ValueCommerce Co., Ltd. FY2016 Q2 Financial Results...※）EBITDA＝Operating Income＋Depreciation and amortization + Amortization of goodwill Result overview Cumulative Quarterly

Copyright © 2016, ValueCommerce Co., Ltd.

ValueCommerce Co., Ltd.FY2016 Q2Financial Results

July 28th, 2016

Copyright © 2016, ValueCommerce Co., Ltd. 1

● FY2016 Q2 Highlights 2

● FY2016 Q2 Consolidated Financial Results 3

● FY2016 Consolidated Earnings/Dividends Forecast 14

● Business Review 17

● Business Strategies 25

● Appendix 29

Table of ContentsPage


FY2016 Q2 Highlights

●Revenue JPY 9,164million Record High（Y/Y：＋13.3％）

●Capital Partnership with VTM AdtechDevelops Affiliate Marketing Service in Vietnam

●R∞, CRM tool, customized for Yahoo!Shoppinngis being developed on scheduled and to be released in

2016

● Result of the first half against FY2016 consolidatedearning forecast・Operating income ：First half JPY440millions 34.9％ progressed・Net income ：First half JPY152millions 18.6％ progressed

Highlights


2016 Q2 Consolidated Financial Results


2016 Q2 Financial Highlights・ Revenue：Recorded high for active sales in existing business and growth of new

business.・ Income：A temporary decrease in profit due to strategic investment to new business

and amortization of goodwill.

（※）EBITDA＝Operating Income＋Depreciation and amortization + Amortization of goodwill

Result overview

Cumulative QuarterlyFY2016 Q1-Q2 Y/Y FY 2016 Q2 Y/Y

Revenue 9,164 +13.3% 4,640 +11.6%Operating income 440 △42.8% 184 △52.6%EBITDA（※） 653 △23.9% 296 △32.9%Net income 152 △73.2% △4 ーSegmentAffiliate Marketing Service 7,810 +6.2% 3,992 +6.1%Storematch Service 736 +11.4% 361 +7.4%Ad Network Service 300 +502.4% 148 +208.4%Other 341 +793.6％ 149 +634.8%

（Million JPY）


Cumulative QuarterlyFY2016Q1-Q2 Y/Y FY2016

Q2 Y/Y

Revenue 9,164 13.3% 4,640 11.6%Cost of revenue 7,238 19.8% 3,716 19.3%

Gross Income 1,926 △5.8% 924 △11.4%SG&A Expenses 1,486 16.4% 740 12.9%

Operating Income 440 △42.8% 184 △52.6%Ordinary Income 494 △43.5% 195 △52.0%Extraordinary Gains/Losses (Net) △184 - △168 -

Income before income taxes 309 △64.3% 26 △93.5%Income taxes 157 △47.2% 31 △77.5%

Net Income attributable to owners of the parent 152 △73.2% △4 -

Basic EPS ¥4.59 △73.2% ￥△0.15 -ROE (Annualized) 4.9%EBITDA（※） 653 △23.9% 296 △32.9％

Consolidated Financial Results Overview（Million JPY）

Loss on valuation of investment securities


Result overview

Strategic investment

Subsidiary’s SG&A expense

and amortization of goodwill.


Active sales in existing business and growth of new business+11.6％(Y/Y)

Record high

Trends in Consolidated Revenue (Quarterly) Quarterly result

2,666 2,964

3,225 3,157 3,230 3,032

3,424 3,685

3,928 4,159 4,145

4,424 4,523 4,640

0

1,000

2,000

3,000

4,000

5,000

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

FY2013 FY2014 FY2015 FY2016

Quarterly Revenue(Million JPY)


Quarterly result

A temporary decrease in profit due to strategic investment and amortization of goodwill

Trends in Consolidated Operating Income and Operating Margin (Quarterly)

300 338

379

322

445

382 312

375 380 388 376 373

256

184

11.4% 12.6%

9.3%

4.0%

0.0%

5.0%

10.0%

15.0%

0

100

200

300

400

500

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

FY2013 FY2014 FY2015 FY2016

Quarterly Operating Income Quarterly Operating Margin(Million JPY)


Trends in Consolidated Ordinary Income and Net Income (Quarterly)A temporary decrease in profit due to strategic investment for continuous growth.

Quarterly result

357380

422

360

473

428

338

406

468

406 396 384

299

195235 241

273

214

298

213 202

244

301 266

220 243

157

(4)

▲ 100

0

100

200

300

400

500

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

FY2013 FY2014 FY2015 FY2016

Ordinary Income Quarterly Net Income(Million JPY)

Extraordinary loss:Loss on valuation of investment securities


Trends in Cost of Revenue and Cost rate (Quarterly)

Strategic investment for developing ad network.（+19.3% Y/Y）

Quarterly result

1,760 1,999

2,249 2,131 2,174 2,052

2,486 2,703

2,926 3,115 3,172

3,416 3,521 3,716

67.4% 67.7%

74.9%

80.1%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

0

1,000

2,000

3,000

4,000

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

FY2013 FY2014 FY2015 FY2016

Quarterly Cost of Revenue Cost rate(Million JPY)


Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2FY2013 FY2014 FY2015 FY2016

Amortization of Goodwill 15 15 15 51 35Compensation 388 444 396 493 415 408 412 385 398 419 395 404 462 462Other SG&A 217 182 199 209 194 188 213 220 222 221 186 214 231 242Employees* 216 225 223 223 229 232 232 225 218 237 231 238 256 267SG&A ratio 22.7% 21.1% 18.5% 22.3% 18.9% 19.7% 18.3% 16.4% 15.8% 15.8% 14.4% 14.3% 16.5% 16.0%

21.1%

19.7%

15.8% 16.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

200

400

600

800Other SG&A Compensation Amortization of Goodwill Employees* SG&A ratio

Trend in SG&A and SG&A ratio

※ Including temporary employees

Increase in expense and amortization in goodwill for consolidating Digimiho

Quarterly result

（Million JPY）


769

440

+42 △117

△237

△17

(Million JPY)

Breakdown of Consolidated Operating Income

Note:It is calculated by segment operating income. “Other” includes other segment operating income and Corporate expenses not allocated to the segments

・ Existing business： Steady sales in affiliate marketing and Growth in Storematch・ New business ：Amortization of goodwill in Ad network and CRM.

Result overview

Expenses of subsidiary, etc

CRM included


Consolidated Balance Sheet

Q2’16 End (June. 30, 2016)

Q4’15 End (Dec. 31, 2015) Change Factors of Change

Current Assets 7,277 7,443 △165 Cash and deposit: △236

Notes and accounts receivable-trade: +74Account receivable-other:△7

Cash andDeposit [3,962] [4,198] △236

Noncurrent Assets 2,929 2,682 247

Goodwill:△249Software：＋171Software in progress:+84Security deposit:+242

Total Assets 10,206 10,125 81

Current Liabilities 3,802 3,795 ６

Noncurrent Liabilities 136 84 51 Differed tax liabilities:+55

Net Assets 6,268 6,244 23

Net Income: +152Cash dividend paid:△199Valuation difference on available-for-sale securities:＋71

(Million JPY)

Head office relocation

Result overview

Cost for software

development


Breakdown

● Operating Cash FlowsIncome before income taxes 309Depreciation and amortization 126Amortization of goodwillEquity in earnings of affiliates

86△32

Operating losses on investment in partnershipLoss on valuation of investment securities

23

149Expense on head office relocation 16Increase in accounts receivable-trade △74Increase in accounts payable-trade 114Decrease in accounts receivable-other 7Increase in accounts payable-other 103Income taxes paid △367

● Investing Cash FlowsPurchase in intangible assets △203Payment for security deposits △242

● Financing Cash FlowsRepayment of long-term loans payableCash dividend paid

△14△198

Consolidated Cash Flows

Q1-Q2’16 Q1-Q2’15

Operating Cash Flows (OCF) 480 337

Investing Cash Flows (ICF) △498 △268

Free Cash Flow △18 68

Financing Cash Flows (FCF) △213 △195

Incremental Cash Flows △236 △126

Ending Cash Balance 3,962 4,615

(Million JPY ) (Million JPY)

Software development cost and

security deposits

Result overview


FY2016 Consolidated Earnings/Dividends

Forecast


Progresses as scheduled. Though no changes have been made in the earnings forecast for the full fiscal year released on January 29, 2016, it will be announced promptly once revision of the earnings forecast is required based on future trends in business results.

FY2016 Consolidated Earnings Forecast(Million JPY)

Q1-Q2’16[Result]

First Half [forecast] Full Year Forecast

Progress Progress

Revenue 9,164 8,500 ＋7.8% 19,000 48.2%

Operating Income 440 360 ＋22.3% 1,260 34.9%

Ordinary Income 494 360 +37.3% 1,260 39.2%

Net Income attributable to owners of the parent 152 200 △23.8% 820 18.6%

Basic EPS ¥4.59 ¥6.0 ¥24.7

EBITDA（※） 653 568 1,699

Earning forecast


It is the earnings forecast of the consolidated full fiscal year released on January 29, 2016. Also, the Company announced Notification Concerning Revision of Earnings Forecasts for First Half of Fiscal 2016, on July 15, 2016.


FY2016 Dividends Forecast

（JPY）

The target payout ratio is 30% or more of consolidated net incomeDivideneds Forcast has not been changed.

Dividend per Share, Consolidated Payout Ratio

Interim Dividend 2.00

Year-end Dividend 6.00（forecast）

Total 8.00（forecast）

Consolidated Payout Ratio 32.4%（forecast）

Dividend forecast


Business Review


FY2016 Q2 Segment Information Overview by segments

（Notes) Segment operating income/loss is adjusted to operating income in the consolidated financial statement.Allocation rules has reviewed from 2016 Q1. Segment information for 2015 Q2 is prepared under revised calculation method.

FY 2016 Q1-Q2 FY 2016 Q2

compared y/y Revenue Grossincome

Operatingincome Revenue Gross

incomeOperating

incomeAffiliate Marketing Service

7,810 1,928 1,201 3,992 957 588+6.2% △3.1% +0.0% +6.1% △5.8% △5.1%

Storematch Service

736 201 99 361 100 48+11.4% +11.7% +76.3% +7.4% +10.2% +84.6%

Ad Network Service

300 △ 73 △ 274 148 △ 47 △ 151+502.4% - - +208.4% - -

Other 341 111 △ 409 149 49 △ 217+793.6% +883.4% - +634.8% +736.3% -

●Affiliate marketing

Active sales in Travel, Jobs, and cosmetics categories.While some advertisers in finance category started to more focus on performance efficiency.

●Storematch Active sales in Storematch, service for stores on Yahoo!shopping

●Ad network Strategic investment for developing ad network

●others The reporting segment comprises new businesses(including CRM, O2O, Media service etc,.）Also, included subsidiaries expense and amortization of good will.


Affiliate Marketing Revenue and Gross Income Ratio by services

Affiliate marketing

1,737 2,005

2,280 2,106 2,219 2,087

2,543 2,755

3,004 3,188 3,153 3,326 3,290 3,473 648

682

692 710

727 645

558 555

584

574 533

529 527 518

35.7%

35.3%

27.0%24.0%

0.0%

10.0%

20.0%

30.0%

40.0%

0

1,000

2,000

3,000

4,000

5,000

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

FY2013 FY2014 FY2015 FY2016

ASP Consulting Rate of Gross Income of Revenue（Millions of Yen）


Affiliate Marketing Gross Incomeby Service

Affiliate marketing

358 391 400 401 422 394 433 456 444 501 481 521 500 508

550 573 598 597

630 568 486 482 528

514 471 450 469 449

0

200

400

600

800

1,000

1,200

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

2013年 2014年 2015年 2016年

ASP Consulting


Trends in Numbers of Advertisers & Publishers

Publishers

Advertisers

Service closure of Yahoo!Affiliatein the end of March 2015

Promote online systematization while concentrating on sales support for existing major clients

Affiliate marketing

(thousands)

1,979 1,943 1,905 1,764 1,742 1,749 1,751 1,726 1,671 1,635 1,598 1,556 1,527 1,546

0

800

1,600

2,400

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

FY2013 FY2014 FY2015 FY2016

924 942

959 975

991 1,005

1,020 1,032

1,046

604 615 623 633 642

0

400

800

1,200

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

FY2013 FY2014 FY2015 FY2016

The number of advertisers increased by sales promotions


52.6% 53.2% 53.8% 50.3% 51.0%46.1% 46.5% 46.9%

52.1% 51.8% 48.9% 45.8% 47.0% 48.1%

9.4% 9.1% 9.6%11.7% 13.1%

13.0% 11.6% 11.4%

12.4% 11.8%10.7%

11.3% 11.0% 11.6%

10.7% 13.1% 14.1% 13.5% 10.7%13.7% 15.1% 13.1%

9.5% 10.9%13.3%

12.2% 9.9% 10.6%

3.1%3.0% 2.7% 2.7% 3.7% 4.6% 4.9% 5.2%

6.8% 7.3% 6.8%7.4% 10.0%

9.5%5.5%

5.4%6.7%

4.9% 6.0% 7.1% 7.4%5.9%

5.8% 5.1% 6.9%8.0% 7.8% 7.3%

18.7% 16.1% 13.2% 16.8% 15.4% 15.5% 14.6% 17.5%13.4% 13.1% 13.4% 15.3% 14.3% 12.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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

FY2013 FY2014 FY2015 FY2016

Finance Shopping, Auctions Jobs Travel Beauty, Cosmetic Other

Affiliate Marketing Breakdown in Revenue by Categories

Active sales in Shopping, Travel, Jobs and Beauty, which resulted in share increase in other categories than finance.

Affiliate marketing


Trends in Commissions for PublishersRecorded high in commissions for publishers and transaction madeVia smartphone exceeded 50% out of all transactions

Affiliate marketing

（Million JPY）

(Commission for publishers)(Smartphone ratio)

Smart phoneRatio 51.8%

2,954 3,259

3,650 3,522

3,809 3,570 3,604

3,880

4,334 4,470

4,327 4,280 4,477

4,681

26.0%

37.9%

47.4%51.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

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

FY2013 FY2014 FY2015 FY2016

Commissions for publishers Smartphone ratio


11,036

12,315 13,019

14,028 14,466

13,741 13,569 14,591

15,617

14,578 14,384 14,874 14,757

14,007

15.2%19.4%

23.8%

27.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

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

FY2013 FY2014 FY2015 FY2016

Number of transaction Smartphone ratio

Affiliate Marketing trends in transactions(Thousand）

Affiliate marketing

(Numbers of transaction) (Smartphone ratio)

Smart phoneRatio 27.9%


Business Strategies


Our analysis and practical use of data maximizes clients’ performanceBy web marketing ranges in attracting users to retention.

CRM

Affiliate networkAd network

Designs communication approach and sends personalized information to each customer

Attracting users Customer service Retention

Web customer service

Customized for each customer

Advertising

Business domains


Strengthen retargeting Infeed ads Tie-up with R∞ (DMP, DSP）

Tracking transactions via apps Developing reporting to evaluate LTV

Affiliate Marketing

Service

CRM

Service development for other categories（Travel, real estate, etc.）

WEB serving, AI Strengthen service tie-ups with SNS and DSP Provides CRM to Yahoo!Shopping and

other services of group companies

Ad Network Service

Business Strategy for further growth


● This presentation material is intended to offer reference information asmaterial for investors. Neither ValueCommerce nor its personnel assume anyresponsibility for the accuracy, appropriateness, or integrity of the informationcontained in this material.

● This presentation is not intended to solicit investment in connection with theacquisition of ValueCommerce’s securities. It does not contain all informationessential to any decision on investment in ValueCommerce’s securities. In theevent of making an investment decision, you are advised to refer to theCompany’s securities reports and other statutory disclosure documents and itspublished materials in addition to this presentation material.

● This presentation material contains financial outlooks and other statements onfuture results. Actual results may differ materially from those described in thismaterial due to various factors.

● For details about factors that may have an impact on ValueCommerce’sfinancial results, please refer to “Business and Other Risks” in the TSE Filingentitled Financial Results (Consolidated) for Fiscal Year 2015. However, pleasenote that the factors that have an impact on ValueCommerce’s financial resultsare not confined to those described in “Business and Other Risks.”

Disclaimer


Appendix


Changes in Consolidated Results and Cash Flows (Quarterly) （Million JPY）FY 2014 FY 2015 FY 2016

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Revenue(+ASP commission for Publisher) 5,131 4,719 4,771 5,034 5,449 5,677 5,492 5,657 5,742 5,746

Revenue 3,230 3,032 3,424 3,685 3,928 4,159 4,145 4,424 4,523 4,670Consulting Service 2,219 2,087 2,543 2,755 3,004 3,188 3,153 3,326 3,290 3,473ASP Service 727 645 558 555 584 574 533 529 527 518

Storematch Service 275 293 315 363 324 337 347 431 374 361Ad Network service - - - - 1 48 88 111 152 148Other Service 10 9 13 16 17 20 30 37 191 149

Inter-segment revenue △2 △2 △5 △6 △5 △8 △8 △10 △13 △11Cost of Revenue (△) 2,174 2,052 2,486 2,703 2,926 3,115 3,172 3,416 3,521 3,716Cost of Revenue (Direct) 2,102 1,987 2,420 2,644 2,862 3,044 3,101 3,329 3,419 3,582

Consulting Service 1,796 1,692 2,109 2,299 2,560 2,686 2,672 2,804 2,789 2,965ASP Service 97 77 72 73 56 59 62 78 57 68

Storematch Service 201 212 232 263 235 245 257 309 274 261Ad Network service - - - - 1 43 93 119 177 196Other Service 10 7 10 12 12 14 22 24 130 99

Inter-segment cost of revenue △2 △2 △5 △5 △3 △5 △6 △7 △10 △8Cost of Revenue (Indirect) 72 65 65 59 64 70 71 87 102 133

Gross Income 1,055 979 938 981 1,001 1,043 973 1,008 1,001 924SG&A Expenses (△) 610 596 626 606 620 655 597 634 745 740

Compensation 415 408 412 385 398 419 395 404 462 462Other SG&A 194 188 213 220 222 236 201 229 283 277

Operating Income 445 382 312 375 380 388 376 373 256 184Ordinary Income 473 428 338 406 468 406 396 384 299 195Extraordinary Gains/Losses (Net) - △96 △14 △8 △9 - △51 - △16 △168Income before income taxes 473 331 324 397 459 406 345 384 282 26Income Tax 175 118 121 152 157 139 124 141 125 31Net income attributable to owners of the parent 298 213 202 244 301 266 220 243 157 △4Depreciation & Amortization 30 31 30 33 35 53 55 58 101 112Operationg Cash Flow △35 486 173 411 △11 349 335 344 177 302Investing Cash Flow △45 △340 △44 △27 △245 △23 △114 △852 △357 △140Financing Cash Flow △212 △1 △164 △1 △193 △1 △128 △1 △210 △3


Corporate Name ValueCommerce Co., Ltd.Established 1996 Fiscal Year End DecemberHQ Location ARK Hills South Tower, 1-4-5 Roppongi, Minato-ku, Tokyo JAPANRepresentative Jin Kagawa,

Representative Director, President and CEOBusinesses Marketing Solution Service

Media ServiceMain Shareholder Yahoo Japan Corporation Group Company DIGIMIHO Co., Ltd. (Marketing Automation Service)

JP21 Inc. (Media Operation) Slogan Your Success is Our ValueMission To Create New Value by Information TechnologiesVision To Be the Best Performance Marketing Company Representing JapanCorporate Website http://www.valuecommerce.co.jp/en/ir/

Others Inquiry to: Inayama / ItoPhone: 03 4590 3600 (4#)E-mail: [email protected]

Corporate Information

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ValueCommerce Co., Ltd. FY2016 Q2 Financial Results...※）EBITDA＝Operating Income＋Depreciation and amortization + Amortization of goodwill Result overview Cumulative Quarterly