（FYE January 2016 Q2 Financial Results supplementary explanatory materials）

Q2 Results for FYE January 31st 2016 (12th period)

Presentation Material

September 14, 2015
Enigmo Inc.
(C) 2015 ENIGMO,INC. All rights reserved.

01

Company Profile
Name of the Company

Enigmo Inc.

Main Business

Management of social shopping site "BUYMA"

Location

Juko Bldg. 7F, 1-26-1 Minami Aoyama, Minato-ku, Tokyo

Date of Establishment

February 10, 2004

Representative

Representative Director and Chief Executive Officer Shokei Suda

Capital381.9 million yen

Number of Employee

50 people (As of end of July, 2015)

Accounting Period

The end of January

Major Shareholder

Executive officers & Sony Corporation

Audit firm

Ernst & Young ShinNihon LLC(C) 2015 ENIGMO,INC. All rights reserved.

02

Highlights from the 1st half of the FYE Jan.31, 2016
This fiscal year was a period of investment to achieve future growth (ie. commitment of achieving
operating profit of 3 billion yen). Particularly, mass campaigns, (whose results appear with a time lag)were launched this term; therefore we see this profit level bottoming out as of this Q2.

Mass campaigns are investments for future growth
1st half (Q1, Q2): Spreading recognition of BUYMA ➝ 2nd half (Q3, Q4): Business expansion
After the airing of TV commercials, there was a significant increase in the number of new members and new orders.
Running campaigns have surely increased the pace of growth
Acceleration of new growth of new members（140.2% over last year）
Surge in recognition %（25.0% in Feb. 2015 → 34.2% in Aug. 2015）

Measures in the second half (Q3 and Q4)
Measures to have members use the site more (“Activation”)
Merchandise enforcement (Strategic enhancement of items in various price ranges and categories)
Service programs (Expansion of compensation services, broadening premium membership)
Event program (Strengthening sales promoting programs)

TV Commercial campaigns
Expanding commercials for Autumn/ Winter season
Attempting media exposures through infomercials on nationwide broadcasting stations

Initiating a full-fledged global expansion
Launch of BUYMA English version (by end September)(C) 2015 ENIGMO,INC. All rights reserved.

03

The time-lag between acquiring BUYMA Members and achieving sales
There is a time lag between receiving orders and recording actual sales due tothe business structure Mass campaign will bring about
expanded business volume starting from the latter half of this fiscal year.
2Q (May-July 2015)

May

3Q (Aug.-Oct.2015)

June

AugustJuly

Mass campaign

Number of new membership(July yoy 182.1%）

Amount of orders received(July yoy 131.2%）

Actual sales recorded(July yoy 122.3%）(C) 2015 ENIGMO,INC. All rights reserved.

04

Earnings results for the 1st half of the FYE Jan.31, 2016
Enigmo Inc.

2Q(Cumulative)
FYE2016

Total trading
amount※ including settlement
fee etc.

Revenue

Consolidated(non-consolidated)
2Q(Cumulative)
FYE2015yoy

12th stageJanuary
2016 forecast

Progressrate

2Q(Cumulative)
FYE2016

Total trading
amount10,548 million yen

9,978 one million yen 105.7%

31,529 million yen

33.7%

1,158 million yen

1,103 million yen 105.0%

3,436 million yen

33.7%

Revenue

1,198 million yenー※ including settlement
fee etc.

Operatingprofit/ loss

21 million yen

568 million yen

3.9%

702 million yen

3.2%

Operatingprofit/ loss(41) million yen

Ordinary
profit/ loss

23 million yen

569 million yen

4.2%

702 million yen

3.4%

Ordinary
profit/ loss(45) million yen

Net income/ loss

25 million yen

351 million yen

7.2%

432 million yen

5.9%

Net income/ loss

(61) million yen

Earnings per share(for the quarter)(yen)

Per share the year
¥1.01

¥16.86

7.1%¥20.27

5.9%(quarter)
Net income and loss
amount (yen)¥2.88※ Full year forecast remains unchanged as company earnings tend to be concentrated in the second half of the fiscal year.

(C) 2015 ENIGMO,INC. All rights reserved.

05

Revenue trend (parent) (non-consolidated)
Effect of the mass campaign is expected in the 2nd half and beyond
Advertising Business

BUYMA(Unit:¥MM)

2,500

2,285

2,000

1,823

1,439

1,500

1,103
1,000

1,158

851
47

500

804

0
FYE
Jan.2012

FYE
Jan.2013

FYE
Jan.2014

FYE
Jan.2015

2Q (May-July)
Jan.2016(C) 2015 ENIGMO,INC. All rights reserved.

06

Selling, general and administrative expenses (non-consolidated)
SG &A expenses expanded to 276.2% you
due to the increase in advertising costs for the mass campaign（SG & A expenses, excluding advertising expenses was 114.2% yoy）
( Unit:¥MM)

2Q(Cumulative) FYE2016

Previous year

yoy (%)

Personal Expenses

199 million yen

181 million yen

109.9%

Advertisement expenses

636 million yen

76 million yen

837.9%

Depreciation

4 million yen

4 million yen

95.9%

Other

97 million yen

77 million yen

125.4%

Total

937 million yen

339 million yen

276.2%(C) 2015 ENIGMO,INC. All rights reserved.

07

Operating profit and margin (non-consolidated)
Operating profit for this half year was reduced to 3.9% of that of the same
period last year due to the advertising costs for the mass campaign
OPM( Unit:¥MM)

60.0%

1,500

52.3%
46.7%
1,200

1,196

48.0%

41.5%
36.0%

852

900

597

24.1%

24.0%

600

568

300

9.3%

12.0%

205

Investment(Advertising)

85

1.9%
21

0
FYE
Jan.2011

FYE
Jan.2012

FYE
Jan.2013

FYE
Jan.2014

FYE
Jan.20150%2Q (May-July)
Jan.2016(C) 2015 ENIGMO,INC. All rights reserved.

08

Overview of BUYMA business(C) 2015 ENIGMO,INC. All rights reserved.

09Profile of BUYMA Business
BUYMA is a social shopping site that offers a unique shopping experience
with unlimited fashion merchandise by connecting individualsof the world through its own unique “C to C” services

Membership

Number of items
on display

2,567,000 people
over 10,000 items/ day

Number of Personal
Shoppers
Number of countries where
Personal Shoppers resideMore than 70,000

123 countries※ 2015 July 31, point(C) 2015 ENIGMO,INC. All rights reserved.

10Trend of the Number of BUYMA Registered Members
BUYMA members have steadily increased and was 130.2% yoy(Unit：Person)

3,000,000

2,567,000
2,500,000
2,235,261

2,000,000

1,972,313
1,693,994
1,500,000
1,190,574
1,000,000
819,886

500,000

0
FYE
Jan.2012

FYE
Jan.2013

FYE
Jan.2014

FYE
Jan.2015

2Q (May-July)
Jan.2016(C) 2015 ENIGMO,INC. All rights reserved.

11

Trend of the number newly obtained BUYMA Members
New membership surged after the mass campaign; 182.1% yoy for July
(Unit：Person)

200,000

198,188

160,000

141,320

120,000

80,00040,0001Q

2Q 3Q 4Q

1Q 2Q

3Q 4Q

1Q

2Q 3Q 4Q

1Q 2Q 3Q 4Q

1Q 2Q

0
FYE
Jan.2012

FYE
Jan.2013

FYE
Jan.2014

FYE
Jan.2015

2Q (May-July)
Jan.2016(C) 2015 ENIGMO,INC. All rights reserved.

12

Trend of the number of active BUYMA members
The number of BUYMA active members after mass campaign started
surged to 124.1% yoy in July 2015
(Yearly active member number 539,958 people)
Monthly Active members: Members who have bought at least once in the monthYearly active members:
Members who have bought at least once within the last year

196,134

200,000(Unit：Person)

174,553
160,000

120,000

80,00040,0001Q

2Q 3Q 4Q

1Q 2Q

3Q 4Q

1Q

2Q 3Q 4Q

1Q 2Q 3Q 4Q

1Q 2Q

0
FYE
Jan.2012

FYE
Jan.2013

FYE
Jan.2014

FYE
Jan.2015

2Q (May-July)
Jan.2016(C) 2015 ENIGMO,INC. All rights reserved.

13

BUYMA Total trading volume
July total trading volume after the start of the mass campaign was 122.3%
yoy in July 2015 (131.2% on an orders base)(Unit:¥MM)

6,000

5,373
5,000

4,762

4,000

3,000

2,000

1,000

1Q

2Q 3Q 4Q

1Q

2Q 3Q

4Q

1Q

2Q

3Q

4Q

1Q 2Q

3Q

4Q

1Q

2Q

0
FYE
Jan.2012

FYE
Jan.2013

FYE
Jan.2014

FYE
Jan.2015

2Q (May-July)
Jan.2016(C) 2015 ENIGMO,INC. All rights reserved.

14

Total number of BUYMA transactions
The number of BUYMA transactions in July 2015
after the mass campaign was 121.6%yoy (134.6% on an orders basis)(Unit:Case)

350,000

321,601
303,647
300,000

250,000

200,000

150,000

100,000

50,0001Q

2Q 3Q 4Q

1Q 2Q

3Q 4Q

1Q

2Q 3Q 4Q

1Q 2Q 3Q 4Q

1Q 2Q

0
FYE
Jan.2012

FYE
Jan.2013

FYE
Jan.2014

FYE
Jan.2015

2Q (May-July)
Jan.2016(C) 2015 ENIGMO,INC. All rights reserved.

15

Highlights on measures implemented in the first half of FYE Jan 2016
and measures planned for the second half(C) 2015 ENIGMO,INC. All rights reserved.

16

Measures implemented in the first half of FYE Jan 2016

Policies announced at the beginning of the fiscal year

Measures for member
acquisition
We will continue to reach out to10 million potential customers

Measures to maintaina high ARPU
Increase number of transactions
to maintain a high ARPU

(C) 2015 ENIGMO,INC. All rights reserved.

17

Member acquisition measures - Flow of Mass Campaign
FYE Jan 2016 Q2 July 2015

[Phase1][ Acquiring new members ]Spreading recognition and establishing image
Large scale advertising copies to draw attention:
6 commercials consecutively aired during the soccer world cup

A distinct brand imageFYE Jan 2016 Q3 October 2015

[Phase 2]

FYE Jan 2016 Q3 January 2016

[ Activating members ][Phase 3]

Having members understand our services
and promote purchases[ Maximizing sales ][Acquiring more members]

Running regionallyfocused commercials
on TV and on the web

Acquiring moremembers through thewinter sales campaign

to enhance customer
understanding

Maximize revenue
through large-scale
TV advertising

TV viewers’ voices
Female 40s : Eye catching commercial with popular figures.Stylishcommercial as the colors are calm-toned.
Female 30s : I thought the commercial was cool as it had the popular
figure who I liked
Female 20s : I think I may be able to find something unique- items that
nobody else has(C) 2015 ENIGMO,INC. All rights reserved.

18

Member acquisition measures - Mass campaign
Introduction of expansion ad
Nation-wide TV commercial

Broadcast area: National
Aired Date: 2015/06/16 (Tuesday)
W Cup qualifying
2015/06/20 (Sat) - 06/28 (Sun)2015/07/04 (Sat) - 07/12 (Sun)In-station advertising

Giant public screens

Place：Omotesando station (Ginza line heading Shibuya)
Duration：2015/07/06（Mon）〜 07/12（Sun）

Alta vision (Shinjuku) ：2015/06/19（Fri）〜
Shibuya IG (Shibuya) ： 2015/06/19（Fri）〜(C) 2015 ENIGMO,INC. All rights reserved.

19

Member acquisition measures - Mass campaign
Recognition jumped from 25.0% (Feb.2015）to 34.2％ (Aug.2015）
after airing the nation-wide TV commercial（49.0% in the “F1” segment）% of those who know BUYMA※

TOTAL

50.0%

F1（20 to 35 female)

49.0%

40.0%

36.4%

34.2%
30.1%
30.0%

23.6%
25.0%
20.0%

15.9%

17.9%

20.8%
16.6%

10.0%

13.2%

14.5%

336
0.0%
July.2011

Feb.2012

March.2013

March.2014

Feb.2015

Aug.2015※ those who have visited the 【shopping websites（fashion）】 within the last 6 months(C) 2015 ENIGMO,INC. All rights reserved.

20

Member acquisition measures - Mass campaign
As a result of the mass campaign, new membership numbers
have surged（140.2% yoy）
New membership(Unit：Person)

200,000

Nation-wide CM
Large screens
In-station advertising

180,000

160,000

140,000

120,000

336
100,000

1Q

2Q

3Q

FYE
Jan.2014

4Q

1Q

2Q

3Q

FYE
Jan.2015

4Q

1Q

2Q

2Q (May-July)
Jan.2016(C) 2015 ENIGMO,INC. All rights reserved.

21

Member acquisition measures - Mass campaign
Expansion into the mass market
As a result of the mass campaign, there has been an increase in the share of male members,
those under 20 years old and over 40 years old; thus servicing the mass market

Change in share of male members

Share of those under age 20

13.5%

24.3%

17.6%
15.4%

20.6%

2Q (May-July)
FIY2015

Share of thoseover age 40

11.0%

2Q (May-July)
FIY2016

2Q (May-July)
FIY2015

2Q (May-July)
FIY2016

2Q (May-July)
FIY2015

2Q (May-July)
FIY2016(C) 2015 ENIGMO,INC. All rights reserved.

22

Member acquisition measures - Mass campaign
Surge in the number of male members
Number of registrations by men

Total transactions in the mens category

With an increase in 141,250 people,
Membership of men exceeded 50 million (134.3% yoy)

Increase by 440 million yen(134.0% yoy)

(New membership surged：165.8%yoy for May 〜July)(On an orders base：151.9%yoy for May 〜July)(Unit:¥MM)(Unit：Person)

553,652
412,402

2Q (May-July)
FIY2015

1,744
1,302

2Q (May-July)
FIY2016

2Q (May-July)
FIY2015

2Q (May-July)
FIY2016(C) 2015 ENIGMO,INC. All rights reserved.

23

Member acquisition / activation measures - campaign events
Conducted a members-only secret SALE for registered members
Recorded a historic high number of new members registered(on July 22, 2015)

Campaign dates
1st trial: June 16 (Tues) 19: 00 ~ 26: 00
2nd trial: July 22 (Wed) 19: 00 ~ 26: 00(C) 2015 ENIGMO,INC. All rights reserved.

24Member acquisition / activation measures - MD measures
Expand item line-up in the lower price range, which are easier for new members to buy
Growth in the number of exhibited items under ¥20,000 (which had slowed down) has largely increased(75.5% of initial purchase goods cost less than ¥20,000)
Composition ratio of the purchase amount ot the first user
(Result for FYE Jan.2015)
40 to 100 thousand yen
6.87%

More than
100 thousand yen
２.23%

20 to 40thousand yen
15.38%

Number of new exhibitions by different price range■■ less than 20 thousand yen ■ 20 to 100 thousand yen ■ more than 100 thousand yen(Unit：Case)

600,000

500,000

400,000
10 to 20
thousand yen
23.84%

Less than
10 thousand yen
51.69%

300,000

200,000

100,0000
2Q (May-July)
FIY20122Q (May-July) 2Q (May-July)
FIY2013
FIY2014

2Q (May-July)
FIY2015(C) 2015 ENIGMO,INC. All rights reserved.

25

Member acquisition / activation measures - MD measures
The number of brands expanding steadily
Trend of brands registered
7,000(Unit: number of Brands)

6,700
Brands or
more

6,500

6,000

5,500

5,000

4,500

336
4,000

1Q

2Q

3Q

FYE
Jan.2014

4Q

1Q

2Q

3Q

FYE
Jan.2015

4Q

1Q

2Q

FYE
Jan.2016(C) 2015 ENIGMO,INC. All rights reserved.

26

Member acquisition / activation measures - Service Measures
As we run mass campaigns to increase new members, we also

Increased the categories where item-returns are accepted,
to reduce the anxiety for first-time buyers(89.1% of the customers have a positive impression when they find certain items can be returned）
How customers will feel when they ﬁnd
the service guaranteeing returns
Not muchaﬀected,9.4%

Not aﬀected,
1.5%

Big positive
factor, 59.3%

Positivefactor,29.8%

返品可能カテゴリ(一部)※Own company research “Research on EC
websites（conducted：Jan 30th- Feb 1st 2015
Surveyed：those who used a fashion EC site within the last 6

トップス

ボトムス

ワンピース

靴・シューズファッション雑貨小物

ドレス

メンズ シューズ

メンズ トップス

メンズ ボトムス

モバイルケース

months/the positive effect of having a return OK policy whenpurchasing from an EC site(C) 2015 ENIGMO,INC. All rights reserved.

27

Global Expansion(C) 2015 ENIGMO,INC. All rights reserved.

28

Advantages of BUYMA - Personal Shopper Network
Personal Shopper network of more than 70,000 Japanese people
in 123 countries around the world
Geographical distribution of Personal Shoppers
Sweden

UK

0.4%

5.8%

CanadaGermany

6.5%

2.4%

China

France
Spain
1.0%

3.4%

6.7%

Italy
2.2%

USA

47.6%

Korea
6.5%

Thailand
2.0%
Malaysia
0.9%

Indonesia
Singapore 0.7%

Brazil2.0%

0.4%

Australia
4.5%

NewZeaLand
0.9%※ As of end July 2015
(C) 2015 ENIGMO,INC. All rights reserved.

29

Advantages of BUYMA - Personal Shoppers
A prominent system to create Personal Shoppers with hospitality

1

Training programs for new Personal Shoppers

2

Check and advice system by Customer Support ※3

Enlightenment through Personal Shopper appraisal system

4

System of Premium Personal Shopper※ Customer Support → A department to respond to customers(C) 2015 ENIGMO,INC. All rights reserved.

30

Advantages of BUYMA - Attractive collection of products
An excellent system to offer attractive productsCollecting
information

Analyzeand share・Analysis through media

・Measures to offer more
items

・Collecting informationin the relevant industry

Collaborate

exhibit・Sales promotion

・Searching and analyzingof purchase data

・Sending mail magazines
from Personal Shoppers

・Collecting informationfrom Personal Shoppers

・Recruiting specialized
Personal Shoppers

BUYMA operating team

Personal Shopper(C) 2015 ENIGMO,INC. All rights reserved.

31

Advantages of BUYMA - summary
A combination of our own CtoC platform andthe operational ability to maximize the appeal of BUYMAStrengths of BUYMAC2C Platform-typebusiness model

Operation
Excellence

Our own highly profitable model

A leveraged operation to control
a large scale platform
with limited number of people(C) 2015 ENIGMO,INC. All rights reserved.

32

Global BUYMA - Concept of global expansion
In 2015, BUYMA will be able to buy and sell anywhere in the world.

GLOBAL BUYMA
BUYMAbuyma.com

1:N

N:N
and

Japanese fashion market in 2020

19 trillion yen

buyma.us

and Moreand More

Global fashion market in 2020

325 trillion yen(C) 2015 ENIGMO,INC. All rights reserved.

33

Global BUYMA - Concept of global expansion「All Japan strategy」
There are many ways to expand globally.
Establishing a local affiliated company. M&A of foreign companies. Forming business alliances with foreign companies.
Enigmo’s idea of global expansion is none of these.
Web service, which requires maintenance every day
Requires passion to operate; passion is everything

As for BUYMA, operating with the most passion is the team in JapanI judged that, the highest success probability will be brought through the operation by this team.
Also, when users overseas purchase items,
It is actually the Personal Shoppers who they come into direct contact

76% of BUYMA’s Personal Shoppers can respond in English
Those Personal Shoppers who have been able to increase sales even under an unfavorable, weak yen environment through their quality
service and items Should now be able to, under a more favorable exchange rate environment,

Provide attractive, less expensive items with high hospitality to overseas users;
This should become a powerful advantage of BUYMA.
While there may be many ways to expand globally,

Enigmo will, with the help of our Japanese Personal Shoppers who can respond to global requests
And a passionate operating team in Japan
Pursue a new pattern of global expansion and success in the global market.

(C) 2015 ENIGMO,INC. All rights reserved.

34

Global BUYMA - Reasons why BUYMA will succeed
The one and only CtoC service in the world to be chosen by the rich in emerging
countries and/or consumers with eyes for excellence in US and Europe

1

Overwhelming number of products offered2

Trustworthiness- sense of safety and security
when shopping on the site

3

Excellent product selection and services by Personal Shoppers

4

Site structure with SEO (site engine optimization) that works in
English spoken areas

5

Started to offer Japanese products, which one can enjoy the
merits of the depreciated yen(More than 6,700 brands varying from inexpensively priced (“petit price”) items to luxury items(C) 2015 ENIGMO,INC. All rights reserved.

35

Global BUYMA - Strategic STEPs
Pull in customers from a wide range
SEO
Tune up SEO and induce
the use of people overseas

Adding Japanesemerchandise

Select regions to focus and Product Categories
Understandingof local needs

Marketing

Horizontal expansion into new regions(C) 2015 ENIGMO,INC. All rights reserved.

36

Global BUYMA - image

Oct .1
Launch schedulev(C) 2015 ENIGMO,INC. All rights reserved.

37

Group and affiliated companies’ topics(C) 2015 ENIGMO,INC. All rights reserved.

38

Topics for Group and Affiliated Companies
Media Business
Rocket Venture Inc.
・Both sales and PV grew steadily
・Investment phase this fiscal year; expected to yield profit next year

Resale Business
STULIO・Transaction amounts grew steadily, but at a small scale
・Examining our next growth strategy in the resale market

GLOBAL Business
Enigmo KOREA・Business transactions trends move simultaneously with the seasonality of BUYMA in Japan・Cleared ARPU target but not lagging behind in reaching target transaction amount・Will realign strategy as a part of the global BUYMA promotion when the English version of BUYMA is released

Image Network,Inc.
・As BUYMA English version has been released, will close service as it has fulfilled its role as a test
marketing vehicle(C) 2015 ENIGMO,INC. All rights reserved.

39

Medium-term strategy(C) 2015 ENIGMO,INC. All rights reserved.

40

Medium-term strategy
BUYMA aims to reach …

BUYMA Ecosystema domestic transaction amount of 100 billion yen
Establish a BUYMA ecosystem
To encounter and purchase an item on BUYMAThen re-sell items one no longer needs…
Providing a one-stop service from encounter to disposal

Purchase items

BUYMA※J a p a n e s e ,English,Korean

Make profits globally by
distributing wonderful items from all over the world,to people from all over the world
Globalize BUYMA, the curation, and resale businesses
By using the earnings we will stably grow as our fund source,
We will further explore areas that generate new revenue

By connecting the world and individuals,
Become a company to maximize the potentialof the individual

Encountering
new items

Curation※J a p a n e s e ,ChineseSelling items
no longer used

Resale※J a p a n e s e(C) 2015 ENIGMO,INC. All rights reserved.

41

Medium-term strategy
BUYMA business is on a clear growth track as a result of this year’s investment in advertising
Based on the knowledge we have acquired from business investments in the past,
we plan to earn profits in the 3 business areas of “Curation”,“Resale” and “ Global” respectively, during the next fiscal year.

Such “investment period” will end this year and we will be maximizing earnings thereafter.
Media business

Investment
Media businessResale business

GLOBAL businessResale business

Image
Network,Inc.

GLOBAL businessRestructure

To Postprofits
next
periodEnigmo Korea

BUYMA

BUYMA

BUYMA
FYE Jan 2015

FYE Jan 2016

Phase to invest ※ends this FY

FYE Jan 2017

Phase to reap fruits(C) 2015 ENIGMO,INC. All rights reserved.

42

Medium term Commitment

FYE January 2017

Operating Profit :3billion yen(total trading amount estimated at approx. 44 billion yen)FYE January 2019

Operating Profit :5billion yen(total trading amount estimated at approx.72 billion yen)(C) 2015 ENIGMO,INC. All rights reserved.

43

VisionNo.1 in Social Commerce
E-Commerce is a rare market with “extraordinary" growth prospects
Among the various transaction styles,
the C to C transaction of BUYMA is an area which is attracting much attention as thecommerce for the next generation
Enigmo will, in this rapidly expanding e-commerce market,
Provide value through unique services thatleverage the power of the individual through C to C transactions,and establish its position as No. 1 in “Social Commerce”
And by doing so, will provide a new lifestyle to as many individuals all around the world(C) 2015 ENIGMO,INC. All rights reserved.

44

Mission Statement

creating change(C) 2015 ENIGMO,INC. All rights reserved.

45

This presentation material is provided solely for the purpose of better understandingof our company and its business and is not intended for solicitation purposes.
Forward-looking projections contained are made based on assumptions and plans
available as of today. Actual business performance may differ from projections due
to risks and uncertainties in the future.

(C) 2015 ENIGMO,INC. All rights reserved.

46