Gunosy, Inc. · TSE:6047

Gunosy — FY2019/5 Earnings Presentation

40 slides from Gunosy's earnings presentation, Jul 12, 2019

1. Slide 1: FY2019/5 Financial Results

   FY2019/5 Financial Results Gunosy Inc. First Section of The Tokyo Stock Exchange (Stock Code: 6047) July 12, 2019

2. Slide 2: INDEX

   INDEX 1 Financial Results for FY2019 P3 2 Medium- and Long-Term Growth Strategy P9 3 FY2020 Outlook P15 4 Business Overview by Division P18 5 Recent Actions P28 6 Reference Materials: Overview of Gunosy Inc. P33 （C） Gunosy Inc. All Rights Reserved.

3. Slide 3: Financial Results for FY2019

   1 Financial Results for FY2019 Section 1 （C） Gunosy Inc. All Rights Reserved.

4. Slide 4: FY2019/5 Consolidated Results (On a YonY comparison)

   FY2019/5 Consolidated Results (On a YonY comparison) Although operating income declined YonY due to active injection of advertising expenses, increases in both sales and profit achieved on a full year basis. Sales and gross profit marked solid growth by user acquisition through coupon program, enhan

5. Slide 5: FY2019/5 Consolidated Results [Compared to the Plan]

   FY2019/5 Consolidated Results [Compared to the Plan] When Q3 financial results were announced on April 12, 2019, the full-year plan was revised incorporating the increased advertising expenses. Q4 sales and operating income exceeded the revised plan by approx. 250 million yen and 200 million yen, re

6. Slide 6: Total Number of Active Users (MAU)

   *1 Total Number of Active Users (MAU) Total MAU in Q4 increased by 31% YonY (“Gunosy” increased by 14%). Supported by improved algorithm, enhancement of new content and coupon program, MAU of “Gunosy” turned to re-growth, achieving a record high. "NewsPass" and "LUCRA" also showed solid growth. 31%

7. Slide 7: Breakdown of Net Sales

   *1 Breakdown of Net Sales ADNW recovered from the sales decline recorded in Q3. (Increased by 8% over the previous quarter) Sales of Gunosy Ads increased due to improvements in algorithms, enhancement of new content such as videos and user acquisition through coupon programs. (Increased by 4% over t

8. Slide 8: Cost Structure

   Cost Structure Along with ADNW sales growth, “Ad network costs” also increased over the previous quarter. Continued injection of “advertising expenses” to promote coupon program. “Other expenses”, which increased over the previous quarter, is mainly associated with the costs for revenue sharing with

9. Slide 9: Medium- and Long-Term Growth Strategy

   2 Medium- and Long-Term Growth Strategy Section 2 （C） Gunosy Inc. All Rights Reserved.

10. Slide 10: Introduction

    Introduction (1) Outline Establish “an investment phase to accelerate growth”, which aims to achieve medium- and long-term growth. See p.11 for more detail (2) Strategy Inject advertising costs strategically making effective use of media such as online ads and TV commercials. See p.12 for more detai

11. Slide 11: Investment Phase to Accelerate Growth

    (1) Outline Investment Phase to Accelerate Growth Aiming for a large growth in profits in FY2021/5, we will continue to consider FY2020/5 as “an investment phase for accelerated growth”, in which aggressive investment is made to "Gunosy" to realize medium- and long-term growth and profits. Furthermo

12. Slide 12: Advertising Plan to Achieve Growth

    (2) Strategy Advertising Plan to Achieve Growth With a focus on our core business "Gunosy", we will actively invest in advertising through effective use of TV commercials and online ads. We plan to raise the investment amount to 3.88 billion yen in FY2020/5, which is planned to be lowered to FY2019/

13. Slide 13: MAU and DAU of “Gunosy”

    (3) Recent results MAU and DAU of “Gunosy” Both MAU and DAU of “Gunosy” recorded growth by aggressive investment in advertisement started in FY2019/5 Q3. Not only did MAU reach a record high, DAU increased by more than 10% compared to before investment, which suggests the users, who are not limited

14. Slide 14: Image of “Gunosy” Regrowth

    Image of “Gunosy” Regrowth (4) Future outlook Continue active investment in advertising to accelerate user growth. Meanwhile, strictly monitor the return on investment and expect sales growth in line with the increase in users. Through these measures, in FY 2020/5 Q4, we aim to achieve double-digit

15. Slide 15: FY2020/5 Outlook

    3 FY2020/5 Outlook Section 3 （C） Gunosy Inc. All Rights Reserved.

16. Slide 16: FY2020/5 Forecast [On a YonY comparison]

    FY2020/5 Forecast [On a YonY comparison] Through aggressive investment in advertising, we plan to raise both net sales and gross profit by at least 10% YonY. On the other hand, while operating income is expected to record a temporary decline, we will control spending on advertising, closely monitori

17. Slide 17: FY2020/5 Forecast [H1 and H2]

    FY2020/5 Forecast [H1 and H2] In particular, as investment costs in 1st half for advertising are regarded as upfront investment, operating income is expected to show significant decline. It is, however, expected to recover in 2nd half along with an increase in service users. (Million yen) FY2020/5 F

18. Slide 18: Business Overview by Division

    4 Business Overview by Division Section 4 （C） Gunosy Inc. All Rights Reserved.

19. Slide 19: Media “Gunosy”: campaign programs and MAU growth

    Media “Gunosy” Utilizing our ❶planning ability and ❷engineering resources to implement the plan in a short time, we carried out a variety of campaign programs (including lotteries and time sale coupons) many times in a short time, which received favorable support by users. As a result, MAU marked st

20. Slide 20: Media “Gunosy”: video content enhancement

    Media “Gunosy” Following enhancement of official videos such as professional sports and Korean drama, we strengthened tie-up with external partners, which contributed to the accumulation of active users. Changes in the scale of users Main video content broadcast who have completed viewing video In-

21. Slide 21: Media “NewsPass”

    Media “NewsPass” Enhancement of the delivery system improved the open rate of push notifications. With the start of coupon delivery in March 2019, we are aiming for continuous growth in the future. Enhancement of push delivery system Start of coupon delivery (1) Speed of news flash delivery improved

22. Slide 22: Media “LUCRA”

    Media “LUCRA” The number of active users steadily expanded due to successful introduction of new content and more. Largest media outlet oriented to women in the Japanese market. ＊1 Introducing new content • Weather forecast • Horoscope • Coupon Advertising strategy change Regarding the revenue shari

23. Slide 23: Media Game8

    Media Game8 Q4 sales affected by sluggish growth in PV and CPM due to market conditions. Operating income decreased over the previous quarter as strategic investments made to enter into new businesses. FY2020/3 positioned as a period of preparation for sustained growth. In order to achieve medium- a

24. Slide 24: Game8 Launched “CLABEL”

    Media Game8 Launched “CLABEL” Game8, which runs the game walkthrough website, entered into a new business other than gaming. Released "CLABEL" beta version, a new media that supports users when making important decisions in life, such as going to school or finding a job. Media image of beta version

25. Slide 25: Advertising: Ad Network (ADNW)

    Advertising Ad Network (ADNW) The impact of the environmental change in the advertising market has calmed down, and CPM (Cost Per Mile) has bottomed out. Advertising inventory (impressions) recovered from seasonal decline in Q3 and marked a new record high. Num be r of I m pre s s i ons Number of Im

26. Slide 26: Advertising: digwell and VIDPOOL

    Advertising digwell and VIDPOOL - digwell's business remained strong until Q4. However, rapid market changes have made it difficult to achieve growth in existing businesses. As a result, sales and profits are expected to decline in the current quarter. We will focus on developing new services other

27. Slide 27: Investment business: Gunosy Capital

    Investment business Gunosy Capital As the third project, we invested in Caster Corporation that provides support for better working style. Since its establishment in July 2018, Gunosy Capital has invested in three companies. 1st project 2nd project 3rd project Investment executed in May 2019 Company

28. Slide 28: Recent Actions

    5 Recent Actions Section 5 （C） Gunosy Inc. All Rights Reserved.

29. Slide 29: (1) “OTOKUL”, a Coupon App, Released

    (1) “OTOKUL”, a Coupon App, Released “OTOKUL”, a coupon app, released on March 4, 2019. The growth in the number of coupons available exceeds expectations and user acquisition efficiency is better than existing products, leading to steady growth. Section 5 （C） Gunosy Inc. All Rights Reserved. PAGE |

30. Slide 30: (2) Establishment of Gunosy Tech Lab

    (2) Establishment of Gunosy Tech Lab We established "Gunosy Tech Lab" as an organization specialized in research in further data utilization and information recommendation. [Recent research theme] Enhancement of recommendation algorithm using deep 1 learning / machine learning technology in various

31. Slide 31: (3) Our Paper Accepted at International Conference KDD2019

    (3) Our Paper Accepted at International Conference "KDD2019" Gunosy's research paper accepted by international conference on data mining "KDD2019“ (Applied Data Science Track) KDD is… KDD (The ACM SIGKDD Conference on Knowledge Discovery and Data Mining) is one of the international conferences on da

32. Slide 32: (4) SDGs Tab Added in 3 Apps Provided by Gunosy

    (4) "SDGs" Tab Added in 3 Apps Provided by Gunosy Advocating the efforts of "SDGs" as a member of the international community, SDGs tab was added in 3 apps provided by Gunosy. It aims to contribute to the realization of a better international community. SDGs tab added in 3apps What are the SDGs? Sus

33. Slide 33: Reference Materials: Overview of Gunosy Inc.

    Appendix Reference Materials: Overview of Gunosy Inc. （C） Gunosy Inc. All Rights Reserved.

34. Slide 34: Our Mission

    Our Mission Optimally deliver information to people around the world （C） Gunosy Inc. All Rights Reserved. PAGE | 34

35. Slide 35: Figures in Mid-term Vision

    Figures in Mid-term Vision In the rapidly changing market environment, we set the following indicators as a 3-year goal and will expand our business to achieve further development. MAU Total duration of all sessions Total sales 20% growth / year 25% growth / year 30% growth / year Raise “Total durat

36. Slide 36: Model of Our Main Business

    Model of Our Main Business We aim to coexist with various stakeholders based on making use of our strengths in the Internet advertising business with our own media. Users Newspaper companies, etc. Provide news content Offer ￥ news for free Our own Payment media Sell (Payment) add Advertisers space M

37. Slide 37: Directors

    Directors (as of July 12, 2019) Representative Director and CEO Representative Director and COO Director Director Yuya Taketani Tetsuya Nagashima Yoshinori Fukushima Shinji Kimura He graduated from the Department of Industrial and He graduated from the Faculty of Science and He graduated from the Gr

38. Slide 38: Overview of Gunosy Inc. (as of July 12, 2019)

    Overview of Gunosy Inc. (as of July 12, 2019) Basic Information ・Company name: Gunosy Inc. ・Officers:Representative Director and CEO, ・Representative: Yuya Taketani Yuya Taketani ・Established: November 14, 2012 Director and COO, Tetsuya Nagashima ・Fiscal year end: May 31 Director, Yoshinori Fukushim

39. Slide 39: Disclaimer

    Disclaimer Forward-looking statements contained in these materials are prepared from judgments and assumptions based on information available at the time of preparing the materials, and do not guarantee their accuracy. These materials contain financial data that have not been audited by an independe

40. Slide 40: Optimally deliver information to people around the world

    Optimally deliver information to people around the world

Gunosy — FY2019/5 Earnings Presentation on 6ix