Carta : Financial Results for 3Q 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 3rd 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:

	Nov 11, 2021
Listed stock exchange:	TSE first section
https://cartaholdings.co.jp/en/ir/
Shinsuke Usami
Hidenori Nagaoka	TEL [phone]
Nov 11, 2021

―

Yes

Yes

(For security analysts and institutional investors）

（Rounded down to million yen）

1. Consolidated Financial Results for FY 2021 First Nine Months (January 1, 2021 - September 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 nine months	18,464		13.1	3,554		37.8		4,019	65.0	2,574	87.5
FY 2020 first nine months	16,321			―	2,578			―		2,435		―	1,372	―
（Note）Comprehensive Income:	FY 2021 first nine months: ¥3,336 million 174.3％
	FY 2020 first nine months: ¥1,216 million ―％
	Net income		Diluted net income				EBITDA
	per share			per share
	¥			¥				¥million		%
FY 2021 first nine months	101.92			101.41				4,994		49.1
FY 2020 first nine months	54.34			54.07				3,349		―

(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 third quarter of the fiscal year ended December 31, 2019 represent October 1, 2018 through June 30, 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 third quarter of the fiscal year ended December 31, 2020, would be ¥3,276 million.

1. Consolidated financial position

		Total assets		Net assets	Shareholders'	Net assets
			equity ratio	per share
		¥million		¥million	％	Yen
September 30, 2021		47,485		26,434	55.3	1,035.42
December 31, 2020		49,259		24,553	49.5	967.47
（Reference）Owned capital:	September 30, 2021: ¥26,277 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: No

※ Notes

(1) Changes in significant subsidiaries during the period	: Yes
(Change of specified subsidiaries that lead to a change in the scope of consolidation)
New: 1 company (Name) CARTA COMMUNICATIONS Inc.	Excluded from consolidation: ― company (Name) ―

(Note) For details, please see "2. Consolidated Financial Statements (3) Notes to Condensed Interim Consolidated Financial Statements (Changes in Significant Subsidiaries during the Period)" on page 10 of the attached documents.

(2) Application of special accounting methods for the preparation of quarterly consolidated : Yes financial statements

(Note) For details, please see "2. Consolidated Financial Statements (3) Notes to Condensed Interim Consolidated Financial Statements (Adoption of Accounting Method Specific to Preparation of Quarterly Consolidated Financial Statements)" on page 10 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 September 30, 2021	25,380,832	As of December 31, 2020	25,469,852
2) Number of treasury stock issued and outstanding
As of September 30, 2021	2,191	As of December 31, 2020	301,018
3) Average number of shares during the period (quarterly consolidated cumulative accounting period)
Nine months ended September 30, 2021	25,255,579	Nine months ended September 30, 2020	25,262,766

• 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)

(3) Notes to Condensed Interim Consolidated Financial Statements

(Going Concern Assumption)

(Changes in Significant Subsidiaries during the Period)

(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 media communication; 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 ¥18,464 million, or an increase of 13.1% year on year, operating income of ¥3,554 million, or an increase of 37.8% year on year, ordinary income of ¥4,019 million, or an increase of 65.0% year on year, and profit attributable to owners of parent of ¥2,574 million, or an increase of 87.5% year on year, in the period under review.

1) Partner Sales Business

The Partner Sales Business sells advertising space and provides solutions mainly through media communication. 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 securing profits from existing businesses through the promotion of better operational efficiency.

As a result, the Partner Sales Business recorded net sales of ¥8,146 million, or an increase of 30.2% year on year, and segment income of ¥1,980 million, or an increase of 112.4% 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 ¥5,431 million, or an increase of 3.3% year on year, and segment income of ¥1,349 million, or an increase of 1.1% 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. Particularly in the EC-related business, advertising expenses in the form of upfront investment are rising as our business grows.

As a result, the Consumer Business recorded net sales of ¥4,902 million, or an increase of 1.9% year on year, and segment income of ¥224 million, or a decrease of 27.8% year on year, in the period under review.

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 ¥47,485 million, a decrease of ¥1,773 million from the end of the previous fiscal year. This was mainly

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attributable to decreases in accounts receivable - trade and goodwill.

(Liabilities)

Consolidated liabilities as of the end of the period under review amounted to ¥21,050 million, a decrease of ¥3,655 million from the end of the previous fiscal year. This was mainly attributable to decreases in accounts payable - trade and provision for bonuses.

(Net Assets)

Consolidated net assets as of the end of the period under review stood at ¥26,434 million, an increase of ¥1,881 million from the end of the previous fiscal year. This was primarily owing to increases in retained earnings and valuation difference on available-for-sale securities.

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 2nd Quarter of the Fiscal Year Ending December 31, 2021" on August 6, 2021.

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