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Review of Full-Year Financial Results

The year ended September 2022

In 2021, the rate of individuals owning smartphones in Japan increased to 74.3% and exceeded 90% among people in their 20s to 40s, showing the quantitative expansion is ongoing. At the same time, the purpose of using smartphones has diversified with the increase in the rate of social media use, and there have been remarkable qualitative changes (Source: Ministry of Internal Affairs and Communications, "Results of FY2021 Communication Usage Trend Survey"). With smartphones becoming the main Internet devices, in the services and applications markets, the expansion of content business such as video, music, and e-books is accelerating. In addition, the use of social media is expanding beyond communication to include areas such as payments and purchasing, further strengthening its influence. As a result, demand for marketing support using the respective media features, data, and AI is growing further.

Moreover, in the Japanese advertising market in 2021, Internet advertising expenditures reached 2.7052 trillion yen (121.4% compared to the previous year), surpassing four Traditional Media advertising expenditures for the first time (2.4538 trillion yen, or 108.9% compared to the previous year) (Source: Dentsu Inc., "2021 Advertising Expenditures in Japan"). In this way, the COVID-19 crisis has triggered a major wave of digital transformation (DX) in all industries, further increasing demand for digital marketing in the advertising industry.

Under these circumstances, in the main Digital Marketing Business, both revenue and profit increased significantly due to organic growth resulting from capturing increased demand for DX in companies, promotion of collaboration through deepening capital and business alliances with the Dentsu Group, and the impact of new consolidations. In the Media Platform Business, while continuing investments to expand into new business segments, revenue increased, and the extent of the loss narrowed due to the driving force of the manga content business. Regarding the expansion into new business segments, business development progressed in the HR technology field and the sports field.

As a result, revenue increased to ¥28,819 million (up 34.8% year on year), Non-GAAP operating profit increased to ¥5,855 million (up 54.2% year on year), operating profit increased to ¥5,440 million (up 49.0% year on year), profit before tax increased to ¥8,241 million (up 110.7% year on year), profit increased to ¥5,751 million (up 120.6% year on year), and profit attributable to owners of parent increased to ¥5,734 million (up 120.2% year on year).

For non-consolidated operating results, due to an increase in dividend income from subsidiaries etc., operating revenue increased to \5,495 million (up 40.9% year on year), operating profit increased to \2,875 million (up 71.0% year on year), ordinary profit increased to \4,364 million (up 133.3% year on year) and net income increased to \3,673 million (up 256.7% year on year).

Overview of consolidated full-year financial results

(units:\million)

  FY2018 FY2019 FY2020 FY2021 FY2022
Revenue 15,272 16,796 17,938 21,384 28,819
Non-GAAP Operating profit 1,011 2,065 2,452 3,796 5,855
Operating profit 977 183 2,274 3,650 5,440
Profit attributable to owners of the parent 847 -547 1,464 2,607 5,734
【Reference】Net Sales 72,443 76,501 76,489 97,606 131,434

The trend of consolidated full-year financial results

Revenue
Non-GAAP Operating profit
Operating profit
Profit attributable to owners of the parent

Financial results by segment

(units:\million)

    FY2018 FY2019 FY2020 FY2021 FY2022
Revenue
Digital Marketing Business 14,234 15,079 15,807 18,869 25,862
Media Platform Business 1,324 2,005 2,487 2,885 3,297
Adjustment -286 -289 -356 -370 -340
  15,272 16,796 17,938 21,384 28,819
Non-GAAP Operating profit
Digital Marketing Business 4,026 4,775 5,248 6,991 9,211
Media Platform Business -1,051 -901 -956 -1,110 -844
Adjustment -1,964 -1,809 -1,840 -2,085 -2,512
  1,011 2,065 2,452 3,796 5,855
【Reference】Net Sales
Digital Marketing Business 72,177 75,311 74,728 95,605 129,021
Media Platform Business 1,324 2,005 2,487 2,885 3,297
Adjustment -1,058 -815 -726 -884 -884
  72,443 76,501 76,489 97,606 131,434
Revenue
Non-GAAP Operating profit

Review of Digital Marketing Business in Fiscal Year Ended September 2022

In the fiscal year under review, both revenue and profit increased significantly due to organic growth resulting from capturing increased demand for DX in companies, promotion of collaboration through the deepening capital and business alliance with the Dentsu Group, and the impact of new consolidations.

As a result, revenue increased to ¥25,862 million (up 37.1% year on year), and Non-GAAP operating profit increased to ¥9,211 million (up 31.8% year on year).

Revenue
Non-GAAP Operating profit
【Reference】Net Sales
Transaction of Domestic Brand Ad
Volume of clients in collaboration with Dentsu

Review of Media Platform Business in Fiscal Year Ended September 2022

In the fiscal year under review, while continuing investments to expand into new business segments, revenue increased, and the extent of loss narrowed due to the driving force of the Manga Content Business.

As a result, revenue is ¥3,297 million (up 14.3% year on year), and Non-GAAP operating loss is ¥844 million (¥1,110 million in the previous fiscal year).

Revenue
Non-GAAP Operating profit