Digital Garage, Inc.
3Q of FYE June 30, 2014 Financial Report
2014.5.14

Investment Highlights
FY14 3Q results exceeded the budget, making steady progress for a full year
〜 New projects underway to further strengthen DG’s business platform 〜Ⅰ

Incubation : Accelerating incubation business globally Achieved strong sales growth from the sales of stocks and Neo’s business expansion
 Capital and business alliance with Betaworks (Head Office: NY), strengthening
partnership with Silicon Alley in addition to Silicon Valley Launching CIWorks (website for physicians) to provide global collective intelligence on
medical information

Ⅱ

Marketing : Continued strong growth of Web ads. Launched Big Data business Revenue increased +42% YoY, Op income increased about 6x YoY in FY14.6 3Q (1-3)
 Growth gaining traction in ROI-focused performance ads
 BI.Garage (JV with Dentsu) launches “BIG MINING” ad product utilizing Big Data

Ⅲ

Payment : Significant op income growth as IPO cost burden decreases：

 Revenue increased +11% YoY, Op income increased +64% YoY in FY14.6 3Q (1-3)

 Domestic shows steady growth, following the expansion of e-commerce market and thelast-minute demand ahead of the consumption tax hike in Japan
 Accelerating Asian expansion of the settlement and EC-related servicesCopyright © 2014 Digital Garage, Inc. All Rights Reserved2FY14.6 3Q Consolidated (Cumulative) P/L Summary
Revenue up 18%, Op income up 90%, Ordinary income up 32% to 2.5 B JPY～ Making steady progress ( about 90% complete ) on a net income basis ～JPY in Million

Net sales
Operating income
Non-operating income
Investment profit on equity method

Foreign exchange gain
Non-operating expensesOrdinary income
Extraordinary income
Gain on change in equity
Extraordinary loss
Income before income taxes
Income taxes

Net income
EBITDA

Note: EBITDA is based on preliminary calculation

FY13.6 3Q

FY14.6 3Q

Cumulative

Cumulative

ActualActual20,328
624
1,531
945
375
268
1,886
1,196
1860
3,023
844
2,208
4,319

23,894
1,186
1,705
1,229
208
393
2,498
500
374
26
2,972
962
1,873
4,134

YoY

FY14.6 Full Year%

AmountForecast+18%+90%+11%+30%
-45%
+47%
+32%
-58%
+1978%-57%

32,0001,800-2%+3,566+562+174+284-167+125+612-696+356-34-51+14%+118-15%-4%-335-185

1Q-3Q
Progress

75%
66%

3,500

71%

2,100
4,800

89%
86%

Copyright © 2014 Digital Garage, Inc. All Rights Reserved

3

FY14.6 3Q Consolidated B/S Summary
JPY in Million

FY13.6

FY14.6 3Q

Difference

Reason for change / Remarks

Current assets

33,83750,301+16,464

Cash and deposits

15,32924,436+9,107

Financing - IPO of econtext ASIA, etc

Receivables

9,037

10,606+1,569

Payment segment related items

Money held in trust3,768

2,754-1,014

Payment segment related items

Operational investment securities

2,641

8,667+6,026

Mark-to-market for listed stocks, etc

Fixed assets

22,17325,947+3,774

Investment securities

5,521

10,837+5,316

Investment real estate

3,102

3,719+617

Goodwill

9,968

7,474

-2,494

Total assets

56,01076,249+20,239

Current liabilities

21,801

30,574+8,773

Deposits

18,22920,039+1,810

Short-term borrowing

305

5,661+5,356

Deferred tax liability

13

1,783+1,770

Fixed liabilities

6,950

9,206+2,256

Long-term borrowing

6,799

8,968+2,169

Total liabilities

28,75239,781+11,029

Increased investment profit on equity
method, Capital alliance, New acquisition, etc
Decreased stake in econtext ASIA
upon the listing

Payment segment related items
Demand for working capital
Increased due toMark-to-market
Demand for working capital+0Net assets

27,25836,467+9,209Retained earnings

7,003

8,641

+1,63831

3,159+3,128

Minority interests

1,468

5,824+4,356

Liabilities / Net assets

56,01076,249+20,239

Unrealized gains on securities

Unrealized gains after tax
Increased upon the listing ofecontext ASIA

Unrealizedgains

Copyright © 2014 Digital Garage, Inc. All Rights Reserved

4Quarterly comparison of Consolidated Sales / Op Income

Sales increased +28% YoY, op income increased 2.5x YoY
in FY14.6 3Q (1-3)(JPY in Million)【Net Sales】

10,000

8,539
7,636

8,000

6,000

1,980

【Operating Income】

800

8,349 8,272
7,273

Adjustment forchange of fiscal
term

700

OperatingIncome

600

6,482

523

500

5,307

726

698

374

223

400
300

4,000200

6,559
2,000

Adjustment for change of fiscal term

▲ 10002Q

860Net Sales

1Q

300100151

3Q

2013.6期
FY13.6

4Q

1Q

2Q
2014.6期
FY14.63Q▲ 511Q

2Q

3Q

2013.6期
FY13.6

4Q

1Q

2Q

3Q

2014.6期
FY14.6Note : FY13.6 actuals include the effect of an irregular 15-month reporting period, due to the fiscal year end shift from March to June for consolidated VeritransGroup. 9 months for 1H, 6 months for 2H
Copyright © 2014 Digital Garage, Inc. All Rights Reserved

5DG Group’s Business Segment
Accelerating Lean Global Through 3 Business Segments

ⅠIncubation Segment

Global Incubation of next-generation Internet businesses

INCUBATION

Investments to cultivate promising startups
Development of media
Technological & business development based on agile
development methodology

ⅡMarketing Segment

Provider of web ads and latest marketing technologies

MARKETING

Data science businessWeb advertisement, media business
O2O related, business development

ⅢPayment Segment

One of the Asia’s largest payment platforms

PAYMENTOne of the largest online payment
service providers in Japan
Expansion of online payment platform
to Asia
Copyright © 2014 Digital Garage, Inc. All Rights Reserved6Quarterly comparison of Incubation Performance
Achieved revenue growth from sale of stocks and agile business expansion～ Investing in Betaworks, jointly accelerating global business ～(JPY in Million)【Net Sales】

1,600

600

1,467

1,400

548

5125001,263400

1,200

300

927

1,000

755

80020056100616600

4970400200【Operating Income】▲ 20▲ 100131▲ 200▲ 30001Q

▲ 48

▲ 77

2Q

3Q

2013.6期
FY13.64Q

1Q

2Q
2014.6期
FY14.6

3Q

▲ 258
1Q

2Q

3Q

2013.6期
FY13.64Q

1Q

2Q

3Q

2014.6期
FY14.6Copyright © 2014 Digital Garage, Inc. All Rights Reserved7Quarterly comparison of Marketing Performance
Growth gaining traction in ROI-focused performance ads～ Sales increased +42% YoY, Op income increased about 6x YoY ～(JPY in Million)【Net Sales】

4,500

4,012

4,000

2,748 2,825

3,000
2,500

350

308300

3,557

3,500

【Operating Income】

3,104 3,068

250

2,364

199

200

2,000

150

1,500

167
129

136

120

100

1,000

5550

500

00
1Q

2Q

3Q

2013.6期
FY13.6

4Q

1Q

2Q
2014.6期
FY14.6

3Q

1Q

2Q

3Q

2013.6期
FY13.6

4Q

1Q

2Q

3Q

2014.6期
FY14.6

Copyright © 2014 Digital Garage, Inc. All Rights Reserved8Quarterly comparison of Payment Performance
Achieved net sales and op income growth, following the expansion of domestic e-commercemarket and the last-minute demand ahead of the consumption tax hike in Japan～ IPO cost burden decreases, and full-fledged Asian strategy has started ～(JPY in Million)【Net Sales】

6,000

3,158 3,269 3,277

2,810

Adjustment for changeof fiscal term
Operating Income

480

415

1,980

4,000600

Adjustment for changeof fiscal term
Net Sales5,174【Operating Income】

3,326

3,503400308223253260203200

2,000260

3,194257

00
1Q

2Q

3Q

2013.6期
FY13.6

4Q

1Q

2Q
2014.6期
FY14.6

3Q

1Q

2Q

3Q

2013.6期
FY13.6

4Q

1Q

2Q

3Q

2014.6期
FY14.6

Copyright © 2014 Digital Garage, Inc. All Rights Reserved

9Topics : Launching “BIG MINING” ad product utilizing Big data

A new business in the business intelligence field leveraging big data
DG Group, Dentsu, and Kakaku.com jointly begandata science business to optimize marketing activities< Business Overview ＞
Data from
Kakaku.com

Data fromDGG

Data from Dentsu Groupand others

Data fromsponsors
Clients datafrom sponsors
Behavior dataetc

Datascienceview

DSP targeting ad

Latesttechnology

Coordination
with CRM area

A two-phase approach to develop the business
Copyright © 2014 Digital Garage, Inc. All Rights Reserved10

Topics : Launching knowledge services in medical field

Launching CIWorks to provide collective intelligence in medial field
By developing a network of doctors with specialized physicians as the hubwith knowledge share and discussion group, we plan to promote the latest
knowledge of clinical applications
The role of CIWorks

CIWorks Inc.

Make our society better with“+Collective Intelligence”

Ⅰ Collective intelligence can bringmore values than specialized
knowledge experts haveⅡⅢ

Create large collective
intelligence as more physicians
share knowledge with experts
Begin with cancerous region withthe highest growth potential(expand the scope of businessgradually)

Latest knowledge

GlobalKnowledge

General physicians /practitioners
Medical specialists

Topexperts
InternetTechnology

Original, easy-tounderstand content on
standard treatment

Discussion

Copyright © 2014 Digital Garage, Inc. All Rights Reserved

11Quarterly Profit and Loss (Consolidated)

JPY in Million

FY13.6

FY14.6

1Q

2Q

3Q

4Q

1Q

Net sales

5,307

8,539

6,482

7,636

7,273

8,349

8,271

Incubation

131616

497

1,263

927

1,467755

Marketing

2,364

2,748

2,825

3,104

3,068

3,557

4,012

Payment

2,810

5,174

3,158

3,269

3,277

3,326

3,503

△ 51523

151

698

86726

374

Incubation△ 25856△ 20512△ 77548△ 48

Marketing

129

120

55167

136

199

308

Payment

308

480

253

260

203

260

415

Ordinary income

167

1,000

719

1,191

473

1,214

810

Net income

213

700

1,294

507

389

1,037

446EBITDA

696

1,573

2,050

1,581970

1,956

1,207200333

211195191204170

Operating income

Amortization

2Q

3Q

Note: Operating income per segment is based on figures prior to elimination or Group deduction. EBITDA is based on preliminary calculation.
Copyright © 2014 Digital Garage, Inc. All Rights Reserved

12Press Releases
DateTitle

2014.04.28

Digital Garage to Launch CIWorks to Provide Specialized Cancer Treatment Knowledge

2014.04.16

Open Network Lab Begins Accepting Applications for the 9th Batch of its Incubation Program

2014.04.10

BI.Garage Launches "BIG MINING" Ad Product Utilizing Digital Garage Group's Big Data

2014.02.13

Digital Garage to invest in and partner with US-based Internet studio Betaworks

2014.01.07

Digital Garage expands its incubation business in Asia by investing in Indonesia's major online babyproduct retailer Bilna

Copyright © 2014 Digital Garage, Inc. All Rights Reserved13

Please note that the business forecasts and strategies covered in this material are based on our current
evaluation and future results may vary significantly depending on unforeseeable events or circumstances.