fy2018/5 financial resultsgunosy.co.jp/downloads/w31c434nfinancial results presentation... · * the...

Gunosy Inc.

First Section of The Tokyo Stock Exchange

Stock (Code: 6047)

July 12, 2018

FY2018/5 Financial Results

1

3

2

4

5

Financial Results for FY2018

FY2019 Outlook

Management Structure & Business Policy

Media ADNW Business

New Business

P03

P14

P16

P33

P37

INDEX

(C) Gunosy Inc. All Rights Reserved.

６Appendix

P21


FY2019/5 Results Forecast

Management Structure for Further Growth and Management Targets

Policies for the Media Business and the Advertising Business

New Businesses

Reference Materials: Overview of Gunosy Inc.



Financial Results for FY2018

1

(C) Gunosy Inc. All Rights Reserved. PAGE | 4

FY2018/5 Consolidated Results

Net sales increased to 11,200 million yen, up 45%. Operating profit rose to 1,930

million yen, up 28% YoY.

Profit attributable to owners of parent declined 55% YoY due to the effect of a 760 million

yen loss on valuation of investment securities.

Quarter Full year

FY2017/5

Q４FY2018/5

Q4 YonY FY2017/5 FY2018/5 YonY

Forecast on

July 14,

2017

Net sales 2,117 3,322 +56.9% 7,739 11,201 +44.7% +4.2%

Operating profit 431 568 +31.8% 1,517 1,938 +27.8% -12.1%

Operating

margin 20.4% 17.1% - 19.6% 17.3% - -

Profit before

income taxes 289 -157 - 1,426 1,231 -13.7% -

Profit

attributable to

owners of parent234 -379 - 1,126 501 -55.5% -66.0%

(Million yen)


Highlights of Full-Year Net Sales

Net sales for Q4 were 3,320 million yen, a significant YoY rise of 57%, and were 104%

in comparison with the full-year forecast.

0

4,000

8,000

12,000

Q1 Q2 Q3 Q4 Full-year

(Million yen)

2,413

2,707

2,758

3,322

10.74billion yen

FY2018

Net Sales

11.20billion yen

Full-year

forecast on

July 14, 2017


Highlights of Full-Year Operating Profit

Operating profit for Q4 was 568 million yen, up 32% YoY, but the achievement rate of

the full-year forecast was 88% due to the effect of the fall in Q3.

0

800

1,600

2,400

Q1 Q2 Q3 Q4 Full-year

(Million yen)

2.20billion yen

416

508

444

568

Operating Profit

1.93billion yen

Full-year forecast

on July 14, 2017

FY2018


Financial Results (Quarterly)

Both net sales and operating profit set record highs, with net sales rising to 3,322 million

yen (up 20% QoQ) and operating profit increasing to 568 million yen (up 28% QoQ).

271486

790892

995880

1,0061,191

1,5211,680

1,959 1,9822,117

2,413

2,707 2,758

-997

-124 -172

201 28547 129 184 201 245

376 464 431 416 508 444568

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Net Sales and Operating Profit

FY2018FY2015 FY2016 FY2017

(Million yen)

3.32billion yen

* For the quarters up to FY2016 Q2, the figures are from the non-consolidated results.


Breakdown of Net Sales

Sales in Gunosy Ads increased 21% QoQ due to growth in NewsPass and LUCRA.

Sales in ADNW rose 11% QoQ due to the continued contribution of the expanding ad

inventories of existing major media. Sales in Others were up 65% QoQ, reflecting the

steady start-up of digwell inc., in addition to Game8 Inc.

*1 Sales of Gunosy Ads are the total of Gunosy, NewsPass and LUCRA.

776 853 939 1,080 1,175 1,283 1,300 1,411 1,505 1,574 1,4761,786103

153251

388466

610 606625

815974 1,067

1,182

5239

65 7481

92

157 214

353

0

1,000

2,000

3,000

4,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

(Others)

(ADNW)

(Gunosy Ads)*1

(Million yen)

FY2018FY2016 FY2017

*2 For the quarters up to FY2016 Q2, the figures are from the non-consolidated results.


Cost Structure

Variable costs (ADNW costs, costs for revenue sharing with KDDI) increased associated

with the rise in net sales. The ratio of variable costs remained stable without major

change. Expenses increased 104 million yen due to live video production expenses.

56 90 162253 308

411 413 439574

693782 838

39 5340

3744

43 47 48

55

6070

92

146176

198236

251262 274 293

315

336352

396

2222

24

4480

56 5555

55

55

54

55

443394

407

504471

494 390460

547

562504

58823

104

123 140

173

243278

314336

389

447

489524

678

832 8771,007

1,3191,435

1,5821,517

1,686

1,997

2,1982,313

2,753

0

1,400

2,800

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Cost Structure

FY2018FY2016 FY2017

(Million yen)

Ad network costs

Server expenses

Personnel expenses

Rents

Advertising expenses

Live video production expenses

Other expenses

Expenses for the change of the listed market to the Tokyo Stock Exchange 1st Section


(C) Gunosy Inc. All Rights Reserved. PAGE |

Cumulative Total of Downloads

CPA for Gunosy rose due to the impact of seasonal factors, which restrained the

advertising expenses of Gunosy. The number of DLs of NewsPass and LUCRA

increased as planned.

515

746 866

977 1,084

1,191 1,302

1,436

1,618

1,841

2,043

2,268

2,515

2,799

3,084

0

150

300

450

0

1,750

3,500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

LUCRA

News Pass

Gunosy

CPA (right axis)

FY2018FY2015 FY2016 FY2017

(10,000 DLs) (Yen)33.54 million DLs

10


Total Number of Active Users

The number of active users declined for Gunosy. NewsPass and LUCRA offset the

decline of Gunosy, and the total number of active users rose 44% YoY and 9% QoQ.

The overlapping part of the MAUs*2 of Gunosy and NewsPass remained stable at 10% or

less.

*1 Average for each quarter of MAUs (monthly active users) of Gunosy, NewsPass and LUCRA.

*2 The percentage of overlapped MAUs (monthly active users) of both Gunosy and NewsPass. Source: Estimates of Gunosy Inc.

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

LUCRA

News Pass

Gunosy

*1

FY2018FY2015 FY2016 FY2017


Advertisers

Both the number of active advertisers and major advertisers* increased.

The share of the Health products and Beauty care segments continued to be large.

* The number of advertisers whose advertising budget is 1 million yen or more.

Health42%

Beauty care31%

Apps(excluding games) 7%

Finance 5%

Games 1%

Human resources 1%

Real estate1%

Others 12%

Number of Active Advertisers

Segment of Advertisers (FY2018 Q4)

221 207 246 261 260332 345 346 350 324 310 355

636

782 843

1,098

1,211

1,388 1,396

1,253 1,273

1,343

1,210 1,239

75%

80%

85%

90%

95%

100%

0

800

1,600

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Other advertisers

Major advertisers*

Percentage of sales of majoradvertisers (right axis)

(Companies)

FY2018FY2016 FY2017


Ad Network (ADNW)

In ADNW, both CPM and impressions grew steadily.

27,348

30,788 30,142

33,680

38,61039,585

36,330

¥16.90

¥19.50 ¥19.80 ¥18.40

¥21.10

¥25.10

¥30.70 ¥30.70

0

20

40

0

15,000

30,000

45,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

imp

CPM (right axis)

FY2018FY2017

39.5 billion imp

Number of Impressions and CPM

(Million imp)(Yen)


FY2019/5 Results ForecastFY2019 Outlook

２


FY2015 FY2016 FY2017 FY2018 FY2019

15

FY2019/5 Results Forecast

The full-year consolidated results forecast shows net sales of 13.9 billion yen,

operating profit of 2.5 billion yen and profit of 1.6 billion yen.

3,165

4,599

7,739

11,201

190 562 1,517

1,938

-136

6051,126

501

Sales

Operating profit

Profit attributable to owners of parent

13.9 billion yen

1.6 billion

yen

2.5 billion yenH1

6,524

H2

7,435

1,122

1,380898

752

(Million yen)



Management Structure for Further Growth and

Management Targets

Management Structure & Business Policy

3


Changes in Management Structure

To clarify their roles, the number of representative directors has been changed from two

to one. Fukushima will remain committed to the BC business, aiming for significant

growth in the future.

Representative Representative

Old structure New structure for growth

Representative

Previously, business was led by

the two-representative system.

He will engage in the blockchain (BC)

business that will require technical

capabilities because it has the potential to

take a major leap forward in the long term.

New businesses

To expand in the media and advertising

businesses in the short and medium term, the

number of representatives has been changed

to one: Taketani, who mainly presided over

the media business in the past.

Representative

Director and COO

Taketani

Representative

Director and CEO

Fukushima

Representative Director and CEO: Taketani

Director and Representative Director of

LayerX Inc.: Fukushima


Redefinition of Our Domains

To maximize business opportunities, we aim to become an integrated Internet company

with the four domains of “media,” “advertising,” “blockchain” and “investment.”

To promote the visualization of management efficiency, we will change from an organization

by function to an organization with a divisional system.

Media Business Advertising Business Blockchain Business Investment Business

Enhancem

ent o

f num

ber o

f pro

ducts

Expansion of business domains

• Gunosy

• NewsPass

• LUCRA

• Game8

• New media

• Our own media

advertising

• In-feed ADNW

• Video ADNW

• Affiliate advertising

New New


Allocation of Management Resources

Achieve improved capital efficiency by effectively utilizing assets through M&A and the

investment business, in addition to existing businesses.

Media Business

Advertising

Business

Investment

Business

BC

Business

Effective utilization of assets

Inve

stm

en

t fun

ds

Approx. 8.5 billion yenInvestment

Investment

Investment

Investment


Management Policies

• Growth rate of operating profit: 25% (average for the period)

• Growth rate of net profit: 25% (average for the period)

• ROE: 30% (FY2021/5)

Management Targets for 3 Years (FY2019 - FY2021)

Measures for

improving ROE

• Creation of new media

• Creation of new advertising businesses

• Establishment of a BC company

• Implementation of M&A

• Establishment of an investment company

etc.


Policies for the Media Business and the

Advertising Business

Media ADNW Business

4


Media Business 3-Year VisionMedia

Business

Building of Gunosy information economic sphere

Enhancement of

reliability of media

Increase

in service lineupIncrease in MAUs

22


Aim to maximize the number

of visiting users on a monthly

basis, instead of on a daily

basis, to expand the service

lineup to domains other than

news.

Aim for the further expansion

of the economic sphere by

adding new services for new

users, as well as new

functions for current users.

Enhance reliability by taking

countermeasures against

problems with current Internet

media, such as click bait, in

addition to strengthening the

article delivery algorithm.

23

Media

Business

Enhancement of

reliability of media

Increase

in service lineupIncrease in MAUs

Media Business 3-Year Vision


Increase MAUs in existing businesses through improved service quality, function enhancement and active

promotion.

For new businesses, enhance the media lineup through our own launch and cooperation with other

companies.

Existing businesses

One of the largest general smartphone

information applications in Japan with

24 million DLs

Gunosy

News application in collaboration

with KDDI Corporation with 6.5

million DLs

NewsPass

Women-specific application in

collaboration with KDDI Corporation

with 2.5 million DLs

LUCRA

Game strategy information service

with 21 million MAUs per month

Game8

New businesses

Our own

(self-manufacturing)Collaboration /M&A

Reinvestment of profits from

existing businesses

Attraction of users from existing

media

Start up new media tailored to the

trends of the times

Assets of other companies

Media operation capacities of

other companies

Develop new media businesses

24

Media

Business Media Business 3-Year Vision


Aim for regrowth as a family of Gunosy services by strengthening its position as a general smartphone

information platform, focusing on the three points below.

Strategies Specific examples

Diversification of content• Coupon

• Manga

• Video

Improvement of content quality

Restructure of UI/UX

• Improvement of article quality across

applications, and establishment of a UI/UX

improvement team

Cutting out of applications

in the vertical domain• Cutting out of services with a different app

experience as separate applications

POINT

1

2

3

(1) GunosyMedia

Business


(1) Gunosy

Aim for the regrowth of business by achieving improved MAUs in the entire family of Gunosy services

while securing profitability through the diversification of content, quality improvement and the cutting out of

applications.

In the pastEstablishment of the Gunosy brand

In the futureDiversification based on the Gunosy brand

Database as a media platform

Exp

an

sio

n o

f the

sta

ble

reve

nu

e b

ase

Re

ve

nu

e e

xp

an

sio

n

thro

ug

h n

ew

me

dia

Present

Gunosy vertical application (1)



Main body of Gunosy

26

Media

Business


(2) NewsPass

Establish a position as a reliable news application for daily living, focusing on the three points below.


1

2

3

Strengthening of essential functions as

a news application

• Strengthening of information on daily life close

to news, such as disaster and transportation

information


Restructure of UI/UX

• Improvement of article quality across

applications, and establishment of a UI/UX

improvement team

Differentiation from other services,

taking advantage of the assets of KDDI

Corporation

• Collaboration of KDDI-related points

• Response to new devices such as voice

Media

Business


(3) LUCRA

Expand the service domain for women after establishing the position of LUCRA as a useful information

application for women, focusing on the three points below.


Information diversification• Strengthening of content that could trigger

actions, such as live video, fortune-telling and

coupons


Restructure of UI/UX• Improvement of the article delivery algorithm

• Continuous improvement of UI/UX

Development of services in the

cosmetics domain

• Develop services in the cosmetics domain on

our own

• To be released in fall

１

２

３

Media

Business


(4) Game8

Sales increased 152% year on year due to a rise in sales of goods in tie-up ads because PVs increased

steadily. Work to maximize revenue opportunities by improving the PV unit price and expanding domains

other than game strategy information.

0

20000000

40000000

60000000

80000000

100000000

120000000

140000000

160000000

180000000

200000000

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Sales

PVs

Strategies

Improvement of ad unit price

per PV

Strengthening of the sales

system and goods for sale

Development of new products

leveraging traffic

1

2

3

Sales and Number of PVs

FY2018FY2016 FY2017

* The rate of increase in the number of PVs and sales is on a year-on-year basis.

Number of PVs: Up 98%*

Sales: Up 152%*

Media

Business


Summary of Growth Strategies of the Advertising Business

Actively enter into and invest in the advertising market that is expected to grow in the future, making

maximum use of the asset of being a company that holds media.

Advertising

Business

From smartphones to the real world and audio devices

From IMP/pay per click to pay per action

From native to video and voice

From Japan to Asia

Device Format

Delivery Form The Market

1 2

3 4


Existing Businesses in the Advertising Business

Focus on the update of the ad delivery algorithm based on data and technologies and the expansion of

ad products for branding, centered on video.

Advertising

Business

Our own media advertising

• Strengthening of sales of tie-up products in live

video

• Development of premium ad products in

NewsPass and LUCRA

• Update of delivery algorithm for programmatic

advertising

In-feed ADNW

• Strengthening of sales of re-targeting products

• Expansion of advertisers and ad inventories in

collaboration with the KDDI Group

• Improvement of delivery accuracy through data

collaboration with partner media and SSP

1 2


New Products in the Advertising Business

Strengthen product and sales capabilities of digwell inc., which deals with Affliate advertising.

Established VIDPOOL Inc. as a joint venture company to strengthen video ADNW.

Advertising

Business

Affiliate advertising

• Stronger development of new advertisers

• Release of products for app advertisers

• Building of a creative and LP mass production

system

Video ADNW

• Expansion of advertisers in collaboration with

CyberAgent, Inc.

• Stronger acquisition of quality ad inventories

• Search for optimum benefit indicators in video

advertising

New product New product

3 4

(subsidiary) (subsidiary)


New Businesses

New Business

5


Policies for the Blockchain (BC) Business

We expect that demand for technically advanced professional support will increase in the ICO market. This is

a domain where use will be made of the technical capabilities of protocol study, which Gunosy has

been cultivating for the past six months.

• Funds are raised by ICO without a product.

• In many cases, a product is not released even though funds have been raised.

Current Status of ICO

Size of ICO (Quarter) Number of ICO Projects Business Operations before ICO

$3.3 billion 412 9%

1. Needs for productization will increase.

2. Incentive design in consideration of a token economy

3. Power of incorporation into software/application

4. Deep understanding of blockchain technology and its implementation capability

What will be required in

the years ahead

The size of crypto funds worldwide is $27.8 billion Utility type is the largest in number,

accounting for nearly 70%

Projects where business operations

before ICO account for only 9%

Source: ICO Market Research Q1 2018(by ICORating)


Policies for the Blockchain (BC) Business

We will carry out business that will leverage our technical capabilities such as

consulting by establishing a joint venture company with AnyPay Inc.

Establishment

Technology Financing

Investment ratio: 50% Investment ratio: 50%

Business Overview

Token development

Anti-hacking

measures at the time

of ICO and smart

contract

Token design,

implementation consulting

Code audit

Design and implement a token that will actually work and install an application for it, aiming

for ICO or launch.

A smart contract will not be easily revised once a bag has been broken into. Check the

code of the smart contract by assuming hacking patterns.

Provide our own products that will solve problems in the token economy such as DEX

in cooperation with partner companies such as securities firms.

Medium- and

long-term targets

Feasibility studyFeasibility confirmation

PoC

Provide consulting on a technical aspect or conduct a demonstration experiment for new

services with a partner company to see whether the new services using blockchain are

feasible.


Policies for the Investment Business

Capital Pte. Ltd.

Establish CVC, which makes an investment in domains that are expected to grow in the future,

such as blockchain, sharing economy and AI, in Singapore.

Shinji Kimura, who has a strong investment record in several areas, will become the representative director.

Establishment

(1) Companies that will develop new business domains, create new business models and develop new

technologies

(2) Companies that will make a paradigm shift in existing industries with an innovative approachInvestment Targets

Fixed long-term investment (VC) Quasi-liquid investment Liquid investment

• Sharing economy in India

• Mobile fintech in India

• Mobile and blockchain in Indonesia, etc.

• Asset owner in a sharing economy, etc.

• Investment in businesses before IPO

• Listed companies in the United States,

China and South Korea

Portfolio Image


Reference Materials: Overview of Gunosy Inc.

Appendix


Overview of Gunosy Inc.

・Company name: Gunosy Inc.

・Representative: Yoshinori Fukushima

・Established: November 14, 2012

・Fiscal year: May

・Capital: 3,975 million yen

(as of the end of May 2018)

・Stock Code: 6047 (First Section of The

Tokyo Stock Exchange)

・Audit corporation: Ernst & Young ShinNihon LLC

・Number of

employees:

161 (as of the end of May 2018,

on a consolidated basis)

・Head office: Roppongi Hills Mori Tower,

6-10-1 Roppongi, Minato-ku,

Tokyo

・Business: Development and operation of

information curation service

and other media

・Officers:Representative Director and CEO, Yoshinori Fukushima

Representative Director and COO, Yuya Taketani

Director and CFO, Mitsushige Ito

Director and CRO, Tetsuya Nagashima

Director, Shinji Kimura

Director (Outside), Katsuya Yanagihara

Director (Outside), Toshifumi Tsukada

Corporate Auditor, Masakazu Ishibashi

Corporate Auditor (Outside),Tsutomu Arai

Corporate Auditor (Outside),Kenji Shimizu

Corporate Auditor (Outside),Noboru Kashiwagi

Basic Information


Directors

Graduated from the Graduate School

of Engineering of the University of

Tokyo. While in school, developed the

service of Gunosy. Founded the

Company in November 2012 and

become Representative Director. In

November 2013, became

Representative Director and CEO. In

FY2012, was certified as an IPA

MITOH Super Creator.

Representative Director and CEO

Yoshinori FukushimaGraduated from the Department

of Industrial and Management

Systems Engineering of the

School of Creative Science and

Engineering of Waseda University.

Joined GREE, Inc. and then

Gunosy Inc. In August 2013,

became a director of the

Company. In August 2016,

became Representative Director

and COO.

Representative Director and COO

Yuya TaketaniGraduated from the Graduate School of

Economics of Waseda University. Served

as the General Manager of Business

Administration Division of Dream Incubator

Inc. Joined the Management Planning

Team of Fast Retailing Co., Ltd. Served as

the Manager of the Accounting and Tax

Affairs Department of GREE, Inc. Joined

Gunosy Inc., and in April 2014, became

Director and CFO.

Director and CFO

Mitsushige ItoGraduated from the Faculty of

Science and Technology of Keio

University. Served as an Executive

Officer at AUN Consulting, Inc.

Joined GREE, Inc. and then

Gunosy Inc. In August 2016,

became a Director at the Company.

In August 2017, became CRO.

Director and CRO

Tetsuya Nagashima

Graduated from the Graduate School of Engineering of

the University of Tokyo. Graduated from the Department

of Physics, Faculty of Science of the University of Tokyo.

Joined Dream Incubator Inc. Founded Atlantis Inc. (now

Glossom Inc.) in March 2007 and sold the business to

GREE, Inc. in 2011. Became a Representative Director of

Gunosy Inc. in 2013 and retired in 2014. Established

AnyPay Inc. In June 2016. Became a Director of Gunosy

in August 2017.

Director

Shinji KimuraBecame a public prosecutor in 1995.

Registered as an attorney in 2006. Joined

Daiichi Law Office, P.C. in 2007 and has

been a partner at the office. In August

2015, became an Outside Director at

Gunosy Inc.

Director (Outside)

Katsuya YanagiharaDirector (Outside)

Toshifumi TsukadaJoined DDI Corporation (present KDDI

Corporation). Served as President of Mediba, Inc.

and President of WebMoney Corp. Currently

General Manager of the Advanced Business

Development Division, Life Design Business

Sector and General Manager of the promotion of

UI/UX at KDDI Corporation. In August 2016,

became an Outside Director at Gunosy.


Business Model: Gunosy Ads

Revenue

Targeting advertisement delivery

by interest cluster

Click-guaranteed (CPC = Cost per Click)

Impression-

guaranteed (CPM = Cost per Mille)

Features

1. In-feed advertisements (ads inserted

into articles) enhance visibility

2. Highly frequent contact

3. Ads delivered according to interests

Ad on list page Ad in an article

Interests

News

AD

UsersGunosy


Business Model: Ad Network

In addition to delivering advertisements inside Gunosy (Gunosy Ads), we release Gunosy

Ad Network service, which delivers ads to external partner media.

Currently, more than 600 media outlets have introduced this service.

Advertiser A

Gunosy

Ad Network

Server

Advertiser B

Advertiser C

Advertiser D

Advertiser E

Media A

Media B

Media C

Media D

Media E


Disclaimer

Forward-looking statements contained in these materials are prepared from

judgments and assumptions based on information available at the time of

preparing the materials, and do not guarantee their accuracy.

Please note that actual results may differ materially from the forecasts due to

various uncertainties included in these judgments and assumptions and changes

in risk factors and the economic environment.

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