Third Quarter, Fiscal Year Ending March 2016

Consolidated Financial Results
February 3, 2016

United, Inc.
(TSE Mothers, Code 2497)

Contents

1. Financial Highlight

P4

2. Ad-Tech Business

P8

3. Smartphone Application Business

P13

4． Investment Business

P17

5. Future Direction

P19

6. Summary

P22

7. Reference Material

P24

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.

Advertisingsegment

Media segment

Investment segment

Ad-Tech businessCore Businesses

Advertising agency business

Smartphone Application business

Other media businesses(*1)

Venture capital business*1 Email advertising, internet research, sports marketing

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3

1. Financial Highlights

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4

Highlights of Q3 Cumulative Financial Results (April-December)

Whole

Q3
Cumulative
Consolidated
Results

Ad TechBusiness• Sales and profit increased against the same period lastyear (Growth rate compared to the same period last year)
Sales
8,025 million yen (+32%)
Operating profit 1,320 million yen (+501%)
Net profit
1,403 million yen (+98%)

Core Businesses< Sales >・Q3 cumulative results: ＋31％ against the same period
last year
・Q3 (Oct-Dec) results: +52% against the previous
quarter
Accelerated growth of DSP “Bypass” and SSP “AdStir” in Q3 which had
been steadily growing continuously< Sales >• Q3 cumulative results: -23％ against the same period
last year
Smartphone
App Business

Effect of reduced revenue due to business structure transformation• Q3 (Oct-Dec) results: +14% against the previous
quarter
The growth of Services to be focused and invested (CHEERZ and social games)
reversed the trend toward reduced earnings associated with business structuretransformation in Q1 and Q2, achieving revenue growth as planned
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5

Q3 Cumulative (Apr-Dec) Consolidated P/L Statement
Revenue (+32%) and profit (+501%) grew compared to the same period last year
Sales of 1,274 million yen and operating profit of 1,217 million yen generated from the profit of stock sales
associated with the listing of an investing company in the investment business segment in Q2.
Advertising segment: Revenue and profit increased with the growth of DSP “Bypass” and SSP “AdStir”
Media segment:
Profit and revenue decreased due to Smartphone App business structural transformation
Year ending inMarch 2016
Q3 cumulative

8,025

6,100

+32%

Inter-segment elimination

4,351
1,994
1,738
-58

3,559
2,501
106
-66

+22%
-20%
+1,537%-

Total profit from sales

2,812

1,517

+85%

810
298
1,703
0

696
737
83
0

+16%
-60%
+1,935%
-

1,491

1,297

+15%

1,320

219

+501%

384
-311
1,658
-410

217
352
64
-414

+77%
+2,458%
-

1,485
1,403

470
708

+216%
+98%

294
377

319
80

-8%
+367%

Sales
Advertising segment
Media segment

Investment segment

Advertising segment
Media segment
Investment segment
Inter-segment elimination
Selling, general andadministrative expenses

Operating profit
Advertising segment
Media segment
Investment segment
Extraordinary profit of 2.96
million yen generated fromthe profit from the sale ofstocks of SOCIAL WIRE
CO., LTD., (our affiliatedcompany equity method)Same period last Vs. the same (Million yen)period last year
year
(Q3 cumulative in the year Increase/decr
ending in March 2015)
ease rate

Headquarter expense

Current profit
Quarterly net profit
Extraordinary profit and loss
Tax expense, etc.

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6

Changes in Sales and Operating Profits
Q3 cumulative sales of core businesses (Ad Tech Business + Smartphone App
Business) :+11% against the same period last year
Q3 sales of core businesses (Oct-Dec):+35% against the same period last year, +43% against he previous quarter
Accelerated growth of core businesses in Q3
Changes in Q3 Cumulative Sales andProfits
Sales(million yen)

Quarterly Changes

Operatingprofit(million yen)

8,025

8,000

Sales
(million
yen)

3,091

3,000

6,100
6,000

3,795

2,263

4,340

2,000

1,817
1,5651,615

732

4,000

1,159

2,354

1,000

2,000

3,835

4,276
1,320

1,985
0

6
Year ending inMarch 2014

Sales of core businesses
profit782

Operating

(※)

812

720

822
756

+43%

1,000

1,152 1,291 1,217

500

0

1,197

1,992 1,840

833

741

Year ending in Year ending inMarch 2015
March 2016

Sales of other businesses

665

2,941

2,230

1,000

418

219

2,024
1,937

2,139

Operating profit(million yen)783 782
70
44

132

128

1,788

1,326 1,407

28

1,251
1,235

62

151

11

500

1,109
(※)

199

0

0

△ 109

Q1

Q2

Q3

Year ending inMarch 2014

Q4

Q1

Q2

Q3

Year ending inMarch 2015

Q4

Q1

Q2

Q3

Year ending inMarch 2016(*) Sales of 1,274 million yen and operating profit of 1,217 million yen generated from the profit ofstock sales associated with the listing of an investing company in the investment business segment
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7

2. Ad-Tech Business

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8

Ad-Tech Business: Changes in Sales+23% compared to the same period (Q3 cumulative) last year
+52% compared to the previous quarter
DSP “Bypass” and SSP “AdStir” accelerated the growth from Q2

Quarterly changes

Changes in Q3 (cumulative) by year
(million yen)(million yen)
1,400

3,200

+52%
1,050

2,400

3,206

1,600

1,432

700

2,442
350

800

1,084

700
342

0

262

403

419

2Q

3Q

759

809

873

952

834

939

0

Year
ending in
March
2014

Year
ending in
March
2015

Year
ending in
March
2016

4Q

1Q

Year ending in Year ending inMarch 2013
March 2014
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4Q

1Q

2Q

3Q

Year ending inMarch 2015

4Q

1Q

2Q

3Q

Year endingin March 2016

9

Factors of Ad Tech Business Growth (1)Our Ad Tech Business with unique features is continuously growing
Feature 1: Specializing in the smartphone segment, a growing market
Feature 2: Open platform strategy
Feature 3: One stop service solution

Feature 1: Specializing in the smartphone segment, a growing market< Estimate/forecast of programmatic market size by device (unit: 100 million yen) >Demand for PC

2013
2018

2014

Demand for Smartphone

2015

2016

2017

“Demand for
Smartphone” has been
expanding continuously
since 2013 and isforecasted to growcontinuously in the
future(Source: Joint survey by VOYAGE GROUP/Seed Planning in August 2015)

Advantages in Specializing in Smartphone Segment
DSP “Bypass”
・ Accumulation of knowhow on bidding &CPA optimization logic in smartphone
DSP・ Quick adjustment to new distribution
technique in smartphone DSP

SSP “AdStir”
・ The largest-scale inventory of smartphone ads
in Japan (over 30 billion imp./month) acquired
from the early stage of the start of the services
ahead of other companies
・ Quick adjustment to advertising format uniqueto smartphone

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10Factors of Ad Tech Business Growth (2)Feature 2: Open platform strategy
Connection with external SSP & DSP has beenproactively promoted for our DSP & SSP since theservice launch in April 2012.
Open transaction with connected SSP/DSP without
preferentially treating internal transactions .

External DSP

External SSP

External DSP

External SSP

External DSP

External SSP

・
・
・

・
・
・

Product improvement fromboth demand side and supply
side

AgencyDSPAdvertising
agencybusiness

SSP

Publisher

Connected
with 22 DSPs

We have DSP, SSP, and advertising agency within
the company and have direct contact with bothadvertisers and publishers.

Advertiser

Connected
with 11 SSPs

Feature 3: One stop service solution

Advantages

Advantages

・DSP & SSP grew as products by winning in fierce
market competition
・Both market expansion and competitor increase canbe used advantageously→ Example: New competitor entry in DSP segment
leads to the scale expansion of SSP

・Functions can be developed/improved from multiple
viewpoints including opinions of advertisers andmedia
・Trials and effect validation of new functions can bequickly completed internally

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11

Accelerated Growth of Ad Tech Business in
Q3+52% growth in sales in Q3 against the pervious quarter, showing an accelerated growth
Enhanced advertising performance with improved bidding & CPA
optimization logic

Growth continuously led by sales growth in direct response
advertisements
Increases in the number of bidding from DSP & ad inventory
Revenue
growth by both increased RTB WinRate and sales unit price
Increased bidding
from each DSP

Increased ad inventory

DSP
DSP

RTB

DSP
Advertiser

SSP

ADNW
(Ad Network)

ADNW
ADNW

Media

Yield
optimization(*)

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12

3. Smartphone Application Business

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13

Smartphone App Business: Changes in Sales-23% compared to the same period (Q3 cumulative) last year
+14% compared to the previous quarter
Revenue grew in Q3 as planned against the pervious quarter by the growth of Services
to be focused and invested (CHEERZ & social games)
Continuous revenue growth is planned for Q4 onward

Changes in Q3 cumulativesales

Quarterly changes(million yen)(million yen)

1,400

1,392

Business structuretransformation

500

Return ofrevenue growth

1,050

1,069
900
700

531

250

452
380

363

2Q

3Q

407

453

455
401
311

350

0

157

156

4Q

1Q

356

0

Year
ending in
March
2014

Year
Year
ending in ending in
March
March
2015
2016

Year ending inMarch 2013

4Q

Year ending inMarch 2014

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1Q

2Q

3Q

Year ending inMarch 2015

4Q

1Q

2Q

3Q

Year ending inMarch 201614

Progress in Business Structure Transformation
Business structure transformation took place in the first half of the year ending in March
2016.
Transformation of sales structure to the one centering around Services to be focusedand invested (social games & CHEERZ) is underway as planned.
Changes in Sales Structure of
Smartphone App BusinessChanges in Sales of Services to befocused and invested
The figure of Q3
of the year
ending in March
regarded as 100(index number)

Other
services

Continuous
growth is
expected in Q4
onward12-fold
1,234

CocoPPa

Services tobe focusedand invested

2nd half of the 1st half of theyear ending
year endingin March 2015 in March 2016

Constituent ratio
is expected togrown in Q4
onwardQ3 in the year
endingin March 2016

100
Q3

Q4

Year ending inMarch 2015

Q1

Q2

Q3

Year ending inMarch 2016

Continuous revenue growth of Smartphone app business is planned for Q4 onward
by the growth of Services to be focused and invested
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15

Social Games ＆ CHEERZ
Crash Fever: Profitability enhanced by further improvement of game balance and charging
content
CHEERZ:
Diversification of measures for revenue growth and enhancement of service
contents are prioritized toward further scale expansion

Crash FeverCHEERZ

Revenue grew after September when theeffect of steady improvement was started to
be seen due to increase in “DARPU (daily
average revenue per user)”
The number of downloads exceeded 1.5 million
in January 2016

Male idol version: Tie-up events with companies,
start of “CHEERZ NEXT FEED”.
Actor version: Collaboration with Marvelous, Inc.
and TV Asahi Music Co., Ltd.
NumberSalesof CHEERs
IDOL
+

28%

141 mil.

+9%

ACTOR

110 mil.

75 mil.
47 mil.
+

246
mil.

227%

8 mil.
Q4

Q1

Year ending inMarch 2015

Q2

Q3

Year ending inMarch 2016

Q4

Q1

Year ending inMarch 2015

Q2

Q3

Year ending inMarch 2016

< Measures after Q4 >・Continuous improvement
・Proactive deployment of events within the
Aim for further revenue increase by “core user
game such as collaboration with HATSUNE
increase x horizontal expansion” through
MIKU
continuous prioritization of service
・ Consideration of implementation of largeenhancement
scale promotion (depending on situations)
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16

4. Investment Business

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17

Investment Segment
The sales in Q2 of the year ending in March 2016 was1,274 million yen, due to the profit
from the sale of stocks of Fujisan Magazine Service Co., Ltd. associated with its listing.
The sales in Q3 was 333 million yen due to the profit from investment fund, etc.
The current stocks we have is expected to contribute to future sales.
Primary Investment Results

Changes in Quarterly Sales in Investment Segment(million yen)Social Wire Co., Ltd.

1,274

Primary business: News wire, incubation
business
Excluded from the application of the equity method at the endof Q3.
Since the stocks were changed to operational investment
securities from Q4 onward, the sale of the stocks was booked
as the sale in the investment segment.

333

93
11

40 17

76

Mercari, Inc.

Translimit, Inc.

Orb

Music Securities, Inc.

Wonderplanet Inc.

130
43
10 19

Metaps Inc.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
Year ending inMarch 2014

Year ending inMarch 2015

Year ending inMarch 2016

Fujisan MagazineDatasection Inc.
Service Co., Ltd.

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Enigmo Inc.

mixi, Inc.

18

5. Future Direction

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19

Toward Growth in the Next Quarter Onward
In addition to core business, start a multiple of focusedbusiness“Becomethe leading internet firm in Japan”
Changes in consolidated “Sales” and “Operating Profit” by fiscal
year
Consolidated sales

Consolidated
sales（million yen）

13,500Consolidated operating profit

Consolidated
operating profit（million yen）

11,500-13,500

9,000

1,500
-2,000

8,330
4,500

6,156

2,000

1,000

0

138

370

Year ending in March 2014

Year ending in March 2015

Year ending in March 2016
(forecast)

Stable surplus phase
Growth of core businesses

Surplus expansion phase
Led by core businesses

Increasing investment to corebusiness and enhancebusiness portfolio phase0・ Invest the profit obtained in theinvestment segment in corebusinesses
・ Enhance business portfolio for
future big growth(acquisition of two companies by
M&A; see the next page)
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20

Business Portfolio Enhancement
Acquired “KiRAMEX Corporation” and “Smarprise, Inc.” in February 2015(*)
Aim for further growth by business portfolio enhancement
Acquired 100% ownership of KiRAMEX Corporation
Headquarter: Shibuya-ku, Tokyo
Representative: Masayuki Murata
Establishment: February 2009
URL: https://www.kiramex.com

Capital: 116 million yen

・ Operates “TECH ACADEMY,” on-line school specializing
in programming for engineer candidates
・ In response to recent shortage of engineers, over 100
companies and 7,000 people participated in their training
programs. Its future growth is expected.
・ Accelerated growth is expected by combining ourabundant knowhow of on-line promotion.

Acquisition of Smarprise, Inc. (Our share: 58.8%)
Headquarter: Shibuya-ku, Tokyo
Representative: Ken Igarashi
Establishment: April 2015
URL: https://smarprise.co.jp

Capital: 25 million yen

・ Operates smartphone web media business
・ Its future growth is expected through the utilization of
our abundant knowhow of smartphone marketing* See IR release to be published on February 4, 2016
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21

6. Summary

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22

Overall Summary
Q3 in Year Ending in March 2016
• Sales and profit increased ascompared with the same
period last year (Growth rate vs.

Consolidated

the same period last year)

Sales

8,025 mil. yen(+32%)

Operating profit 1,320 mil.
yen (+501%)

Ad TechBusiness

Smartphone
App BusinessQ4 onward inYear Ending in March 2016

・ Growth and dramaticdevelopment by continuous
growth of core businesses andbuilding a new pillar for revenue(business portfolio
enhancement)

・ Accelerated growth of DSP“Bypass” and SSP “AdStir”

・ Aim for further growth of DSP“Bypass” and SSP “AdStir” in thesmartphone segment which is
expected to grow continuously

・ Revenue increased against thepervious quarter by the growthof Services to be focused andinvested (CHEERZ ＆ social games)

・ Aim for further growth throughthe growth of Services to befocused and invested

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23

7. Reference Material

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24

Consolidated P/L Statement for Q3 (October to December)
Revenue (+38％) and profit (+222%) increased compared to the same quarter lastyear
Revenue (-5%) and profit (-82%) decreased compared to the previous quarterQ3 of year
ending inMarch 2016

Results of theResults of thesame quarter last Increase/decrease
Increase/decreas
previous quarter
year
rate vs. the samee rate vs. the(Q2 of year ending(Q3 of year ending quarter last year
previous quarter
March 2016)
in March 2015)

2,941

2,139

+38%

3,091

-5%

1,900

1,251

+52%

1,240

+53%

Media segment

730

886

-18%

589

+24%

Investment segment

333

19

+1,637%

1,274

-74%

Inter-segment elimination

-22

-18

-

-12

-

Total profit from sales

698

515

+35%

1,593

-56%

273
93
330

253
255
6

+8%
-63%
+5,120%

267
80
1,245

+2%
+17%
-73%

0

0

-

0

-

Selling, general andadministrative expenses

498

453

+10%

484

+3%

Operating profit

199

62

+222%

1,109

-82%

Advertising segment

124

131

-6%

126

-2%

Media segment

-96

88

-

-114

-

Investment segment

315

7+3,963%

1,231

-74%

Headquarter expense

-144

-165

-

-134

-

239
366

292
592

-18%
-38%

1,223
1,028

-80%
-64%

Extraordinary profit and loss

254

359

-29%

-1

-

Tax expense, etc.

127

59

+113%

194

-34%

Sales
Advertising segment

Advertising segment
Media segment
Investment segment
Inter-segment elimination

Current profit
Quarterly net profit

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(Million yen)25

Consolidated Balance Sheet for this Quarter
Current assets increased by 1,637 million yen due to the stocks of Social Wire
Co., Ltd. changing to operational investment securities associated with theexclusion from application of the equity method and increase in accounts
receivable, etc.
Current liabilities increased by 1,027 million yen due to increase in accounts(million yen)payable, etc.
End of ThisEnd of previous
Quarterquarter
Increase/(December(September
decrease
2015)
2015)
Current assets

11,374

9,736+1,637(Cash and deposits)

5,679

5,319

+359

Fixed assets

562

733

-171

Current
liabilities

2,650

1,622

+1,027

ー

ー

ー

9,286

8,848

+438

Fixed liabilities
Net assets

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26

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.28).
*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.

27

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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28

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.28)
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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29

Organizational Strengths of Ad-Tech BusinessContinues to grow in the future based on the background of the strengths of organization
supporting the 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 improvementfrom a different viewpoint

Highly-experienced
development
members

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

Sales and operation
members fromvarious 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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30

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
the advertiser with the highest bidding price.
Bidding(4)
TheAdvertiser
advertiser with the highest bidding price among DSPs wins the bidding and their ad is Media/User
pricedisplayed.

¥70

(3)

SSP

DSP

¥80
¥60
¥50

(3)

¥90

(4)

¥70

(1)

(2)

¥80
¥60

SSP

DSP

(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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31