September 13, 2024

1Q FY2025 Q&A

During the ZOOM webinar held on September 13, there were operational issues, and we were unable torespond to the real-time questions received, ending the broadcast with some questions unanswered.
The following Q&A text includes those unanswered questions from the live session.

Q1.

The POS market is highly competitive, with many companies offering similar products
and services. Could you share your company ʼs strategy moving forward, yourpositioning, and the competitive advantages you hold over others
Our competitive advantage lies in our extensive external integration capabilities with other companies'products and services, as well as our approach to addressing niche needs through our App Marketplace.

Q2.

Could you provide the adoption rate of PAYGATE payments within the total GMV ofSmaregiWhile we do not disclose GMV-based figures, as a reference, the adoption rate of PAYGATE among our POS

users is around 10%. When we first absorbed and started this business in July 2022, the rate was nearly 0%,
but since then, it has steadily increased and continues to grow at a significant pace.

Q3.

What are your expectations for future customer unit prices, and do you have any
strategies in place to raise these prices
We expect a gradual increase in customer unit prices moving forward. As our long-term vision now targets
ARR, improving unit prices will naturally be a focus. Specific initiatives include enhancing optional andperipheral features through the Smaregi App Market and offering subscription plans for hardware without

upfront investment. While these efforts are centered around our POS services, the expansion of our businessdomain will contribute to an increase in unit prices per customer across the board. Although not yet publicly
disclosed, this is a key pillar of our strategy.

Q4.

The ARPA growth in 1Q seems higher than usual. Could you explain the reasons for thisAs mentioned in our earnings presentation, the increase in sales is due to costs related to our integration withthird-party payment services. These sales were previously accounted for under our payment segment, but
starting this fiscal year, they have been included in the POS segment. Although the amount itself is notsubstantial, this change has contributed to the growth. Additionally, the continued smooth adoption of oursubscription plans has also boosted sales.

Q5.

Could you explain your plans for advertising and promotion expenses from 2Q onwards
Will they remain at 1Q levels, or do you plan to increase themThe advertising and promotion expenses for 1Q will likely serve as a benchmark moving forward. As you cansee from past quarters, there tends to be a slight concentration of expenses in 4Q. We anticipate a similar
trend this year, with a gradual increase towards 4Q.

Q6.

Regarding the pyramid chart representing your domestic market share, could you clarify
which data is used to classify large, medium, and small-scale businesses, and whichindustries are included
While we won't detail every step, we use data from the Economic Census for Business Activity for both"establishments" and "enterprises." To estimate the number of stores in each industry, we combine thenumber of employees per establishment with data from "enterprise size by employee count." Thismethodology, unique to our company, allows us to calculate the number of stores by size. The industries
covered include retail, accommodation, food service, personal services, entertainment, and medicalservices, with appropriate adjustments in subcategories.

Q7.

For Smaregi-related POS fees, can we assume the total is the customer count multipliedby the price of each plan Also, what explains the rapid increase in ARR compared tomonthly figures
Referring to page 17 of the earnings presentation, your question likely pertains to the discrepancy between
the growth in store count and ARR. While the total subscription fees for Smaregi are generally derived bymultiplying the number of stores by the plan prices, the ARR figure on page 17 includes peripheral and related
services, unlike the customer unit price on page 20, which reflects POS-only figures. The ARR includes

revenue from the App Marketplace and integrated systems, like the chiropractic clinic software. Therefore,the "Smaregi-related ARR" is not based solely on the POS subscription fees.

Q8.

How much of an impact did the special demand related to the new currency issuance
have in 1Q Should we expect a decline in 2Q and beyond
The special demand caused by the issuance of new banknotes largely ended in the previous fiscal year, andwe had anticipated only a minimal impact for this fiscal year. As expected, the effect was negligible.

Q9.

Advertising and promotion expenses seem to have been reduced. Has this impacted thenumber of leads
Advertising and promotion expenses did decrease compared to the 4Q of the fiscal year ending in April 2024.
However, 4Q had included non-lead-generating expenses, such as event sponsorships. Additionally, westrengthened promotional activities in line with our peak season, which led to the usual increase in 4Q

expenses. Since we closely monitor unit economics for all lead sources and optimize accordingly, advertisingcosts were lower in this quarter.

Q10. Could you explain your profit distribution policy Currently, you prioritize growthinvestments and have no dividend payouts. What conditions need to be met to startissuing dividends
At present, our priority is to maintain sufficient internal reserves to support growth investments. While wecannot specify a timeline for initiating dividends, we will carefully consider commencing dividends once wehave completed large-scale investments, such as M&A, and established a stable profit base.

Q11.

One of your company ʼs strengths is product development. Could you share what
measures you take to recruit and retain top engineers Additionally, what makes working
at your company attractive to engineers
We focus on hiring talent not only for their technical skills but also for their understanding of business. Our

hiring standards and development philosophy are discussed in detail in this article. We expect our engineers
to possess both technical proficiency and a business-oriented mindset. In an industry where trends shift
rapidly, those who can bridge technology and business can grow into highly valued engineers capable ofsolving critical issues.