Kakaku com : Summary of Main Questions and Answers at Results Briefing for the Second Quarter of the Fiscal Year ending March 31, 2024

Summary of Main Questions and Answers at the Results Briefing for Q2 of the Fiscal Year ending March 2024, held on November 7, 2023

• Consolidated Results

Q: Are there any changes in the assumptions for the full-year revenue growth of each business segment?

1. Kakaku.com is below plan, Tabelog is almost in line with plan, and Kyujin Box is considerably above plan, so there were changes in the first half of the year. For the second half, Kyujin Box has the most room for growth, and we feel there is tremendous potential there, but our goal is for all businesses to achieve their targets. However, since the balance of earnings in the first half has changed, we believe that our initial assumptions for each business' revenue growth for the full year will also change.

1. Regarding the consolidated results, you missed your target for the first half by 600 million yen. Will you be able to catch up in the second half? If so, where do you see an upside?

1. Q1 was a slow start because our revenue was unable to absorb the increase in expenses, but we have caught up considerably in Q2, and we believe that our biggest challenge is to continue this trend in Q3 and beyond. All businesses have upside potential. We hope that Tabelog will further exceed the plan and that Kyujin Box will maintain its strong performance. As for Kakaku.com, we would like to improve the smartphone site and generate more revenue from the service business, thereby in total making up for the results of the first half.

1. I think it will be difficult to achieve your initial forecast of 15.2 billion yen in operating profit for the second half unless the momentum is increased considerably. Could you please share your thoughts on revenue growth for each business segment in the second half?

1. The momentum will increase, but we are not changing our investment portfolio at this point. Our focus will be on trying to make up for the first half of the year in all our businesses.

1. Is there any possibility of speeding up the process to achieve 40% ROE?

1. First of all, we are going to achieve our goals for this fiscal year. We have no choice but to continue to do so in the next fiscal year and beyond and raise the ratio of earnings to shareholders' equity. In terms of the possibility of speeding up the process, we believe that one of the company's most important tasks is to restore ROE, which has fallen considerably due to COVID, to 40% as quickly as possible.

1. You announced the acquisition of treasury stock. What is the background behind your decision to set the total acquisition cost at 6 billion yen?

1. We decided on 6 billion yen, based on our policy of securing the necessary funds on hand to run the company and using the excess cash to do share buybacks, as we have done in the past. The amount is different every year, as it was 8 billion yen last year and 3 billion yen a few years before that, but based on the current stock price, I think this year's buyback is larger than in previous years.

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Q: What is the amount of cash on hand needed to run the company.

1. In the past, we had explained that we need about 6 months of revenue, but since we do not really need that much, for about 5 years now, we have been explaining that we need 3-6 months of revenue, with a minimum of 3 months. However, the cash required varies considerably from month to month, so we are doing simulations to see how much would be left after taxes, dividend payout and buybacks, or how much would be left at the end of the fiscal year.

1. Both personnel cost and the number of employees have decreased significantly compared to Q1. Can you elaborate on this?

1. The number of employees has decreased mainly due to the divestment of gaie inc. The same is true in part, for personnel costs.

• Kakaku.com

1. What is your outlook for the second half for the shopping business? It seems that sales won't stop declining. When will it bottom out?

1. We are of course hopeful that the PC and digital/home appliance industries will recover in Q3 and Q4, but at this point we are not sure what to expect. Rather, we are focusing on increasing the number of users and conversions by properly improving our website. Rather than "bottoming out," I think it's more about how close we can get to our plan by improving our site and increasing conversions.

Q: Why is there a revenue decline of approximately 10%, a year after we started seeing a slow down? Have your capabilities in search engine optimization (SEO) gotten weaker?

1. Search engine algorithm changes occur several times a year, but our company is stronger in SEO than other companies. The drop in rankings for consumer goods is very painful in terms of operating results, but it does not mean that our company is less capable. It is not something that can be quantified but considering the fluctuations in the search rankings of Tabelog, Kyujin Box and our other businesses, there has not been a major change in our capabilities.

• Tabelog

1. In Q2 the growth in the number of restaurants contracting the promotion service has accelerated. Could you provide a supplemental breakdown as to whether new acquisitions have increased or whether churn is subsiding? Also, I believe sales efforts for the year-end party

season have begun. What has been the response of restaurants so far?

1. In Q2 we saw an unprecedented increase in our numbers. Although we do not disclose details, both new acquisitions and a decrease in churn, have been very positive. Looking ahead to Q3 and Q4, we do not expect to exceed our plan by much, but so far, we are making very good progress.

1. QoQ growth in the number of restaurants contracting the online reservation service was strong, which is probably why ARPU was down. Does this mean that growth in the number of

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reservations per restaurant slowed down? Or is it because many of the newly acquired restaurants are not accustomed to online reservations?

1. We are not too concerned on whether ARPU decreases or increases, but if there were a sudden decrease in ARPU, it would mean that we are sending fewer customers to each restaurant, so do take care that ARPU doesn't decrease. On the other hand, increasing the number of restaurants that take reservations online will lead to a boost in the overall number of online reservations, which in turn will result in ARPU growth in the medium to long term.
   As for whether growth in the number of reservations per restaurant is sluggish or whether more restaurants that are not accustomed to online reservations have entered the market, I believe we are seeing the effects of both. As you pointed out, there is some impact from the large number of restaurants that are not accustomed to online reservations, but a specialized team is working intently to ensure that contracted restaurants are able to fully utilize our online reservation service. We might see some negative impact initially, but we hope to correct that as well.

1. How many restaurants are using Tabelog Note (Tabelog's reservation ledger) and Tabelog

Order (Tabelog's mobile ordering service), what are the quarterly trends.

1. The number of restaurants that are using Tabelog Note is about 12,000. The number of restaurants that are using Tabelog Order is still about 150, but the number has increased 1.5 times from September to October, so I think it will accelerate in the future.

• Kyujin Box

1. Could you provide some background on the better-than-expected results for Kyujin Box? Also, please comment on whether this momentum is sustainable from Q3 onward.

1. Revenue exceeded expectations because our sales efforts, which we have ramped up this fiscal year, are on track. Of course, we have been making site improvements and conversions have also improved, but client acquisition still plays a big part. Our sales efforts are going well, so I don't see any risks or concerns for the moment. However, even though there are times when numbers increase, for example due to the acquisition of a large client, there will be other times when they don't. So, while we are hoping for growth of 40% or 50% in Q3 and beyond, we have not changed our initial plan of 30% growth in this fiscal year.

• New Media and Solutions/Finance

1. What are some initiatives for your travel-related businesses?

1. LCL and Time Design remain strong. We are also working on a couple of major projects for Kakaku.com Travel (the travel category within Kakaku.com) and icotto starting next year, so I think we will be able to make some announce around the beginning of next fiscal year. What we are preparing is something that will bring a little change to the Internet travel industry, but I can't tell you what it is at this time.

Q: What was the revenue impact in Q2 from the divestment of gaie, inc.?

1. Projected sales for August-September were 134 million yen. That amount is missing from this quarter's revenue. As for profit, it is a little over 10 million yen, so there is almost no impact.

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