Second Quarter, Fiscal Year Ending March 2016

Consolidated Financial Results
November 4, 2015

United, Inc.
(TSE Mothers, Code 2497)

Contents

1. Financial HighlightP4

2. Status of Smartphone Application P11
Business and Future Direction

３．Status of Ad-Tech Business andFuture Direction

P17

４．About Investment Business

P21

５．SummaryP23

６．Reference Material

P25

All of the opinions, predictions, forecasts and the like presented in this document arethose made by UNITED, Inc. based on information available at the time of preparation of
the document, but no guarantee is made as to the accuracy of this information. Actual
results may differ greatly from these forecasts due to changes in various factors.
Company names and product names presented in this document are trademarks orregistered trademarks of their respective owners.
Copyright © UNITED, Inc. All Rights Reserved.

1

Our vision & mission

VisionBecome the leading internet firm in Japan

MissionCreate new value through continued
challenges and contribute to society

Copyright © UNITED, Inc. All Rights Reserved.

2

Our Core BusinessWe are putting effort into the ad-tech business and smartphone
application business expecting to see market growth in the
future, actively investing in these two to achieve business growth.

Media segment

Smartphone Application businessCore Businesses

Other media businesses(*1)

Advertisingsegment

Advertising agency business

Investment segment

Venture capital business

Ad-Tech business*1 Email advertising, internet research, sports marketing

Copyright © UNITED, Inc. All Rights Reserved.

3

1. Financial Highlights

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4

Highlights of 2Q Cumulative Financial Results (April-September)

Other
Businesses

Core Businesses

Whole• Sales and profit increased as compared with the same period last year
2Q Cumulative
Consolidated
Results

Smartphone
App Business(Growth rate compared to the same period last year)

Sales
Operating profit
Net profit

5,084 million yen (+28%)
1,121 million yen (+612%)
1,036 million yen (+789%)• Sales: -24% compared to the same period last year (business structuretransformation was promoted)• Three applications were released in the active investment services. We aim for profit
growth in 3Q onward.
”CHEERZ for MEN,” young actor version of idol cheering application “CHEERZ”
Social games “Crash Fever” and “Monster Beat”

Ad TechBusiness

Investment
Business• ＋13％ sales compared to the same period last year
• DSP “Bypass” and SSP “AdStir” continued to grow

• Operating profit of 1,217 million yen was generated by the sale and sellout of stocks ofFujisan Magazine Service Co., Ltd. and fund management profit of out investing
companies

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5

2Q Cumulative (Apr-Sept) Consolidated P/L Statement
Revenue (+28%) and operating profit (+612%) grew compared to the same period last year
Media segment: Revenue and profit dropped due to structural transformation of Smartphone App Business
Advertising segment: Revenue and profit grew thanks to the growth of DSP “Bypass” and SSP ”AdStir”(Million yen)
Year ending in March Same period last
2016
year
2Q cumulative

Vs. the same period
last year(2Q cumulative in the year Increase/decrease
ending in March 2015)
rate

5,084

3,961

+28%

Media segment

1,263

1,614

-22%

Advertising segment

2,451

2,307

+6%

Investment segment

1,404

87

+1,514%

Inter-segment elimination

-35

-47

-

Total profit from sales

2,114

1,002

+111%

Media segment

204

481

-58%

Advertising segment

537

443

+21%

Investment segment

Sales

1,372

77

+1,674%

Inter-segment elimination

0

0

-

Selling, general andadministrative expenses

992

844

+18%

Operating profit

1,121

157

+612%

Media segment

-215

129

-

Advertising segment

260

220

+18%

Investment segment

1,342

57

+2,253%

Headquarter expense

-266

-248

-

1,245
1,036

177
116

+602%
+789%

Current profit
Quarterly net profit

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6

Changes in Quarterly Sales and Operating Profits-1% in the sales of core businesses (Smartphone App Business + Ad Tech Business) comparedto the same period last year
Smartphone app business : Plan to return to a growth track by the business structure transformation from 3Q onward.
Ad-tech business : continued to grow. ＋13％ sales compared to the same period last year.

Operating Profits increased led by Investment business
Strengthen the prior investment to the Ad-tech business aiming to further accelerate the growth from 3Q onward

Changes in 2Q Cumulative Sales and Profits
Sales(million yen)

5,084

5,000

Sales of core businesses

Operating profit(million yen)

Sales of other businesses

Operating profit

Quarterly changes

Sales(million yen)

Sales of core businesses: +3％ vs. the same quarter lastyear, +1％ vs. the previous quarter

Operating profit(million yen)

3,091

3,961
4,000

3,000

2,000

2,589
2,724

1,453
2,000

1,522

1,000

2,508

1,000

2,487
1,121

1,203
0

3,000

△ 39

Year ending in Year ending in Year ending inMarch 2014
March 2015
March 2016

782

1,000

500
0

418

1,152 1,291
783 782
70
44

△ 109

1Q

732

2Q

812

720

822
756

1,000

1,109
1,251
1,235

500

833

741

0

157

1,817
1,565 1,615
1,159
665

2,139 2,230
2,024 1,937
1,982 1,840

3Q

132

128

4Q

1Q

Year ending in March2014
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1,217

1,326 1,407

28

62

2Q

3Q

151

4Q

Year ending in March
2015

11

1Q

0

2Q

Year ending inMarch 20167

Midterm Dividends
We paid midterm dividends by targeting a “consolidated dividend payout ratio of around20%”

Details of Midterm Dividend

Midterm Devidend
Most recentof Year Ending in dividend forecast(Announced May 11,2015)
March 2016

Actual record ofprevious year
Midterm Devidend ofYear Ending inMarch 2015

Reference Date

September 30, 2015―

September 30, 2014

Dividend per share
Total amount ofdividends

9.00 yen

To be decided

1.00 yen

209 million yen―

23 million yen

Effective date

December 4, 2015―

December 4, 2014

Dividend resource

Retained earnings―

Retained earnings

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8

Acquisition of Own Stocks

Acquisition details (completed October 9, 2015)

1.

Type of stocks acquired

Common stock2.

Total number of stocks
acquired

500,000 stocks

3.

Total amount of stocks
acquired

693 million yen

4.

Acquisition period

From August 26, 2015
to October 9, 2015

5.

Acquisition method

Market buying of stocks by trust method(2.1% of Total Number of Issued Shares)

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9

Consolidated Balance Sheet for this Quarter
Cash and deposits decreased due to the setting of money trust for acquiring own
stocks, whereas current assets increased based on the market value of operational
investment securities associated with the IPO of our investing company.
→ Future investment capability enhanced by increase in short-term redeemableassets(Million yen)

End of This
Quarter(Sept. 2015)

End of Previous
Quarter(June 2015)

Increase/decrease

Current assets

9,736

8,701

+1,035(Cash and deposits)

5,319

5,588

- 268

Fixed assets

733

725

+8

Current
liabilities

1,622

1,346

+276

ー

ー

8,848

8,080

Fixed liabilities
Net assets

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+767

An increase of 848 million
yen in operating investments
in capital by the acquisition ofoperating investment
securities and market valueof fund

An increase of 1,085 million
yen by the revenue from thesale of operating investment
securities , and a decrease of
1,001 million yen by money
trust and increase of own
stocksAn increase of 1,028 million
yen by the quarterly net
profit , and a decrease of 498
million yen by the acquisitionof own stocks10

2. Status of Smartphone Application
Business and Future Direction

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11

Smartphone App Business: Changes in Sales-24% compared to the same period (2Q cumulative) last year
Business structure transformation led to decreased sales. We aim to grow profits in 3Q onward by thegrowth of active investment service.
Changes in 2Q (cumulative) by year
(Million yen)

1,000

938
750

Business
Structuretransformation

Quarterly changes-24% vs. the same period last year, -22% vs. the previous quarter(Million yen)

713

500

600

536

300

531

250

452

0

157

156

4Q

1Q

380

363

2Q

3Q

407

453

455

401
311

0

Year
ending
2014年
in March
2014
3月期

Year
ending
2015年
in March
2015
3月期

Year
ending
2016年
in March
20163月期

Year ending inMarch 2013

Year ending inMarch 2014

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4Q

1Q

2Q

3Q

Year ending inMarch 2015

4Q

1Q

2Q

Year endingin March 201612

Structure Transformation of Smartphone App BusinessWith the business structure transformation in first half in the year ending in March 2016,
we plan to generate revenue led by Active Investment Service (CHEERZ & Social
Games) in the second half of the year
Change of Revenue Structure of Smartphone App Business (image)The sales structure
led by the other services(affiliate media)

Business
Structuretransformation

The sales structure
led by the active
investment service

Other services

CocoPPa

Active Investment
Service
4Q in Year Endingin March 2015

1st Half of YearEnding in March 2016

Target of 2nd Half of YearEnding in March 2016

We aim to increase the revenue of Smartphone App Business by
the growth of Active Investment Service in the 2nd half of the year
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13

Idol Cheering App “CHEERZ”
Revenue continued to grow by prioritizing service expansion.
We aim for a rapid growth in the 2nd half of the year onwards by “horizontal deployment through coreuser increase and spin-off versions.”

Sales growthService enhancement

Both the number of CHEERs and sales
continued to grow

MAU ratio (※) exceeds 75%

Grow to the service to be enthusiastically supported bycore idol fans
Collaboration

Number of CHEERs

Miss iD (hosted by Kodansha Ltd.)
Semifinalists of “Miss iD 2016,” aunique idol discovery audition,
participated in CHEERZ+34%

100.39million47.21
million74.92
millionStudio Murai
Sharing of movies of idols participatingin CHEERZ by YouTube channel of
Max Murai, a popular YouTuber

Sales
+30%

Events4Q

Year ending inMarch 2015

1Q

2Q

Year Ending inMarch 2016

Provide many events where idols can actively participate
in such as:・Event featuring CHEERZ original photo collection“CHEERZ BOOK”
・Halloween live performance hosted by TBS
・Tokyo Girl’s Update interview* percentage of users starting up the app once or more per month.
Copyright © UNITED, Inc. All Rights Reserved.

14

Idol Cheering App “CHEERZ”: Horizontal Deployment”CHEERZ for MEN,” young actor cheering application, was released in September 2015.
A large-scale update is scheduled for this winter, including collaboration with Marvelous Inc.

Released in
September 2015

Large-scale update
this winter (plan)

Collaboration with “JUNON Superboy Contest (sponsoredby Shufu To Seikatsu Sha Co., Ltd.) ,” which is held todiscover young male stars.
1. Collaboration with Marvelous Inc.
Approx. 100 artists, mainly
consisting of young actors
actively performing in thestage business of Marvelous,participate in “CHEERZ forMEN”
2. Service Enhancement
Establish a new business model unique for “CHEERZ for MEN”
through holding events decided by the number of CHEERs andinviting fans to events
Continue to further develop the project with “JUNON Superboy Contest”

FutureAim for the growth of the service as a platform to cheer for
young actors and artists

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15

Social Games“Crash Fever” and “Monster Beat” released in 2Q
Also, in collaboration with our new investing company “CreativeFrontier, inc.”,

the release of a new game “Idol Connect” has been decided(to be released in Spring of 2016)

Crash Fever

Monster Beat

Idol Connect(Released in July 2015)(Released in September 2015)(To be released in Spring of 2016)

Joint project with Wonderplanet,Inc., our investing company.
Repeatedly improved after release,
and DARPU (daily average revenue
per user) is gradually increasing

Development by our subsidiary“hipposlab Co., Ltd.”The first game developed within the
United group. Featured as a hot app
in GooglePlay immediately after the
release

Joint project with CreativeFrontier,inc., our investing company.
To be released in spring of 2016.
(See the press release published on
November 4, 2015 for details)

Develop these apps into bigger services in a mid to longterm through repeated improvement

Accumulate the know-how of developing and managing social games for significant
future profit growth
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16

3. Status of RTB Ad-Tech Businessand Future Direction

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17

Ad-Tech Business: Changes in Sales+13% compared to the same period (2Q cumulative) last year
DSP “Bypass” and SSP “AdStir” continued to grow
Changes in 2Q (cumulative) by year
(Million yen)

1,800

1,773

Quarterly changes

1,569
1,350

+16% vs. the same period last year, +13% vs. the previous quarter(Million yen)
1,000

900

750

500

665
450

700

759

809

873

952

834

939

250

342
0

262

403

419

2Q

3Q

0

Year
ending
2014年
in March
2014
3月期

Year
ending
2015年
in March
2015
3月期

Year
ending
2016年
in March
2016
3月期

4Q

1Q

Year ending inMarch 2013

Year ending inMarch 2014

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4Q

1Q

2Q

3Q

Year ending inMarch 2015

4Q

1Q

2Q

Year endingin March 201618

DSP ”Bypass”
Continuous steady revenue growth in 2Q

Primary factors of revenue increase in 2Q
・Improvement of bidding & CPA
optimization logic
・Release of new function andfunctional improvement

Growth led byincreased sale indirect-response typeadvertisers

Action in 3Q
・Further improve bidding and CPA optimization logic

Further accelerate the growth by improving
advertisement performance (CTR & CVR)

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19

SSP ”AdStir”
Revenue growth by increase in the number of biddings from connected DSP and a high WinRate in RTB with high unit priceKey point in revenue increase in SSP ＝ Increase in ad distribution volume × Unit price increase
Factors in ad distribution volume: Number of biddings from DSP /Number of ads in ADNW / Number of inventory ads for distribution in media

Primary factors for revenue growth in 2Q:
Increased number of biddings from DSP
Increase in biddings
from DSPHigh WinRate in RTB withhigh unit price (*1)

Growth in sales

DSP
DSP

RTB

DSP

SSP

ADNW
(Ad network)

ADNW
ADNW

Media A

Yield
optimization(*2)

Media BMedia C

Advertisers

Aim for further growth in 3Q onward with demand expansion from DSP*1 It is designed to hold an auction by setting a high price for RTB and display an ad of ADNW when no conversion occurs.
*2 A central management system to maximize sales from several ADNWs.
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20

4. About Investment Business

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21

Investment Business
Investment in Internet-related companies of Seed/Early Stage.
Very successful current portfolio companies at present will also contribute in the future
expansion of sales and operating profits
Major investment performance

Investment Business/Quarterly Sales Changes
1,274(Million yen)

Mercari, Inc.

Translimit, Inc.

Wonderplanet Inc.

Orb Inc.

Music Securities, Inc.

Metaps Inc.

Fujisan Magazine
Service Co., Ltd.

Datasection Inc.

Enigmo Inc.

mixi, Inc.

130
93

76
43

40
17

11
1Q

2Q

3Q

4Q

Year ending in March 2014

10
1Q

2Q

19

3Q

4Q

Year ending in March 2015

1Q

2Q

Year ending inMarch 2016

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22

5. Summary

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23

Overall Summary

2Q in Year Ending in March 2016

Consolidated

Smartphone
App Business

Ad TechBusiness• Sales and profit increased ascompared with the same period
last year (Growth rate vs. the same
period last year)
Sales
5,084 mil. yen (+28%)
Operating profit 1,121 mil. yen (+612%)

3Q onward inYear Ending in March 2016

・Plan to return to a growth track by
the business structuretransformation of Smartphone App
Business in 3Q onward.

・Promotion of business structuretransformation.
Three applications were releasedin the active investment service.

・ Plan to change the sales structure
led by the active investment
service, aiming for revenue growthin 3Q onward.

・DSP “Bypass” and SSP “AdStir”
continued to grow・ Aim to further accelerate the growthof DSP “Bypass” and SSP “AdStir”

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24

6. Reference Material

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25

Cash Flow Statement for the 2nd Quarter
Consolidated Cumulative Period“Cash flow from operating activities”
Additional inflow of 1,286 million yen by the booking of the quarterly net profits before adjustment for
tax, etc., additional outflow of 419 million yen by the spending for the acquisition of operational
investment securities“Cash flow from investing activities”
Additional outflow of 107 million yen by the spending for the acquisition of tangible fixed assets“Cash flow from financing activities”
Additional outflow of 1,002 million yen by the spending for setting money trust for the acquisition ofown stocks and a additional outflow of 93 million yen by the spending for dividends(Million yen)

2nd Quarter Consolidated
Cumulative Period(April to September 2015)

Cash flow from operating activities

610

Cash flow from investing activities-95

Cash flow from financing activities-1,073

Increase/decrease in cash and cash equivalent-559

End-of-term balance of cash and cash equivalent (*)

1,919* The cash and deposits in the balance sheet is 5,319 million yen. Among the cash and deposits included in the balance
sheet, fixed-term deposits exceeding a period of 3 months are not included in the cash flow statement.
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26

Consolidated P/L Statement for 2Q (July to September)
Revenue (+60％) and profit (+3,760%) increased compared to the same quarter last year

Revenue (+55%) and profit (9,982%) increased compared to the previous quarter(Million yen)
2Q of year
ending inMarch 2016

Results of theResults of thesame quarter Increase/decreas
Increase/decreprevious quarterlast year
e rate vs. thease rate vs. the(1Q of year
(2Q of year
same quarter
previous
ending March
ending in Marchlast year
quarter
2016)
2015)

3,091

1,937

60%

1,992

+55%

589

737

-20%

674

-13%

Advertising segment

1,240

1,198

+3%

1,210

+2%

Investment segment

1,274

10

+12,382%

130

+880%

Inter-segment elimination

-12

-9

-

-23

-

Total profit from sales

1,593

442

+260%

520

+206%

Sales
Media segment

80

214

-62%

123

-35%

Advertising segment

267

225

+19%

269

-1%

Investment segment

1,245

3

+38,338%

127

+880%

Media segment

Inter-segment elimination

0

0

-

0

-

Selling, general andadministrative expenses

484

413

+17%

508

-5%

Operating profit

1,109

28

+3,760%Media segment

-114

36

-

-100

-

Advertising segment

126

112

+12%

133

-5%

Investment segment

1,231

-5

-

111

+1,009%Headquarter expense

-134

-114

-

-132

-

1,223
1,028

43
35

+2,742%+2,828%Current profit
Quarterly net profit

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11 +9,982%

22 +5,394%
8 +12,739%
27

Overview of「CHEERZ」
Our subsidiary, Fogg, inc. (*1) released in December 3.
Charging method
How to use “CHEERZ”

Charging will be required to “CHEER” more than the specified number.
Users can play for free, as there is free limited allocation of “CHEER” andrecovery by time.

Photos and movies ofidols appear on timeline.

Choose your favorite idol
(photo or movie) and“CHEER” her.

Idols will be ranked basedon the number of“CHEERS” received.

After the payment to theplatform, the balance ofthe revenue will beallocated to Fogg and idols(agencies).

Motivation for CHEER (1)“Developing idols”
Idols who ranked high will be exposed to affiliated media and Monthly
CHEERZ (*2) for recognition expansion

Users will be ranked
based on the number of“CHEERS” to each idol.

Motivation for CHEER (2) “Incentive”
Campaign such as photo presented by idols to fans who ranked high.

*1 A new business company established by our unique personnel system “U-start” (See p.29).
*2 A visual book with photos of idols who received high numbers of cheers per month. It is planned to be sold atbookstores, convenience stores located nationwide and Amazon.
Copyright © UNITED, Inc. All Rights Reserved.

28

Our Unique Personnel System “U-Start “As an organizational effort to continue to develop new promising businesses, in April 2013
we have introduced a system to give our employee with outstanding performance a right toinvest in a new company to be started.

Start-up Support System “U-Start”

An employee who wasrecognized for outstanding
performance in business
operation andplanning/development of a
new businessOur
employee

PartialOver 50%
investment/
investment
becomescompany
representative Establishment of a
new company（Our consolidated
subsidiary)
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29

Organizational Strengths of Our Smartphone Media BusinessWe have generated profits from various types of services backed by our various “strengths andsystems” as an organization.
We will continuously develop and introduce our new services.
Features of human resources and organization
・”People with strength in net business, internallytransferred from other section,“ “mid-hires withspecialized skills,”and “new graduates with highpotential” work integrally.
・Corporate culture enabling cooperation beyond thelines of work categories.

Internal development skills
・High capability to plan and develop applications
internally and business development ability
・Internally-developed potent applications (with stronguser base) suppresses the cost for attracting users

We can start various projects with rightpeople at right locations in harmony withmarket changes

Planning & development, businessestablishment, and promotion can be
efficiently made within our company

Empirical value

Internal system

・Entered the application market in June 2010 during its
dawn. Released over 100 applications to date.

・Our own unique personnel system “U-start” (See p.27)
Offer a unique business start-up support system forour employees with high entrepreneurship andexcellent results.
Fogg, inc., an operator of “CHEERZ,” is the firstcompany this system applied.

・Have developed from scratch a large-scale service“CocoPPa,” which achieved 40 million downloads.

We have general knowhow obtained
through our abundant experience

We turn entrepreneurship of our excellent
employees into business power of thegroup

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30

Organizational Strengths of Ad-Tech BusinessContinues to grow in the future based on the background of the strengths of organization supportingthe current high growth

Owns its own DSP, SSP,
ad agency

・ Able to speedily perform new actions within the company such as
RTB distribution of native ads, from testing to implementation
・ Able to provide feedback such as functional improvement from adifferent viewpoint

Highly-experienced
development members

・ Team mainly consists of members who have long engaged
in business since the time of ad network and are very
familiar with ad tech and our own system

Sales and operation
members from various
backgrounds

・ Collaboration among members with various net
advertisement backgrounds, such as ad agents, media
reps, and sales persons from media company sales

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31

Flow of RTB Advertisement
Flow of RTB Advertisement Transaction until Closing [(1) to (4) below take place within 0.05 second)(1) Impression occurs(2) Through SSP, device (browser) information such as frame size and user ID is sent to DSP as a bid request.
(3) Based on information of the bid request, an auction takes place at a preset price within DSP, selecting theadvertiser with the highest bidding price.
(4) The advertiser with the highest bidding price among DSPs wins the bidding and their ad is displayed.
Bidding price¥70

Advertiser

Media/User

(3)

¥80

SSP

DSP

¥60
¥50

(4)

(3)

¥70

(1)

(2)

¥80
¥60

SSP

DSP

¥90

(3)

SSP

DSP

¥60
Advantages for advertisers
Able to efficiently place ads for each impression
only to users they wish to display ads

Advantages for media
Able to offer ad space for bidding to multiple
advertisers and maximize profits

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32