Makuake : Non-consolidated Financial Results for the Nine Months Ended June 30, 2021

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

July 27, 2021

Non-consolidated Financial Results

for the Nine Months Ended June 30, 2021

Company name:	Makuake, Inc.
Listing:	Tokyo Stock Exchange
Stock code:	4479
URL:	http://www.makuake.com/
Representative:	Ryotaro Nakayama, CEO
Inquiries:	Yuki Tamura, Corporate Officer and General Manager of Business Management
	Division
TEL:	[phone] (from overseas)

Scheduled date to file quarterly securities report:	July 28, 2021
Scheduled date to commence dividend payments:	-
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results presentation meeting:	Yes

(Millions of yen with fractional amounts discarded, unless otherwise noted)

1. Performance for the nine months ended June 30, 2021 (from October 1, 2020 to June 30, 2021)

(1) Operating results (cumulative)			(Percentages indicate year-on-year changes.)
	Net sales	Operating profit	Ordinary profit	Profit
Nine months ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
June 30, 2021	3,332	59.3	201	(62.1)	200	(62.2)	129	(63.5)
June 30, 2020	2,092	128.2	530	842.7	530	795.1	355	747.0
	Basic earnings per	Diluted earnings per
	share		share
Nine months ended		Yen		Yen
June 30, 2021		10.86		10.37
June 30, 2020		32.21		29.99

Note: For the diluted earnings per share for the nine months ended June 30, 2020, because the Company's shares were listed on the Mothers section of the Tokyo Stock Exchange on December 11, 2019, the figure is calculated using the average share price from the date the shares were newly listed to the end of the quarter under review as the average share price for the period.

(2) Financial position

	Total assets	Net assets	Equity ratio
As of	Millions of yen	Millions of yen	%
June 30, 2021	10,416	6,733	64.4
September 30, 2020	6,173	2,673	43.1
Reference: Equity
As of June 30, 2021	¥6,707 million
As of September 30, 2020	¥2,662 million

2. Cash dividends

				Annual dividends
	First		Second		Third	Fiscal year-end		Total
	quarter-end		quarter-end		quarter-end
	Yen		Yen		Yen	Yen		Yen
Fiscal year ended	-	0.00		-	0.00	0.00
September 30, 2020
Fiscal year ending	-	0.00		-
September 30, 2021
Fiscal year ending						0.00	0.00
September 30, 2021 (Forecast)
Note: Revisions to the cash dividend forecasts most recently announced: None

3. Earnings forecasts for the fiscal year ending September 30, 2021 (from October 1, 2020 to September 30, 2021)

(Percentages indicate year-on-year changes.)

										Basic
	Net sales		Operating profit	Ordinary profit	Profit		earnings per
										share
	Millions of		%	Millions of	%	Millions of	%	Millions of	%	Yen
	yen		yen	yen	yen
Fiscal year ending	4,670		44.8	311	(39.0)	309	(39.5)	205	(44.3)	17.06
September 30, 2021
Note: Revisions to the earnings forecasts most recently announced: Yes

* Notes

1. Application of special accounting treatments for the preparation of quarterly financial statements: None
2. Changes in accounting policies, changes in accounting estimates, and restatement
3. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None
4. Number of issued shares (common shares)
5. 1. Total number of issued shares at the end of the period (including treasury shares)

As of June 30, 2021	12,316,700 shares
As of September 30, 2020	11,667,700 shares

(ii) Number of treasury shares at the end of the period

As of June 30, 2021	64 shares
As of September 30, 2020	24 shares

(iii) Average number of shares during the period (cumulative from the beginning of the fiscal year)

For the nine months ended June 30, 2021	11,960,170 shares
For the nine months ended June 30, 2020	11,037,876 shares

• Quarterly financial results reports are exempt from quarterly review conducted by an audit corporation.
• Proper use of earnings forecasts, and other special matters
  The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. These statements do not purport that the Company pledges to realize such statements. Actual business and other results may differ substantially due to various factors.
  For matters regarding the above earnings forecasts, please refer to "(3) Explanation of forward-looking information including earnings forecasts" in "1. Qualitative information on quarterly financial results" on page 3.

		Makuake, Inc. (4479)
Attached materials
	Index
1. Qualitative information on quarterly financial results ..............................................................................	2
(1)	Information on operating results ........................................................................................................	2
(2)	Information on financial position .......................................................................................................	3
(3)	Explanation of forward-looking information including earnings forecasts........................................	3
2. Quarterly financial statements and significant notes thereto ....................................................................	4
(1)	Quarterly balance sheet ......................................................................................................................	4
(2)	Quarterly statement of income ...........................................................................................................	5
(3)	Notes to quarterly financial statements ..............................................................................................	6
	Notes on premise of going concern ....................................................................................................	6
	Notes on significant changes in the amount of shareholders' equity..................................................	6
	Segment information ..........................................................................................................................	6

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Makuake, Inc. (4479)

1. Qualitative information on quarterly financial results

1. Information on operating results
   The forward-looking statements in this report were prepared based on information available as of the end of the quarter under review.
   Based on its vision of "Create a world where all the good things are born, spread, and continue to exist," the mission of Makuake, Inc. (the "Company") is to "Connect the world through the creation of new things." We operate the "Makuake" platform to connect business operators who want to create and spread new things with consumers who wish to find new items that fit their own tastes and preferences.
   The first nine months of the fiscal year ending September 30, 2021, saw a continuation of the difficult conditions caused by the effects of the novel coronavirus disease (COVID-19), but the Japanese economy is expected to follow a path of recovery, as measures to prevent the spread of COVID-19 are being taken and vaccination programs are being expedited both in Japan and overseas. However, we must pay close attention to the risk of global economic decline caused by future changes in the spread of infection, and the future remains uncertain.
   The business environment for the Company is affected by multiple markets, including the new product offline debut market, the e-commerce market for debuting new products, and the e-commerce market for pre-ordering new services. We believe that the e-commerce market for debuting new products and services has extraordinarily high growth potential.
   Under these conditions, the Company is accelerating innovation in its previous business model, helped by the tailwind of the digital transformation of Japanese society, providing a place for business operators (project owners) to debut new products and services online for test marketing and PR prior to mass production. In this way the Company continues to provide support for the introduction to the world, in a way that was difficult under the primarily off-line business models of the past, of products and services that use wonderful technology and ideas.
   In addition, we are providing to consumers (project supporters), and spreading awareness of, a new form of consumption called "support purchases." This provides consumers with something that could not be experienced in the past, namely a sense of specialness that is derived from being able to acquire products that fit their own tastes and preferences before anybody else as well as a sense of connectedness with business operators (project owners), and that allows them to enjoy the sense of trust and expectation that comes from knowing the story behind the product being created.
   In the period under review, the spread of COVID-19 led to restrictions on offline venues for debuting new products. However, the number of new projects posted on Makuake rose significantly due to a rising awareness of the benefits of debuting new products and services on Makuake without incurring inventory risk. This approach also enables confirmation of consumer needs and the acquisition of purchaser data before mass production, while at the same time making it possible to manufacture only the required volume after securing initial customers, and to then move on to the mass-production phase. Moreover, brand recognition rose as a result of television commercials, and we increased our exposure on television programs and strengthened our Internet and app advertisements. This led to a further expansion in unique users, and total support purchase value at Makuake grew 67.1% year on year.
   However, having put the highest priority on growth in total support purchase value and having moved forward with upfront investments in promotions and in the hiring of personnel, the unexpectedly large increase in the number of new projects posted resulted in a rise in the operational burden for curators. We became aware that there were issues related to the hiring and development of curators and of inspection, legal and monitoring personnel, as well as in the examination of operational flows and the development of operations systems.
   As a result, for the period under review, the Company recorded net sales of ¥3,332,990 thousand (up 59.3% year on year), operating profit of ¥201,096 thousand (down 62.1% YoY), ordinary profit of ¥200,403 thousand (down 62.2% YoY) and profit of ¥129,918 thousand (down 63.5% YoY).
   As the Company consists of a single business segment, the Makuake service, a platform for people to make support purchases of new things and experiences, information by segment is omitted.

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