I mobile : FY2022 Q1 Consolidated Financial Results

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

December 8, 2021

Consolidated Financial Results for the Three Months

of the Fiscal Year Ending July 31, 2022

(Under Japanese GAAP)

Company name:	i-mobile Co., Ltd.
Listing:	Tokyo Stock Exchange
Securities code:	6535
URL:	https://www.i-mobile.co.jp/
Representative:	Tetsuya Noguchi, Representative Director, CEO
Inquiries:	Yasuhiro Fumita, Director
Telephone:	[phone]

Scheduled date to file quarterly securities report:	December 9, 2021
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results:	Yes
Holding of quarterly financial results briefing:	Yes (for institutional investors and security analysts)

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the three months ended October 31, 2021 (from August 1, 2021 to October 31, 2021)

(1) Consolidated operating results (cumulative)

(Percentages indicate year-on-year changes.)

			Net sales		Operating profit		Ordinary profit	Profit attributable to
					owners of parent
	Three months ended	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%
	October 31, 2021		2,533		54.7	870	50.2		931	61.1	626	60.1
	October 31, 2020		1,637		35.1	579	72.0		578	82.5	391	87.6
Note: Comprehensive income	For the three months ended October 31, 2021:	629 million yen [60.9%]
			For the three months ended October 31, 2020:	391 million yen [89.2%]
		Basic earnings per share	Diluted earnings per share
	Three months ended				Yen		Yen
	October 31, 2021				29.15		29.04
	October 31, 2020				17.98		17.78

Note: The Company applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the first three months of the current fiscal year. Figures for the first three months of the fiscal year ended July 31, 2021 are the figures after retrospective application of the accounting standard, etc.

(2) Consolidated financial position

	Total assets	Net assets	Equity-to-asset ratio
As of	Millions of yen	Millions of yen	%
October 31, 2021	16,824	13,215	78.4
July 31, 2021	18,992	14,720	77.4

Reference: Equity
As of October 31, 2021:	13,186 million yen
As of July 31, 2021:	14,704 million yen

2. Cash dividends

		Annual dividends per share
	First quarter-end	Second quarter-end	Third quarter-end		Fiscal year-end	Total
	Yen	Yen	Yen		Yen	Yen
Fiscal year ended
July 31, 2021	-	0.00	-		100.00	100.00
Fiscal year ending
July 31, 2022	-
Fiscal year ending
July 31, 2022 (Forecast)		0.00	-		35.00	35.00

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Consolidated earnings forecast for the fiscal year ending July 31, 2022 (from August 1, 2021 to July 31, 2022)

(Percentages indicate year-on-year changes.)

	Net sales		Operating profit		Ordinary profit		Profit attributable to	Basic earnings
				owners of parent		per share
	Millions of yen		%	Millions of yen		%	Millions of yen		%	Millions of yen		%	Yen
July 31, 2022	14,270		23.1	3,750		10.9	3,715		10.4	2,504		8.9	116.49

Note: Revisions to the earnings forecasts most recently announced: None

The Company applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the first three months of the current fiscal year. Year-on-year changes show comparisons with the figures after retrospective application of the accounting standard, etc.

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None

Newly included:	0 companies
Excluded:	0 companies

1. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
2. Changes in accounting policies, changes in accounting estimates, and restatement
3. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None
4. Number of shares issued (common shares)
5. 1. Total number of issued shares at the end of the period (including treasury shares)

As of October 31, 2021	21,848,196 shares
As of July 31, 2021	21,848,196 shares

1. Number of treasury shares at the end of the period

As of October 31, 2021	341,150 shares
As of July 31, 2021	345,050 shares

(iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Three months ended October 31, 2021	21,504,290 shares
Three months ended October 31, 2020	21,768,570 shares

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters

The forward-looking statements, including business results forecasts, contained in this document are based on information currently available to the Company and certain assumptions deemed reasonable by the Company. Actual business results may differ considerably due to a variety of factors. See 1. Qualitative Information on Quarterly Financial Results, (3) Explanation of Forward-looking Information, including Consolidated Earnings Forecasts on page 4 of the Quarterly Financial Results (Appendix).

Change in unit for presentation of amounts

The amounts for accounts and other items on the Company's quarterly consolidated financial statements were previously stated in thousands of yen. However, from the first three months of the current fiscal year, the amounts are stated in millions of yen. For ease of comparison, the units of the amounts for the previous fiscal year and the first three months of the previous fiscal year have also been changed to millions of yen.

Appendix

Index

1. Qualitative Information on Quarterly Financial Results ………………………….…………………………...	2
(1)	Explanation of Operating Results …………………………………………………………………………	2
(2)	Explanation of Financial Position …………………………………………………………………………	4
(3)	Explanation of Forward-looking Information, Including Consolidated Earnings Forecasts ………………	4
2. Quarterly Consolidated Financial Statements and Notes ………………………………………………………	5
(1)	Quarterly Consolidated Balance Sheet ……………………………………………………………………..	5
(2)	Quarterly Consolidated Statement of Income and Consolidated Statement of Comprehensive Income …..	6
(3)	Notes to Quarterly Consolidated Financial Statements ……………………………………………………	8
	Notes on Going Concern Assumption ……………………………………………………………………..	8
	Notes on Significant Changes in Shareholders' Equity ……………………………………………………	8
	Changes in Accounting Policies ……………………………………………………………………………	8
	Segment Information and Other Data ...…………………………………………………………….………	9
	Significant Subsequent Events ……………………………………………………………………………..	10

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1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Operating Results

During the first three months of the current fiscal year, the Japanese economy showed positive signs amid the prolonged impact of the COVID-19 pandemic, including the gradual resumption of economic activities and the effect of various measures implemented by the Japanese government as well as a decrease in case numbers due to progress in the vaccine rollout and other measures. However, the economic outlook remained uncertain due to concerns about a renewed spread of infections.

Amid this social environment, there was no major impact on the consolidated business performance of the i- mobile Group due to COVID-19 during the first three months of the current fiscal year. However, if the economic impact becomes more prolonged and serious in the future, the Group's business performance could be adversely affected by such factors as a contraction in the Japanese advertising market due to a decrease in the number of advertisers, a shrinkage in the hometown tax donation market because of a decline in individual residence and income tax, and further restrictions on business activities.

The i-mobile Group is composed of two business segments - Consumer Service and Online Advertising - operating under the corporate vision "Creating a Business for the Future". In the market for the Hometown Tax

Donation business, which is the mainstay of the Consumer Service segment, the hometown tax donation amount in fiscal 2020 increased by approximately 1.4 times year on year to 672.5 billion yen while the number of hometown tax donations also increased by approximately 1.5 times to 34.89 million*1. In addition, the number of people eligible for the hometown tax donation credit (the number of people who actually made a hometown tax donation and were eligible for a residence tax credit) also increased year on year by approximately 1.3 times*1 to 5.524 million people, as it becomes more widely accepted as a stable system in line with its initial purpose of realizing regional revitalization*2.

Moreover, in the domestic online advertising market, which is a core business domain in the Online Advertising segment, online advertising expenditure in 2020 increased by 5.9% year on year to 2,229.0 billion yen, and despite being impacted by COVID-19, growth remained steady with the acceleration in the digitization of society serving as a tailwind. In particular, in the area of online advertising media expenditures, programmatic advertising expenditures amounted to 1,455.8 billion yen, up 9.7% year on year, and demand for programmatic advertising increased, mainly from major platformers, with increased opportunities for exposure to social media, e-commerce, and video ad streaming services due to lifestyle behavioral changes resulting from voluntary restraint on leaving home*3. Further, overall online advertising media expenditure in 2021 is forecast to increase by 7.7% year on year to 1,891.2 billion yen*4. In the future, the domestic online advertising market is forecast to expand to approximately 3,300 billion yen by fiscal 2024 due to growth in programmatic advertising, which includes social media advertising and video ads.

In this business climate, the i-mobile Group has worked to further enhance corporate value, leveraging the technology and marketing expertise cultivated in the core Online Advertising (Ad Network) business to transform its business portfolio into one that is highly profitable by developing new markets, and investing in growth business sectors. With Furunavi, the Hometown Tax Donation business which has functions for solving social issues, such as the revitalization of local communities, we identified a market which has entered a growth phase and increased the number of local governments we do business with, as well as working with local governments to promote peripheral businesses such as planning experience-based gifts in return such as dining and lodging gift certificates. We have also worked for the penetration of the hometown tax donation system and to increase our customer base by building recognition of the Furunavi brand through ongoing television commercials and other means and running aggressive promotional campaigns. In the Online Advertising segment, we worked to increase existing business for the Media Solution business and the App Operation business, which are both the focus areas. We also worked to further grow media-related business, making Simple App Studio Inc., a company that plans and operates health tech apps, into a new subsidiary. Moreover, in the Ad Network business, which is facing a challenging market environment due to the growing market dominance of large-scale platformers and intensifying competition, we also focused on gaining new customers and overseas customers as well as striving to improve the earnings structure and ensure stable profits.

As a result of these efforts, for the first three months of the current fiscal year, the Group recorded net sales of

2,533 million yen, up 54.7% year on year, operating profit of 870 million yen, up 50.2% year on year, ordinary profit

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