INTAGE : Supplementary Materials for Consolidated Financial Results for the Nine Months Ended March 31, 2023607KB

Supplementary Materials for

Consolidated Financial Results for

the Nine Months Ended March 31, 2023

INTAGE HOLDINGS Inc.

Security code: 4326

May 9, 2023

Summary of Consolidated Statements of Income

2

During the nine months under review, increases in overseas sales contributed positively to profits, while profits decreased owing to increases in personnel expenses and costs as a result of strengthening the organization in anticipation of sales growth and in investment aimed at expanding business areas. The company kept its forecasts for the fiscal year ending June 30, 2023 unchanged.

Results for the cumulative period (9 months)

(Millions of yen)

Results for the accounting period (3 months)

(Millions of yen)

	9 months	9 months			Annual
			Forecasts
	ended Mar. 31,	ended Mar. 31,	Change	YoY
	(Revised on
	2022	2023
			February 7)
Net sales	47,020	47,889	+868	+1.8%	63,300
Operating	5,030	4,046	-984	-19.6%	4,650
income
Ordinary income	5,250	4,225	-1,024	-19.5%	5,000
Net income	3,842	3,767	-74	-1.9%	4,000
attributable to
owners of parent
EPS (Yen)	96.75	97.71	2,100	-	105.06
ROE (%)	12.6	12.3	-0.3	-	-

January-	January-	Change from
March 2022	March 2023	previous
(3 months)	(3 months)	year
17,889	17,929	+39
2,411	2,070	-341

*The Company finalized the provisional accounting treatment for the business combination at the end of the fiscal year ended June 30, 2022. The figures for the nine months ended	©INTAGE GROUP
March 31, 2022 reflect the revision following the finalization of the provisional accounting treatment.

Q3 Figures and Business Environment

3

• During the busy season, year-end demand declined owing to budget tightening by some large

customers with the fiscal year ended in March.

While overall business sentiment among consumer goods manufacturers has been mixed, budget tightening at some manufacturers of daily goods and beverages and those with fiscal year ended in March with a challenging performance was unusually severe.

• Research needs for overseas and consumer changes remain strong

Overseas business (Asian countries ((except for Hong Kong)), dataSpring and USA) continued to grow. Regarding research projects, inquiries continue on subjects such as price hikes by consumer goods manufacturers (examples: continued price analysis for formulating price increases, impact analysis of previous price increases to determine re-price increases, consumer understanding for global expansion, measures and consumer surveys to increase the probability of product success.)

• Increase in operating expenses

Operating expenses, which are the sum of cost of sales and selling, general and administrative expenses, increased by 1.85 billion year on year. The main reason for the increase is the upfront increase in human resources to strengthen the organization to respond to the strong demand for custom research projects. (See Human Resources Strategy on page 4.) The other reasons include higher outsourcing costs related to strong overseas business, higher personnel expenses related to temporary employees and other personnel in some Asian countries, and higher retirement benefit expenses.

• Sales in the projects that have entered the investment recovery phase underperformed mainly owing

to deterioration of the business environment

Sales in the new business areas (TV commercial advertising optimization and sales promotion support for retailers and manufacturers), in which investments were made last year, were below the planned level, while expenses were ahead of revenue. We will continue to strengthen our sales while cutting costs. As for the TV CM advertising optimization support in collaboration with Switch Media Inc., the delay in the development of SaaS TVAL and the curtailment of TV advertisement sales have affected the figures in the Company's results for the current period.

©INTAGE GROUP

Future Growth Strategies and Outlook for the Next Fiscal Year and Beyond

4

We expect that the recovery of market conditions, the steady renewal of panel survey contracts, as well as strengthening of CR- related systems in 2023, and cost innovation through the renewal of SCI in 2025, will contribute to the figures in financial results

Market conditions for

There was a major impact of budget tightening at manufacturers with a challenging

23/7

24/7

25/7

some consumer goods

performance due to the impact of rising raw material prices.

manufacturers and the

We expect the impact on the Company's performance to begin to recover during 2023

To a recovery trend

outlook for impact on

and believe that the timing of the easing of price hikes by manufacturers is one of the

the Company

key points.

Renewal of panel

Panel surveys, mainstay services, are a positive factor for the next fiscal year owing to

Renewals are

survey contracts

steady progress in renewing contracts.

strong

CR-Web initiatives

Upfront investment for automation and efficiency by strengthening the human resources

Effects of strengthening

system and utilizing research technologies as a means to respond to the strong demand

for CR

of the organization

Toward SCI Renewal

SCI renewal is progressing smoothly. Expected to realize cost innovation in the final

Renewal

Increase in

Cost

year of the 14th Medium-Term Management Plan starting in July 2023

progress

sample size

effectiveness

Image diagram

Human resources strategy

the recruitment of personnel to respond to strong research needs and to take on new

Previous two

Current year

Although we have strengthened

Human

areas of business, it has been difficult to acquire good quality personnel owing to the shortage of researchers in the

resource

mid-career recruitment market since two years ago.

investment

• Shifted to a policy of increasing the number of new graduates to be recruited and strengthening their training, and

Project

made an upfront investment in securing and training human resources.

• In the current fiscal year, demand stagnated owing to customer environment deterioration that exceeded CR

demand

expectations, resulting in higher personnel expenses.

GROUP

©INTAGE

Factors Contributing to Changes in Operating Income and Quarterly	5
Performance Trends

The plan was for sales growth to cover the increases in costs, personnel expenses, and investments. But sales fell short of the plan owing to lower demand from consumer goods manufacturers and others. This greatly affected the profits. The overseas business contributed to the profits as sales increased.

(Millions of yen)

5,030

Operating income for	Personnel
	Higher sales		Variable
9 months ended				costs		expenses
March 31, 2022

Major factors contributing to decreasing profit

(including unforeseen factors)

• Sales fell below plan due to budget tightening of some customers
• Upfront spending to strengthen the organization in anticipation of sales growth (personnel expenses)
• Increased upfront spending to expand into new business areas (personnel expenses / costs)
• Increased investment in infrastructure such as CR system enhancement (costs)
• Increase in costs related to acquisition of overseas monitors and API connection (costs)

Operating income for
Costs	Investment
					9 months ended
					March 31, 2023

Progress in investment

• CXMPF and SCI renewals (approx. ¥650 million planned annually)
  3Q results: approx. ¥470 million Proceeding almost as planned
• Service development, system installation, etc. (approx. ¥100 million planned annually)
  3Q results: approx. ¥30 million, below the planned target in consideration of business conditions

Trend in net sales

20,000
15,000
10,000
5,000
0
1Q (July-Sept.)	2Q (Oct.-Dec.)	3Q (Jan.-Mar.)

3000	Trend in operating income

2500
2000
1500
1000
500
0
(Millions of yen) 1Q (July-Sept.)	2Q (Oct.-Dec.)	3Q (Jan.-Mar.)

Year ended	Year ended	Year ending
June 30, 2021	June 30, 2022	June 30, 2023