Tobila : Non-consolidated Financial Results for the First Quarter of the Fiscal Year Ending October 31, 2022

(Percentages represent year-on-yearchanges)

Non-consolidated Financial Results for the First Quarter of the Fiscal Year Ending October 31, 2022

(Three Months Ended January 31, 2022)

		[Japanese GAAP]
Company name: Tobila Systems Inc.	March 10, 2022
Listing: Tokyo Stock Exchange, First Section
Securities code:	4441	URL: https://tobila.com
Representative:	Atsushi Akita, Representative Director and President
Contact:	Takuya Yuki, Director and CFO
	Tel: [phone]

Scheduled date of filing of Quarterly Report:	March 10, 2022
Scheduled date of payment of dividend:	-
Preparation of supplementary materials for quarterly financial results:	Yes
Scheduled date of filing of Quarterly Report:	Yes (Video distribution is planned)

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

1. Non-consolidated Financial Results for the First Quarter (November 1, 2021 - January 31, 2022) of the Fiscal Year Ending October 31, 2022

(1) Results of operations

			Net sales			Operating profit	Ordinary profit				Profit
			Million yen	%			Million yen		%	Million yen	%		Million yen	%
	Three months ended Jan. 31, 2022	391	16.7			134		9.2	126	2.9				62	(26.6)
	Three months ended Jan. 31, 2021	335	23.9			123		22.7	123	22.6				84	21.9
			Net income per share		Diluted net income per share
					Yen						Yen
	Three months ended Jan. 31, 2022			5.97						5.89
	Three months ended Jan. 31, 2021			8.21						8.00
(2) Financial position
			Total assets		Net assets	Equity ratio
				Million yen		Million yen				%
	As of Jan. 31, 2022				2,199				1,450				65.9
	As of Oct. 31, 2021				2,170				1,489				68.6				1,489
	Reference: Shareholders' equity (million yen) As of Jan. 31, 2022:	1,450	As of Oct. 31, 2021:
2. Dividends
										Dividend per share
					1Q-end	2Q-end		3Q-end	Year-end	Total
					Yen			Yen			Yen			Yen		Yen
	Fiscal year ended Oct. 31, 2021			-		0.00		-			12.90			12.90
	Fiscal year ending Oct. 31, 2022			-
	Fiscal year ending Oct. 31, 2022							0.00		-			11.10			11.10
	(forecasts)
	Note: Revision to the most recently announced	dividend forecast: None

3. Earnings Forecast for the Fiscal Year Ending October 31, 2022 (November 1, 2021 - October 31, 2022)

(Percentages represent year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit		Net income
			per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
First half	786	13.3	228	(20.0)	220	(23.0)	146	(25.7)	14.12
Full year	1,636	14.8	513	(11.5)	504	(12.8)	333	(13.7)	32.05

Note: Revision to the most recently announced earnings forecast: None

* Notes

1. Application of special accounting methods for presenting quarterly non-consolidated financial statements: None
2. Changes in accounting policies and accounting-based estimates, and restatements
3. 1. Changes in accounting policies due to revisions in accounting standards, others: Yes
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting-based estimates: None
   4. Restatements: None
4. Number of outstanding shares (common shares)
5. 1. Number of shares outstanding at the end of the period (including treasury shares)

As of Jan. 31, 2022:	10,617,000 shares	As of Oct. 31, 2021:	10,479,900 shares
2) Number of treasury shares at the end of the period
As of Jan. 31, 2022:	97,850 shares	As of Oct. 31, 2021:	89,150 shares
3) Average number of shares outstanding during the period
Three months ended Jan. 31, 2022:	10,431,031 shares	Three months ended Jan. 31, 2021:	10,334,715 shares

• The current quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.
• Explanation of appropriate use of earnings forecasts, and other special items

Cautionary statement with respect to forward-looking statements

Forecasts of future performance in these materials are based on assumptions judged to be valid and information available to Tobila Systems' management at the time these materials were prepared, but are not promises by Tobila Systems regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons.

	Tobila Systems Inc. (4441) Financial Results for the First Quarter of FY10/22
Contents of Attachments
1. Qualitative Information on Quarterly Financial Performance	2
(1)	Explanation of Results of Operations	2
(2)	Explanation of Financial Position	3
(3)	Explanation of Earnings Forecast and Other Forward-looking Statements	3
2. Quarterly Non-consolidated Financial Statements and Notes	4
(1)	Quarterly Non-consolidated Balance Sheet	4
(2)	Quarterly Non-consolidated Statement of Income	5
(3)	Notes to Quarterly Non-consolidated Financial Statements	6
	Going Concern Assumption	6
	Significant Changes in Shareholders' Equity	6
	Changes in Accounting Policies	6
	Segment and Other Information	7

1

Tobila Systems Inc. (4441) Financial Results for the First Quarter of FY10/22

1. Qualitative Information on Quarterly Financial Performance

(1) Explanation of Results of Operations

Economic activity increased during the first quarter of the current fiscal year as the number of COVID-19 cases declined due to progress with vaccinations. However, there was subsequently an upturn in the pandemic caused by the omicron variant, which created concerns about a negative impact on economic activity. As a result, the outlook for the economy remains uncertain.

A variety of scams have been causing an enormous amount of losses. Examples include fraudulent messages about refunds concerning COVID-19 vaccines, fraudulent warnings about PCs and offers of assistance, and smishing, SMS phishing scams to steal personal information. In this manner, specialized fraud schemes are becoming ever more sophisticated as the world continues to change.

There is thus a growing need for protection against these scams, including for family members and friends. We have been focusing on our spam filter service to deter these criminal activities. In the landline filtering services category, we started offering with KDDI CORPORATION a service called the Fraudulent Call Automatic Block. This is Japan's first malicious call automatic blocking service for landline phones that does not require an add-on unit. Users do not require a special device because automatic blocking equipment for malicious calls is placed in KDDI's network. In addition, the TobilaPhone Mobile fraud and spam filtering service became the first app to be certified as an Outstanding Fraudulent Call Prevention Device recommended by the Japan National Crime Prevention Association. This certification further increases the recognition of the effectiveness of this app. Furthermore, there were many marketing campaigns for the purpose of raising awareness of 280blocker, an app that blocks malicious advertisements.

TobilaPhone Cloud, a cloud business phone service, has been a priority of ours for some time. To make this service even more convenient, we have launched an optional service that allows using an area code when making and receiving calls with a landline phone number. No special connection or equipment is needed. As a new business, we have developed and launched Talk Book, an AI sales support tool that realize the visualization of sales discussions and data-driven sales. In addition, we are implementing various measures to increase the number of monthly active users (see note) for our services. As a result, more than 14 million users now use our services.

The businesses and business models of Tobila Systems have received recognition in many ways. One example is the December 2021 selection of Tobila Systems by the Small and Medium Enterprise Agency of the Ministry of Economy, Trade and Industry for inclusion in the "300 Most Promising SMEs and Small Businesses." To strengthen corporate governance, we established a Nomination and Remuneration Committee for increasing the fairness, transparency and objectivity of the process used to determine nominations and remuneration for directors and other executives.

The Board of Directors resolved to select the Prime Market of the Tokyo Stock Exchange when the Tokyo Stock Exchange begins using its new trading categories in April 2022. We will continue to take actions aimed at achieving consistent growth of sales and earnings and the medium to long-term growth of corporate value.

In the first quarter, net sales increased 16.7% year-on-year to 391,882 thousand yen, operating profit increased 9.2% to 134,610 thousand yen, ordinary profit increased 2.9% to 126,655 thousand yen and profit was down 26.6% to 62,287 thousand yen.

Note: MAU is an important KPI for determining the contribution of our products and services to eliminating problems caused by fraud and spam. Our revenue is, however, not always directly affected by an increase or decrease in MAU because contracts with customers such as telecommunications companies have different terms.

Business segment performance was as follows: Fraud and spam prevention services

There are three service categories in this segment. A filtering service that blocks fraudulent and other malicious calls on mobile phones is the core business. The other categories are a filtering service for landline phones and TobilaPhone Cloud, a filtering service for phones used by businesses. We continued to focus on building an even larger and more powerful foundation for the provision of filtering services.

2

Tobila Systems Inc. (4441) Financial Results for the First Quarter of FY10/22

As a result, first quarter sales were 377,252 thousand yen, up 19.2% from one year earlier, and segment profit increased 16.2% to 230,757 thousand yen.

Others

Other services include a website design and operation support service, development projects outsourced by other companies and other activities. We do not intend to increase the scale of operations in this segment. First quarter sales decreased 24.1% from one year earlier to 14,630 thousand yen, and the segment profit was 10,175 thousand yen, down 12.4%.

Total operating profit is the sum of the profit of the two segments minus corporate expenses, which are not allocated to the reportable segment. Corporate expenses mainly consist of selling, general and administrative expenses that are not attributable to the reportable segment. In the first quarter, corporate expenses increased 22.4% from one year earlier to 106,322 thousand yen mainly because of higher administrative expenses because of the larger scale of operations.

1. Explanation of Financial Position Total assets

Total assets increased 29,951 thousand yen from the end of the previous fiscal year to 2,199,968 thousand yen at the end of the first quarter of the current fiscal year. This was attributable mainly to an increase of 42,298 thousand yen in cash and deposits, and a decrease of 29,156 thousand yen in investments and other assets.

Liabilities

Total liabilities increased 68,756 thousand yen from the end of the previous fiscal year to 749,764 thousand yen. The main factors include a decrease of 57,909 thousand yen in income taxes payable and an increase of 133,412 thousand yen in other current liabilities.

Net assets

Total net assets decreased 38,804 thousand yen from the end of the previous fiscal year to 1,450,204 thousand yen. The main factors include the booking of profit of 62,287 thousand yen, an increase in share capital and capital surplus of 16,040 thousand yen each due to the exercise of share acquisition rights, and a decrease of 134,040 thousand yen in retained earnings due to dividends paid.

(3) Explanation of Earnings Forecast and Other Forward-looking Statements

We currently maintain the earnings forecast for the fiscal year ending October 31, 2022 that was announced on December 10, 2021.

3