Digital Garage, Inc.
株式会社デジタルガレージ- 1Q of FYE June 2014 2013年6月期 決算説明会
Financial Report
November 12, 2013

FY14.6 1Q Summary: Profit and Loss (Consolidated)
context company

Revenue increased 37% YoY, Ordinary profit almost tripled〜Marketing and Payment grew steadily. Incubation delivered results
due to favorable market conditions〜

JPY in Million

FY13.6

FY14.6YoY

1Q Actual

1Q Actual

Amount

FY14.6

FY14.6

2Q Cumulative

Full Year

Forecast

Forecast

Net sales

5,307

7,273+1,966

15,00032,000Operating income△ 5186+137

△ 300

1,800

Ordinary income167473+306

350

3,500Net income

213

389+176

100

2,100

EBITDA

696970+274940

4,800

Note: EBITDA is based on preliminary calculation.

-2-Copyright © 2013 Digital Garage, Inc. All Rights Reserved

FY14.6 1Q Summary: Balance Sheet (Consolidated)
context company

JPY in Million

FY13.6

FY14.6̲1Q

Q on Q

Current assets

33,83733,363-474

Cash and deposits

15,32913,717-1,612

Receivables

9,037

8,972-65

Payment-business-related items

Money held in trust

3,768

3,886+118

Payment-business-related items

Operational investment securities2,641

3,492+851

Proactive investment continued

22,17322,443+270

Investments

5,521

5,786+265

Investment real estate

3,102

3,266+164

Goodwill

9,968

9,808

-160

Total assets

56,01055,806-204

Current liabilities

21,80121,019-782

18,22915,035-3,194(quarter-end, weekday / end factor)

305

3,198+2,893

Increased demand for working

6,950

6,915

-35

6,799

6,786

-13

Total liabilities

28,752

27,934-818

Net assets

27,25827,872+614■ Equity Ratio

Retained earnings

7,003

7,158+155

Liabilities / Net assets

56,01055,806-204

46%(13/6) → 47%(13/9)

Fixed assets

Deposits
Short-term borrowing
Fixed liabilities
Long-term borrowing-3-Reason for change / Remarks
Investment, Corporate tax,
dividends, etc■ Quick Ratio
155%(13/6) → 159%(13/9)
Payment-business-related items

capitalCopyright © 2013 Digital Garage, Inc. All Rights Reserved

Business Segments
context company

DG leads Lean Global with 3 Business segments
Incubation Segment
Incubates world-changing service ideas and transforms them into next
generation internet businesses
Investment to cultivate promising startups inside and outside Japan
Development of media services inside and outside Japan
Technology/business development using Lean Startup methodology

Marketing Segment
Supports clients through providing cutting-edge datascience technology, web advertising / promotion
Data science businessWeb advertisement, media business
Oto related, Business development

Payment Segment
Aims to become Asia's largest payment service
provider based on expertise and technology built
in the Japanese Market
Payment platform in Asia
One of the largest online settlement
infrastructures in Japan-4-Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Business Segment’s Highlight : Incubation（JPY in Million）

context company【Net Sales】

FY13.6【Operating Income】（JPY in Million）

FY14.6

FY13.6

FY14.6

Achieved strong revenue growth from sale of stocks and Neo’s businessexpansion. Opened startup incubation center (aka DG717) in San
Francisco to lead lean global.
-5-Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Business Segment’s Highlight : Marketing（JPY in Million）

context company【Net Sales】

FY13.6【Operating Income】（JPY in Million）

FY14.6

FY13.6

FY14.6

Internet ads and mall business gained traction, achieving strong revenue
growth of 30% YoY. Announced the launch of data science business with Dentsu
and Kakaku.com to optimize marketing activities for clients.
-6-Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Business Segment’s Highlight : Payment（JPY in Million）

context company【Net Sales】【Operating Income】（JPY in Million）

Adjustment forchange of fiscal term

Adjustment forchange of fiscal term

Net Sales

Operating income

3,194

FY13.6257

FY14.6

FY13.6

FY14.6

Achieved strong revenue growth of 17% YoY, following the growing domestic
ecommerce market. Incurred expenses pertaining to planned IPO at HKSE.
Started full-fledged Payment strategy in Asia, following Indonesia and China.
-7-Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Topics：Opening San Francisco Incubation Centercontext company

DG opened Startup Incubation Center in San Francisco to lead Lean Global
Digital Garage announced the launch of DG717 , a startup incubation centerin San Francisco. Digital Garage and Neo hosted New Context Conference on
5 th – 6 th November. San Francisco Mayor Ed Lee proclaimed November 5 th as
Digital Garage Day . Mr. Taro Aso, Deputy Prime Minister, sent acongratulatory message from Japan. Mr. Nobuhiro Watanabe, Deputy Consul
General of Consulate-General of Japan in San Francisco, gave a speech at theceremony. Joi Ito, DG co-founder and MIT Media Lab Director, delivered akeynote at the conference along with Biz Stone, Twitter co-founder.

Link to DG717
http://www.dg717.com/about.html-8-Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Topics：Opening San Francisco Incubation Center
context company

Media coverage on the launch of DG717 - Japan and overseas◆Wall Street Journal
Digital Garage Announces Startup Incubator in San Francisco to Bridge Japanese and U.S. Technology Communities
http://online.wsj.com/article/PR-CO-20131104-907573.html?dsk=y◆Yahoo FinanceDigital Garage Announces Startup Incubator in San Francisco to Bridge Japanese and U.S. Technology Communities
http://finance.yahoo.com/news/digital-garage-announces-startup-incubator-160028310.html◆世界新聞網Digital Garage進軍金山
http://worldjournal.com/bookmark/23988270-Digital-Garage◆Nikkei
Digital Garage Launches Startup Incubation Center in US
http://www.nikkei.com/article/DGXNASDD060P4̲W3A101C1TJ2000/◆CNET
Digital Garage Opens New Space in San Francisco – Kickoff event
http://japan.cnet.com/news/service/35039533/
Digital Garage Opens Incubation Center in San Francisco
http://japan.cnet.com/news/business/35039410/

Keynote session - from left, DG co-founder Joi Ito,
Twitter co-founder Mr. Biz Stone,
Mr. John Underkoffler from Oblong, Minority Report
UI designer◆Toyo Keizai Online
Digital Garage Opens New San Francisco Space
http://toyokeizai.net/articles/-/23538-9-

Startup panel - Mr. Oki Matsumoto ( ManagingDirector and Chairman, Monex Group ),Mr. Teruhide Sato ( President and CEO, netprice.com ),and several other key leaders(Photo by Taro Matsumura)
Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Topics：Launching Data Science Business
context company

Next generation ad marketing in collaboration with Dentsu, cci, and ADK.
CGM Marketing aims at further business expansion as BI. Garage .
Business Framework

Corporate Logo

MissionOptimize marketing activities forclients and create new value formedia by leveraging Dentsu / DG
group’s data and building
alliances with media including
mass.

-10-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Financial Summary : Quarterly Profit and Loss (Consolidated)
context company

JPY in Million

FY12.6

FY13.6

FY14.6

1Q

2Q

3Q

4Q

1Q2Q

3Q

4Q

1Q

Net sales

3,418

2,879

5,202

3,403

5,307

8,539

6,482

7,636

7,273

Incubation

583

17

1,973

37131

616

497

1,263

927

Marketing

1,906

1,939

2,295

2,416

2,364

2,748

2,825

3,104

3,068

Payment

928

922

933

949

2,810

5,174

3,158

3,269

3,277

437

△ 134

1,708

△ 389

△ 51523

151

698

86

Incubation

387

△ 136

1,650

△ 268

△ 258

56

△ 20512△ 77

Marketing

142

139

163

65

129

12055

167

136

Payment154

128

142

126

308

480

253

260

203

Ordinary income

594

70

2,193

△ 149

167

1,000719

1,191473

Net income

533

77

1,747

△ 251

213

700

1,294507

389

EBITDA

698

163

2,292

△ 186696

1,573

2,050

1,581970

44444456200333211

195

191

Operating income

Amortization

Note: Operating income per segment is based on figures prior to elimination or Group deduction. EBITDA is based on preliminary calculation.

-11-Copyright © 2013 Digital Garage, Inc. All Rights Reserved

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 unforeseeableevents or circumstances. This announcement is solely for the purpose of the investors relationship and is not for making any solicitation for investment in any 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 which such offer, solicitation or sale would be unlawful prior toregistration 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, asamended (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 be made by means of a prospectus. Such prospectus will contain detailed information about the company making theoffer and its management and financial statements..