AI talent placement, AI
talent education

AI
Developme
nt

The largest AI platform in JapanAI Talent 23k
members registered
AI Talentplacement

AI TalentTraining

23

2-2．AI Platform Business ：Client Overview
Solve many client issues

242-2．SIGNATE’s Positioning in the World
A mega platformer exists in each major country.
SIGNATE is the largest and only mega platformer in Japan.
[Global Players]（Chain）
Alibaba.com
TIAACHI（America）
GoogleKaggle（Japan）
SIGNATE

25

2-2．Business Environment Surrounding AI platformer
AI business market will reach JPY 80 trillion yen in 2030
【Global AI market growth forecast】（Unit: US$ billion）

8,000
800

800 US$ billion
7,707

700
7,000
600
6,000
500
5,000
400
4,000

200 US$ billion

300
3,000

2,003

200
2,000
1,000
100

30 US$ billion
325

0
2015

2020

2030

Source: EY Institute Report “’Creation’ and ‘Disruption’ Brought to Management by Artificial Intelligence”

26

2-2．Business Environment Surrounding AI platformer
IT needs increase, and IT personnel shortage will become more serious（人材数）supplied
供給人材数（人）1,800,000

Shortage of personnel
人材不足数（人）Number of personnel
shortage in 2030

Approx.
590k

1,600,000

1,400,000

374,564

401,843

429,611

461,087

492,983

524,562

555,873586,598

912,370

907,878

902,789

893,863884,368

875,018

865,744856,845

347,611

320,638

293,499

243,805

218,976

1,000,000

194,608

170,700

1,200,000

268,655

Current shortageof personnel

800,000

600,000

916,447

919,924

923,002923,273923,094

922,491

918,921915,052

910,492

905,408

899,266

200,000

892,511400,000

921,082

Human resources supply declines
after the peak in 20190

Source: Ministry of Economy, Trade, and Industry Survey results on the latest trends and future estimates of IT human resources (June 10, 2016)27

3．References
１）Financial Indicators２）Business Topics

2019 Q3 Consolidated Revenue by segment (Adjusted）(Unit: JPY million)

906

25,0001,496

20,000(599)

915,00010,00020,877

19,970

5,000

0
調整後
2018年Q3
2018
Q3

MarketingBusiness
マーケティング事業

Synergy
Investment
シナジー投資事業

Other/Internaltransaction
その他/内部取引2019 Q3
2019年Q3
連結合計

29

2019 Q3 Consolidated Gross Profit by segment (Adjusted）(Unit: JPY million)

(792)

4,500

4,000

(89)
(722)

3,500

19

3,000

2,500

2,000

3,944
3,152

1,500

1,000

500

0
調整後
2018年Q3
2018
Q3

マーケティング事業
MarketingBusiness
MarketingBusiness

シナジー投資事業
Synergy
Investment
Synergy
Investment

その他/内部取引
Other/Internaltransaction
Other/Internaltransaction

2019年Q3
2019 連結合計
Q330

2019 Q3 Consolidated EBIT by segment (Adjusted）(Unit: JPY million)

(84)

250

200

150

169

(154)

100

50

40

(99)

0

(44)
(50)

Q3
調整後20182018年Q3

MarketingBusiness
マーケティング事業

Synergy
Investment
シナジー投資事業

Other/Internaltransaction
その他/内部取引2019 Q3
2019年Q2
連結合計

31

2019 Q3 Consolidated EBITDA by segment （Adjusted）

(96)

800

(Unit: JPY million)

700

(218)

600

(47)
169

500

400

719
622

300

200

100

0

2018
Q3
調整後
2018年Q3

MarketingBusiness
マーケティング事業* EBITDA: Before allocation of Corporate Function costs

Synergy
Investment
シナジー投資事業

Other/Internaltransaction
その他/内部取引2019 連結合計
Q3
2019年Q3

32

Quarterly Consolidated SG&A Movement
Continued investment on human resources (hiring/training) for mid-to-long term growth and enhancing
group-wide management system increasing SG&A.
(Unit: JPY million)
in million yen
5,000

17.6%

4,000

15.6%

3,262

3,000

426

2,500

204
106
154
38
258

3,569

3,897

16.0%

3,791
3,557

17.1%

4,079

17.0%

3,500

19.2%

18.6%

4,500

3,632

562

505

301

463

493
423

422

183
117
158
62
261

209
118
156
42
271

263

134
157
43
261

256
114
154
47
252

20.0%

19.9%

19.4%

280

140
155
89
260

126
145
46
242

17.5%

3,969

18.0%
17.3%

4,012

16.0%

3,771
472

463
283
146
75
102
239

512
279
159
69
30
234

306
151
76
44
240

3,573
274
296
146
75
38
248

2,000

10.0%

6.0%
2,353

2,350

2,441

2,077

2,306

2,595

2,572

2,661

2,490

2,723

2,530

4.0%

500

2.0%

0

0.0%
Q1

Q2

Q3

Q4

Q1

FY2017# of Employees
Consolidated

12.0%

8.0%

1,500

1,000

14.0%

1,513

1,639

Q2

Q3

Q4

FY2018
1,641

1,573

Note; Employee include regular employees and contractors.

1,652

1,667

1,616

1,631

Q1

Q2

Q3

20219年20219年
FY201920219年

1,645

1,778

1,509

33

2019 Q3 Breakdown of Marketing Business
Breakdown of Revenue (Adjusted）(Unit: JPY million)
25,0001,496

469

20,0001,030(3)15,00010,00020,576

19,080

5,000

0
2018
Q3
調整後
2018年Q3

Large
Corporations
マーケ大手領域

Local SMEs
マーケ中小領域

Other/Internaltransaction
内部取引2019 Q3
2019年Q3

34

2019 Q3 Marketing Business EBITDA Analysis (Adjusted)(Unit: JPY million)

(218)

1,200

1,000

(197)
800

(26)

6

600

987
400

768

200

0
2018
Q3 (Adj)
調整後
2018年Q3

Large Corporations
マーケ大手領域* EBITDA: Before allocation of Corporate Function costs

Local SMEs
マーケ中小領域

Other/Internal
内部取引transaction2019 Q3
2019年Q3

35

OPT Inc. Quarterly Revenue Movement by Client Segment

Switched to long-termLong-term
長期顧客
clients*1

新規顧客
clients*3

clients*2

18,00016,00014,000

Newly acquired

from newly acquired
新規から既存顧客

96

68
103

2,280

96

12,000
1,537

10,000

1,902

44
2,034

94

1,650
83
1,271

1,899

1,350

1,757

3,372

Non-long term contracted

非継続(スポット等)
clients (spot billing, etc)*4

110
1,286

1,950

1,729

(Unit: JPY million)
544
46
1,537

3,206

2,463

1,795

2,601

[New clients]■ Brand advertisers,
retail and fashion

2,095

2,381

2,021

2,016

8,000

6,000

11,582
10,434

9,416

9,121

9,157

Q2

Q3

Q4

4,000

10,6499,753

10,724

11,175

10,1689,534[Royal clients]■Finance, HR, Real Estate,
Cosmetics

2,000

Q1

2017

Q1

Q2

Q3
2018

Q4

Q1

Q2

Q3

2019

The category above is defined based on service period; *1: More than 24 months *2: 12 months ~ 24 months,*3: 1 month~12 months, *4: Less than 1 month36

OPT Inc., Revenue Growth by Products[Listing Ad]

YoY：10.7% up[Ad-network Ad]

YoY：4.2% up

Increased transaction volume due to increased placementof listing ads by new clients

Increased slightly by new clients, even though transaction
volume of a part of existing clients decreased

5,000

4,500

4,500

4,000

4,000

3,500

(Unit: JPY million)

3,500

3,000

3,000
2,500
2,500
2,000
2,000
1,500
1,500
1,000
1,000
500

500

0

0
2014Q3 2015Q3 2016Q3 2017Q3 2018Q3 2019Q3

2014Q3 2015Q3 2016Q3 2017Q3 2018Q3 2019Q3

37

OPT Inc., Revenue Growth by Products[Video Ad][SNS Ad][LINE Ad]

YoY:21.2% up

YoY：4.1% up

YoY：38.8% down

Increased transaction volume due to impact
from new clients

1,400

1,200

Increased social ads by new clients, but growthslowed down in line with decreased transaction
volume of a part of existing clients(Unit: JPY million)

Decreased in line with decreased transaction
volume of a part of existing clients

1,800

900

1,600

800

1,400

700

1,200

600

1,000

500

800

400

600

300

400

200

200

100

0

0

1,000

800

600

400

200

0

Note: All figures are results of OPT Ind., belongs to Marketing Business, large Corporation segment

38

Marketing Business for SMEs: KPIs
KPIs on track; aiming for continued higher growth[Duration of contracts (continuity)][# of companies ×Unit Price]
・The number of clients: steadily increasing (YoY 11.6% up )・Average price: increased in revenue from medium-sized clients. (YoY2.1% down)(The unit prices steadily increasing for medium-priced transactions.)“Long-term duration” transactions are increasing. (YoY +26.3pts)
1 to 3 month business are defined as new, 4 to 12 month asexisting, 13 month and more as long-term.

Distribution by duration of contracted period

Trend of total sales, # of company, and price(2016=100)
300

# of
clients

Long-term
長期

Average
price

社数

総単価

Existing
既存

Newly acquired
新規

総売上

250

248
328

203.6
200

543
229

182.5

502

191
888

1,009

569

212

603

770

884

135.5

138.3

150

557

269

183

100

1,754

1,785

1,777

Q4

Q1

Q2

1,945

2,253

2,304

2,414

2,457

Q4

Q1

Q2

Q3

50
Q1

Q2

Q3

FY16
2016

Q4

Q1

Q2

Q3

FY17
2017

Q4

Q1

Q2

Q3

FY18
2018

Q4

Q1

Q2
FY19
2019

Q3

Q3

2017年
2017
Note: Out of digital marketing business, extracted companies engaged in mainly ad business.
Therefore the growth rate is different from corporate growth rate.

2018年
2018

2019年
2019

39

2019 Q3 Synergy Investment ：Breakdown of Revenue（Adjusted）
Business
Development

SIGNATE’s revenue is steadily inceasing

Financial
Investments

No capital gain from own fund

China/crossboarder EC

Delayed transition to general tradingbusiness

Overseas
MarketingDecreased revenue due to the sale ofoverseas subsidiary eMORECE,INC.

(599)
1,000

(Unit: JPY million)

26

900

(143)
2

800

700

600

500

(484)
920

400

300

200

320

100

0
2018年Q3
2018 Q3

事業開発
Business Development

中国/越境EC EC
China/cross-boarder

金融投資
Financial Investment

海外マーケティング
Overseas Marketing2019年Q3
2019 Q340

2019 Q3 Synergy Investment：EBITDA Breakdown（Adjusted）
Business
Development

Reduced due to SIGNATE/digital shift related
cost

Financial
Investments

Reduced due to impairment loss

China/crossboarder EC

Increased due to reduction in SG&A

Overseas
Marketing

One time gain from sales of ouerseas subs
(eMFORE and Chai)(169)(Unit: JPY million)

350
300
250
200

450

150

(25)

311

25

100
50

141

(281)

0
(50)
(100)
2018 Q3

Businessdevelopment* EBITDA: Before allocation of Corporate Function costs

China Crossboarder EC

Financial
Investment

Overseas
Marketing2019 Q3

41

Computation of Fair Market Value for AUM
1) Shares of consolidated Subsidiaries and affiliates: book value.
2) Operational investment securities and other investment securities; calculated depending on theclassification
Classification

Valuation method① Notes and securities of whichinvestment amount is small

Acquisition cost

② Listed companies’ shares

Closing price at the end of September 2019③ Securities (except ① or ②) with therecent financing

Based on value on the recent financing④ Securities except above

CMV*1, DCF*2, or net asset method*3 depending on eachcompany’s status.

*1: CMV (comparable multiple valuation) method
Applied to issues for which competitors are set in SPEEDA, an information analysis tool.
*2: DCF (discounted cash flow) method
Applied to issues for which competitors are not set in SPEEDA and with reasonable business plans using KPIs or any other basis
for calculation are available. If there are any discrepancies between the actual performance and the business plan, it will be
adjusted by the plan achievement ratio.
*3: Net asset method
Applies to issues for which: (I) no specific business plan is available, (ii) a company with going concern, or (iii) the FMV
estimate by the CMV or DCF method falls below shareholders’ equity attributed to us.

KPMG AZSA LLC has provided us with guidance and advice in calculating FMV for theinvestment business.
42

IRR (Internal Rate of Return) Calculation
item

Investment

contents

Those invested in or after 2003 (including securities of operational
investment securities, investment securities, shares of subsidiaries
and shares of affiliates)

Reference date for calculation End of reporting period

MethodImpairedinvestment

Calculated as if they were sold at the net asset value after impairment.

Investment withrecent financing

Calculated as if they were sold at the refinance valuation if refinancehappens within last one year.

IPOed investment

Calculated as if they were sold at the market value as of the reference
date.

Fund

Calculated with the amount collected until the end of the reporting
period and the book value as of the end of reporting period.

OthersAny other investment with no change in their acquisition cost due tosale, impairment, financing, IPO or the like are calculated as if they
were sold on the reference date at the acquisition cost.

Income taxes

Income taxes are included.

43

Business Topics： Large Corporations
Jointly developed AI car repair estimate service for automobile
accidents, the first in the liability insurance industry～Just snap with a smartphone, for a repair quote estimate in 30 seconds～
Jointly developed the “SOMPO AI repair quote” tool, an AI based real-time car
repair estimate service to be started in Nov. 2019 by Sompo Japan Nipponkoa“SOMPO AI repair quote” screenshots
1. Select“AI repair quote”

2. Take photo ofdamaged area

3. AI based automatic
calculation

4. Display and send
estimated amount

Artificial intelligence (AI) analyzes images of cars taken by customers and estimates the car damage amount in real time. It
can be used through the “Accident Response Service” offered by Sompo Japan Nipponkoa's official LINE account.
The chat system uses the LINE Messaging API distribution tool "TSUNAGARU" provided by our company.
44

Business Topics： Large Corporations“ToSTORE analysis” to visualize consumer behavior and store issues
Launched the standard version to accelerate digital shift support for in-store operators
Services limited to certain areas were expanded nationwide. The business area analysis module adopted in thestandard version could estimate the size and information of visitors of competitor stores (assumed location ofresidence, assumed work location, etc.) on a map, so specific measures such as target areas to attract
customers could be easily found.
Overview of toSTORE analysis. Standard version

analysis.

[Competitor comparison module]*available in freemium &standard versions
1.Few visitors to store and issues with attracting clients. Attractclients from competitor store C from standpoint of scale.
[Competitor comparison module]*available in freemium &standard versions
2. Specify target area based on predicted location ofresidence/work of visitors to competitor store C.

１.Expanded area of analysis across Japan(freemium version includes 6 prefectures)
２．Increased number of target users(approx.10 times vs the freemium version)
３. Business area analysis module function added(assumed location of residence and work)(reference）please see https://tostore.jp/analysis/

45

Business Topics： Large Corporations
Reorganization of the Large Corporations Subsegment ～Towards Group Optimization～

Data Intelligence Team・Conducted an absorption-type corporate split of
Crossfinity Inc., OPT Holding’s consolidated subsidiary,and succeeded a part of the business (Oct. 1, 2019)
・Conducted a reorganization to achieve groupsynergies and efficiencies by integrating operations andservices and started to operate under a new structure.

・Established an AI R&D team through Opt
Technologies, an organization of Opt engineers, toimprove internal productivity and expand marketing
support for advertisers.
・AI R&D and data analysis useful for in-houseautomation tools and marketing and promotion foradvertisers.

“OpenChat”

Auto Tagging AI

・Started implementation/management consulting
services for “OpenChat” offered by LINE
・Opt’s social media consultants support the design andoperations of the talk-room in OpenChat used bycompanies.
・Stimulates conversation between fans of advertiser’s
brands and enables various social marketing measures
such as accumulating the voices of users, etc.

・Accelerated improvement of creative ad operations
through in-house developed Auto Tagging AI・Reduced creative analysis tasks by approximately
30% and improved advertising cost-effectivenessAmazon Ad Automation Tools「Handy CEM」のPoC

・Developed and started to offer Amazon sponsored
product ad automation tools
・Achieved enhancement of cost-benefit of ads with
automated bidding/keyword refinement

・Started PoC (proof of concept) of “Handy CEM,” anAI-based tool that analyzes customer loyalty andautomatically proposes appropriate communicationplans.
・Based on our knowledge and know-how of CEM
coupled with AI realized CEM that can be easily
practiced.
46

Business Topics： Local SMEs Segment
Established an operation center for
operational ads in Shimanto, Kochi Prefecture

Signed a strategic partnership agreementwith companies in Gunma Prefecture

・Established an operational center for operational ads,
“Shimanto Digital Operation Center” in Shimanto, Kochi
Prefecture.

・Signed a strategic partnership agreement with Joetsu
Printing Industry to promote digital innovation forcompanies in Gunma Prefecture.
<Purpose of partnership>
・ Improve problem-solving capabilities through print
media x digital・ Contribute to the promotion of digitalization in local
markets＜Purpose of establishment＞
・Strengthen support system for Internet advertising
operations with diversifying needs
・ Support local cities away from the Tokyo
metropolitan area

Provide digital support in 5 cities in the
Northeast region of Japan・ As a business partner of the “Business Partnership
Agreement for Revitalizing the Local Economy
Community” sponsored by Facebook Japan and fivecities in the Northeast region of Japan (Morioka in
Iwate Prefecture and Yokote, Yuzawa, Daisen, andSemboku in Akita Prefecture), we are providing on acontinuous basis digital support.

SO Technologies, Inc. commenced operations
・ SearchLIFE Co., Ltd. and TechLoco, Inc., consolidated
subsidiaries of SoldOut, Inc., merged on July 1, 2019 andstarted operations as “SO Technologies, Inc.”.
・ In pursuit of the vision to “Create a digital platform toattract clients making it easy for anyone and anywhere in
Japan transforming passion to earning power,” we develop
services with high value by leveraging accumulated knowhow and technology.
47

List of awards and certifications by media type(as of the end of September 2019)
Media TypeAwardsStatusOPT Inc.

Search Innovation Award※１－

GrowingBusinesses Online Awards※２－

GoogleYahoo!JAPAN

CriteoFacebooK
IndeedFinalist in the Search
Advertising Division
Ranked first domestically inJapanSpecial Certified Partner※３

Advertising Operations
Partner

Advertising Operations Partner

Search Advertising Award※４－

First place in the Hokkaido
area

Preferred Partner Program※５－

ATOM Certified

Criteo Certified Partners※６

Four stars（★★★★）

Two stars（★★）

SilverSilverCertified as the Best SMB Partner

Diamond－Silver－－Business support partner
Certified－First place

LINE Ads Platform Division
Sales Partner※７
LINE

SoldOut, Inc.

LINE Account Connect Division
Technology Partner※７
LINE Account Connect Division
Sales Partner※７“Business Partner of Business Partnership Agreement on
Revitalization of Local Economy and Local Community” concluded
by Facebook Japan and Kobe City ※8
2019 first half Strategic Products Award Featured Employer
Division※９※１：The Search Innovation Award is presented in the Premier Partners Awards 2018 event sponsored by Google Partners.
※２：The award is presented to agencies honored with a Premium Badge in the global Google AdWords Agency Contest.
※３：A “Special Certified Partner” conducts marketing methods requiring specialization and advertising operations under the “Yahoo! Marketing Solutions Partner Program” certified
by Yahoo Japan Corporation.
※４：The “Search Advertising Award” is sponsored by Yahoo Japan Corporation, certifying agencies that continuously sell ad products.
※５：The “Preferred Partner Program” is a system supporting the operational efficiency of Yahoo! promotional advertisements presented by Yahoo Japan Corporation.
※６：Agencies that continuously sell ad products offered by CRITEO and pass a certification test are certified as Criteo Certified Partners (star agency system)※７：The award is presented under the “Line Biz-Solutions Partner Program” division to partners certified for sales and development of corporate services offered by Line Corporation※８ “Business Partner of Business Partnership Agreement on Revitalization of Local Economy and Local Community” concluded by Facebook Japan and Kobe City
※９：The award recognizes achievement in the proposals/operations for the “Featured Employer” provided by Indeed Japan Co., Ltd

48

THE LEADER
in DIGITAL SHIFT～Support, Innovate, and Create Digital Revolution～

49