February  3,  2015

Third  Quarter,  Fiscal  Year  Ending  March  2015
Consolidated  Financial  Results

United,  Inc.
(TSE  Mothers,  Code  2497)

All  of  the  opinions,  predictions,  forecasts  and  the  like  presented  in  this  document  are  those  made  by  UNITED,  Inc.  based  on  information  available  at  the  time  of  preparation  of  the  document,  but  no  guarantee  is  made  as  to  the  accuracy  of  this  information.  Actual  results  may  diﬀer  greatly  from  these  forecasts  due  to  changes  in  various  factors.  Company  names  and  product  names  presented  in  this  document  are  trademarks  or  registered  trademarks  of  their  respective  owners.

Contents

1. Financial  Highlights

P3    

2. Status  of  Smartphone  Media  Business  and  Future  Direction

P9

3. Status  of  RTB  Advertising  Business  and  Future  Direction

P19

4. Summary

P27

5. Reference  Material

P29

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

1

Our  Core  BusinessWe  are  putting  eﬀort  into  the  RTB  advertising  business  and  smartphone  media  business  expecting  to  see  market  growth  in  thefuture,  actively  investing  in  these  two  to  achieve  business  growth.

Media  segment

Smartphone  media  businessCore  Businesses

Other  media  businesses(*1)

Advertisingsegment

RTB  advertising  business(*2)

Investment  segment

Venture  capital  business

Advertising  agency  business*1  Email  advertising,  internet  research,  sports  marketing*2  RTB  (real-‐‑‒time  bidding)  refers  to  which  ad  inventory  is  bought  and  sold  on  a  per-‐‑‒impression  basis,  via  programmatic  instantaneous  auction
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

2

1. Financial  Highlights

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

3

Highlights  of  Cumulative  3Q  (April-‐‑‒December)  Results

Whole

Cumulative  3Q  Consolidated  Results• Both  revenue  and  proﬁt  increased  compared  to  the  same  period  last  year                (Growth  rate  in  the  same  period  last  year) 　  Sales 　 　 　                            6,100  million  yen  (+41%) 　  Operating  proﬁt 　       　219  million  yen  (+3,455%) 　  Net  proﬁt       　                            708  million  yen(*)  (Proﬁtability  achieved:+729million  yen)
   　*  Proﬁt  generated  from  investment  fund  and  stock  sales  due  to  the  listing  of  investing  company  (See  P.5)

・Core  businesses  (smartphone  media  business  +  RTB  advertising  business)  continue  to  act  as   　  drivers  for  growth• Sales:  +55%  vs.  the  same  period  last  year

Core  Businesses

Smartphone  MediaBusiness• CocoPPa-‐‑‒related  services,  primarily  the  avatar  application  “CocoPPa  Play,“  led  the  growthRTB  Advertising
Business• Sales:  +125％  vs.  the  same  period  last  year

• Newly  launched  applications  in  3Q,  an  idol  cheering  application  “CHEERZ”  (See  p.15)  and  “Casual  Game  Application”  (see  p.16)  contributed  to  the  proﬁt  growth• SSP  “AdStir”  led  the  growth.  DSP  “Bypass”  achieved  a  growth  in  3Q

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

4

Consolidated  P/L  Statement  for  Cumulative  3Q 　(April  to  December)  Increase  in  revenue  (+41%)  and  proﬁt  (+3,455%)  vs.  the  same  period  last  year 　Driven  by  the  expansion  of  the  size  of  advertising  segment  due  to  growth  of  RTB  advertising  business
Cumulative 3Q of year
ending March 2015

Results of the same
period last year
(Cumulative 3Q of year
ending March 2014)

Increase/decrease
rate vs. the same
period last year

Sales

6,100

4,339

+41%

Total  proﬁt  from  sales

1,517

1,180

+29%

Selling,  general,  and  administrative  expenses

1,297
219

1,174
6

+11%
+3,455%470

18+2,461%249

12+1,960%10      Media  segment 　Advertising  segment 　Investment  segment 　Inter-‐‑‒segment  elimination      Media  segment 　Advertising  segment 　Investment  segment 　Inter-‐‑‒segment  elimination
Operating  proﬁt      Media  segment 　Advertising  segment 　Investment  segment 　Head  oﬃce  expenses︎  Proﬁt  from  investment  fund  to  which  equity  method  is  applicable  in  3Q:213  million  yenProﬁt  from  stock  sales  due  to  the  listing  ofinvesting  company  Datasection,  Inc.  in  3Q:  380  million  yen

  Current  proﬁt 　Equity  method  in  earning  of            aﬃliate 　Other

  Quarterly  net  proﬁt 　Extraordinary  proﬁt  and  loss 　Tax  expense

2,501
3,559
106
△66

2,180
2,047
145
△33

737
696
83
0

217
352
64
△414

708
319
83

679
411
89
0

*

264
58
67
△384

△21
△9
33

+15%
+74%
△27%
-‐‑‒
+9%
+69%
△7%
-‐‑‒

△18%
+500%
△4%
-‐‑‒

+1,598%Proﬁtability
achieved

-‐‑‒
+151%

*  From  1Q  of  year  ending  March  2015,  we  changed  the  standards  for  allocating  SG&A  to  each  business  segment  and  recalculated  the  operating  proﬁt  in  the  cumulative  3Q  of  the  last  year  according  to  new  standards.

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

5

1
÷

Consolidated:  Changes  in  Sales  and  Operating  Proﬁt
Sales  of  core  businesses  (smartphone  media  business  +  RTB  advertising  business):  +93%  vs.  cumulative  3Q  of  the  last  year
Compared  to  cumulative  3Q  last  year

perating  proﬁtmillion  yen)Operating  proﬁt(million  yen)Sales(million  yen)

Sales  of  other  businesses

Sales  of  core  businesses

Operating  proﬁtQuarterly  trend+9%  sales  against  the  pervious  quarter.  Smartphone  media  business  and  RTB  advertising  business  achieved  the  proﬁt  growth.
Operating  proﬁt(million  yen)Sales(million  yen)

200
55%
100

0
Cumulative  3Q  of  year  ending  March  2014

Cumulative  3Q  of  year  ending  March  2015

Year  ending  March  2014

Year  ending  March  2015

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

6

6
7

Smartphone  Media  Business:  Changes  in  Sales÷

+55%    vs.  cumulative  3Q  last  year
Compared  to  cumulative  3Q  last  year

(millio
(百万円

yen)

600

Quarterly  trend(million  yen)

+11％  vs.  the  previous  quarter.  “CocoPPa-‐‑‒related  services”  particularly  grew.  

392

300

0

年年3⽉月期ulative  f  year  累累計

ding  h  2015

Year  ending  Year  ending  March  20142013年年3⽉月期
2014年年3⽉月期
March  2013

Year  ending  March  2015

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

7

RTB  Advertising  Business:  Changes  in  Sales÷

+125%    vs.  cumulative  3Q  last  year
Compared  to  cumulative  3Q  last  year
(million  yen)

(百万円

900

Quarterly  trend+8%  vs.  the  previous  quarter.  Both  DSP  and  SSP  grew.  
DSP  particularly  achieved  a  large  growth.

(million  yen)

600

442

年年3⽉月期累累計

300

0Cumulative  3Q  of  year  ending  March  2014

Cumulative  3Q  of  year  ending  March  2015

Year  ending  March  2013

Year  ending  March  2014

Year  ending  March  2015

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

8

2.  Status  of  Smartphone  Media  Business  and  Future  Direction

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

9Services  in  Smartphone  Media  BusinessAs  a  CocoPPa-‐‑‒related  services,  a  new  home  application  ”CocoPPa  Home”  was  released  in  3Q.
New  services  ”CHEERZ”  and  “Casual  Game  Application”  were  also  released  in  3Q.

CocoPPa-‐‑‒related  services

Application  group  centering  around  the  home  screen  customizing  application  “CocoPPa,”  which  achieved  32  million  downloads.  “CocoPPa  Home”  was  newly  launched  in  3Q.

Applications  for  carrier  marketOur  own  applications  are  supplied  to  NTT  Docomo  “Sugotoku-‐‑‒Contents”,  au  “Smart  Pass”,  SoftBank  Mobile  “App  Pass”  ,  etc.

Aﬃliate  media

Point  media  developed  and  operated  by  our  company

Newly  released  services  in  3Q
CHEERZ

Casual  Game  Application

Idol  cheering  application  with  user  participation

Casual  game  application  is  provided  for  free,  and  proﬁt  is  earned  from  advertisements  displayed  on  the  screen  of  application.
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

10CocoPPa-‐‑‒related  Sercices Number  of  “CocoPPa”  Downloads                                                                                      The  number  of  downloads  reached  32  million  in  December  2014.  (*)

The  ratio  of  downloads  of  the  Android  version  increased:  The  number  of  monthly  downloads  of  the  Android  version  was  the  highest  in  December,  exceeding  1.2  million.

Changes  in  the  cumulative  downloads  by  OS

Ratio  of  downloads  by  country

3200(10  thousand  DLs)

U.S.  28%

iOS  (released  in  July  2012)
Android  (released  in  May  2013)

Other  29%32  million
cumulative  downloads

U.K.  3%
Italy  3%

Japan  14%

Spain  3%Mexico  3%
2013

2012

Jul.

Oct
.

Jan
.

2014

Apr
.

Jul.

Oct
.

Jan
.

Apr
.

Jul.

Oct
.

Dec.  2

France  4%
Taiwan  4%

Germany  4%Brazil  5%*  The  number  of  downloads  exceeded  35  million  at  the  end  of  January,  2015
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

11

8,583

3,950

3,521

9,574

7,602

CocoPPa-‐‑‒related  Sercices 　 　 　 　 　 　 　 　 　 　 　 　  Changes  in  Sales+169%  compared  to  a  time  before  sales  measure  diversiﬁcation  (2Q  of  a  ﬁscal  year  ending  March  2014)  We  achieved  a  steady  growth  while  taking  new  approaches.  ”CocoPPa  Play”  led  the  growth  in  3Q.  

Changes  in  sales  of  “CocoPPa-‐‑‒related  services”  by  quarter

    （The  sales  in  2Q  in  a  ﬁscal  year  ending  in  March  2014  regarded  as  100)

44,233+169%

Sales  only  for  banner  advertisement(before  diversiﬁcation)

Introduction  of  new  revenue-‐‑‒earning  approaches
・Charging  contents
・Tie-‐‑‒up  advertisement
・Supply  to      Sugotoku-‐‑‒Contents®

Year  ending  March  2014

Started  to  supply  CocoPPa  Homein  a  full  scale(From  December)Started  to  supply
CocoPPa  Playin  a  full  scale(From  August)Aim  for  accelerated  growth  in  4Q  onwards+70%

Year  ending  March  2015
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12

CocoPPa-‐‑‒related  Sercices 　 　 　 　 　 　 　 　 　 　 　 　          New  Development  in  3Q
A  new  home  application  ”CocoPPa  Home”  was  released  in  December  25,  2014
<What  is  “home  application”?>
・Application  to  customize  a  home  screen  (standby  screen)  of  a  smartphone.
・A  home  application  can  be  replaced  under  Android  OS.  In  addition  to  wallpapers  and        icons,  widgets  such  as  clock  and  visual  eﬀect  can  also  be  customized.  
General  standby  screen

Home  application  of  a  carrier  or  a  manufacturer
is  active

Home  pack  of  CocoPPa  Home
Favorite  one  can  be  selected  on  selection  screen

Customized  home  screen  using  CocoPPa  Home  (examples)

CocoPPa  Home  is  active
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13

CocoPPa-‐‑‒related  Sercices 　 　 　 　 　 　 　 　 　 　 　 　  Future  Plan
In  CocoPPa-‐‑‒related  services,  we  aim  for  accelerated  growth  of  the  entire  services  through  various  revenue-‐‑‒earning  measures  such  as  charging  and  advertisement,  by  increasing  the  active  rate  of  related  applications  including  CocoPPa  Home  as  a  core.

“CocoPPaHome”
Advertising  revenue
Revenue  from  charging

Plenty  of  materials  for  customization  and  use  of  communities  (development  of  core  users)“CocoPPa”

Advertising  revenue

Increased  revenue  from  charging

Enhancement  of  individual  services
Customers  sent  from  the  CocoPPa  platform  with  many  users  (13  million  downloads  of  Android  version)

Release  of  related  services  in  the  future

New

New

New

New

“CocoPPa  Play”

Send  customers  through  the  use  of  CocoPPa  services

Revenue  from  charging

Revenue  from  charging

Accelerate  growth  of  the  entire  services  through  various  revenue-‐‑‒earning  measures
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

14

CHEERZ
 　 　 　 　 　  Idol  cheering  application  with  user  participation  Our  subsidiary,  Fogg,  inc.  (*1)  released  in  December  3.  

How  to  use  “CHEERZ”

Charging  method

Charging  will  be  required  to  “CHEER”  more  than  the  speciﬁed  number.
Users  can  play  for  free,  as  there  is  free  limited  allocation  of  “CHEER”  and  recovery  by  time.

Photos  and  movies  of  idols  appear  on  timeline.

Choose  your  favorite  idol  (photo  or  movie)  and  “CHEER”  her.

Idols  will  be  ranked  based  on  the  number  of  “CHEERS”  received.

Users  will  be  ranked  based  on  the  number  of  “CHEERS”  to  each  idol.

After  the  payment  to  the  platform,  the  balance  of  the  revenue  will  be  allocated  to  Fogg  and  idols  (agencies).

Motivation  for  CHEER  (1)“Developing  idols”

Idols  who  ranked  high  will  be  exposed  to  aﬃliated  media  and  Monthly  CHEERZ  (*2)  for  recognition  expansion

Motivation  for  CHEER  (2)  “Incentive”

Campaign  such  as  photo  presented  by  idols  to  fans  who  ranked  high.

*1  A  new  business  company  established  by  our  unique  personnel  system  “U-‐‑‒start”  (See  p.37).
*2  A  visual  book  with  photos  of  idols  who  received  high  numbers  of  cheers  per  month.  It  is  planned  to  be  sold  at            bookstores,  convenience  stores  located  nationwide  and  Amazon.

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

15

Casual  Game Game  applications  generating  revenue  through  advertisements 　 　 　 　 　 　 　 　 　Casual  game  applications  were  released  since  October.
Revenues  through  advertisements  displayed  on  a  screen  while  the  application  is  in  use

Five  applications  have  already  been  released  by  the  end  of  December,  including  the  ﬁrst  application  “Nekonowakusei  (planet  of  cats)”  released  in  end  October,  2014.

Nekonowakusei
Nyaberunoto
Kichiku  momotaro(Planet  of  cats)(Nyaberu  tower)

Makainotobira
XX  keijoshi(Door  to  the  devildom) (XX  girl)

Several  applications  will  be  released  every  month  in  the  future.  
We  will  increase  revenue  from  advertisement  by  enhancing  the  number  of  active  users
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

16

Organizational  Strengths  of  Our  Smartphone  Media  BusinessWe  have  generated  proﬁts  from  various  types  of  services  backed  by  our  various  “strengths  and  systems”  as  an  organization.  
We  will  continuously  develop  and  introduce  our  new  services.
Features  of  human  resources  and  organization
・”People  with  strength  in  net  business,  internally        transferred  from  other  section,“  “mid-‐‑‒hires  with        specialized  skills,”and  “new  graduates  with  high        potential”  work  integrally.  
・Corporate  culture  enabling  cooperation  beyond  the        lines  of  work  categories.

Internal  development  skills
・High  capability  to  plan  and  develop  applications        internally  and  business  development  ability
・Internally-‐‑‒developed  potent  applications  (with  strong        user  base)  suppresses  the  cost  for  attracting  users

We  can  start  various  projects  with  right  people  at  right  locations  in  harmony  with  market  changes

Planning  &  development,  business  establishment,  and  promotion  can  be  eﬃciently  made  within  our  company

Empirical  value

Internal  system

・Entered  the  application  market  in  June  2010  during  its        dawn.  Released  over  100  applications  to  date.

・Our  own  unique  personnel  system  “U-‐‑‒start”  (See  p.37) 　Oﬀer  a  unique  business  start-‐‑‒up  support  system  for        our  employees  with  high  entrepreneurship  and        excellent  results.
 　Fogg,  inc.,  an  operator  of  “CHEERZ,”  is  the  ﬁrst        company  this  system  applied.

・Have  developed  from  scratch  a  large-‐‑‒scale  service        “CocoPPa,”  which  achieved  32  million  downloads.

We  have  general  knowhow  obtained  through  our  abundant  experience

We  turn  entrepreneurship  of  our  excellent  employees  into  business  power  of  the  group
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

17

Service  Structure  of  Smartphone  Media  Business  and  Changes  in  Monthly  Sales  in  3Q
Our  service  structure  has  become  diversiﬁed  with  the  launch  of  new  services  in  3Q,  achieving  increased  sales  on  a  monthly  basis.    

Service  Structure

Monthly  Sales  and  Topics  of  Smartphone  Media  Business  in  3Q

Various  types  of  applications  are  speedily  developed  internallyNew 　  …New  services  launched  after  3Q(Unit:  million  yen)

CocoPPa  Home  launched

Proﬁt  by  charging

CHEERZ
launched

New

Applications  forcarrier  markets

CHEERZ
CocoPPa
related  services

Casual  game  application  launched

CocoPPa
Play
Investment
scale  per  application(small)New

Casual  game  applications

CocoPPaNew

CocoPPaHome

    Accelerated  growthafter  4Q

Investment
scale  per  application(Large)Aﬃliate  media

Proﬁt  by  advertiseme
nt

Oct.

Nov.

Dec.

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

18

3.  Status  of  RTB  Advertising  Business  and  Future  Direction

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

19

RTB  Advertising  Business:  Quarterly  Changes  in  Sales  Continuous  proﬁt  growth  for  6  consecutive  quarters
  since  1Q  of  year  ending  March  2014

Sales  in  RTB  Advertising  Business/
Quarterly  changes  ((million  yen)Proﬁt  growthFor  6  consecutive
quarters

Year  ending  March  2014

Year  ending  March  2015
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

20

5
9

RTB  Advertising  Market  and  Growth  Rate  of  Our  RTB  Advertising  Platform  Sales

Our  RTB  advertising  platform  sales  specialized  in  smartphone  increased  by  +144%  compared  to  the  January-‐‑‒December  period  of  the  previous  ﬁscal  year.
The  size  of  Japanese  RTB  advertising  market  is  estimated  to  grow  by  36%  in  the  period  from  2013  to  2014.

Overall  market  (full  year)

Our  company(Results  in  January-‐‑‒December)(million  US  dollars)



+36%






 







2013 


2014 

January-‐‑‒December  2013

January-‐‑‒December  2014

(Source:  IDC,  October  2013)
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

21

Estimated  Smartphoneʼ’s  and  PCʼ’s  Respective  RTB  Market  Sizes  While  RTB  advertisement  market  slows  down  the  growth  in  PC  segment,  the  Smartphone  segment  where  our  RTB  advertisement  business  belongs  is  estimated  to  continue  to  grow  till  2017  and  to  exceed  PC.

Estimated  display-‐‑‒via-‐‑‒RTB  advertisement  market  size  in  Japan
One  hundred  million  yenFor  smartphone
For  PC

2012

2013
expected

2014  
estimated2015  
estimated2016  
estimated2017  
estimated(Source:  Survey  by  MicroAd,  Inc.  in  January  2014)

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

22

Factors  that  Diﬀerentiate  SSP  Services“Scale”  and  “automation”

Factors  that  diﬀerentiate  SSP  services  are  “size”  of  demand  and  supply  to  increase  the  volume  of  advertisements  distributed  within  SSP  and  “automation”  to  raise  transaction  unit  value.

Scale
Number  of  connections  at  purchaser  (demand  side)The  number  of  purchasers  will  increase  along  with  the  number  of  advertisers,  making  it  easier  to  have  high-‐‑‒price  bidding.

Amount  of  advertisement  inventory  (supply  side)
The  larger  the  inventory  is,  the  more  prone  advertisers  are  to  meet  target  users.  

DSP
DSP

RTB

DSP
ADNW
ADNW
ADNW
Advertisers

Media  A

SSPYield  optimiza-‐‑‒tion  (*)

Media  BMedia  C

Automation
Responds  to  many  formats  and  automatically  displays  an  advertisement  with  the  highest  unit  price  each  time.
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

23

Factors  of  Proﬁt  Increase  from  SSP  ”AdStir”
Main  factors  were  increased  RTB  matching  rates  by  increased  number  of  connected  DSPs  and  increased  unit  price  by  automatic  detailed  optimization

Scale

Increase  of  DSP  is  the  primary  factor

Number  of  connections  at  purchaser  (demand  side)The  number  of  purchasers  will  increase  along  with  the  number  of  advertisers,  making  it  easier  to  have  high-‐‑‒price  bidding.

Amount  of  advertisement  inventory  (supply  side)
The  larger  the  inventory  is,  the  more  prone  advertisers  are  to  meet  target  users.  

DSP
DSP

RTB

DSP
ADNW
ADNW
ADNW
Advertisers

Media  A

SSPYield  optimize  (*)

Media  BMedia  C

Automatization
Responds  to  many  formats  and  automatically  displays  an  advertisement  with  the  highest  unit  price  each  time.
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

24

Increase  in  the  Number  of  Bidders  for  SSP  ”AdStir”  (Number  of  connections  at  purchasers)
Newly  connected  to  8  DSPs  since  July  2014.    The  number  of  connected  DSPs  increased  from  9  to  17  in  a  half-‐‑‒year  period.  

List  of  DSPｓ  connected  with  “AdStir”
FreakOut

Connected  October-‐‑‒December
Connected  July-‐‑‒September

Our  Company

F@N  Communications,  Inc.

MicroAd,  Inc.

CRITEO
CyberAgent,  IncPlatform  for  media  companies  (SSP)

ScaleOut  Inc.

KYOCERA  Communication  Systems  Co.,  Ltd.
 　 　 　 　 　 　Maverick.,inc.
Glossom,  Inc.

Appier  Japan  K.K.

willile  mobile  co.,ltd.

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

25

Factors  of  Proﬁt  Increase  from  DSP  “Bypass”  in  3Q  and  Future  Eﬀorts
In  3Q,  advertising  performance  improved  primarily  by  the  improvement  of  bidding  and  CPA  optimization  logic.  We  will  continue  to  work  to  improve  advertising  performance  to  achieve  a  high  growth  in  the  continuously  expanding  smartphone  DSP  market.  

Continuous  eﬀorts
・Improving  bidding  and  CPA  optimization  logic
・Expansion  of  supply  inventory

Newly-‐‑‒initiated  eﬀorts  this  year  which  started  to  generate  results
・Dynamic  retargeting
・Audience  expansion

Improvement  ofadvertisement  performance（CTR/CVR)
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

26

4.  Summary

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

27

Overall  Summary
Cumulative  3Q

Whole  company

Both  revenue  and  proﬁt  increased  compared  to  the  same  period  a  year  ago  (proﬁtability  achieved)
Sales                              6,100  million  yen  (+41%)
Operating  proﬁt 　219  million  yen  (+3,455%)
  (Growth  rate  in  the  same  period  last  year)

Smartphone
media  business

RTB  advertising  business

CocoPPa-‐‑‒related  services  led  the  sales  growthStart  of  new  services  accelerated  sales  growth

We  achieved  growth  focusing  on  our  platforms  in  the  smartphone  segment

4Q  and  after
We  continued  to  achieve  growth  mainly  in  core  businesses  (smartphone  media  business  and  RTB  advertising  business)

Achieve  the  growth  through  proﬁt  expansion  of  individual  services  and  development  of  new  businesses

We  continued  to  achieve  growth  focusing  on  our  platforms  in  the  smartphone  segment

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

28

5.  Reference  Material

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

29

Consolidated  P/L  Statement  for  3Q  (October  to  December)
Revenue  (+32％)  and  proﬁt  (+17%)  increased  compared  to  the  same  quarter  last  year
Revenue  (+10%)  and  proﬁt  (+116%)  increased  compared  to  the  previous  quarter3Q  of  year  ending  in  March  2015

Sales 　Media  segment 　Advertising  segment 　Investment  segment 　Inter-‐‑‒segment  elimination

Total  proﬁt  from  sales 　Media  segment 　Advertising  segment 　Investment  segment 　Inter-‐‑‒segment  elimination

Selling, general andadministrative expenses
Operating profit 　Media  segment 　Advertising  segment 　Investment  segment 　Head  oﬃce  expenses︎    Current  proﬁt 　Equity  in  earning  of  aﬃliate 　Other

Quarterly  net  proﬁt 　Extraordinary  proﬁt  and  loss 　Tax  expense

2,139

Increase/
Results  of  the  same  Results  of  the  Increase/decrease  rate  quarter  last  year   decrease  rate  vs.   previous  quarter  vs.  the  (3Q  of  year  ending   the  same  quarter   (2Q  of  year  ending  previous  last  year
in  March  2014)
March  2015)
quarter

1,615

+32%

1,937

+10%

515

432

+19%

442

+16%

453

387

+17%

413

+10%

62

44

+39%

28

+116%

886
1,251
19
△18

837
749
40
△12

255
253
6
0

88
131
7
△165

292

253
143
35
0

*

103
31
28
△118

43

229
1

3
△4

359
△60

0
△20

592

24

+6%
+67%
△53%
-‐‑‒
+1%
+77%
△82%
-‐‑‒

737
1,198
10
△9
214
225
3
0

△15%
+318%
△73%
-‐‑‒

36
112
△5
△114

+6,615%-‐‑‒+2,297%

12
1

+566%

43

+44,221%

△5
△2

-‐‑‒

35

+20%
+4%
+88%
-‐‑‒
+19%
+12%
+96%
-‐‑‒

+145%
+17%
-‐‑‒
-‐‑‒

+580%

+1,752%△15%+1,586%-‐‑‒-‐‑‒*  From  1Q  of  year  ending  March  2015,  we  changed  the  standards  for  allocating  SG&A  to  each  business  segment  and  recalculated  the  operating  proﬁt  of  the  same  quarter  last  year  according  to  the  new  standards.
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

30

Consolidated  Balance  Sheet  for  this  Quarter<Current  assets>  +1,218  million  yen  due  to  increase  in  operational  investment  securities  (*)  and  account  receivable,  and  other  factors<Fixed  assets>  -‐‑‒339  million  yen  due  to  decrease  in  investment  securities  (*)  and  other  factors<Current  liabilities>  +244  million  yen  due  to  increase  in  account  payable  and  other  factors(million  yen)End  of  this  quarter(December  2014)End  of  previous  quarter  (September  2014)

Increase/decrease

Current  assets(Cash  on  hand)
Fixed  assetsCurrent  liabilities
Fixed  liabilities
Net  assets*  We  reviewed  the  management  policies  of    securities  in  this  quarter  and  partly  changed  the  classiﬁcation  of  “other  securities”.  
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

31

Overview  of  “CocoPPa”  services
Icons,  wallpapers  and  home  screens  posted  by  users  are  downloaded  and  used  by  other  users.  The  translation  featured  by  Google  within  “CocoPPa”  is  enjoyed  by  users  for  cross-‐‑‒border  communication.

”CocoPPa”  Usage  Images
User  posting  material  (creator)<Sample  page  of  creators>(comments)

Icons  and  wallpapers  are  contributed  from  around  the  world  (free).  970,000  icons,  210,000  wallpapers  by  the  end  of  Dec.

Post

Communication  between  users  (motivation  forcreators  to  post)

Users  from  all  over  the  world  write  comments  on  the  creatorʼ’s  page
”This  icon  is  cute.”  or“I  like  your  sense  ofstyle.”In  English,  Chinese,  Arabic,  German  and  many  other  languages

Decorating  users
replies:“Thank  you  for  thecomments.”  “I  am
glad  to  contribute  it.”
The  translation  featuresare  provided  in  many  languages
Smartphone  screen  decorated  using  posted
material  (free)

There  is  ample  communication  amongusers  based  on  posted  materials,  etc.
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

32

CocoPPa  Home  =  The  Userʼ’s  Very  Own  Home  Screen
When  a  smartphone  is  turned  on,  this  screen  is  always  seen  by  the  user,  and  comes  in  contact  with  the  user  many  times  a  day

Basic  Objectives
A  drastic  increase  of  active  users  in  the  CocoPPa  service  group

Resulting  in  increase  of  sales  in  proportion  to  the  number  of  active  users  through  items  such  as  advertising

Furthermore,  reinforcing  user  ﬂow  to  other  related  applications  such  as  CocoPPa  Play

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

33

Trends  in  the  Global  Home  Application  Market
Major  international  IT  corporations  are  entering  the  market  one  after  another
The  largest  home  application  company,  Sungy  Mobile  Limited,  has  been  listed  in  the  NASDAQ  stock  market
Date

EventsApril  2013

Facebook,  Inc.  (USA)  releases  “Facebook  Home”

May  2013

Kakao  Corp.(Korea)  releases  “KakaoHome”

November  2013

Sungy  Mobile  Limited  (Guangzhou,  China)  is  listed  in  Americaʼ’s  NASDAQ  stock  exchange
・Providers  of  the  home  application  “GO  Launcher  EX”,  which  totals  over  300  million  downloads
・Their  proceeds  for  2013  were  54  million  dollars 　(In  which  proceeds  from  the  application  category  with  a  focus  on  the  GO  Launcher  EX  were  25  million  dollars  or  approximately  half  of  all  proceeds)

January  2014
April  2014Yahoo!  Inc.(USA)  acquires  Aviate,  providers  of  home  applications
Twitter,  Inc.  acquires  Cover,  providers  of  home  applications

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

34

Barriers  to  Introducing  a  Home  Application  and  our  Advantages
We  will  strive  for  a  constant  share  in  the  home  application  market  by  establishing  a  unique  position  using  our  CocoPPa  user  base  and  implementing  collaborations  with  external  corporations
Barriers  when  introducing  a  home  application

Our  advantages

Distinguishing  an  application  from  all  existing  rival  applications  poses  a  problemOur  position  as  a  home  application  geared  to  female  users  with  a  focus  on  cuteness(present  applications  are  mostly  geared  toward  male  users  and  have  a  “cool”  atmosphere)

Gathering  users  is  diﬃcult

We  have  a  user  base  of  CocoPPa  (12  million  downloads  on  the  Android  platform)  who  enjoys  customization.  It  is  possible  to  clearly  and  powerfully  motivate  users  with  more  convenient  customization  features

Costs  and  procurement  of  customization  materials  will  be  neededWe  have  a  stock  of  850  thousand  icons  and  190  thousand  wallpapers  from  CocoPPa

Development  may  be  diﬃcult  due  to  the  type  of  service  standards  and  values  aimed  forWe  have  chosen  to  undergo  joint  development  with  SS  Digital  Media,  LLC,  with  an  aim  of  implementing  high  standards  such  as  convenient  usability  and  interlocking  features  with  user-‐‑‒contributed  CocoPPa  materials

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

35

Our  Capital  and  Business  Alliance  with  SS  Digital  Media,  LLC  (USA)In  June  2014,  we  started  a  capital  and  business  alliance  with  SS  Digital  Media,  LLC,  who  created  the  home  application  “Themer”  and  is  a  specialized  startup  in  the  same  category  as  we  are.  Along  with  our  company  and  our  wholly  owned  American  subsidiary  CocoPPa,  Inc.,  a  joint  team  of  the  three  companies  are  developing  “CocoPPa  Home”  in  the  USA.

Home  Application  “Themer”

・Released  in  October  2013  with  over  3  million  downloads
・The  total  downloads  of  home  screen  materials  have  exceeded  12.5  million  since  its  release
・Enables  home  screen  customization  with  one  touch 　(without  additional  downloads  of  themes  and  widgets)・Published  in  media  such  as  the  New  York  Times,  Wired,  CNET,  Tech  Crunch,  and  Lifehacker  as  an  excellent  home  application

SS  Digital  Media,  LLCHeadquarters:  California,  USARepresentative:  Ashvin  Dhingra(CEO)  URL：http://themerapp.com/
As  of  June  2014,  we  acquired  an  equity  stake  of  19.9%

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

36

Our  Unique  Personnel  System  “U-‐‑‒Start  “As  an  organizational  eﬀort  to  continue  to  develop  new  promising  businesses,  in  April  2013  we  have  introduced  a  system  to  give  our  employee  with  outstanding  performance  a  right  to  invest  in  a  new  company  to  be  started.

Start-‐‑‒up  Support  System  “U-‐‑‒Start”
An  employee  who  was  recognized  for  outstanding  performance  in  business  operation  and  planning/development  of  a  new  businessOur  employee

Partial  Over  50%  investment/
investment
becomes  company  representative Establishment  of  a  new  company（Our  consolidated  subsidiary)

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

37

Real-‐‑‒Time  Bidding  Setup
STEP  1

When  a  user  visits  a  site,  user  data  is  transmitted  to  a  DSP.

SSP
User  A  visits  site

STEP  2

Data  on  User  A  (advertising  framesize,  Browser,  etc.)

DSP
A

Advertiser:  Beverage  Manufacturer

DSP
B

Advertiser:  Car  Company

DSP
C

Advertiser:  Real  Estate  Agent

Advertisers  bid  from  a  DSP,  auction  held  at  SSP
▶Advertising  from  the  winning  advertiser  is  displayed.
AuctionUser  A  is  served  a  real  estateadvertisement

DSP
A
DSP
B

SSP
Advertisingfrom  winning
advertiser  isservedAdvertiser  bid  data

DSP
C

Bids  ¥0.05  for  User  A

Beverage  Manufacturer

Car  Company

Bids  ¥0.07  for  User  A

WINReal  Estate  Agent

Bids  ¥0.09  for  User  A

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

38

RTB  Advertising  Market  Size  and  Predicted  Share  of  Overall  Display  Advertising
The  U.S.  RTB  advertising  market  is  projected  to  expand  to  approximately  $10.1  billion  in  FY  2016,  while  the  Japanese  RTB  advertising  market  is  projected  to  expand  to  approximately  $900  million  in  FY  2016.  This  is  projected  to  be  the  highest  growth  rate  within  the  display  advertising  market.
Forecast  of  U.S.  RTB  advertising  market  size
(million  US  dollars)

Forecast  of  Japanese  RTB  advertising  market  size
(million  US  dollars)

12 ,0 0040 %

1 0 ,0 5 6

35 %

10 ,0 00

1,00 0

923

90 0

40 %
35 %

80 0

720

30 %

30 %

70 0

8,00 0

6 ,8 7 5

6,00 025 %
20 %

4 ,6 6 918%
13%

1 ,9 9 7
7%

15 %

20 %

40 0

30 0
10 %

10%

5%

0

0%
20 12

50 0

15 %

218

10 %

20 0

2,00 0

5%

25 %

521

382

3 ,1 3 7

4,00 0

60 0

20 13

20 14

20 15

20 16

10 0

3%

0
20 12

7%

4%

5%

20 13

20 14

8%

5%
0%

20 15

20 16

Size  of  RTB  advertising  market

Size  of  RTB  advertising  market

RTB  advertising  share  of  overall  internet  ad  market

RTB  advertising  share  of  overall  internet  ad  market(Source:  IDC  October  2013  /  RTB  advertising  share  of  overall  market  calculated  by  United)
Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

39

Comparison  of  “Bypass”  with  Other  DSPs
In  the  smartphone  RTB  advertising  market,  there  are  several  unique  DSPs  from  other  companies  including  a  new  entrant  but  “Bypass”  has  unique  features  that  diﬀerentiate  it  from  other  major  DSPs.

Comparison  of  “Bypass”  with  the  Other  Major  Smartphone  DSPs
Features  of  Supports  all  advertisers  whofocus  on  performance

Features  ofother  major
DSPs
Specialized  in  speciﬁc  business  categories  such  as  electronic  commerce

Focus  on  branding

Detailed  audiencetargeting  utilizing
an  abundant  advertisinginventory

Focus  on  distribution  method  such  as
specializing  in  retargeting

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

40

VisionBecome  the  leading  internet  ﬁrm  in  Japan

MissionCreate  new  value  through  continued
challenges  and  contribute  to  society

Copyright  ©  UNITED,  Inc.  All  Rights  Reserved.

41