Carta : Financial Results for 1Q of FY2021

English Translation

This is a translation of the original release in Japanese.

In the event of any discrepancy, the original release in Japanese shall prevail.

Financial Results for the 1st Quarter of the Fiscal Year Ending December 31, 2021 〔Japanese Standards〕（Consolidated）

Listed company name:	CARTA HOLDINGS, Inc.
Stock Code No.:	3688		URL:
Representative:	Title	Chairman	Name:
Contact:	Title	Director and CFO	Name:

Date to submit the Securities Report:

Scheduled date of dividend payments:

Availability of supplementary information

Holding investors' meeting:

	May 13, 2021
Listed stock exchange:	TSE first section
https://cartaholdings.co.jp/en/ir/
Shinsuke Usami
Hidenori Nagaoka	TEL [phone]
May 13, 2021

―

Yes

Yes

(For security analysts and institutional investors）

（Rounded down to million yen）

1. Consolidated Financial Results for FY 2021 First Three Months (January 1, 2021 - March 31, 2021)

(1)Consolidated results of operations (cumulative total)					（The percentage indicates year-on-year change）
	Net sales		Operating income	Ordinary income	Net income
	¥million		％	¥million			％	¥million		％	¥million	％
FY 2021 first three months	6,483		9.1	1,675		32.6	1,988	67.6	1,344	94.0
FY 2020 first three months	5,944		―	1,263			―	1,186		―	693	―
（Note）Comprehensive Income:	FY 2021 first three months: ¥1,678 million (895.9)％
	FY 2020 first three months: ¥168 million ―％
	Net income	Diluted net income			EBITDA
	per share		per share
	¥		¥			¥million		%
FY 2021 first three months	53.34		53.09			2,478		54.7
FY 2020 first three months	27.26		27.13			1,602		―

(Note) The fiscal year ended December 31, 2019 was a transitional period for the change in accounting period and was an irregular accounting period that covered 15 months (October 1, 2018 to December 31, 2019), and as such, the consolidated financial results for the first quarter of the fiscal year ended December 31, 2019 represent October 1, 2018 through December 31, 2018. Consequently, the periods to be compared differ, and as such, the year-on-year change rate is not stated.

• EBITDA noted above (earnings before interest, tax, depreciation, and amortization) is calculated by adding interest expenses, depreciation, amortization, amortization of goodwill, loss on retirement of non-current assets, and impairment loss to the Company's profit before income taxes. The definition of EBITDA has been changed to include loss on retirement of non-current assets and impairment loss from FY2021 in order to improve the effectiveness of the indicator. Based on the previous definition, EBITDA for the fiscal year ending December 31, 2020, would be ¥1,558 million yen.

1. Consolidated financial position

		Total assets		Net assets	Shareholders'	Net assets
			equity ratio	per share
		¥million		¥million	％	Yen
March 31, 2021		50,567		25,242	49.6	993.57
December 31, 2020		49,259		24,553	49.5	967.47
（Reference）Owned capital:	March 31, 2021: ¥25,064 million
	December 31, 2020: ¥24,376 million

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2. Dividend status

				Annual dividends
	1Q end		2Q end	3Q end	Fiscal year-end	Total
		Yen	Yen	Yen	Yen	Yen
FY 2020		―	8.00	―	40.00	48.00
FY 2021		―
FY 2021 (Forecast)			25.00	―	25.00	50.00

(Note) Revisions to dividend forecast for the current quarter: No

3. Forecast of Consolidated Financial Results for FY 2021（January 1, 2021 － December 31, 2021）

Net sales

Operating

Ordinary

Net income

Net income

EBITDA

income

income

per share

¥million

％

¥million

％

¥million

％

¥million

％

Yen

¥million

%

Full year

24,500

8.9

3,800

9.7

3,700

10.9

2,400

34.7

95.25

5,000

21.0

(Note) Revisions to performance results forecast for the current quarter: No

• Notes

(1)	Changes in significant subsidiaries during the period	: None
	(Change of specified subsidiaries that lead to a change in the scope of consolidation)
(2)	Specific accounting procedures	: Yes

Please see "2. Consolidated Financial Statements (3) Notes to Condensed Interim Consolidated Financial (Adoption of Accounting Method Specific to Preparation of Quarterly Consolidated Financial Statements)"

(3) Changes in accounting policies, changes in accounting estimates, corrections and restatements and retrospective restatements

1) Changes in accounting policy resulting from revisions to accounting standards	: None
2) Changes in accounting policy other than above	: None
3) Changes in accounting estimates	: None
4) Retrospective restatements	: None

1. Number of shares issued (common stock)
2. 1. Number of shares issued and outstanding (including treasury stock)

As of March 31, 2021	25,528,052	As of December 31, 2020	25,496,852
2) Number of treasury stock issued and outstanding
As of March 31, 2021	301,042	As of December 31, 2020	301,018
3) Average number of shares during the period (quarterly consolidated cumulative accounting period)
Three months ended March 31, 2021	25,204,196	Three months ended March 31, 2020	25,424,006

• Notice regarding audit procedures

This financial result is excluded from audit procedures.

• Explanations related to appropriate use of the performance forecast other special instructions(Note on forward-looking statements)
  Earnings forecasts and other forward-looking statements in this report are based on information currently available and certain assumptions judged to be reasonable. Therefore, these statements do not constitute a guarantee of achievement. Actual results may differ materially for various reasons.
  Please see "1. Qualitative Information on Quarterly Financial Results for the Period under Review (3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information" on page 5 of the attached documents.

(Supplementary materials)

Supplementary materials on financial results are on our website (in English and Japanese).

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Attachment

Contents

1. Qualitative Information on Quarterly Financial Results for the Period under Review
   (1) Analysis of Operating Results
   (2) Analysis of Financial Position
   (3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information
2. Consolidated Financial Statements

1. Consolidated Balance Sheets
2. Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

(Consolidated Statements of Income)

(Consolidated Statements of Comprehensive Income)

(3) Notes to Condensed Interim Consolidated Financial Statements

(Going Concern Assumption)

(Notes on Significant Changes in the Amount of Shareholders' Equity)

(Adoption of Accounting Method Specific to Preparation of Quarterly Consolidated Financial Statements)

(Changes in Accounting Policies) (Changes in Accounting Estimates) (Segment Information)

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1. Qualitative Information on Quarterly Financial Results for the Period under Review

1. Analysis of Operating Results

With regard to the online advertising market where the Group operates its mainstay business, according to research by Dentsu Inc., in 2020, despite sluggish consumption and a decrease in advertising placements due to the spread of the novel coronavirus (COVID-19), internet advertising spending recovered faster than other media and reached ¥2,229.0 billion, or an increase of 5.9% year on year.

Performance-based advertising costs amounted to ¥1,455.8 billion, or an increase of 9.7% year on year, due to increased contact opportunities with SNS, EC, and video distribution services as a result of nest-egg demand, and increased demand for operational advertising mainly from large-scale platformers. In addition, costs for digital advertising from the four traditional types of mass media amounted to ¥80.3 billion, or an increase of 12.3% year on year, as the use of operational advertising made further progress.

Under these circumstances, the Group worked to develop its business in the following three segments and has been promoting vertical integration throughout the Group to achieve sustainable growth: 1) the "Partner Sales Business" which provides advertising sales and solutions mainly through a media rep; 2) the "Ad Platform Business" which operates ad distribution platforms; and 3) the "Consumer Business" which operates its owned media and services in the EC, game, and HR fields.

As a result, the Group posted net sales of ¥6,483 million, or an increase of 9.1% year on year, operating income of ¥1,675 million, or an increase of 32.6% year on year, ordinary income of ¥1,988 million, or an increase of 67.6% year on year, and profit attributable to owners of parent of ¥1,344 million, or an increase of 94.0% year on year, in the period under review.

Financial results for each segment were as follows. Sales of each segment include intersegment sales and transfers.

In addition, in the period under review, some business that was previously included in the "Ad Platform" segment has been reclassified into the "Partner Sales" segment due to organizational restructuring. Therefore, the following year-on-year comparisons are based on figures for the same period of the previous fiscal year that have been reclassified to reflect the new reporting segment classification.

1) Partner Sales Business

The Partner Sales Business sells advertising space and provides solutions mainly through a media rep. The Group has been working to acquire new profit sources through initiatives in operational advertising and sales promotion/EC-related services, as well as expanding sales of our own products and solutions, while promoting operational efficiency to secure the existing media rep margins.

As a result, the Partner Sales Business recorded net sales of ¥3,064 million, or an increase of 23.0% year on year, and segment income of ¥1,039 million, or an increase of 45.7% year on year, in the period under review.

2) Ad Platform Business

The Ad Platform Business operates "Zucks," "PORTO," "TELECY," and others as operational advertising platforms, as well as "fluct" and BEYOND X" as media support services. We worked to improve and expand the functions of each platform and service, and also captured demand from corporate clients, which led to solid performance.

As a result, the Ad Platform Business recorded net sales of ¥1,785 million, or an increase of 2.6% year or year, and segment income of ¥491 million, or an increase of 6.9% year on year, in the period under review.

3) Consumer Business

In the Consumer Business, we operate sales promotion media centered on "EC Navi" and "PeX", and content media such as "KAMI GAME" and "Kotobank", as well as services in the areas of EC, games, and human resources. We have promoted the expansion of the scale of existing media and the strengthening of initiatives in growth areas.

As a result, the Consumer Business recorded net sales of ¥1,636 million, or a decrease of 4.9% year on year, and segment income of ¥144 million, or an increase of 59.3% year on year, in the period under review.

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1. Analysis of Financial Position
2. 1. Assets, Liabilities and Net Assets (Assets)
      Consolidated assets as of the end of the period under review totaled ¥50,567 million, an increase of ¥1,307 million from the end of the previous fiscal year. This was mainly attributable to an increase in accounts receivable - trade.

(Liabilities)

Consolidated liabilities as of the end of the period under review amounted to ¥25,324 million, an increase of ¥619 million from the end of the previous fiscal year. This was mainly attributable to an increase in accounts payable - trade.

(Net Assets)

Consolidated net assets as of the end of the period under review stood at ¥25,242 million, an increase of ¥688 million from the end of the previous fiscal year. This was primarily owing to an increase in retained earnings due to the recording of profit attributable to owners of parent.

1. Explanation of Consolidated Performance Forecast and Other Forward-looking Information
   No revisions have been made to the full-year consolidated performance forecast announced in "Financial Results for the Fiscal Year Ended December 31, 2020" on February 12, 2021. Although results in the period under review progressed steadily, in light of the uncertain impact of Apple's iOS 14.5 update on the Internet advertising industry and plans to strengthen the ad creative screening system in the Ad Platform business, we have left our full-year consolidated performance forecast unchanged.

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