T Gaia : Consolidated Financial Results for the 3Q of Fiscal Year Ending March 31, 2023

(Percentages represent year-over-yearchanges)

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.

Consolidated Financial Results for the Third Quarter of Fiscal Year Ending March 31, 2023

(Nine Months Ended December 31, 2022) (Based on J-GAAP)

			February 2, 2023
Company name:	T-Gaia Corporation	Listing:	Tokyo Stock Exchange
Stock code:	3738	URL:	https://www.t-gaia.co.jp/
Representative:	Masato Ishida, President & CEO
Contact:	Kaoru Hayashi, Senior Managing Officer & General Manager of Corporate Planning & Strategy Dept.
	Tel: [phone]
Scheduled date of filing Quarterly Securities Report: February 3, 2023
Scheduled commencement date of dividend payout: -

Quarterly financial results supplementary explanatory documents: Yes

Quarterly financial results presentation: None

(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Third Quarter of Fiscal Year Ending March 31, 2023 (April 1, 2022 - December 31, 2022)

(1) Consolidated results of operations (nine months)

	Net sales		Operating profit		Ordinary profit		Profit attributable to
				owners of parent
3Q FY 2023	Million yen			%	Million yen	%		Million yen		%		Million yen	%
328,308			(3.4)	4,659	(35.3)	7,890		(27.5)		5,493	(28.2)
3Q FY 2022	339,744			17.4	7,202	(15.5)	10,881		(20.0)		7,649	(18.9)
Note: Comprehensive	income (million	yen):	3Q FY	2023: 5,732 /		[(24.8)%] 3Q	FY 2022: 7,620 /	[(18.9)%]
	Earnings per		Diluted earnings
	share		per share
3Q FY 2023		Yen			Yen
98.48			-
3Q FY 2022	137.20			-
(2) Consolidated financial position
	Total assets		Net assets		Equity ratio
3Q FY 2023		Million yen			Million yen				%
242,837			72,705				29.7
FY 2022	241,277			70,483				29.2
Reference: Shareholders'	equity (million yen):	3Q FY	2023: 72,098	FY 2022:	70,448

2. Dividends

			Annual dividends
	1Q-end	Interim	3Q-end		Year-end
FY 2022	Yen	Yen	Yen		Yen
-	37.50	-		37.50
FY 2023	-	37.50	-
FY 2023					37.50
(forecasts)

Annual

Yen 75.00

75.00

Note: Revisions to the dividend forecast most recently announced: None

3. Consolidated Forecasts for the Fiscal Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)

										(Percentages represent year-over-year changes)
	Net sales		Operating profit		Ordinary profit		Profit attributable to	Earnings per
				owners of parent	share
	Million yen		%	Million yen		%	Million yen		%	Million yen	%	Yen
Full year	483,000		1.4	11,200		6.0	15,400		0.1	10,000	(5.5)	179.32

Note: Revisions to the financial forecast most recently announced: None

Notes

1. Changes in significant subsidiaries during the period (nine months) under review (Changes in subsidiaries accompanying change in the scope of consolidation): Yes

Newly included:	2 companies (Relay2, Inc. and UNiCASE Corporation)
Excluded:	-

1. Application of accounting procedures specific to creation of quarterly consolidated financial statements: None
2. Changes in accounting principles, estimates and restatements
3. 1. Changes in accounting principles caused by revision of accounting standards, etc.: None
   2. Changes in accounting principles other than those mentioned above: None
   3. Changes in accounting estimates: None
   4. Restatement: None
4. Number of shares issued and outstanding (shares of common stock)

1. Number of shares outstanding (including treasury shares) at the end of the period
2. Number of treasury shares at the end of the period
3. Average number of shares outstanding during the period (nine months)

3Q FY 2023	56,074,000 shares	FY 2022	56,074,000 shares
3Q FY 2023	282,309 shares	FY 2022	308,866 shares
3Q FY 2023	55,780,994 shares	3Q FY 2022	55,753,571 shares

• Quarterly financial results reports are exempt from quarterly reviews conducted by certified public accountants or an audit corporation.
• Cautionary statement with respect to forward-looking statements

(Disclaimer on forward-looking statements, etc.)

These materials contain forward-looking information including earnings projections based on information currently available to the Company and certain assumptions considered reasonable in the judgment of the Company. Nothing contained in these materials is meant to suggest that the Company promises to attain the said projections. Moreover, due to various factors, actual results may materially differ from projections.

(Concerning quarterly financial results supplementary explanatory documents)

Financial results supplementary explanatory documents will be posted in Japanese on February 2, 2023.

T-Gaia Corporation (3738) / Consolidated Financial Results for the Third Quarter of Fiscal Year Ending March 31, 2023 (Nine Months Ended December 31, 2022) (Based on J-GAAP)

• Attachment: Table of Contents

1. Qualitative Information Concerning the Third Quarter Financial Results	2
(1)	Explanation of operating performance	2
(2)	Explanation of financial position	3
(3)	Explanation of forward-looking information including the consolidated financial forecasts	4
2. Quarterly Consolidated Financial Statements and Notes	5
(1)	Quarterly consolidated balance sheets	5
(2)	Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income	6
	(Quarterly consolidated statements of income)
	(Consolidated nine months period)	6
	(Quarterly consolidated statements of comprehensive income)
	(Consolidated nine months period)	6
(3)	Notes to quarterly consolidated financial statements	7
	(Notes on the going-concern assumption)	7
	(Notes on significant changes in shareholders' equity)	7
	(Segment information)	7

- 1 -

T-Gaia Corporation (3738) / Consolidated Financial Results for the Third Quarter of Fiscal Year Ending March 31, 2023 (Nine Months Ended December 31, 2022) (Based on J-GAAP)

1. Qualitative Information Concerning the Third Quarter Financial Results

1. Explanation of operating performance

In the period under review (April to December 2022), amid the continuation of global monetary tightening, etc., the downturn in overseas business conditions has been a downward risk on the business conditions in Japan. Careful attention also needs to be paid to the impacts of rises in commodity prices, supply side limitations, fluctuations in the financial and capital markets, etc.

In the market for mobile phone handsets, which is the main business field of the Group (the Company, its consolidated subsidiaries, and its equity-method affiliates), gradual progress was made on the shift to 5G (5th-generation mobile communication system), including in March 2022 when KDDI CORPORATION ended its 3G (3rd-generation mobile communication system) service. However, commission terms and conditions for some telecommunications carriers were revised in the second quarter of the previous fiscal year (July to September 2021). In addition to this, great change is underway in the role played by mobile phone distributors, including the Company, and the competitive environment, such as planning to improve online procedures and to consolidate or abolish carrier shops in the medium to long term. Furthermore, in addition to holding off purchases due to an increase in the price of mobile phone handsets, the impacts of rises in commodity prices have been causing a decrease in spending on mobile-phone services.

Under this business environment, the Group steadily worked toward the realization of the TG Universe (the ecosystem within T- Gaia), the Group-wide strategy in our medium-term management plan, and initiatives to achieve the TG Material Issues (eight priority issues) with the aim of transforming our business portfolio so that it is not dependent on the Consumer Mobile Business Segment. In April 2022, we established a specialist division that will operate on a Group-wide basis to support efforts in the areas of "growth investments, particularly in the Enterprise Solutions Business Segment and Payment Service Business and Other Business Segment," and "further growth of sales of original products and enhancement of the productivity of store operations." Activities of the business process reengineering (BPR) and the digital transformation (DX) promotion departments with the aim to enhance the productivity have become full-fledged.

The number of contracts for mobile phone numbers (below, "mobile phone contracts") agreed during the period under review was 2,600,000 (a decrease of 14.1% compared to the same period of the previous fiscal year), mainly due to deterioration in the external environment, such as rises in commodity prices, and a fall in the number of model change contracts that accompanied a change in the direction of sales measures by telecommunications carriers. We are improving profitability per line by growing sales of original products and restraining excessive discounts on handsets. However, this was not enough to offset revenue decreases such as the decline in commission income due to effects of the revisions to commission terms and conditions and fall in the number of mobile phone contracts mentioned above.

Although we began to see the effects of specific initiatives for raising productivity, such as Smart Online Support, which provides remote support for initial setup and usage methods at shops, selling, general and administrative expenses increased due to change in the scope of consolidation, an increase in the number of consolidated subsidiaries, and an increase in on-site sales service.

As a result, consolidated business results for the period under review marked net sales of 328,308 million yen (-3.4% compared with the year-earlier period), with operating profit of 4,659 million yen (-35.3%). Due to a year-on-year decrease in the hoard profit of prepaid card, ordinary profit marked 7,890 million yen (-27.5%) and profit attributable to owners of parent posted 5,493 million yen (- 28.2%).

Results by business segment for the period under review are described below.

	Consumer		Enterprise	Payment Service
		Solutions	Business and
	Mobile Business
		Business	Other Business
	Segment
		Segment	Segment
Net sales	273,997		27,590	26,667
(5.3%)		8.9%	5.8%
Profit attributable to	1,608		1,631	2,069
owners of parent	(57.7%)		20.5%	(17.1%)
Supplementary	2,394		1,980	144
information -
(56.4%)		15.6%	-
Operating profit
* Percentages represent	year-over-year changes

Others and adjustment amounts

52

-

184

-

139

-

(Millions of yen)

Total

328,308

(3.4%)

5,493

(28.2%)

4,659

(35.3%)

- 2 -

T-Gaia Corporation (3738) / Consolidated Financial Results for the Third Quarter of Fiscal Year Ending March 31, 2023 (Nine Months Ended December 31, 2022) (Based on J-GAAP)

[Consumer Mobile Business Segment]

This segment is engaged in intermediary services specializing in contracts for telecommunications services, including mobiles, and other types of contracts provided by each telecommunications carrier, as well as the sales of mobile phones, etc. For the Group's shops across Japan, we are aiming to realize shops that are "regional ICT hubs" rather than mere "points of sale," and which please customers and win their trust through high quality services and proposals with utility value that meets customer requirements.

In the Consumer Mobile Business Segment, the external environment is becoming increasingly severe than before, mainly with commission income declining compared with the same period of the previous fiscal year due to revisions to commission terms and conditions and sluggish growth in the number of mobile phone contracts as mentioned above. However, we are creating opportunities to make sales and provide services not only by opening satellite shops, mainly at shopping malls, etc., but also by providing sales support for remote locations where there are no local shops. We continue to work on expanding the number of shops that can handle Smart Online Support to raise efficiency and focusing on growing sales of coating services for mobile phones, etc., and sales of original products such as security products.

Also, in addition to being selected as an implementation organization for the Ministry of Internal Affairs and Communications' Project on Digital Utilization Support for Users under FY2022 Initial Budget (Regional Cooperation), we are also contributing to the vitalization of regional communities in ways such as taking on a project to support applications for Individual Number Card through telecommunications carriers. With regard to support for applications for Individual Number Card, as the application period has been extended to the end of February 2023, we continue to work on this service.

As a result, net sales marked 273,997 million yen (-5.3% compared with the year-earlier period), with profit attributable to owners of parent of 1,608 million yen (-57.7%).

[Enterprise Solutions Business Segment]

This segment is engaged in the sale of mobile phone for enterprise customers, the provision of solution services related to devices and network management services, etc., and sales and intermediary services specializing in optical communication line service contracts for corporate and individual customers. The Group is expanding products and services to create a one-stop channel for meeting customers' requirements through its Life Cycle Management (LCM) business which revolves around administrative and support services for device life cycles spanning from procurement, propositions, and introduction support for smart devices including PCs, to building Wi-Fi environment, maintenance, operations, and updating services.

In the Enterprise Solutions Business Segment, the number of mobile phone contracts increased compared with the same period of the previous fiscal year as delays to the delivery of some products caused by a global supply shortage of semiconductors, etc., were being resolved.

We expanded products and services in the LCM business and the number of management IDs for network administrative services, helpdesks, and the like surpassed the same period of the previous fiscal year. With regard to helpdesks, we expanded the space for the call center to respond to education-related projects, reinforcement of the offering of Smart Online Support, and other matters. We also continue to focus on proposing new business areas such as proposing the building, operation and maintenance of networks that use edge solutions, as well as strengthening relationships with local governments against the background of the "Vision for a Digital Garden City Nation" advocated by the Japanese government.

In products related to fixed-line telecommunications, the cumulative number of lines owned by the Company's own "TG Hikari" fiber-optics access service rose steadily, increasing approximately 10% from the same period of the previous fiscal year.

As a result, net sales marked 27,590 million yen (+8.9% compared with the year-earlier period), with profit attributable to owners of parent of 1,631 million yen (+20.5%).

[Payment Service Business and Other Business Segment]

This segment is mainly engaged in sales of PIN (prepaid codes), sales of gift cards, and sales of smartphone accessories through major nationwide convenience store chains. It also includes the consolidated subsidiary QUO CARD Co., Ltd. which is tasked with the issuance and settlement of "QUO Card" and "QUO Card Pay" and the sales and repair/maintenance of card-handling equipment, etc.

In Payment Service Business, PIN and gift card transaction volumes were down compared with the same period of the previous fiscal year but there continued to be high levels of demand for a variety of digital content, including games, music, and video streaming.

The amount of issuance for QUO Card and Quo Card Pay increased compared to the same period of the previous fiscal year, mainly due to adoption in various local government initiatives, but some shipping and administrative expenses were incurred in advance. QUO CARD Co., Ltd. continued to focus on adding member stores to increase convenience for users.

In the other new business, sales in the wholesale of smartphone accessories mainly to convenience stores were robust due to the expansion of sales channels and the broadening of the merchandise lineup. We continue to work on such areas as the operation of ICT schools for children and the hosting of online events for the e-Sports business. Furthermore, in November 2022, we started sales as a major distributor in Japan for "Fitbit," a wearable device brand.

We expanded our renewable energy business while contributing to customers' efforts to address climate change, including through contracts for the installation of solar power generation systems concluded between our consolidated subsidiary TG Power Inc. and the stores of major restaurant chains and electronic goods retailers.

As a result, net sales marked 26,667 million yen (+5.8% compared with the year-earlier period), with profit attributable to owners of parent of 2,069 million yen (-17.1%) due to the year-on-year decrease in the hoard profit of prepaid card mentioned above.

1. Explanation of financial position (Assets)
   Current assets at the end of the period under review were 196,975 million yen, which was 2,433 million yen higher than at the end of the previous fiscal year. This was mainly due to a 4,473 million yen increase in inventories, a 1,457 million yen increase in accounts receivable - other, a 11,819 million yen increase in guarantee deposits, and a 14,919 million yen decrease in cash and deposits. Non-current assets at the end of the period under review were 45,862 million yen, which was 873 million yen lower than at the end of the previous fiscal year. This was mainly due to a 1,400 million yen decrease in deferred tax assets.
2. • 3 -