Carta : Financial Results for 2Q 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 2nd 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:

	Aug 6, 2021
Listed stock exchange:	TSE first section
https://cartaholdings.co.jp/en/ir/
Shinsuke Usami
Hidenori Nagaoka	TEL [phone]

Aug 6, 2021

Sep 30, 2021

Yes

Yes

(For security analysts and institutional investors）

（Rounded down to million yen）

1. Consolidated Financial Results for FY 2021 First Six Months (January 1, 2021 - June 30, 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 six months	12,629		13.6	2,940		47.6	3,301	76.2	2,215	122.3
FY 2020 first six months	11,113			―	1,992			―	1,874		―	996	―
（Note）Comprehensive Income:	FY 2021 first six months: ¥2,727 million 165.5％
	FY 2020 first six months: ¥1,027 million ―％
	Net income		Diluted net income			EBITDA
	per share			per share
	¥			¥			¥million		%
FY 2021 first six months	87.84			87.42			4,034		60.7
FY 2020 first six months	39.36			39.17			2,511		―

(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 second quarter of the fiscal year ended December 31, 2019 represent October 1, 2018 through March 31, 2019. 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 second quarter of the fiscal year ended December 31, 2020, would be ¥2,453 million yen.

1. Consolidated financial position

		Total assets		Net assets	Shareholders'	Net assets
			equity ratio	per share
		¥million		¥million	％	Yen
June 30, 2021		47,651		26,369	55.0	1,035.93
December 31, 2020		49,259		24,553	49.5	967.47
（Reference）Owned capital:	June 30, 2021: ¥26,215 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	―	25.00
FY 2021 (Forecast)			―	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

25,000

11.2

4,500

29.9

4,800

43.9

3,120

75.2

123.71

6,000

45.2

(Note) Revisions to performance results forecast for the current quarter: Yes

• 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 (4) Notes to Condensed Interim Consolidated Financial Statements (Adoption of Accounting Method Specific to Preparation of Quarterly Consolidated Financial Statements)" on page 12 of the attached documents.

(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 June 30, 2021	25,306,032	As of December 31, 2020	25,496,852
2) Number of treasury stock issued and outstanding
As of June 30, 2021	29	As of December 31, 2020	301,018
3) Average number of shares during the period (quarterly consolidated cumulative accounting period)
Six months ended June 30, 2021	25,219,931	Six months ended June 30, 2020	25,312,400

• 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 refer to "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)

1. Overview of Cash Flows for the Fiscal Year under Review
2. 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 ¥12,629 million, or an increase of 13.6% year on year, operating income of ¥2,940 million, or an increase of 47.6% year on year, ordinary income of ¥3,301 million, or an increase of 76.2% year on year, and profit attributable to owners of parent of ¥2,215 million, or an increase of 122.3% 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, from the first quarter of the fiscal year ending December 31, 2021, 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 ¥5,793 million, or an increase of 33.0% year on year, and segment income of ¥1,755 million, or an increase of 94.7% 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 ¥3,546 million, or a decrease of 0.3% year on year, and segment income of ¥938 million, or an increase of 12.2% 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 ¥3,295 million, or an increase of 2.5% year on year, and segment income of ¥246 million, or a decrease of 3.2% 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 ¥47,651 million, a decrease of ¥1,607 million from the end of the previous fiscal year. This was mainly attributable to a decrease in accounts receivable - trade.

(Liabilities)

Consolidated liabilities as of the end of the period under review amounted to ¥21,282 million, a decrease of ¥3,423 million from the end of the previous fiscal year. This was mainly attributable to a decrease in accounts payable - trade.

(Net Assets)

Consolidated net assets as of the end of the period under review stood at ¥26,369 million, an increase of ¥1,815 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.

2) Cash Flows

Cash and cash equivalents at the end of the period under review (hereinafter, "funds") totaled ¥17,949 million. The following is the status and factors of each cash flow during the period under review.

(Net cash flows from operating activities)

Net cash flows provided by operating activities amounted to ¥3,498 million (¥1,159 million was provided in the same period of the previous fiscal year.). The main positive factors included a decrease in notes and accounts receivable - trade and the recording of profit before income taxes, while the main negative factors included a decrease in notes and accounts payable - trade.

(Net cash flows from investing activities)

Net cash flows used in investing activities amounted to ¥350 million (¥466 million was provided in the same period of the previous fiscal year.). The main negative factors included the purchase of property, plant and equipment.

(Net cash flows from financing activities)

Net cash flows used in financing activities amounted to ¥1,032 million (¥632 million was used in the same period of the previous fiscal year.). The main negative factors included the payment of cash dividends.

(3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information With regard to the consolidated performance forecast, net sales are expected to be higher than the forecast previously announced as demand for brand advertising placements in the Partner Sales Business, which had been subdued by the impact of the last year's spread of COVID-19,remained robust with no declines in and after April, although a decrease in net sales in the Ad Platform Business is expected due to plans to strengthen the ad creative screening system.

In addition, as a change in sales mix improved profit margins, operating profit, ordinary profit, profit attributable to owners to parent, and EBITDA are also expected to exceed the forecast previously announced.

For details, please see the "Notice Regarding Revisions to the Full Year Consolidated Financial Forecast" announced today (August 6, 2021).

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