COMPANY RESEARCH AND ANALYSIS REPORTFreeBit Co., Ltd.
3843
Tokyo Stock Exchange First Section

13-Feb.-2019
FISCO Ltd. Analyst

Hideo Kakuta

FISCO Ltd.
http://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. FY4/19 1H result trends......................... ......................................................................................................

01

2. FY4/19 outlook...................................... ......................................................................................................

02

3. Medium- to long-term growth strategy.. ......................................................................................................

02■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company profile.. ................................... ......................................................................................................

03

2. Company history. . ........................................................................................................................................

04

3. Segment descriptions..................................................................................................................................

05■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 05
1. Broadband Business. . ............................ ......................................................................................................

05

2. Mobile Business. . .........................................................................................................................................

07

3. Ad Technology Business..............................................................................................................................

07

4. Cloud Business...................................... ......................................................................................................

08

5. HealthTech Business. . ............................ ......................................................................................................

09■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 11
1. FY4/19 1H results........................................................................................................................................

11

2. Financial position and management indicators. ...........................................................................................

12■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 13■Medium- to long-term growth strategy------------------------------------------------------------------------------------------------ 14
1. Newly established the EdTech Business alongside the consolidation of ALC PRESS..................................

14

2. Progress in the real estate tech business: aiming for 250 stores by the end of FY4/22................................

15■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 16

We encourage readers to review our complete legal statement on “Disclaimer” page.

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html██Summary
Expecting a seventh straight year of higher sales and all-time highoperating income in FY4/19
Rates of progress in 1H were steady. Following the consolidation of
ALC PRESSINC., newly established the EdTech Business. Aiming for
250 stores in the real estate tech business by FY4/22.
FreeBit Co., Ltd. <3843> (hereafter, also the Company") provides a variety of Internet-related services mainly tocorporations, including infrastructure for Internet service providers (ISPs), support for entering the MVNO*1 businessas a Mobile Virtual Network Enabler (MVNE), cloud infrastructure, particularly virtual data centers (VDCs)* 2, andconsulting and solutions for Internet services. It also works through Group companies to supply ISP services, MVNO
services, web marketing services, Internet services to collective housing (condominiums), and other services toindividuals.
*1	MVNO is the abbreviation of Mobile Virtual Network Operator. It is a virtual mobile communications business that involves
conducting an independent communication business by piggybacking on the wireless communications infrastructure ofother communication businesses, such as NTT DOCOMO, INC. <9437>, KDDI CORPORATION <9433>, and SoftBank
Corp. <9984>.
*2	A mechanism or service for virtually building the functions of a data center so they can be used over the Internet.

In September 2016, the Company launched the HealthTech Business, the core of which is the business of EPARK
Health Care, Inc. (currently, FreeBit EPARK Health Care, Inc.), which was made a consolidated subsidiary. In March
2017, it made a consolidated subsidiary of For Members Co. Ltd., which conducts a real estate brokerage business,to acquire a foothold in the real estate tech field. In September 2018, it made a wholly-owned subsidiary of ALC
PRESS INC., a comprehensive language education company, and took on the challenge of entering-into the field of
IT for education. In 2016, its listing was reassigned to the First Section of the Tokyo Stock Exchange.
1. FY4/19 1H result trends
In the FY4/19 1H consolidated results, sales increased and profitability was achieved, with net sales increasing
10.8% year-on-year (YoY) to ¥21,497mn, operating income rising 139.6% to ¥1,013mn, ordinary income of ¥734mn(compared to a loss of ¥3mn in the same period in the previous fiscal year), and profit attributable to owners of parentof ¥9mn (a loss of ¥806mn). The increase in net sales was driven by the strong performances of the Broadband
Business (up 27.2%), including the condominium Internet service, and the rapidly growing HealthTech Business(up 164.6%). Sales also steadily increased in the Ad Technology Business. Operating income grew significantly, up
139.6%. By segment, there were major increases in income in the HealthTech Business (up ¥420mn), in gross profits
from condominium Internet services in the Broadband Business (up ¥400mn), and in income in the Mobile Business(up ¥388mn). The Company is conducting upfront investment (an increase of ¥615mn in total) to strengthen the
structure of the Ad Technology Business and for the real estate technology field.

We encourage readers to review our complete legal statement on “Disclaimer” page.

01 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Summary

2. FY4/19 outlook
For the FY4/19 full year consolidated results, the forecasts upwardly revised in the 1Q have been left unchanged
for both sales and profits. The Company projects net sales to increase 24.2% to ¥48,000mn, operating income torise 48.5% to ¥2,750mn, ordinary income to grow 68.3% to ¥2,400mn, and profit attributable to owners of parentof ¥250mn. If the Company achieves these forecasts, it will be the seventh consecutive fiscal year of higher sales
and record high operating income. For net sales, in addition to the strong performances of the two mainstay, major
business segments (the Broadband Business and the Ad Technology Business), sales are forecast to grow in the
HealthTech Business (of FreeBit EPARK Health Care). In addition, 1H net sales of ALC PRESS will be added to theresults from 3Q with the PL consolidation. The rate of progress in 1H toward achieving the net sales forecast was
44.8% (50.2% in the previous fiscal year). But after excluding the part from ALC PRESS (initial forecast, ¥45,000mn),
this rate is 47.8%, a position in which the forecast is fully achievable. For operating income, smooth progress isbeing made toward the initial scenario, with the Mobile Business and HealthTech Business becoming profitable
and contributing to higher income. The rate of progress up to 1H for the operating income forecast was 36.8%(22.8% in the previous fiscal year). But when considering that in a typical fiscal year, the Company’s profits tend
to be concentrated in the 2H, and also the addition of the contribution from ALC PRESS, it can be judged to be
making steady progress toward it.
3. Medium- to long-term growth strategy
In September 2018, the Company acquired all of the shares of ALC PRESS and made it a wholly owned subsidiary.
ALC PRESS, which was established in 1969, develops and sells various language-education contents, and it isa pioneer in this field. In its FY1/18 full year results, it recorded net sales of ¥6,272mn and operating income of¥301mn. It is hoped that by making it part of the Company’s Group, synergies will be generated with the Full Speed
Inc. <2159> Group in the short term. It is possible that the Internet-related services already being provided by ALC
PRESS will be grown by the Company’s ad technologies, such as for Internet advertising. In the medium term, theCompany will introduce the latest IT technologies into the contents owned by ALC PRESS and pursue possibilities
for reproducing and monetizing them as advanced learning materials. It can be expected, for example, to introduce
a subscription-type model based on Cloud technologies and to respond to the advancement of ICT into school
education.
In the real estate tech business, the Company is working to establish competitive advantages through making a
consolidated subsidiary of For Members, which conducts a real estate brokerage business. The company is currently
working to improve earnings, expand the store network, and introduce new services that utilize IT. Its major strengths
in this field are that it can utilize the AEON Housing brand, and that it has a large number of technologies, products
and services that are advancing the shift toward IoT in the living room. During FY4/19, the forecast is for existing
stores to be profitable on a single-month basis, and the aim is to have a network of 250 stores by FY4/22.
Key Points
A mega venture with the strength of providing an Internet and mobile infrastructure. Succeeded in launching the
HealthTech Business and is conducting upfront investment for real estate tech and EdTech (education)• Profits increased significantly in FY4/19 1H. It is clear that earnings in the Mobile Business and HealthTech
Business are improving.
• Forecasting seventh consecutive fiscal year of higher sales and record high operating income for FY4/19. The
1H rates of progress against the forecasts were steady.
• Newly established the EdTech Business following the consolidation of ALC PRESS. Aiming for 250 stores in thereal estate tech business by FY4/22.
•

We encourage readers to review our complete legal statement on “Disclaimer” page.

02 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Summary㻾 㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻔¥㼙㼚㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕㻡㻜㻘㻜㻜㻜

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Source: Prepared by FISCO from the Company's financial results██Company profile
A mega venture with the strength of providing an Internet andmobile infrastructure. Succeeded in launching the HealthTech
Business and is conducting upfront investment for real estate techand EdTech (education)
1. Company profile
The Company provides a variety of Internet-related services mainly to corporations, including infrastructure for
ISPs, support for entering the MVNO business as an MVNE, cloud infrastructure, particularly VDCs, and consulting
and solutions for Internet services. It also works through Group companies to supply ISP services, MVNO services,
web marketing services to individuals, as well as Internet services to collective housing (condominiums), and otherservices.
The Group has many companies, including GIGAPRIZE Co., Ltd. <3830>, Full Speed <2159>, DREAM TRAIN
INTERNET INC. (wholly owned subsidiary), For it Inc. (wholly owned subsidiary of Full Speed Inc.), FreeBit EPARK
Health Care (subsidiary), Tone mobile inc. (equity-method affiliate).

We encourage readers to review our complete legal statement on “Disclaimer” page.

03 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Company profile

2. Company history
The Company was founded in Shibuya Ward, Tokyo, in 2000 (its predecessor was FreeBit.com Co. Ltd.). Its
business grew mainly for services for ISPs and it was listed on the Mothers market of the Tokyo Stock Exchange in2007. Using the opportunity of its listing, it accelerated the expansion of its business areas through M&A. It madea consolidated subsidiary of DREAM TRAIN INTERNET in that same year and of GIGAPRIZE in 2009. In 2010,
alongside making a consolidated subsidiary of Full Speed , which is an Internet advertising agency, the Company
also made consolidated subsidiaries of For it, which conducts an affiliate advertising business, and BEKKOAME
INTERNET. INC., which conducts an IT platform business. In this way, it is expanding its business areas based on its
corporate philosophy of "Being the NET frontier! Expand the Internet and contribute to society." In 2011, it entered
the MVNE/MVNO business and also accelerated growth in the mobile business field. In 2016, it entered the healthcare business, using an M&A as the first step. In March 2017, to acquire a foothold in the real estate tech field, it
made a consolidated subsidiary of For Members, which conducts a real estate brokerage business. In September
2018, it made a wholly-owned subsidiary of ALC PRESS, a comprehensive language education company, and took
on the challenge of entering-into the field of IT for education. In 2016, its listing was reassigned to the First Sectionof the Tokyo Stock Exchange.
Company history
Date
May 2000
December 2002

Main events
Founded as FreeBit.com Co., Ltd. in Shibuya Ward, Tokyo, to provide Internet business support
Changed its corporate name from FreeBit.com Co., Ltd. to FreeBit Co., Ltd.

March 2007

Listed on the Mothers market of the Tokyo Stock Exchange

August 2007

Made a consolidated subsidiary of DREAM TRAIN INTERNET INC., which operates an ISP business for individuals

March 2009

After making a consolidated subsidiary of Media Exchange Co., Ltd., which had been listed on the Mothers market of the Tokyo
Stock Exchange (delisted after becoming the Company’s wholly owned subsidiary and merged with DREAM TRAIN INTERNET
through an absorption merger), its subsidiary GIGAPRIZE Co., Ltd. <3830>, which conducts a condominium ISP business, wasalso made a consolidated subsidiary

August 2010

Made consolidated subsidiaries of Full Speed Inc. <2159>, which operates an Internet advertising agency, For it Inc., which
operates an affiliate advertising business and provides its proprietary program Affiliate B, and BEKKOAME INTERNET. INC., which
operates an IT platform business

March 2011

Entered into the MVNO business (as a MVNE)

June 2012

Full Speed launched the advertising management integration program AdMatrix series

July 2013

Started providing the freebit MVNO Pack, an MVNE (MVNO supporter) service for MVNOs through an L2 connection from NTT
DOCOMO, INC. <9437>

November 2013

DREAM TRAIN INTERNET started providing freebit mobile, an MVNO service that offers all aspects, from terminal development
through to user support, in an integrated manner

January 2015

Established FreeBit Mobile, Inc., which conducts an MVNO business (currently, Tone mobile inc., a joint-venture company with
Culture Convenience Club Co., Ltd.)

April 2015

Founded freebit investment inc. with the objective of conducting investments for business expansion

September 2015

DREAM TRAIN INTERNET started providing DTI SIM, a mobile, high-speed data communications service

December 2015

Full Speed established GoJapan Inc. as a joint-venture company with Asia Smart Travel (Beijing) Information Technology Co., Ltd.
and started a travel app business for tourists visiting Japan

March 2016

Started to provide mobabiji, a cloud PBX service for corporations

July 2016

Listing changed to the First Section of the Tokyo Stock Exchange

September 2016
February 2017
March 2017

Made a consolidated subsidiary of EPARK Health Care, Inc., which provides health care solutions services
Changed the corporate name of EPARK Health Care to FreeBit EPARK Health Care, Inc.
GIGAPRIZE made a consolidated subsidiary of For Members

April 2017

GIGAPRIZE merged with its wholly owned subsidiary ESP Co., Ltd. through an absorption merger

May 2017

Full Speed conducted a company split for the video ad network business for smartphones and established Calmbold Inc.
(currently, CRAID Inc.)

August 2017

Acquired Medip inc., a digital signage provider for medical facilities, as a consolidated subsidiary

October 2017

Made GIGA TECH Co., Ltd., established by GIGAPRIZE to expand ISP business for multi-household dwellings, a consolidated
subsidiary

March 2018
September 2018

Acquired the nursing care records system business of TEAC ONKYO SOLUTIONS CORPORATION
Made a consolidated subsidiary of ALC PRESS INC., a language education company

Source: Prepared by FISCO from the Company’s website

We encourage readers to review our complete legal statement on “Disclaimer” page.

04 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Company profile

3. Segment descriptions
In FY4/19 1H, segment sales breakdown consisted of Broadband Business at 33.2%, Mobile Business at 19.0%,
Ad Technology Business at 37.4%, Cloud Business at 3.9%, and HealthTech Business at 6.5%.

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Source: Prepared by FISCO from the Company's results briefing materials██Business overview
The Broadband Business and the Ad Technology Business are thesources of profits. The HealthTech Business is rapidly growing.
1. Broadband BusinessBroadband Business primarily supplies ISP business assistance service and Internet connection service using fixedlines to corporations, multifamily dwellings, and individuals. The market for communications services over the fixedline network has slowed to moderate pace due to exhausting adoption of the high-speed broadband environment
and faster communications service through the mobile network. Despite these conditions, the condominium Internet
business at GIGAPRIZE is sustaining strong growth thanks to accelerated deployments via joint business withmultiple extremely large house manufacturers. Cumulative deployment climbed by 48,000 units from the end of theprevious fiscal year to 306,000 units. In the Broadband Business in FY4/19 1H, net sales increased 27.2% YoY to¥7,185mn, but segment income decreased 29.1% to ¥650mn, for higher sales but lower profits. The main reason
for the lower profits was the strategic, upfront investment (approximately ¥356mn) in the subsidiary For Members,
which is advancing the real estate tech business.

We encourage readers to review our complete legal statement on “Disclaimer” page.

05 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Business overview

㻺 㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍 㼚㼐㻌㼟㼑㼓㼙㼑㼚㼠㻌㼕㼚㼏㼛㼙㼑㻌㼕 㼚㻌㼠㼔㼑㻌㻮㼞㼛㼍㼐㼎㼍㼚㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼏㼛㼚㼐㼛㼙㼕㼚㼕㼡㼙㼟㻧㻌㼘㼑㼒㼠㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼛㼠㼔㼑㼞㻌㼠㼔㼍㼚㻌㼏㼛㼚㼐㼛㼙㼕㼚㼕㼡㼙㼟㻧㻌㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕

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Source: Prepared by FISCO from the Company's results briefing materials㻔㼠㼔㼛㼡㼟㼍㼚㼐㼔㼛㼙㼑㼟㻕
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㻲㼅㻟㻛㻝㻜 㻲㼅㻟㻛㻝㻝 㻲㼅㻟㻛㻝㻞 㻲㼅㻟㻛㻝㻟 㻲㼅㻟㻛㻝㻠 㻲㼅㻟㻛㻝㻡 㻲㼅㻟㻛㻝㻢 㻲㼅㻟㻛㻝㻣 㻲㼅㻟㻛㻝㻤 㻲㼅㻟㻛㻝㻥Note: the results of the condominium Internet service business are from the subsidiary GIGA PRIZE, whose fiscal year ends in
March
Source: Prepared by FISCO from the Company's results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

06 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Business overview

2. Mobile Business
Mobile Business provides MVNO business assistance service (MVNE) and mobile communications service toindividuals. It faces uncertainty in its business environment because of the impact of management strategies at
MVNOs, its customers. In FY4/19 1H, net sales decreased 7.0% YoY to ¥4,109mn and segment income was ¥76mn(compared to a loss of ¥312mn in the same period in the previous fiscal year), for lower sales but higher profits. The
reasons for the lower sales included the decline in communication carrier wholesale prices. Conversely, segment
income steadily improved and has been profitable for 3 consecutive quarterly periods since FY4/18 4Q. The main
factors were the increase in income from MVNE services and the improved earnings from keeping down DTI SIM
sales promotion costs. The equity method affiliate Tone Mobile is succeeding with its independent strategy, and it
achieved profitability on a single-month basis in September 2018.

㻺 㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍 㼚㼐㻌㼟㼑㼓㼙㼑㼚㼠㻌㼕㼚㼏㼛㼙㼑㻛㼘㼛㼟㼟㻌㼕 㼚㻌㼠㼔㼑㻌㻹㼛㼎㼕㼘㼑㻌㻮㼡㼟㼕㼚㼑㼟㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕

㻔¥㼙㼚㻕
㻟㻘㻜㻜㻜
㻞㻘㻡㻜㻜

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕

㻔¥㼙㼚㻕
㻟㻜㻜

㻞㻘㻣㻥㻟
㻞㻘㻟㻡㻠

㻞㻘㻟㻝㻢
㻞㻘㻝㻜㻟

㻝㻘㻥㻟㻢

㻞㻘㻜㻜㻜

㻞㻜㻜

㻝㻡㻜

㻞㻘㻜㻠㻟

㻝㻘㻥㻤㻡

㻞㻘㻜㻢㻢
㻝㻜㻜

㻝㻘㻣㻡㻥

㻝㻘㻣㻝㻜

㻝㻘㻡㻜㻜

㻞㻥

㻠㻣

㻜

㻙㻟
㻝㻘㻜㻜㻜

㻙㻢㻡

㻙㻝㻞㻥

㻡㻜㻜
㻜

㻙㻝㻜㻜

㻙㻝㻞㻠

㻙㻝㻜㻜

㻙㻝㻜㻢

㻙㻞㻜㻜

㻙㻝㻤㻤
㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻝㻽

㻞㻽

㻲㼅㻠㻛㻝㻣

㻟㻽㻲㼅㻠㻛㻝㻤

㻠㻽

㻝㻽

㻞㻽

㻙㻟㻜㻜

㻲㼅㻠㻛㻝㻥

Source: Prepared by FISCO from the Company's results briefing materials

3. Ad Technology Business
Ad Technology Business supplies Internet marketing services to companies. The Internet advertising market
continues to growth due to steady shift from conventional reserved-type ads to managed-type ads (such as listing
ads and ads utilizing ad technology) and upbeat momentum from video ads, social media ads, and mobile ads.
AdMatrix, the Company core proprietary advertising integration platform, is making further strides with new video
functionality and unique data acquisition and holds the No.1 DSP*1 in Japan. The affiliate platform "afb"*2, which issupplied by affiliate service provider (ASP)*3 For it, is maintaining business expansion having been highly evaluatedfor proprietary functions and as the leader in media user satisfaction. Currently, the overseas deployment of afb isbeing accelerated, and continuing on from Taiwan, its deployment in Malaysia and Singapore have been started.
*1	Demand Side Platform*2	Service provider that distributes ads with performance-based fees*3	Network of over 550,000 partner sites. Utilizing PC knowhow to deploy services to tablets, smartphones, and mobile
devices. Formerly called “Affiliate B.”

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07 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Business overview

In FY4/19 1H, net sales increased 1.7% YoY to ¥8,112mn and segment income decreased 21.7% to ¥575mn,
so although sales increased slightly, profits decreased. In the background to the fact that sales were basicallyunchanged YoY is the effects of the changes to the search engine algorithm. The factor behind the lower profits
was mainly the increase in SG&A expenses due to the Company investing in human resources and in strengthening
the structure relating to incubation (new businesses and M&A).

㻺 㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍 㼚㼐㻌㼟㼑㼓㼙㼑㼚㼠㻌㼜㼞㼛㼒㼕㼠㻛㼘㼛㼟㼟㻌㼕 㼚㻌㼠㼔㼑㻌㻭㼐㻌㼀㼑㼏㼔㼚㼛㼘㼛㼓㼥㻌㻮 㼡㼟㼕㼚㼑㼟㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕

㻔¥㼙㼚㻕
㻡㻘㻜㻜㻜
㻟㻠㻤

㻠㻘㻡㻜㻜

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕

㻟㻡㻤

㻠㻜㻜

㻟㻞㻝
㻞㻣㻡

㻠㻘㻜㻜㻜

㻔¥㼙㼚㻕

㻟㻣㻢

㻞㻣㻣

㻞㻣㻡

㻟㻜㻜

㻟㻜㻜

㻞㻟㻠

㻟㻘㻡㻜㻜

㻟㻡㻜

㻞㻡㻜

㻟㻘㻜㻜㻜

㻞㻜㻜

㻞㻘㻡㻜㻜

㻝㻡㻜

㻞㻘㻜㻜㻜

㻟㻘㻥㻞㻥

㻟㻘㻣㻣㻟

㻝㻘㻡㻜㻜

㻟㻘㻜㻥㻢
㻟㻘㻠㻤㻠

㻟㻘㻥㻠㻢

㻠㻘㻜㻟㻜
㻟㻘㻠㻞㻢

㻟㻘㻢㻝㻟

㻠㻘㻜㻠㻞

㻠㻘㻜㻢㻥

㻝㻜㻜
㻡㻜

㻝㻘㻜㻜㻜

㻜

㻙㻢㻠

㻡㻜㻜
㻜

㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻙㻡㻜
㻝㻽

㻞㻽

㻲㼅㻠㻛㻝㻣

㻟㻽㻲㼅㻠㻛㻝㻤

㻠㻽

㻝㻽

㻞㻽

㻙㻝㻜㻜

㻲㼅㻠㻛㻝㻥

Source: Prepared by FISCO from the Company's results briefing materials

4. Cloud Business
Cloud Business* handles cloud services for companies and individuals and is an essential infrastructure for theCompany's other businesses. In FY4/19 1H, net sales declined 7.4% YoY to ¥837mn, and the segment loss was¥29mn (compared to an income of ¥6mn in the same period in the previous fiscal year), for lower sales and profit.
The main reason for recording a loss was the continued reorganization of legacy services.
*	Cloud refers to the format of supplying software and other contents through a network to users and data centers andservers that store and manage related data. A public cloud is a service or system that anyone can use from the Internet.
A private cloud is a service or system used by a large company or others on a self-operated network. A hybrid cloud has
both aspects and combines advantages of the two formats to enhance security and cost management.

We encourage readers to review our complete legal statement on “Disclaimer” page.

08 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Business overview

㻺 㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍 㼚㼐㻌㼟㼑㼓㼙㼑㼚㼠㻌㼜㼞㼛㼒㼕㼠㻛㼘㼛㼟㼟㻌㼕 㼚㻌㼠㼔㼑㻌㻯㼘㼛㼡㼐㻌㻮 㼡㼟㼕㼚㼑㼟㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕

㻔¥㼙㼚㻕
㻢㻜㻜

㻡㻜㻜
㻠㻜㻜

㻡㻟㻝
㻠㻤㻡

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕

㻔¥㼙㼚㻕
㻤㻜

㻠㻥㻠

㻠㻤㻢

㻠㻡㻜

㻢㻡㻌

㻠㻡㻟

㻠㻞㻤

㻠㻞㻣

㻡㻟㻌

㻠㻜㻢

㻠㻟㻝

㻢㻜
㻠㻜

㻟㻤㻌
㻟㻜㻜

㻞㻜

㻞㻢㻌

㻞㻜㻜
㻙㻝㻌

㻣㻌
㻙㻤㻌

㻝㻜㻜
㻜

㻝㻽

㻞㻽
㻟㻽
㻲㼅㻠㻛㻝㻣

㻠㻽

㻝㻽

㻜

㻣㻌

㻞㻽
㻟㻽
㻲㼅㻠㻛㻝㻤

㻙㻥㻌

㻠㻽

㻙㻝㻥㻌

㻝㻽
㻞㻽
㻲㼅㻠㻛㻝㻥

㻙㻞㻜㻙㻠㻜

Source: Prepared by FISCO from the Company's results briefing materials

5. HealthTech Business
HealthTech Business provides a solution service to pharmacies, including operation of EPARK Kusuri-no-Madoguchi,
a comprehensive pharmacy portal site. In September 2016, the Company acquired the shares (acquired 47.5%of voting rights) and made a consolidated subsidiary of EPARK Health Care, which runs this business. In February
2017, it changed the corporate name to FreeBit EPARK Health Care. The business concept is for the Company toenhance the media platform that connects end users (patients) and dispensing pharmacies with its technologicalcapabilities and to provide information and highly convenient reservation, delivery, and other services to these end
users. The revenue models are diverse and include commission from transferring patients and reservation system
usage fees. "EPARK OKusuri Techo" is a free app handled as a service for end users (patients), and it has been
attracting attention for its highly convenient functions, including pharmacy-reception reservations, an alarm toindicate when it is time to take medicine, and drug-information registration. Cumulatively it has been downloaded
more than 420,000 times (as of October 2018), making it the No.1 app of its kind, including help from mass-media
exposure. The number of reservations at pharmacies is steadily rising and per store reservations are also increasing.
In FY4/19 1H, net sales grew significantly, up 164.6% YoY to ¥1,401mn, while segment loss also improved greatly
to ¥70mn (compared to a loss of ¥490mn in the same period in the previous fiscal year). Freebit EPARK HealthCare, which is the core company in this segment, achieved profitability on a single-month basis in November
2017, and it has remained profitable since then. With the aim of further expanding the HealthTech Business, theCompany obtained a care records system business and established a joint venture with a company closely tied tocare facilities in FY4/18 4Q.

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09 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Business overview

㻺 㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍 㼚㼐㻌㼟㼑㼓㼙㼑㼚㼠㻌㼜㼞㼛㼒㼕㼠㻛㼘㼛㼟㼟㻌㼕 㼚㻌㼠㼔㼑㻌㻴㼑㼍㼘㼠㼔㼀㼑㼏㼔㻌㻮 㼡㼟㼕㼚㼑㼟㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕
㻙㻞㻝㻌

㻤㻜㻜

㻙㻢㻌

㻙㻝㻡㻌

㻜
㻙㻢㻟㻌

㻣㻜㻜
㻢㻜㻜
㻙㻝㻢㻤㻌

㻡㻜㻜

㻣㻢㻢

㻡㻤㻠

㻙㻝㻥㻢㻌

㻙㻝㻡㻜

㻡㻞㻝

㻠㻜㻜

㻙㻞㻜㻜
㻟㻠㻤

㻟㻜㻜

㻙㻞㻡㻜
㻙㻞㻥㻟㻌

㻞㻜㻜
㻝㻜㻜
㻜

㻙㻡㻜
㻙㻝㻜㻜

㻢㻟㻠

㻙㻝㻡㻡㻌

㻔¥㼙㼚㻕

㻝㻜㻡
㻝㻽

㻞㻽

㻟㻽

㻙㻟㻜㻜

㻝㻤㻝

㻝㻠㻥
㻠㻽

㻝㻽

㻙㻟㻡㻜
㻞㻽

㻲㼅㻠㻛㻝㻣

㻟㻽㻠㻽㻲㼅㻠㻛㻝㻤

㻝㻽

㻞㻽

㻙㻠㻜㻜

㻲㼅㻠㻛㻝㻥

Source: Prepared by FISCO from the Company's results briefing materialsProgress in the HealthTech Business

Source: The Company's results briefing materials

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10 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.

13-Feb.-2019

3843 Tokyo Stock Exchange First Section

https://freebit.com/en/ir/highlights.html██Results trends
Profits increased significantly in FY4/19 1H. It is clear that earnings
in the Mobile Business and HealthTech Business are improving.
1. FY4/19 1H results
In the FY4/19 1H consolidated results, sales increased and profitability was achieved, with net sales increasing
10.8% year-on-year (YoY) to ¥21,497mn, operating income rising 139.6% to ¥1,013mn, ordinary income of ¥734mn(compared to a loss of ¥3mn in the same period in the previous fiscal year), and profit attributable to owners ofparent of ¥9mn (a loss of ¥806mn).
FY4/19 1H results(¥mn)
FY4/18 1H
ResultFY4/19 1H

Ratio to sales

ResultRatio to sales

YoY

Net sales

19,407-

21,497-

Cost of sales

14,56975.1%

15,684

73.0%

7.7%

Gross profit

4,838

24.9%

5,813

27.0%

20.1%

SG&A expenses

4,415

22.8%

4,799

22.3%

8.7%

Operating income

422

2.2%

1,013

4.7%

139.6%

Ordinary income

-3

-0.0%

734

3.4%

-

-806

-

9

-

-

Profit attributable toowners of parent

10.8%

Source: Prepared by FISCO from the Company's financial results

The increase in net sales was driven by the strong performances of the Broadband Business (up 27.2%), including
the condominium Internet service, and the rapidly growing HealthTech Business (up 164.6%). Sales also steadily
increased in the Ad Technology Business.
In costs of sales, some costs increased, including for the expansion of the fixed network, but network-related
costs were kept down, such as from the declines in payment amounts following the changes to unit prices bycommunication companies. The gross margin rose by 2.1 percentage points, from 24.9% in the same period in theprevious fiscal year to 27.0%. SG&A expenses increased by 8.7% YoY, due to investing in human resources relating
to new businesses, but this was lower than the sales-increase rate.
As a result, operating income increased significantly, up 139.6% YoY. By segment, there were major increases inincome in the HealthTech Business (up ¥420mn), in gross profits for condominium Internet services in the Broadband
Business (up ¥400mn), and in income in the Mobile Business (up ¥388mn). The Company is conducting upfront
investment (an increase of ¥615mn in total) to strengthen the structure of the Ad Technology Business and for thereal estate technology field.
Ordinary income increased (up ¥590mn YoY) and profitability was once again achieved. This included an increase
from the absence of the decline in the equity method-related investment loss that was recorded in the same period
in the previous fiscal year. Profit attributable to owners of parent also became profitable from the effects of the risein ordinary income (up ¥738mn).

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11 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Results trends

The ALC PRESS BS was consolidated at the end of FY4/19 1H andthe asset scale expanded
2. Financial position and management indicators
The ALC PRESS BS was consolidated at the end of FY4/19 1H as the Company acquired all of its shares on
September 28, 2018, and the asset scale expanded.
At the end of FY4/19 1H, total assets were up ¥4,580mn from the end of the previous fiscal year to ¥35,377mn.
Within this amount, current assets rose ¥2,040mn, with the main increases being ¥1,379mn in notes and accounts
receivable - trade and ¥503mn in merchandise and finished goods. Non-current assets grew ¥2,539mn, mainly
due to an increase in intangible assets of ¥1,907mn. Cash and deposits were at ¥14,002mn, and the Company has
prepared funds so that it can respond flexibly to opportunities, such as for M&A.
Liabilities were up ¥4,537mn from the end of the previous fiscal year to ¥24,658mn. Within this amount, current
liabilities increased ¥1,125mn, mainly due to a ¥428mn increase in long-term loans payable scheduled to be repaid
within a year. Non-current liabilities rose ¥3,411mn, primarily because of an increase in long-term loans payable of¥2,531mn.
In the management indicators of financial soundness (as of the end of October 2018), the current ratio was 209.6%
and the equity ratio was 24.7%, and the Company’s finances remain sound.
Consolidated balance sheet and management indicators(¥mn)
End-FY4/18

End-FY4/19 1H

Change22,01324,054(Cash and deposits)

13,656

14,002

346(Notes and accounts receivable - trade)

5,088

6,467

1,379

Current assets

2,040

286

790

503

8,783

11,323

2,539(Intangible assets)

4,269

6,177

1,907

(Investments and other assets)

2,391

2,694

303

Total assets

30,79635,377

4,580

Current liabilities

10,352

11,477

1,125

Non-current liabilities

9,769

13,181

3,411

Total liabilities

20,121

24,658

4,537

Total net assets

10,675

10,71843

Total liabilities and net assets

30,79635,377

4,580

Current ratio (current assets ÷ current liabilities)

212.6%

209.6%-

Equity ratio (shareholders’ equity ÷ total assets)

28.8%

24.7%

-

(Merchandise and finished goods)
Non-current assets<Soundness>

Source: Prepared by FISCO from the Company's financial results

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12 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.

13-Feb.-2019

3843 Tokyo Stock Exchange First Section

https://freebit.com/en/ir/highlights.html██Outlook
Forecasting seventh consecutive fiscal year of higher sales andrecord high operating income for FY4/19. The 1H rates of progressagainst the forecasts were steadyFor the FY4/19 full year consolidated results, the forecasts upwardly revised in the 1Q have been left unchanged
for both sales and profits. The Company projects net sales to increase 24.2% to ¥48,000mn, operating income torise 48.5% to ¥2,750mn, ordinary income to grow 68.3% to ¥2,400mn, and profit attributable to owners of parentof ¥250mn. If the Company achieves these forecasts, it will be the seventh consecutive fiscal year of higher sales
and record high operating income.
Net sales are forecast to grow stably from the further growth of the Broadband Business (the condominium Internet
service), the continued expansion of name merchandise in the Ad Technology Business, and from the HealthTech
Business, which is mainly conducted by Freebit EPARK Health Care. In addition, 1H net sales of ALC PRESS will
be added to the results from 3Q with the PL consolidation. The rate of progress in 1H toward achieving the net
sales forecast was 44.8% (50.2% in the previous fiscal year). But after excluding the part from ALC PRESS (initial
forecast, ¥45,000mn), the rate is 47.8%, a position in which the forecast is fully achievable.
For operating income, smooth progress is being made toward the initial scenario, with the Mobile Business and
HealthTech Business becoming profitable and contributing to higher income. In the Broadband Business, theCompany is continuing upfront investment in real estate technology. ALC PRESS is projected to additionallycontribute operating income of ¥250mn (FY1/18 result, ¥301mn). The rate of progress up to 1H for the operating
income forecast was 36.8% (22.8% in the previous fiscal year). But when considering that in a typical fiscal year, theCompany’s profits tend to be concentrated in the 2H, and also the addition of the contribution from ALC PRESS, it
can be judged to be making steady progress toward it.
Outlook for FY4/19(¥mn)
FY4/18

FY4/19ResultRatio to sales

Initial forecast

Revisedforecast

Ratio to sales

YoY

Progress rate

Net sales

38,653100.0%

45,00048,000100.0%

24.2%

44.8%

Operating income

1,851

4.8%

2,500

2,750

5.7%

48.5%

36.8%

Ordinary income

1,426

3.7%

2,350

2,400

5.0%

68.3%

30.6%

Profit attributable toowners of parent

-567

-

250

250

0.5%

-

3.7%

Source: Prepared by FISCO from the Company's financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

13 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html██Medium- to long-term growth strategy
Newly established the EdTech Business following the consolidationof ALC PRESS. Aiming for 250 stores in the real estate tech businessby FY4/22
The Company announced SiLK VISION 2020, its four-year medium-term business policy, in June 2016, which targets
net sales of ¥50bn and operating income of ¥5bn in FY4/20. In the growth strategy basic policy, it has defined two
growth areas, the living revolution and the mobile revolution. Within the living revolution, it has made an early start to
the HealthTech Business and is establishing its foundation as a promising business. It is currently accelerating thepace of upfront investment for the real estate tech business and the EdTech (education × IT technology) Business,
which is conducted by ALC PRESS that was recently made a subsidiary.
1. Newly established the EdTech Business alongside the consolidation of ALC PRESS
In September 2018, the Company acquired all of the shares of ALC PRESS and made it a wholly owned subsidiary.
ALC PRESS, which was established in 1969, develops and sells various language education contents, and it isa pioneer in this field. Its main products and services include 1) the English learning monthly magazine ENGLISHJOURNAL, 2) the English vocabulary learning book Kikutan, 3) the English learning communication course 1,000
Hour Hearing Marathon, 4) e-learning services, including the ALC NetAcademy and ALC Online English Conversation,and 5) Japan's leading English-Japanese, Japanese-English database, Eijiro on the WEB. In recent years, ALC
PRESS has also been focusing on developments that utilize ICT, including providing contents for Alexa, which is
the Cloud-based voice service provided by Amazon Co., Inc. <AMZN>. For its FY1/18 full year results, it recorded
net sales of ¥6,272mn and operating income of ¥301mn.
It is hoped that by making it part of the Company’s Group, synergies will be generated with the Full Speed Group in
the short term. It is possible that the Internet-related services already being provided by ALC PRESS will be grownby the Company’s ad technologies, such as for Internet advertising. In the medium term, the Company will introduce
the latest IT technologies into the contents owned by ALC PRESS and pursue possibilities for reproducing andmonetizing them as advanced learning materials. It can be expected, for example, to introduce a subscription-typemodel based on Cloud technologies and to respond to the advancement of ICT into school education.
The ALC PRESS BS was consolidated and recorded from FY4/19 1H and the PL statement will be consolidated
from 3Q. The new reporting segment is called the EdTech Business.

We encourage readers to review our complete legal statement on “Disclaimer” page.

14 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.
3843 Tokyo Stock Exchange First Section

13-Feb.-2019https://freebit.com/en/ir/highlights.html

Medium- to long-term growth strategy

Progress in the ALC PRESS business

Source: The Company's results briefing materials

2. Progress in the real estate tech business: aiming for 250 stores by the end of FY4/22
In the real estate tech business, the Company is working to establish competitive advantages through making a
consolidated subsidiary of For Members, which conducts a real estate brokerage business. The company is currently
working to improve earnings, expand the store network, and introduce new services that utilize IT. Its major strengths
in this field are that it can utilize the AEON Housing brand, and that it has a large number of technologies, products
and services that are progressing the shift toward IoT in the living room. During FY4/19, the forecast is for existing
stores to be profitable on a single-month basis, and the aim is to have a network of 250 stores by FY4/22.
The real estate brokerage industry still has a “paper culture,” such as sending and receiving documents like leaflets
and plans by FAX, and using handwritten contract documents. It is expected that the industry will be transformedby the Company’s inventive and technological capabilities.
Progress in the Broadband Business

Source: The Company's results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

15 16

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

FreeBit Co., Ltd.

13-Feb.-2019

3843 Tokyo Stock Exchange First Section

https://freebit.com/en/ir/highlights.html██Shareholder return policy
Planning to maintain a ¥7 dividend for FY4/19
The Company returns profits to shareholders through paying dividends. Its basic dividend policy is to prioritize
continuously returning profits to shareholders while also supplementing internal reserves and investing for businessexpansion. Since FY3/13, it has continuously paid an annual dividend of ¥7. Even though it recorded loss attributableto owners of parents in FY4/18, it did not change the annual dividend of ¥7. The forecast annual dividend per share
for FY4/19 is the same, of ¥7, for a dividend payout ratio of 62.2%.

㻰㼕 㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㼍 㼚㼐㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻕㻔¥㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻕

㻝㻜㻚㻜㻜

㻤㻚㻜㻜

㻝㻜㻜㻚㻜㻑

㻣㻚㻜㻜

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㻣㻚㻜㻜

㻣㻚㻜㻜

㻢㻚㻜㻜

㻤㻜㻚㻜㻑

㻢㻜㻚㻜㻑
㻢㻞㻚㻞㻑

㻠㻚㻜㻜

㻠㻜㻚㻜㻑

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㻞㻤㻚㻟㻑
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㻲㼅㻠㻛㻝㻡

㻜㻚㻜㻑㻲㼅㻠㻛㻝㻢

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㻲㼅㻠㻛㻝㻥㻌㻱

Source: Prepared by FISCO from the Company's financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

16 16

Disclaimer
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This report is based on information that we believe to be reliable, but we do not confirm or
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This report was prepared at the request of its subject company using information provided
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FISCO Ltd.