Chatwork : Summary of Financial Results for the six Months Ended June 30,2021

Summary of Financial Results for the Six Months Ended June 30, 2021 (Japanese GAAP)

(Non-Consolidated)

			August 13, 2021
Name of listed company:	Chatwork Co., Ltd.		Listing exchange: Tokyo Stock Exchange
Securities code:	4448	URL: https://go.chatwork.com/ja/
Representative:	Masaki Yamamoto, Representative director, CEO
Contact for inquiries:	Naoki Inoue, Director, CFO & VP of Corporate Division	Tel: [phone]

Scheduled date to file quarterly securities report : August 13,2021

Scheduled date to commence dividend payments: －

Preparation of supplementary materials on quarterly financial results: Yes

Holding of quarterly financial results meeting: Yes (for institutional investors and analysts)

(Amounts are rounded down to the nearest million yen)

1. Financial results for the six months ended June 30, 2021

1. Business results (from January 1, 2021 to June 30, 2021)

(% indicate year-on-year changes)

	Revenue			Operating profit	Ordinary profit	Profit
	Millions of yen		%	Millions of yen		%	Millions of yen	%	Millions of yen		%
Six months ended June	1,423		23.3	(119)		－	(118)	－	(120)		－
30,2021
Six months ended June	1,154		35.3	225		305.1	226	300.0	227		390.4
30,2020
	Basic earnings per		Diluted earnings
	share			per share
Six months ended June		Yen			Yen
(3.26)			－
30,2021
Six months ended June	6.22			5.73
30,2020

(Note) Diluted earnings per share for the six months ended June 30, 2021 is not shown in the above table, because basic earnings per share is negative although there are potensial shares.

(2) Financial position

		Total assets		Net assets		Equity ratio
		Millions of yen	Millions of yen		%
As of June 30, 2021			2,617	1,763		67.4
As of December 31, 2020		2,535	1,790		70.6
(Reference) Equity	As of June 30,2021	1,763 million yen As of December	1,790 million yen
				31,2020

2. Cash dividends

		Annual cash dividends per share
	End of 1Q	End of 2Q	End of 3Q	Year-end	Total
	Yen	Yen	Yen	Yen	Yen
Year ended December	－	0.00	－	0.00	0.00
31,2020
Year ended December	－	0.00	－	0.00	0.00
31,2021
Fiscal year ending December	－	0.00	－	0.00	0.00
31,2021(forecast)

: No

: No

: No

(Note) Changes from forecast dividend most recently announced: No

3. Earnings forecast for fiscal year ending December 31, 2021 (from January 1, 2021 to December 31, 2021)

With regard to the earnings forecast for the fiscal year ending December 31, 2021, please refer to the attachment on page 3, entitled "1. Qualitative Information on Quarterly Financial Results (3) Explanation of Future Forecast Information Including Earnings Forecast.".

*Notes

(1) Application of special accounting methods for preparing quarterly	: No
Financial statements

1. Changes in accounting policies, changes in accounting estimates, and restatement

1. Changes in accounting policies due to amendment of accounting standards, : No etc.

2) Changes in accounting policies other than 1)

3) Changes in accounting estimates

4) Restatement

(3) Number of shares issued and outstanding (common shares)

1. Number of shares issued and outstanding at the end of the period (including treasury shares)
2. Number of treasury shares at end of the period
3. Average number of shares during the period (for the six months ended June 30, 2021)

As of June 30,2021	37,092,415	shares	As of June 30, 2020	36,880,640	shares
As of June 30,2021	41	shares	As of June 30, 2020	41	shares
Six months ended	37,015,317	shares	Six months ended	36,606,257	shares
June 30,2021	June 30, 2020

• Summary of quarterly financial results is not subject to quarterly reviews by certified public accountants or audit corporations.
• Explanation regarding appropriate use of earnings forecasts, and other notes

The earnings outlook and other forward-looking statements contained in this document are based on information currently available to and certain assumptions that are thought to be reasonable by the Company. Accordingly, such statements should not be construed as a guarantee of achieving the results by the Company. Actual results and the like may differ materially due to various factors. For the assumptions used for the forecast of financial results and notes on the use of the forecast of financial results, please refer to the attachment on page 3, entitled "1. Qualitative Information on Quarterly Financial Results

(3) Explanation of Future Forecast Information Including Earnings Forecast."

• Table of Contents of the Attachment

○ Table of Contents of the Attachment	1
1. Qualitative Information on Quarterly Financial Results	1
(1)	Explanation on Business Results	2
(2)	Explanation of Financial Position	2
(3)	Explanation on Future Forecast Information Including Earnings Forecast	3
2. Quarterly Financial Statements and Significant Notes Thereto	4
(1)	Quarterly Balance Sheet	4
(2)	Quarterly Statement of Income (cumulative)	5
(3)	Quarterly Statement of Cash Flows	6
(4)	Notes on Quarterly Financial Statements	7
	(Notes on Going Concern Assumption)	7
	(Notes on Substantial Changes in the Amount of Shareholders' Equity)	7
	(Segment Information, Etc.)	7
	(Significant Subsequent Events)	8

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1. Qualitative Information of Quarterly Financial Results

1. Explanation on Business Results

Business results

In the six months ended June 30, 2021, the Company continued its proactive endeavors to reinforce marketing activities for acquiring new customers, strengthen advertising and marketing activities, and enhance functions of existing services in an effort to achieve continuous business growth.

As a result, the Company achieved net revenue of 1,423,569 thousand yen (up 23.3% compared with the same period of the previous fiscal year) , operating loss of 119,534thousand yen (compared with operating income of 225,261 thousand yen in the same period of the previous fiscal year) , ordinary loss of 118,814 thousand yen (compared with ordinary income of 226,398 thousand yen in the same period of the previous fiscal year) and loss of 120,720 thousand yen(compared with profit of 227,583 thousand yen in the same period of the previous fiscal year) for the six months ended June 30, 2021. In addition, As an upfront investment, the steady progress in recruitment, and further acceleration of advertising and marketing activities have resulted in a negative impact on each level of profit below operating income.

The following describes the business results by each segment.

(Chatwork Business)

In the Chatwork business, the Company continued to demonstrate the advantages of Chatwork, its mainstay service, and endeavored to add new functions and cultivate customers. These efforts led to net revenue of 1,296,981thousand yen (up 31.3% compared with the same period of the previous fiscal year) and segment loss of 166,496 thousand yen (compared with segment income of 138,512 thousand yen in the same period of the previous fiscal year).

Furthermore, the Chatwork business is the Company's mainstay business and all indirect costs, including the headquarters functions, are expensed to maintain and expand this business. Accordingly, the entire amount of the indirect costs is recorded as expenses in this business.

(Security Business)

With regard to the security business, the Company makes it a policy to not expand the business proactively. AS a result, net revenue was 126,588 thousand yen (down 24.1% compared with the same period of the previous fiscal year) and segment profit stood at 46,961 thousand yen (down 45.9% compared with the same period of the previous fiscal year) for the security business. Furthermore, since the entire amount of indirect costs is recorded for the Chatwork business as stated above, the recorded segment profit of the security business is the amount obtained by deducting only the direct costs required for conducting the business, including advertising expenses, promotion expenses and outsourcing expenses, from the net revenue of the business.

(2) Explanation of Financial Position

(Assets)

Total assets as of June 30,2021 increased by 82,185 thousand yen compared with the end of the previous fiscal year to 2,617,251 thousand yen. This was mainly due to an increase in intangible assets of 136,189 thousand yen.

(Liabilities)

Total liabilities as of June 30, 2021 increased by 109,202 thousand yen compared with the end of the previous fiscal year to 854,047 thousand yen. This was mainly due to an increase in advances received of 164,650 thousand yen and a decrease in accrued expenses of 62,553 thousand yen.

(Net Assets)

Net assets as of June 30, 2021 decreased by 27,017 thousand yen compared with the end of the previous fiscal year to 1,763,204thousand yen. This was mainly due to an increase in share capital of 46,851 thousand yen, an increase in capital surplus of 46,851 thousand yen, and a decrease in retained earnings of 120,720thousand yen.

(Cash Flows)

Cash and cash equivalents as of June 30, 2021 decreased by 186,825 thousand yen compared with the end of the previous fiscal

year to 1,660,462 thousand yen. The status of each cash flow and their factors for the six months ended June 30, 2021 are as

follows.

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1) Cash flows from operating activities

Net cash used in operating activities amounted to 77,085 thousand yen (compared with net cash provided by operating activities of 259,719 thousand yen in the same period of the previous fiscal year). This was mainly due to profit before income taxes of 118,814 thousand yen, an increase in advances received of 164,650 thousand yen.

2) Cash flows from investing activities

Net cash used in investing activities amounted to 153,356 thousand yen (up 99.1% compared with the same period of the previous fiscal year). This was mainly due to the purchase of intangible assets of 154,180 thousand yen.

1. Cash flows from financing activities
   Net cash provided by financing activities was 43,501 thousand yen (compared with net cash used in financing activities of 72

thousand yen in the same period of the previous fiscal year). This was mainly due to proceeds from issuance of shares of 43,950 thousand yen.

(3) Explanation of Future Forecast Information Including Earnings Forecast

Our company is planning to shift to consolidated financial statements from the third quarter of the fiscal year ending December 31, 2021.

In our business forecast for the current fiscal year, we have targeted an overall sales growth of 30% or more compared to the previous fiscal year and a growth of 35% or more in the Chatwork business.

In the first half of the fiscal year ending December 31, 2021, we have continued to grow steadily. We expect overall sales for the fiscal year ending December 31, 2021 to increase by between +37% and +40% compared to the previous fiscal year, and Chatwork business sales to increase by between +45% and +48% compared to the previous fiscal year, due to measures such as growth in the number of Chatwork IDs through aggressive advertising investment, revisions to pricing and billing systems, and the acquisition of the cloud storage business in the third quarter and beyond.

As for the range, we assume fluctuations in ARPU due to advertising investment, fluctuations in the number of IDs charged due to revisions in the billing system, price revisions, and cross-selling in the platform business.

The details of the financial forecast are as follows.

Revenue	3,319 million yen to 3,392 million yen	(YoY)	+37.0% to +40.0%
Chatwork Business revenue	3,089 million yen to 3,153 million yen	(YoY)	+45.0% to +48.0%
Gross profit	2,248 million yen to 2,320 million yen	(YoY)	+29.0% to +33.2%
Operating profit (loss)	(938) million yen to (815) million yen	(YoY)	－
Ordinary profit (loss)	(941) million yen to (818) million yen	(YoY)	－
Profit (loss)	(937) million yen to (814) million yen	(YoY)	－

(Note)The above forecasts are based on information available to the Company at this time, and actual results may differ from these forecasts due to various factors in the future.

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