Third Quarter, Fiscal Year Ending March 2020

Financial Results
January 31, 2020

United, Inc.
(TSE Mothers：code 2497)

Corporate Vision and Mission

CorporateVision

To become one of Japan’s preeminentinternet companies

MissionWe embrace challenges in order to create value
and contribute to society1AgendaPage

1

Financial Highlights of Q3 FY03/20

22Performance by Segment in Q3 FY03/20

83Forecast

184

Appendix22

This presentation contains statements describing future plans, strategies, and performance forecasts of United and its affiliated companies. These statements
reflect forecasts based on management’s assumptions and beliefs using information available as of the date of this presentation. The accuracy of this information
is not guaranteed. Actual performance may differ substantially due to unforeseen circumstances in the operating environment. Company names and productnames are trademarks or registered trademarks of their respective companies.

2Financial Highlights of Q3 FY03/20

Consolidated
OperatingPerformance

Sales : ¥15,984 million (-30％ YoY)
Operating Income : ¥3,267 million (-71％ YoY)
※Excluding the Investment Segment*:

Sales:
Operating Loss:
Ad TechnologySegment

Game Segment¥10,697 million (＋8％ YoY)
¥1,612 million (＋¥24 million YoY)

Profit rose YoY thanks to successful measures to improve gross profit.
Sales:¥4,851 million (＋2％ YoY)
Operating Income: ¥415 million (＋¥476 million YoY)

Profit declined YoY on impact of goodwill amortization accompanying the addition of TriFort, Inc. as aconsolidated subsidiary, and due to sluggish performance of new titles.
Sales:
Operating Loss:¥1,749 million (-3％ YoY)¥783 million (-¥495 million YoY)

Profit fell YoY mainly as a result of up-front investments through 1H.

Content Segment

Investment
Segment

Sales:
Operating Loss:¥4,144 million (＋23％ YoY)
¥485 million (-¥332 million YoY)

We disposed of operating investment securities, including shareholdings in Mercari, Inc.
Sales:¥5,287 million (-60％ YoY)
Operating Income: ¥4,879 million (-62% YoY)

* Total for the Ad Technology, Game, and Content segments , and headquarters expenses and other items
3

Consolidated Sales
Quarterly sales were up 15% YoY supported by the disposal of shareholdings in invested companies inthe Investment Segment. Excluding the Investment Segment, quarterly sales were down 11% YoY mainly
due to sluggish performance of new titles in the Game Segment.
(Millions of yen)

15,662Ad Technology, Game, Content
Investment＋15％ YoY*12,901

6,083
5,221
4,659

3,644
241

3,575
51

3,210

3,402

1Q

2Q

3,254
44

3,969

3,195

614

142

3,523

3,355

2,760

3,052

3Q

4Q

1Q

2Q

FY03/18

4,062
10

831

4,051

3,828

3Q

4Q

FY03/19

4,679

2,637
1,566

1,083

3,445

3,655

3,596

1Q

2Q

3Q

FY03/20* Due mainly to capital gain from the IPO of Mercari, an investee
4Quarterly Operating Income, by Segment
In Q4, we expect reorganization of our business portfolio and improved profitability in the Ad
Technology Segment to lift combined operating income for the three segments other than theInvestment Segment into the black.
(Millions of yen)

12,777
1,960
820

799

1,179

179

885

219
490
30
156

117
185

401

203

12,791

588

108

172

169
204

125

586

2,491

1,386

1,001

108

94

119

200

△ 185

△ 161

△ 141

△ 155

2Q

3Q

175
15054△1Investment2669△ 49△ 339113
3517△ 555
△ 28
△ 367△ 340△ 437ContentGame△ 154Ad Technology1Q△ 175△ 188

△42Q

3Q
FY03/18

4Q

1Q

2Q

3Q
FY03/19

4Q

1Q

FY03/20

Note: Operating income indicates totals for the Ad Technology, Game, and Content segments .
Headquarters expenses and other items are excluded.

5

Consolidated Financial Highlights Q3 FY03/20
SG&A expenses rose ¥300 million YoY due to higher goodwill amortization accompanying an increasein consolidated subsidiaries. We recorded a ¥3,363 million extraordinary loss mainly as a result ofbusiness portfolio reorganization.
FY03/19 Q3

FY03/20 Q3

Excl. Investment
Segment(Millions of yen)

YoY

Excl. Investment
Segment

Excl. Investment
Segment

Sales

22,921

9,865

15,984

10,697△ 30%+8%Gross Profit

14,774

1,830

7,077

2,102

△ 52%+15%

SG&A expenses

3,509

3,466

3,810

3,714

+9%+7%

383

383791791+106%+106%

The Others

3,126

3,083

3,018

2,923

△ 3%

△ 5%

Operating Income

11,264△ 1,636

3,267△ 1,612△ 71%+24

Non-operating income

7777+1%+1%Non-operating expenses

32325151+57%+57%

11,239△ 1,662

3,223△ 1,655△ 71%△6Extraordinary profit

51518989+74%+74%

Extraordinary loss

301301

3,363

3,363

+1,016%+1,016%

10,989△ 1,912△ 50△ 4,930△ 11,039△ 3,018

Goodwill amortization

Ordinary Income

Profit before income taxes
Total income taxes

Net Income

*1

3,792

N/A

△ 445※2

N/A+4,237

N/A

7,317

N/A

402 *2

N/A

△ 95%

N/A

*1: Tax effects from the business portfolio reorganization totaled ¥1,830 million.
*2: Refers to net income attributable to owners of parent.

6

Reorganization of Business Portfolio
Based on the business portfolio reorganization outlined in our 2H plan, we set out to implement
fundamental reforms in the following businesses.
Business

TriFort, Inc.
(Game Segment)

ALAN•PRODUCTS, Inc.
(Content Segment)

Smarprise, Inc.
(Content Segment)

United Ad Technologies
Asia Sdn. Bhd.
(Ad Technology Segment)

Reforms

Scheduledcompletion

・TriFort currently operates the contracted app development business and thegame business.
・We plan to spin off TriFort’s contracted app development business into a newcompany (Brewus, Inc.) and obtain all Brewus shares from TriFort.
・Following the spin-off, we will sell our shareholdings in TriFort to its founder.

February 2020

・Mainly due to changes in the business environment, we have terminated allbusinesses at ALAN•PRODUCTS, Inc. to liquidate the company.
・Shares in subsidiary RAPS Inc. were sold to its founder in December 2019.

We sold all shares in Smarprise to Game8, Inc., a subsidiary of Gunosy Inc.

We plan to liquidate this subsidiary, which operates as our branch office forSoutheast Asia.

End-March 2020
(scheduled completionof liquidation)

December 2019(sale completed)

March 2020
(scheduled start ofliquidationproceedings)

7

AgendaPage

1

Financial Highlights of Q3 FY03/20

22

Performance by Segment in Q3 FY03/20

83Forecast

18

4

Appendix228

Ad Technology Segment: Sales
Sales of app install ads were up QoQ, mainly because the quarter coincided with peak demand fromgame advertisers.
(Millions of yen)

Web AdApp Install Ad

2,067
1,870

1,940

1,874

1,755
1,463

1Q

2Q

3Q
FY03/18

4Q

1Q

1,671

1,593

1,583

1Q

2Q

1,674

1,538

2Q

3Q
FY03/19

4Q

3QFY03/209Ad Technology Segment: Gross Margin and Operating Income
By strengthening links between products and improving efficiency in our operating structure, wecontinued to improve the gross margin, and operating income rose ¥229 million YoY.

Operating Income

Gross Margin(Unit: %)+¥229 million
YoY(Millions of yen)22204200

185

1919191617125108

141212811994

54178△ 28
△ 49
1Q

2Q

3Q

FY03/184Q

1Q

2Q

3Q

FY03/194Q

1Q

2Q
FY03/20

3Q

1Q

2Q

3Q

FY03/184Q

1Q

2Q

3Q

FY03/194Q

1Q

2Q

3QFY03/20

10Game Segment: Sales and Operating Income before Goodwill Amortization
In the Game Segment, operating income before goodwill amortization moved into the black supportedby the sale of the Tokyo Conception business and effects from a shift in focus to TriFort’s contracted
development business.
Operating Income(excl.goodwill amortization)
Quarterly Trend

Quarterly Sales Trend

Move intothe black(Millions of yen)

995

TriFort

172

858

234

440
391

9△ 202
△ 175

194

171

181

170

△ 20
△ 272

3111

111

132

72427443

69250

173490447

26117

United453

169

579
202

408616553

8△ 55 △ 62 △ 80△ 102△ 167△ 172 △ 164 △ 153 △ 167

312282△ 154△ 209505

4303766△△ 140 115△ 177

CocoPPa Dolls
development costs

United’s existing titles

303

United’s new titles

270

TriFort (excluding goodwill amortization)
1Q

2Q

3Q

FY03/18

4Q

1Q

2Q

3Q

FY03/19

4Q

1Q

2Q
FY03/20

3Q

1Q

2Q

3Q

FY03/18

4Q

1Q

2Q

3Q

FY03/19

4Q

1Q

2Q

3Q

FY03/20

Note: Goodwill amortization for TriFort was ¥164 million in Q3.
11

Game Segment: New Game Title

Fashion dress-up RPG

CocoPPa Dolls

Launched globally on January 20, 2020 with language support
for Japanese, English, and Chinese (traditional Chinese)

App overview
・App that allows players to dress up movingavatars.
・Players can select from over 1,000 types ofoutfits.
・Up to 10 players can collaborate to dress up
an avatar, creating fun experiences.
・Support for multiple languages allows players
from around the world to play together.

12Game Segment: Restructuring of TriFort, Inc.
TriFort’s contracted app development business, where we see synergies with the United group, will be
spun off into a new company and made our subsidiary.
Our subsidiary KiRAMEX Co. will collaborate with the new company to drive mutual growth.
Following the spin-off, our shareholdings in TriFort will be sold to its founder.

SchemeBrewus, Inc.
(Contracted appdevelopment)

TriFort, Inc.

KiRAMEX Co.

Pursue growth at both companies
through collaboration

TriFort, Inc.
(Games)

Impact on Q3 results
Extraordinary loss from goodwill impairment:-¥2,471 million
Tax effects: +¥1,106 million

Reference: In cumulative Q3 FY03/20, TriFort posted an operating
loss of ¥656 million (after goodwill amortization).

Impact on net income: -¥1,364 million

13Content Segment: Sales and Operating Income before Goodwill Amortization
Sales were up ¥45 million YoY mainly due to sales growth at KiRAMEX Co.
Operating income before goodwill amortization fell QoQ due to up-front investments in continuing operations.
In Q4, we expect the deconsolidation of ALAN•PRODUCTS, Inc. and Smarprise, Inc. to bring the segment into
the black at the operating level.
Quarterly Sales Trend

Operating Income(excl.goodwill amortization)
Quarterly Trend＋3％ YoY(Millions of yen)

1,466
Discontinued operations *1

228

1,331 1,317 1,301

141

1,026 1,026 1,053
911346582
360

117584629

107136621

38580
121339147

134638675

1Q703680

713772635749688

720

844

2Q

3Q

4Q

14053276242650

180

107
1,132322

222

1,377

Continuing operations *2893

275

1Q
2Q
△ 37 △ 39726929

3Q

4Q
1Q
2Q
3Q
△ 105
△ 125△ 133△ 161 △ 183

793

△ 76

△ 56

△ 80
△ 89

1Q

2Q

3Q

FY03/18

4Q

1Q

2Q

3Q

FY03/19

4Q

1Q

2Q

FY03/20△ 423Q
FY03/18

FY03/19

FY03/20*1 Smarprise, Inc., ALAN・PRODUCTS, Inc., RAPS Inc.
*2

KiRAMEX Co., Fogg, Inc., TREiS, Inc.,
International Sports Marketing Co., Ltd., Apps for mobile carriers

14

Content Segment: Reorganization of Business Portfolio
We have identified core businesses for the future, and reorganized our business portfolio as follows.

Target companies
ALAN•PRODUCTS, Inc.

All businesses terminated, company to be liquidated

RAPS Inc.

All shareholdings sold to company founderSmarprise, Inc.

All shareholding sold to Game8, Inc.

Impact on Q3 results
Extraordinary profit and losses from business transfers, etc.
ALAN•PRODUCTS, Inc.: -¥373 million *Reference: Cumulative Q3 FY03/20 operating losses

RAPS Inc.: -¥300 million(after goodwill amortization)

Smarprise, Inc.: +¥75 million
Tax effects

ALAN•PRODUCTS, Inc.: -¥447 million
RAPS Inc.: -¥139 million:+¥723 million

Smarprise, Inc.: -¥78 million

Impact on net income: +¥125 million

Total: -¥665 million* Includes a ¥43 million extraordinary loss from the liquidationof subsidiary Glasspod, Inc.
15

Investment Segment: Sales and Breakdown of Operating Investment Securities

We generated sales of ¥1,083 million through the disposal of operating investment securities, including
shareholdings in Mercari, Inc. As of end-Q3, operating investment securities totaled ¥24,123 million*.

Breakdown of operational investment securities

Quarterly Sales Trend
12,901(Millions of yen)

InvestedCompanies

As at Dec.2019(amount of BS)

Listedshares

Mercari, Inc.
SOCIALWIRE CO., LTD.
CyberBuzz, Inc.

Approx. ¥20.2 Bn

PrivatesharesMore than
50 Companies

Approx. ¥2.3 Bn

Invested
funds as LP

More than
25 funds

Approx. ¥1.7 Bn

2,637～～1,566
1,083
831614

241
1Q

142

51

44
2Q3QFY03/18

4Q

1Q

2Q

103Q

FY03/19

4Q

1Q

2Q

3Q

FY03/20* Of this amount, operating investment securities related to Mercari: ¥18,930 million (5.5% of voting rights held, as of December 30, 2019).
Unlisted shares are valued at investment book value; listed shares are marked to market.
16Investment Segment: Investment Portfolio

Major Directly Invested Start-ups
Post IPO

Major Invested Funds as LP

Seed ~ EarlyNew

Middle ~ Later

17

AgendaPage

1

Financial Highlights of Q3 FY03/20

22

Performance by Segment in Q3 FY03/20

83Forecast

184Appendix

2218

Positioning of FY03/20 in the Medium-Term
Management Plan

Source: 2Q, Fiscal Year Ending March 2020
Consolidated Financial Results

In the medium-term management plan ending in FY03/22, FY03/20 is positioned as a “focusingPeriod” for reaching operating income targets. We are continuing to invest in businesses
identified as likely to grow.

Operating Income Trend(illustration)
Mercari

Challenging target¥10 billion

Operating income before amortization exluding capital gain related to Mercari

Comitted target¥5 billion

0FY03/19Investment Period
Proactively prioritize up-front
investment rather thanpursuing short term profit

FY03/20
Focusing Period
A period when profitable andunprofitable businesses both exist;
continue to invest in high-growthbusinesses

FY03/21

FY03/22Growth Period

Harvest Period

Significant profit growth
in multiple businesses

Aim to maximize profits in eachbusiness and meet targets

19

FY03/20: Full-Year Consolidated Forecast

FY03/20 forecast

YoY change(Millions of yen)Sales

20,500 to 21,500-26 to -22%

Operating Income

5,000-55%

Ordinary Income

4,900-56%Extraordinary loss

Income taxes*1

3,500 to 3,600+2,790 to +2,890*2100-3,240

1,200 to 1,300-83 to -81%

Net income attributable toowners of parent*1: Of this amount, extraordinary loss due to business portfolio reorganization: ¥3,354 million*2: Of this amount, tax effects accompanying reforms: ¥1,830 million
20

Future Priority Areas
In line with the “focusing period” outlined in our medium-term management plan, we have reorganized
our business portfolio and narrowed down several priority areas with an eye toward future growth.

Priority areas going forward
Growth drivers

Earnings drivers

KiRAMEX Co.

Ad Technology Segment

Collaborations with Brewus, Inc. (to beestablished as a new company) with a view
to pursuing growth at both companies

Operations to remain focused on profitability

Investment Segment

Game Segment

Strengthen operations by enhancing structureand expanding investment budget; continue todispose of operating investment securities

Operations to focus on profitability of existing
titles, with new development being put on holdfor the time beingAgendaPage

1

Financial Highlights of Q3 FY03/20

22

Performance by Segment in Q3 FY03/20

83Forecast184Appendix2222

Consolidated P/L Statement Q3 FY03/20
Difference
Q3 FY03/19

Q2 FY03/20

Q3 FY03/20（Millions of yen）

Sales
Ad Technology Segment
Game Segment
Content Segment

Investment Segment
Other Segment
Gross Profit
Ad Technology Segment
Game Segment
Content Segment
Investment Segment
Other Segment
SG&A expenses
Operating Income
Ad Technology Segment
Game Segment
Content Segment
Investment Segment
Other Segment
Ordinary Income
Net Income *4,062
1,755995
1,33110△ 30447138330610△ 111,402△ 955△ 28△ 367
△ 154△4△ 400
△ 967
△ 763

5,221
1,583616
1,466
1,566
△ 102,213300
132345
1,434
1,279933
119
△ 185
△ 141
1,386
△ 245
9155084,679
1,674553
1,377
1,083
△81,843
365
148
304
1,024
1,204639
200
△ 161
△ 155
1,001
△ 245644
△ 870

YoY

QoQ

+15%
△ 5%
△ 44%
+3%+9,827%+21+312%+164%+3,794%△ 1%+9,481%+11△ 14%+1,594+229+206△0+1,005+154+1,612△ 107△ 10%+6%△ 10%△ 6%△ 31%+1△ 17%+22%+12%
△ 12%
△ 29%
△ 6%
△ 32%+68%+23
△ 14
△ 28%
△ 30%
△ 1,379*Refers to net income attributable to owners of parent
23

Consolidated Balance Sheet for End of Q3 FY03/20（Millions of yen）

End of FY03/19(Mar. 31, 2019)

End of Q3 FY03/20(Dec. 31, 2019)

Difference

51,20433,877△ 17,326

Cash & Deposits

8,822

7,032

△ 1,790*1

Operating Investment Securities

39,19024,123△ 15,067

*2

6,026

1,752

△ 4,273

4,125

143

△ 3,981

Total Assets

57,23035,629△ 21,600

Current Liabilities

6,595

2,438

△ 4,157

Non Current Liabilities

10,533

5,402△ 5,130

10,1985,025△ 5,173

Total Liabilities

17,1297,840△ 9,288

Net Assets

40,10027,788△ 12,311

24,501

13,958△ 10,543

Current Assets

Non Current Assets
Amortization of Goodwill

Deferred Tax Liabilities

Unrealized Gain on Securities*2*2*1: Breakdown: operating investment securities +¥5,909 million, operating income before goodwill amortization (after excluding Investment Segment) -¥820 million,
income tax payments -¥4,344 million, acquisition of treasury stock -¥992 million, year-end dividend for FY03/19 -¥849 million, interim dividend for FY03/20 -¥240 million,
impact of deconsolidation of subsidiaries -¥220 million*2: The impact of revaluation (mark-to-market) and disposal of operating investment securities (listed shares) was as follows:
operating investment securities -¥15,335 million, deferred tax liabilities -¥4,655 million, valuation difference on available-for-sale securities -¥10,548 million
24Consolidated Sales and Operating Income in Previous Fiscal Years(Millions of yen)

Sales
Operating Income

27,58014,595

14,444

11,131

11,0848,330
6,156138
FY03/14370
FY03/15

1,509
FY03/16

1,395
FY03/17

1,648
FY03/18

FY03/1925

Ad Technology Segment: Product Overview

ProductsOverview

Comprehensive management platform foroptimizing ROI of app install ads
App Install Ad

Mobile video ad distribution platform
supporting various video ad formats

DSP specializing smartphones

Web AdSSP specializing smartphones

Ad network optimizing ad effectiveness26

Content Segment: Group Companies

KiRAMEX Co.

Fogg, inc.

Operates TechAcademy, whichteaches programming online

Operates CHEERZ, a service tohelp invigorate artists’ activities

International Sports Marketing Co., Ltd.

TREiS, inc.

Produces sports-related websites
and plans and develops media

Plans and operates Dream Mail,a sweepstakes and gift site

*1

*２

ALAN•PRODUCTS, Inc.

Smarprise, Inc.

Runs multiple media businesses
and develops new businesses

Plans and operates media for F2P
game players, as well as VTuberand others*1: All businesses terminated, company to be liquidated*2: All shareholding sold to Game8, Inc.
27

Number of Consolidated Employees and Directors(Unit: Numbers employed)

Temporary employees

653645Other full-time employees

619

Content Segment full-time employeesGame Segment full-time employees

146

Ad Technology Segment full-time employees

612
135

127

126

540

Directors (United directors, corporate auditors and outside directors)

453
380

401

96

117

26

28

404

108
38

425

385
80

78
46

112

117

56

88
160
54

106

48
162

155

50
150
138

149

121

184

185

191

180
156

58

57

85

96

94

89

85

103

97

79

12

12111111

111111

11

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

43

42

43

45

93

90

86

12121Q

2Q

FY03/18

51

42
136

110

55

FY03/19

FY03/2028