Kakaku com : Summary of Main Questions and Answers at Results Briefing for the Fiscal Year Ended March 31, 2017

Summary of Main Questions and Answers at Results Briefing for the Fiscal Year Ended March 31, 2017

The following is a summary of key questions and answers at the results briefing for the fiscal year ended March 31, 2017, held on May 10 (Wednesday), 2017.

Q1. What is the cost of further increasing tabelog's restaurant sales calls and how will sales agencies benefit?

A1. We are currently selling the new plans in the Tokyo area only and seeing sales growth from not only our own sales force but also sales agencies. We plan to begin nationwide sales from August 2017.

We expect the new plans to increase ARPU by ¥8,000-10,000 in Tokyo and around ¥5,000 elsewhere. We can use the increased ARPU to cover acquisition costs. Additionally, the new plans require follow-up sales calls to maintain an inventory of restaurant seats, but costs will not double or anything like that. We can amply afford the additional costs.

We expect sales agencies to benefit because the new plans can better increase customer referrals.

Q2. Regarding tabelog's fee schedule, do you have any plans of, for example, changing to 100% performance-based fees?

A2. We constantly review the fee schedule but have no plans of revising it at present.

Q3. How do you explain tabelog's lack of growth in fee-paying restaurants in the fourth quarter?

A3. The main reason is that we were focusing more on increasing the new plans' subscribership and making follow-up sales calls to existing fee-paying restaurants than on recruiting new restaurants. Another factor is that some restaurants canceled their tabelog subscriptions in the fourth quarter. When we analyzed the restaurants that did so, we found that some did not need help drawing customers. We see no cause for concern in terms of restaurant recruitment going forward.

Q4. What accounted for tabelog's advertising business's weak performance in the fourth quarter?

A4. The fourth quarter, being restaurants' busiest season, is not conducive to the offline promotions we have been working on in the current fiscal year. Additionally, each of tabelog's advertisers account for a large share of its advertising revenues. Its advertising revenues consequently tend to decline substantially if any one of its advertisers stops running ads. This fiscal year, we plan to expand tabelog's advertising sales force to eight personnel while also focusing on bringing in more advertisers.

Q5. How long do you expect to take to realize your plan of increasing the New Media's share of sales to 20%?

A5. Within the new media business, over 7% of Kinarino Mall's gross transaction volume counts as sales. We aim to reliably grow sales and profits by increasing not only advertising revenues but also Kinarino Mall's gross transaction volume. We believe Time Design can grow its sales by forming additional alliances. Through such initiatives, we aim to increase the New Media's share of sales to 17-18% within three years.

Q6. How do you plan to grow the New Media business over the medium to long term?

A6. We do not plan to grow all media in the same manner. We will pursue revenue growth in certain cases, pursue traffic growth in other cases and search for the right business model in yet other cases.

Q7. What is your sales outlook by segment for the current fiscal year?

A7. We expect kakaku.com's shopping business's gross transaction volume to continue growing because conversion is increasing in consumer goods categories, but with digital consumer electronics sales not doing well, we cannot expect much growth overall. In kakaku.com's service business, we are projecting sales growth driven by editorial media.

In the tabelog business, we expect fee revenues from restaurants to keep growing. On a consolidated basis, our overall budget factors in substantial growth in the tabelog business.

Q8. In the shopping business, do you plan to raise your cost-per-click (CPC) or cost-per-acquisition (CPA) charges in the current fiscal year?

A8. We are continuously renegotiating charges but have not specifically decided to raise CPC or CPA charges at present.

Q9. Does your forecast for the current fiscal year include commercial utilization of the Kakaku.com Group's data?

A9. It is included in our budget. We currently have a program that utilizes the data for advertising via external media. We will increasingly utilize the data going forward.

Q10. Your financial metrics' former emphasis on profit growth has changed. Why?

A10. In our presentation, we explained our results using profit margins as a performance metric, whereas we previously used growth rates to do so. We switched because we did not achieve double-digit earnings growth last fiscal year and are not forecasting double-digit earnings growth in the current fiscal year either. We continue to target double-digit growth over the medium to long term.