ValueCommerce Co., Ltd.

FY2019

Financial Results

January 29, 2020

Copyright © 2020, ValueCommerce Co., Ltd.

Table of Contents

Page

FY2019 Highlights

2

FY2019 Consolidated Financial Results

3

Segment information

15

FY2020 Consolidated Operating/Dividends Forecast

27

Future approach

31

Appendix 1

(Consolidated Financial Results Overview)

34

Appendix 2

(STORE's R∞ : Effect of CV information deficit)

36

Copyright © 2020, ValueCommerce Co., Ltd.

1

FY2019 Highlights

Highlights

Annual basis (Jan.-Dec.) and quarterly basis (Oct.-Dec.)

Record high in revenue and operating income

FY2020 Consolidated Operating Forecast

Focus on monetization of subsidiary's services in addition to perform existing services.

Jan.-Dec. 2020

Y/Y

Revenue

¥30.0 billion

+16.8%

Operating Income

¥5.5 billion

+10.7%

Consolidate B-SLASH Corporation which provides

necessary solutions for EC operation

(January 2020)

Strengthen services for stores on online shopping mall operated by Yahoo Japan Corporation.

Copyright © 2020, ValueCommerce Co., Ltd.

2

FY2019 Consolidated

Financial Results

Copyright © 2020, ValueCommerce Co., Ltd.

3

FY2019 Highlights

Results overview

Existing services

expanded

(Million JPY)

Cumulative

Quarterly

Jan.-Dec.

Y/Y

Oct.-Dec.

Y/Y

Q/Q

2019

2019

Revenue

25,694

+23.7%

7,395

+21.4%

+23.6%

Operating income

4,966

+32.3%

1,474

+29.6%

+31.7%

EBITDA(*)

5,441

+32.5%

1,667

+35.6%

+37.0%

Net income attributable

3,345

+28.4%

989

+25.3%

+29.1%

to owners of the parent

Segment revenue

Flat

Marketing solution

17,040

+10.8%

4,176

-2.5%

+1.5%

business

EC solution business

8,654

+60.5%

3,219

+78.0%

+72.0%

(*)EBITDA=Operating income+Depreciation and amortization+Amortization of goodwill

Account profit and loss of Dynatech subsidiary from fourth quarter

Copyright © 2020, ValueCommerce Co., Ltd.

4

Consolidated Financial Results Overview Results overview

(Million JPY)

Related to Dynatech subsidiary

Cumulative

Quarterly

Jan.-Dec.

Y/Y

Oct.-Dec.

Y/Y

Q/Q

2019

2019

Revenue

25,694

+23.7%

7,395

+21.4%

+23.6%

Cost of revenue

16,870

+21.7%

4,546

+12.5%

+13.0%

Gross income

8,824

+27.8%

2,848

+38.9%

+45.3%

SG&A expenses

3,857

+22.6%

1,374

+50.4%

+63.3%

Operating income

4,966

+32.3%

1,474

+29.6%

+31.7%

Ordinary income

4,988

+31.5%

1,484

+32.2%

+32.4%

Income before income

4,906

+28.3%

1,454

+25.6%

+30.0%

taxes

Income taxes

1,561

+28.0%

464

+26.4%

+31.8%

Net income attributable

3,345

+28.4%

989

+25.3%

+29.1%

to owners of the parent

Basis EPS

¥103.57

+28.2%

ROE (annualized)

32.4%

EBITDA(*)

5,441

+32.5%

1,667

+35.6%

+37.0%

(*)EBITDA=Operating income+Depreciation and amortization+Amortization of goodwill

Copyright © 2020, ValueCommerce Co., Ltd.

5

Consolidated Revenue

Quarterly results

(Million JPY)

8,000

6,093

7,395

6,000

6,300

6,013 5,985

4,640

4,326

4,9485,044

4,523

4,6634,677

4,000

4,015

4,024

3,960 4,241

2,000

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

6

Consolidated Operating Income and Operating Margin

Quarterly results

(Million JPY)

Quarterly Operating Income

Quarterly Operating Margin

1,800

1,137

1,474

25.0%

19.9%

1,500

18.7%

20.0%

1,200

16.0%

1,242

1,129 1,119

15.0%

919

900

747

827

871

5.4%

575

10.0%

600

483

256

416

300

249

233

5.0%

184

0

0.0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

7

Consolidated Ordinary Income and Net Income

Quarterly results

(Million JPY)

Ordinary Income

Quarterly Net Income

2,000

1,500

1,484

1,122

1,242

1,121

989

1,139

989

1,000

765

821

859

692

789 836 752

766

491

582

551

571

500

417

431

299

195

259

247

330

126

121

157

(4)

92

99

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

-500

FY2016

FY2017

FY2018

FY2019

Impairment loss on ad network service

(Decided to close the service)

Impairment loss on CRM service for general EC business owner (Decided to close the service)

Copyright © 2020, ValueCommerce Co., Ltd.

8

Cost of Revenue and Cost Rate

Quarterly results

(Million JPY)

Quarterly Cost of Revenue

Cost rate

4,546

4,042

5,000

61.5%

90.0%

76.3%

66.3% 4,267

65.9%

4,024

80.0%

4,000

3,716

4,032

70.0%

3,521

3,301

3,311

3,380

60.0%

3,061

3,0723,128

3,000

2,821

2,940

2,731

50.0%

2,000

40.0%

30.0%

1,000

20.0%

10.0%

0

0.0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

9

SG&A and SG&A ratio

Quarterly results

- Expenses of Dynatech inc. and amortization of goodwill

    • ¥370M (include compensation expense of ¥170M)
  • Recruiting, promotion of system introduction for operational efficiency

(Million JPY)

1,374

1,500

914

1,000

791

812

843

766

790 851

841

745

740

704

718

725

721

744

500

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Amortization of Goodwill

51

35

43

43

43

43

28

28

28

28

28

28

28

28

28

91

Compensation

462

462

442

432

424

481

429

486

427

445

417

470

431

509

463

680

Other SG&A

231

242

218

315

250

287

267

328

266

292

298

415

331

313

350

602

SG&A total

745

740

704

791

718

812

725

843

721

766

744

914

790

851

841 1,374

SG&A ratio(%)

16.5 16.0 17.6 18.3 17.9 20.5 17.1 18.1 15.4 15.5 14.8 15.0 12.5 14.2 14.1 18.6

Copyright © 2020, ValueCommerce Co., Ltd.

10

Number of employees

Quarterly results

(Employees)

500

400

300

200

100

0

398 391

256 267

258 258

246

250 273

248 240 236 241 244 242 246

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

VC

239

250

252

252

242

235

231

236

244

242

246

246

250

273

273

266

Subsidiaries

17

17

6

6

6

5

5

5

-

-

-

-

-

-

125

125

Total Employees

256

267

258

258

248

240

236

241

244

242

246

246

250

273

398

391

* Including temporary employees.

- Consolidate Dynatech in September 2019.

- Account compensation expense from fourth quarter

Copyright © 2020, ValueCommerce Co., Ltd.

11

Breakdown of Consolidated Operating Income

Results overview

(Million JPY)

Existing services expanded.

(based on operating income)

+708

-166

4,966

+357

3,755

+311

FY2018

Affiliate

Storematch

STORE's R∞

Other

FY2019

Marketing

(Note) Calculated based on the profit of each service and other factors.

Copyright © 2020, ValueCommerce Co., Ltd.

12

Consolidated Balance Sheet

Results overview

(Million JPY)

'18 End

'19 End

Change

Factors of Change

(Dec.31,2018)

(Dec.31,2019)

Current assets

12,663

13,472

+ 809

Cash and deposits: -115

Notes and accounts receivable-

Cash and

[7,978]

[7,862]

-115

trade: +740

deposits

Noncurrent

2,043

4,539

+ 2,495

Software: +293

Software in progress: +941

assets

Goodwill: +1,096

Related to Dynatech Inc.,

Total assets

14,706

18,011

+ 3,305

- Software: +298

- Software in progress: +988

Current

- Goodwill: +1,208

5,485

6,437

+ 952

liabilities

Accounts payable-other: +475

Income tax payable: +242

Noncurrent

75

82

+ 6

liabilities

Net assets

9,145

11,491

+ 2,346

Net income: +3,345

Cash dividends paid: -1,033

Copyright © 2020, ValueCommerce Co., Ltd.

13

Consolidated Cash Flows

Results overview

(Million JPY)

(Million JPY)

Q1-Q4 '18

Q1-Q4 '19

Operating cash flows

2,756

4,041

Acquisition of share of Dynatech inc.

Investing cash flows

627

-3,135

Sales of shares of an affiliate

Free cash flows

3,383

906

Financing cash flows

-407

-1,021

Incremental cash flows

2,975

-115

Ending cash balance

7,978

7,862

Breakdown

Operating cash flows

Income before income taxes

4,906

Depreciation and amortization

298

Amortization of goodwill

175

Increase in accounts receivable-trade

-367

Decrease in accounts payable-trade

-28

Increase in accounts receivable-other

-73

Increase in accounts payable-other

245

Income taxes paid

-1,372

Investing cash flows

Purchase of property, plant and

-77

equipment

Purchase of intangible assets

-424

Acquisition of share of subsidiary

-2,640

Financing cash flows

Cash dividends paid

-1,027

Copyright © 2020, ValueCommerce Co., Ltd.

14

Segment Information

Copyright © 2020, ValueCommerce Co., Ltd.

15

Segment Information

Overview by segment

Planning/developing

Steady performance

cost increased

Flat

(Million JPY)

Segment Marketing revenue

Solution Segment

Business operating income

Segment

EC revenue

Solution Segment

Business operating income

Cumulative

Quarterly

Jan.-Dec.

Y/Y

Oct.-Dec.

Y/Y

Q/Q

2019

2019

17,040

+10.8%

4,176

-2.5%

+1.5%

2,884

+8.2%

640

-8.2%

-8.5%

8,654

+60.5%

3,219

+78.0%

+72.0%

3,395

+40.1%

1,243

+50.4%

+75.1%

(Notes) Segment operating income is adjusted to operating income in the consolidated financial statement.

Strong performance in existing services

Account Dynatech subsidiary

Copyright © 2020, ValueCommerce Co., Ltd.

16

Service Information

Overview by segment

Double digit growth

Strong performance

Flat

(Million JPY)

Cumulative

Quarterly

Jan.-Dec.

Y/Y

Oct.-Dec.

Y/Y

Q/Q

2019

2019

Marketing

Affiliate marketing

Revenue

17,016

+11.0%

4,174

-2.4%

+1.7%

Solution

(ASP+Consulting)

Gross

Business

4,708

+13.2%

1,169

+3.6%

+0.6%

income

Revenue

5,102

+69.5%

1,611

+53.3%

+28.8%

Storematch

Gross

EC

1,260

+54.4%

393

+39.2%

+26.8%

income

Solution

Business

Revenue

3,059

+33.2%

1,167

+58.2%

+93.3%

STORE's R∞

Gross

3,059

+33.2%

1,167

+58.2%

+93.3%

income

Copyright © 2020, ValueCommerce Co., Ltd.

17

Affiliate Marketing Revenue by Service

Affiliate marketing

(Million JPY)

5,000

4,277 4,516

4,174

3,992

4,220

4,104

3,818

4,000

3,564

3,724

3,340

3,408

3,379

3,499

3,756

3,145

3,133

3,000

2,000

1,000

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

ASP

527

518

514

561

588

593

569

599

594

539

558

637

685

660

695

697

Consulting

3,290 3,473 2,826 2,847 2,557 2,539 2,809 2,900 2,970 3,184 3,198 3,640 3,830 3,559 3,409 3,477

Affiliate Marketing total 3,818 3,992 3,340 3,408 3,145 3,133 3,379 3,499 3,564 3,724 3,756 4,277 4,516 4,220 4,104 4,174

Copyright © 2020, ValueCommerce Co., Ltd.

18

Affiliate Marketing

Gross Income by Service

Affiliate marketing

(Million JPY)

1,500

1,128

1,169

1,2111,164

1,162

970

957

904

868

951

940

970

975 1,000 1,005 1,024

1,000

500

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

ASP

469

449

453

448

493

502

504

515

529

502

516

570

639

604

631

623

Consulting

500

508

450

420

458

438

466

459

470

502

508

557

572

560

531

545

Affiliate Marketing total

970

957

904

868

951

940

970

975

1,000

1,005

1,024

1,128

1,211

1,164

1,162

1,169

Gross Profit Margin(%)

25.4

24.0

27.1

25.5

30.3

30.0

28.7

27.9

28.1

27.0

27.3

26.4

26.8

27.6

28.3

28.0

Copyright © 2020, ValueCommerce Co., Ltd.

19

Number of Advertisers & Publishers

Advertisers (Number of ID)

Affiliate marketing

1,500

1,126 1,144 1,146 1,142 1,144 1,146 1,147 1,146 1,140 1,128 1,090 1,064 1,020 1,005 1,001 1,013

750

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Publishers (Number of ID)

(Thousand)

1,200

656

669

679 688

697

708

718

729

739

750

759

759

764

633

642

650

800

400

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

20

Affiliate Marketing

Revenue Breakdown by Category

Affiliate marketing

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Finance

Electronics

Travel

Recruiting

Shopping

Beauty

Gourmet

Other

9.6%

7.9%

8.9%

9.7%

16.3% 12.5%

12.8% 12.3% 12.3% 12.3%

11.2%11.1%10.7% 10.5% 10.3%10.8%

0.6%

0.7%

0.7%

0.9%

2.2% 5.2% 5.5%

2.4%

1.9%

3.2%

7.3%

1.0%

1.0%

1.7%

2.1%

7.8%

7.7%

6.5%

3.1%

11.5%

2.2%

8.7%

8.7%

8.6%

8.5%

9.3%

9.2% 7.3% 6.4%

7.7%

7.3%

6.4%

11.0%

9.8%

10.2%

7.2%

8.5%

8.4% 8.6%

9.0%

8.0%

9.7%

8.1%

8.8%

10.2%

8.2% 7.7%

9.6%

7.5%

9.5%

10.0%

9.5%

9.6%

10.9% 12.0% 11.7%12.1%

10.3%

9.6%

10.9% 11.9%

10.0%

10.8%

9.9%

13.8%

9.9%

10.6%

14.4%

11.2%10.6% 12.7% 14.1%12.2%

4.2%

14.3%

19.2%

15.4% 14.0% 13.9%

4.0%

11.8%

13.6%

6.4%

15.5%

10.3% 10.1%

8.2%

12.5% 11.1% 10.6%

13.1%17.4% 17.7% 18.3%18.3%

11.6%

47.0% 48.1%

42.6% 42.5%

30.9%

34.1%

32.6%

30.0%

32.0% 31.2%

34.0%

26.4%

30.8%

28.5%

28.0%

28.3%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

21

Affiliate Marketing Commissions for Publishers

Affiliate marketing

(Million JPY)

Commissions for publishers

Smartphone ratio

6,000

4,945

80.0%

4,320

5,306 4,898

4,843

70.0%

5,000

4,681

4,707

4,477

3,941

4,055 4,087

4,312

3,873

60.0%

3,667

3,7763,961

4,000

60.8%

50.0%

56.8%

3,000

51.2%

49.6%

40.0%

2,000

30.0%

20.0%

1,000

10.0%

0

0.0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

22

Affiliate Marketing Number of Transactions

Affiliate marketing

(Million)

Number of transaction

Smartphone ratio

20.0

80.0%

16.9

17.2

16.4

70.0%

16.1

16.1

15.7

15.8

15.0

14.7

13.9

13.4

14.2

14.8

15.1

14.6

14.914.5 60.0%

50.0%

57.9%

10.0

49.5%

40.0%

38.2%

30.0%

5.0

29.6%

20.0%

10.0%

0.0

0.0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

23

Storematch Revenue by Service

Storematch

(Million JPY) 2,000

1,611

1,500

1,251

1,106

1,133

1,051

1,000

593

596

642

719

496

456

463

471

500

374

361

357

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Storematch

343

327

323

419

398

416

424

516

537

584

659

959

1,039

1,065

1,177

1,521

Other

31

34

34

76

58

46

47

76

59

58

60

91

67

67

73

90

Storematch total

374

361

357

496

456

463

471

593

596

642

719

1,051

1,106

1,133

1,251

1,611

Copyright © 2020, ValueCommerce Co., Ltd.

24

Storematch

Gross Income by Service

Storematch

(Million JPY) 500

400

393

282

286

310

300

269

174 192

200

100 100

163

142

134

132

181

166

100

100

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Storematch

69

66

66

87

83

87

85

104

107

116

131

191

202

218

236

303

Other

31

34

34

76

58

46

47

76

59

58

60

91

67

67

73

90

Storematch total

100

100

100

163

142

134

132

181

166

174

192

282

269

286

310

393

Gross Profit Margin(%)

26.9

27.8

28.2

33.0

31.1

29.0

28.2

30.5

28.0

27.2

26.7

26.9

24.4

25.3

24.8

24.4

Copyright © 2020, ValueCommerce Co., Ltd.

25

STORE's R∞

STORE's R∞

Revenue

(Million JPY)

1,500

1,167

1,000

738 652

635

603

500

510

475

546

537

280

163

219

4

65

0

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

26

FY2020 Consolidated

Operating/Dividend

Forecast

Copyright © 2020, ValueCommerce Co., Ltd.

27

FY2020 Consolidated Operating Forecast

Operating forecast

Revenue : Existing service expansion + Subsidiary revenue

Income : Existing service expansion + Subsidiary service monetization

(Million JPY)

First Half Forecast

Full Year Forecast

Q1-Q2 '20

Y/Y

Q1-Q4 '20

Y/Y

Revenue

14,300

+16.1%

30,000

+16.8%

Operating income

2,550

+7.5%

5,500

+10.7%

Ordinary income

2,550

+7.0%

5,500

+10.3%

Net income attributable to

1,670

+5.1%

3,600

+7.6%

owners of the parent

Basic EPS

¥51.70

¥111.45

Copyright © 2020, ValueCommerce Co., Ltd.

28

FY2020 Breakdown of Consolidated Operating Income

Existing services are

(Million JPY)

expected to expand.

(based on operating income)

+402 -48

+108

+71

4,966

Forecast overview

5,500

FY2019

Affiliate

Storematch STORE's R∞

Other

FY2020

(Result)

Marketing

(Forecast)

(Note) Calculated based on the profit of each service and other factors.

Copyright © 2020, ValueCommerce Co., Ltd.

29

FY2020 Dividends Forecast

Dividends forecast

The target payout ratio is 30%

  • Dividends per Share, Consolidated Payout Ratio

Interim Dividend

¥16.00

(forecast)

Year-end Dividend

¥18.00

(forecast)

Total

¥34.00

(forecast)

Consolidated Payout Ratio

30.5%

(forecast)

Copyright © 2020, ValueCommerce Co., Ltd.

30

Future Approach

Copyright © 2020, ValueCommerce Co., Ltd.

31

Future Approach

Marketing Solution Business

Affiliate marketing

  1. Develop high quality media who have ability to attract customers
  2. Strengthen consulting to enhance media profitability
  3. Increase existing advertisers' revenue and acquire new advertisers +α Improve productivity by operational efficiency

EC Solution Business

Storematch, STORE's R∞

Dynatech

Enhance reservations for

(1)

Expand ad distribution space

accommodation facilities and

(2)

Increase introduction number

repeating

of stores

(3)

Enhance products

B-SLASH

Ally sales activities for stores

Copyright © 2020, ValueCommerce Co., Ltd.

32

Appendix 1

Copyright © 2020, ValueCommerce Co., Ltd.

34

Consolidated Results and Cash Flows (Quarterly)

(Million JPY)

FY2017

FY2018

FY2019

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Revenue (+ASP commission for

5,501

5,518

5,824

6,292

6,387

6,574

6,667

7,868

8,357

7,934

8,004

9,323

publisher)

Affiliate marketing revenue(+ASP

4,622

4,691

4,961

5,129

5,274

5,350

5,379

6,052

6,573

6,141

6,123

6,101

commission for publisher)

Revenue

4,024

3,960

4,241

4,663

4,677

4,948

5,044

6,093

6,300

6,013

5,985

7,395

Affiliate marketing(Consulting)

2,557

2,539

2,809

2,900

2,970

3,184

3,198

3,640

3,830

3,559

3,409

3,477

Affiliate marketing(ASP)

588

593

569

599

594

539

558

637

685

660

695

697

Storematch

456

463

471

593

596

642

719

1,051

1,106

1,133

1,251

1,611

STORE's R∞

163

219

280

510

475

546

537

738

652

635

603

1,167

Others

258

144

110

59

41

35

30

26

24

24

25

442

Cost of revenue (-)

2,821

2,731

2,940

3,072

3,128

3,311

3,380

4,042

4,267

4,032

4,024

4,546

Cost of revenue (direct)

2,690

2,604

2,808

2,957

3,007

3,199

3,269

3,923

4,146

3,909

3,890

4,381

Affiliate marketing (Consulting)

2,099

2,101

2,342

2,440

2,499

2,682

2,690

3,082

3,258

2,999

2,877

2,931

Affiliate marketing(ASP)

94

91

65

83

64

36

41

66

46

56

64

73

Storematch

314

329

338

412

429

468

527

768

836

846

940

1,218

Others

182

82

62

20

14

12

9

6

4

6

7

158

Cost of revenue (indirect)

130

127

131

115

120

112

111

118

120

123

133

165

Gross profit

1、202

1,228

1,300

1,590

1,549

1,637

1,663

2,051

2,033

1,980

1,961

2,848

SG&A expenses (-)

718

812

725

843

721

766

744

914

790

851

841

1,374

Compensation

424

481

429

486

427

445

417

470

431

509

463

680

Other SG&A

293

330

295

357

294

320

326

443

359

341

378

694

Operating income

483

416

575

747

827

871

919

1,137

1,242

1,129

1,119

1,474

Ordinary income

491

417

582

765

821

859

989

1,122

1,242

1,139

1,121

1,484

Extraordinary gains/losses (net)

-5

-225

-342

-145

-3

-12

12

34

-7

-40

-2

-30

Income before income taxes

485

192

239

620

817

847

1,002

1,157

1,234

1,098

1,118

1,454

Income tax

155

70

113

188

266

276

309

367

398

346

352

464

Net income attributable to

330

121

126

431

551

571

692

789

836

752

766

989

owners of the parent

Depreciation & amortization

118

121

110

88

83

88

87

92

88

94

97

193

Operating cash flow

460

546

367

830

135

1,027

386

1,207

489

1,392

582

1,576

Investing cash flow

-160

-80

-176

-118

-66

-2

627

69

-23

-149

-2,680

-280

Financing cash flow

-213

9

-75

11

-213

12

-210

3

-570

0

-449

-1

Copyright © 2020, ValueCommerce Co., Ltd.

35

Appendix 2

Copyright © 2020, ValueCommerce Co., Ltd.

36

STORE's R∞ : Effect of CV information deficit

In 2019Q4, the Company found the fact that it had been unable to acquire a part of conversion information from 2018Q3 to 2019Q3 due to a bug in a part of STORE's R∞ program that identifies OS information.

As STORE's R∞ revenue is calculated based on the information, unrecorded revenue of 195 million yen for the period is accounted in 2019Q4.

The amount in case of retrospective adjustment is as below;

Period : From 2018Q3 to 2019Q3

Amount : Revenue 195 million JPY

(Million JPY)

FY2018

FY2019

Q3

Q4

Q1

Q2

Q3

Q4

STORE's R∞: Revenue adjustment

7

17

32

54

83

-195

- Effect of CV information deficit

Copyright © 2020, ValueCommerce Co., Ltd.

37

(Adjusted) FY2019 Q4 Highlights

Results overview

In 2019Q4, the Company found the fact that it had been unable to acquire a part of conversion information from 2018Q3 to 2019Q3 due to a bug in a part of STORE's R∞ program that identifies OS information. As STORE's R∞ revenue is calculated based on the information, unrecorded revenue of 195 million yen for the period is accounted in 2019Q4. The amount in case of retrospective adjustment is as below.

(Million JPY)

Cumulative

Quarterly

Jan.-Dec.

Y/Y

Oct.-Dec.

Y/Y

Q/Q

2019

2019

Revenue

25,669

+23.5%

7,200

+17.8%

+18.6%

Operating income

4,942

+30.7%

1,279

+10.8%

+6.3%

EBITDA(*)

5,416

+31.1%

1,472

+18.0%

+13.1%

Net income attributable

3,327

+26.9%

853

+6.5%

+3.5%

to owners of the parent

Segment revenue

Marketing solution

17,040

+10.8%

4,176

-2.5%

+1.5%

business

EC solution business

8,629

+59.4%

3,023

+65.6%

+54.6%

(*)EBITDA=Operating income+Depreciation and amortization+Amortization of goodwill

Copyright © 2020, ValueCommerce Co., Ltd.

38

(Adjusted) Consolidated Financial Results OverviewResults overview

In 2019Q4, the Company found the fact that it had been unable to acquire a part of conversion information from 2018Q3 to

2019Q3 due to a bug in a part of STORE's R∞ program that identifies OS information. As STORE's R∞ revenue is calculated

based on the information, unrecorded revenue of 195 million yen for the period is accounted in 2019Q4. The amount in case of retrospective adjustment is as below.

(Million JPY)

Cumulative

Quarterly

Jan.-Dec.

Y/Y

Oct.-Dec.

Y/Y

Q/Q

2019

2019

Revenue

25,669

+23.5%

7,200

+17.8%

+18.6%

Cost of revenue

16,870

+21.7%

4,546

+12.5%

+13.0%

Gross income

8,799

+27.0%

2,653

+28.2%

+29.8%

SG&A expenses

3,857

+22.6%

1,374

+50.4%

+63.3%

Operating income

4,942

+30.7%

1,279

+10.8%

+6.3%

Ordinary income

4,963

+30.0%

1,289

+13.1%

+7.0%

Income before income

4,882

+26.8%

1,258

+7.1%

+4.6%

taxes

Income taxes

1,554

+26.6%

404

+8.5%

+7.0%

Net income attributable

3,327

+26.9%

853

+6.5%

+3.5%

to owners of the parent

EBITDA(*)

5,416

+31.1%

1,472

+18.0%

+13.1%

(*)EBITDA=Operating income+Depreciation and amortization+Amortization of goodwill

Copyright © 2020, ValueCommerce Co., Ltd.

39

(Adjusted) Consolidated Revenue

Quarterly results

In 2019Q4, the Company found the fact that it had been unable to acquire a part of conversion information from 2018Q3 to

2019Q3 due to a bug in a part of STORE's R∞ program that identifies OS information. As STORE's R∞ revenue is calculated

based on the information, unrecorded revenue of 195 million yen for the period is accounted in 2019Q4. The amount in case of retrospective adjustment is as below.

(Million JPY)

8,000

6,000

4,000

2,000

0

6,111

7,200

6,332

6,068 6,069

4,640

4,326

4,663

4,9485,052

4,523

4,241

4,677

4,015

4,024

3,960

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

40

(Adjusted) Consolidated Operating IncomeQuarterly results and Operating Margin

In 2019Q4, the Company found the fact that it had been unable to acquire a part of conversion information from 2018Q3 to 2019Q3 due to a bug in a part of STORE's R∞ program that identifies OS information. As STORE's R∞ revenue is calculated based on the information, unrecorded revenue of 195 million yen for the period is accounted in 2019Q4. The amount in case of retrospective adjustment is as below.

(Million JPY)

Quarterly Operating Income

Quarterly Operating Margin

1,800

1,154

1,279

25.0%

1,500

18.9%

17.8%

20.0%

16.0%

1,274

1,200

1,1841,203

15.0%

827 871 926

900

747

600

256

5.4%

483

575

10.0%

416

300

249

233

5.0%

184

0

0.0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

41

(Adjusted) Consolidated Ordinary Income Quarterly results and Net Income

In 2019Q4, the Company found the fact that it had been unable to acquire a part of conversion information from 2018Q3 to 2019Q3 due to a bug in a part of STORE's R∞ program that identifies OS information. As STORE's R∞ revenue is calculated based on the information, unrecorded revenue of 195 million yen for the period is accounted in 2019Q4. The amount in case of retrospective adjustment is as below.

(Million JPY)

Ordinary Income

Quarterly Net Income

2,000

1,500

1,140 1,275

1,289

996

1,1941,204

1,000

821

859

801 858

790 824

853

765

491

582

431

551

571

697

500

417

299

195

259

247

330

126

157

99

121

0

△4 92

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

△ 500

FY2016

FY2017

FY2018

FY2019

Impairment loss on ad

Impairment loss on CRM service

network service

for general EC business owner

(Decided to close the service)

(Decided to close the service)

Copyright © 2020, ValueCommerce Co., Ltd. 42

(Adjusted) Cost of Revenue and Cost RateQuarterly results

In 2019Q4, the Company found the fact that it had been unable to acquire a part of conversion information from 2018Q3 to

2019Q3 due to a bug in a part of STORE's R∞ program that identifies OS information. As STORE's R∞ revenue is calculated

based on the information, unrecorded revenue of 195 million yen for the period is accounted in 2019Q4. The amount in case of retrospective adjustment is as below.

(Million JPY)

Quarterly Cost of Revenue

Cost rate

66.1%

63.1%

5,000

4,546

90.0%

76.3%

65.9%

4,267

4,042

4,024

80.0%

4,000

3,716

4,032

70.0%

3,521

3,301

2,9403,072

3,311 3,380

3,061

60.0%

2,821

3,000

3,128

2,731

50.0%

2,000

40.0%

30.0%

1,000

20.0%

10.0%

0

0.0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2016

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

43

(Adjusted) Segment Information

Overview by segment

In 2019Q4, the Company found the fact that it had been unable to acquire a part of conversion information from 2018Q3 to

2019Q3 due to a bug in a part of STORE's R∞ program that identifies OS information. As STORE's R∞ revenue is calculated

based on the information, unrecorded revenue of 195 million yen for the period is accounted in 2019Q4. The amount in case of retrospective adjustment is as below.

(Million JPY)

Cumulative

Quarterly

Jan.-Dec.

Y/Y

Oct.-Dec.

Y/Y

Q/Q

2019

2019

Segment

17,040

+10.8%

4,176

-2.5%

+1.5%

Marketing

revenue

Solution

Segment

Business

operating

2,884

+8.2%

640

-8.2%

-8.5%

income

Segment

8,629

+59.4%

3,023

+65.6%

+54.6%

revenue

EC Solution

Business

Segment

operating

3,371

+37.7%

1,047

+24.1%

+32.0%

income

(Notes) Segment operating income is adjusted to operating income in the consolidated financial statement.

Copyright © 2020, ValueCommerce Co., Ltd.

44

(Adjusted) Service Information

Overview by segment

In 2019Q4, the Company found the fact that it had been unable to acquire a part of conversion information from 2018Q3 to

2019Q3 due to a bug in a part of STORE's R∞ program that identifies OS information. As STORE's R∞ revenue is calculated

based on the information, unrecorded revenue of 195 million yen for the period is accounted in 2019Q4. The amount in case of retrospective adjustment is as below.

(Million JPY)

Cumulative

Quarterly

Jan.-Dec.

Y/Y

Oct.-Dec.

Y/Y

Q/Q

2019

2019

Marketing

Affiliate marketing

Revenue

17,016

+11.0%

4,174

-2.4%

+1.7%

Solution

Gross

(ASP+Consulting)

4,708

+13.2%

1,169

+3.6%

+0.6%

Business

income

Revenue

5,102

+69.5%

1,611

+53.3%

+28.8%

Storematch

EC

Gross

1,260

+54.4%

393

+39.2%

+26.8%

income

Solution

Revenue

3,034

+30.7%

971

+28.6%

+41.3%

Business

STORE's R∞

Gross

3,034

+30.7%

971

+28.6%

+41.3%

income

Copyright © 2020, ValueCommerce Co., Ltd.

45

(Adjusted) STORE's R∞ Revenue

STORE's R∞

In 2019Q4, the Company found the fact that it had been unable to acquire a part of conversion information from 2018Q3 to 2019Q3 due to a bug in a part of STORE's R∞ program that identifies OS information. As STORE's R∞ revenue is calculated based on the information, unrecorded revenue of 195 million yen for the period is accounted in 2019Q4. The amount in case of retrospective adjustment is as below.

(Million JPY)

1,500

971

1,000

755

684

690

687

510

475

546

544

500

163

219

280

65

4

0

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY2017

FY2018

FY2019

Copyright © 2020, ValueCommerce Co., Ltd.

46

Disclaimer

  • This presentation material is intended to provide reference information as material for investors. Neither ValueCommerce nor its personnel assume any responsibility for the accuracy, appropriateness, or integrity of the information contained in this material.
  • This presentation is not intended to solicit investment in connection with the acquisition of ValueCommerce's securities. It does not contain all information essential to any decision on investment in ValueCommerce's securities. In the event of making an investment decision, you are advised to refer to the Company's securities reports and other statutory disclosure documents and its published materials in addition to this presentation material.
  • This presentation material contains financial outlooks and other statements on future results. Actual results may differ materially from those described in this material due to various factors.
  • For details about factors that may have an impact on ValueCommerce's financial results, please refer to "Risk Factors" on ValueCommerce's website (https://www.valuecommerce.co.jp/en/ir/risk_factors/). However, please note that the factors that have an impact on ValueCommerce's financial results are not confined to those described in "Risk Factors."

Copyright © 2020, ValueCommerce Co., Ltd.

47

Corporate Information

Corporate name

ValueCommerce Co., Ltd.

Established

1996

Fiscal year end

December

HQ location

MINAMI AOYAMA BRIGHT SQUARE 3F

2-26-1Minami-Aoyama,Minato-ku, Tokyo 107-0062 Japan

Representative

Jin Kagawa,

Representative Director, President and CEO

Businesses

Marketing Solution Business (Affiliate marketing)

EC Solution Business (Storematch, STORE's R∞)

Main shareholder

Z Holdings Corporation

Slogan

Building Together

Mission

To Create New Value with Information Technologies

Vision

To Be the Best Performance Marketing Company Representing Japan

Corporate website

https://www.valuecommerce.co.jp/en/ir/

Contact us

E-mail: investor_relations@valuecommerce.co.jp

Copyright © 2020, ValueCommerce Co., Ltd.

48

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