Second Quarter of Fiscal Year Ending March 31, 2023
Financial Results Presentation Materials

Drecom Co., Ltd.
October 27, 2022
Please refer to the Fact Sheet on our website for consolidated financial results, cost of sales, SG&A expenses, etc., and billing sales
in the game business.
https://drecom.co.jp/ir/factsheet_202303Q2.pdf

Summary of this document• Q2 results: Mainstay IP titles performed well due to measures to coincide withthe movie release, etc.
Q2 FY2022

Sales: 2,873 million yen (+13.9% YoY), Operating profit: 790 million yen (+70.7% YoY)

(Jul-Sep)• 1H results: Operating income, ordinary income, and net income *1 reachedrecord highs on a 1H basis

ActualNet sales 5,800 million yen, Operating income 1,607 million yen
Ordinary income 1,547 million yen, Net income*1 1,056 million yen• Steady progress in relation to full-year forecasts
Forecast for
FY2022Business
Progress

Full-year forecast (announced on May12, 2022): Net sales: 13,000 million yen, Operating
income: 2,000 million yen
Ordinary income 1,900 million yen, Net income*2 1,200 million yen• Steady progress in each business for development, acquisition and nurturing ofIP
Publication of light novels begins
First of a series of new game titles with NFT functionality added as part of Game x Web3

*1 Net income attributable to owners of the parent *2 Net income attributable to owners of the parent
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2

1. Review of Q2 (Jul-Sep) FY2022
2. Forecast for FY2022
3. Medium-term goals and progress of each business
4. Appendix

Copyright Drecom Co., Ltd. All Rights Reserved.

31. Review of Q2 (Jul-Sep) FY2022

Summary of Q2 FY2022 Results
In Q2 (Jul.-Sep.), mainstay IP title with high profit margins performed well due to measures to coincide with the movie
release, etc.
(Millions of yen)

Q2
FY2022(Jul-Sep)

Q2
FY2021(Jul-Sep)

Q1
FY2022 (AprJun)

YoY

QoQ

Net sales

2,873

2,523

+349

2,927

-53

Operating income

790

463

+327

817

-26

Operating profit ratio

27.5%

18.4%

-

27.9%

-

EBITDA*

875

597

+278

909

-33

EBITDA Margin

30.5%

23.7%

-

31.1%

-

Ordinary income

737

448

+288

810

-73

534

311

+223

521

+13

Net income

attributable to shareholders of
the parent company*EBITDA = operating income + amortization of goodwill + depreciation
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41. Review of Q2 (Jul-Sep) FY2022

Q2 Results for FY2022 (Operating Income QoQ Comparison)
Strong performance in Q2 following Q1
Decrease in revenues (Increase in expenses)
Increase in revenues (decrease in expenses)(Millions of yen)

Decrease
Impact(-44)

Llabor cost(-35)

Materials for gamedevelopment(+99)
Depreciation
expense(+7)
Outsourcing
expenses(-24)

Advertisingexpenses(-15)

Postage(-1)

Game
Development
Costs
Amount recorded
as Assets
(-8)

Other
(+8)
R&D
expenses
(-14)

817

790

Q1 FY2022
Operating Income

Q2 FY2022
Operating Income*Amount of development costs such as labor and subcontracting costs mainly related to pre-release games deducted from manufacturing costs and transferred to assets as "Software in progress".
Copyright Drecom Co., Ltd. All Rights Reserved.

51. Review of Q2 (Jul-Sep) FY2022

Game Business Earnings from Titles in Operation
Strong performance of main IP titles; 2 titles slightly in the red
Profit/loss of 11 titles under management※ (Q2 Jul-Sep FY2022)

Loss

Profit※ Number of titles in operation as of October 31, 2022. Series titles and titles developed overseas are counted as one title. Including two enza titles and BOKU &DRAGONS.

Copyright Drecom Co., Ltd. All Rights Reserved.

61. Review of Q2 (Jul-Sep) FY2022

Topics of each business•

Strong performance from measures to coincide with movie release of mainstay IP title, etc.
→ Driven by the IP title excitementGamebusiness•

Securing stable income through long-term investment titles→ Earned revenues from accumulation of multiple titles amid a difficult market environment•

Release dates of some titles under development will be changed for quality improvement.
→GGGGG and Wizardry Variants Daphne are now scheduled for release in Q3 (Oct.-Dec.) and Q4 (Jan.Mar.), respectively.
→Consumption of advertising expenses has been pushed back to the second half of the fiscal year.

Newbusiness•

Launch of DRE Novels, Drecom Media's light novel label→To go on sale around the 10th of each month. All 9 works to be published during the year will becomicalized on the comic label "DRE Comics".

•“Rooot”, a fan community promotion service, has surpassed 150 service installments.
→Officially launched in diverse industries including games, apps, brands, distribution, food & beverage,
and manufacturers.

•

Business activities in the Web3 domains are progressing well.
→In addition to blockchain game development, multiple projects are underway, including an NFT project
aimed at IP creation.

Copyright Drecom Co., Ltd. All Rights Reserved.

71. Review of Q2 (Jul-Sep) FY2022
2. Forecast for FY2022
3. Medium-term goals and progress of each business
4. Appendix

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8

2. Forecast for FY2022

Full-Year Consolidated Earnings for FY2022 Point of View
(Added on supplementary material on May 12, 2022) *Additional information is underlined.
•

Q1 (Apr-Jun) is expected to show the same trend as the previous year's Q1, thanks to the anniversary
events of mainstay titles.
•Gamebusiness

New Business
Development•

Contribution of three newly released titles is expected in the second half of the fiscal year.
•

For new titles, release dates are determined based on quality of completion.

•

All new titles are in-house distributed titles (gross sales), which will have a significant impact on net sales.

•

Assumed increase in sales in the game business is mainly contributed by three new titles.

•

Operational and advertising costs are expected to increase with the release•

In the publishing business, more than 10 new titles are scheduled for sequential release in thesecond half of the year and beyond.
In the Web3 business, in addition to blockchain game development, several projects are underway,
including the NFT project for IP creation.
“Rooot”, a Twitter-based fan community promotion service, is expected to continue to see steadysales growth.

•••

Investment
PolicyMainstay IP titles in 1H outperformed initial forecasts•

New business revenue growth is expected to come mainly from the publishing business and "Rooot"; sales in the
Web3 domains are not expected.

Proactively invest cash generated from operations in the game business into new business areas
where growth is expected (publishing, web3)

Copyright Drecom Co., Ltd. All Rights Reserved.

92. Forecast for FY2022

Progress in Relation to Full-Year Forecasts
In the first half (Apr-Sep), mainstay IP titles performed better than expected.
(Reference) Fiscal year ending March 31, 2022

Fiscal year ending March 31, 2023

(Unit: Millions of yen)

Q1
(Apr-Jun)
ActualQ2(Jul-Sep)
Actual

1H(Apr-Sep)
ActualProgress

Full Year
Forecast

Q1(Apr-Jun)
ActualQ2(Jul-Sep)
ActualQ3(Oct-Dec)
ActualQ4(Jan-Mar)
ActualFull year
Actual

2,927

2,873

5,800

44.6%

13,000

2,661

2,523

2,893

2,450

10,528

Variable cost

356

346

702

37.8%

1,860

394

380

391

365

1,630

Fixed cost

1,753

1,736

3,489

38.2%

9,139

1,762

1,680

2,048

1,913

7,306

Advertising expenses

24

40

65

9.0%

725

16

21

88

117

243

R&D expenses

55

68

123

16.8%

737

117

91

80

54

345

Game Development Costs
Amount recorded as assets*

-465

-457

-922

45.2%

-2,040

-496

-692

-485

-558

-2,233Operating income

817

790

1,607

80.4%

2,000

504

463

452

171

1,591

Ordinary income

810

737

1,547

81.5%

1,900

492

448

439

160

1,541

521

534

1,056

88.1%

1,200

300

311

241

-45

807

Net sales

Net income

attributable to shareholdersof the parent company*Amount of development costs such as labor and subcontracting costs mainly related to pre-release games deducted from manufacturing costs and transferred to assets as "Software in progress".

Copyright Drecom Co., Ltd. All Rights Reserved.

102. Forecast for FY2022

Progress in Relation to Full-Year Forecasts
Progress in the first half was 44.6% for net sales and 80.4% for operating income, well in line with the full-year forecast.
Sales:
Strong sales in the first half of the year. Release of some of the three new titles (gross sales) distributed in-house wasdelayed.
Although sales are expected to be lower in the second half of the fiscal year than initially projected, the assumption ofoveremphasis towards the second half of the fiscal year remains unchanged.
Operating income: Strong performance in 1H. Profit is expected to be lower than the initial forecast in the second half due to the delayed
release of new titles.
* Details of net sales and operating income are shown on the next page and thereafter.

Net sales

Full-year forecast: 13,000 mn yen
1H Results 5,800 mn yen
Q1: 2,927 mn yen, Q2: 2,873 mn yen

Progress in 1H
44.6%

Operating income

1H

Q3 Progressgoal

Full-year forecast: 2,000 mn yen

1,607

Results
mn yenQ1: 817 mn yen, Q2: 790 mn yen

Progress in 1H
80.4% (%)

Q3 Progress
goal

Although first-half results were favorable,
we need to carefully assess the impact of existing and new titles in the second half of the fiscal year.
At this time, the full-year earnings forecast remains unchanged. If it is necessary to make an announcement
after careful examination, we will do so as soon as possible.
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11

2. Forecast for FY2022

Progress in Relation to Full-Year Forecasts: Net sales
In the second half of the fiscal year, sales are expected to increase due to the release of three new titles but are expected
to decrease from the initial projection due to the delay of some titles.

Net sales

Full-year forecast:

13,000 million yen

1H Results 5,800 million yen
Q1: 2,927 million yen, Q2: 2,873 million yen

Progress in 1H
44.6%

1H Results (Apr-Sep)
Existinggame

New game

Q3 Progressgoal

2nd half (Oct-Mar) Forecast• In the mainstay IP titles
anniversary events and measures linking to movies
release are performing well.

• Expected to decrease from 1H• The release date of GGGGG scheduled for the firsthalf of the year
Changed to the second half of the fiscal year.
Expected sales will be postponed to the second halfof the year.

• Expect sales to increase due to the planned
release of three titles (in-house distribution =gross sales).
• However, sales are expected to be lower thaninitially estimated due to the delayed release ofsome titles.

New
business
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-• Monthly publication of light novels starting in
October122. Forecast for FY2022

Progress in Relation to Full-Year Forecasts: Operating income
Due to the delayed release of some titles, operating income in the second half is expected to be lower than theforecast at the beginning of the period.

Operating income

Full-year forecast:

2,000 million yen

1H Results 1,607 million yen
Q1: 817 million yen, Q2: 790 million yen
Progress in 1H
80.4% (%)

1H Results (Apr-Sep)
Existinggame

New gameNewbusiness• Strong performance of high-margin mainstay IP
titles (net sales)• Due to the change in release timing, advertising andother expenses that were expected in the first halfof the fiscal year will be postponed to the second
half of the fiscal year.

• Partially unrealized R&D expenses

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Q3 Progressgoal

2H (Oct.-Mar.) Forecast• Expected to decrease from 1H• Three titles are scheduled to be released. Expect anincrease in advertising and other expenses in
conjunction with the releases.
• Profit is expected to be lower than the forecast
at the beginning of the period due to the delayed
release of some of the three titles.
• Investing R&D and other expenses in accordancewith business progress13

2. Forecast for FY2022

Summary of Consolidated Financial Forecasts for the Full Year (Reiterated)
Recognized a great opportunity for business growth. Aggressive investment while expecting to secure profits.
Growth of
Game
Business

Growth ofNewbusiness(Millions of yen)
13,000

Variable cost

261

Investment Portfolio

1,860

2,211
10,528725

Advertisingexpenses

Game

9,718

Publication

Web3 & Other

Other fixed
costs

Investment
Game Development
Costs Amountrecorded as assets*

R&D
cost
737

2,000

Depreciation andamortization

Tax-2,040

FY2021
Net sales
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FY2022
Net sales

FY2022
Operating income

Investable
cash*Amount of development costs such as labor and subcontracting costs mainly related to pre-release games deducted from manufacturing costs and transferred toassets as "Software in progress".

14

1. Review of Q2 (Jul-Sep) FY2022
2. Forecast for FY2022
3. Medium-term goals and progress of each business
4. Appendix

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15

3. Medium-term goals and progress of each businessMedium-term goal
A comprehensive entertainment company that provides a variety of digital entertainment content
based on IP(1) New game hits
Main Initiatives•

Six new titles under development hit themarket(2) Acquisition, development andcultivation of IP(1) Expansion of game business
Main Initiatives• Improve profitability of titles in operation(2) Breaking away fromdependence
on the F2P* model

Securing
Stability

Main Initiatives• Webtoon, light novel, comics

Promotion of
growthpotential

Main Initiatives•

Wizardry•

Evil Prince and the Puppets•

Publishing/ Video•

NFT Project(3) Global expansion of existing/new titles
4) Business development in new
business areas•“AROW” AR application building platform•

Fan community promotion service "Rooot”•

Load testing service, vulnerability

Main Initiatives

assessment•

Webtoon, light novels, comics (publishing)•

Blockchain Game Development (Web3)•“AROW" AR application building platform•

Fan community promotion service "Rooot”•

Load testing service, vulnerability assessment*F2P: Abbreviation for free to play. An online game that can be played basically for free.
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16

3. Medium-term goals and progress of each business

Promoting growth potential: new game hits
Six development projects underway as of October 2022
Business

StatusDefinition

Number of projects

Operation

Titles inoperation

11

DetailsØ Other company distribution: 7 titles
Ø In-house distribution: 4 titles•

Wizardry Variants Daphne→3D dungeon RPG Scheduled for release during the fiscal year
ending March 2023

Game
Business

Development(Separate title from Blockchain game Wizardry BCG (tentative)
announced on 3/18/2022 )Commercialized
development

Titles underdevelopmentwith a prospect
for release

6

•

GGGGG

→Cooperative and competitive action game scheduled forrelease by the end of 2022•

Unannounced title (developed by Studio Rex)

Evil Prince and the Puppets• Location-based IP titles using “AROW”• Unannounced title (developed by Drecom)•

PrototypePre-development
stage title in works

severalØ Multiple projects in progress

Series titles and titles developed overseas are counted as one title.
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17

3. Medium-term goals and progress of each businessDriving growth potential: new game hits (continued)
11 titles in operation, with 3 planned for release during the fiscal year ending March 31, 2023
FY03/2012 – FY2021

Title
under
operation

11*

FY2022 andthereafter

Scheduled to be released during the fiscal year ending
March 31, 2023: 3 titles• Wizardry Variants Daphne→3D dungeon RPG Scheduled for release during the fiscal
year ending March 31, 2023.
(Separate title from the blockchain game Wizardry BCG (tentative))• GGGGG→Cooperative and competitive action game Scheduled forrelease by the end of 2022
• Unannounced title (developed by Studio Rex)

Title
under
development

6

Scheduled to be released during the fiscal year ending
March 31, 2024: 3 titles• Evil Prince and the Puppets• Location-based IP titles using “AROW”• Unannounced title (developed by Drecom)* Series titles and titles developed overseas are counted as one title. * Projects classified as prototypes on the previous page are not included above.
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18

3. Medium-term goals and progress of each business

Progress of Game Business: GGGGG App store reservation started
With the next generation communication standard "5G" coming into service, this experimental title pursues
a new experience on mobile phones.
After announcing full-scale entry into the Web3 domain, NFT functionality was also implemented.

GGGGG(read: g-g-g-g-g-)

•
•
•
•
•
•
•
•

Genre: Cooperative and competitive action game
Release date: Year 2022
Supported platforms: iOS/Android
Price: Free for basic play (with in-game purchases)
Development/Distribution/Operation: Drecom Inc.
Countries of distribution: 172 countries and regions
worldwide, including Japan
Copyright Notice: ©Drecom Co., Ltd.
NFT skins that can be changed in-game will also be
available

Copyright Drecom Co., Ltd. All Rights Reserved.

Press Release (September 20)
https://drecom.co.jp/news/2022/09/20220920-01.php
193. Medium-term goals and progress of each businessGame Business Progress: Wizardry Variants Daphne Information Release
The official title was decided. The release date, originally set as "within the year 2022," was changed to”by the end of the fiscal ear 2022.”
We will keep acquiring copyrights and trademarks of popular IPs and develop original titles.

Wizardry Variants Daphne•••

Genre: 3D dungeon RPG
Release date: Within fiscal year 2022
(during FY2022)
Supported platforms: iOS/Android
Price: Free for basic play (with in-game charges)
Development/Distribution/Operation: Drecom Inc.
Country of distribution: Worldwide (Japan andoverseas)
Supported languages: Japanese/English *At the time of•

Copyright Notice: © Drecom Co., Ltd

•
•
•
•

distribution

Copyright Drecom Co., Ltd. All Rights Reserved.

Press Release (October 26, 2012)https://drecom.co.jp/news/2022/10/20221026-01.php
203. Medium-term goals and progress of each businessAccelerate growth potential: acquire, develop, and nurture IP
Strengthen our IP production capabilities by adding "our investment areas of publishing, video business,and the Web3 domains" to "our strengths.”
IP Producing Capability
IP development andacquisition

Policy• Focus on quality of IP to be developed
and acquired• Aiming for controllable IP ownership

Our
Strengths

Game
Development/Distribution

NFT
Copyright Drecom Co., Ltd. All Rights Reserved.

• Expanding the fan base throughcross-media development• IP development based on fan
community

IP fan community
management using SNS

×

IP Monetization Channel
Diversification• Breaking away from dependence
on the F2P model• Multi-layered revenue portfolio
based on diverse monetization
channels

IP gamedevelopment/distribution

×

Investment
Areas

Light novels
ComicsIP development

××
Webtoon×

Cross-media development
Animation/Video etc.

Book and e-book sales
Animation/FilmRights management
Overseas expansion, etc.

NFT/Community
Management

Blockchain game21

3. Medium-term goals and progress of each business

Progress in Publishing and Video Business
Light novel label "DRE Novels" to launch on October 7; Webtoon to be co-produced with a leading Korean studio

Light novel label "DRE Novels" is launched.
All 9 works to be published this year
will be comicalized.

Webtoon productions
Announced a joint production
with Contents Lab.Blue Tokyo
About Contents Lab. Blue
Global webtoon production company headquartered in Korea
Webtoon adaptation of famous web novels and popular publishedmanga.
In Japan, "Piccoma”mange series started in September 2021.
The romance fantasy "The Unapproachable Lady" swept
the popularity ranking charts as soon as it was distributed andbecame a hot topic.

■Official website of "DRE Novels":.
https://drecom-media.jp/drenovels
Copyright Drecom Co., Ltd. All Rights Reserved.

The Japanese branch, Contents Lab. Blue Tokyo established in
January 2022. In charge of Webtoon and Manga production,
localization, and global distribution of webtoons and manga, etc.
mainly for the Japanese market.

Press Release (October 25, 2012)https://drecom.co.jp/pr/2022/10/20221025-02.php
223. Medium-term goals and progress of each business

Promote growth potential: Business development in new business areas(Web3 domains)
Launched 5 initiatives in areas of high affinity with existing businesses. Aiming to promote growth strategies
through Entertainment x Web3
Existing Initiatives
Initiatives in the Web3 domains(1) Blockchain game
(FT+NFT)

Game Business

Mobile game
Development and Operation(2) NFT x Games
(e.g., GGGGGG)

Publishing andVideo Business

Webtoon, animation
Light Novels, Comics

B to B Business

Fan Community Promotion
Services

M&A, Investment

Load Testing Services
M&A of game development
companies
IP Acquisition Investment

Copyright Drecom Co., Ltd. All Rights Reserved.

×Web3(3) NFT(4) Business support in the
Web3 areas(5) Net investment in
Web3 areas23

3. Medium-term goals and progress of each businessEntering Performance Expansion Phase
Aiming to enter a phase for a virtuous cycle of earnings expansion by aggressively investing cash generated fromthe game business.
FY2022

FY03/2024

FY03/2025

Sales: 13 billion yen (forecast)
Operating income: 2 billion yen (forecast)

Sales: +20% or more YoY
Operating margin: Maintain 15%

Sales: +20% or more YoY
Operating margin: Maintain 15%
GrowthGrowthGame
Publication
animation
copyright
acquisition
Web3

GrowthGame
Publication
Web3

Investment

Game
Publication
animation
Web3

Growth driver• Three new games••

Light novels/Comics
Webtoon••

NFT
Blockchain game

Growth driver• Three new games• Light novels/Comics• Webtoon• Animation/Video

ProfitShare-holder
returnCopyright Drecom Co., Ltd. All Rights Reserved.

Investment• NFT• Blockchain game

Share-holder
returnProfitInvestment

Growth driver• New Game
• Light novels/Comics• Webtoon• Animation/Video• NFT• Blockchain Games• Rights management• Global Expansion

ProfitShare-holder
return24

1. Review of Q2 (Jul-Sep) FY2022
2. Forecast for FY2022
3. Medium-term goals and progress of each business
4. Appendix

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25

4. Appendix

Revenue status of titles in operation (by release date)
Breaking away from the dependence on few hit titles to a portfolio that earns stable revenue from multiple hit titles
Total sales of titles under operation
2011

2014

FY03/2020

2015

2016

2017

FY03/2021

2018

2019

FY2021

Total business profit transition of titles under management
2020

2021

2022

FY20222011

FY03/2020

2014

2015

2016

FY03/2021

2017

2018

2019

FY2021

2020

2021

2022

FY2022*Please refer to the fact sheet posted on our website for consolidated business performance trends, cost of sales, SG&A expenses, etc., and game business billing sales trends.
https://drecom.co.jp/ir/factsheet_202303Q2.pdf
Copyright Drecom Co., Ltd. All Rights Reserved.

26

4. Appendix

ESG Initiatives
1) Establish a working environment that takes into account human rights, diversity,and flexibility

In addition to prohibiting discrimination in the workplace and implementing
appropriate labor management, we are focusing on maintaining the health of ouremployees and creating a working environment that considers and respects thelife events and life stages of our employees by introducing remote work andIn order to achieve sustainable growth and maximize
shareholder value, and to ensure sound and appropriate
management, Drecom is focusing on strengthening
governance, especially the appointment of female directors,
the appointment of many independent outside directors withdifferent professional backgrounds, and active discussions.

encouraging male employees to take childcare leave.
2) Support for employees' health promotion and skill development
We are taking the following measures to create anenvironment where employees can exercise their fullpotential in good health.
-Installation of massage rooms-Cafe space in partnership with a popular cafe

1) Actively appoint female directors

As of May 2022, the ratio of female directors is 20%.
2) Balance between internal directors and independent outside directors

As of May 2022, the ratio of independent outside directors to all directors is
60%.

-Support for holding knowledge-sharing events

3) Diversity of Independent Outside Directors

and dissemination of technology-related information

The Company appoints experts in various fields, such as certified public
accountants, lawyers, and university professors, as independent outside
directors.

3) Support for entrepreneurial communities

As a pioneer in the field of IT venture and student entrepreneurship, we are undertaking thefollowing initiatives to contribute to the development of future entrepreneurs andthe further revitalization of entrepreneurship in Japan.
-Holding programming classes for junior and senior high school students-Speaking at and supporting various entrepreneurship-related events-Support students by sponsoring programming classes

4) Regular Board of Directors meetings and high attendance rate

The Board of Directors meets regularly on a monthly basis to share
information on business conditions and management issues in a timely
manner and engage in active discussions. 19 Board of Directors meetings were
held annually for FY2021 and 24 meetings were held annually for FY03/2021.

-Providing office space for study groups and seminars

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27

4. Appendix

List of game titles in operation
Title NameDistributor

Service start date

Chokotto Farm

Drecom Co., Ltd.

Jan 2011

ONE PIECE Treasure Cruise

BANDAI NAMCO Entertainment Inc.

May 2014

BOKU & DRAGONS

studiorex Co., Ltd.

Feb 2015

Derby Stallion: Masters

Drecom Co., Ltd.

Nov 2016

Everybody's Golf

Forward Works Corporation

Jul 2017

Kirara Fantasia

Aniplex Corporation

Dec 2017

THE IDOLM@STER SHINY COLORSBANDAI NAMCO Entertainment Inc.

Apr 2018

NEKO & DRAGONS

studiorex Co., Ltd.

Apr 2019

Super Robot Wars DD

BANDAI NAMCO Entertainment Inc.

Aug 2019

Disgaea: Hour of Darkness RPG

Forward Works Corporation

Nov 2019

New Japan Pro-Wrestling Strong Spirits

Bushiroad Inc.

Feb 2022

Copyright Drecom Co., Ltd. All Rights Reserved.

28

4. Appendix

Glossary
Terminology

Meaning

Games distributed in-house

Games for which Drecom is the distributor. We are in charge of game planning, development, advertising,and sales.

Games distributed by other companies

The game is distributed by another company, and Drecom is in charge of development as a partnering company.

Platformer

Apple, Google, and other companies that provide service infrastructure systems to users and third parties.

Gross sales

The amount of money paid by the user to the distributor, Drecom.

Net sales

The amount of money distributed from the distributor to the developer, Drecom.

Developer

A company responsible for the development of games.

Amount of game development costs
charged to assets

Amount of development costs, such as labor and subcontracting costs, mainly related to pre-release games,
deducted from manufacturing costs and transferred to assets as "Software in progress".

Research and development expenses

Costs associated with planning and creating prototypes for new games and services.

IP

Abbreviation for Intellectual Property.

Commercialized development

Game development is in full swing.

Anniversary Events

Every six months and a year, an event is held that boosts the game. The number of active users and sales often
rise compared to normal times due to the introduction of many new measures and contents

Copyright Drecom Co., Ltd. All Rights Reserved.

29

Please refer to the Fact Sheet on our website for consolidated financial results, cost of sales, SG&A expenses, etc.,
and billing sales in the game business. https://drecom.co.jp/ir/factsheet_202303Q2.pdf

Among the perceptions, strategies, plans, etc., described in this document, the outlook is not a historical fact but contains uncertain
elements. Actual results may differ materially from those in the forward-looking statements for a number of reasons. Important factorsthat may affect actual business results include, but are not limited to, economic conditions surrounding our business, social trends,
and changes in relative competitiveness due to demand trends for the services we provide.