Creema : Financial Results Briefing Report for 1Q, FY2023

Financial Results Briefing Report for 1Q, FY2023

CREEMA LTD. (TSE Growth Market: 4017) July 15, 2022

Review of the previous fiscal year results and policy of the current fiscal year

In the fiscal year ended February 2022, the GMV of the handmade marketplace "Creema" hit the record high of 16 billion yen and

established a strong position as one of the market's largest platforms in Japan and Asia.

• Due to the spread of COVID-19,mask-related products and stay-at-home consumption increased exceptionally in the previous fiscal year.
• Excluding mask-related products, GMV grew strongly by 118% YoY in the fiscal year ended February 2022 (104% YoY including mask-related products).
• As a result, this year's GMV hit the record high of 16 billion yen.

Strong financial results for the fiscal year ended February 2022. Both sales and profits hit record highs.

• Sales hit a record high of 2,294 million yen, 111% YoY.
• Operating profit hit a record high of 322 million yen, 143% YoY.
• Ordinary profit hit a record high of 363 million yen, 177% YoY.
• Net income hit a record high of 230 million yen, 129% YoY.

The fiscal year ending February 2023 is positioned as a phase of upfront investment from the perspective of medium-to-long-term growth. We aim to further expand the "Creema economic zone" by large-scale investment in three areas; "strengthening promotions for increasing awareness of markets and services", "expanding and strengthening new services," and "large-scale investment in systems and infrastructure."

In 1Q of this year, the company is gradually increasing its investment in promotions and new services

but has yet to implement them on a large scale.

While offline consumption recovered rapidly from March 2022 as COVID-19 infections partially subsided,

E-commerce-related sectors including "Creema" are facing a backlash.

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[Company-wide] 1Q Results

Sales reached 593 million yen, 98% YoY. On the other hand, due to up-front investments for medium-to-long-term growth, costs were up slightly compared to the previous year based on the current term plan and operating profit was 19 million yen, 13% of the same period last year.

1Q Results

(Ref.) Annual earnings forecast progress rate

Unit: million yen

Sales

Sales Cost

Results YoY

59398%

123 1602%

Sales down slightly due to results of marketplace and external advertising services described later.

Increased YoY as part of SG&A was entered into sales cost from this FY due to the new revenue recognition standard.

Unit : million yen

Progress

Sales rate21%

Annual Budget : 2,872

1Q Results : 593

Gross profit

SG&A

Operating

profit

Ordinary profit

47079%

450 100%

1913%

1813%

Due to the new revenue recognition standard, part of SG&A was entered into sales cost, so there was no change YoY. However, as growth investment gradually increased, total cost has increased YoY.

As a result, profits in operating profit and below are lower YoY, as planned.

Progress

Operating rateprofit

-%

Progress

Net rateincome

-%

Annual budget : - 447

1Q Results : 19

Annual budget : - 376

1Q Results : 33

In FY23, the initial plan calls for a loss due to large-scale TV commercials and new business development from 2Q.

Net income

33

26%

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[Company-wide] Trends in consolidated sales

With the COVID-19 pandemic under a degree of control, sales growth in the marketplace service was limited to a slight increase, due to the significant decrease in stay-at-home consumption from March, compared to the previous year. Also, there was no delivery of a large external advertising project in 1Q (as planned), unlike in FY22, so 1Q sales were 98% YoY. Moreover, the three-year CAGR from before the pandemic was 118%.

Unit: million yen

		CAGR:118%			YoY:98%
			606		557	628	593
523	514	485	539	503
448

365	386
317

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

FY20

FY21

FY22

FY23

Delivery of a large project in external advertising in FY22.

1. Marketplace service sales growth was only slightly higher YoY due to a significant decline in stay-at-home consumption.
2. No delivery of large-scale projects in external advertising, unlike in FY22 (however, full-year results are as planned).

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[Company-wide] Changes in consolidated SG&A expenses

SG&A costs are the same as last year as settlement commissions included in "Other" were transferred to sales costs due to the application of the new revenue recognition standard from this fiscal year. Under the same standard as the previous fiscal year, the total real costs have increased. However, this investment is within the plan of "up-front investment intended for medium-to-long-term growth" mentioned previously.

Unit: million yen

		:Other										YoY:100%
		:Promotion expenses
		:Personnel expenses					263
											222	248	255	186
										228
								201
						201	202
					168
			175
	173	161				249
								96		117	110	108	124	131
					79	96	81
			84	67
	90
	73	84	93	103	101	103	110	122	104	130	118	128	133
	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q
	FY20				FY21				FY22				FY23

Application of the new revenue recognition standard caused some costs to be included in sales costs.

Growth-related costs have increased YoY in line with the initial plan.

Copyright © 2022 CREEMA LTD.

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