Digital Garage, Inc.

2Q of FYE March 31, 2020 Financial Report2019.11.11

Table of Contents
Mission and Business Model ・・・・・・・・・

3

Investment Highlights ・・・・・・・・・・・・

7

Segment Performance Review ・・・・・・・・

13

Appendix ・・・・・・・・・・・・・・・・・・・

28

Copyright © 2019 Digital Garage, Inc. All Rights Reserved2Mission & Business Model

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

3Corporate Mission
As aDigital Garage creates innovative
business context for the new
Internet age and provides uniquebusiness solutions for new
lifestyles, society, and industries bylinking
Real & Cyber
Local & International
Marketing & Technology
Present & Future

Copyright © 2019 Digital Garage, Inc. All Rights Reserved4

DG’s Business Model
Producing and incubating Internet businesses by optimizing
our 3 core strengths: IT, MT, and FTInformation
Technology

Information
Technology

MarketingTechnology
MarketingTechnology

Financial
Technology

Financial
Technology

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

5Enabling Platform for DG’s Incubation Model
DG continues to incubate and develop unique Internet services
through its Enabling Platform since the early days of the Internet

Ⅰ

Ⅱ

Ⅲ

Portal/Search

e-commerce/
Destination Site

Social Media

1995-2000

2000 -

2008-2015

Marketing2016 -

Payment
環亞智富有限公司

Advertising / Promotion

Big Data Businesse-Commerce / Online Settlement Platform

Enabling Platform – Two Revenue Sources
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

6Investment Highlights

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

7

Financial Results Highlights
FY20.3 1Q-2Q Profit before tax: 7.3 B JPY, down 1% YoY
Comprehensive income: 7.0 B JPY, up 13% YoY
FY19.3 1Q-2Q

Consoli
dated

Profit before tax
Comprehensive
income7.4 (B JPY)
6.2 (B JPY)

FY20.3 1Q-2Q

7.3(B JPY)

7.0(B JPY) +13 ％Profit before tax

FT■ Advertisement volume

MT ■ Other volume

16.7 B JPY(YoY down by 9%)
2.8 B JPY (YoY up by 73%)

(CRM, Data science, application development etc)

IT

■ Investment/ Sold
3.3 B JPY/ 0.5 B JPY■ Fair valuation 33.1 B JPY (from E of Mar. 2019 up by 24%)

LTI

■ Investment profit on equity method of Kakaku.com
1.9 B JPY (YoY up by 17%)
■ Monthly traffic for all sites of Kakaku.com
257.54 million

Increasing the fair valueof Welby, and achieving
incubation results

By Segments

KPI■ Transaction volume 1.2 T JPY (YoY up by 21%)■ of which, face-to-face settlement
0.1 T JPY (YoY up by 2X)-1 ％The impact of exchange rates-1.9B JPY

YoY

2.2(B JPY) +28 ％Record-high profits andboth EC/non-EC
settlements were strong

1.0(B JPY) +50 ％Strong CRM andapplication development
business, strengthening
collaboration with FT

3.3(B JPY) -22 ％Fair value increased steadily
despite the impact of exchange
rates and a decline in valuation
profit associated with stock
sales

2.4(B JPY) +29 ％Investment profit onequity method of
Kakaku.com, Inc.
trended steadily

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

8

FY20.3 1Q-2Q Consolidated P/L, C/I Summary (IFRS)Revenue increased by 8% YoY to 19.6 B JPY, profit before tax decreased by 1% YoY to
7.3 B JPY, and comprehensive income increased by 13% to 7.0 B JPY～ Revenue in recurring business grew by 16% YoY, revenue in operational investment
securities decreased by 14％ ～JPY in Millions

FY19.3

FY20.3

YoY

1Q

2Q

1Q-2Q

1Q

2Q

1Q-2Q

(%)

(Amount)

8,548

9,677

18,225

8,217

11,37919,596+7.5+1,371

Revenue in recurring business

5,323

5,722

11,045

6,138

6,718

12,856+16.4+1,810

Revenue in operational investment securities

1,732

2,677

4,409

459

3,332

3,790

-14.0

-618

Other income

664

206

870

817

422

1,239

+42.3

+368

Finance income

104

125

229

1

16

17

-92.4

-212

Share of profit of investments accounted for using equity method

725

946

1,672

803

891

1,694

+1.4

+23

5,154

5,671

10,825

5,999

6,271

12,270+13.4+1,445

Cost of sales

2,463

2,629

5,092

2,740

2,976

5,716

+12.2

+624

Selling, general and administrative expenses

2,582

2,914

5,497

2,951

3,138

6,089

+10.8

+592

Other expenses

72

76

149

78

86

164

+10.4

+15

Finance costs

37

51

87

230

71

301

3.4 X

+214

Profit before tax

3,394

4,006

7,400

2,218

5,108

7,326

-1.0

-74

Profit attributable to owners of parent

3,113

2,612

5,725

1,624

3,647

5,271

-7.9

-454

Profit

3,135

2,640

5,775

1,617

3,623

5,240

-9.3

-535

549

-109

439

2,972

-1,184

1,787

4.1 X

+1,348

376

-265

110

3,107

-1,186

1,921

17.4 X+1,810

3,684

2,530

6,215

4,589

2,439

7,028

+13.1

+813

Revenue

Expenses

Other comprehensive income
Net change in fair value of equity instruments designated asmeasured at fair value through other comprehensive income

Comprehensive income

NOTE: The above Revenue, Expenses, and Profit before tax refers to the continuing operations excluding discontinued operations
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

9

FY20.3 1Q-2Q Consolidated Segment P/L Summary (IFRS)
Double-digit growth in revenue and profit in FT, MT and LTI～ Fair value of investee companies increased steadily in IT, but profit decreased due to theimpact of foreign exchange rates and a decline in valuation profit associated with stock sales ～JPY in Millions

Revenue

FY19.3

FY20.3

YoY

1Q

2Q

1Q-2Q

1Q

2Q

1Q-2Q

(%)

(Amount)

8,548

9,677

18,225

8,217

11,37919,596+7.5+1,371FT

Financial Technology

1,763

1,812

3,575

2,083

2,204

4,287

+19.9

+712

MT

Marketing Technology

3,053

3,390

6,443

3,376

3,984

7,360

+14.2

+917

IT

Incubation Technology

1,898

2,890

4,789

507

3,462

3,969

-17.1

-820

LTI Long Term Incubation

1,740

1,506

3,246

2,232

1,696

3,928

+21.0

+682

3,394

4,006

7,400

2,218

5,108

7,326

-1.0

-74

Profit before tax
FT

Financial Technology

849

856

1,705

1,061

1,112

2,173

+27.5

+468

MT

Marketing Technology

266

402

668

327

676

1,004

+50.2

+335

IT

Incubation Technology

1,634

2,573

4,206

146

3,138

3,284

-21.9

-922

LTI Long Term Incubation

1,050

825

1,875

1,493

932

2,426

+29.4

+551

NOTE: Revenue here shows revenue from external customers. Segment profit before tax are before elimination of intersegment transaction and corporate revenue and expenses.
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

10Changes in Profit before Tax and Comprehensive Income

 Profit before tax and
FY19.3

FY20.3

1Q-2Q

1Q-2Q

(%)

Profit before tax

7,400

7,326

-1.0

-74

Profit attributable to owners of parent

5,725

5,271

-7.9

-454

6,215

7,028

+13.1

+813

Comprehensive income+ 1.4 B JPY

 IT segment- 0.9 B JPY➡ Impact of exchange rates
Valuation profit associatedwith sales of stocks
Gain on fair value valuation

comprehensive income
JPY in Millions

 FT / MT / LTI segment

YoY(Amount)

 HQ➡ Increased in SG&A expenses due to- 1.6 B JPY- 1.5 B JPY

+ 2.3 B JPY- 0.5 B JPY

business expansion
Impact of exchange rates- 0.28 B JPY- 0.24 B JPY

Decrease of profit before tax- 0.1 B JPY

 Decrease of profit- 0.5 B JPY➡ Continuing operations
Discontinues operations+ 0.25 B JPY- 0.78 B JPY Other comprehensive income+ 1.3 B JPY➡ Increased fair value due to Welby listing etc + 1.81 B JPY
Foreign currency translation adjustments- 0.37 B JPY

Increase of comprehensive income + 0.8 B JPY
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

11

FY20.3 2Q Consolidated P/L, C/I Summary (IFRS)JPY in Million

Current assets

End of FY19.3

End of FY20.3 2Q

Reason for change / Remarks

Difference

99,18692,990-6,196

Cash and cash equivalents

48,15436,665-11,489

Trade and other receivables

23,25421,924-1,330Operational investment securities

26,695

33,114+6,41947,70454,269+6,565

6,575

7,689

+1,114

New acquisition

19,13920,584+1,445

Increased investment profit on equity method

6,662

10,161+3,499Total assets

146,890

147,259+369

New investments and increase in market value of listed shares

Current liabilities

52,42045,981-6,439Borrowings

2,211

3,140

+930

Trade and other payables

45,79938,679-7,11947,12547,904+779

Bonds and borrowings

35,95934,469-1,490

Deferred tax liabilities

4,744

6,859

+2,115

Total liabilities

99,54593,885-5,659Total equity

47,34553,374+6,02946,60952,634+6,025

Share capital

7,504

7,547

+43

Capital surplus

4,235

4,431

+196

Treasury shares-5,026-5,012+14

Other components of equity

1,303

3,090

+1,787Retained earnings

38,59342,578+3,985

Non-controlling interests

736

740

+4

Total liabilities and equity

146,890

147,259+369

Non-current assets
Goodwill
Investments accounted for using
equity method

Other financial assets

Non-current liabilities

Total equity attributable toowners of parent

New investment, Relating to FT business, payment of income taxes and dividends etc

Relating to FT business etc
New investments and increase in fair value of investee companies

Relating to FT business etc

Estimated taxes related to unrealized gains on securities

Increase in fair value of investee companies (Other comprehensive income)
Increased profit

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

12Segment Performance Review

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

13

Business Highlights< Major highlights of 4 segments >EC Payment

FT

MT

IT

LTI

Non-EC /Alliances
Digitalmarketing
Data scienceContinued high growth exceeding EC market. Substantial increase in profits. Transaction volume
in data processing payment expanded
Face-to-face settlement volume doubled YoY amid growing momentum for cashless settlementEstablished a JV, TD Payment, with TOSHIBA TEC CORPORATION, which has the largest share of the POS
market in Japan, and provide multi-payment services. Responding to growing demand for payment frominbound tourists by developing Face-to-Face Payment (mPOS) through ANA Digital Gate

Promote cross-segment growth strategy in cooperation with the FT segment. Following the offering the
CRM and payment platforms of the JR Kyushu Group, construction of an EC mall for members of the JR
East Group's VIEW Card
CyberBuzz, Inc., which DG is the largest outside shareholder, was listed on the TSE’s Mothers section in
September 2019
Strengthen data science business utilizing proprietary data across the group. As the secretariat of the Japan
Premium Media Consortium, promoting a variety of demonstration experiments linking national clients withhigh-quality media.

Promoting < Global Incubation Stream > linking the United States, Japan, Asia, and Europe

Steady increase in fair value of investments in Asia (India, Indonesia, Vietnam) where growth is remarkable

Incubation(ONL)

Launched “Open Network Lab FUKUOKA”. Conducted test ride sessions in Fukuoka and Sapporo with
Lime, our investee and a major shared electric scooter services in the US

Kakaku.com, Inc.

 Healthy growth in “Tabelog” and “New Media”, in addition to “Kakaku.com”

Investment(DGI)

New business

In Crypto Garage, tests for the commercialization of Atomic Swap (Simultaneous Exchange
Transactions) for crypto assets in blockchains progressed steadily. Full-scale service will be launchedwithin next year.
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

14

FT Segment
Ⅰ

Financial Technology Segment
Revenue

Profit before tax

FY19.3

1Q-2Q

3,575 M JPY

1,705 M JPY

FY20.3

1Q-2Q

4,287 M JPY

2,173 M JPY➤ econtext ASIA Ltd.

Payment corporation to expand e-commerce platforms globally➤ econtext, Inc.

Integrates online and offline business as the convenience store payment pioneer➤ VeriTrans Inc.

Provides leading e-commerce payment solutions➤ NaviPlus Co., Ltd.

Subsidiary of VeriTrans Inc. Offers website support tools including personalizedrecommendation engines➤ ANA Digital Gate, Inc. （49％ stake／equity method）
Develops and offers the new payment solution by FinTech➤ SCORE Co., Ltd （49％ stake／equity method）

Development of post-settlement payment business and various financial
businesses utilizing settlement data

➤ TD Payment Corporation （49％ stake／equity method）
Offers multiple payment solutions for POS systems

NOTE: Revenue here shows revenue from external customers. Profit before tax are before elimination of intersegment transaction.
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

15

FT Segment - Highlights
Transaction volume marked approx. 1.2 Trillion,+21% YoY,
number of transaction surpassed 220 million, +20% YoY～ Revenue rose 20% YoY, Profit before tax marked 2.17B JPY, +27% YoY, record-high earnings～
Transaction Volume
FY19.3
1Q-2Q(JPY in 100 Million)(+21%)

9,785

FY20.3
1Q-2Q

11,872OthersConvenience
Store
Payment

Number of Transaction
FY19.3
1Q-2Q(in Million)(+20%)

186.90FY20.3
1Q-2Q

224.75

OthersConvenience
Store Payment

FY19.3
1Q-2Q

FY20.3
1Q-2Q(JPY in 100 Million)(+20%)

35.8

データ
Data
処理

processing

FY19.3
1Q-2Q(JPY in 100 Million)

42.9

Profit before tax(+27%)

Others17.1

Monthly basic fee/ Initial

コンビニ
コンビニ

FY20.3
1Q-2Q
Ratio of profit
before tax torevenue

21.7

50.7%

Convenience
Store
Payment

Data
processing

CreditCard
payment

Profit before tax

Revenue

データ
処理
Data

Credit

カード

カード
Card

payment

processing

カード

47.7
%
カード
カード

CreditCard
payment
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

16

FT Segment - Face-to-face settlement initiatives
Alliances with business partners to cover large businesses and small and medium-sized retail stores～ Providing payment solutions for face-to-face retailers in response to a cashless society ～Alliance strategy

Transaction volume ofFace-to face settlement

Merchant by Size ／ Payment Terminal

JV with Toshiba TEC,【FY 20.3 1Q-2Q】

the top share company
in Japan
Providing multi-payment
solution
JV with ANA group
Providing multi-payment
terminals for airports,
duty-free shops, face-toface retailers, etc
Partnering with NTT
DOCOMO, INC. andleading players inJapan and overseas
for MPM settlementof common QR
codes

Large
Scale
MediumScale

Small Scale

POS
RegisterTabletPOS
MultiPayment
TerminalmPOS
QR CodeScanning
Panel
Cloud Pay

106.8

Billion JPY
【YoY】

x2

FY19.3 1Q-2Q
54.2 B JPY

Image of QR Code Standfor shop installationNote) MPM (Merchant Presented Mode) : Method in which consumers scan QR codes displayed at stores with their smartphones to make payments
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

17

MT Segment
Ⅱ

Marketing Technology Segment
Revenue

Profit before tax

FY19.3

1Q-2Q

6,443 M JPY

668 M JPY

FY20.3

1Q-2Q

7,360 M JPY

1,004 M JPY➤ Marketing Technology Company

Supports client’s business through performance-based ads, Online to
Offline strategy and web marketing➤ DG Communications Co., Ltd.

Provides solutions that make people's lives more comfortable, mainly throughthe real estate advertising business➤ BI.Garage, Inc.

Develops and provides ad products incorporating data science, social marketing,and cutting edge ad technology➤ CyberBuzz, Inc. （22.5％ stake／equity method）

Provides the social media marketing platform structured with influencers as its
center part

➤ DG MARKETING DESIGN, Inc. （20％ stake／equity method）

Established on June 25th, 2018 and its predecessor is Business Design Company

NOTE: Revenue here shows revenue from external customers. Profit before tax are before elimination of intersegment transaction.
Copyright © 2019 Digital Garage, Inc. All Rights Reserved18

MT Segment - Highlights
Revenue marked 7.36B JPY, +14% YoY, and profit before tax increased to 1.0B JPY, +50％ YoY～ Aiming to secure high profitability through selection and concentration of highly
profitable cases ～Revenue

Advertisement volume(JPY in
100 Million)

FY18.3

FY19.3

98
84

79

82
23

21

63

35

19

19
19
22

22

21

20

23

16

22

19

24

30

98

90 93

25

27

25

FY20.3

82

24

19

22

19
19

85
21

17

21

(+14%)

FY20.3
1Q-2Q(JPY in
100 Million)

FY19.3
1Q-2Q
Profit before tax

73.6

64.4

FY20.3
1Q-2Q

Ratio of profit before
tax to revenue

10.0(+50%)

17

18

22
20

28

19

27

26

25

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

(7-9)

(10-12)

(1-3)

(4-6)

(7-9)

(10-12)

(1-3)

(4-6)

(7-9)

Smartphone/App

13.6%
10.4%

32

1Q

Cosmetics/HR

FY19.3
1Q-2Q

6.7

16

(4-6)

Financial(JPY in
100 Million)

Profit before tax

Real estate■ Smartphone/App business recovered YoY

 Other than Internet Advertising
Business, CRM Marketing Businessand App development businessperformed well

 Selection and concentration of highly
profitable cases
 Cyber Buzz, Inc.'s equity in earnings ofaffiliates
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

19

MT Segment - Highlights
Responding to Changes in the Business Environment

Ⅰ＜Marketing Technology Company＞

Ⅱ＜DG Communications Co., Ltd.＞Ⅲ＜CyberBuzz, Inc.＞

MT / FT collaboration

Real estate / Collaborate with ONL

Social Media Marketing

Promoting growth strategies across segments, including FT■Establishment of the JR Kyushu Group's CRM and payment platform■Promote OMO customer transfer by building e-commerce malls for VIEW card members

Revenues from CRM and app development, etc. increased 2.4 times YoY“Open Network Lab Resi-Tech” for the real estate developer industry 1st Batch ended
In 2nd Batch, will collaborate with the government and area partner companies of major cities inJapan to conduct tests in line with urban plans with startups
Develop proprietary platforms for influencer marketing utilizing SNS
such as Instagram and Facebook
Listed on the TSE’s Mothers section in September 2019.
Generate future marketing group synergies

Leading data scientists in Japan

Next-generation data technology＜Media Consortium Planning Office＞ Formed a Digital Value Study Group with 39 leading Japanese content media companies,

Ⅳ National Clientand conducted test marketing of high-value digital advertisements to major clients. Promote
activities for joint commercialization. Entered Final phase for joint commercialization＜ Strengthen data science business across FT / MT / LTI ＞
BI. Garagetransaction volume

YoY +63%

Increased advertising business from national clientsby menu developed mainly by DG and Kakaku.com

Number of clients

FY19.3 1-2Q

65

FY20.3 1-2Q

100

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

20

IT Segment
Ⅲ

Incubation Technology Segment
Revenue

Profit before tax

FY19.3

1Q-2Q

4,789 M JPY

4,206 M JPY

FY20.3

1Q-2Q

3,969 M JPY

3,284 M JPY➤ DG Incubation, Inc.

Invests in and incubates cutting-edge internet startups➤ Open Network Lab, Inc.

Seed Accelerator Program in progress in the 20 th term

➤ DG Daiwa Ventures, Inc. （50％ stake／equity method）

Manages DG Lab Fund to invest in startups with next-generation technologies➤ Digital Garage US, Inc.

The US-based global strategy headquarters➤ D2 Garage, Inc.

Manages “Open Network Lab HOKKAIDO” for the startups in Hokkaido➤ DK Gate, Inc.

Researches and develops of next-generation content business companies ina global scale with Kodansha Ltd.

NOTE: Revenue here shows revenue from external customers. Profit before tax are before elimination of intersegment transaction.
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

21

IT Segment - Highlights（B/S）
The balance of operational investment securities as of the end of September 2019 was
33.1 B JPY, up 24% from the end of FY19.3～ Increase in fair value despite the impact of yen appreciation ～Operational investment securities

Portfolio by regions

Portfolio by currencies

The fair value of operational
investment securities increased
substantially by 24% from theend of FY19.3

Building a balanced investment
portfolio centered on Global
Incubation Stream

Due to aggressive investment
overseas, USD based investment
accounts for two-thirds of total
investment(JPY in

100 Million)(+24 %)

331

EuropeINR(Rupee)

Others

0.5% 7.2%

267

4.8%

North
America

Japan

34.2%

25.5%
Asia

32.7%
End of FY19.3

End of FY20.3 2Q

GBP

2.4%

EUR

0.3%

Others

0.5%

JPY

24.3%

USD

67.8%

Note) Shows the share of operating investment securities outstanding by region and currency
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

22

IT Segment - Highlights（P/L）
Significant growth in valuation profit on fair values excluding the impact of foreign
currency fluctuations～ On the other hand, profits declined due to a decrease in valuation losses by appreciation of the
yen and decline in valuation profit associated with stock sales ～Profit before tax YoY(JPY in
100 Million)

Impact ofValuation exchange
rates
profit

+22.7

42.1

- 16.1

Valuation
profit on
sales ofstock

- 15.3

 Gain on valuation of fair value,
excluding the impact of foreignexchange, increased 2.2 times from
1.8 B JPY in FY19.3 2Q to 4.1 B JPY in
FY20.3 2Q
Others

- 0.6

32.8

 Impact of 1.61 B JPY YoY decrease invaluation gains (losses) on fair value
due to the appreciation of the yen Due to large-scale sales in FY19.3,
valuation profit associated with stock
sales decreased by 1.53 B JPY YoY

FY19.3 1-2Q

FY20.3 1-2Q
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

23

IT Segment - Examples of Investment
Increase in fair value mainly of investments in Asian countries～ Strengthen the support system and aim to increase investment value ～Sen Do Technology [Vietnam]
Operates Sendo, a marketplace for
C2C and B2C in Vietnam, andprovides electronic wallet services
Steadily expanding as a topclass EC site in Vietnam's
domestic market share

GMV transition

Examples of Investment
QD Laser [Japan]

GrubMarket [US]NOIN [Japan]

NeutronHoldings [US]Develop and provide new semiconductor
laser solutions in the telecommunications,industrial, medical, and consumer sectors asa pioneer in the commercialization ofquantum dot laser technology

Develop a leading
marketplace platform
specializing in freshorganic foods

Operates cosmetics e-commerce app “NOIN”
which is cosme EC platform where manufactures
open up a shop directly, and operates cosmetics
video Instagram “noin.tv”

NoBrokerTechnologies
Solutions [India]

Ride-sharing service for electric scooters
focusing on last mile solutions

ThredUp[US]

Operates India’s peer-to-peer property
marketplace. Using this service, people
can rent/buy houses online without
brokers

The world’s largest fashion resale
platform, inspiring a new generation tothink secondhand first. Specializing in
women's and children's clothing

Expedient
Healthcare
Marketing [India]

Droom [India]

Operates “Healthians.com”, a healthcare webbased service that provides reservations for
examinations at clinics and related informationfrom doctors and specialists

A leading online marketplace for new
and second-hand automobiles in India

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

24

LTI Segment
Ⅳ

Long-Term Incubation Segment
Revenue

Profit before tax

FY19.3

1Q-2Q

3,246 M JPY

1,875 M JPY

FY20.3

1Q-2Q

3,928 M JPY

2,426 M JPY➤ Kakaku.com, Inc. （20％ stake／equity method ）Operates purchase support service Kakaku.com, restaurant review andrestaurant service tabelog, and New Media and Solutions➤ Crypto Garage, Inc.

Promoting development of advanced financial services utilizing blockchain
technology and cryptography technology with Tokyo Tanshi Co., Ltd.

➤ ACADEMIE DU VIN

Operates wine schools and wholesaling wine.

NOTE: Revenue here shows revenue from external customers. Profit before tax are before elimination of intersegment transaction.
Copyright © 2019 Digital Garage, Inc. All Rights Reserved

25

LTI Segment - Highlights
Profit before tax marked 2.43B JPY, +29% YoY. Investment profit on equity methodof Kakaku.com, Inc. remains robust～ “Kakaku.com”,“Tabelog” and “New Media” going well ～Profit before tax
税引前利益(JPY in 100 Million)（＋29%）

24.3

Business Progress of Kakaku.com, Inc.
【Total Accumulated Traffic for Kakaku.com Group】
Monthly traffic for all sites of Kakaku.com has increased to257.5 million, up 5.0% YoY (September 2019)

18.7

YoY
+5.0%

(in million people)
300

icottoKyujin Box
TASCLAP
Kinarino

200

webCG
eiga.com
Sumaity
4travelLow price trips

100

Bus Hikaku Navi
Priceprice.com
Tabelog
Kakaku.com

0
Dec

Sep

FY19.3
1Q-2Q
19.3期
2Q

FY20.3期
20.3 1Q-2Q
2Q

2016

Mar

Sep

Jun
2017

Dec

Mar

Jun

Sep
2018

Dec

Mar

Jun

Sep

Other

2019

Ref. Kakaku.com, Inc. Results Briefing for 2Q FY2020/3

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

26

LTI segment – Promote Blockchain Financial Business
Asset trading is underway in the regulated sandbox with participation in the domestic exchange~ Develop SETTLENET globally in the first half of 2020 and further promote P2P derivatives R&D ~For video of Crypto Garage/SETTLENET/P2P, click HERE
R&D

Commercialization



Simultaneous exchange of P2P using real assets on theblockchain is underway under the regulated sandbox.
→ Launched POC linking four leading crypto currency
exchange companies in JapanCommercial versions are scheduled for global launchin the first half of 2020.
Planning to provide settlement services between
domestic exchanges and OTC operators* around theworld.

【Image】

OTC operatorsin overseas

Exchange
in Japan
Simultaneous
settlementon blockchain*Over the counter. Firm that specializes in large-scale transactions outside the exchange

Expandbusiness as a
P2P financial
settlement
platform

 Signed and executed P2P smart contract
transactions in Bitcoin linked to Standard & Poor's
500 Index with Skew in UK, and completed
technical verification.
 By eliminating credit risk between parties totransactions and reducing contract costs, aims to
avoid price fluctuation risk of crypto assets andcontribute to the formation of a sound market inwhich more businesses participate in transactions.

Established: 2018 HQ: London
Business: Provision of leading-edge
financial services in the crypto asset
area

The CoinDesk, one of the world's largest media in the area of blockchain and crypto currencies,
publishes articles here
Copyright © 2019 Digital Garage, Inc. All Rights Reserved27

Appendix

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

28

Financial Results: Consolidated PL (IFRS)JPY in Millions

FY2018.3

FY2019.3(Result)(Result)

Continuing operations
25,50335,687

Revenue in recurring business

18,141

22,713

Revenue in operational investment

1,007

6,090

Other income

2,111

1,933

Finance income

764

117

3,481

4,835

Revenue

Share of profit of investments accounted for using equity method

Expenses

17,12722,264

Cost of sales

7,187

10,401

Selling, general and administrative expenses

9,095

11,296

Other expenses

542

332

Finance costs

303

235

Profit before tax

8,376

13,424

1,857

4,088

6,518

9,336

Revenue

3,260

1,261

Expenses

3,403

1,655

Profit (loss) before tax from discontinued operations

-143

-394

38

-225

Loss (gain) on sales on discontinued operations-

898

Income tax expense from sale of discontinued operations-

275

Profit (loss) from discontinued operations

-181

454

Profit

6,337

9,790

6,412

9,771

-75

19

Income tax expense
Profit from continuing operations
Discontinued operations

Income tax expense

Profit attributable to
Owners of parent
Non-controlling interests

Copyright © 2019 Digital Garage, Inc. All Rights Reserved

29

Financial Results: Consolidated PL by Segments (IFRS)JPY in Millions

Revenue

FY18.3

FY19.3(Result)(Result)

25,50335,687

FT

Financial Technology

5,929

6,693

MT

Marketing Technology

9,939

13,676

IT

Incubation Technology

2,553

8,022

LTI

Long Term Incubation

6,301

7,133

8,376

13,424

Profit before tax
FT

Financial Technology

2,809

3,174

MT

Marketing Technology

1,856

1,390

IT

Incubation Technology

1,321

6,889

LTI

Long Term Incubation

3,621

4,378

NOTE: Revenue here shows revenue from external customers. Segment profit before tax are before elimination of intersegment transaction and corporate revenue and expenses.
Copyright © 2019 Digital Garage, Inc. All Rights Reserved30

Press Releases
Date

Title

2019.10.24

Digital Garage Group's "Cloud Pay", a Multi-QR Code Payment Solution, Supports Alipay, AlipayHK, and Kakaopay

2019.10.23

7 Companies Established the Japan Digital Therapeutics Consortium and Launch Activities

2019.10.4

DG Lab to Host THE NEW CONTEXT CONFERENCE 2019 SAN FRANCISCO

2019.9.17

VeriTrans Provides Post-Settlement Payment Service "VeriTrans Atobarai" for UNIQUEST's "Small Funeral"

2019.9.12

Digital Garage and KDDI Conduct a Digital Transformation (DX) Proof of Concept Using AR and VPS Technology

2019.8.30

Digital Garage and Daiwa Securities Group Establish DG Lab Fund II for Global Startups with Next-generation
Technologies

2019.8.16

Digital Garage's Equity Method Affiliate, CyberBuzz is Approved for Listing on the TSE's Mothers Section

2019.8.2

Digital Garage Supports Joint PoC Projects by 7 Major Companies and 5 Startups through "Open Network Lab ResiTech"

2019.7.25

Digital Garage Joins MIT Media Lab's "Space Exploration Initiative"

2019.5.31

Digital Garage, Fukuoka D.C., and Fukuoka Growth Next Launch the Smart City Incubation Program, "Open Network
Lab FUKUOKA"

2019.5.16

Digital Garage Group Launches "Cloud Pay", a Merchant-presented mode Multi-QR Code Payment Solution

2019.5.13

Digital Garage and Welby Launch a Proof of Concept Project for PHR Lifestyle Disease Prevention Program in Fukuoka
City to Build a Personal Health Record Platform2019.5.9

DG Lab to Host THE NEW CONTEXT CONFERENCE 2019 TOKYO on the Theme of "How to Build a Data Ecosystem"

2019.4.19

Crypto Garage Developed and Executed the Contract of a P2P Protocol Based Crypto Asset Derivative Settled in
Bitcoin2019.4.12

DG Incubation Co-leads Investment in Food E-Commerce Service GrubMarket

2019.4.1

VeriTrans Launches Credit Card Payment Services for Patent and Other Fee Payments to the Japan Patent Office

Copyright © 2019 Digital Garage, Inc. All Rights Reserved31

Please note that the business forecasts and strategies covered in today’s presentation are based on our current evaluation and future results may vary significantly depending
on unforeseeable events or circumstances. This announcement is solely for the purpose of the investors relationship and is not for making any solicitation for investment inany securities. This announcement does not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States or any other jurisdiction in whichsuch offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any securities of our consolidated
subsidiaries have not been registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements of the U.S. Securities Act. Any public offering of securities to be made in the United States will bemade by means of a prospectus. Such prospectus will contain detailed information about the company making the offer and its management and financial statements.