Kakaku com : FY3/2019 3Q Consolidated Financial Results

This is an abridged translation of the original Japanese document and is provided for informational purposes only. If there are any discrepancies between this and the original, the original Japanese document prevails.

Kakaku.com, Inc.

Consolidated Earnings Report for the

Third Quarter of the Fiscal Year Ending March 31, 2019

Stock listings:	Tokyo Stock Exchange (First Section)
Securities code:	2371
URL:	http://corporate.kakaku.com/?lang=en
Representative:	Shonosuke Hata, President and Representative Director
Information contact:	Hajime Uemura
Director, Administrative Division General Manager
Telephone	[phone]
Scheduled dates

February 5, 2019

Filing of statutory quarterly financial report:	February 12, 2019
Dividend payout:	-
Supplementary materials to financial results available:	Yes
Fiscal year-end earnings presentation held:	Yes (for institutional investors and analysts)
(Amounts of less than one million yen are rounded.)

1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2019

(1) Consolidated Operating Results

Operating profit

Profit attributable to owners of the parent company

¥ million

% ¥ million

% ¥ million

% ¥ millionQ3

FY2018

39,884 19.1

18,196 12.4

18,048 11.6

Q3

FY2017

33,497

5.0

16,193

3.5

16,168

3.3

Basic earnings per share	Diluted earnings per share
Q3 FY2018 Q3 FY2017	¥ 57.58 51.76	¥ 57.55 51.73

(2) Consolidated Financial Position

% ¥ million

12,112 9.7

11,041 2.7

(% = year-on-year change)

12,079 9.5

11,029 2.9

%

Total assets	Total equity	Total equity attributable to owners of the parent company	Total equity attributable to owners of the parent company ratio
As of December 31, 2018 As of March 31, 2018	¥ million 44,177 42,770	¥ million 36,269 33,908	¥ million 35,880 33,573	% 81.2 78.5

¥ million

%

12,140 8.7

11,169 3.9

2. Dividends

Annual dividends
Q1	Q2	Q3	Year End	Total
FY2017 FY2018	¥ - -	¥ 16.00 18.00	¥ - -	¥ 16.00	¥ 32.00
FY2018 (Forecast)	18.00	36.00

(Note) Revisions to most recent dividend forecasts: None

3. Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2019

(April 1, 2018 to March 31, 2019)

(% = year-on-year change)RevenueOperating profitProfit before income taxes

Profit attributable to owners of the parent companyBasic earnings per share

¥ million 25,080

¥ million

%

¥ million

%Full year

52,000 11.2

25,200 10.2

% 9.9

¥ million 17,090

% 8.9

¥ 81.92

(Note) Revisions to most recent dividend forecasts: None

*Notes

• (1) Changes in Significant Subsidies during the Period: None

• (2) Accounting policy changes and accounting estimate changes:

  • i) Changes in accounting policies required by IFRS: Yes

  • ii) Changes other than the above 1): None

  • iii) Changes in accounting estimates: None

  (Note) For details, see "2. Condensed Consolidated Financial Statements, (6) Notes on the Condensed

  Consolidated Financial Statements (Changes in accounting policies) on page 12.

• (3) Number of shares issued (common stock)

  • 1) Number of shares issued at end of period (treasury stock included):

    December 31, 2018: 210,605,000 shares

    March 31, 2018: 210,605,000 shares

  • 2) Number of shares held in treasury at end of period:

    December 31, 2018: 1,976,158 shares

    March 31, 2018: 794,107 shares

  • 3) Average number of shares outstanding during the period:

    December 31, 2018: 209,773,676 shares

    December 31, 2017: 213,087,775 shares

* Quarterly consolidated earnings reports are exempt from quarterly review procedures of certified public accountants and the accounting auditor.

*Appropriate Use of Earnings Forecasts and Other Important Information (Disclaimer Regarding Forward-Looking Statements)

The above forecasts, which constitute forward-looking statements, are prospects based on information available to the Company as of the date of the release of this document. Actual results may differ materially from the above forecasts due to a range of factors.

Contents

1. Explanation of Operating Results and Financial Position ........................................................................................... 2

(1) Explanation of Operating Results ...................................................................................................................... 2

(2) Explanation of Financial Position ..................................................................................................................... 3

(3) Explanation of Consolidated Earnings Forecast and Other Forward-looking Statements ................................ 3

2. Condensed Consolidated Financial Statements ............................................................................................................ 5

(1) Condensed Consolidated Statement of Financial Position ................................................................................ 5

(2) Condensed Consolidated Statement of Income ................................................................................................. 7

(3) Condensed Consolidated Statement of Comprehensive Income ....................................................................... 8

(4) Condensed Consolidated Statements of Changes in Equity ............................................................................... 9

(5) Condensed Consolidated Statement of Cash Flows ......................................................................................... 11

(6) Notes on the Condensed Consolidated Financial Statements .......................................................................... 12

(Notes regarding the going concern assumption) .............................................................................................. 12

(Changes in accounting policies) ....................................................................................................................... 12

(Significant subsequent events) ......................................................................................................................... 12

1. Explanation of Operating Results and Financial Position

(1) Explanation of Operating Results

The Company's operating results for the nine months ended December 31, 2018, were as follows.

Consolidated revenue grew 19.1% year on year to 39,884 million yen, driven mainly by growth in tabelog's restaurant promotion business, kakaku.com and tabelog's advertising businesses and the new media and solutions business. The new media and solutions business's revenue growth was partly attributable to incremental revenue from newly consolidated subsidiaries in addition to growth in existing operations.

Consolidated operating profit grew 12.4% year on year to 18,196 million yen. Its growth was mainly attributable to revenue growth.

Consolidated profit before income taxes grew 11.6% year on year to 18,048 million yen, mainly as a result of the increase in operating profit partially offset by a net loss on equity-method investments.

Consolidated profit attributable to owners of the parent company increased 9.5% year on year to 12,079 million yen, mainly as a net result of growth in consolidated profit before income taxes and a one-time tax expense booked in the quarter ended June 30, 2018.

Operating results (after intersegment eliminations) are presented below by business segment.

(a) Internet Media Business

The Internet media business's revenue grew 18.4% year on year to 38,659 million yen while its segment income increased 11.6% year on year to 17,812 million yen in the nine months ended December 31, 2018.

(kakaku.com)

kakaku.com's revenue grew 2.5% year on year to 16,274 million yen in the nine months ended December 31, 2018.

In kakaku.com's shopping business, revenue increased 0.4% year on year to 6,843 million yen as a net result of increased revenue from durable goods transactions and reduced revenue from consumer goods due to a decrease in gross consumer-goods transaction volume. In kakaku.com's service business, revenue was up 2.3% year on year to 6,215 million yen as a result of robust growth in revenue from finance service and moving company comparison services. In kakaku.com's advertising business, revenue grew 8.0% year on year to 3,217 million yen, driven by growth in advertorial and banner advertising.

kakaku.com had 60.17 million monthly unique users1 in December 2018.

(tabelog)

tabelog's revenue grew 21.9% year on year to 18,022 million yen in the nine months ended December 31, 2018.

In tabelog's restaurant promotion business, the number of restaurants using fee-based services as new fee plan2 subscribers grew briskly, reaching 35,100 as of December. Its growth was driven by both acquisition of new subscribers and conversion of existing subscribers from old fee plans to the new ones. Additionally, online reservation bookings grew steadily by virtue of an increase in restaurants that accept online reservations via tabelog. The restaurant promotion business's revenue consequently increased 29.3% year on year to 14,030 million yen. In tabelog's premium memberships business, revenue was down 2.2% year on year to 2,212 million yen in response to a decrease in fee-paying members. In tabelog's advertising business, revenue increased 6.9% year on year to 1,781 million yen, boosted by growth in revenue from tie-up ads planned in collaboration with restaurants.

tabelog had 118.06 million monthly unique users1 in December 2018.

(New Media and Solutions)

The new media and solutions business's revenue grew 117.6% year on year to 4,362 million yen in the nine months ended December 31, 2018.

Kyujin Box's commission revenues grew in tandem with its traffic growth. Kinarino increased its advertising revenue through robust growth in advertorial advertising.

Another revenue growth driver was the addition of LCL Incorporated and gaie, Inc., as newly consolidated subsidiaries.

(b) Finance Business

The finance business's revenue grew 45.3% year on year to 1,225 million yen while its segment income increased 71.8% year on year to 380 million yen in the nine months ended December 31, 2018.

Consolidated subsidiary Kakaku.com Insurance, Inc., achieved major growth in commission revenue due to growth in online applications for both life and non-life insurance coverage in its insurance agency business.

1. Monthly unique users are counted on a net basis as the number of browsers that visited the site. Users who visit the site multiple times during a month are counted as one user. Prior to September 2018, some mobile browsers were double-counted as a side effect of high-speed loading of mobile webpages. Effective from September 2018, the Company switched to a browser counting method that eliminates such double-counting. The updated counting method screens out, to the fullest extent possible, mechanical accesses by, e.g., third parties' web-scraping bots, but some such accesses may be included in monthly unique user counts.

2. tabelog's new fee plans are restaurant service plans for which tabelog's restaurant promotion business charges a monthly base fee plus a variable fee based on online reservation bookings. tabelog's old fee plans are restaurant service plans for which tabelog charges a monthly base fee only.

(2) Explanation of Financial Position

1) Analysis of Financial Position

Assets

Consolidated assets at December 31, 2018, totaled 44,177 million yen, a 1,406 million yen increase from March 31, 2018. The increase was mainly the net result of a 691 million yen increase in other current assets, a 640 million yen increase in investments accounted for using the equity method, a 767 million yen increase in trade and other receivables and a 1,216 million yen decrease in cash and cash equivalents.

Liabilities

Consolidated liabilities at December 31, 2018, totaled 7,908 million yen, a 955 million yen decrease from March 31, 2018. The decrease was mainly the net result of a 2,158 million yen reduction in income taxes payable, a 699 million yen increase in trade and other payables and a 289 million yen increase in other financial liabilities.

Equity

Consolidated equity at December 31, 2018, totaled 36,269 million yen, a 2,361 million yen increase from March 31, 2018. The increase was mainly the net result of 12,079 million yen of profit attributable to owners of the parent company, 7,135 million yen of dividends distributed from retained earnings, and a 2,714 million yen net acquisition of treasury shares.

2) Cash Flows

Cash and cash equivalents ("cash") at December 31, 2018, totaled 19,813 million yen, a 1,216 million yen decrease from March 31, 2018. Cash flows from operating, investing and financing activities were as follows.

Cash flows from operating activities

Operating activities provided net cash of 10,860 million yen (vs. 9,412 million yen provided in the year-earlier period).

The net cash inflow was mainly attributable to 1,322 million yen of depreciation and amortization and 18,048 million yen of profit before income taxes net of 8,207 million yen of income taxes paid.

Cash flows from investing activities

Investing activities used net cash of 2,445 million yen (vs. 2,425 million yen used in the year-earlier period).

The main uses were acquisition of intangible assets for 917 million yen and investment securities for 1,231 million yen.

Cash flows from financing activities

Financing activities used net cash of 9,629 million yen (vs. 17,126 million yen used in the year-earlier period).

The main uses were dividend distributions totaling 7,129 million yen and acquisition of treasury shares for 3,000 million yen.