Eole : (Delayed)Financial Results for the First Three Quarters of the Fiscal Year Ending March 31 2021

Excerpted version

Financial Results

for the First Three Quarters of the Fiscal Year Ending March 31, 2021

eole Inc.

(TSE Mothers, Securities Code: 2334)

February 12, 2021

Unless otherwise specified, this English-language version of the financial results of eole Inc. has been prepared solely for the convenience of non-Japanese speakers. Should there be any inconsistencies between the English and the Japanese versions, please note that the Japanese version will always prevail.

Table of Contents

I

Business Results Highlights for the First Three Quarters of the Fiscal Year Ending March 31, 2021

[3Q FY03/21 (Cumulative)]

II

Business Review for FY03/21

III

Other Business Initiatives

I

Business Results Highlights for the 3Q FY03/21 (Cumulative)

.

The translation of Chapter I is omitted.

Regarding our business results for 3Q FY03/21

(cumulative), refer to the "Company Report"

prepared by Walden Research Japan

Incorporated posted on our website as of

February 22, 2021.

URL:Company Report (by Walden Research Japan

Incorporated)

II

Business Review for FY03/21

Business Review for FY03/21

1.	Launch of HR* Ads Platform

2.	Expansion of "pinpoint and Other Programmatic Ads"

3.	Expansion of New Graduate Recruitment Sales

4.	Development Status of Proprietary Media

* Refer to "Reference information: Glossary" (at the end of this document).

Selection and Concentration of Our Business



We advocate the selection and concentration of our business in the era of coexisting with COVID-19 and prioritize profitability to construct infrastructure for redrawing the growth curve.

Business focus

HR Ads Platform

pinpoint and Other Programmatic Ads

New Graduate Recruitment Sales

Consumer Advertising

•  By incorporating the concepts of bidding and automatic ad delivery into recruitment media advertising, we lead the change in the recruitment advertising industry from face-to-face sales to sales by ad technology, corresponding to the era of coexisting with COVID-19.

•  Focus on the business that has potential for player change while coexisting with COVID-19.

•  Renew sales initiatives with a strategic sales partner.

•  Support our sales by focusing consumer advertising, for which sales are thought to recover relatively soon.

•  Because of the dramatic decrease in the number of job listings, Gakuba Arbeit and Rakuraku Arbeit will be reinforced after the economic recovery.

•  Proprietary media are in the maintenance phase.

1. Launch of HR Ads Platform ― Changes of Job Advertising

The method of domestic job advertising has been undergoing structural changes in accordance with overseas job advertising and domestic consumer advertising.

Overseas

Display job advertisingSearch job advertising

Job advertising

Display job advertising

Search job advertisingProgrammatic job advertising (Second generation)Programmatic job advertising

Domestic

consumer advertising

Display advertising Search advertisingProgrammatic advertising

Source: Prepared by eole based on "Shinsuke Horie, (2018). Textbook of Ad Technology, Shoeisha."

1. Launch of HR Ads Platform ― Overview

 Advertisers (companies seeking workers) can automatically post job advertisements from abundant job posting manuscripts on ATSs*1, including JOBOLE, to job advertisement spaces on each medium.

 For posting, bidding such as cost per click (CPC) or cost per acquisition (CPA) is adopted. Every click or acquisition generated revenue, and we pay a commission to the media.

Demand side Supply side

Medium A

Bidding

Posting

*2

Advertisers

(companies seeking workers)

Job seekers

Medium Z

*1 Refer to "Glossary" (at the end of this material). *2 HR Ads Platform website：https://hr-ads.jp/

1. Launch of HR Ads Platform ― Roadmap for FY03/21

Phase 1

Phase 2

Service launch

Link with four types of media

Phase 3

Link with other media/ATSs

1. Launch of the HR Ads Platform ― Topics

• A. Patent application

   Applied for a HR Ads Platform patent on October 9, 2020. The patent application is our intellectual property strategy to expand the HR Ads Platform business.

• B. Finished linking with/development to four types of media

  •  Linked with "Lacotto" operated by CareerIndex Inc. on October 12, 2020

  •  Finished linking with/development to "Shufu JOB Part" operated by B-style Media on December 22, 2020

  •  Linked with a job ad medium on December 22, 2020

  •  Linked with "jobMAKER" operated by WILLB Inc. on December 23, 2020

  •  Promote development to generalize media linkage from January 2021, aiming for linkage in 5 business days

• C. Post-launch market reaction

  •  Many inquiries from major ATSs and job ad media

  •  Continue to develop generalization to link with ATSs and job ad media

  •  6,369 job manuscripts on HR Ads Platform at the end of December 2020

  •  The first ATS to link with HR Ads Platform has been decided.

1. Launch of HR Ads Platform ― Growth Strategy

Enhancing first-mover advantage

FY03/21

FY03/22

• • Link with four types of media

• • Backbone system development

• • Development generalization for linkage with media

  • • Linkage with other ATSs/ with other media

  • • Publishing the API*1 (media)

  • • Building an efficient development system

  FY03/23～FY03/25

  • • Link with major media

  • • Development of additional peripheral functions

  • • Link with recruitment system

  Increasing advertisers

• • Launch

• • Open HR Ads Platform to other ATSs

• • Publishing the API*1 (ATS)

• • Accumulation of operational know-how and analysis of advertisers

• • Advancement of operations

• • Enhancement of administrator functions (in-house operations, CPC*2 bidding）

• • Automated operation including AI

Remarks

• • Launch the first programmatic job advertising platform in Japan

• • Ensuring the same number of • Become a market leader in the new job adjob posting manuscripts as major job ad mediamarket

*1 Application Programming Interface. API allows sharing of software functions, so other companies can be encouraged to use it. *2 Cost Per Click

1. Launch of HR Ads Platform ― Strategic Concept

 We have various channels for job seekers through SNS, recruitment media, aggregation sites and recruitment pages of clients.

 We aim to become a market leader in the new job advertising market by providing appropriate recruitment channel to advertisers through our operation.

Facebook/ Twitter / LINE / Instagram……

Social media

Bid

2. Expansion of "pinpoint and Other Programmatic Ads"

What is necessary to succeed	Content	Strengths	Future development
1.	Competitive data (DMP)	Hold high-quality audience data including attribute data, which is most important, in volume.	Holding high quality data through the "Rakuraku Contact Network." This data is very important in the job ad market.	In addition to the measures to increase membership for Rakuraku Contact Network, we advocate alliances with other data suppliers and finding new partner companies, thus expanding our data.
2.	Operation know-how	Accumulate know-how of programmatic ads in the job ad market (including linkage with large social media and job search engines).	On "Indeed," which is a programmatic job ad, JOBOLE has the unique operational method and know-how to achieve a high conversion rate. Also, it has considerable experience for linkage with large social media.	We will demonstrate our presence in the process transferred from the sales power game to the operational power game (effect) such as the era of search advertising expansion in the 2000s.
3.	Number of Job Listing Manuscripts	Market share by handling the number of manuscripts	By utilizing JOBOLE as a pump-priming tool, we can acquire job seekers through "pinpoint and other programmatic ads."	We will expand JOBOLE and the HR Ads Platform.

 Continue to expand "pinpoint and other programmatic ads" while carefully observing the target industry, business and employment pattern.

(Millions of yen)

1,400

1,200

Sales

1,000

800

600

400

200

0

Cumulative 3Q

Cumulative 3Q

FY03/20

FY03/21

Cumulative 3Q FY03/21

Sales Ratio

 With our good operational capabilities in programmatic advertising, the shift of orders from other companies (ad agencies) has been accelerating.



Sales in job advertising increased as a result of restructuring our sales structure and reviewing sales strategies in 3Q FY03/21.

"pinpoint and Other Programmatic Ads"

Sales⋆

(Millions of yen)

300 250 200 150 100 50 0

3Q FY03/20

3Q FY03/21

⋆ Compared by operation costs. Production costs such as creative work and web production are not included.

― Progress of JOBOLE

FY03/19 4 Q

FY03/20 1Q

2Q

3Q

4Q

FY03/21 1 Q

2Q

3Q

JOBOLE releasedLinkage with Indeed Corresponding with Google for JobsLinkage with KyujinboxLinkage with Stanby (Yahoo! Shigoto Kensaku)Linkage with HR Ads PlatformOptimization of displayed recruitment page on smartphones

• • Improvement of usability on JOBOLE management screen

• • Improvement of import function on JOBOLE management screenImprovement of import function through JOBOLE management screen

  • • Prevention of duplicate job manuscripts and optimization of job posting

  • • Promotion of sort function on job management screenAddition of message function and dashboard function Release of new price planChange the design (UI/UX) of recruitment site, applicant, and job category management screensImproved usability of job management screen

• • Improvement of feed job information from JOBOLE to linked job search engines

Development of visualization feature for companies'

recruitment progress

* The number of job manuscripts is the figure listing on JOBOLE at the end of each quarter.

3. Expansion of New Graduate Recruitment Sales

 We focused on new graduate recruitment sales with a strategic sales partner, and started nationwide development in July. But recruitment activities were delayed due to the impact of COVID-19.



On the other hand, we currently have engaged in cooperation in the field of mid-career recruitment.

Review of recruitment approach due to the impact of COVID-19

• • Cancellation of internship

• • Cancellation of large-scale events such as joint corporate information sessions for job hunting

  Discontinue hiring guideline for new graduates in 2021 due to the decision by Keidanren

  A big change in hiring new graduates

  • • Trend of earlier recruitment activities

  • • Diversification of recruitment activities and approaches

• • Diversification of recruitment schedules (all-year recruiting activities for new graduates)

• • Global recruitment

We will aggressively expand our share of new graduate recruitment, such as gathering job seekers through websites using pinpoint DMP, which has abundant data on university students.

4. Development Status of Proprietary Media ― Transition to maintenance/operation phase of proprietary media

•  Development of Gakuba Arbeit was finished in January 2020, and development of Rakuraku Arbeit was finished except for linkage in April 2020. Both are in the maintenance phase.

•  A new app for Rakuraku Contact Network released on August 31 to reduce operating costs. Through these developments, future maintenance and operation costs can be reduced.

•  Devoted development resources to the HR Ads Platform.

Gakuba Arbeit

FY03/20 4Q

FY03/21 1Q

2Q

・・・

↑

Development finished in Jan.

Rakuraku Arbeit

↑ Development finished except for linkages in Apr.

Rakuraku Contact Network

↑ A new app was released on August 31.

Rakuraku Renrakumo Dot App ― New Rakuraku Contact Network App

Launched the "Rakuraku Renrakumo Dot App"

Launched the group activity-oriented

contact network service "Rakuraku Renrakumo Dot App" for iOS/Android on August 31, 2020.

 Reduce man-hours required for maintenance and operation of the

Rakuraku Contact Network.

•  Realize a "contact-specific" application with less functions for greater user convenience.

•  With the trend of increasing corporate usage needs due to business environment changes such as the demand for "the new lifestyle," we decided to utilize the app in customizable SaaS solution businesses. The service will be launched this summer as a joint project with a major company.

⋆ Rakuraku Renrakumo Dot App website：https://ra9.app/

Rakuraku Renrakumo Dot App

Our Response and Business Impact to the Spread of COVID-19

 Develop proactive initiatives and respond to a changing society.

Work system

•  August 1, 2020: Standardized teleworking and advocated for a more flexible work style

•  October 1, 2020: Started paying teleworking compensation

•  January 8, 2021: Promoted leaving office by 8 pm. Prohibited internal and external dinners.

Work style

•  Implement teleconference and internet conference, prohibit non-urgent business trips and maintain a hygienic environment, such as by wearing masks.

•  We have been promoting the acquisition of potential clients through websites since last year and using new sales methods such as online sales negotiation.

•  Implement a mentor system as part of the new graduates onboarding program during teleworking.

Response to social changes

 Building a system to efficiently acquire leads (potential clients) for accepting orders.

➡ Inside sales from lead nurturing

For example, we published white papers dedicated to university student marketing on July 1.

https://daigaku-koukoku.com/download/

(当社「大学生広告ナビ」)

III

Other Business Initiatives

Participation in "Public-Private Partnership Platform for Local Innovation SDGs"

 Participated in "Public-Private Partnership Platform for Local Innovation

SDGs*2" established by the Cabinet Office to promote efforts toward achieving SDGs

Rakuraku Contact Network

• • The largest contact network supporting group and community activities in Japan, with 390,000 groups and 6,960,000 memberships

• • Support for revitalizing local communities

• • A DMP (Data Management Platform) that enables ad delivery utilizing data of over 20 million people in total

• • Effective web promotion for revitalizing local communities, as it is possible to distribute SNS ads by specifying detailed criteria such as region and age group

• • Creating opportunities for all people to attain a good working environment by connecting many job seekers with companies through recruitment media

• • By encouraging local companies and organizations to use HR Ads Platform, we aim to promote I-turns (moving to the countryside) and U-turns (back to one's hometown) and realize a sustainable society.

• • Support for local private sectors and government initiatives

• • Achieving SDGs including regional revitalization

• • Contributing to society

*1 Cabinet Office website：https://future-city.go.jp/platform/about/

*2 Sustainable Development Goals. The 2030 Agenda for Sustainable Development, adopted at the United Nations Summit in September 2015 as a successor to the Millennium Development Goals (MDGs) formulated in 2001, is an international goal to achieve a sustainable and better world by 2030.

Note: eole press release "Participation in 'Public-Private Partnership Platform for Local Innovation SDGs'" as of January 28, 2021.

Participation in "Public-Private Partnership Platform for

Local Innovation SDGs" ― Initiatives with The Shimane Bank, Ltd.

 We will start a digital promotion initiative with The Shimane Bank, Ltd. from February 2021.



We will provide accurate financial information to families raising children in the

San'in Region by utilizing our big data and ad technology such as digital ad management know-how.

Conventional sales techniques

Digital promotion with eole

Shimane Bank

Maximizing mass reach through digitalizationShimane Bank

Families raising children in the

San'in Region

Face-to-face sales

Face-to-face sales

Digital promotion

• • Provide financial information such as educational loans

• • Reach out to a customer base that cannot be accessed through face-to-face sales

Note: eole press release "Launch of Digitalization Initiative with The Shimane Bank to Support Families Raising Children" as of January 29, 2021.

Increase in Rakuraku Contact Network Memberships and Number of Groups

 In FY03/20, memberships and the number of groups increased every quarter due to the termination of similar services by a competitor.



As for FY03/21, memberships and the number of groups will remain as usual, despite the impact of COVID-19.

Rakuraku Contact Network

Rakuraku Contact Network

1Q 2Q 3Q 4Q

Memberships*1

1Q 2Q 3Q 4Q

1Q 2Q 3Q 4Q

1Q 2Q 3Q 4Q

FY03/18

FY03/19

FY03/20

FY03/21

FY03/18

FY03/19

FY03/20

FY03/21

 There is a seasonal change where memberships and groups tend to increase from April to June with the beginning of new semesters, while figures tend to decrease from the end of December to the end of March with the end of semesters, etc. In FY03/20, memberships and groups at the end of semesters increased as shown above.

*1 Figures are rounded down to the nearest thousand.

*2 Figures are rounded down to the nearest thousand. *3 A group is a group with more than three members.

Initiatives for Gakuba Arbeit and Rakuraku Arbeit

 Number of new Gakuba Arbeit registrants (cumulative 3Q): The number of registrants decreased due to a decline in the number of job advertisements, decreasing by 43.3% compared to the same period last year.

 Rakuraku Arbeit Memberships: Increased by 6.4% compared to the same period last year due to the increase in the number of Rakuraku Contact Network memberships.

Gakuba Arbeit

Rakuraku Arbeit

(Thousands of people) (Thousands of people)

New Registrants

Memberships

1,900

1,800 1,700

1,600 1,500 1,400 1,300 1,200 1,100 1,000

900 0

FY03/20

FY03/21

End	End End	End	End	End	End	End	End	End	End
of	of of	of	of	of of	of	of	of of	of	of	of	of
1Q	2Q 3Q	4Q	1Q	2Q 3Q	4Q	1Q	2Q 3Q	4Q	1Q	2Q	3Q
FY03/18	FY03/19	FY03/20

FY03/21

Note: Figures are rounded down to the nearest thousand.

Note: Figures are rounded down to the nearest thousand.

B/S Summary in Cumulative 3Q FY03/21

End of FY03/20

(Mar. 31, 2020)

End of 3Q

FY03/21

(Dec. 31, 2020)

Change

Assets

Current assets

Cash and cash equivalents Accounts receivable-trade

Other

Total current assets

802 170 22 995

491 136 27 656

(311)

(33)

5

(338)

Fixed assets

Tangible fixed assets Intangible fixed assets Investments and other assets

Total fixed assets

Total assets

4 353 74 433

1,428

3 356 73 433

1,089

End of FY03/20

(Mar. 31, 2020)

End of 3Q

FY03/21

(Dec. 31, 2020)

(338)

(1)

(1)

2

0

Liabilities

Net assets

Current liabilities

Account payable-

trade

Income taxes

payable

Other

Total current liabilities

Total liabilities

Shareholders' equity

[Retained earnings]

Share options

Total net assets

Total liabilities and net assets

(Millions of yen)

Change

85 －

83 169

169

917

[(516)]

2 920

(80)

(7)

(17)

(105)

(105)

(233)

[(248)]

－

(233)

1,089

(338)

用語集

Term

Definition

ATS (Applicant Tracking System)

A unified management system for supporting the recruitment process of companies, from job application to hiring.

CPC (Cost per click) has two different meanings. One is the cost per click of a user through advertisement, while the other is the unit price of a pay-per-click advertising transaction. Cost of 1,000 ad reach or exposure.

"HR" in the HR Ads Platform developed by eole stands for Human Resources. In general, it refers to operations related to human resources, such as recruitment, human development, training, evaluation, and management. In the case of HR Ads Platform, "HR" means recruitment.

pinpoint DMP

DMP developed by eole. pinpoint DMP has abundant user data being encrypted and not identifying any personal information which enables ad distribution and marketing surveys utilizing user information taken from Rakuraku Contact Network and affiliated companies.

RTB (Real-Time Bidding)

An auction system for digital advertisement space. Every time a user visits a website (impression), user information from cookie and advertisement space information such as minimum bid price are instantly sent to DSPs. Advertisements with the highest bids are displayed.

SSP (Supply-Side Platform)

A supply-side platform is a platform that maximizes media revenue, including websites, apps, etc. An advertisement offering the highest price for the ad space is displayed through SSP.

Ad exchange

A platform coordinating advertisement space stock and demand among DSPs, SSPs and ad networks, in addition to advertising agencies.

Ad network

An advertising network for ad distributable media such as websites, social media, and blogs. It can deliver ads all at once.

Programmatic ad

An advertising method that automatically or instantly assists with the optimization of an advertisement with a platform processing huge volumes of data. This includes search ads and some ad networks. Typical examples are DSPs, ad exchanges, and SSPs.

Trading desk

An agency service which manages digital advertisements using DSP and the other platforms, etc.

Disclaimer

In preparing all of this material, eole Inc. relied upon and assumed the accuracy and completeness of all available information. However, we make no representations or warranties of any kind, express or implied, about the completeness and accuracy.

This presentation also contains forward-looking statements. Actual results, performance and achievements are subject to various risks and uncertainties. Accordingly, actual results may differ significantly from those expressed or implied by forward-looking statements. Readers are cautioned against placing undue reliance on forward-looking statements.

Third parties are not permitted to use and/or disclose this material and the contents herein for any other purpose without the prior written consent of eole Inc.

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