Vega Corporation Co., Ltd. · TSE:3542
Vega — Q3 FY2022 Earnings Presentation
44 slides from Vega's earnings presentation, February 2022
Slide 1: Quarterly Financial Results for the Nine Months Ended December 31, 2021
i H For the Nine Months Ended December 31, 2021 Quarterly Financial Results Vega corporation Co., Ltd. / Securities code: 3542 VEGA corporation
Slide 2: Agenda
oar WwW NY = Business Description Overview of Quarterly Financial Results for the Nine Months Ended December 31, 2021 Report on LOWYA Business Report on DOKODEMO Business Financial Results Outlook Appendix
Slide 3: Business Description
Business Description
Slide 4: Business Model
LOWYA Business Business Model In addition to offering private brand (PB) products at the flagship store (the Company’s e-commerce website) and other e-commerce marketplace stores, products of other companies’ brands are offered at the flagship store The Company Users Manufacturing - contractors Deli
Slide 5: DOKODEMO Business Business Model
DOKODEMO Business Business Model Operate a cross-border e-commerce platform with all functions including settlement, logistics and CS, which enables seller companies to offer Japanese products to overseas users Seller The Company Users companies Displayed in 5 ———— ae languages, with a choice Provid
Slide 6: Difference in Sales Recognition Methods
Difference in Sales Recognition Methods LOWYA business is a D2C business of furniture and interior sundries* However, the method for recognizing sales of products of other companies’ brands may be changed in the future DOKODEMO business is a cross-border e-commerce platform business that has a model
Slide 7: Overview of Quarterly Financial Results
2 Overview of Quarterly Financial Results for the Nine Months Ended December 31, 2021
Slide 8: Financial Highlight
Financial Highlight Overview of Company-wide Results LOWYA business Overview DOKODEMO business Overview *GMV: Gross Merchandise Value Progress was made on improving profit, even amid a rising cost of sales, and we achieved operating profit in excess of 2Q DOKODEMO performed strongly, with GMV passin
Slide 9: Financial Results for the Three Months Ended December 31, 2021
Financial Results for the Three Months Ended December 31, 2021 Net sales: 3,868 million yen, Operating profit: 1 04 million yen (Million yen) al year ended Fiscal year ended ar. 21 Fiscal year ending (New Revenu cognition Mar. 31, 2022 Standard retrospe pplied) 3Q results Sales ratio 3Q results Sale
Slide 10: Financial Results for the Nine Months Ended December 31, 2021 (Cumulative)
Financial Results for the Nine Months Ended December 31, 2021 (1Q-3Q Cumulative) Net sales: 1 2,455 million yen, Operating profit: 449 million yen (Million yen) Fiscal year ended Fiscal year ended Mi 3 Fiscal year ending (New Revenue Recognition Mar. 31, 2022 Standard retrospect J applied) Sales rat
Slide 11: Quarterly Net Sales and Operating Profit
Quarterly Net Sales and Operating Profit Net sales fell short year on year but trended higher than the pre-COVID-19 pandemic levels Operating profit exceeded 2Q due to an overall improvement in gross margin, even amid a rising cost of sales (Wilion yen) Net sales (Left) = Operating profit (Right) 8,
Slide 12: Quarterly SG&A Expenses Ratio
Quarterly SG&A Expenses Ratio (against Net Sales) The SG&A expenses ratio progressed stably overall due to a decrease in the selling expenses ratio and delivery expenses ratio, despite a rising personnel expenses ratio and advertising expenses ratio resulting mainly from investment in the flagship s
Slide 13: Balance Sheet
Balance Sheet While inventory is increasing, there are still no concerns about financial soundness (Million yen) As of pst As of Msot December 31, a December 31, March 31, 2021 2021 March 31, 2021 2021 Current assets 6,892 6,415 Current liabilities 3,023 2,625 Cash and deposits 3,028 1,393 Debt obli
Slide 14: Report on LOWYA Business
Report on LOWYA Business = 14
Slide 15: Management Indicators
LOWYA Business Management Indicators Membership of the flagship store has grown steadily, and the ratio of sales to repeat customers has increased solidly, indicating progress in our efforts to accelerate GMV growth Scope Company- wide Flagship store Item Company-wide GMV (million yen) Flagship stor
Slide 16: Quarterly GMV and Net Sales
LOWYA Business — Quarterly GMV and Net Sales Although it was confirmed that our capacity for attracting customers grew mainly at the flagship store, the GMV and net sales of the overall LOWYA business fell slightly short of the year-earlier results, which presented big hurdles to clear wwiienyen) mt
Slide 17: Quarterly GMV by Sales Channel
LOWYA Business — Quarterly GMV by Sales Channel GMV of the flagship store was at the same level as the previous year, indicating that the flagship store remained the main sales channel (Million yen) mmm Flagship store Market place stores =—Q=Flagship store ratio Up 2 . 7 pt 51.4% 48.7% 5,000 —o 4,00
Slide 18: Monthly GMV at Flagship Store
LOWYA Business = Monthly GMV at Flagship Store GMV of the flagship store progressed smoothly in October and November In December however, the strong performance seen in last year’s Christmas sales could not be repeated, and GMV for 3Q as a whole remained at the same level as the previous year (Milli
Slide 19: Company-wide Monthly GMV
LOWYA Business Company-wide Monthly GMV For the overall LOWYA business (flagship store -+marketplace stores), both November and December saw month-on- month growth in GMV (Million yen) FY2021 2,000 1,915 1,800 1,600 1,400 1,200 4,000 mmm FY2022 —OYoY 1,988 4,573 1,409 1,402 87.0%. 102.4% Apr. May Ju
Slide 20: Cost of Sales Ratio and Delivery Expense Ratio
LOWYA Business — Cost of Sales Ratio and Delivery Expense Ratio (vs. GMV) Cost of sales ratio increased due to rising marine containers transportation costs and raw material purchase costs coupled with yen depreciation. However, as in the first half of the fiscal year, further reduction in delivery
Slide 21: Profit Structure by Sales Channel
LOWYA Business —_ Profit Structure by Sales Channel The average value per order and the contribution margin (before marketing expenses)* are 1.4 times and 1.7 times larger at the flagship store than at marketplace stores The business structure is designed to improve profit margin by expanding GMV th
Slide 22: Marketing Investment Ratio
LOWYA Business — Marketing Investment Ratio (vs. Flagship Store GMV) We have currently been focusing on GMV growth by acquiring new members of the flagship store and turning existing members into active customers, and executing active marketing investments =c=Advertising expense ratio (Advertising e
Slide 23: Enhance Product Lineup (i)
LOWYA Business Enhance Product Lineup (i) During the year since the start of the trial phase, we have significantly expanded the range of products of other companies’ brands that we offer beworth style cado © GART Joseon KARE LaForma @ Rose @TWINBIRD SOR! YANAGI BB-company RFs ZipTop oa TAKANO MOKKO
Slide 24: Enhance Product Lineup (ii)
LOWYA Business — Enhance Product Lineup (ii) The number of items offered has increased, but challenges have emerged in adjusting the UI. We will therefore lower the target number of items we handle by the end of the fiscal year under review, and make improvements to expand sales Net sales and number
Slide 25: Enhance Product Lineup (iii)
LOWYA Business — Enhance Product Lineup (iii) Add design- and trend-conscious new products while expanding product categories primarily of other companies’ brands Products of the Company's PB Products of other companies’ brands ‘a le 25
Slide 26: Trial Sales in Taiwan
LOWYA Business Trial Sales in Taiwan We commenced trial sales in Taiwan from October, in alliance with Bibian Co., Ltd., a group company of PChome Online Inc., a major Taiwanese e-commerce marketplace operator, and held a joint press conference in December to launch full-scale sales Scheme enabling
Slide 27: KPI of the Flagship Store (Membership)
LOWYA Business — KPI of the Flagship Store (Membership) Total membership* of the flagship store has topped one million people, and is continuing to rise steadily Total membership of the flagship store (People) 1,057,956 1,000,000 800,000 600,000 400,000 200,000 | 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q F
Slide 28: KPI of the Flagship Store (Repeat Members)
LOWYA Business KPI of the Flagship Store (Repeat Members) GM\* by repeat members has been on a rise as guest purchasers become members and new members turn to repeat members GMV by member type (LTM*) (Wilion yen) mm Repeat members New members Guest purchasers -O=Repeat member order ratio (%) 14,000
Slide 29: KPI of the Flagship Store (Average Basket Value)
LOWYA Business — KPI of the Flagship Store (Average Basket Value) Average basket value has been steadily progressing Average basket value (exclusive of tax) (LTM*) (Yen) —O-Members -O-Guest purchasers 30,000 24,963 25,392 25,089 24,486 , ~ 25,000 oO —O— O- —O— 24,088 23,506 23,349 23,168 23,091 23,0
Slide 30: Report on DOKODEMO Business
Report on DOKODEMO Business
Slide 31: DOKODEMO Business Management Indicators
DOKODEMO Business = Management Indicators While membership and the number of APP DLs increased smoothly, average basket value grew and GMV continued to show a high growth rate Three months ended Three months ended , Item YoY December 31, 2020 December 31, 2021 GMV (million yen) 605 1,021 168. ie Net
Slide 32: DOKODEMO Business GMV
DOKODEMO Business GMV GMV grew by 68.7: YoY, topping 1 ,000 million yen for the first time ever Repeat customer GMV remained high, accounting for 70.7% (Million yen) ‘Milli Repeat customer GMV mamliNew customer GMV =O=Ratio of repeat customers Up 68.7% 1,021 4,000 CaGy f 64.8% 65.0% 64.7% 64.9% 727%
Slide 33: DOKODEMO Business Upfront Investment Amount
DOKODEMO Business Upfront Investment Amount GMV has been expanding smoothly, while saving the upfront investment level (net expenditure of this business) Transactions are projected to further increase by retaining repeat customers and acquiring new customers efficiently (Million yon) = = GMV ™Upfron
Slide 34: DOKODEMO Business Ratio of GMV by Delivery Destination Area
DOKODEMO Business Ratio of GMV by Delivery Destination Area Deliveries to Asia, primarily Taiwan, account for more than 90% of GMV By region By country Middle East Oceania 9.2% 1.196 Europe 1.5% North Amer Africa 0.02% UK Latin America 0.5% 0.0196 e us ay Kong Taiwan @ 22% ae 83.5% Malaysia 0.4% iP
Slide 35: Financial Results Outlook
Financial Results Outlook
Slide 36: FY2022 Financial Results Outlook
FY2022 Financial Results Outlook We have revised our financial results forecast based on the progress of results for the nine months ended December 31, 2021 (Million yen) Original plan Revised plan Net sales 19,000 — 20,500 16,000 — 16,500 Before additional 1,300 - 1,700 700 — 800 7 investment Opera
Slide 37: Appendix
Appendix
Slide 38: Impact of a New Revenue Recognition Standard
LOWYA Business Impact of a New Revenue Recognition Standard As a new accounting standard for revenue recognition (new Revenue Recognition Standard) has been applied from the fiscal year ending March 31, 2022, creating a difference between GMV and sales, the Company has newly announced GMV as an impo
Slide 39: Market Scale (Past Trend)
LOWYA Business Market Scale (Past Trend) The furniture and interior e-commerce market is a growth market, expanding with a CAGR of 5.51% (2016-2020) The rate of e-commerce shift remains relatively low compared to other products, and the further progress of e-commerce shift is forecast . ao Compariso
Slide 40: Market Scale
LOWYA Business Market Scale Target market is forecast to expand driven by a greater range of products offered and increasing e-commerce shift, which presents significant room for growth Field for further exploration (Not only related fields, but merchandise in general acceptable to LOWYA users in th
Slide 41: Competition in the trendy & low price space of the furniture and interior market
ition in the “trendy & low price” space of the furniture and interior products market | 2 - Trendy area Z Low price Copynaht 2021 VEGA cororstion Al ight Resend
Slide 42: Purchaser Data
LOWYA Business Purchaser Data Showing higher ratio of females in their 20’s to 30’s, and in the Kanto region by area. Ratio of Age nan male vs. distribution female 60 and older 2% Male 29 and ounger 45% young Female 55% * Of those who made purchases at the flagship store in the past 12 months, data
Slide 43: DOKODEMO Business Market Scale
DOKODEMO Business Market Scale Even with a platform specialized for seller companies in Japan, massive markets present abundant opportunities BtoC cross-border e-commerce market scale (billion dollars) “! Cross-border e-commerce usage by region (2018 ) ? Have never used Have used before Middle East
Slide 44: VEGA corporation
wl, ae VEGA corporation IR Inquiries vega_ir@vega-c.com Views and forecasts in this document were prepared based on the judgment of the Company at the time of preparation. These statements are based on current expectations, forecasts, and assumptions that are subject to risks, and contain uncertaint